XLMedia share price falls 30% on profit warning
Affiliate firm expects annual revenues to drop by approximately $8m after regulatory upheaval in Australia and Europe
XLMedia has issued a profit warning for FY2018 this morning in the face of regulatory changes in Australia and uncertainty in key European markets.
The firm’s share price dropped by more than 30% on the announcement, with the board expecting 2018 revenues of around $130m, compared to $138m last year, with EBITDA also likely to take a hit.
The affiliate giant told investors in a statement: “The Group has seen some impact from regulatory changes, namely the closure of the Australian market at the end of 2017 in addition to uncertainty regarding the regulatory status of certain European markets during 2018.
“These regulatory changes have triggered a re-alignment in how operators and marketers can work which should lead to a clearer and more functional environment.
“There has also been some reduction in SEO performance in few specific territories.”
Switzerland voting to ban international gambling companies is likely to have worsened the headache for the XLMedia board who have several assets in German-speaking regions.
Regulus Partners analyst Paul Leyland wrote: “A relatively prolonged period of limited adverse regulatory change has meant that many gambling companies seem to have been able to have their cake and eat it in terms of generating high risk cash flow and presenting a relatively low risk business view.
“From a macro perspective, this period now seems to be very much ‘at risk’ and if relatively visible regulatory changes continue to ‘surprise’ at the governance level, then this risk is likely to spill into critical areas of overall sector capital availability and key stakeholder management,” he added.
Playtech’s share price plummeted 22% in November 2017 when the supplier issued a similar profit warning based on regulatory concerns in Asian markets, Malaysia in particular.