XLMedia notes 29% FY 2023 revenue decline as $8m in savings confirmed

XLMedia has disclosed a 29% year-on-year (YoY) decline in full-year 2023 revenue to $50.3m with the affiliate now looking ahead to a North America-focused future.

The AIM-listed firm also reported a 36% YoY slump in adjusted EBITDA from $18.9m to $12.1m, while full-year 2022’s operating profit of $6.2m swung to a $300,000 loss in 2023.

Breaking revenue down geographically, North America accounted for the lion’s share of revenue at $27.5m despite the region suffering a 42% YoY drop in the metric from full-year 2022’s $47.7m.

Bosses pointed to a slew of state launches and Barstool Sportsbook being pulled by PENN Entertainment as core reasons for the decline.

Europe revenue remained flat, with a 2% dip, from $23.2m in 2022 to $22.8m last year.

CPA agreements accounted for $26.2m of group revenue, down 46% compared to 2022 when the figure stood at $48.3m.

In comparison, revenue share deals equated to $24.1m in group revenue, an increase of 7% on 2022.

Strategically, XLMedia reported it had secured cost savings to the tune of $8m in full-year 2023 following a reduction in technology, expenditure, content creation costs and headcount.

Those costs are set to reduce throughout 2024 after the business agreed to sell its European and Canadian assets to Gambling.com Group in a deal worth up to $42.5m.

The streamlining of the business, which has seen headcount decline from 193 at the start of 2023 to 100 by 3 April 2024, will see XLMedia home its focus on North America.

XLMedia said in a statement accompanying the results : “Having previously focused the group’s strategy towards becoming sports-led with a strong gaming presence, we have now refined this to focus the group’s activities in the North America sports market, while seeking to build the gaming side of the business.

“The market offers the opportunity for organic growth over the longer term as new operators enter the existing markets and new states legalise online sports betting and online gaming.

“The core elements of the group’s strategy remain unchanged. We will seek to expand our footprint, deepen audience relationships and diversify revenue streams with the goal of developing more predictable income for the longer term. This will take time as the market currently remains a predominantly CPA-led market with a relatively small number of operators.”

Management have not provided any financial guidance for 2024 but did note the year would be one of “consolidation”.

David King, XLMedia CEO, said: “Following the announcement of the sale of the Europe sports and gaming business on 1 April 2024, we are focused on driving organic revenues in the North America market while continuing both to expand our footprint in preparation for new state launches when they happen, while also right sizing the group’s cost base for 2025.”

Marcus Rich, XLMedia chair, added: “We are delighted to have realised value for shareholders from the sale of the group’s Europe and Canada assets while also providing cash to clear legacy liabilities and working capital for the North America business. We anticipate an initial return of capital to shareholders from sale proceeds in Q4 2024.”