XLMedia shares plunge as affiliate reveals 521% increase in losses last year

XLMedia has focused on medium to long-term growth, especially in the US online sports betting market, following a year of major restructuring.

In line with its February guidance, the London-listed affiliate announced revenue of $73.7m (£59.7m) for 2022, a year-on-year (YoY) increase of 11% on the $66.5m reported in 2021, for total group performance including discounted operations.

Adjusted EBITDA was down 7% YoY from $17.9m in 2021 to $16.7m in 2022, while operating losses shot up 521% from a profit of $2.8m in 2021 to losses of $11.8m in 2022.

The first half of the year was impacted by a $5.9m decline in personal finance revenue due to search engine ranking penalties issued in 2021.

These results have led to XLMedia’s share prices falling at the time of writing by 5.4% to 13.95p.

The sports vertical generated $54m in revenue, up 72% on the figure posted in 2021, with the affiliate highlighting its substantial presence in North America.

Breaking that down by region, North America revenue jumped 112% YoY to $46.4m, while European revenue fell by 20% YoY from $9.5m to $7.6m.

XLMedia attributed the decline in European revenue to the fact the firm migrated its Freebets.com business from legacy technology to a new platform in preparation for future growth.

XLMedia also acquired 102,300 sports betting real-money players (RMP), an increase of 9% YoY.

Elsewhere, the affiliate’s gaming revenue fell by 33% YoY to $15.6m, mainly due to a 38% drop in European gaming revenue, accounting for more than 90% of the business’ gaming revenue.

XLMedia said the downturn it its European gaming performance was also due largely to search engine ranking penalties imposed in previous years.

Additionally, as part of the group’s discontinued operations, the personal finance arm saw revenue fall by 78% to $1.9m.

XLMedia confirmed it was in the process of selling the arm in December 2022 after establishing it as a non-core asset.

Speaking on the results, David King, who was brought in as CEO in 2022, was full of praise for the business and believes the last 12 months has set the firm up well for future growth in 2023.

King said: “We made good progress in 2022, having re-engineered the business to become one of the leading sports betting affiliates in North America, and our US business is expected to continue to evolve at a rapid pace as the market starts to migrate from upfront acquisition payment to revenue share agreements.

“However, our mix of media and betting brands, both owned and partnered, are well placed in that environment to build sustainable revenues. Within our European sports and gaming operations, our teams continue to build back our business following the recent restructure.

“2022 has been an important year for refocusing the business, and I’m pleased with the progress we have made. Whilst still early into the new year, I’m confident XLMedia is in a stronger position as a result of the actions we took and I look forward to updating on our continued progress in 2023,” the CEO added.

Looking ahead, King noted the launches across Massachusetts and Ohio as primary factors in what he believes has been a strong start to 2023 for the affiliate.

He also confirmed that European sports and gaming started the year well, with steady growth in new customer acquisition and tail revenues.

King concluded: “The growth in total revenue and profits across the group will periodically benefit from launch spikes. Going forward, we will report the short-term impact of state launches while continuing to maximise the revenues from these launches. Highlighted – choose one spelling for consistency – while

“We will also continue to prioritise diversifying our revenue streams and building sustainable revenues which includes starting to engage in revenue sharing in North America where that is possible.”