Revenue for the 12 months to 31 December amounted to $54.8m, down from $79.7m in the previous year. XLMedia was significantly impacted by changes to the Google rankings of its sites in January of last year.
Google applied a search ranking penalty to a number of XLMedia casino sites, which made generating new revenue in this vertical difficult for the affiliate.
After a thorough review, XLMedia chose to focus its efforts on 10 of the penalised websites and a small number of other high-performing assets to minimise duplication in each target country, submitting these to Google for reconsideration. This led to penalties applied to Casino.pt, Casino.gr, and CasinoKiwi.co.nz being rescinded, resulting in an improvement in their rankings. However, it will take some time to return to historical levels.
“From this point, we are concentrating our resources on growing the new revenue in the casino vertical from the current lower base,” XLMedia chief executive Stuart Simms said. “This includes driving further growth from our unpenalised sites and seeking to re-establish the performance of the penalised assets, through partnerships, to successfully remove the penalties or develop new sites.
Alongside this, we continue to assess the option of disposing of elements of this business, where we feel the value to another party may exceed that to XLMedia over the longer term.”
XLMedia was also initially impacted by the cancellation and postponement of many major sports events in the second quarter due to Covid-19. This resulted in a drop in sports betting revenue during the period. These two main factors saw revenue fall across all of XLMedia’s operating markets.
Scandinavia remained its core region, but revenue fell 38.3% to $21.4m, while revenue from other European markets declined 27.9% to $15.5m. North American revenue was down 29.0% to $11.5m. Revenue from Oceania fell 31.6% to $941,000; Asian revenue plummeted 84.4% to $35,000, and the contribution from other fell 41.4% to $61,000.
Looking at costs for the full year, operating expenses were up 9.9% to $30.0m, with earnings before interest, tax, depreciation, and amortisation (EBITDA) reaching $12.2m, down 63.6% but largely in line with a forecast published in January this year.
After also including $2.5m in reorganisation costs and $955,000 in impairment loss, this left an operating profit of $913,000, compared to a loss of $56.7m in 2019. The larger loss in 2019 was caused by a much heavier impairment charge of $81.4m.
Finance expenses amounted to $139,000 and other income $332,000, leaving a pre-tax profit of $1.1m, compared to a $57.7m loss in the previous year. XLMedia paid $314,000 in tax, resulting in a $792,000 profit from continuing operations, up from a $60.9m loss in 2019.
“We entered 2020 with strategic and operational clarity, only to find ourselves knocked off track in the short term by the unforeseen challenges of a Google penalty and the Covid-19 global pandemic,” Simms said.
“Even against this backdrop, the business performed relatively well, and we made significant progress on the priorities of upgrading the asset portfolio and restructuring the organisation, which will drive performance over the longer term.”
Simms also highlighted the acquisition of US-focused sportsbook review website Sports Betting Dime in March and sports gaming and sports betting business CBWG Sports in December as factors that will support growth plans moving forward.
“Completing the transformation of the business, including the overhaul of the systems supporting it and delivering the long-term operating structure to maximise growth will involve further significant investment in 2021.
“Notwithstanding this, our level of confidence in the business performance and recovery continues to grow, and we have entered 2021 with positive momentum, which we expect to lead to revenue materially ahead of the previous year.”
