TIDMXLM
RNS Number : 4007X
XLMedia PLC
19 December 2019
19 December 2019
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Business and Trading Update
XLMedia (AIM: XLM), a leading global digital performance
publisher, today outlines a number of strategic initiatives
following an internal review initiated by Stuart Simms, who was
appointed Chief Executive Officer of the Group on 2 October 2019,
and updates on trading for the remainder of 2019 and the full year
to 31 December 2020.
The key elements of this internal review centre on the Group's
operating model, organisational structure and culture.
Over the past two months, this ongoing review has assessed the
core operational base of the business, including both scale and
commercial responsiveness, with the resulting conclusion that the
Group will require increasing expenditure in 2020 in order to
support sustainable growth in the medium term. These new
initiatives are aimed at strengthening the Group's core business,
mitigating ongoing regulatory headwinds and better positioning the
Group for growth.
The following decisions were taken to strengthen the foundations
for the Group's wider growth aspirations:
-- To invest in and expand the Group's global publishing activities
XLMedia has over 13 years' experience as a technology-driven,
online performance publisher and operates over 2,000 content rich
websites across sectors. The Group's core skill is the creation of
consumer engagement. The Group monetises online content by sending
paying users to its partners and gets paid based on the value it
brings to those partners through performance-based models. As a
global business, XLMedia will seek to further deploy its online
real estate and market knowledge to expand its geographical
footprint in areas such as North and Latin America and APAC, and to
broaden its growth potential.
Owning strong publishing assets puts the Group in a position to
create better engagement and results than other traditional
performance marketing, whereby consumers actively choose the
content they want to consume, generating both greater value and
increased levels of engagement.
To facilitate this expansion, management will increase its spend
beyond historical budgets, in both new and existing online
properties, to invest organically in the business alongside
actively seeking acquisitions. This new initiative is designed to
increase exposure and traffic in new territories in addition to
improving engagement in existing territories through improved
functionality, rich content and design. Ultimately, the Group aims
to both extend its geographic reach and expand into new verticals,
which complement the Group's existing focus on gaming, gambling,
personal finance and sports betting.
-- To initiate a detailed review on the Group's technology
platform to leverage data and AI opportunities more effectively
Going forward, the Company will seek to leverage opportunities
that exist around smart data analysis and AI more effectively in
order to deliver appropriate content and offers to consumers which,
in turn, bring value to XLMedia's partners. A thorough review will
be conducted in the next three months and the Company will re-focus
its technology investments based on its findings.
-- To implement a transformation plan aimed to evolve the
Group's operating model and people strategy
The plan is to review and address shortcomings of the current
operating model through a structured program of transformation
which will review, and evolve as necessary, all areas of the
business. There are many talented people in the business and the
review will have a particular focus on our employees and how best
to retain and nurture talent. Management aims to implement a
progressive people strategy, which complements the wider efforts to
leverage both existing data and AI platforms. Immediate changes
have already been made through eliminating executive positions
which were held both at headquarter and at subsidiary levels, now
operating with a unified, aligned executive team. These
transformation costs are estimated to be c.$3 million in aggregate
across 2019 and 2020.
Trading update
Trading for the year ended 31 December 2019 has been broadly
consistent with previous guidance, with management focused on the
planning and execution of the transformation strategy aimed at
evolving the business for sustainable growth. The Board expects the
Group to deliver consolidated revenues of c.$78 million and
adjusted EBITDA(1) to be c.$32 million for the year ending 31
December 2019.
Management remains encouraged by the US sports betting markets
as they continue to regulate. The Group has already built a number
of websites, is engaged with US users across multiple states, and
is in the process of expanding its local presence. In addition, the
Group is actively looking for acquisition opportunities to
accelerate its expansion into this important market.
Regulatory headwinds highlighted earlier in the year are
expected to continue to create trading uncertainty for XLMedia, and
the review has been central in addressing the future
diversification of the Group's revenue base. However, in the longer
term, the board believes that fully regulated markets will provide
better, sustainable conditions in which to operate.
As a result of the implementation of the initiatives outlined
above, the Group will incur a greater level of direct costs
(investment in core capabilities / assets / new markets) than was
budgeted for in 2020 financial year, in addition to one off
transformation costs which are estimated to be c.$3 million in
aggregate across 2019 and 2020.
The combination of increased spend on direct costs to support
growth, further predicted regulatory headwinds and implementation
of a transformation plan which prepares XLMedia for the next phase
of growth means the Board is today also updating market guidance
for the year ending 31 December 2020.
The initiatives outlined above are proactive measures designed
to benefit the business in the longer term. As a result of those
measures, the investment and costs budgeted for 2020 are
significantly higher than previously anticipated and will
consequently impact the overall performance of the Group.
Therefore, despite revenues for the year ending 31 December 2020
expected to remain broadly stable versus 2019, adjusted EBITDA is
anticipated to be materially lower than previous management
expectations.
Stuart Simms, Chief Executive Officer of XLMedia, commented:
"Having now spent a couple of months immersed in the business, I
am excited to be leading it towards the next phase of growth.
Whilst there are some clear near-term headwinds and operating
issues (similar in many other companies of our size and stage of
development), our core expertise, assets and market presence remain
incredibly strong.
"We have already identified and are investing in market
opportunities which will generate sustainable growth in the future.
I look forward to the coming months to continue to evolve our
strategy, progress with the transformation program and execution of
our strategic plan."
The information contained within this announcement (the
"Announcement") is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU)
No. 596/2014. Upon the publication of this Announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
For further information, please contact:
XLMedia plc Stuart Simms, Group Chief Via Vigo Communications
Executive Officer Liat Hellman, Acting
Group Chief Financial Officer www.xlmedia.com
Vigo Communications Jeremy Garcia / Fiona Tel: 020 7390 0233
Henson / Fiona Norman www.vigocomms.com
Cenkos Securities plc (Nomad and Joint Tel: 020 7397 8900
Broker) Giles Balleny / Max Gould www.cenkos.com
Berenberg (Joint Broker) Chris Bowman Tel: 020 3207 7800
/ Mark Whitmore / Simon Cardron www.berenberg.com
(1) Adjusted EBITDA - Earning before interest, taxes,
depreciation and amortisation and excluding share based
payments
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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December 19, 2019 02:00 ET (07:00 GMT)
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