XLMedia feels strain of Google deranking

Affiliate marketing publisher XLMedia has continued to battle the effects of a Google deranking, with projected revenues expected to fall short of previous quarters.

Publishing a trading update for the first six months of 2020, XLMedia predicts that revenues will amount to approximately £27.5 million, while EBITDA is forecasted to reach approximately £3.5 million.

XLMedia said: “As anticipated, monthly revenue is currently running around $2 million below the level being achieved before the impact of the Google deranking, with the vast majority of this dropping through to the bottom line.

“The Company believes that around half of the revenue drop is directly associated with the deranking of these predominantly Casino websites, with the remainder caused by the impact of Covid-19 on the Sports and Personal Finance verticals and the management decision to discontinue the media buying operations.

“The first quarter of the year was stronger than the second, with revenue of $15.6 million, due to a normal period of trading before the deranking in late January and the impact of Covid-19 not being felt until the middle of March. A strong focus on cost management and the recently announced reduction in employee numbers contributed to the healthy cash position at the end of June.”

Despite the effects of the deranking, XLMedia expressed its confidence in being able to maintain a strong balance sheet, with cash balances at the end of June of approximately $27.9 million.

XLMedia explained that unlike some of its competitors, the January Google deranking has prevented the company’s casino division from being able to take full advantage of the industry-wide uptick in online casino and gaming.

The London AIM-listed affiliate marketing network, continues to restructure its publishing portfolio, seeking to reduce the number of domains and focusing growth on its revenue effective properties.

The statement concluded: “While financial performance in the first six months was disappointing, XLMedia continues to make good progress on its transformation agenda and the delivery of its strategic priorities. Alongside this, the Company is prioritising removing the penalties imposed by Google on some of its premium sites.

“Combined with recent encouraging signs of increased activity in Sports and Personal Finance, this would provide an increasing level of confidence in the Company’s ability to grow revenue and profit in 2021 and beyond.

“XLMedia remains a strong business and a leader in its industry, with a clear strategic vision and the operational and financial strength to deliver it.”

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