Europe provides bulwark against US H1 slowdown for XLMedia

Europe provides bulwark against US H1 slowdown for XLMedia

XLMedia (XLM) has kept faith in its European and North American performance despite a slowdown in both revenue and EBITDA during H1 2023, although the media publisher stated that these results were in line with management expectations.

Total revenue for the first half of the year fell by 34% from $44.5m in 2022 to $29.4m, whilst EBITDA also dropped by 38% to $6.5m (H1 2022: $10.6m). XLM had previously cautioned its London AIM investors that a slowdown in US trading would lead to unfavourable H1 comparatives this year.

The firm reiterated this week that the ‘timing, number and scale of new state launches’ contributed heavily to the differences in revenue year-on-year. In particular, the launch of the New York betting in January 2022 provided a significant boost to trading last year that was not replicated in 2023.

Whilst North American business has been the dominant factor in previous XLM trading updates, this year the group has emphasised that its European operations provided a bulwark against the US slowdown. 

A new dawn in Europe

XLM’s European sports operations generated revenue of around $5.2m to its overall business, an uptick of 27% from the year prior ($3.8m), with the Freebets.com site highlighted as a standout performer.

The sports betting content site was rolled out in Ireland during H1, and overall generated revenue of £21.4m to the group’s worldwide sports vertical, although this marked a decrease of 37% on the $34m recorded the year prior.

Sporting events in the UK also played a significant boost to the firm. The horse racing fixtures of the Cheltenham Festival, Grand National and Royal Ascot and a ‘good end’ to Premier League football were hailed as driving a 36% growth in real money players.

On the gaming side of the business, revenue also dipped slightly by 12% to $7.4m ($8.4m), although this was buoyed by the sale of three of its EU-facing gaming assets – Casino.se, Casino.gr and Casino.pt – for $4m.

XLM’s European Gaming segment, encompassing casino and bingo operations, is now trading ‘marginally ahead’ of expectations, the group asserted. The segment generated revenue of $7m ($8m), down 10% on the year prior, although RMPs grew 9% year-on-year.

“In the short-term, the decline in historical tail revenues continues to impact period-on-period growth, however the business expects to return to overall growth over time,” XLM stated.

Understanding North American challenges

Further breaking down the company’s US experience, XLM reiterated that the new state launches of Massachusetts and Ohio did not reach the same level as New York last year. 

Additionally, delays to Massachusetts’ launch meant that the state did not take betting live until after the conclusion of the NFL, one of the most popular wagering markets in the US.

At the close of H1, XLM’s North American sports revenue stood at $16.2m, down 46% on $30.2m in H1 2022. Despite this, XLM is confident in a bounceback for its North American business, which has been a key growth driver for the company in recent years.

“However, the upcoming NFL season presents a second opportunity to launch sports betting in Massachusetts,” the company’s statement continued.

“With the highly anticipated Kentucky launch in September 2023 expanding our operations to 20 states, our North American Sports business continues to be driven by the group’s high-quality content, offering audiences both national and local sports coverage and sports betting content that builds engagement and trust to connect sports fans with operators when promotions are available.

“Additionally, the XLMedia teams continue to deliver exclusive sports betting content for media partners that offers targeted, relevant and engaging information for sports fans in those markets where it is permitted.”

Lastly, XLM’s North American gaming revenue for the trading period remained consistent with 2022, standing at $400,000. The group ‘rebuilt’ its coasion offering during this time, subsequently extending this to some partner sites and is preparing for the launch of a new North America-focused site, HoneyMonkeyPineapple.

The company closes H1 with cash balances of around $7.4m, down 31% from $10.8m at the end of 2022 and 58% from $17.7m in H1 2022. Following the sale of its European gaming assets and continued development of its North American operations, the group remains confident of future transatlantic growth prospects.

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