SBC News XLMedia FY2023 stung by $57m US & Euro writedowns

XLMedia FY2023 stung by $57m US & Euro writedowns

XLMedia Plc trades on a leaner portfolio following the strategic divestment of non-core assets in Q1 2024, aimed at returning the company to growth.

This morning, the London AIM affiliate media publisher posted its full-year 2023 results, reporting statutory operating losses of $45m.

Corporate accounts booked a ‘necessary write-down’ of $57.3m, related to the reorganisation of its US network and remaining European media assets.

SBC News XLMedia FY2023 stung by $57m US & Euro writedowns
David King: XLMedia

David King, Chief Executive Officer of XLMedia, commented, “Following the announcement of the sale of the Europe Sports and Gaming business on 1 April 2024, we are focused on driving organic revenues in the North America market, while continuing to expand our footprint in preparation for new state launches when they happen, while also right-sizing the Group’s cost base for 2025.”

Year trading saw XLMedia achieve corporate revenues of $50m, generated from ‘continued operations’ and corresponding to a 29% decline on FY2022 results of $71m.

The decline in revenue performance was primarily linked to ‘considerable changes’ in the US market, which saw fewer state launches and a reduction in CPA payment rates as XLMedia’s North American revenues dropped by 47% to $27.5m.

A breakdown of revenue split showed that XLMedia reported its CPA sales had declined by 46% to $26m, due to reduced US partner payments as revenue-share contracts generated 7% growth to $24m.

Reorganising its US network, XLMedia renegotiated US contracts, entering into revenue share agreements with US partners previously working on a CPA basis.

The firm’s leaner European network maintained FY revenues at $23m, in which XLMedia highlighted the performance of its ‘re-platformed’ Euro sports sites, contributing to an 8% growth in revenues to $13m, led by Freebets.com.

Year accounts detailed cost savings of $8m, as XLMedia reduced FY2023 direct sales costs to $18m ($23m) and operating expenditure to $25m (FY2022: $34m).

However, XLMedia’s balance sheet revealed that adjusted earnings were impacted by “impairment charges of $58m for US Sports and EU Sports assets, offset by an impairment reversal of $13.9m for Casino assets.”

The impact of impairment charges saw XLMedia’s FY2023 EBITDA decline by 36% to $12m (FY2022: $19m).

2024 proceedings saw XLMedia sell its Europe and Canada assets to Gambling.com Group for $37.5m, with up to an additional $5m earnout, completing the transaction on 1 April. The payment schedule includes $20m in April 2024, with a further $10m paid at the six-month mark, and $7.5m reserved for further deal earnouts.

SBC News XLMedia FY2023 stung by $57m US & Euro writedowns
Marcus Rich: XLMedia

Providing an initial outlook, XLMedia estimates an Adjusted EBITDA of $5m for 2024 and anticipates an “initial return of capital to shareholders from the sale proceeds in Q4 2024.”

Marcus Rich, Chair of XLMedia, commented, “We are delighted to have realized value for shareholders from the sale of the Group’s Europe and Canada assets whilst also providing cash to clear legacy liabilities and working capital for the North America business. We anticipate an initial return of capital to shareholders from sale proceeds in quarter four 2024.”

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