Ahead of the Summit of iGaming Malta (31 Oct – 1 Nov), Team SBC talks to XLMedia Founder and CEO Ory Weihs, to get the lowdown on XL Media’s successful IPO launch.
Having founded XLMedia in 2008, Ory Weihs successfully negotiated an initial public on the London AIM in March 2014, making XLMedia the first specialist igaming marketing company to go public. An expert in igaming marketing, partnership management and player acquisition, Ory Weihs talks to SBC about his company’s future ambitions, current igaming marketing conditions and the upcoming Summit of igaming Malta (SIGMA).
SBC: Ory, Pleasure to interview you. XLMedia has a unique story in igaming, from affiliate to an IPO on the London AIM. Can you summarise your company’s journey for our readers?
Ory: XLMedia was established in 2008 as a consolidation of two companies, one run by myself focusing on content & search marketing alongside affiliate management, the other owned by my two co-founders focusing on media buying. Both companies focused on the online gambling sector.
Since 2008 we have gone from a few people in a basement to a group with over 140 in three countries, via two rounds of private equity investments and finally a successful IPO. The company has grown constantly year on year in both revenue and EBITDA, reaching more than $34M revenue and $13.3M EBITDA in 2013.
The growth was achieved mainly organically although some part of this has been through acquisitions. Expansion has been both geographic and methodology / platform based. Historically we had focused on Scandinavia but are now showing growth in other regions such as German & English speaking countries, as well as a few more. Platform wise we have developed our BI and backend analysis systems and become very active on social and mobile platforms, both showing strong YOY growth.
SBC: Was going public, in XL Media’s long term business plans, when did you realise that floating XLMedia could become a reality?
Ory: XLMedia has always been focused on growth and re-investment of profits. Following our first private equity investment we began assessing our options, which included further PE investment as well as in IPO. We ended up going for both. During 2013 we started the process and ended up listing successfully (the IPO was oversubscribed) in March 2014.
SBC: Being the first igaming media specialist to go public, how has your business changed in order to meet market led expectations with regards to future performance?
Ory: Our approach is to continue running our business as we have before. My belief is that the market will appreciate a strong growing company which delivers what it forecasts thus giving value to its shareholders. We are growing according to market expectations, our H1 results for 2014 are expected to show at least 22% increase in revenue, in line with forecasts. Our commitment is to deliver strong returns to our investors, and we have therefore committed to paying a minimum 50% dividend, with the first one paid in June 2014.
The business has “grown” from the process, being a PLC introduces a set of demands (mainly on financials and reporting) as well as expectations. The transition was long and time consuming but has helped us develop our group both process wise as well as control wise.
As a PLC we also have the advantage of being able to use shares as a commodity to assist acquisitions.
SBC: You have used the capital gained from your IPO, to expand XLMedia’s digital inventory through acquisition. Why did you take on board this strategy to grow your company, what value do you see in these acquisitions?
Ory: As I have mentioned before, we have made acquisitions over the years as part of our growth strategy. We develop our business organically and this is still our main growth focus (the recent update did not include acquisitions), with acquisitions representing a complementary path.
The concept is to complement our existing activities via acquisitions mainly in fields that are newer to us, both geographically and vertically. For example social gaming is a field we are interested in, as well as campaign optimization technology (which we invest in heavily) among others. Geographically we are looking into “newer” regions, mainly post regulation ones.
Our industry is quite fragmented, we believe our business and financial positions will allow us to become the natural consolidator.
So far we have completed a few small transactions and are actively evaluating a few more of various sizes. Our approach is very diligent, we want to be sure that we make the correct acquisitions at the right time in order to deliver long term value to our shareholders.
SBC: XLMedia, works with numerous top level operators. With the igaming sector set to change due to regulations and further taxes, what factors do you feel become a priority for igaming marketing in the future?
Ory: Put simply – creativity, technology and branding.
For affiliate sites, the landscape has changed significantly over the years. Back in the 2005-2006 era any simple site with thin content and limited features could generate a significant amount of revenue but that is not the case anymore. Affiliates have to distinguish themselves with content, marketing, branding and features. The game has changed from “publishing bad content and tricking search engines into ranking it” to “publishing great content and delivering a good user experience and getting search engines and social media to notice it”.
Technology wise, regulation introduces many opportunities accompanied by challenges. The media channels are open for gambling which allow for wider distribution, however marketers will have to invest heavily in technology to optimize their efforts, such as RTB systems, BI systems and multi variant testing. However more advertisers are coming into the market so technological and know how superiority is a must. We invest both internally in development as well as look for potential acquisitions and “acquhires”, especially in the mobile and social marketing scene.
SBC: You are speaking at the upcoming SIGMA igaming conference in Malta what do you want your audience to take away from your sessions?
Ory: Generally, I believe the affiliate industry and online marketing has been on the side-lines of the operator scene and now, following our IPO as well as several others (Marimedia, Matomy and so on), it is being brought more to the spotlight. I hope that attendees see just what a vibrant and exciting area of the market this is.
I would like to think that other established companies in the gambling marketing scene would consider the option of IPO or PE investments. The session will also discuss the process, from which advisors to choose to internal hires needed and systems that need to be put in place.
Ory Weihs – CEO & Founder of XlMedia
Content Sponsored by Summit of iGaming Malta