XLMedia, the digital publishing group active in the U.S. sports betting sector, has released a trading update for the first six months of the 2020 financial year, showing revenues of around $2 m lower than before the Google deranking in January.
As stated previously by the company, the first half of the year was heavily impacted by a manual penalty being introduced by Google in January this year to over 100 of its websites, and the resulting global recession triggered by the Covid-19 pandemic. XLMedia plans to record revenue of approximately $27.5 m and EBITDA of approximately $3.5 m for the first six months of 2020.
The business added that its balance sheet remains solid, with cash balances of approximately $27.9 at the end of June.
The firm noted in its investor update: “As anticipated, monthly revenue is currently running around $2m 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, XLMedia said, was better than the second with sales of $15.6 m, owing to a regular operating cycle before the late January deranking and Covid-19 ‘s effect was not felt until mid-March. At the end of June a heavy emphasis on cost control and the newly reported reduction in staff numbers led to the healthy cash situation.
On the situation of Google deranking, the company said it had dramatically affected the search ranking of the affected websites and thus the potential to generate new business; 23 of the affected websites were asset-generating premium revenue.
It has been, and will remain, based on re-ranking those sites it said and has been improving the quality of the content on the sites for the last six months to make it more meaningful and engaging. Measures include providing user-generated content, expanding targeted product experiences, supported by data analysis, and transitioning to an outsourced platform that enables it to take advantage of the accelerated innovation offered by an open-source network.
Focusing on more recent developments, the company took stock of the appointment of Ken Dorward, who entered North America as President. “Ken’s successful track record and deep knowledge of the industry will help to expedite progress in North America, where the company sees the opportunity as very significant in both sports and personal finance,” it said.
The business said, on the outlook, that while financial performance was weak in the first six months, it continues to make strong progress on its transformation agenda and achieving its strategic priorities.
“Alongside this, the company is prioritising removing the penalties imposed by Google on some of its premium sites,” it advised. “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.”