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XLMedia eyes 2021 with optimism

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What it does


XLMedia PLC (LON:XLM) is a digital marketing group that owns and operates over 2,000 websites across a variety of industries including gambling, sports betting and personal finance.


The company’s websites include Money Under 30, a personal finance portal specialising in financial advice for young adults, investment education site Investor Junkie, casino review site Nettikasinot.com, sports betting site Freebets.com and football news site 101 Great Goals.


The group also uses proprietary machine learning algorithms, content management systems, and advanced business intelligence tools to offer capabilities including scalable content management systems, data modelling and smart tracking and segmentation tools.


In this vein, XLMedia’s main technologies include Palcon, a consolidated management system that offers dynamic integration and deployment and improved conversion, and Phoenix, a technology that allows central management of group entities and operational processes for enhanced efficiency.


The firm also leverages the significant volumes of data from its websites to identify consumer activities and spot trends in behaviour. XLMedia’s experts also use the data to offer services including conversion rate optimisation, user intent analysis, user lifetime value prediction and cross-market analysis.


XLMedia’s clients include major gambling brands such as 888 Holdings, William Hill, Paddy Power, Mr Green and Ladbrokes.


How it’s doing


In December, the company made a significant expansion into the US market with the acquisition of sports gaming and betting business CBWG Sports.


Based in the northeast US, CBWG owns and operates six sports betting and gaming websites and already has agreements in place with leading regulated online sportsbooks around the country.


It is registered as a sports gaming affiliate in six states, including New Jersey and Pennsylvania, while it also has an agency arm which partners with sports media brands to drive user acquisition in the betting markets of Colorado, Illinois, and Tennessee.


XLMedia will pay US$12mln in cash and issue around 7.9mln new shares upfront for the purchase, while there is also the potential for additional payments of US$9.5mln based on net revenue performance at CBWG in the three years to the end of 2023.


Looking to its finances, for the six months ended June 30, the company adjusted earnings (EBITDA) of US$5.1mln compared to US$18.6mln alongside revenues of US$27.7mln from US$42.5mln in 2019. The decline in earnings was attributed to the impact of the COVID-19 pandemic as well as the penalty from a previous deranking of the company’s websites on Google search results.


Despite this, XLMedia said it has made a positive start to the second half of the year, particularly in its personal finance and sports segments, and it expects to make a “material recovery” in 2021.


What the boss says – CEO Stuart Simms


Commenting on the CBWG acquisition, Simms said: “It is great to have acquired such an attractive set of assets during an inflection point for the US Sports betting market. On some estimates, almost 60% of the US population is set to have legal access to sports betting by the end of 2022 – this could include New York, where one of the key assets, EliteSportsNY.com, is focused.”


“In order to build upon the positive momentum of CBWG, it is important to retain the team, especially the founders, Kyle Scott and Jason Ziernicki; it is great to be able to depend upon their sports expertise and knowledge. They are also exceptionally keen to play a central role in the next exciting stage of the journey, both for this business and for our broader US operations,” he added.


What the broker says


In a note on December 11, analysts at Cenkos Securities said they believed the CBWG acquisition will leave XLMedia with “positive net cash balances and trading profitably in 2020”.


The broker added that in their view, trading losses for the company “bottomed in June” and the company is likely to be profitable on a full-year basis.


“The share price is only begging to discount continued good execution”, Cenkos said.


Inflexion points


  • Development of CBWG business following acquisition
  • Expansion organically and through acquisitions
  • Growth of US betting market

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