XLMedia give shareholders a cautious update as shares fall over 22%

XLMedia PLC (LON: XLM) have seen their shares crash over 22% as the firm gave shareholders a cautious outlook.

XLMedia Plc is a  provider of digital marketing services, using proprietary tools and methodologies to generate high-value engagement for our customers.

The Group has three divisions based on its primary marketing methodologies: content and search engine optimization through its Publishing, digital Media Buying and Partner Network.

XLMedia saw their shares rally in May as the company announced that it intended to continue its share buyback programme which it began in December 2018.

The company added that its trading has been in line with its expectations for the financial year, and that its focus remained on increasing its exposure to high margin publishing activities and opportunities.

Today, the firm gave a warning on next years profit on Thursday as it begins a structural reorganization which focuses on publishing activities.

The digital marketing firm appointed Stuart Simms as chief executive in October, who then began an internal review of operations.

XLMedia has come up with three decisions moving forward: investing into and expanding global publishing activities, reviewing its technology platform, and an organizational restructuring.

XLMedia is set to increase its spending on publishing, both organically and via acquisitions.

The overall one-off cost of transforming the organisational structure will be around $3 million over 2019 and 2020, the company added.

XLMedia added that trading for 2019 is in line with previous guidance, which would have sufficed shareholders.

The firm also reiterated guidance of $78 million of revenue and $32 million of adjusted earnings before interest, tax, depreciation, and amortisation. This compares to $117.9 million and $43.9 million respectively the year prior.

The US sports betting market, which is growing rapidly, has XLMedia “encouraged”, it said, though it did note regulatory headwinds are going to increase uncertainty.

Shares of XLMedia crashed 22.03% on the announcement to 46p. 19/12/19 12:15BST.

In digital news today, Bidstack have seen their shares surge over 50% as the firm announced that it had secured a new contact with a global client.

The firm said it had entered a two year trading agreement with an undisclosed global marketing group.

Bidstack said Thursday the new agreement will start on January 1 and calls for £10 million per year in gross media expenditure.

XLMedia Comments

As a global business, XLMedia will seek to further deploy its online real estate and market knowledge to expand its geographical footprint in areas such as North and Latin America and APAC, and to broaden its growth potential,” it explained.

“Owning strong publishing assets puts the group in a position to create better engagement and results than other traditional performance marketing, whereby consumers actively choose the content they want to consume, generating both greater value and increased levels of engagement.”

“The combination of increased spend on direct costs to support growth, further predicted regulatory headwinds and implementation of a transformation plan which prepares XLMedia for the next phase of growth means the board is today also updating market guidance for the year 2020,” said XLMedia.

“The initiatives are proactive measures designed to benefit the business in the longer term. As a result of those measures, the investment and costs budgeted for 2020 are significantly higher than previously anticipated and will consequently impact the overall performance of the group. Therefore, despite revenue for 2020 expected to remain broadly stable versus 2019, adjusted Ebitda is anticipated to be materially lower than previous management expectation,” the company continued.

“Having now spent a couple of months immersed in the business, I am excited to be leading it towards the next phase of growth,” chief executive Stuart Simms explained. “Whilst there are some clear near-term headwinds and operating issues (similar in many other companies of our size and stage of development), our core expertise, assets and market presence remain incredibly strong.

“We have already identified and are investing in market opportunities which will generate sustainable growth in the future. I look forward to the coming months to continue to evolve our strategy, progress with the transformation program and execution of our strategic plan.”

Previous articleStar Wars Origins gives British companies the force
Next articleBritish Airways see a decline in their public image according to Which survey