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  • Writer's pictureMark Watson-Mitchell

XLMedia – strong expansion of its US Sports business will create profits in 2023

Operating across the sports, gaming and personal finance sectors this global digital publisher connects advertisers and targeted, engaged audiences in helping to build up the brands.

The interim results for the half-year to end June from this XLMedia (LON:XLM) showed revenues of $44.5m ($32.2m) and an adjusted EBITDA of $10.6m ($6.6m).

The group ended the period with $17.7m in cash and short-term investments.

Rationalisation having its benefits

The recent rationalisation of the group’s activities and its online portfolio saw a massive reduction from over 3,000 sites to just around 45 currently. It has also set about cost saving to the tune of $4m a year.

The company saw a very strong performance from its Sports vertical which generated first-half revenues of $14m, some 76% of group revenues.

It has a very strong focus upon the US sports sector, especially with an easing of regulations permitting sports betting across various of the US states. After opening its legal online sports betting in New York in January this year and is now operating in 16 US states.

Strong US Sports advance

The group expects its full year adjusted EBITDA results to be in line with last year, while expecting to return to profits in 2023.

CEO David King stated that:

"Refocusing the business towards the rapidly growing US online sports betting market, managing the reduction in Personal Finance, while stabilising the Gaming vertical, alongside rightsizing the Group's cost base, remains a key priority to ensuring new XLMedia is well placed for further growth.”

Broker’s opinion

Analysts Andrew Renton and Simon Strong at Cenkos Securities have rated the group’s shares as a Buy.

They are estimating $69.8m ($66.5m) of revenues for this year to end December and an EBITDA of $16.5m ($17.9m).

The 2023 year could see $72.4m of sales and $17.3m of EBITDA.

The brokers consider that the group will have a healthy cash balance to fund both organic growth and future acquisitions to build its market share in US Sports.

They conclude that XLM’s valuation remains compelling trading on an EV/EBITDA multiple of 5.1x against its peers on 6.0x.

The group, which is a dollar-dedominated business, has its shares currently trading at 34.5p.


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