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Shares in affiliate group XLMedia are trading lower today (27 July) after the business revealed a 33.9% year-on-year decline in revenue during the first half of 2023.

Revenue decline

Total revenue for H1 was $29.4m, down from $44.5m in the first half of 2022.

Adjusted EBITDA, meanwhile, came to $6.5m, marking a 38.7% decline compared to the $10.6m recorded in H1 2022. 

Adjusted EBITDA for the full year remains in line with management expectations, XLMedia said.

The group previously warned investors in May that it was anticipating a year-on-year revenue decline during H1 this year.

At that time, CEO David King partly attributed the decline to a tough comparative period, which was boosted by the launch of New York’s online sports betting market in January 2022.

This year, XLMedia said, although there was a somewhat comparable market launch in Ohio in January, operator marketing activity “was not repeated at the same level” as in New York.

Sports betting breakdown

The group’s revenue decline was driven by lower activity across many of its key focus areas.

In North American sports betting, for example, revenue took a significant hit as it came in down 46.4% year-on-year, at $16.2m (H1 2022: $30.2m).

The significant swing in North American revenue appears to confirm CEO King’s previously issued advice that “growth in the US market will not be linear, with significant spikes generated by periodic state launches.”

Further to that advice, XLMedia explained today how the timing of state launches also impacts revenue potential.

“The delay in confirmation of the regulatory regime around the Massachusetts launch, combined with the launch occurring after the NFL season had ended resulted in a more muted initial revenue spike,” the business said. 

“However, the upcoming NFL season presents a second opportunity to launch sports betting in Massachusetts.”

Meanwhile, European sports betting revenue was up year-on-year, but failed to offset the decline in North America as it grew to just $5.2m, albeit 36.8% ahead of the comparative period.

Overall, XLMedia’s sports betting assets generated $21.4m during H1, a decline of 37.1%.

iGaming breakdown

In iGaming, North American revenue was flat year-on-year at $0.4m. 

During H1, XLMedia said it had rebuilt its casino offering across its owned and operated portfolio, and extended its improved offering to a number of partner sites.

Its increasing operational activity in North American iGaming will soon culminate in the launch of a new “premium branded gaming site serving the North American market,” it added, called HoneyMonkeyPineapple.

In Europe, iGaming revenue was down 12.5% from $8m to $7m, leaving overall global iGaming revenue down 11.9% from $8.4m to $7.4m.

European iGaming revenue includes earnings from the three casino assets (Casino.se, Casino.gr and Casino.pt) which were subsequently sold off for $4m following the end of the reporting period.

Offloading those assets should allow XLMedia to focus on its larger brands, which helped the business achieve 9% growth in the number of real money players of iGaming in Europe.

That was driven by improvements at WhichBingo, for example, which grew its H1 revenue by 38% year-on-year and delivered 28% more real money players, to record its strongest performing half-year ever.

Finnish-facing brand Nettikasinot, meanwhile, managed to increase its revenue by 5% year-on-year and its real money players by 16%.

2023 outlook

Despite the declines in revenue, XLMedia said that during H1 it had “launched into new markets, developed new brands, diversified revenue streams, expanded sports and gaming, signed new partnership agreements, and refocused on its core activities.”

The business “is ready for new state launches when they come,” it added.

With the sale of its loss-making personal finance assets and additional online casino assets complete, the business will use the additional working capital provided to continue funding its expansion in both North America and Europe, it said.

The company’s cash balances at the end of the period were around $7.4m, with the July asset sales adding another $4m to that figure.

Shares in the business are currently close to an all-time low. 

In late 2017 and early 2018, shares traded briefly for upwards of 200p. Today, shares sell for a little over 9p, marking a more than 95% decline in the price since its all-time high.

Since the beginning of 2023, shares are down some 41%, with the largest decline taking place between February, when shares traded for over 23p, and June, when they hit a low of under 7.5p.