XLMedia shares jump 8% as sports betting becomes dominant vertical in full-year 2021
Shares in London-listed affiliate group XLMedia are trading up 8% today at 30.8p following an announcement that the business grew its net profit more than seven-fold in 2021.
Group revenue grew by 21.2% year-on-year to $66.5m during the 12 months ended 31 December 2021, as the business refocused its strategy on a smaller number of key brands and partnerships in high-growth, regulated markets.
Due to its increased focus on North America, the proportion of XLMedia’s total revenue generated by sports betting skyrocketed from 21% in 2020 to 47% in 2021 as the vertical overtook casino as the affiliate’s biggest cash-generating market sector.
The proportion of revenue from casino was reduced from 58% to just 35%, while the personal finance vertical, which delivered 15% of 2020 revenue, generated 13%. Other verticals brought in the remaining 5% in 2021, compared to 6% in 2020.
These changes in revenue structure by vertical were reflected in the real-money value of each sector, too, as sports betting revenue leapt 178% to $31.4m. A 19% decline in sports betting ‘old money’ (revenue from existing customers), caused by the impact of Finnish regulations, was more than offset by a 760% increase in sports revenue from new customers.
Casino revenue, meanwhile, was down 27% to $23.2m, with a reduction in revenue from both existing and new customers. Personal finance revenue grew 4% to $8.7m, driven exclusively by new customers.
Overall, the business declared profit before tax of $4.0m – up from $1.1m – after costs totalling $62.5m. After an income tax benefit of $1.6m, XLMedia declared net profit of $5.6m, up from just $792,000 in 2020.
The number of real money players (RMPs) in sports betting also more than doubled to 102,405, while casino RMPs were down by around half, to 35,247. By number of players, however, personal finance was the firm’s most popular vertical, with 318,727 players registered – an increase of 10% year-on-year.
The changes in XLMedia’s business structure are the result of a broad rethink of the firm’s strategy, from a European-based, casino-focused business operating in non-regulated territories, to a global business targeting a diverse range of verticals in fully regulated jurisdictions.
In addition, what was previously an audience-led strategy which saw the business administrate thousands of websites, is now a brand-led strategy, with fewer than 40 websites.
Large increases in sports betting revenue and RMPs were also driven by the establishment of a larger footprint in the US, where XLMedia currently has brands live in 15 states including New York.
Partnerships with relevant US publishers, and the acquisition of US-facing assets Sports Betting Dime and Saturday Football Inc, also helped grow XLMedia’s footprint stateside, and the business said it foresees “immense NA market potential”.
“We’ve made great progress in North America during 2021 alongside delivering important organisational changes to both rationalise and ring-fence legacy areas of our business,” said XLMedia CEO Stuart Simms.
“We set out to become a significant player in North American sports – in line with our strategy to pursue high growth, large, regulated markets – we’re now in really good shape, with strong geographical coverage and capability, ready to fully exploit this significant market opportunity,” he added.