Shares in XLMedia have taken a dip after the affiliate business revealed it anticipates a year-on-year revenue decline for H1 2023.
At the company’s AGM today (26 May), CEO David King partly attributed the decline in revenue to the tough comparative period, in which revenue was boosted by the launch of New York’s online sports betting market in January 2022.
“We also note that the level of acquisition spend by operators in H1 2023 is not comparable to 2022, with less generous promotions available to attract new customers,” King added.He noted that the group had a robust start to Q1 in the US, driven by the successful launch of online sports betting in Ohio.
However, he stressed that the launch of online sports betting in Massachusetts in mid-March, following the conclusion of the NFL season, did not generate the typical revenue surge observed during state launches.
“This reflects our previous acknowledgement that growth in the US market will not be linear, with significant spikes generated by periodic state launches,” he added.
Strong comparisons
Back in H1 2022, the affiliate business recorded revenue of $44.5m, showing a strong year-on-year increase of 38.2%.
That growth was primarily fuelled by the rapid expansion of the company’s operations in the US market.
Specifically, XLMedia’s sports betting revenue in the US during that period surged to $30.2m, a massive fivefold increase compared to the previous year.
The CEO predicted that the current softness in the market would continue through the early summer.
The group said it anticipates a return to significant investment in customer acquisition as well as the launch of new products leading up to the new NFL season, which is expected to bolster the company’s performance in the second half of the year.Despite the slow start to 2023, XLMedia said it predicts revenue to be in line with its expectations for the full year.
Last year, total revenue reached $73.7m.
Potential for growth
XLMedia said it sees potential opportunities in Massachusetts as the NFL season kicks off, and is also awaiting the launch of online sports betting in Kentucky.
Looking beyond the immediate future, King emphasised the potential for online sports betting and online casino legalisation in several US states.
A total of 23 states, including California, Georgia, and Texas, are yet to legalise online sports betting, while three states have legalised but are not yet operational, including Florida. Additionally, 43 states are yet to legalise online casino operations.“Across European sport and European gaming, performance is tracking in line with management expectations benefiting from a strong Cheltenham and Aintree festival, and we expect this encouraging performance to continue,” he said.
In 2022, the group went through a restructuring exercise, which has seen it turn its core focus away from European iGaming and towards US sports betting.
Investors did not share King’s optimism, and XLMedia shares were trading more than 16% lower in the morning.