XLMedia issues shock profits warning as shares fall

XLMedia’s shares down by almost a third

XLMedia’s shares were down by almost a third today after the company issued a profits warning. The digital marketing services company said that it expects to see lower revenues than expected, of around $130 million – lower than the $137million registered in 2017.

XLM issued a statement saying they had been impacted by regulatory changes, which saw the closure of the Australian market at the end of last year as well as the uncertain regulatory status of some European markets during 2018.

The company said: “These regulatory changes have triggered a re-alignment in how operators and marketers can work which should lead to a clearer and more functional environment. There has also been some reduction in SEO performance in few specific territories.”

The company, which trades on London’s AIM, said the recently acquired personal finance assets continue to perform well and expects total publishing revenues in this sector to continue to grow as a proportion of overall group publishing revenues during 2018.

It added that it retains a “solid pipeline of acquisitions targets under various stages of evaluation and the board remains optimistic of completing further transactions within 2018.”

Paul Leyland of Regulus Partners said XLMedia’s travails are symptomatic of the gambling industry’s exposure to regulatory changes.

He said: “Gambling companies (not all but possibly a critical mass in certain sectors) have developed a bad reputation for both underlying regulatory volatility and not clearly explaining the risks (by no means limited to .com-exposed operators).

“This might appear to be most painful on days of reckoning, but it is also likely to be an increasing problem when dealing with stakeholders who might be more alarmed by and averse to this sort of thing than ‘risk on’ small-cap investors, such as governments, regulators, large regulated businesses.”

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