XLMedia’s revenue for 2019 declined 14.8% to $79.7m, while an $81.4m impairment loss meant the affiliate group made an overall net loss for the year.
Of the business’s $79.7m in revenue, $34.7m came from Scandinavia, down 18.2%. A further $21.5m came from the rest of Europe, a 19.8% decline, while North American revenue increased 11.4% to $16.2m.
Revenue from Oceania fell 17.6% to $1.4m, while revenue from Asia quadrupled to $224,000 and revenue from elsewhere collapsed by more than 95% to $104,000. A further $5.7m in revenue came from “unidentified locations,” a 3.5% year-on-year decrease.
XLMedia’s costs of revenues came to $26.0m, down 13.3%. This resulted in gross profit of $53.7m, down 15.7%.
The business spent a further $1.6m on research and development, up 48.8%. Its sales and marketing expenses came to $4.6m, down 9.3%, while general and administrative expenses rose 4.8% to $21.2m. The combined cost of these expenses was $27.3m, up 3.9%.
After deducting these costs, XLMedia’s operating profit before impairment and reorganisation costs came to $26.3m, down 28.8%.
The business’s earnigns before interest, tax, depreciation and amortisation (EBITDA) fell 23.2% to $33.5m.
XLMedia made an $81.4m impairment loss on goodwill, domains and websites with indefinite useful life, and other intangible assets. This loss was mostly due to an independent and comprehensive review of all of its recorded asset values carried out during the year.
The business paid a further $1.7m in reorganisation costs for an operating loss of $56.7m. XLMedia made a net financial loss of $1.0m, up 86.2% from 2018’s loss.
This resulted in a pre-tax loss of $57.7m, compared to a $36.1m profit in 2018. The business paid $3.2m in tax for a $60.9m loss from continuing operations, compared to a $32.1m profit for 2018.
The business made a $2.2 profit from discontinued operations, contrasted with an $11.3m loss a year prior, mostly due to the sale of Webpals Mobile for $1.8m.
After these operations, XLMedia’s net loss came to $58.7m, down significantly from the prior year’s profit of $20.8m.
XLMedia has already faced further difficulties in 2020, after 107 of its sites were demoted in Google’s search rankings in January. The affiliate group said the demotion was done manually.
The group then faced further difficulties due to the Coronavirus (Covid-19) pandemic. It said it was uncertain of how the outbreak would affect revenue, saying that it may prove to have a positive impact on some verticals, but a negative effect on others, such as sports betting.
XLMedia added that neither the de-ranking or the pandemic would derail its plans to implement a new strategy, focusing on the consolidation of its more than 450 publishing sites, the targeting of high-growth markets such as sports betting in the US and further investment in mature regulated markets.
“The Google de-ranking and COVID-19 have not changed our strategic ambition or goals for the transformation, and in some ways have amplified them, acting as a catalyst to accelerate and drive change,” the business said.
In February, the group appointed Iain Balchin as its new group chief financial officer and Sarah Clark as chief transformation officer. XLMedia in September of last year announced that Yehuda Dahan had stepped down as its CFO with immediate effect. The provider did not disclose the reasons behind the departure.
“There is no question that the business is now undergoing a significant period of transformation with our new management team evaluating new geographies and end markets, alongside an improved focus on our efforts to generate greater levels of end consumer engagement,” XLMedia non-executive chairman Christopher Bell said. “To that end, we remain committed to investing in the core business alongside additional organic investment initiatives.
“The health and safety of our staff is of paramount importance during the current coronavirus pandemic and we have implemented a number of measures to protect our global workforce aligned with the latest local government and industry recommendations.
