Fierce competition for players has driven online gambling operators to XLMedia (XLM), which directs traffic to operators' websites in return for a cut of the house's winnings. Combined with acquisitions and technology investments, that fuelled a 118 per cent rise in the digital marketer's first-half adjusted operating profits to $11m (£7.1m). Investors bid its shares up 4 per cent on the news.
Strong demand for performance-based digital advertising campaigns, coupled with acquisitions, underpinned a more than doubling of gross profits to $6.2m in the media buying segment. Further growth could stem from Marmar Media, a web and mobile marketer acquired after the period ended. Publishing revenues and profits also soared as improved technology and new mobile and social tools drove gamblers to XLMedia's 2,000-plus websites.
The group's increased focus on media buying poses a threat to gross margins, while integration costs, a recruitment drive and increased spending on research and technology may weigh on second-half earnings growth. Nonetheless, management expects to hit full-year targets.
Broker Cenkos forecasts full-year pre-tax profits of $22m, giving EPS of 9.1¢, rising to $27.8m and 11.5¢ in 2016 (from $14.9m and 6.4¢ in 2014).
| XLMEDIA (XLM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 72.5p | MARKET VALUE: | £145m | |
| TOUCH: | 72-73p | 12-MONTH HIGH: | 77p | LOW: 34p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 42¢* | NET CASH: | $43.2m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014† | 19.9 | 4.6 | 2.0 | 1.58 |
| 2015 | 36.8 | 13.2 | 6.0 | 2.595 |
| % change | +85 | +186 | +200 | +64 |
Ex-div: 1 Oct Payment: 30 Oct *Includes intangible assets of $42.7m, or 21¢ a share †XLMedia floated in March 2014 £1=$1.55 | ||||
