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Digital marketer XLMedia posts gains across the board

The group, which drives traffic to customers' websites, revealed strong first-half growth
September 28, 2016

Fierce competition for gamers and gamblers fuelled strong first-half growth at XLMedia (XLM), which uses digital advertising, informational websites and marketing partners to funnel internet users to websites in exchange for a cut of the proceeds. Record revenues drove adjusted cash profits up 37 per cent to $17.7m (£13.6m) in the reported period.

IC TIP: Buy at 89.5p

Sales surged 48 per cent in the lucrative publishing business as the group fine-tuned its websites using its Palcon management platform. They also leapt 39 per cent in the media division, although management warned that weaker demand from a few customers could weigh on second-half growth. And although the partner network division grew revenues by 16 per cent, an ongoing review of members and the introduction of stricter criteria could temper short-term progress.

XLMedia established a US subsidiary to strengthen its ties to clients across the pond, bolster its presence in the fast-growing mobile app market and diversify the company away from gambling, which generated 71 per cent of revenues in the period.

Broker Liberum expects adjusted pre-tax profits of $30.1m for the full year, giving EPS of 11.9¢, up from $26.4m and 10.6¢ in 2015.

XLMEDIA (XLM)
ORD PRICE:89.5pMARKET VALUE:£179m
TOUCH:89-90p12-MONTH HIGH:98pLOW: 59p
DIVIDEND YIELD:5.4%PE RATIO:11
NET ASSET VALUE:48¢*NET CASH:$42.9m†

Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201536.813.25.82.60
201651.215.86.53.82
% change+39+20+12+47

Ex-div: 6 Oct

Payment: 4 Nov

*Includes intangible assets of $57.6m, or 29¢ a share †Includes short-term investments of $20.2m £1=$1.30