They say that in the age of Facebook and Google, digital advertising is becoming an increasingly difficult market to crack. XLMedia’s (XLM) results have proved there is still money to be made in the marketing industry. Revenue at its media business – where it buys and develops ad campaigns for social media, mobile and pop-ups – rose 39 per cent to $66.4m (£47.8m) as the acquisition of ClicksMob complemented organic progress.
But that pace of growth isn’t expected to be maintained in 2018 as management plans to prune its contract base and focus on higher-quality customers. Berenberg also thinks adjusted cash profit margins will fall back to around 33 per cent as the group invests in its technology. The broker has forecast pre-tax profit and EPS of £43m and 15.9p in the year to December 2018 (from £39m and 15p in 2017).
Gambling and gaming are still a large chunk of the group’s 2,300 websites, but chief executive Ory Weihs aims to make personal finance the second-largest division. In 2017, most of XL’s acquisitions were in the personal finance market and since the year-end, management has spent a further $5.2m on similar websites. Mr Weihs thinks there are a great deal more expansion opportunities in the US and, having raised $43.6m on the stock market in January, the group has plenty of cash to fund its expansion plans there.
| XLMEDIA (XLM) | ||||
| ORD PRICE: | 184p | MARKET VALUE: | £406m | |
| TOUCH: | 183-185p | 12-MONTH HIGH: | 224p | LOW: 101p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 52.8ȼ* | NET CASH: | $40.8m** | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2013 | 34.5 | 11.7 | 9.0 | 2.77 |
| 2014 | 50.7 | 13.2 | 6.0 | 3.16 |
| 2015 | 89.2 | 24.3 | 10.0 | 5.09 |
| 2016 | 104 | 31.0 | 12.0 | 7.61 |
| 2017 | 138 | 39.3 | 15.0 | 7.73 |
| % change | +33 | +27 | +25 | +2 |
| Ex-div: | 22 Mar | |||
| Payment: | 20 Apr | |||
| *Includes intangible assets of $30m, or 14ȼ a share | ||||
| **Includes $4.9m of short-term investments £1=$1.39 | ||||
