XLMedia PLC (LON:XLM), the digital marketing company, continues to work on ensuring the penalties imposed by Google on some of its premium sites are removed.
Combined with recent encouraging signs of increased activity in Sports and Personal Finance, these initiatives are set to provide an increasing level of confidence in the company's ability to grow revenue and profit in 2021 and beyond, XLMedia said in a trading update covering the first half of 2020.
The period was a tumultuous one, mainly for two reasons; firstly, a manual penalty was applied by Google to more than 100 of the company's websites in January, and this was followed, of course, by the disruption caused by the COVID-19 pandemic.
The group said it expects to report first-half revenue of roughly US$27.5mln and underlying earnings (EBITDA) of US$3.5mln.
The group said its balance sheet remains strong, with cash balances of around US$27.9mln.
As anticipated, monthly revenue is currently running around US$2mln below the level being achieved before the impact of the Google deranking, with the vast majority of this dropping through to the bottom line, XLMedia said.
The company believes that around half of the revenue drop is directly associated with the deranking of the websites, most of which are casino websites, with the remainder caused by the impact of COVID-19 on the Sports and Personal Finance businesses and the management decision to discontinue the media buying operations.
The company conceded that financial performance in the first six months was disappointing but said it continues to make good progress on its transformation agenda and the delivery of its strategic priorities.
“XLMedia remains a strong business and a leader in its industry, with a clear strategic vision and the operational and financial strength to deliver it,” the company concluded.
Shares in XLMedia were down 17% at 24p in early deals.