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Digitalbox expects first half profits to be ahead of expectations, eyes recovery in advertising spend in third quarter

The website operator also highlighted that its news satire site The Daily Mash had recorded record audience figures in the early stages of lockdown

Digitalbox - Digitalbox expects first half profits to be ahead of expectations, eyes recovery in advertising spend in third quarter

Digitalbox PLC (LON:DBOX) has said it expects to report an adjusted pre-tax profit “ahead of management expectations” for its first half and that advertising spending is showing signs of recovery in the third quarter.

In a trading update for the six months to June 30, 2020, the owner of the Daily Mash and Entertainment Daily websites said trading in the period has been “encouraging” with strong operating margins and a rise in its cash balance to £1.2mln, up from £600,000 on December 31, 2019.

WATCH: Digitalbox PLC reports record traffic for its content after 'strong Q1 trading'

Revenue for the period is expected to be flat year-on-year at around £1mln, which the company attributes to a significant increase in website traffic being offset by a fall in the value per session due to the coronavirus pandemic. However, Digitalbox said it has taken measure to mitigate the impact of the lockdown on revenues which had protected its profit margins.

Meanwhile, the firm said it's online publishing assets had continued to progress during the period, with Entertainment Daily reporting a 16% increase in recorded sessions year-on-year, although revenue was flat.

The Daily Mash has also expanded its user base with record audience figures through the early stages of lockdown, Digitalbox said, which was helped by the Mash Report TV show which aired on the BBC through April and May and achieved record viewing figures and grew its share of the younger audience demographic.

The company said it has found trading “very challenging” due to the pandemic, however, there are “some early signs” of increasing advertising spending in the third quarter and it remains “cautiously optimistic that a positive advertising market upturn will occur in the second half of the year”.

"Our success in the first quarter positioned us to withstand the challenges presented by [coronavirus]. We quickly adapted to deal with the new environment, and our content teams made a seamless switch to homeworking. Running a largely automated commercial operation through programmatic and header bidding solutions has enabled us also to continue the trading of our inventory without disruption”, Digitalbox chief executive James Carter said in the pre-close season trading update

"While the lockdown has presented great opportunities for the Daily Mash to showcase the talent of its writers, the flow of news for Entertainment Daily slowed as TV production stopped and celebrities were out of view. We remain cautiously optimistic about the second half of 2020 as big TV shows return to our screens, retail opens up again, and the economy returns to a more positive position", he added.

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