0R15 9263.0 5.0108% 0R1E 8452.1602 1.1266% 0M69 17150.1406 36.2203% 0R2V 172.4 -2.4335% 0QYR 1461.5286 -0.4069% 0QYP 428.0701 1.1986% 0LCV 139.42 -2.0239% 0RUK 2966.5117 1.5233% 0RYA 1810.0 2.1445% 0RIH 148.0 0.339% 0RIH 148.44 0.6373% 0R1O 177.75 10071.6738% 0R1O None None% 0QFP 9346.083 85.4382% 0M2Z 284.6256 0.0529% 0VSO 25.39 -28.6898% 0R1I None None% 0QZI 511.0 2.8169% 0QZ0 220.0 0.0% 0NZF 839.5385 68.4467%
Overview
XLMedia Plc (XLM) is an online performance marketing company which is focussed on providing digital marketing services. The company have its operations spread globally and operates in multiple verticals including gambling and personal finance. The company has split its business into three segments being Publishing, Media and other. The company holds over 2,300 websites in almost 18 languages under its brand.
Key Statistics
Financial Results and Review - FY2018 ($, thousand)
(Source: Annual Report, Company Website)
In the Financial year 2018, XLMedia Plc’s reported revenue was $117.9 million in the financial year ending December 2018, against $137.6 million in the financial year 2017. There was a decrease of 14 per cent due to poor performance by media segment and affiliated activities but Publishing business had shown an increase in revenue by 4.6 per cent in the current financial year.The gross profit for the company stood at $67.9 mn in FY 2018 as compared to $73.1 mn in FY 2017. There was a decline of7.1 per cent which is marginally less than the decline in revenue due to improved gross profit in H2 of the financial year as compared to H1 and even Publishing segment shown an increase of 3 per cent in gross profit. The operating income stood at $35.7 mn in FY 2018 as compared to $40.8 mn in FY2017.The Adjusted EBITDA for the FY 2018 stood at $43.9 mn as compared to $47.1 mn in FY 2017. In H2 2018, the company had shown improvement in the adjusted EBITDA due to strong revenue generation and high margins reported from Publishing business. The company’s reported profit for the year before tax stood at $25.1 mn in FY 2018 as compared to $39.3 mn in FY 2017. The company’s balance sheet stood strong with $41.1 million working capital & total equity of $166.8 million in FY 2018 as compared to $33.8 million working capital, $116.4 million equity in FY 2017. The Cash and short-term investments stood to $47.6 million in FY 2018 against $43.3 million in FY 2017. The adjusted Earnings per Share decreased by 9 per cent and stood at $0.13 in FY 2018 as compared to $0.15 in FY 2017.
Financial Ratios
The reported gross margin in H1 FY2018 increased by 4.9 per cent to 56.7 per cent against 51.8 per cent reported last year for the same period. The reported EBITDA margin of 34 per cent for the H1 of FY2018 stood marginally higher than the last year data of 33.1 per cent. Return on equity stood at 9.6 per cent which was lower than the last year value of 13.8 per cent. On the liquidity front, XLMedia Plc’s current ratio was 2.20, reflecting the sufficient current assets to pay its short-term obligations.
Share Price Performance
Daily Chart as at Mar-28-19, before the market close(Source: Thomson Reuters)
On 28th March 2019, at the time of writing (before the market close, GMT 8:28 AM), XLMedia Plc shares were trading at GBX 61.40, down by 0.16 per cent against its previous day closing price. Stock's 52 weeks High and Low is GBX 196.50/GBX 48.64. The outstanding market capitalisation was around £130.72 million and a dividend yield of 8.86 per cent.
Conclusion
The company’s revenue declined in the financial year ending 2018 and the profitability margins have decreased significantly. The company was impacted by the challenging environment driven by heightened compliance, regulatory demands in the gambling and digital marketing sectors and operational challenges in the current financial year. Moreover, the company is trading near its 52-week low, raising doubts at its upside potential at current prices. Keeping in mind the weak relative valuation of the company, we recommend it’s better to avoid XLMedia Plc’s stock at the current levels and investors should avoid taking fresh positions at the current price.
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