XLMedia share price tumbles further as extent of hit to site rankings is revealed
London-listed affiliate firm says more than 100 sites were impacted since Google demotion in January as business hires new CFO
XLMedia’s share price fell almost 30% in early trading after the affiliate revealed 107 of its websites had been hit by Google’s reduction in rankings since the last update issued on 20 January.
The Jersey-based outfit acknowledged 23 of the sites affected are “tier-one and tier-two premium sites” while 84 are “tier-three or tier-four sites”.
The latter are “legacy or of low commercial value to the company,” the 12-year-old company stated in a trading update.
From a financial perspective, management anticipates the demoted tier-one and tier-two sites will lead to immediate group loss revenue of between $1m and $2m per month.
The removal or de-indexing of tier-three and tier-four sites is forecast to hit revenue by $3m to $5m for the financial year 2020.
Last month, XLMedia’s share price tumbled 30% after Google demoted the ranking of its online casino affiliate websites. XLMedia also said it expects any lengthy period of demotion to impact the rankings once they are restored and that it could take “a period of time to re-establish the former high rankings”.
The affiliate also suggested that it is possible a certain number of the lower-level legacy sites will have a negative impact on the ranking of a broader pool of the company’s sites, including its premium ones.
An immediate priority has been put on getting its premium sites reinstated with Google and removing legacy sites not compliant with the search giant’s guidelines, the trading update stated.
The company has scrapped its final dividend for the 2019 financial year, with no dividend proposed until further notice.
XLMedia CEO Stuart Simms said: “There is no question that we currently face operational headwinds but, fundamentally, I firmly believe in the underlying quality and sustainability of our business.
“However, I believe it is now time to accelerate a number of strategic measures that will create a short-term drag on revenue growth, but will ultimately strengthen our business by creating a much stronger and more transparent platform from which to grow.
He added: “By proactively consolidating – and where necessary culling – our considerable tail of legacy websites and focusing a greater proportion of our efforts on monetising both tier-one and tier-two websites in addition to incubating new sites, we will significantly improve the medium-term prospects of the group.
Meanwhile, the company announced two new hires this morning, including Iain Balchin as group CFO with immediate effect. The role is initially a non-board position. Balchin joins from payments business Ixaris Group where he was group CFO.
It was also revealed Sarah Clark has been appointed as chief transformation officer, recruited from gaming merchandise specialists Loot Crate Inc.
Simms said: “The recruitment of Sarah and Iain will significantly strengthen our senior leadership team and we look forward to working with them as we continue to transform our core business in order to capitalise on opportunities across our industry.”