A sharp rise in direct advertising revenue has failed to prevent a profits warning at LBG Media, the Manchester-based social media publisher behind LADbible and Betches.<\/p>\n
The AIM-listed company downgraded full-year profit guidance for the second time in two months, now expecting adjusted EBITDA of \u00a315m to \u00a320m for the year to September 2026, down from previous guidance of \u00a322m.<\/p>\n
Shares are trading at almost a third of their value of a year ago, with an opening price of 33p this morning.<\/p>\n
Revenue for the six months to 31 March rose 19% to \u00a352.4m, driven by a 95% surge in direct revenues to \u00a337.6m as blue-chip brands including Google, KFC, Netflix and Uber commissioned content to reach young adult audiences.<\/p>\n
But indirect revenues \u2014 generated through advertising on social platforms and the company’s own websites \u2014 fell 41% to \u00a314.5m, hit by changes to Meta’s Facebook algorithm and lower search traffic due to Google’s AI Overviews.<\/p>\n
Profit before tax fell 79% to \u00a31.8m.<\/p>\n
Adjusted EBITDA fell 34% to \u00a38m as the company invested in sales teams and senior leadership while absorbing lower margins on its fast-growing direct business.<\/p>\n
This morning’s update said the “cultural relevance and commercial effectiveness” of LBG’s content enables them to “capture opportunities with new and existing clients presented by cultural events” such as the upcoming Men’s FIFA World Cup, which is “already driving client engagement” in the second half of the financial year.<\/p>\n
Solly Solomou, co-founder and chief executive, said: “Our 2026 financial year is a year of transition, towards long-term value. While our strategy to drive repeatable revenue growth is making good progress \u2014 with our Direct revenue streams almost doubling in 1H26 \u2014 our Indirect business was hit harder than expected.”<\/p>\n
Direct revenues now account for 72% of group turnover, up from 44% a year earlier, as the company shifts away from algorithm-dependent income streams.<\/p>\n
The US market grew 154% to \u00a316.1m and is “becoming materially more important” for the group, which operates social media brands including SPORTbible and GAMINGbible alongside its owned websites.<\/p>\n
LBG Media reported a global audience of around 500 million and cash reserves of \u00a328.4m.<\/p>\n
The company implemented cost controls and new leadership in its web business but said indirect revenues “have not stabilised as quickly as anticipated”.<\/p>\n
Russ Mould, investment director at AJ Bell said: \u201cShifts in the media landscape have led Ladbible-owner LBG to issue a profit warning. It has revenue-sharing agreements with social media platforms that display adverts near its content and owned websites.<\/p>\n
\u201cUnfortunately for LBG, this part of its business is declining at a worse than expected rate as third parties shift away from websites and focus more on social platforms and video content.<\/p>\n
\u201cChanges to Facebook\u2019s algorithm are also causing problems for LBG as it means the publisher is scrambling to make tweaks to its system so that its content is still getting millions of eyeballs. This goes to show that content creation is not always an easy ticket to riches.<\/p>\n
\u201cLBG is down but not out. Its core business of creating content for brands and media agencies to reach young adults is doing well. The challenge now is to convince the market that the problem areas of its business can be managed, and that the core growth engine is still purring away.\u201d<\/p>\n
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Shift away from algorithm-dependent revenues weighs on margins<\/p>\n","protected":false},"author":264565,"featured_media":2166664,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120781,120783],"coauthors":[116163],"class_list":["post-2173556","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","category-media","tag-featured-story","tag-greater-manchester"],"yoast_head":"\n