9th Jun 2026 11:46
(Alliance News) - LBG Media PLC on Tuesday cited challenging trends in search traffic and algorithm changes for lower profit in its first half, as it revised down full-year guidance.
The Manchester, England-based digital entertainment company owns social media accounts such as LADBible.
Its shares fell 24% to 26.50 pence on Tuesday morning in London.
Pretax profit plummeted 79% to GBP1.8 million from GBP8.6 million, though revenue was up 19% to GBP52.4 million from GBP43.9 million.
Direct revenue, which includes content for brands and media agencies, advanced 95% to GBP37.6 million from GBP19.3 million. Indirect revenue, which is earned through advertisments on LBG-owned websites and social media platforms with which the company has revenue-sharing agreements, sunk 41% to GBP14.5 million from GBP24.5 million.
The Indirect segment's downturn reflected changes to Meta Platform Inc's Facebook algorithm, LBG said, continuing the "challenging" trends seen in the second half of 2025.
LBG reported a 34% drop in adjusted earnings before interest, tax, depreciation and amortisation for the first half, which were down GBP8.0 million from GBP12.2 million, for a margin of 15.4%, slimmed from 27.8%. LBG attributed this to investment in Direct sales and the first-half revenue mix.
Back in April, LBG had lifted full-year 2026 revenue expectations to around GBP110 million, above GBP105 million consensus. However, the revenue mix means that the firm expects FY26 Ebitda of GBP22 million compared to consensus of GBP25.4 million.
On Tuesday, however, the company explained that Indirect revenue trends had failed to stabilise as quickly as expected, and as a result, it has revised full-year guidance down to revenue of GBP100 million to GBP107 million, and adjusted Ebitda ranging from GBP15 million to GBP20 million.
In the year ended September 30, 2025, revenue rose 7.0% to GBP92.2 million from GBP86.2 million. Adjusted Ebitda rose 2.9% to GBP25.2 million from GBP24.5 million, but pretax profit fell 3.4% to GBP14.0 million from GBP14.5 million.
The updated guidance "reflects an anticipated further decline in Web and Social revenues within the Indirect revenue stream, which has reduced visibility as part of a long-term structural shift away from websites towards social platforms and video content," LBG said.
Among the challenges seen in the first half, LBG cited "lower traffic from search engines due to AI overviews".
Last week, the UK Competition & Markets Authority imposed tighter controls on Alphabet Inc's Google, specifically related to the use of artificial intelligence in search results.
The watchdog's new digital markets regime will allow online publishers to opt out of their content being used for Google search's AI function. Google's AI offering, Gemini, scrapes content from different websites to generate summaries in response to online search prompts.
As far as LBG's use of generative AI is concerned, the media company reported "momentum...productivity gains and client engagement".
It also stressed that it has taken "a number of mitigating actions" to address the slowdown in its indirect business.
Chief Executive Solly Solomou called financial 2026 "a year of transition".
"While our strategy to drive repeatable revenue growth is making good progress - with our Direct revenue streams almost doubling in 1H26 - our Indirect business was hit harder than expected. As a result, we have lowered our forecasts for FY26 and made changes to stabilise our Web business, alongside our steps to capture the further opportunity in our Direct markets.
Solomou continued: "LBG Media's planned shift to more predictable Direct revenues with greater visibility on earnings is accelerating. We are seeing an increasing share of wallet from large blue-chip clients, who see our relevant and engaging content on premium digital platforms as an effective way to reach young adults."
The company ended March with net cash of GBP28.4 million, reduced from GBP30.8 million at September 30.
By Holly Munks, Alliance News reporter
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