Good morning, everyone, and welcome to XLMedia's half-year results update. I'm David King, the CEO. I'm going to talk through the business update and the strategy update.
I am Caroline Ackroyd, the CFO, who will be talking through XLMedia's H1 2023 results today.
Our purpose remains to create great content, to engage with audiences through brand and through search, to meet their needs, and to introduce them to relevant advertisers, enabling us to generate revenue. Before we get to the numbers, a short recap on some of the business highlights. We have a clear focus on sport and gaming, on North America and Europe, with owned and operated and quality partner sites. We continue to deliver strong margins and have returned Europe to growth. We have primed the business for the next phase of growth and simplified our organization tech. There are 21 states yet to legalize online sports betting in North America, including California and Texas, two of the largest states. There are over 45 states that could legalize online gaming in the future.
The continuing business, as presented on the slide, excludes personal finance, Blue Claw, and assets that have been sold or exited, and therefore, it reflects the business that we have going forward. Now, while revenue was down against H1 2022, in 2023, as anticipated, across the two years, from 2021 to 2023, revenue is up 18%. New York and operator market share acquisition in 2022 was not matched by, the activity in 2023. We were up over 400% in U.S. sport between 2021 and 2022. That is why, as we have seen, revenues fall into 2023. Operators are now more focused on profitability than market share. We will continue to benefit from state launches, but period-on-period comparisons, as we have said, will continue to show some volatility as they did between 2022 to 2023.
Adjusted EBITDA was 92% up against 2021 in 2023, but down against 2022, with North American sports betting revenues of $16.2 million in 2023 relative to some $30 million in 2022, being the main driver of the profit reduction period-on-period. So this slide shows the reconciliation on the right-hand side between our total revenues and those are the continuing business I just described. But more importantly, perhaps on the left-hand side, the chart shows the growth in that business of 18% over the five quarters, and highlights the effect of the New York spike and the pent-up demand when New York launched live online sports betting in early 2022.
While the market remains a CPA-led market, i.e., a one-off acquisition payment, so state launches remain important to us while we continue to build up our recurring revenues. Now, in a balanced portfolio, as we manage, we are starting to see growth again in our European assets, building our recurring revenues, while we still continue to enjoy spikes in the U.S. Real Money Players. Now, the chart here shows the Real Money Players trend. Again, you can see growth in the new customers that we have delivered to operators over the period 2021 to 2023. Once again, you can see the benefit of a very large state going live in H1-2022, New York, which is a common theme of the volatility that we are seeing in our revenues.
I should also note, of course, that, in H1 2022, that was the first period in which all our business acquisitions were actually live. In 2023, H1, there are no new business acquisitions benefiting the period-on-period performance. And of course, in the period we did see, as I've said earlier, operator spending patterns changing, some targeting spends at different points in the season, some significantly reducing their focus around the NFL. We remain sport-led, U.S.-led, and CPA-led currently, but with Europe growing and the decline in the U.S. that we just talked about, so the mix has shifted towards owned and operated activities, Europe, gaming, and, revenue share or recurring revenues. We're very pleased to see our three main European brands, Netti Casino, WhichBingo, and Freebets, return to growth in H1 2023.
In all three cases, they've been growing their new customers, creating in-period revenue, and of course, creating future revenue share, and ultimately future tail revenues. If I may, I'll just update you now more further on the strategy and progress. For the longer term, only media sites like Saturday Down South offers the opportunity to engage regularly with sports fans and bettors, before the game, during the game, after the game, and between games. And that gives us the opportunity to participate in revenue share when that's available in the U.S., as we are constantly engaging with the fans during that process. In SDS's case, it's the leading independent college site in the U.S. market.
Recent data suggests that up to 40% of betting on football in North America is actually on college games, and with XLMedia's SBD site, very well-placed in that marketplace when revenue share comes, so we would expect to see significant revenue from that source. In Europe, Freebets is our leading betting marketing affiliate site, and in the US, Sports Betting Dime is our leading betting market affiliate site. Both were up year-on-year in terms of revenues, SBD being up 13%, and they both provide us with national betting footprints. In Europe, Netti Casino and WhichBingo lead our casino and bingo offerings. Together with our media partnerships, both local and national, we have a balanced portfolio. We are doing the things we said we would do. In North America, we've signed new partners to expand our footprint.
We've expanded our offering into Daily Fantasy Sports to diversify our revenues. Daily Fantasy Sports is legal in most U.S. states. We've entered revenue share deals with 3 operators, and we've focused on a smaller, more targeted, higher intent audience. In Europe, with Freebets back to growth, as I've said, we're now trialing it in new markets. And in gaming, Netti Casino and WhichBingo are back to growth, and our data-driven conversion tools have supported that improvement and are now being rolled out to all our portfolio to support further growth. As we move into H2, we are delivering against the strategy we laid out, as summarized on this slide. Now, I'm going to hand over to Caroline, and then I'll come back and explain the outlook preparation for 2024.
Thank you, David. For the half year, we generated $28.8 million in continuing group revenues, which excludes personal finance, which is a held-for-sale asset at the year-end and has subsequently been sold during this half. Adjusted EBITDA for the half year was $6.9 million, which declined period on period, as expected, as this half included state launches in Ohio and Massachusetts, which were smaller in size than New York, Louisiana and Ontario. Our cash balances reduced from $10.8 million to $7.4 million, with cash funding required for earn-out considerations and historical taxes relating to 2016 to 2020. Our discontinuing activities of the business, which included personal finance and other income, resulted in total group discontinued revenues of $0.6 million and an associated loss of EBITDA of $0.4 million.
Moving on to our progress across our sports and gaming segments, which are split into two geos, North America and Europe. In H1 2023, sports remained a significant percentage of overall revenues at 74%, with North America being 76% of sports revenue, in line with the group's focus on being sports-led in the US, while we rebuild our Europe casino assets and diversify into iGaming in the US. The sports vertical generated $21.4 million, down 37% period on period. We continue to make progress in the US, although revenues are impacted by state launches during the period. US sports generated $16.2 million from both our owned and operated websites and media partnerships. But to break that down further, we generated $12.2 million from media partnerships and $4.4 million from our owned and operated websites.
We saw a strong performance with our new partner, cleveland.com in Ohio. However, our MassLive launch in Massachusetts was dampened due to the late launch date being at the end of the NFL season and uncertainty on how affiliates would operate in the market. European sports grew overall. The European sports revenues improved to $5.2 million in H1 2023, including revenues remaining from the slimmed-down sub-affiliate network. Europe remains the main gaming region for the group. The revenues were $7 million, accounting for over 90% of gaming revenues in both H1 2023. Gaming revenues declined 14% year-on-year to $7.4 million, largely impacted by the decline of tail revenues from websites affected by the Google penalties and which are no longer in operation.
However, we are now seeing against H2 2022, a growth in the new gaming vertical and expect to grow going forward. As the business has made no acquisitions during the last financial year, all our revenues are generated from organic growth in our owned and operated websites across all verticals. Moving on to our core revenues, split by market for H1. In the U.S., we generated $30.2 million in sports revenues and $0.4 million in gaming revenues. Period-on-period, the U.S. vertical declined, as previously stated. Revenues were not only impacted by those state launches, but also shifts in the market, including an operator temporarily leaving the market, which is expected to be back in H2.
We're seeing positive traction in Sports Betting Dime, which grew revenue in H1 2023 by 13% and total unique visitors by 120% period on period. We've also seen positive traction in Saturday Down South brands, where we've expanded revenue diversification by adding daily sports fantasy offers with over 1,000 real money players in the period. European sports revenues improved to $5.2 million, $3.8 million, and we saw positive growth from our primary site, Freebets.com, which grew by 37% period on period. Gaming revenues declined by 12% to $7.4 million, as tail revenues declined in the European gaming markets against the prior period. However, our marquee brands, Netti Casino, grew by 5% and WhichBingo by 38% period on period.
To also note, European Sports now includes a continued sub-affiliate network, which has been significantly rationalized during the period. Moving on. The U.S. market has continued as a largely CPA-led market, whereas the Europe market continues to operate with a mixture of fixed, hybrid, and revenue share deals. As a result, CPA revenues accounted for 59% of core revenues, declining from 67% in the prior period. Revenue share has increased to 41% of total revenue, due to the overall decline in U.S. revenues as a percentage of total revenues. As the U.S. market continues to develop, we've started to see some hybrid and revenue share deals offered and expect this to grow as a proportion of revenues over time.
We've continued to drive high-quality new customers, or RMPs, for our customers, and therefore have had strong CPAs throughout the period, particularly in the U.S., which have remained above $350 per CPA. Both EU Sports and EU Gaming are growing period-on-period. Moving on, our gross margin over the total business was 48%, which was slightly below expectation and was mainly impacted by the North America sports vertical. As a reminder, our gross margin is defined as margin as a percentage of revenue after deducting associated content, technology, marketing, and people costs. North America sports generated around 31% gross margin for the half year, mainly impacted by lower margins from our owned and operated websites, which were impacted by some operators being temporarily out of the market during H1.
E.U. sports gross margin performed above expectations at 70%, largely impacted by a strong performance over the racing festivals and on-site content conversions. E.U. gaming gross margin was 76% and benefited from strong growth on Netti Casino and WhichBingo new customer acquisition. Our total direct costs, which are associated with these revenue streams, decreased from $15.5 million to $10.6 million. This includes the revenue shares paid to the media partners in the U.S., which totaled $8.1 million in the period. Moving on to cost management. Our operating sales and marketing cost base, excluding our media partner revenue shares, transformation costs, and share-based payments, fell from $19 million to $13.8 million from continuing operations, providing cost savings of over $5 million and around $4 million on a sustainable basis.
Operating costs of $12.7 million included $1 million of reorganization costs and $0.4 million of share-based payment charges. We have made significant progress during the year to reduce staff costs from $11.3 million to $8 million, with overall headcount reducing from 193 to 167. We have now realized the full year benefit of moving roles from costly geographies and removing unnecessary management layers in the organization. The group has continued to make some investment in its technology in H1 2023, incurring around $1.6 million of operating costs in the area, down 43% from $2.8 million in the prior period. We have reinvested in technology platforms by upgrading our website infrastructure last year and continuing to replace legacy technology for data platforms and finance billing systems.
Sales and marketing costs were $2.5 million, a decrease of 19%. The reduction in these costs related to rationalizing our content, freelance costs, paid social media costs, and optimizing these costs on a period-by-period basis. Our adjusted EBITDA is growing consistently, although not linear growth, as David has already mentioned. In H1 2023, we have also seen changes in the market, with operators shifting their investment from acquisition to showing profitability, and some operators temporarily withdrawing from the market and reducing customer acquisition spend during half one, 2023. Transformation costs in the half year reduced from $1 million versus the prior year of $3 million. These costs related to the closure and sale of loss-making activities in the period. Moving forward, we now anticipate a lower requirement to invest in transformation projects as legacy technology is near completion.
We have now recalibrated the cost base with cash savings of $5-$6 million per annum, and are now in a strong position for growth. Our cash balances declined by $3.4 million, from $10.8 million cash at the beginning. We generated cash of $3.4 million period and received $2 million of funds from the sale of personal finance assets. The main reason for the decline in overall cash related to funding $3 million for an earn-out payment, and further payments to be made for the settlement of historical taxes in 2016-2020, with the Israeli tax authorities of $2.8 million. In addition, we've invested in capital projects to replace our data warehouse and build out improvements on on-site conversion.
As a reminder, in the half year, we paid $3 million earn-out payment to CBWG and expect to make a further deferred payment for Saturday Football in H2. Next year, we expect to make earn-out and deferred payments of $7.5 million in 2024. We continue to take a very prudent approach to ensure we have sufficient cash to continue to fund acquisition payments and provide sufficient headroom for investment in organic growth. The business is also considering putting a debt facility in place for working capital purposes and future capital considerations. Thank you, and back over to you, David.
Thank you very much, Caroline. To deliver our half two, we are very focused on today's launch of online sports betting in Kentucky. We're also focused on the return of Penn to the North American sports market. They previously ran the Barstool brand, but they exited that brand some months ago, and they are returning to market in this autumn, having licensed the ESPN Bet brand from ESPN. We continue, of course, to be focused on the new NFL season and the new Premier League season, which are always an important part of our revenue in the second half, following the lulls of the summer. We continue, as I said, to build out our relationships with new partners to expand our footprints.
As I mentioned, we have signed a contract with WRAL in North Carolina to support the delivery of the new state launch when it goes live in early 2024. We signed a partnership with the Atlanta Journal-Constitution, a newspaper based in Georgia, with a reputation and a website that reaches way beyond the Georgia geography. I can tell you today that we have also signed a new contract with WDRB.com, a local TV station based in Kentucky, and they are in a position to use their television audience to promote the online sports betting that we will be marketing in that state. We are focused in H2, of course, on continuing to benefit from the growth we have delivered in Freebets, our European sports site, and we expect to see further growth period on period from Freebets.
Similarly, our two main brands, WhichBingo and Netti Casino, our two primary gaming brands, we expect to see further improvement in their revenue trends into H2, coming out of H1. So cost reduction remains an important part of delivering half two. Caroline has already talked to the savings that we have made. Half one may, of course, continue into half two, with some additional savings expected from further cost reduction activity. As a result, the group currently expects full-year Adjusted EBITDA to be broadly in line with management expectations. We look at the preparation that we have made for 2024. We are, as I just said, ready with our partner, WRAL, for the launch of North Carolina in early 2024. We will seek to deliver more revenue share deals in the US with further operators when that's possible.
We, we do plan to launch a casino affiliate marketing site in the U.S. and inside, in Europe, either late 2023 or early 2024. We will continue to build on the success of the premium brands that I just talked about, run those improving trends out of 2023 into 2024. We will also roll out the conversion tools that we have applied to those core brands to improve site conversions on our other sites, having seen very significant improvement in conversion metrics, for example, on WhichBingo, as we roll out these data-driven conversion tools. Of course, in 2024, as 2023, so we will continue to keep a tight grip on our cost base.
Finally, we will explore bringing on board a debt facility to support our working capital and to support the growth and investment into those premium brands that we've already spoken about. Thank you very much for listening. That concludes our half year results update. We will also be holding an Investor Meet Company call on the third of October.