Good morning, everybody, welcome to the XLMedia's 2022 results presentation. This is my first full year results presentation. I very much hope you've had a chance to run through the RNS that we issued this morning. I joined in 2022, as I said, I'm gonna run through some headlines, then I'm gonna hand over to Caroline Ackroyd, our CFO, who joined in March 2022, she will go through... We've had a good year, I should say, in 2022. These results reflect the continuing operations of the business. That's a requirement for accounting purposes, therefore they exclude the personal finance business which is up for sale, as you probably know.
Revenues up at 24% to $71.8 million, and adjusted EBITDA up 18% to 17%, to $17.8 million, I beg your pardon. Critically in line with strategy, we have a very clear focus on our North American sports business, with revenues now of over $46 million. For improved transparency and clarity for the investor group, we have provided information now around our core business. Our core business being sports and gaming, excluding personal finance, small affiliate activity, and a small agency activity. Once again, you can see that our core business has had strong growth in the year, 27% up on revenue and 25% up at EBITDA. Media meets betting. XLMedia sits in the middle of brand content, partners and audiences.
We bring media assets and betting assets together to create a proposition to audiences that enable them ultimately to enjoy content and decide to bet. Our brands provide authority and trust. Our content provides insight, entertainment, opinion, and in sport, our writers are fans writing to fans. Our media partners. We select media partners who have similar values to ourselves, high authority in Google, high quality content, entertaining, trustworthy, and opinionated, that engage with audiences. Audiences, by definition, are engaged sports audiences who enjoy the engagement with our media content, and some of whom enjoy a bet. In gaming, we have audiences who enjoy simply the fun, the casino slots game or the bingo games that we offer.
I want to emphasize that XLMedia now is a very, very different operation from the one of a few years ago, even year on year. This is our core business. As you can see now, 69% of our business is now in the U.S. 78% is sport, and of our sports business, 97% is in regulated markets. Only Finland really a significant market for us, and we think that is about to regulate. You can see that the business has changed enormously from what was, a few years ago, a casino, and gaming-led business, to a sports-led business, predominantly in North America. We have three primary verticals: Our sports media assets, such as Saturday Down South. Our sports betting assets, such as Freebets, in Europe and SBD in North America. We have our gaming assets.
In North America, we are seeking to grow our footprint, so that we have presence in both legal and yet to legalize states, so that when they legalize, we are ready to take full advantage. We do that both through our owned and operated assets and through signing up with partners, media partners. We've been refining our European sports assets. We are focusing very, very much on our Freebets asset that I've already mentioned. This is an asset where we have a strong presence, very, very high authority, and where we think there's an opportunity, and indeed, we're taking that opportunity, to build back that asset. Most recently, for example, we've developed it into providing a much more fulsome racing proposition, which has gone very well in Cheltenham recently by launching a new racing widget.
Again, there's lots of opportunity to build back this site. In gaming, our focus has been very much on the small number of high-quality sites where we've radically improved the content, where we provide much greater choice to the users of those sites, and we spend a lot of time optimizing those sites so that the things that the customers want are the things that the customers get. We're using data, we're improving customer-facing technology, and all of these things ultimately are there to help us underpin a major objective for us, which is to, A, rebuild revenues and, B, diversify those revenues. That will take time. I think you've probably seen a version of this slide before.
You will know back in 2019, we were very much a European casino-led business, and we had no sports betting activity at all. We are now live following Q1 2023 in 19 states in the U.S. As you can see from this, we are slowly expanding our owned and operated brands. Most recently with Saturday Out West in late 2022. We continue to find new partners that, as I said earlier, have the right policies to enable us to maximize revenues in new markets as we go live, such as Cleveland.com, you know. We constantly look forward at those states that might go live so that we can either identify which our own assets will serve those markets or which partners we need to work with in order to maximize revenue in those new markets.
This slide reflects the nature of our business in terms of the cyclical nature of it. As you can see from this, we see significant spikes when a new state launches. Typically, we would expect something in the region of four months or so to prepare for a state launch, albeit latterly with Massachusetts, we only had a matter of a few weeks. We see that state as being a much more slow burn. Typically, the pattern we're showing you here is one of a significant spike, as I call it, and Caroline will say a little bit more on the valuation of those spikes that we saw in 2022.
What this shows you is a, this chart starts to show you the underlying business, the, the blue bars and the green bars, where we are trying to build, and we think this is critical, a larger sustainable business, and then enjoy the spikes when they happen. Building sustainable revenues is perhaps, in my view, the most critical part of our strategy going forward. In North America, as you know, we enjoy CPAs, so that's a one-off acquisition payment, when a customer signs up a book with an operator. We are in the process of discussing with some operators and negotiating with them to move to a revenue share. That means a lower upfront payment, but we participate in the revenues that they make from those bettors over the life of those bettors.
That is important both to make sure we take maximum value from the activities we deliver to the operators, but also build better, build bigger, longer-term sustainable revenues. We've also got to build our US gaming business. In North America, we did $1.3 million of revenue last year. That is very small. There are effectively Well, there are 7 in total, 6 states that we could be operating in. Frankly, we only have a meaningful presence in 1 of them. We are very focused again on If you like, outside of sport, which is quite seasonal, moving into a much less seasonal activity, which is casino and slots. Building our presence through both our existing sports brands, but also developing our casino brands in that North American market. We started the journey, but it will take time.
One of the assets that we think or one of the unique assets that we have in our business is our connection with audiences through our sports media brands. We believe those are extremely well-placed to serve the revenue share market, and as we would call it, the reactivation market, where customers have stopped betting with a particular book. We engage with sports fans and bettors before, during, after, and between games. Therefore, rather than trying to only encourage them to take up a new book, new operator, we are now in a position if once we have revenue share deals in place to actually engage them in making the bet. Our content at these different points of the cycle is extremely well-placed to achieve that.
Very briefly, I'm going to just say a few things about some of the developments that we have operated in 2022. We launched, as I've already said, Saturday Out West to further develop our owned footprint. We've signed 4 new partners, Newsweek, Cleveland.com, MassLive, and Inside the Hall. We've completely rebuilt our SEO team with 2 primary purposes, 1 reducing risk and 1 increasing our optimization. We've continued the program of replacing technology with new, better or best-in-class, indeed, technology and improving the customer journey. We have an entirely new executive team, and we've made the steps to exit personal finance, closed down our, it's a very small agency, and to reduce our affiliate business down to a more profitable activity. Again, Caroline will say more.
Let me hand over to Caroline to take you through the detailed financials.
Thank you, David. We announced our trading update at the end of January, and I'm pleased to announce that for the full- year audited accounts, the business has performed ahead of those expectations. We generated GBP 73.7 million in total group revenues, and that includes our personal finance assets, which are held for sale. Adjusted EBITDA for the full year was GBP 16.7 million. Our financial highlights for the full year from our continuing operations, that excludes the personal finance assets, we generated GBP 71.8 million in total group revenues, and that was 24% up year-on-year. Adjusted EBITDA for the year was GBP 17.8 million and has grown 18%.
Our cash balances although they reduced to GBP 10.8 million, we generated free cash flow of GBP 10.1 million, which supported the business's ability to fund GBP 21.3 million of deferred consideration and earn-out payments for acquisitions made in the prior years. Excluding those non-core activities of the business, which include personal finance and other income streams, which are the Blueclaw Media marketing agency and the affiliate network, we generated GBP 69.6 million in group revenues. That was up 27% year-on-year. We've grown our North America sports vertical to GBP 46.4 million. That's 112% up on 2021. Adjusted EBITDA for the full year for core verticals has improved to GBP 18.6 million.
The business has continued to remove these loss-making verticals in Q1 2023 and has closed the external agency, retaining the talent internally to support technical SEO for the XLMedia business. I'd like to start by covering our progress on revenue growth across our geographies. Our two segments are North America and Europe. US sports generated $46.4 million from both our owned and operated sites and media partnerships. To break that down further, we generated $28.4 million from our media partnerships and $19.3 million from our owned and operated websites. Our media partnerships have grown year-on-year with successful partnerships such as amNewYork, which outperforms our expectations at the start of the financial year.
Our revenues from owned and operated sites grew by 25% year-on-year, with our website ESNY performing well in New York, Saturday Down South performing well in Kansas, and Sports Betting Dime in Maryland. We're now seeing some operators moving towards revenue share deals into 2023 and customer retention. The business has also started to invest in its gaming content to attract customers in the six legalized states for gaming. Seven legalized states overall, although one of those states we are not active in, and generated $1.3 million of revenue for the full year for this gaming content. European sports have declined overall, largely due to websites we closed and are no longer in operation and cost prohibitive to continue operating.
However, our U.K.-focused assets, Freebets.com, has recovered since we moved and migrated those platforms to the new tech platform and are growing quarter-on-quarter into Q1 2023, despite Q4 including a World Cup. Gaming revenues declined 38% year-on-year to $14.3 million, largely impacted by the decline of tail revenues from websites affected by the Google penalties and which are no longer in operation. Our active Finnish sites declined by 26% year-on-year. However, our U.K. website, WhichBingo, has seen really positive year-on-year growth into Q1 2023. The group saw strong growth in its North America vertical by the four state launches plus one province launch during the financial year. Those were New York, Louisiana, Kansas, and Maryland, and Ontario in Canada. In addition to that, mobile registration launched in Illinois.
Previously, registrations were only allowed in land-based operations. We've defined the spike period for a launch to be the first 10 days, including any pre-registered accounts. In the financial year, revenues for stakes, states launch spikes were $10.3 million versus prior year of $0.9 million, with only one state launch, Arizona, in the newly acquired U.S. assets in 2021. The spikes contributed between $4 million-$5 million in EBITDA in 2022. Our organic revenues from U.S. and Europe, including new and mature states, generated $59.3 million and has grown 10% year-on-year. Moving on to our core revenues split by vertical. Significant progress in the year has seen our revenue mix shift in the full year in 2022 to 78%, $54 million from sports and 22% from gaming, $15.6 million.
Sports increased year-on-year by 72%, with 86% of the revenue from U.S. assets and 14% from European sports. Sports as a whole has 97% of its revenue from regulated markets and has significantly more of its revenue generated from CPA deals, around $350 to acquire customers in the U.S., but with lower CPA deals in European sports as revenue share and hybrid deals are more prominent in this market. Gaming revenues overall declined in Europe as tail revenues declined from websites impacted by the penalties and subsequently closed. Our gaming websites remain a priority for the business. In the U.S., we started to create gaming content and generated $1.3 million, 8% of gaming revenues, and this will be a valuable vertical to grow in the future.
In both the half year results and the capital market day, we gave a clear understanding of the business mix within XLMedia and how it's broken down into its component parts. As a reminder, 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 50% in gross margin for the full year and splits into two areas. Gross margin from owned and operated websites, which was 61% of margin, and we expect this to improve as revenues grow. With the full year impact in integrating the owned and operated acquisitions into a single North America sports operating structure. Media partnerships, where we have lower associated costs but higher revenue shares, which we share with our partners, were 40% for the full year.
The mix of owned and operated revenues and media partners can vary year on year, dependent on the presence of those partners in legalized states and our own coverage from our owned and operated sites, and this blended to 50% gross margin in 2022. EU sports gross margin performed below expectations at 55%, largely impacted by sporting results affecting our tail revenues and a sharp drop in revenues impacted by the migration of the websites to the new platform. We expect this to return to a level inside our range for 2023. EU gaming gross margin was 75% and benefited from tail revenue share, revenues from customers introduced in previous years, and strong management of costs associated with that vertical. Cost reduction.
Our operating and sales marketing cost base, excluding our media partnership, revenue share, transformation costs, and share-based payments, fell from GBP 39.8 million to GBP 37.6 million from continuing operation. This has provided a cost saving of GBP 2.2 million. This was after absorbing full year costs of staff, marketing, and technology for acquisitions in 2021 of Sports Betting Dime, Saturday Football, and Blueclaw Media, along with launching two new websites on the Saturday brand. We made significant progress during the year to reduce staff costs from GBP 22.6 million to GBP 20.8 million, with overall headcount reducing from 267 to 193.
We realized these benefits by moving roles from costly geographies and removing unnecessary management layers, which has brought management closer to the operation and improved communication and created more opportunities for the business to collaborate across our U.S. and European businesses. We rationalized our content freelancer costs, paid and social marketing costs in order to optimize this cost year-on-year. We've invested in technology in 2022 to remove legacy technology and improve processes, systems, and data which were end of life. We're now seeing growth in our adjusted EBITDA year-on-year, growing from $15.1 million in the prior year to $17.8 million this year from continuing operations, 18% year-on-year increase.
Transformation costs in the full year reduced to GBP 4.6 million versus the prior year of GBP 6.5 million. We've completed the projects to move staff from costly jurisdictions and delivered a new technology platform. Our websites over time will move to the new platform that is now part of BAU technology costs. Annually, the transformation has benefited the group by delivering ongoing savings of GBP 5 million-GBP 6 million, and this is now complete. Our adjusted EBITDA improved from GBP 14.6 million to GBP 18.2 million, 25% year-on-year growth for our core operations. Our non-core EBITDA generated a loss of GBP 0.4 million, largely related to loss-making clients from Blueclaw Media, which have now been closed in Q1 2023.
Our operating cash flow, which is cash from operating activities on a continued basis minus CapEx and excludes any payments relating directly to the acquisition, significantly improved year-on-year from an outflow of $4.4 million to generating $10.1 million. This was from improved trading performance and a positive working capital benefit from media partnerships as payments are made after we have received the monies from our operators, usually around 30 days later. Our cash revenues have reduced since 2021 year end and are $10.8 million at the end of 2022. We've continued to fund deferred considerations and earn-out payments relating to the acquisitions, which we've been able to fund with this excess cash generation.
In the full year, we funded $21.3 million of acquisition-related payments, with $17.6 million of deferred consideration for U.S. acquisitions acquired in 2021 and $0.7 million for Blueclaw Media. The earn-out for CBWG for 2021 was achieved and paid in 2022, totaling $3 million. In future years, we'll continue to fund from our cash reserves deferred and earn-out payments of $7.4 million in 2023 and $7.5 million in 2024. We've taken a prudent approach to ensure we have sufficient cash to continue to fund acquisition payments. The RGD tax liability relating to 2016, 2020 of $3.6 million will be paid over this financial year, we're providing sufficient headroom for investment in organic growth.
The business currently has no debt arrangements in place. This remains a consideration for the future if working capital or acquisitions present a reason for the Board to put this in place. Thank you. Over to you, David.
Well, thanks very much, Caroline. Very briefly on the outlook, we've obviously had a good start to the year with the launch of Ohio. As I think I've already said, Massachusetts legislation was a slow process, and as a result, we see that market having a much more slow burn approach to growing, as having launched after the end of the football season. We're looking very much forward, as I said, to diversifying our revenue stream, building out our casino proposition in North America, diversifying our revenues from pure CPA-led to revenue share-led, and continue to build out our casino assets and our sports assets in Europe, as I've already said. Just a few last-minute takeaways. We've got 4 state launches, plus Canada, Ontario in 2022.
Two state launches that we know about in 2023. As I said, there's a lead time to knowing about a state launch, as I've already said. A key priority, and I think perhaps this is the most fundamental, is building more sustainable revenues. The way I'm looking at the business, and would encourage you to look at the business in two parts. The underlying business, that which is the European sport, the European casino and the mature North American business, and then the spikes which deliver very attractive short-term profitability but don't form part at the moment under CPA of the long-term profitability of the business. As I said, we're underweight in casino, and therefore, there's a big opportunity there, we think, but that will take time.
As a constant focus on cost and cash will always remain. Thank you very much for listening to us so far. I've got some questions in front of me. What I'm going to do, if I may, is have a look, have a look at the questions. We'll get through as many as we can. I've got a handful in front of me. I think I'll say who they're from and what the question is. The first question I've got in front of me is from Natalie: Do you expect EBITDA to return to growth in 23? Is the basic question.
I think as I just said, the core business is where I would look at underlying growth. We expect to see the core business grow this year. The headline revenue and the headline profitability will in part be determined by the state launches that take place during any year. That's why we've given perhaps the first people to give really good visibility of the level of revenue and the level of profitability that we enjoy from the first 10 days of the state launches is when we see a spike. The nature of the state launch, the timing of the state launch both have very significant impacts. As I say, I look at the business in 2 parts, the underlying business and then the state launches. We expect the underlying business to show growth.
I've then got another question, from Natalie: How do you intend to leverage the possibilities offered by artificial intelligence? Can you please elaborate on the opportunities and the threats? We are and have been tracking, the likes of ChatGPT, which I suspect is one of the stimuluses for this, Bard, and indeed AI in the wider sense for a while. We don't use it at the moment to generate content, and indeed, as I'm sure you're all familiar, at the moment, Google are in normal traditional search, put a premium on EEAT, so expertise, experience, authority, and trust. Therefore, we have been putting a premium on creating content that fulfills those obligations.
We've looked very carefully and done a number of tests in the world of ChatGPT, and indeed version 4 has recently come out. We obviously see lots of opportunities and indeed have already started, even only a matter of days afterwards, using this technology to educate ourselves about word selection and optimization in our casino brands. We think that there's a lot of use for selectively targeting these tools at specific areas of expertise, then applying them to our own content and educating ourselves not just through our own trials, through A/B testing, but also through using these tools to learn what others have done and apply that to our optimization program. That's one small example.
We also see opportunities for using this to actually educate these tools to actually help us in creating our content and updating our content on a more regular basis that is practical and affordable inside the constraints of employing people. By writing high quality content that meets the EEAT criteria, we think we can then apply technology, AI, to enhance and republish that content to give the user a more fulsome experience. We see a number of opportunities. I've given you a couple there. In terms of the threats, we think that there's a very real issue, perhaps more for the bots than for ourselves, which is taking our content and publishing that content. Cause you, I would observe, once you present that content as your own, you become a publisher.
That's one issue that I think we will need to see resolved. The ownership of obviously that underlying content. Currently, our content is presented on our behalf to the user. If that no longer takes place and content is presented on as if it were created by a different third party, i.e. the AI tool, then as I say, I think this presents certain issues, perhaps more for the presenter of that newly created content, if it doesn't give credit and/or reward back to the original creator. You're gonna have to bear with me a second 'cause all the questions have disappeared from my screen, but I'm sure in a matter of seconds they will reappear. Thank you very much. Let's just run down a few more questions.
I have a question now from Florian. How many people work on content at casino? We have in casino, which is predominantly in our Israeli business, we have about 25 people in Israel. The vast majority of those work on our casino business. We have a small number of people in the U.S. and a small number of people in the U.K. who provide casino content. Round terms, about 25 people. Another question from Florian. How are investments in technology looking? We've reduced our spend in legacy, removing legacy tech and increased our spend slightly in new technology development. This will always be a requirement.
Our business is about delivering technology both in the sense of the physical technology, but in particular the website technology that the consumers see that ultimately converts, providing innovative products, I've already given you an example of one that we've launched recently. A combination of the technology we're currently building and indeed have talked to dynamic advertising, we have now launched dynamic advertising. This is about the right ad in front of the right person at the right time, as we have better information about that individual from first-party data, we can serve them better. Investment in technology will be ongoing.
We're very pleased at the moment with the new technology, and of course, I wish I didn't have to spend money on removing legacy technology, but that is the practical reality of where we are today in moving this business from the old world to the new world. I have a question from Andreas Oranje. With most of the revenue being generated in the U.S., why the company keeps hiring the majority of its FTE in the U.K.? Unfortunately, that's not an accurate statement, because we employ 60-odd people in the U.K., 60 people in the U.S., 25 in Israel, as I've already said, and another 20-odd in Cyprus. Unfortunately, that's I'm not sure where that information came from, but it's not accurate.
The reason why we have 60 people in the U.K. is our corporate team is in the U.K., part of our finance team is in the U.K. Of course, our European sports team is predominantly in the U.K. In the U.S., of course, you will have noted that our revenues come from both owned and operated sites, around $20 million, and from partner sites, around $28 million. Of course, the $28 million that we derive from partner sites, we don't need to employ people to do that because that's the point of the partner sites, which is to benefit from their longevity in terms of creating content, providing content, rich content to their audiences. We are able to leverage their staff without employing them. We have another question now on CapEx. You've spoken a lot about growth.
I've spoken a bit about growth. I do apologize. Will this require more CapEx resources? This is from Massimo Antonello. I think we should be very clear that we think our CapEx spend will probably stabilize at a level marginally below that which we're currently incurring in next year once the legacy program is complete. I would never say that we won't grow our CapEx spend, because if we can see benefits from doing so in terms of driving incremental revenues, building out new websites and delivering new, as I say, widgets, gadgets, or any other tool that might be attractive to an audience. I think you can say we're at a level where we will see a small reduction, potentially, if we see the opportunity, we will invest in it.
Another question from Andreas Oranje. Did the company manage to get a credit facility, a year that the company said they wanted to get one? If so, what's the bank? What are the terms? If not, why not? Why do all the competitors have access to credit facilities, but not XLM? That's the question. Andreas Oranje, the answer to that question is we do not currently have a facility. We have $10 million in the bank. We will take on a credit facility if we believe we require one to support the working capital of the business. No, at the moment we don't have one. Another question from Massimo Antonello: "Why is EBITDA margin so much higher in spikes?" We've obviously. We have a cost base which clearly has a monthly run rate to it.
When a spike occurs in a particular month, such as New York in January last year, you obviously, your cost base doesn't rise significantly other than the payaways to partners. Therefore, you are very heavily leveraging that monthly cost against a very significant spike in revenues, and that's the primary reason why you have a relatively higher margin. Albeit, as you know, depending on the exact deal, payaways to the partner, depending on, again, the mix of revenue in that period will depend on the actual margin in that particular month. "The company cannot raise capital unless it's valuation. What is the company doing to improve its valuation? It's at a massive discount period." Well, it's again another question from Andreas Oranje. The valuation in my mind is at a significant discount.
As I say, I point the investor community to the underlying business and the underlying profitability, which we've given good visibility all this year, by highlighting the level of revenues and profits that we make from spikes. I very much hope that as a result, it will be possible to start looking at the business through what it delivers on a more sustainable basis, and I've talked a lot about that, and less so on the absolute peaks and occasional reductions that might be seen in a spike-led revenue business. I agree with you. In my opinion, the business is undervalued. We are, as you can see, providing the transparency and information to allow investors to make those determinations, and hopefully will result in an improvement in the valuation.
In terms of capital raising, we have no immediate need or plan to raise capital. Therefore, we are very much focused on driving and growing the core business. These are all the questions I've had up on screen, and I've run through them one by one. If there are no more questions, thank you very much to all of those of you who have posted a question. I'll wait for a moment, otherwise we'll bring this to a close. A big thank you to all of you for taking time to listen to us and indeed to sharing your questions. All right, we'll call it a day. Thank you very much.