Good afternoon, ladies and gentlemen, and welcome to the XLMedia Preliminary Results Investor Presentation. Throughout this presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen, please. Just simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet Company dashboard, and we will send you an email to notify you when they are ready for your review. I'd also like to remind you that this presentation is being recorded.
Before we begin, we would like to submit the following poll, and if you could give that your attention, we would be most grateful, and I'd now like to hand over to Stuart Simms, CEO, Iain Balchin, CFO, and Kieran McKinney, Investor Relations from XLMedia. Good afternoon to you all.
Good afternoon, and thank you to everyone for joining. As I was pointing out, we're going through our full year results today, but we're also giving you a bit of perspective on the business and how we're looking at our strategic priorities. I'll give you a bit of a flavor about what we do, and then give you some details of some latest updates, both in terms of talking about 2020 and then as we move into 2021, talking about what's important in there and some of the acquisitions that we've made. So let's just start at the beginning. In terms of what does XLMedia do, is a question that I quite often get asked. So we do three things. We call it the three A's.
We acquire consumers, we activate them in some way, and then we drive some level of activity with a product or service, and then we get paid. So to unpick that slightly, just to kind of explain, if I was looking for a credit card online, I would type in credit cards with cashback. I would type that into Google. Google would then drive me to one of our sites, say like Money Under 30. Money Under 30 would then show a page about the best credit cards, cashback options with credit cards, list a bunch of different providers. Consumers would then click on those links and be passed across to a financial institution, sign up for the credit card, and if successful, we would get paid. So we're a performance marketing business. We're a performance publishing business. I'll explain the difference there in a second.
As a company, we've got two strategic priorities that underpin what we do. One, premium branded assets. We were a company that used to run 3,500 websites. We now run less than 100. The opportunity for us was to really think carefully about how we could run a smaller number of sites with increased focus from our team and drive the best consumer experience, one that was aligned with Google to make sure that we ranked really well in Google, as well as supporting and extending the partners on whose behalf we represent products and services. We've provided some transparency here on the types of sites that we operate. As you can see, we operate in three main verticals: sports, financial services, and casino, which brings me nicely into the portfolio management piece.
So as we operate across a number of verticals, we need to be proactive in making sure that from an investor standpoint, we provide sustainable growth. And in the past, we were heavily predicated upon the casino vertical in particular. We had invested in financial services and also in sports, but not to as great a degree as we are now. So I'm going to talk about that in a bit more detail later. But portfolio management as a strategic priority is where we're thinking carefully about the territory, the vertical, the maturity, and then also the regulation that applies to each of our assets and make sure that we have a balanced portfolio of assets to drive that sustainability and cleanliness of revenues.
Further to that, it's really important for us as a performance publishing business to think about technology and the effect that that's going to have on our business longer term. As I mentioned, it's really important we basically matchmake consumers with products and services. And there's a high requirement, I believe, in the future for affiliate companies such as ourselves to utilize data, artificial intelligence, and machine learning to understand the behaviors of the consumer and matchmake them with the right product or service that we have available to us. So technology is a crucial part of both our historical, but more importantly, future success. And then people, making the most of man and machine is crucial to our success. So humans in our business should be looking at creativity, content, design, strategy, and that forms the key workforce for us.
So we're thinking very carefully about how we design the organization, how we're transforming it to make the most of automation and machines, as well as embracing the need for humans in our business. So just to give you a sense in terms of the operating highlights of last year, it was a tough year for us, and I think that's well documented if you look at any of the announcements that we've put out. But we did make a significant progress in terms of transforming the business. We went down from four layers of management, sorry, eight layers of management down to four. We simplified the way that we operated the business and moved more towards a regional structure that allowed us to invest and support the growth in the U.S., underpinning our priority around portfolio.
We also made some acquisitions that I'm going to talk about later to support that portfolio extension. We simplified our corporate governance and moved our tax from Cyprus to the U.K., which is more closely aligned with our ambitions to work, obviously support us as an AIM-listed business. And then we also continue to evolve, and I'm going to talk about this again later, rebuilding our casino business, which was impacted by Google early in the year, and we're in the process of recovering from some of the impact of that. But generally speaking, our outlook for the year is positive, and I'm going to hand over to Iain to talk through the financials now.
Thank you, Stuart. As Stuart already alluded, 2020 for XLMedia was a year of real transformative change. We delivered revenues for the year of about $54.8 million, and there were three main impacts to our revenue during the year. Firstly, at the beginning of January, we chose to close down our remaining media business. Secondly, there was a number of our websites that were impacted by a manual ranking penalty from Google. And then thirdly, we had to deal with the impact of COVID, just like many other businesses around the world. And this was particularly impactful to our sporting business, where many sports events were taken offline during the second and third quarter of last year. As I said, revenues for the year were $58.8 million, excuse me, and cost of revenues were $20.5 million, resulting in a gross profit of $34.4 million, or 63% gross profit margin.
Our operating expenses during the year increased from the previous year, but there's some important fluctuations to note here. We had a number of significant events during the year, as we've talked about. We were in a process of transformation, so we did have a number of transformation costs during the year, which actually slowed slightly further down the P&L, but we also brought on board a completely new management team, so there was an element of expense around recruiting a new C-suite. Also, we changed our capitalization policy on some proprietary technology that we have decided to stop using going forward, so we took a charge to the balance sheet, and also, we moved our tax jurisdiction, as Stuart briefly mentioned, to the U.K., and there were some one-off costs associated with making that move.
An important factor to note on the operating expenses is that we did take over 80 people out of the organization during 2020. We started the year with 349 people. We finished the year with 261 people, so we did take a significant slug of expense out of the business, which we will get full benefit for as we move forward. With that in mind, operating expenses for the year were exactly $30 million, and that led us to an Adjusted EBITDA of around $12.2 million. The reorganization costs I touched on were predominantly the cost of taking people out of the business, a little bit of consultancy, but predominantly redundancy costs with regards to taking the 80 people out of the business, and all of that resulted in a pre-tax income or profit before tax of about $1.1 million.
As I flip to the next slide, what we've tried to show over the last couple of investor meetings we've done is we're on this pursuit of excellence. And as Stuart was already alluded to, we're trying to reduce the number of websites we run down from 3,500 at the beginning of 2020 to less than 100 as we focus and go forward. And this is all part of becoming the performance publisher that we really want, focusing on quality over quantity. To an extent, we were already doing this, maybe without even realizing. And the left-hand chart here shows really that, yeah, last year, this is for 2020, these numbers, we actually generated 50% of our revenue from just 17 sites.
Despite the fact that we started the year running 3,500, we actually generated 50% of the revenue from our 17 leading sites or brands, as we are going to start talking about them in the future. We actually generated 75% of our revenue from just 60 sites. Then there was a very long tail. As you can see on the pie charts, in terms of 2020, casino business was still a predominant part of our business. Last year, it was 61% of revenue coming from that sector, 22% coming from the sports sector, and 15% coming from our financial services business. We're going to dig into a little bit of that later because that shift will change as the company continues to embark on its transformation and we focus and invest heavily into the US sports market.
What the bottom two pie charts are trying to show is that the left-hand one in 2020, the predominant amount of revenue was coming from what we call revenue share agreements. We have two main areas of being paid. One is through a revenue share agreement, which is predominant in that casino vertical and some of the European sports, and then a CPA or a cost per acquisition, which is again predominant in our financial services business, but is also the predominant payment method in the growing U.S. sports sector, and then we do have a little bit of a hybrid mix where we can get a little bit of both, but last year, 50% of our revenue came from revenue share agreements. What the right-hand pie chart is trying to show is that actually of our new business last year, more of that was coming from a CPA basis.
That was for a couple of reasons. Firstly, a number of our big websites, the casino websites, were actually offline during 2020 in terms of new business. Also, we were investing heavily in the U.S. and then obviously into the financial services business, which are heavily CPA predicated. Last year, 73% of our real money players, new business from real money players, came from that CPA model. We'll talk a little bit more about this and the U.S. market in the forthcoming slides. Stuart, back to you.
Thanks, Iain. So in this section, we're going to give you a little bit more detail on some of the challenges we face as a business, but also the enormous opportunity that we're starting to see evolve in the U.S. business. So let's get into one of the challenges first. So as we mentioned, over a hundred of our sites in January of 2020 were impacted by, had a penalty applied by Google. Now, it was very important for us. In some ways, it was a way of educating the team on the change that we really wanted to make when I came into the business. Culturally, we were a company that had operated thousands of sites and spread results very thinly and never really deeply tried to understand the consumer. We had a fire and forget type mentality of matchmaking the consumer with a product and then moving on.
Our strategy now, as we said earlier, is very different. We're looking at quality over quantity. So as we looked at our casino business in its entirety, irrespective of the sites that were penalized, we decided to really focus our portfolio down to now having less than 50 sites in the casino business in totality. And I think what's got lost in translation over the last year has been that we have still got some very successful sites that are performing well in certain territories. And it's been important for us to continue to dedicate time and effort to those while we rebuild and reconsider other sites. In terms of the reconsideration piece, we had over a hundred sites, as Iain mentioned, impacted, and we've selected just 10 that we need to get back online. And so far, we've got three sites that we've got reconsidered.
And the other seven, we've redeveloped, replatformed, and really reinvigorated with the hope that we can get them reconsidered by Google over the course of the next few months. But we do have a casino business, as I mentioned, with active sites performing well in key territory that we need to continue to nurture. So we think about this as a rebuild plan, building from a lower base, investing time and effort into those to meet the strategic priorities we've spoken about and driving that consumer experience. But to give you a flavor of that, so what's different about perhaps what we did in the past, we're now building out community aspects. We spent a lot of time in terms of the content, the editorial. We've made sure that we provide a lot more structure to the sites to create a more engaging experience for the consumer.
The objective being to get them to keep coming back to the brands that we operate and make sure that we really start to understand the behavior and therefore can create more lifetime value opportunities with those consumers as they interact with the brands that we operate. So it's been important for us to kind of reset the casino business with a view to then growing again, and we've spent significant time and effort in doing that. Now, let me talk about one of the opportunities. So as I mentioned, in terms of the strategic priority around portfolio, it was really important for us to get into high-growth markets that were regulated, that were in verticals that we had good experience with, and that were in territories that we felt had huge market potential.
I think everyone can agree that the U.S. demonstrates and ticks a lot of those boxes. This slide, I just want to give you a flavor of how we think about that opportunity and then what is our strategy to really go after this significant opportunity in itself. In 2018, there was $150 billion spent on sports betting in the U.S., albeit offshore, because at the time, there was no regulated market in the U.S. to support that activity. The federal government then allowed each individual state to then regulate and allow sports betting to exist. At the moment, there are nine states in which we are present where people can bet in a regulated environment. There'll be 34 by the end of 2022.
The key takeaway for this is that I think everyone is surprised at the speed at which each individual state is now regulating. That could be partly driven by COVID because the state governments need to generate more income. It could be generated by the appetite from the consumers themselves. It's part of the social and economic fabric of the U.S. to be so involved in sports, whether it's collegiate, high school, or professional. So there's this huge pent-up demand for engaging with sports. So when we think about this opportunity, we think about three areas that we need to have capabilities. We must have localized, owned, and operated websites that sit within each individual state and tap into the huge fan base that is available to us on that local level.
It's less about sports betting in that environment, and it's more about engaging the fan base and giving them opportunities to follow and support and to have fun with their team, but in addition to that, it's been crucial for us, we believe, to have a Pan-American brand that allows us to see the opportunity across the U.S. So although we can only monetize part of the traffic for that Pan-American brand, we will still get good data market intelligence on the other states through the interactions that we have with sports bettors at any given time, so two prongs of the three-pronged attack, one being local-owned and operated, the other being a Pan-American brand. The third, we believe, to be crucial to our strategy is to work with media companies who, again, engage with perhaps local fan bases or local teams and help them monetize their activity.
So they could be bloggers, they could be influencers, they could be news stations, they could be fan zones associated with a specific team. With our tools and our technology and our capability, we have the opportunity to help them monetize their audience and then get involved in this huge market potential that we see growing. So that's the three-pronged attack. And then just to give you some more detail and specifics on each of these, let me talk about the acquisitions that we've made. So in December of last year, we acquired CBWG. CBWG was a portfolio of sites that we've provided some details on here that operates on an owned and operated basis. It typifies that local fan base, that state focus that each of the sites have to tap into that local audience. And they've been hugely successful.
Largely speaking, we're very pleased with the progress that we've seen from this acquisition. They also ran a successful agency business, which is where they monetize third-party media sites. We're continuing to evolve this, and it complements very nicely one of the business units that we've run for a long time called Reef Media that operates in a similar fashion in Europe. We see this as a crucial acquisition for us last year that helps us in two of the areas that I spoke about earlier, owned and operated agency model that helps us get really good traction on a state-by-state basis. If you couple that with Sports Betting Dime, Sports Betting Dime we acquired in March, and it is a Pan-American brand that really targets bettors. It previously worked offshore.
We went through a significant process to make sure that we could bring it onshore into a regulated environment. We've seen incredibly high growth in terms of the traffic, and now we're working very hard to make sure that this gets monetized over time. As I mentioned earlier, it also gives us fantastic access and intelligence across the U.S. in how each of the individual states are performing and where the demand is likely to come from in the future. Clearly, the monetization opportunity only sits in the regulated states so far, but over time, this is naturally going to grow as more and more states regulate. The other thing to bear in mind on Sports Betting Dime is that it really was built for bettors.
So it offers really significant lifetime value with each of the consumers that we're interacting with by giving them tools, widgets, almost like an investor mindset, a suite of tools to support those bettors to make more informed decisions, getting them to come back time and time again. When they do that, we have the opportunity to perhaps introduce them to other products and services that we can then represent, creating that relationship with them on a regular basis. And Sports Betting Dime was set up to think in that way with various tools to be able to support it. So in summary, we laid out our agenda very clearly when myself and then Iain shortly after joined the business.
This focus on portfolio management, proactively thinking about where we want to be, where we want to play, and what perhaps we may get rid of in the future, as well as this quality over quantity where we can really engage with consumers, understand their behaviors, and then matchmake them with the correct product or service or future products and services as well. We are continuing to look at the organization and make sure it's fit for purpose to support our future vision. We think about the transformation we've gone through in three phases.
Phase one was 2020, where we really just had to clean up the business, make sure that we've made it right-sized for the opportunities we saw, get through COVID, address the casino opportunity that we foresaw, and then get into phase two, which is where we are now, where we're laying the platform, the technology, and the operating model to support the growth that we're now, the growth that is now available to us in the U.S., and I think we're doing a great job in that transformation, but we're not finished yet. We're still working through it. Casinos still represent an opportunity for us, and we're rationalizing and focusing our teams on making sure we maximize the returns that we get from the assets that we currently own.
And that's been a real voyage of discovery for us over the last 18 months, and I feel confident that we're going to start to see that business recover and rebuild from the lower base that we have today. What I'm most excited about, especially as an AIM-listed business, one of the few that has significant assets in the U.S. and significant scale, is the U.S. opportunity. It's fast-growing. It's probably faster than we all anticipated. There's a huge pent-up demand because we've seen this huge wave of offshore coming onshore. And we have some major assets that support the three-pronged attack that I spoke about earlier.
So off the back of all of those things, we believe that we're going to see a material revenue improvement in 2021, but as importantly, we'd have laid the foundations for future growth and gone through a significant transformation that will set us up for a very successful and sustainable growth trajectory. Thanks for your time. Looking forward to your questions.
Stuart, Iain, Kieran, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. But just while the company takes a few moments to review the questions that have been submitted during the meeting itself, I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet Company dashboard, and we will send you an email to notify you when they are ready for your review. I'd also like to remind you that your feedback is important to the company, and immediately after the presentation has ended, you'll be redirected to the opportunity to provide feedback in order that the company can better understand your views and expectations.
Stuart, Iain, Kieran, we received a number of questions before today's event from investors. We've got four. Perhaps before turning the floor to you, Kieran, I could start off with just asking these four pre-submitted questions. The first of which is, are the Google issues now substantially resolved, and are the two U.S. acquisitions sufficient to address the U.S. market? If so, will these positives outweigh potential headwinds from further U.K./European regulation?
So that's two for the price of one there, I guess. So let's answer the first one. Are we largely speaking through the casino? Yes, we're building from a lower base. As I mentioned during the presentation, we are absolutely focusing our time and effort on the resources, our resources on the sites that are ranked, performing well, and we look to increase the yield or performance or productivity of those sites from the base that we now operate from. Secondly, have we got enough assets in the U.S.? The answer is no. It's a huge market opportunity. And as I mentioned, there's only nine states currently that are regulated that we operate in.
As the states grow, I believe it will be necessary for us to continue to acquire specifically on an owned and operated basis locally to continue to allow us to address the market opportunity that then is evolving in front of us. We would also consider looking at other larger assets, Pan-American assets that maybe tie into slightly different audiences to complement the assets we've got today. So we're definitely not over in terms of acquisition, but the most immediate opportunities would be what we call tuck-in ones that would allow us to address that localized opportunity that I spoke about before.
Thank you. The next question that was pre-submitted reads as follows: The two U.S. acquisitions have resulted in significant dilution for private shareholders. Is it expected that earnings enhancements from the acquisitions will be sufficient to compensate for this dilution in the short and medium term?
So the quick answer to that is we obviously hope so. Also, I think it is important to point out that all previous shareholders were given the opportunity to participate in an open offer that we made as part of the equity roadshow. So there was an opportunity for private investors to hold their corner. So yeah, we absolutely expect these acquisitions to be earnings accretive. But hopefully, a lot of the people did actually, well, we know a lot of the people took up the open offer because we were massively oversubscribed, so.
Thank you very much. The next question, somewhat open-ended, but the question reads, how will the business look in three years' time?
I think there's the two strategic priorities that I spoke about earlier, and then there's a third that I'll speak about now. As I mentioned, high-quality assets, so a performance publishing business that focuses on the consumer experience, creating stickiness with the consumer through editorial content, good marketing and interactions with that consumer, and then a balanced portfolio of assets that allows us to go after growth opportunities while having a sustainable revenue stream. If I complement that further with just to unpick the piece that I kind of spoke about earlier, 2021 is about us laying the foundations and creating a technology platform that allows us to look at either enhancing the assets we have in existing verticals and territories or perhaps broadening further.
So I would anticipate us to be playing more in additional verticals in the future that all have similarities to the ones that we operate in today. So high content, good editorial, and more stickiness for that. So three years' time, continued sustainable growth to get to that point, strong technology platform that adds immediate value to any of the acquisitions that we make, and then present in multiple verticals to de-risk any particular overemphasis on one. And also a continued evolution of our opportunity to make money from different business models.
That's great. And then the final pre-submitted question reads, Premier has built up a 28% equity interest pretty much since Stuart Sims arrived in the second half of 2019. Does he have a personal relationship with them, and do we know what their intentions are?
So, no, I don't have. I didn't know them before I joined the company. We do speak to them on a regular basis like we do with every major shareholder. And we've been very lucky to have the level of support from them over the course of my tenure. They do invest in this kind of stock, so they are a very savvy investor when it comes to this particular vertical. And therefore, that's why I can't speak for them, but I assume that because of their knowledge, they see us as an undervalued stock that they should be investing further in.
That's great. Thank you very much. Let that take care of the pre-submitted questions. Obviously, investors have had the opportunity to submit questions throughout the presentation. Kieran, you'll find those obviously in that Q&A tab on your right-hand side of the slides. If I could hand back to you, Kieran, perhaps if I could ask you to read out the question, who it's from, and where appropriate, direct accordingly.
Thank you, Mark. What I'm finding with the questions, of course, is that they're settling into certain category areas. So to get the best use of time, I'm going to basket one or two together, make sure we hit the key themes. Google clearly is a theme, Stuart. Maybe I'll throw to you. There are a few questions there. One, timeframe for getting the remaining websites potentially reconsidered. Two, why we're having the problems we're having getting those websites reconsidered. And three, do we feel we've been treated harshly or fairly by Google?
So firstly, in terms of timescales, it's very hard to predict. We're disappointed not to have got all sites reconsidered by now because of the level of time, effort, and resources that we've put into getting them to what we believe to be a suitable quality level. There's no fixed process for going through reconsideration with Google, but there are and is significant resources available to understand what Google is looking for, whether it's the EAT analogy they talk about, which is expertise, authority, and trust, or whether it's your money, your life. There's a number of things that Google publishes, all of which we have utilized to bring those assets up to the best quality that we possibly can.
Unfortunately, there is no fixed timeline, but one thing to bear in mind that is incredibly important is that even if we do get them reconsidered, they still represent less than 3% of our revenue. So I guess this is what we were trying to do as part of this result, is to reset expectations to a lower revenue base with a view to us then communicating and talking through how we're rebuilding our casino assets and business over the next few months and years.
Thank you, Stuart. Forecasts, again, a few questions on the same theme of forecasts. The questions are very similar. We have no direct guidance in the market, which is not forming a consensus. Have we got intentions to fix that? And if we do, do we have any idea of timing to get some forecasts in the market?
Yeah, I'll take that one. So yeah, clearly, we're very, very conscious that we haven't got numbers in the market at the moment. We know it makes life difficult for investors, but there's a lot of good reasons for that. As we've sort of heard, we have been fundamentally transforming this business over the last 12 months, and we continue to do so. I mean, this transformation to the end state will probably take us another 12-18 months. So we've got lots and lots of moving parts. Phase one really culminated with us acquiring the two U.S. businesses. So now we know that we have those businesses. Clearly, we need just a little bit of time to assess the potential from those two assets.
But I can tell investors that we absolutely plan to put numbers back into the market, and it won't be in the not-too-distant future. So yeah, bear with us.
Thank you, Iain. Maybe another one if you could take on SBD. Revenue potential for SBD, obviously, it's come from offshore to onshore. We shared some historics from its offshore life. What do we think in terms of revenue potential for SBD?
Yeah. So clearly, again, we've got no forward-looking numbers in the market, but just to give people a sort of expectation of how we hope that SBD will ramp up. Clearly, offshore, SBD was able to target the entire American population. Now it's gone onshore. It's cleansed. It is only able to monetize in those states that have regulated or where we have licenses. So currently, that's nine of the U.S. states, but this is the big opportunity in the U.S. We expect that nine states to rise to probably 34 by the end of 2022. So obviously, yeah, it's a sort of exponential hope in terms of the rise, yeah, rise of traffic, rise of conversions, and the growth in that business area. So we're delighted with the acquisition because it is our first pan-American acquisition.
And then add that in with the CBWG acquisition that we did in December, which is very targeted on Pennsylvania, Philadelphia, and some other sort of specific areas. Yeah, we have huge hopes for the growth in that area as the whole sector comes online.
Just another thing to add to that. The more scale you have with regards to accessing audiences, the higher the cost per acquisition you get from the operators. So one of the things that the combination of SBD plus CBWG plus some of our existing assets gives us is we've actually seen a rise in CPA across the board because of that scale that we now have with our assets. And that, for SBD, it is higher CPAs than they would have experienced when they were working offshore previously. So just a quick point of note there.
Thank you, Stuart. Thank you, Iain. On US sports and SBD, and I'm going to broaden this question. It says, given that US sports is a hot area, how important is it to retain the key people? I think players, but they mean key people in the US acquisitions. Maybe, Stuart, you could take that and expand that to the personal finance assets as well because we need to remind our audience of how important those assets are too. So how important is it to retain people in those organizations?
Yeah. So it has been, and I think we've done a great job in actually retaining the staff on both of the acquisitions that we did. There was a clear alignment between the founders in CBWG and the trajectory that we were on as XLMedia. And like any of these acquisitions, they had a significant amount of people trying to talk to them and acquire them at the same time. So there was really good chemistry with us and both founders. With SBD, it was slightly different. We had, as part of the closing process, the CEO at the time left, but predominantly the main team with SBD stayed. And that means that we've got really great access to content, editorial, technology, and a real deep know-how of the sports market and the sports industry with those two acquisitions.
And then to your point, Kieran, to broaden that more, when we think about that quality over quantity priority that we have, it was incredibly important for us to have good synergies from a kind of shared service point of view between both our financial services business and then also our sports business. They share a lot of commonalities in how they operate. As I said earlier, content, editorial, strategy, site structure. The systems that support those assets are very similar with both. So we see some synergies there in the longer term as well. And the other thing we've done is we've dramatically increased the headcount in the U.S. to be able to support the growth that we see in both of those verticals. And that's been crucial also to the work that we're doing this year on the continued transformation of the business.
Thank you. Question from Simon Jean, and you could again possibly expand this to sort of cookies as well. Does the new Apple restrictions recently announced impact XLM's ability to optimize targeting and positioning, and if so, to what extent?
So yeah, I'll ask this question a lot, actually. So I'll broaden it slightly away from just Apple. I mean, clearly, there's a number of market dynamics that affect performance marketing in general, whether it's the work that Google's done, GDPR, or Apple. Now, one of the things that people need to understand is that a lot of the data that we have access to is first-party data, and we get that from the trackers that are on our site. So that's not influenced at all by Apple or others. That's our own data, our own trackers that give us the behavioral understanding of the consumers that come onto our site.
A lot of the kind of dynamics I spoke about earlier, like GDPR and cookies, relate to more programmatic advertising where the adverts chase you around the internet, which has caused great consternation both with consumers and then also some of the brands that are using that as a marketing channel. So in some ways, it could be argued that affiliate, which has been around a long time, becomes more important in that environment because of the data that we get from consumers when they're on our site and what they're registering with us for. So SBD is a great example. It has a large community of consumers that sign up for newsletters, that interact on a regular basis with their tools, and utilize their apps.
All of that data is available to us to really understand the consumer, what they're looking for, and what other products and services could be relevant to them, so in some ways, I think affiliate is becoming more important to the brands, the operators that we work with today, and the financial institutions, rather than less important, and I think that positions performance publishing, the category we sit in, even more in the future to be a key marketing channel for the customers that we represent.
Thank you, Stuart. Again, I'll put a couple of questions together. Michael R., can you update us on the sale of the Finnish assets? And also from Natalie V., Finnish assets provide an update. And also asking about potential further development in Europe, maybe investing in some regulated markets such as the Netherlands as an example.
Can you take that?
So I guess it's a broad portfolio question with specifically the Finnish assets and where we are on that.
Yeah, absolutely. So yeah, an early stage of the transformation last year, shortly after Stuart and I joined, and obviously, we were weighing up the options that we had to us in terms of diversifying the portfolio sort of well in advance of nailing these U.S. acquisitions. We were looking at ways, potential ways of perhaps monetizing some of the assets that we had got. We put a general sale mandate out for a number of our Finnish assets, and we got a lot of interest. But as you can imagine, the valuations perhaps weren't quite as strong as we would have liked because for a number of those sites, they were offline as part of this Google deranking situation. So we took the opportunity at the time to sort of halt that sale process. Would we look at potential sale of casino assets in the future?
Yeah, we potentially may do, yeah, but as part of the overall strategy for our business, so yeah, I think as we look to diversify into new business units that Stuart's talked about in the future, we'll obviously look at deploying the capital that we've got both on our balance sheet and through our intangible assets to the max, and if it's the right thing to do at the right time, yeah, we would consider selling some of those assets,
so I think the crucial thing there is proactive portfolio management that's tied to each individual asset lifecycle, and so when we talk about portfolio, we talk about making sure we've got a really nice balance of assets that are playing in different stages of a territory or a vertical's evolution.
And so it's natural when you kind of look at all of your assets and you plot their lifecycle and where they are at the various stages of that lifecycle for us to then consider, well, is there any more we could do with that, or are they more valuable to other people to allow us to then invest in the areas where we see significant growth? And that's a core capability that we're building within XLMedia that perhaps we didn't have in the past. In the past, we wanted to accumulate as many sites as we possibly could. Now we're being a lot more selective about where we want to operate, how we want to support those operations.
And as the question indicated, we are looking at deploying a lot more resources into the regulated markets, the reasoning being that we believe that gives us a more sustainable and cleaner revenue stream in the long term. In terms of investment, and I think that was the other angle to this question, the U.S. is absolutely where we're focusing time and effort at the moment. The board four years ago or so indicated it was the territory that we really wanted to crack. We went there with financial services and did a good job. We're now complementing that with sports, and we look for further acquisitions in the U.S. That's not saying we're not considering other opportunities in Europe.
It's just this year our priority is to really go after the U.S., plus also look at potential tech that can help us in increasing the yield on our existing assets. That's also crucial to me. When I think about this quality over quantity, it's important to drive as much productivity and yield or efficiency from the sites we operate today, both now and in the future. And to do that, we need to embrace technology to help and support that improved efficiency. So that's a key focus for us as well.
Thank you, Stuart. Again, theme on CPA versus RevShare. So a couple of questions touching on that. One from Tushar Hitch: Is CPA preferred to RevShare? And then one from Andreas Hitch: Given the shift from RevShare to CPA, the sort of revenue implications and how that CPA flows through to revenue, you might touch on.
Yeah. So the shift to CPA is largely driven by reliance on financial services, which is all CPA or CPL, which is cost per lead. So we get paid for generating leads or providing some kind of introduction that ends up in a monetizable event. Also by U.S. sports, it's predominantly CPA at the moment, with probably a move to revenue share in the future. And then even in Europe, in our more traditional markets, we're seeing more hybrid deals where we get paid a fixed fee plus either a CPA or a revenue share.
So when we're seeing the shift from previously revenue share to CPA, the real difference for us from an operating standpoint is that when you do a revenue share, and that's your predominant business model, you basically want to send as much traffic as possible across to the operator concerned to then try to get as much upside from the revenue share as you possibly can. But quite often, we were flying blind without really understanding what happened after we'd made that introduction from a lifetime value point of view. If you then fast forward to now, where we've done, I think, a good job in starting to identify what data requirements we need to be successful in the future.
When we think about CPA as being our predominant business model going forward, then it's really important for us to understand the data that is available to us to start to make more informed decisions on the value of the consumers that we are seeing on our sites. To do that, we need to look at what was the lifetime value, perhaps historically, what's the behavioral analysis of what the consumer does after we've made the introduction, and what's the true value of that consumer in the product or the service that we've introduced that consumer to.
So it's a real shift towards becoming a lot more intelligent about how we're thinking about the consumers that we're introducing, and then using our first-party data a lot more effectively to kind of matchmake the right consumer to the right product or service to increase the potential revenue for us as a consequence, whilst also still recognizing that the consumer experience has to remain key. Otherwise, the consumer is never going to come back to you in the future. So there's a real shift in how we behave, a real shift in our needs from an operating standpoint to rely more upon technology, and then a real need for us to embrace data as being the fuel to give us the intelligence we need to make informed decisions about our business model selection.
We've got a couple of questions together on OpEx. Stephen P.: OpEx was up 10% in 2020. What should we expect for this year? Same question, re-headcount. And if I just put another one on a similar topic, from Tushar Hitch: Can we expect further rationalization of the cost base? Maybe throw that to Iain.
Yeah, I think, again, clearly, it relates to having numbers in the market. We haven't got numbers in the market at the moment, so I have to be a little careful what I say. I think the way you should look at this is clearly the cost base is going to go up because we've just made two acquisitions. So we have the cost of those people, those businesses coming on board. But actually, the underlying business you should see is stable right now in terms of, will you see significant growth? No. Will there be further rationalization? Yes, as we continually adapt both our people and our technology and our infrastructure. So yeah, absolutely, we are. Cost is a huge thing for us. I mean, we're continually looking to rationalize things. But I think an important part here is we are going to have more transformation spend this year.
So as I said earlier, we completed phase one of the transformation. We had to get the US acquisitions done to move into phase two, and we now do need to spend some money on internal technology as much as anything, making sure that we've got scaled platforms for all the growth that we're expecting in the US. And that's not going to be, we're not talking double-digit millions here. We're talking reasonable investment in the future, but with that, will come the opportunity to rationalize our workforce, but also scale ourselves for future growth, so you should expect a little bit more investment cost this year, but investment for the future.
Super. A very specific question. We'll get off to Stuart. In May 2020, from Natalie V., in May 2020, you announced the appointment of Sarah Clark as Chief Operating Officer. It seems Ms. Clark is no longer part of the company. Can you confirm whether she's left, and if yes, do you plan to hire a new COO?
Yes. So Sarah left the business in Q4 of last year and helped perform the first phase of the transformation, which resulted in the reduction of the 80-plus people last year. So she did exit the business at the tail end. We are not likely to move to having a COO. We also, as part of that transformation and evaluation of the business, we look to move towards a slightly different model where we put Ken Dorward. We recruited Ken to run our U.S. business, and he's been largely responsible for building up our financial services business and then also in charge of building out the sports, having gotten two acquisitions across the line and building the pipeline there, and also growing the team and the synergies in the U.S. And then Inbal, who came from our business in Europe to run the European assets.
So they both have operational capabilities within their teams. So there's no plans to recruit a COO anytime soon.
Thanks, Stuart. Another question from Natalie V. was maybe you can use to expand on the three As. XLMedia's competitors consider new depositing customers to be an important key performance indicator. Why doesn't the company also report this metric?
Yeah, I think that's a crucial point. So when we think about the business, and this is something I want to be a lot more transparent on in the future, and I think that's not a bad KPI, but I'll kind of elaborate on perhaps a KPI that I use a bit more that I believe to be more effective. But we think about our business as the three As: acquire, activate, and activation. And each one of them has different KPIs to support that. So when we think about acquisition, I think, are we ranking well in the key sites, in the key territories, in the key verticals that we need to get a good market share of traffic? And the way that we measure that basically could be external tools that help us see where we are from a ranking standpoint.
The other metric I use for acquisition is, well, are our impressions growing or shrinking? So when I look at our financial services business in the U.S., it continued to grow throughout last year and gave me a good sense that the content and the structure and the strategy that we had for financial services was in good shape. So that's the other thing. I look at impressions in terms of users and things like that. Then when we look at activation, so once I've got a consumer onto our site, I then care about things like, are they spending time on the site? Can I behaviorally understand them? But the KPIs that are most important are the two phases to conversion. The first conversion is, am I getting consumers?
Am I activating a consumer in some way to send them across to a product or service that they're interested in? That could be introducing them for a credit card to Capital One in the U.S. for Money Under 30. That's the first conversion rate that I look at. Then the second one, the second step to that is, has that consumer been accepted for the credit card and therefore will we get paid? There's two phases to the activation piece. One, are we making introductions? Two, what is the quality of those introductions and can they then monetize? The third thing we look at as a business is the activity. Once we've made that introduction, can we see how that consumer is performing? Let's say that they've signed up with Ladbrokes or William Hill. How much are they depositing?
How actively are they involved in that product or service? And that can give us an indication in terms of their value. So the three A's is kind of holistically how we look at our scorecard for the business, and you should expect us to share some of the metrics to support that. But the bit that I'm really interested in is, what is our efficiency? Now, we don't publish these today, but I would anticipate trying to share some of these in the future. And that is things like, what is our revenue per impression? How many players are we generating per impression? And is that growing or is that reducing? Because they allow us to then look at all across the three A's and say, are we becoming better or worse at what we're meant to be doing?
So that's the kind of KPIs that we've started to track internally. And that's the kind of KPIs I would expect us to give more transparency on in the future, especially as it relates to, and it's a nice way of telling people whether or not we're increasing or decreasing our efficiency as a company.
Thank you, Stuart. So we're getting tight on time. So I'm going to finish with two questions, and I'll pre-warn you, Stuart, on the second one to give you time to prepare, which is the sort of main reasons why someone should think about getting excited by XLM's prospects in the future and why they might invest. So I'll leave you to think about that for a second while Iain from Giovanni D. First of all, thank you very much for what you've done in 2020. The question relates to strategy. In the past, XLM was drowning in cash, which it spent on not-so-great acquisitions, dividends, and ultimately buyback. This year, you had to raise money. In the near future, do you see the company being able to grow off its own means, internally generated cash flow?
Dividends and buybacks don't seem a great idea for a fast-growing company like XLMedia. I'd rather keep the cash on the balance sheet and redeploy when optimal opportunities arise. What is your view on capital allocation? Sorry, very long way of getting to the last question. What is your view on capital allocation?
Yeah, I think I agree with the surmise on that, but I think it's very difficult for Stuart and I to comment on the way that the business invested in the past. I think, unfortunately, if you followed our results last year, you'll note we did a huge impairment write-down last year, which covered an awful lot of assets impacted by the Google de-ranking, but also assets that had not been bought particularly long before. So I think it was a sort of set of unfortunate circumstances. But this is the evolving business model, and this is the need to focus on these quality sites, these 60-100 sites that we're now going to focus on going forward. I absolutely agree. So the equity raise this year was something we considered alongside the other options. I touched on potentially selling assets earlier. We looked at debt opportunities as well.
But actually, in the end, equity seemed to be the best way of bringing the capital we needed for the SBD acquisition in-house. And I think it was our sort of first foray into that market was heavily, heavily oversubscribed. So we actually took a little bit more. We took GBP 27 million worth of proceeds in the end. That's left us with clearly a nice amount of cash still on the balance sheet, $38 million that we put in the business. So yeah, we absolutely will watch that very carefully. We will look after it very carefully, and we intend to use it for sort of future tuck-in acquisitions, as Stuart's already alluded to. I think you can take it as read. It's unlikely we'll be changing the dividend policy anytime soon because we do see ourselves as being in an investment mode at least for the next 12 months.
But I think, yeah, we will absolutely deploy that capital on further tuck-in acquisitions and investment for the future.
Thanks, Iain. And Stuart, the one I let you prepare for. John A, for those who don't really know the business until now, extra clear, please could you give us three to five key reasons why I should consider investing in you?
Firstly, as many of you will probably know, I invested in the business when I joined. The reason why I joined the business was I was really excited about running a B2C business that was cash-generative, operated in a number of verticals that had the potential for high growth, worked with a bias towards search engine optimization, which means that you create an arbitrage between capturing consumers and then making money from either a rev share or a CPA, and had the potential to go through a significant phase of growth if we could wrestle the kind of industrialization of the business or making it a more corporate business over the time. Largely speaking, that still stays true with me today, that the reason why I joined still excites me about the opportunity that we've got.
We've really started to implement and transform the business to give us that platform for growth. The verticals we operate in, whether it's financial services or sports, give us huge growth potential, and we're now reaching a point where we've got some really nice scale already, and we can identify further assets, as Iain mentioned, to support that, to grow faster in the future, and even if we just stick with what we've got, as you look at that rollout of states regulating and growing from nine to 34 in the next couple of years, we're going to get some really nice natural growth on those assets that we own and operate today, so for me, that growth path is clear.
And then when we think about it from an industry standpoint, I believe affiliate marketing or performance publishing, as we're kind of rebranding it, is here to stay for all of the reasons that we spoke about with regards to the changes in cookie and programmatic display advertising. Affiliates remain an incredibly important channel for the partners and the customers that we represent, and I don't think that's going to change. I do think it's going to evolve to include a lot more reliance upon first-party data and technology to support improved levels of performance and yields from what we do. But I don't think the affiliate industry is going away. In fact, I think it's going to become, it's going to grow even faster as more products and services get pushed through the site. So I'm hugely excited about the industry.
I'm hugely excited about the verticals we're operating in. I'm very proud of the work that we've done in securing some great assets in the U.S. to complement our existing business. And I remain incredibly optimistic about our long-term prospects, bearing in mind I'm familiar with the transformation that we're on. So hopefully that gives you a flavor of why I'm excited and why I invested as well as run the business.
Thank you, Stuart. I think on that high finish, I'm going to send it back over to Mark to wrap up.
That's great. Thank you very much indeed to both Kieran and Stuart and to Iain for being so generous with your time with that Q&A. And also, thank you to all those investors that took the time to both pre-submit questions and submit questions during the event. Now, Stuart, I know investor feedback is important to the company, and we will shortly redirect investors to give you their views and expectations. But before doing so, perhaps I could ask you for a few closing remarks, and then I will take the floor back and other investors.
Yeah, I just want to thank you all for participating. It's my first one, actually, and I've really enjoyed it. I think the questions have been really interesting and very stimulating. So thank you for some thought-provoking questions, and hopefully we answered them adequately. Looking forward to continue with this type of forum and giving people as much transparency as possible on the business. As I mentioned, we're very optimistic about the future, and we look forward to giving you further announcements and information in due course. But hope you enjoyed it. And as we said, very keen to get your feedback and stay involved. Thank you.
Thank you once again to Stuart, Iain, and to Kieran. Could I please ask investors not to close the session? As usual, you'll now be redirected for the opportunity to provide your feedback. If you access this meeting from the platform, then you'll be simply asked to provide your feedback. However, if you logged in using the link we sent you by email, you'll simply be asked to just log back in to submit your feedback. But as I said before, I think that'd be greatly appreciated by the company. On behalf of the management team of XLMedia, we'd like to thank you very much for your time today. That now concludes today's session. Good afternoon to you all. Thank you once again.