Dianomi warns on profits amid global advertising slowdown

Business, finance and lifestyle digital advertising provider Dianomi said in an update on Tuesday that revenue for the year is expected to be in line with last year, although a global slowdown in activity led to a warning on profits.

The AIM-traded firm said Goldman Sachs, Porsche and Ameriprise all became advertisers on its platform in the 12 months ending 31 December.

Distribution of ads was supported by its “deep partnerships” with premium publishers globally, as it worked with 387 publishers, including those accessed programmatically.

The company said the average spend for its top 100 advertisers was at similar levels to 2021, despite newsletter spend decreasing “significantly” as it highlighted in its half-year results.

New advertiser spend in the second half had not grown as anticipated, however, with changes in the economic and political landscape over the course of 2022 creating a general slowdown.

While revenues were expected to be in line with 2021 levels, the decrease in gross margin as Dianomi flagged on 21 September, alongside its investment in developing its talent base to support future growth, meant that adjusted EBITDA was set to be lower than consensus market expectations, at about half of 2021 levels.

Unaudited cash as at 30 November remained “strong”, the board said, at £10.8m.

The firm said the strength of its proposition for both advertisers and publishers remained unchanged, adding that the investment made in new talent, which expanded its sales and engineering capabilities, was “key” to the roll-out of Dianomi's contextually-led, programmatically-enabled platform, and an “important driver” for future growth.

Dianomi said the platform had been trialled by Porsche and Morgan Stanley, with initial results from both said to be “positive”, with programmatic revenues expected to build in 2023.

Macroeconomic headwinds and privacy legislation had caused short-term industry digital ad spending forecasts to be lowered from those published in March.

However, the board said total digital ad spend in the United States was still forecast to grow in 2023 and beyond, adding that privacy changes including the deprecation of cookies were set to benefit the group, given Dianomi's “premium” positioning, the “quality” of its inventory, the “transparency” of its performance, and its contextual platform.

“The group remains well placed for future growth, with strong cash generation and a robust balance sheet,” said chief executive officer Rupert Hodson.

“Though we are disappointed that the growth originally forecast for this year has not materialised, we are encouraged by the stickiness of both our advertiser and publisher base and the new names which have joined our platform this year.

“The market environment is challenging, but we are confident that the quality of our platform as well as its contextual nature will prove to be an advantage in light of the expected changes in privacy legislation.”

Hodson said that furthermore, the roll-out of the company’s programmatic capabilities provided further opportunity for growth next year and beyond.

“Alongside this, our investment in talent is for the long-term.

“Despite macroeconomic headwinds, digital advertising remains a growth sector, Dianomi is a leader in its chosen markets, and we are very focused on further expanding our share.”

At 1334 GMT, shares in Dianomi were down 14.17% at 109p.

Reporting by Josh White for Sharecast.com.