Digitalbox highlights strengthening of digital advertising market at end of third quarter

Digitalbox PLC (LON:DBOX) said the digital advertising market had “strengthened” towards the end of its third quarter, translating into “better than predicted session values” on its Entertainment Daily website.

In a trading update, the digital media firm, which also owns the Daily Mash and The Tab websites, said this market improvement, which followed a “difficult” second quarter and “unpredictable” trading across the year, had continued during August and September, helping to mitigate what the company said was a “market-wide algorithm change that negatively impacted social media traffic in the lead up to the 2020 US elections”.

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Digitalbox said its audience model was “working well” before this change, with traffic volumes starting to recover in October and November, although the algorithm alteration had influenced half-year volumes most significantly on Entertainment Daily.

Although traffic levels are now increasing month-on-month, Digitalbox said the third quarter is “not now expected to be sufficiently strong to enable the company to meet current market expectations for revenue and profits”.

Despite this, the company said revenues and profits for its second half will be stronger than the first and that it still expects to be profitable and cash generative for the full year.

Digitalbox also said the integration of The Tab into its operating model following its acquisition in October is “progressing well” and that revenues for the site in October and November have been “ahead of initial expectations”. Meanwhile, Entertainment Daily is continuing to see traffic return and has “more than doubled” its Google traffic in 2020 while the Daily Mash “continues to show stability”.

The firm noted that it has net cash of GBP1.1mln and “remains in a strong position to benefit as the ad market recovers into 2021 with increased digital advertising spend through mobile devices”.

Digitalbox shares were 18.4% lower at 5.5p in early deals on Thursday.