Business
Contract Amendment
Contract Amendment.
About this update from Dianomi Plc
[{"type":"text","content":"\n\n20 September 2023\nDianomi plc\n(\"Dianomi\", the \"Company\" or the \"Group\")\nContract Amendment\n \nDianomi, a leading provider of native digital advertising services to premium clients in the Business, Finance and Lifestyle sectors, announces that it has agreed a contract amendment with one of its largest and longest standing publisher partners, for whom it provides exclusive content recommendations.\nAt the end of 2022 Dianomi entered into a contract renewal with a monthly guaranteed payment by Dianomi based on publisher minimum guaranteed traffic levels (the \"Agreement\"). As has been widely reported, in the year to date, traffic volumes have been significantly lower across all media, such that the publisher minimum traffic levels in the six months to 30 June 2023 were not met, resulting in an overpayment by Dianomi to the publisher of $1 million (\"overpayment\") for the period which was due to be recouped in the second half of the year.\nFollowing discussions, the Company and the publisher have entered into an amendment to the Agreement (the \"Amendment\") whereby Dianomi has agreed not to recoup the overpayment, in return for which the publisher will provide Dianomi with an enhanced revenue share as from 1 July 2023 and, in addition to its existing permanent ad units, will provide Dianomi with additional premium ad inventory, including a new in-article unit. The Company will recognise the one-off overpayment as an additional cost of sale in H1.\nThe new ad inventory and enhanced revenue share will allow Dianomi to generate additional revenue and margin which is expected to at least offset the one-off additional cost of sale over the next 12 to 18 months.\nThe Amendment is expected to increase revenue and profitability in the second half of the current financial year and beyond. However, for the six months to 30 June 2023, it will result in a lower gross margin and an increased loss at adjusted EBITDA* level of £1.0 million (loss of £0.2 million before the Amendment). The Company expects to be profitable at an adjusted EBITDA* level in the second half of the current financial year.\nThere will be a short-term impact on cash of c.£0.5 million in the current financial year which will unwind during 2024. Without the Amendment, the business is trading in line with the update the Company published on 17 July 2023 (...