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LBG Media, the digital publisher behind popular brands LadBible and Betches, has issued its second profit warning in less than two months.

The company attributes this to slumping search traffic, a trend increasingly linked to the broader shift towards artificial intelligence (AI).

Following the announcement, shares in the Manchester-based publisher plunged by over 40 per cent in early Tuesday trading, before recovering slightly to settle around 22 per cent lower.

The firm’s latest financial update revealed a sharp 41 per cent decline in “indirect revenues” – those generated from its own websites and social media revenue-sharing agreements – for the six months ending 31 March.

This significantly impacted performance, leading to pre-tax profits plummeting by 79 per cent to just £1.8 million, with underlying earnings also falling 34 per cent to £8 million.

This occurred despite a more positive note of direct revenues almost doubling to £37.6 million during the same period.

This latest warning follows an initial alert in April, which had already seen annual profit expectations lowered to £22 million. LBG Media now anticipates underlying earnings to come in even lower, projecting a range of between £15 million and £20 million.

Furthermore, its sales outlook has been cut to between £100 million and £107 million, a reduction from the £110 million guidance provided in April.

This challenging environment for the publisher mirrors a wider industry trend, as media firms grapple with a sharp drop-off in search traffic, partly exacerbated by Facebook’s algorithm changes that have deprioritised news links across its platform.

This has been compounded recently by the switch to AI over traditional web searches, with Google launching its AI Overviews summary at the top of results, which means far fewer click-throughs to publishers’ online content.

LBG Group chief executive Solly Solomou said: “While our strategy to drive repeatable revenue growth is making good progress – with our direct revenue streams almost doubling in the first half – our indirect business was hit harder than expected.

“As a result, we have lowered our forecasts for 2025-26 and made changes to stabilise our web business, alongside our steps to capture the further opportunity in our direct markets.”

But he said the group was pivoting towards “long-term value” with a focus on boosting direct revenues, while also taking action to cut costs, put in place new leadership and use AI to help improve processes and take a data-driven approach.

Mr Solomou said: “LBG Media’s planned shift to more predictable direct revenues with greater visibility on earnings is accelerating.

“We are seeing an increasing share of wallet from large blue-chip clients, who see our relevant and engaging content on premium digital platforms as an effective way to reach young adults.”