Generated record Q2 Contribution ex-TAC, programmatic revenue and CTV revenue
Achieved 27% year-over-year Adjusted EBITDA growth in Q2 2024 while expanding Adjusted EBITDA Margin as a percentage of Contribution ex-TAC to 32% from 26% in Q2 2023
Reaffirming full year 2024 Contribution ex-TAC and Adjusted EBITDA guidance
Launched $50 million Ordinary Share repurchase program and fully repaid the Company's outstanding long-term debt in Q2 2024
NEW YORK, Aug. 22, 2024 (GLOBE NEWSWIRE) -- Nexxen International Ltd. (AIM/NASDAQ:NEXN) ("Nexxen" or the "Company"), a global, flexible advertising technology platform with deep expertise in data and advanced TV, announced today its financial results for the three and six months ended June 30, 2024.
Q2 2024 Financial Highlights
Record Q2 Contribution ex-TAC of $83.1 million, up 4% year-over-year
Record Q2 programmatic revenue of $78.6 million, up 3% year-over-year
Record Q2 CTV revenue of $28.2 million, up 14% year-over-year
CTV revenue reflected 36% of programmatic revenue, up from 32% in Q2 2023
Programmatic revenue reflected 89% of revenue, compared to 91% in Q2 2023
Adjusted EBITDA of $26.8 million, up 27% year-over-year, representing a 32% Adjusted EBITDA Margin on a Contribution ex-TAC basis (30% on a revenue basis), compared to 26% (25% on a revenue basis) in Q2 2023
Video revenue reflected 74% of programmatic revenue, up from 71% in Q2 2023
$151.9 million net cash as of June 30, 2024, alongside $90 million undrawn on the Company's revolving credit facility
Completed $20 million Ordinary Share repurchase program and launched new $50 million Ordinary Share repurchase program
Fully repaid the Company's outstanding $100 million long-term debt
H1 2024 Financial Highlights
Record H1 Contribution ex-TAC of $152.8 million, up 4% year-over-year
Record H1 programmatic revenue of $144.2 million, up 4% year-over-year
Record H1 CTV revenue of $47.0 million, up 2% year-over-year
CTV revenue reflected 33% of programmatic revenue in H1 2024 and H1 2023
Programmatic revenue reflected 88% of revenue, compared to 89% in H1 2023
Adjusted EBITDA of $38.7 million, up 29% year-over-year, representing a 25% Adjusted EBITDA Margin on a Contribution ex-TAC basis (24% on a revenue basis), compared to 20% (19% on a revenue basis) in H1 2023
Video revenue reflected 70% of programmatic revenue, compared to 73% in H1 2023
"In the second quarter we generated record Q2 Contribution ex-TAC, programmatic revenue and CTV revenue while increasing Adjusted EBITDA by 27% year-over-year, benefitting from increased momentum post-rebrand, better sales execution, scaling CTV partnerships and improved market conditions," said Ofer Druker, Chief Executive Officer of Nexxen. "Following the completed integration of Amobee, we've excitingly returned to our product innovation roots, launching Nexxen Data Platform, which has already been adopted by several important partners and unlocked new data licensing and commerce media opportunities. Our platform's differentiated products are enabling customers to maximize reach, returns and efficiency, while also generating growing multi-solution partnership traction with industry leaders. We are confident in our positioning to accelerate growth and long-term market share gains and are pleased to reaffirm our full year guidance."
Financial Guidance
Nexxen reaffirms its previous financial guidance for the full year 2024:
Full year 2024 Contribution ex-TAC in a range of approximately $340 - $345 million
Full year 2024 Adjusted EBITDA of approximately $100 million
Full year 2024 programmatic revenue to reflect approximately 90% of full year 2024 revenue
Management anticipates increased Contribution ex-TAC, programmatic revenue and Adjusted EBITDA, as well as Adjusted EBITDA Margin expansion in H2 2024 vs. H1 2024 and H2 2023, driven by enhanced sales execution and recently launched partnerships scaling.
Management remains confident the Company will achieve CTV revenue growth for full year 2024 vs. full year 2023, with acceleration anticipated in H2 2024 vs. H1 2024 and H2 2023, driven by a broader customer shift into its premium suite of CTV solutions, and increasing CTV revenue related to its partnership with Alphonso and LG Electronics.
Management believes the Nexxen Data Platform launch positions the Company to achieve data licensing revenue growth in full year 2024 vs. full year 2023, with further acceleration expected in 2025.
Management believes the Company's robust suite of technology and data offerings reflect a core advantage and differentiator for Nexxen. To expand upon its advantage, and further enhance its capabilities, management has begun accelerating Nexxen's investment in product innovation, and expanded the Company's generative AI and machine learning utilization. Management expects generative AI to reflect an important product investment focus in 2025.
Operational Highlights
Launched Nexxen Data Platform and unified identity graph, enabling clients to securely and directly onboard first-party customer data and enrich it through Nexxen's robust and differentiated data sources and applications, driving enhanced audience targeting and maximized reach for optimized returns, while unlocking new data licensing and commerce media partnership opportunities.
Stagwell adopted Nexxen as its data partner following the Company's Nexxen Data Platform and unified identity graph launch. The partnership is expected to improve Stagwell's clients' results and drive increased revenue opportunities for both companies over time.
Selected as the first-to-market audience extension data platform partner for United Airlines' commerce media network, Kinective Media.
Increased data licensing revenue opportunities and industry recognition through strategic automatic content recognition ("ACR") data partnership with The Trade Desk.
Enhanced Nexxen's ability to capitalize on the 2024 U.S. election cycle through the release of new data-driven solutions built for political advertisers to maximize audience reach and gain deeper insights into campaign impacts.
Added 86 new actively-spending first-time advertiser customers in Q2 2024 across technology, finance, political, and other verticals, including 16 new enterprise self-service advertiser customers, and two new independent agencies leveraging the Company's self-service software solutions.
Onboarded 78 new supply partners, including 74 in the U.S. across several verticals and formats including CTV, mobile app and gaming, display, and online video in Q2 2024.
Share Repurchase Program Updates
Nexxen (and its subsidiaries) repurchased 2,465,819 Ordinary shares during Q2 2024 at an average price of 233.95 pence, reflecting a total investment of £5.8 million, or $7.3 million, through a combination of its now completed $20 million Ordinary Share repurchase program and recently launched $50 million Ordinary Share repurchase program.
The Company launched a $50 million Ordinary Share repurchase program on May 7, 2024, which will continue until the earlier of November 1, 2024, and the date the program is completed. The program does not obligate Nexxen to repurchase any particular amount of Ordinary Shares and the program may be suspended, modified, or discontinued at any time at the Company's discretion, subject to applicable law.
From March 1, 2022 through June 30, 2024, the Company (and its subsidiaries) repurchased 28,325,815 Ordinary shares, or 18.3% of shares outstanding, reflecting an investment of £96.1 million or $118.9 million.
Nexxen's Board of Directors intends to evaluate the potential for implementing an additional share repurchase program upon completion of the current program, subject to then current market conditions and necessary approvals.
Changes to Board of Directors
Nexxen announces that Non-Executive Director, Rebekah Brooks, and Executive Director, Sagi Niri, both Directors since 2020, are stepping down from the Company's Board of Directors ("Board") effective August 22, 2024, thereby reducing the size of the Board from eleven members to nine members. Mr. Niri will continue to serve as Nexxen's Chief Financial Officer.
The Sustainability, Nominating and Governance Committee of the Board (the "Committee") has determined that the smaller nine-member Board, consisting of two Executive Directors and seven Non-Executive Directors, will be more flexible and efficient to support the ongoing needs of the business, and that the reduced Board size and composition is in line with Board composition practices of similar sized companies traded on the Nasdaq and AIM.
The Committee further determined that Mr. Niri stepping down from the Board (but remaining Chief Financial Officer) is in line with best practices of Nasdaq-listed companies similar to Nexxen, where the Chief Financial Officer does not serve as a Director.
Financial Highlights for the Three and Six Months Ended June 30, 2024 ($ in millions, except per share amounts)
Three months ended June 30
Six months ended June 30
2024
2023
%
2024
2023
%
IFRS Highlights
Revenue
88.6
84.2
5%
163.0
156.0
5%
Programmatic Revenue
78.6
76.3
3%
144.2
138.8
4%
Operating profit (loss)
6.4
(8.0)
180%
(0.2)
(23.2)
99%
Net income (loss) margin on a gross profit basis
5%
(10%)
(4%)
(23%)
Total comprehensive income (loss)
2.9
(3.6)
181%
(4.4)
(20.9)
79%
Diluted earnings (loss) per share
0.02
(0.04)
152%
(0.03)
(0.16)
83%
Non-IFRS Highlights
Contribution ex-TAC
83.1
80.2
4%
152.8
147.1
4%
Adjusted EBITDA
26.8
21.0
27%
38.7
29.9
29%
Adjusted EBITDA Margin on a Contribution ex-TAC basis
32%
26%
25%
20%
Non-IFRS net income
12.6
9.3
35%
13.8
4.3
217%
Non-IFRS diluted earnings per share
0.09
0.06
37%
0.10
0.03
221%
Second Quarter 2024 Financial Results Webcast and Conference Call Details
When: August 22, 2024, at 6:00 AM PT / 9:00 AM ET / 2:00 PM BST
Webcast: A live and archived webcast can be accessed from the Events and Presentations section of Nexxen's Investor Relations website at https://investors.nexxen.com/
Participant Dial-In Numbers:
U.S. / Canada Toll-Free Dial-In Number: (888) 596-4144
U.K. Toll-Free Dial-In Number: +44 800 260 6470
International Toll-Free Dial-In Number: (646) 968-2525
Conference ID: 2988284
About Nexxen
Nexxen empowers advertisers, agencies, publishers and broadcasters around the world to utilize data and advanced TV in the ways that are most meaningful to them. Our flexible and unified technology stack comprises a demand-side platform ("DSP") and supply-side platform ("SSP"), with the Nexxen Data Platform at its core. With streaming in our DNA, Nexxen's robust capabilities span discovery, planning, activation, monetization, measurement and optimization – available individually or in combination – all designed to enable our partners to reach their goals, no matter how far-reaching or hyper niche they may be.
Nexxen is headquartered in Israel and maintains offices throughout the United States, Canada, Europe and Asia-Pacific, and is traded on the London Stock Exchange (AIM: NEXN) and NASDAQ (NEXN). For more information, visit www.nexxen.com.
For further information please contact:
Nexxen International Ltd. Billy Eckert, Vice President of Investor Relations
Caroline Smith, Vice President of Communications
KCSA (U.S. Investor Relations) David Hanover, Investor Relations
Vigo Consulting (U.K. Financial PR & Investor Relations) Jeremy Garcia / Peter Jacob Tel: +44 20 7390 0230
Cavendish Capital Markets Limited Jonny Franklin-Adams / Seamus Fricker / Rory Sale (Corporate Finance) Tim Redfern / Jamie Anderson (ECM) Tel: +44 20 7220 0500
Forward Looking Statements
This press release contains forward-looking statements, including forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities and Exchange Act of 1934, as amended. Forward-looking statements are identified by words such as "anticipates," "believes," "expects," "intends," "may," "can," "will," "estimates," and other similar expressions. However, these words are not the only way Nexxen identifies forward-looking statements. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding anticipated financial results for H2 and full year 2024 and beyond; anticipated benefits of Nexxen's strategic transactions and commercial partnerships; anticipated features and benefits of Nexxen's products and service offerings; Nexxen's positioning for accelerated growth and continued future growth in both the U.S. and international markets in 2024 and beyond; Nexxen's medium- to long-term prospects; management's belief that Nexxen is well-positioned to benefit from future industry growth trends and Company-specific catalysts including increased demand for data rich platforms; the Company's expectations with respect to CTV revenue growth and data licensing revenue growth; the potential negative impact of ongoing macroeconomic headwinds and uncertainty that have limited advertising activity and the anticipation that these challenges could continue to have an impact for the remainder of 2024 and beyond; the Company's plans with respect to its cash reserves; its continued focus in 2024 on expanding its base of end-to-end customers, growing data licensing revenue and expanding its streaming, TV, and agency partnerships to drive growth and increased profitability; the anticipated benefits from the Company's strategic partnership with Stagwell; as well as any other statements related to Nexxen's future financial results and operating performance. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors that may cause Nexxen's actual results, performance or achievements to be materially different from its expectations expressed or implied by the forward-looking statements, including, but not limited to, the following: negative global economic conditions; global conflicts and war, including the war and hostilities between Israel and Hamas, Hezbollah, and Iran, and how those conditions may adversely impact Nexxen's business, customers, and the markets in which Nexxen competes; changes in industry trends; the risk that Nexxen will not realize the anticipated benefits of its acquisition of Amobee and strategic investment in VIDAA; and, other negative developments in Nexxen's business or unfavourable legislative or regulatory developments. Nexxen cautions you not to place undue reliance on these forward-looking statements. For a more detailed discussion of these factors, and other factors that could cause actual results to vary materially, interested parties should review the risk factors listed in the Company's most recent Annual Report on Form 20-F, filed with the U.S. Securities and Exchange Commission (www.sec.gov) on March 6, 2024. Any forward-looking statements made by Nexxen in this press release speak only as of the date of this press release, and Nexxen does not intend to update these forward-looking statements after the date of this press release, except as required by law.
Nexxen, and the Nexxen logo are trademarks of Nexxen International Ltd. in the United States and other countries. All other trademarks are the property of their respective owners. The use of the word "partner" or "partnership" in this press release does not mean a legal partner or legal partnership.
Use of Non-IFRS Financial Information
In addition to our IFRS results, we review certain non-IFRS financial measures to help us evaluate our business, measure our performance, identify trends affecting our business, establish budgets, measure the effectiveness of investments in our technology and development and sales and marketing, and assess our operational efficiencies. These non-IFRS measures include Contribution ex-TAC, Adjusted EBITDA, Adjusted EBITDA Margin, Non-IFRS Net Income, and Non-IFRS Earnings per share, each of which is discussed below.
These non-IFRS financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding financial measures prepared in accordance with IFRS. You are encouraged to evaluate these adjustments and review the reconciliation of these non-IFRS financial measures to their most comparable IFRS measures, and the reasons we consider them appropriate. It is important to note that the particular items we exclude from, or include in, our non-IFRS financial measures may differ from the items excluded from, or included in, similar non-IFRS financial measures used by other companies. See "Reconciliation of Revenue to Contribution ex-TAC," "Reconciliation of Total Comprehensive Income (Loss) to Adjusted EBITDA," and "Reconciliation of Net Income (Loss) to Non-IFRS Net Income," included as part of this press release.
Contribution ex-TAC: Contribution ex-TAC for Nexxen is defined as gross profit plus depreciation and amortization attributable to cost of revenue and cost of revenue (exclusive of depreciation and amortization) minus the Performance media cost ("traffic acquisition costs" or "TAC"). Performance media cost represents the costs of purchases of impressions from publishers on a cost-per-thousand impression basis in our non-core Performance activities. Contribution ex-TAC is a supplemental measure of our financial performance that is not required by, or presented in accordance with, IFRS. Contribution ex-TAC should not be considered as an alternative to gross profit as a measure of financial performance. Contribution ex-TAC is a non-IFRS financial measure and should not be viewed in isolation. We believe Contribution ex-TAC is a useful measure in assessing the performance of Nexxen, because it facilitates a consistent comparison against our core business without considering the impact of traffic acquisition costs related to revenue reported on a gross basis.
Adjusted EBITDA: We define Adjusted EBITDA for Nexxen as total comprehensive income (loss) for the period adjusted for foreign currency translation differences for foreign operations, foreign currency translation for subsidiary sold reclassified to profit and loss, financial expenses, net, tax expenses (benefit), depreciation and amortization, stock-based compensation expenses, restructuring, and other expenses. Adjusted EBITDA is included in the press release because it is a key metric used by management and our Board of Directors to assess our financial performance. Adjusted EBITDA is frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Management believes that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate directly to the performance of the underlying business.
Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as Adjusted EBITDA on a Contribution ex-TAC basis.
Non-IFRS Income and Non-IFRS Earnings per Share: We define non-IFRS earnings per share as non-IFRS income divided by non-IFRS weighted-average shares outstanding. Non-IFRS income is equal to net income (loss) excluding stock-based compensation expenses, restructuring, other expenses, and amortization of acquired intangible assets, and also considers the tax effects of Non-IFRS adjustments. In periods in which we have non-IFRS income, non-IFRS weighted-average shares outstanding used to calculate non-IFRS earnings per share includes the impact of potentially dilutive shares. Potentially dilutive shares consist of stock options, restricted stock awards, restricted stock units, and performance stock units, each computed using the treasury stock method. We believe non-IFRS earnings per share is useful to investors in evaluating our ongoing operational performance and our trends on a per share basis, and also facilitates comparison of our financial results on a per share basis with other companies, many of which present a similar non-IFRS measure. However, a potential limitation of our use of non-IFRS earnings per share is that other companies may define non-IFRS earnings per share differently, which may make comparison difficult. This measure may also exclude expenses that may have a material impact on our reported financial results. Non-IFRS earnings per share is a performance measure and should not be used as a measure of liquidity. Because of these limitations, we also consider the comparable IFRS measure of net income.
We do not provide a reconciliation of forward-looking non-IFRS financial metrics, because reconciling information is not available without an unreasonable effort, such as attempting to make assumptions that cannot reasonably be made on a forward-looking basis to determine the corresponding IFRS metric.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (as implemented into English law) ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
Reconciliation of Total Comprehensive Income (Loss) to Adjusted EBITDA
Three months ended June 30
Six months ended June 30
2024
2023
%
2024
2023
%
($ in thousands)
Total comprehensive income (loss)
2,924
(3,616)
181%
(4,362)
(20,905)
79%
Foreign currency translation differences for foreign operation
(8)
(759)
404
(1,379)
Foreign currency translation for subsidiary sold reclassified to profit and loss
-
(1,234)
-
(1,234)
Tax expenses (benefit)
2,350
(4,601)
2,125
(1,140)
Financial expenses, net
1,091
2,254
1,636
1,496
Depreciation and amortization
15,504
19,933
31,297
36,922
Stock-based compensation expenses
3,444
6,495
6,078
13,569
Restructuring
-
796
-
796
Other expenses
1,488
1,765
1,488
1,765
Adjusted EBITDA
26,793
21,033
27%
38,666
29,890
29%
Reconciliation of Revenue to Contribution ex-TAC
Three months ended June 30
Six months ended June 30
2024
2023
%
2024
2023
%
($ in thousands)
Revenue
88,577
84,246
5%
163,009
155,983
5%
Cost of revenue (exclusive of depreciation and amortization)
(15,557)
(14,604)
(30,095)
(30,701)
Depreciation and amortization attributable to Cost of Revenue
(11,449)
(12,489)
(23,215)
(24,416)
Gross profit (IFRS)
61,571
57,153
8%
109,699
100,866
9%
Depreciation and amortization attributable to Cost of Revenue
11,449
12,489
23,215
24,416
Cost of revenue (exclusive of depreciation and amortization)
15,557
14,604
30,095
30,701
Performance media cost
(5,449)
(3,994)
(10,199)
(8,875)
Contribution ex-TAC (Non-IFRS)
83,128
80,252
4%
152,810
147,108
4%
Reconciliation of Net Income (Loss) to Non-IFRS Net Income
Three months ended June 30
Six months ended June 30
2024
2023
%
2024
2023
%
($ in thousands)
Net Income (loss)
2,916
(5,609)
152%
(3,958)
(23,518)
83%
Amortization of acquired intangibles
7,042
10,214
14,099
17,857
Restructuring
-
796
-
796
Stock-based compensation expenses
3,444
6,495
6,078
13,569
Other expenses
1,488
1,765
1,488
1,765
Tax effect of Non-IFRS adjustments (1)
(2,306)
(4,312)
(3,951)
(6,132)
Non-IFRS Income
12,584
9,349
35%
13,756
4,337
217%
Weighted average shares outstanding—diluted (in millions) (2)
142.1
144.9
143.3
145.0
Non-IFRS diluted Earnings Per Share (in USD)
0.09
0.06
37%
0.10
0.03
221%
Non-IFRS income includes the estimated tax impact from the expense items reconciling between net income (loss) and non-IFRS income
Non-IFRS earnings per share is computed using the same weighted-average number of shares that are used to compute IFRS earnings (loss) per share
Auditor's Review Report to the Shareholders of Nexxen International Ltd.
Introduction
We have reviewed the accompanying financial information of Nexxen International Ltd. and its subsidiaries (hereinafter - "the Company") comprising the condensed consolidated interim statement of financial position as of June 30, 2024, the related condensed consolidated interim statements of operation and other comprehensive income for the six and three month periods then ended and the related condensed consolidated interim statements of changes in equity and cash flows for the six-month period then ended. The Board of Directors and Management are responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 "Interim Financial Reporting". Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements (Israel) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" of the Institute of Certified Public Accountants in Israel. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial information was not prepared, in all material respects, in accordance with IAS 34.
Somekh Chaikin Member Firm of KPMG International
August 21, 2024
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
June 30
December 31
2024
2023
USD thousands
Assets
ASSETS:
Cash and cash equivalents
151,860
234,308
Trade receivables, net
189,143
201,973
