Nexxen’s Earnings Call Highlights Growth and Optimism

TREMOR INTERNATIONAL LIMITED ((NEXN)) has held its Q1 earnings call. Read on for the main highlights of the call.

Nexxen’s recent earnings call painted a picture of cautious optimism, as the company reported strong growth in its CTV and programmatic revenue streams. Despite facing challenges in its non-programmatic business lines and broader economic uncertainties, Nexxen’s advancements in AI capabilities and aggressive share repurchase strategy signal a positive outlook. The sentiment during the call was one of resilience and a focus on execution in the face of potential economic challenges.

Record Contribution ex-TAC and Programmatic Revenue

Nexxen achieved a record contribution ex-TAC of $75 million in Q1, marking an 8% year-over-year growth. Programmatic revenue also reached a new high of $71.8 million, a 10% increase from the previous year. These figures underscore Nexxen’s strong performance in its core revenue-generating activities.

Strong CTV Revenue Growth

The company’s CTV revenue hit a record $26.4 million in Q1, reflecting a 40% year-over-year growth. This segment now accounts for 37% of programmatic revenue, up from 29% in the previous year, highlighting the increasing importance of CTV in Nexxen’s revenue mix.

Launch of nexAI

Nexxen introduced nexAI, a suite of generative AI and machine learning tools designed to enhance advertising capabilities. These tools promise faster insights and smarter planning, leading to meaningful productivity gains for clients, and positioning Nexxen at the forefront of technological innovation in advertising.

Share Repurchase Program

Reflecting confidence in its valuation and future prospects, Nexxen completed a $50 million share repurchase program and launched a new one of the same amount. This move underscores the company’s commitment to returning value to shareholders.

Improved Adjusted EBITDA Margin

Nexxen reported an adjusted EBITDA of $23.1 million, a significant 95% increase from the previous year, with an adjusted EBITDA margin of 31%, up from 17%. This improvement highlights the company’s operational efficiency and profitability.

Decline in Non-Programmatic Business

The company experienced a $900,000 year-over-year decrease in contribution ex-TAC from non-programmatic business lines, with a notable 22% decrease in contribution ex-TAC from display. This decline indicates challenges in these segments amidst a shifting market landscape.

Reduced Net Cash from Operating Activities

Net cash from operating activities decreased to $19.3 million compared to $37.7 million in the previous year. This reduction may raise concerns about cash flow management despite strong revenue growth.

Economic Uncertainty and Softness in Q2

Entering Q2, Nexxen faced some softness in the advertising market due to economic uncertainty and evolving U.S. policies. These factors have impacted market sentiment and advertising demand, posing challenges for the company moving forward.

Forward-Looking Guidance

Nexxen reaffirmed its full-year guidance, projecting a contribution ex-TAC of approximately $380 million, with programmatic revenue expected to comprise around 90% of total revenue. The anticipated adjusted EBITDA for the year stands at about $125 million. Despite some market softness in Q2, Nexxen remains confident in its full-year guidance, supported by trends such as spend consolidation, industry recognition, and CTV revenue growth.

In summary, Nexxen’s earnings call highlighted a strong performance in key revenue areas, particularly in CTV and programmatic segments. The company’s strategic initiatives, including the launch of nexAI and share repurchase programs, reflect a forward-thinking approach. While challenges remain in non-programmatic segments and due to economic uncertainties, Nexxen’s reaffirmed guidance and focus on execution suggest a resilient outlook for the future.