REG - Nexxen International - Q2 and H1 2024 Results
22/08/2024 07:01
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RNS Number : 3373B Nexxen International Ltd 22 August 2024
Nexxen Reports Second Quarter 2024 Financial Results
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, August 22, 2024 -- 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
o 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
o 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.
o 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.
o 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.
o 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
o 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.
o 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.
o 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 $118.9 million.
o Nexxen's Board of Directors intends to evaluate the potential for
implementing an additional share repurchase program upon completion of the
current program, subject to then current market conditions and necessary
approvals.
Changes to Board of Directors
o Nexxen announces that Non-Executive Director, Rebekah Brooks, and
Executive Director, Sagi Niri, both Directors since 2020, are stepping down
from the Company's Board of Directors ("Board") effective August 22, 2024,
thereby reducing the size of the Board from eleven members to nine members.
Mr. Niri will continue to serve as Nexxen's Chief Financial Officer.
o The Sustainability, Nominating and Governance Committee of the Board (the
"Committee") has determined that the smaller nine-member Board, consisting of
two Executive Directors and seven Non-Executive Directors, will be more
flexible and efficient to support the ongoing needs of the business, and that
the reduced Board size and composition is in line with Board composition
practices of similar sized companies traded on the Nasdaq and AIM.
o The Committee further determined that Mr. Niri stepping down from the
Board (but remaining Chief Financial Officer) is in line with best practices
of Nasdaq-listed companies similar to Nexxen, where the Chief Financial
Officer does not serve as a Director.
Financial Highlights for the Three and Six Months Ended June 30, 2024 ($ 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/ (https://investors.nexxen.com/)
· Participant Dial-In Numbers:
o U.S. / Canada Toll-Free Dial-In Number: (888) 596-4144
o U.K. Toll-Free Dial-In Number: +44 800 260 6470
o International Toll-Free Dial-In Number: (646) 968-2525
o 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 (http://www.nexxen.com) .
For further information please contact:
Nexxen International Ltd.
Billy Eckert, Vice President of Investor Relations
ir@nexxen.com (mailto:ir@nexxen.com)
Caroline Smith, Vice President of Communications
csmith@nexxen.com (mailto:csmith@nexxen.com)
KCSA (U.S. Investor Relations)
David Hanover, Investor Relations
nexxenir@kcsa.com (mailto:nexxenir@kcsa.com)
Vigo Consulting (U.K. Financial PR & Investor Relations)
Jeremy Garcia / Peter Jacob
Tel: +44 20 7390 0230 or nexxen@vigoconsulting.com
(mailto:nexxen@vigoconsulting.com)
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
(https://www.globenewswire.com/Tracker?data=gPgQB1DRd3uO04Pe1Nw8HIpq46d0Dt1v2Oxk6rZfSqGQFu9JJd9FAB5SQGpGWUSLBV6GTasGV0uIK2SWvdiElw==)
) 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.
o 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.
o 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.
o Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as Adjusted EBITDA
on a Contribution ex-TAC basis.
o 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 - (1,234) - (1,234)
loss
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%
(1) Non-IFRS income includes the estimated tax impact from the expense items
reconciling between net income (loss) and non-IFRS income
(2) 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
Other receivables 6,445 8,293
Current tax assets 7,031 7,010
TOTAL CURRENT ASSETS 354,479 451,584
Fixed assets, net 16,830 21,401
Right-of-use assets 28,455 31,900
Intangible assets, net 349,142 362,000
Deferred tax assets 18,170 12,393
Investment in shares 25,000 25,000
Other long-term assets 739 525
TOTAL NON-CURRENT ASSETS 438,336 453,219
TOTAL ASSETS 792,815 904,803
Liabilities and shareholders' equity
LIABILITIES:
Current maturities of lease liabilities 12,988 12,106
Trade payables 181,195 183,296
Other payables 36,390 29,098
Current tax liabilities 11,389 4,937
TOTAL CURRENT LIABILITIES 241,962 229,437
Employee benefits 208 237
Long-term lease liabilities 21,473 24,955
Long-term debt - 99,072
Other long-term liabilities 5,952 6,800
Deferred tax liabilities 591 754
TOTAL NON-CURRENT LIABILITIES 28,224 131,818
TOTAL LIABILITIES 270,186 361,255
SHAREHOLDERS' EQUITY:
Share capital 397 417
Share premium 394,026 410,563
Other comprehensive loss (2,845) (2,441)
Retained earnings 131,051 135,009
TOTAL SHAREHOLDERS' EQUITY 522,629 543,548
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 792,815 904,803
Chairman of the Board of Directors Chief Executive Officer Chief Finance Officer
Date of approval of the financial statements: August 21, 2024
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATION AND OTHER COMPREHENSIVE
INCOME (LOSS)
(Unaudited)
For the six months For the three months ended June 30
ended June 30
2024 2023 2024 2023
USD thousands USD thousands
Revenue 163,009 155,983 88,577 84,246
Cost of revenue (Exclusive of depreciation and amortization shown separately 30,095 30,701 15,557 14,604
below)
Research and development expenses 24,912 27,076 12,531 13,829
Selling and marketing expenses 56,714 55,976 29,580 27,402
General and administrative expenses 18,700 26,705 7,560 14,669
Depreciation and amortization 31,297 36,922 15,504 19,933
Other expenses, net 1,488 1,765 1,488 1,765
Total operating costs 133,111 148,444 66,663 77,598
Operating profit (loss) (197) (23,162) 6,357 (7,956)
Financing income (4,268) (4,331) (1,843) (1,404)
Financing expenses 5,904 5,827 2,934 3,658
Financing expenses, net 1,636 1,496 1,091 2,254
Profit (loss) before taxes on income (1,833) (24,658) 5,266 (10,210)
Tax benefit (expenses) (2,125) 1,140 (2,350) 4,601
Profit (loss) for the period (3,958( (23,518) 2,916 (5,609)
Other comprehensive income (loss) items:
Foreign currency translation differences for foreign operation (404) 1,379 8 759
Foreign currency translation for subsidiary sold reclassified to profit and - 1,234 - 1,234
loss
Total other comprehensive income (loss) for the period (404) 2,613 8 1,993
Total comprehensive income (loss) for the period (4,362) (20,905) 2,924 (3,616)
Earnings per share
Basic earnings (loss) per share (in USD) (0.03) (0.16) 0.02 (0.04)
Diluted earnings (loss) per share (in USD) (0.03) (0.16) 0.02 (0.04)
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Share capital Share premium Other comprehensive loss Retained earnings Total
USD thousands
For the six months ended
June 30, 2024
Balance as of January 1, 2024 417 410,563 (2,441) 135,009 543,548
Total comprehensive loss for the period
Loss for the period - - - (3,958) (3,958)
Other comprehensive loss:
Foreign currency translation - - (404) - (404)
Total comprehensive loss for the period - - (404) (3,958) (4,362)
Transactions with owners, recognized directly in equity
Own shares acquired (24) (23,352) - - (23,376)
Share based compensation - 6,196 - - 6,196
Exercise of share options 4 619 - - 623
Balance as of June 30, 2024 397 394,026 (2,845) 131,051 522,629
For the six months ended
June 30, 2023
Balance as of January 1, 2023 413 400,507 (5,801) 156,496 551,615
Total comprehensive income (loss) for the period
Loss for the period - - - (23,518) (23,518)
Other comprehensive income:
Foreign currency translation - - 1,379 - 1,379
Foreign currency translation for subsidiary sold reclassified to profit and - - 1,234 - 1,234
loss
Total comprehensive income (loss) for the period - - 2,613 (23,518) (20,905)
Transactions with owners, recognized directly in equity
Own shares acquired (7) (8,741) - - (8,748)
Share based compensation - 13,632 - - 13,632
Exercise of share options 4 229 - - 233
Balance as of June 30, 2023 410 405,627 (3,188) 132,978 535,827
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30
2024 2023
USD thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the period (3,958) (23,518)
Adjustments for:
Depreciation and amortization 31,297 36,922
Net financing expense 1,442 1,324
Gain on leases modification (4) (164)
Remeasurement of net investment in a finance lease 1,488 -
Share-based compensation and restricted shares 6,078 13,569
Loss on sale of business unit - 1,765
Tax expenses (benefit) 2,125 (1,140)
Change in trade and other receivables 13,740 54,399
Change in trade and other payables 9,136 (71,846)
Change in employee benefits (26) 14
Income taxes received 462 159
Income taxes paid (1,858) (6,273)
Interest received 3,540 3,845
Interest paid (4,793) (5,046)
Net cash provided by operating activities 58,669 4,010
CASH FLOWS FROM INVESTING ACTIVITIES
Change in pledged deposits, net 226 890
Payments on finance lease receivable 885 559
Acquisition of fixed assets (3,323) (2,099)
Repayment of debt investment 51 -
Acquisition and capitalization of intangible assets (7,456) (7,560)
Net cash used in investing activities (9,617) (8,210)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of own shares (23,023) (8,952)
Proceeds from exercise of share options 623 233
Leases repayment (7,453) (8,525)
Repayment of long-term debt (100,000) -
(129,853) (17,244)
Net cash used in financing activities
Net decrease in cash and cash equivalents (80,801) (21,444)
CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF PERIOD 234,308 217,500
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (1,647) (1,010)
CASH AND CASH EQUIVALENTS AS OF THE END OF PERIOD 151,860 195,046
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: GENERAL
a. Reporting entity:
Nexxen International Ltd. (the "Company" or "Nexxen International"), formerly
known as Tremor International Ltd., was incorporated in Israel under the laws
of the State of Israel on March 20, 2007. The ordinary shares of the Company
are listed on the AIM Market of the London Stock Exchange and the American
Depositary Shares ("ADSs"), each of which represents two ordinary shares of
the Company, represented by the American Depositary Receipts ("ADR") are
listed on the Nasdaq Capital Market. The address of the registered office is
82 Yigal Alon Street Tel-Aviv, 6789124, Israel.
Nexxen International is a global Company offering a unified data-driven
end-to-end software platform that supports a wide range of media types (e.g.,
video, display, etc.) and devices (e.g., mobile, Connected TVs, streaming
devices, desktop, etc.), creating an efficient marketplace where advertisers
(buyers) are able to purchase high quality advertising inventory from
publishers (sellers) in real-time and at scale. Nexxen International's
technology stack is comprised of a Demand Side Platform ("DSP"), Supply-Side
Platform ("SSP"), Ad Server, and Data Management Platform ("DMP"), empowering
customers on both the buy- and sell-sides of the ecosystem to leverage a full
suite of data-driven planning and technology solutions to achieve greater
efficiency, effectiveness, and outcomes in their advertising efforts. The
Company's DSP solution is delivered through wholly owned subsidiary Nexxen
Inc. (formerly known as Amobee Inc. and which also includes Tremor Video
Inc.'s activity that was transferred to Nexxen Inc. in 2023) and is designed
to assist customers in a self-managed or full-service capacity to plan and
execute digital marketing campaigns in real-time across various ad formats.
The Company's SSP solution (delivered through Nexxen Group LLC, formerly known
as Unruly Group, LLC) is designed to monetize digital inventory for publishers
by enabling their content to have the necessary code and requirements for
programmatic advertising integration, and provides access to significant
amounts of data and unique demand to drive more effective inventory management
and revenue optimization. The Company's "DMP" integrates both its DSP and SSP
solutions, enabling advertisers and publishers to use data from various
sources, including web, social media, Connected TV and linear TV, and mobile
devices, to optimize results of their advertising campaigns. Following the
acquisition of Nexxen Inc., the Company gained a Linear TV Planning feature,
enabling sellers at national broadcasters to generate linear TV plans during
and after upfronts. Nexxen International Ltd. is headquartered in Israel and
maintains offices throughout the U.S., Canada, EMEA and Asia-Pacific.
Material events during the reporting period:
Company's name change
On January 2, 2024, the Company's name was officially changed to Nexxen
International Ltd. and, in connection with the change, its stock ticker on
both the NASDAQ and London Stock Exchange changed from "TRMR" to "NEXN", as
was mentioned in Note 1 to the financial statement as of December 31, 2023.
Strategic partnership agreement with Alphonso Inc. and LG Electronics
On February 28, 2024, the Company signed a three-year strategic partnership
with Alphonso Inc. and LG Electronics, Inc. (LGE) following the disputes and
the litigation, as detailed in Note 22 to the financial statements as of
December 31, 2023. Per the agreement, Nexxen will provide advertisers
transacting programmatically through Nexxen's platform gained access to a
portion of LG's premium CTV inventory. Nexxen is also providing Alphonso the
rights to utilize the Company's discovery and segmentation tools.
Repayment of loan
On April 9, 2024, the Company repaid its outstanding long term debt, entered
into on September 12, 2022. The repayment totaled approximately $100 million.
No early termination penalties were incurred. Following the repayment, a $90
million Revolving Credit Facility remains available, with $0 drawn as of June
30,2024.
b. Definitions:
In these financial statements -
The Company - Nexxen International Ltd.
The Group - Nexxen International Ltd. and its subsidiaries.
Subsidiaries - Companies, the financial statements of which are fully consolidated, directly,
or indirectly, with the financial statements of the Company such as Nexxen
Group LLC, Nexxen Holding Ltd, Nexxen Inc.
Related party - As defined by IAS 24, "Related Party Disclosures".
NOTE 2: BASIS OF PREPARATION
a. Statement of compliance:
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and do not include all the
information required for full annual financial statements. They should be read
in conjunction with the financial statements for the year ended December 31,
2023 (hereinafter - "the annual financial statements").
The condensed consolidated interim financial statements were authorized for
issue by the Company's Board of Directors on August 21, 2024.
b. Use of estimates and judgments:
The preparation of financial statements in conformity with IFRS requires
management of the Group to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these
estimates.
The preparation of accounting estimates used in the preparation of the Group's
financial statements requires management of the Group to make assumptions
regarding circumstances and events that involve considerable uncertainty.
Management of the Group prepares estimates on the basis of past experience,
various facts, external circumstances, and reasonable assumptions according to
the pertinent circumstances of each estimate.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.
The significant judgments made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the last annual financial statements.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
a. The accounting policies applied by the Company in these condensed
consolidated interim financial statements are the same as those applied by the
Company in its annual financial statements, there was no change in accounting
policies or any new relevant standards during the reporting period.
b. Initial application of new standards, amendments to standards and
interpretations
Amendment to IAS 1, Presentation of Financial Statements: Classification of
Liabilities as Current or Non-Current and subsequent amendment: Non-Current
Liabilities with Covenants.
As a result of applying the Amendment, there was no material effect on the
Company's financial statements.
c. New standards, amendments to standards and interpretations not yet
adopted:
IFRS 18 'Presentation and Disclosure in Financial Statements'
In April 2024, the IASB issued IFRS 18 - Presentation and Disclosure in
Financial Statements, which introduces new concepts relating to: (i) the
structure of the statement of profit or loss, (ii) required disclosures in the
financial statements for certain profit or loss performance measures that are
reported outside an entity's financial statements (management-defined
performance measures), and (iii) enhanced principles on aggregation and
disaggregation which apply to the primary financial statements and notes in
general. The standard is effective on or after January 1, 2027. The Company is
evaluating the potential impact from the adoption of this standard.
Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments:
Disclosures
On May 30, 2024, IASB has issued amendments to IFRS 9 Financial Instruments
and IFRS 7 Financial Instruments: Disclosures, which clarifies the
classification of financial assets with environmental, social and corporate
governance (ESG) and similar features, derecognition of financial liability
settled through electronic payment systems and also introduces additional
disclosure requirements to enhance transparency for investors regarding
investments in equity instruments designated at fair value through other
comprehensive income and financial instruments with contingent features. The
effective date for adoption of this amendment is annual reporting periods
beginning on or after January 1, 2026, although early adoption is permitted.
The Company is yet to evaluate the impact of the amendment.
NOTE 4: LEASES
Material lease agreements entered into during the reporting period
During the six months ended June 30, 2024, the Company renewed a lease
agreement for the office in Israel with contractual original lease periods of
3 years. Accordingly, on lease modification date, the Company increased in the
statement of financial position the lease liability to the amount of USD 1,904
thousand that is measured at the present value of the outstanding lease
payments at that time, and concurrently increased a right-of-use.
In May 2024, one of the Company's subtenants in the U.S. decided not to extend
its sublease agreement, which was reasonably certain to be exercised at the
lease commencement date, and was initially classified as a financing lease. As
a result, the Company remeasured its net investment in financing lease
receivable and recorded a loss of USD 1,488 thousand in other expenses.
NOTE 5: SHAREHOLDERS' EQUITY
Issued and paid-in share capital:
Ordinary Shares
2024 2023
Number of shares
Balance as of January 1 146,162,009 144,477,962
Own shares acquired by the Group (8,691,663) (2,505,851)
Share based compensation exercised to shares 1,278,624 1,343,642
Issued and paid-in share capital as of June 30 138,748,970 143,315,753
Authorized share capital 500,000,000 500,000,000
1) Rights attached to share:
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at general meetings
of the Company. All shares rank equally with regard to the Company's residual
assets.
2) Own shares acquisition:
On December 18, 2023, the Company has received approval from the Israeli court
for its motion to buy back an additional USD 20 million of its ordinary shares
from time-to-time through June 18, 2024.
By April 25, 2024, the Company completed its $20 million Ordinary Share
repurchase program, out of which 7,420,291 ordinary shares in aggregate amount
of USD 19.4 million were repurchased in 2024 and financed by existing cash
resources.
On May 7, 2024, the Company launched a new USD 50 million Ordinary Share
repurchase program. The repurchase program began on May 7, 2024, and will
continue until the earlier of November 1, 2024, or until it will be completed.
From May 7, 2024, until June 30, 2024, the Company repurchased 1,271,372
ordinary shares in aggregate amount of USD 3.9 million.
NOTE 6: EARNINGS PER SHARE
Basic earnings per share:
The calculation of basic earnings per share for the six and three months ended
June 30, 2024, and 2023, was based on the profit (loss) for the periods
divided by a weighted average number of ordinary shares outstanding,
calculated as follows:
Profit (loss) for the period:
Six months ended
June 30
2024 2023
USD thousands
Loss for the period (3,958) (23,518)
Three months ended
June 30
2024 2023
USD thousands
Profit (loss) for the period 2,916 (5,609)
Weighted average number of ordinary shares:
Six months ended
June 30
2024 2023
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 141,004,699 142,990,666
per share
Basic loss per share (in USD) (0.03) (0.16)
Three months ended
June 30
2024 2023
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 139,128,136 142,612,533
per share
Basic earnings (loss) per share (in USD) 0.02 (0.04)
Diluted earnings per share:
The calculation of diluted earnings per share for the six and three months
ended June 30, 2024, and 2023, was based on profit (loss) for the period
divided by a weighted average number of shares outstanding after adjustment
for the effects of all dilutive potential ordinary shares, calculated as
follows:
Weighted average number of ordinary shares:
Six months ended
June 30
2024 2023
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 141,004,699 142,990,666
per share
Weighted average number of ordinary shares used to calculate diluted earnings 141,004,699 142,990,666
per share
Diluted loss per share (in USD) (0.03) (0.16)
Three months ended
June 30
2024 2023
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 139,128,136 142,612,533
per share
Effect of share options issued 2,994,970 -
Weighted average number of ordinary shares used to calculate diluted earnings 142,123,106 142,612,533
per share
Diluted earnings (loss) per share (in USD) 0.02 (0.04)
For the six and three months ended June 30, 2024, 9,033 thousand and 6,038
thousand share options, RSUs and PSUs (In 2023 10,066 thousand) were excluded
from the diluted weighted average number of ordinary shares calculation as
their effect would have been anti-dilutive.
NOTE 7: SHARE-BASED COMPENSATION ARRANGEMENTS
a. Share-based compensation plan:
The terms and conditions related to the grants of the share options programs
are as follows:
· All the share options that were granted are non-marketable.
· All options are to be settled by physical delivery of ordinary shares
or ADSs.
· Vesting conditions are based on a service period of between 0.5-4
years.
b. Stock Options:
The number of share options is as follows:
Number of options Weighted average
exercise price
2024 2023 2024 2023
(Thousands) (USD)
Outstanding of January 1 3,705 4,772
Forfeited (276) (507) 8.27 6.17
Exercised (305) (346) 2.02 2.02
Outstanding of June 30 3,124 3,919
Exercisable of June 30 1,879 1,559
c. Information on measurement of fair value of share-based
compensation plans:
The fair value of employees' share based compensation is measured using the
Black-Scholes formula. Measurement inputs include the share price on the
measurement date, the exercise price of the instrument, expected volatility,
expected term of the instruments, expected dividends, and the risk-free
interest rate.
The total expense recognized in the six months period ended June 30, 2024,
and 2023, with respect to the options granted to employees, amounted to
approximately USD 566 thousand and USD 1,486 thousand, respectively.
The total expense recognized in the three months period ended June 30, 2024,
and 2023, with respect to the options granted to employees, amounted to
approximately USD 312 thousand and USD 755 thousand, respectively.
d. Restricted Share Units (RSU):
The number of restricted share units is as follows:
Number of RSUs Weighted-Average Grant Date Fair Value
2024 2023 2024 2023
(Thousands)
Outstanding at January 1 2,092 5,288 7.601 8.277
Forfeited (29) (119) 4.548 7.273
Exercised (960) (990) 8.990 9.002
Granted 3,804 - 2.431 -
Outstanding at June 30 4,907 4,179 3.345 8.135
The total expense recognized in the six months period ended June 30, 2024,
and 2023, with respect to the RSUs granted to employees, amounted to
approximately USD 4,075 thousand and USD 8,429 thousand, respectively.
The total expense recognized in the three months period ended June 30, 2024,
and 2023, with respect to the RSUs granted to employees, amounted to
approximately USD 2,425 thousand and USD 3,938 thousand, respectively.
e. Performance Stock Units (PSU):
The number of performance stock units is as follows:
Number of PSUs Weighted-Average Grant Date Fair Value
2024 2023 2024 2023
(Thousands)
Outstanding of January 1 952 1,992 8.238 8.937
Forfeited - (16) - 7.541
Exercised (14) (8) 2.160 9.349
Granted 64 - 2.380 -
Outstanding of June 30 1,002 1,968 7.947 8.948
The vesting of the PSUs is subject to continued employment and compliance with
the performance criteria determined by the Company's Compensation Committee
and the Company's Board of Directors.
The total expense recognized in the six months ended June 30, 2024, and 2023,
with respect to the PSUs granted to employees, amounted to approximately USD
1,437 thousand and USD 3,654 thousand, respectively.
The total expense recognized in the three months ended June 30, 2024, and
2023, with respect to the PSUs granted to employees, amounted to approximately
USD 707 thousand and USD 1,802 thousand, respectively.
f. Share based expense recognized in the statements of operation and
other comprehensive income is as follows:
Six months ended
June 30
2024 2023
USD thousands
Research and development 1,478 2,478
Selling and marketing 1,909 2,603
General and administrative 2,691 8,488
6,078 13,569
Three months ended
June 30
2024 2023
USD thousands
Research and development 891 1,205
Selling and marketing 1,383 1,399
General and administrative 1,170 3,891
3,444 6,495
NOTE 8: REVENUES
Six months ended
June 30
2024 2023
USD thousands
Programmatic 144,191 138,838
Performance 18,818 17,145
163,009 155,983
Three months ended
June 30
2024 2023
USD thousands
Programmatic 78,621 76,318
Performance 9,956 7,928
88,577 84,246
NOTE 9: OPERATING SEGMENTS
The Company has a single reportable segment as a provider of marketplace for
digital marketing services.
Geographical information:
In presenting information on the basis of geographical segments, segment
revenue is based on the geographical location of consumers.
Six months ended
June 30
2024 2023
USD thousands
America * 151,087 144,988
APAC 5,819 4,219
EMEA 6,103 6,776
Total 163,009 155,983
Three months ended
June 30
2024 2023
USD thousands
America * 81,984 79,562
APAC 2,969 1,288
EMEA 3,624 3,396
Total 88,577 84,246
* Mainly in the U.S.
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