Nexxen International Ltd. (NEXN) Earnings

Management highlights

- Overall Strategic Execution * Nexen delivered a record Q1 2026 with strong momentum continuing into Q2 2026, with ex-tech contribution, programmatic revenue, and CTV revenue trending above internal expectations following a strong April and May 2026. * Execution is aligned with the company's long-term strategy: advancing enterprise go-to-market globally, enhancing full-funnel platform performance via integration of unique data, media, and growing AI capabilities, extending CTV leadership, and expanding mobile in-app footprint to build resilience against AI-driven industry disruption. - AI Innovation (Next.ai) * Next.ai, Nexen's platform-wide AI suite, is a core strategic focus and force multiplier for the business, leveraging the company's end-to-end structural advantage to operate across the full campaign lifecycle for more efficient, higher-performing planning, activation, and optimization. * Nexen differentiates its AI approach with a core focus on transparency and customer control, aiming to empower advertisers rather than bypass them, progressing gradually from assisted execution to higher levels of automation as trust builds. * Nexen is aligning with open industry standards including ADCP and IAB's agentic ad management protocol, integrating with MCP and broader agent-to-agent workflows for interoperability across AI-driven environments. In 2026, the company will expand AI capabilities into its SSP to enhance publisher monetization and launch more autonomous deal management solutions for advertisers. * Internally, AI is already driving efficiency gains: AI-powered discovery assistance cuts customer audience research time by over 40%, and DSP assistance improvements drive over 90% efficiency gains across key workflows. Internal efficiency and operating leverage benefits are expected to scale into late 2026 and beyond. - CTV Growth and Nexen TV Home Screen * CTV growth is led by Nexen TV Home Screen, the industry's first programmatic solution for smart TV native home screen inventory, a new under-monetized category that consumers access for an average of over 10 minutes per day. * Since launch, Nexen has expanded home screen reach from an initial 25 million V-powered devices to nearly 35 million devices via new partnerships: exclusive programmatic access to TCL's native home screen inventory in select regions, access to TiVo Edge native inventory in North America and the UK, and ongoing testing with LG. More OEM partnerships are expected by end of 2026. * The company's exclusive ACR data from V continues to drive high-margin data licensing revenue, with new partners including Edform joining the platform in Q1, validating the data revenue strategy. - Enterprise Go-To-Market * Late 2025 investments in growing enterprise teams and shifting internal resources to support the enterprise go-to-market strategy have already paid off: as of Q1 2026, Nexen has onboarded more new enterprise clients than it onboarded in all of 2025, with each new client expected to generate at least $1 million in annual spend. * Early indicators show larger budgets, deeper customer engagement, and accelerating enterprise spend is expected in the second half of 2026 and beyond, driven by growing full-stack adoption, increasing wallet share, and continued new customer additions. - Mobile In-App Expansion * Mobile in-app is a key AI-resilient growth channel, with secular tailwinds as advertisers seek high-engagement, high signal-quality environments for performance-driven campaigns. * Direct SDK integration with key partners including Unity has expanded access to high-quality scaled supply, driving strong performance and broader platform monetization, with early signs of acceleration already visible in Q1 results.

Guidance

- Management raised full-year 2026 guidance following stronger than expected Q1 performance and continued Q2 momentum: * Contribution ex-tech is now guided to a range of $382 to $397 million, up from the prior range of $375 to $390 million, representing over 10% YoY growth at the midpoint. * Programmatic revenue is now guided to a range of $374 to $388 million, up from the prior range of $367 to $381 million, representing approximately 12% YoY growth at the midpoint. - Adjusted EBITDA guidance was maintained at $122 to $132 million, representing ~10% YoY growth and a 33% margin at the midpoint. The maintained range reflects continued strategic investment in core growth initiatives, with full-year gross margins and adjusted EBITDA margins expected to remain consistent with 2025 levels. - Management intentionally took a conservative approach to the guidance raise amid ongoing broader macroeconomic and advertising industry uncertainty, despite stronger than expected current momentum. The company will assess further guidance increases as market conditions solidify and more performance data becomes available. - Growth for the full year is expected to be driven by increasing enterprise adoption, growing end-to-end platform utilization, accelerating CTV revenue, scaling mobile in-app contribution, and continued data revenue momentum, with additional incremental revenue from the 2026 FIFA World Cup and U.S. midterm election cycle.

Segment performance

Overall: Total contribution X-stack (contribution ex-tech) was $84.5 million, a 13% year-over-year (YoY) increase that set a Q1 record. Total programmatic revenue was $81.9 million, up 14% YoY, also a Q1 record. Non-programmatic contribution ex-tech declined ~$560,000 YoY. CTV: Record Q1 CTV revenue of $29.4 million, up 12% YoY, accounting for ~36% of total programmatic revenue. CTV returned to year-over-year growth after a period of stagnation, with building momentum heading into Q2 2026. Mobile: Mobile revenue increased 18% YoY, making up ~40% of total consolidated revenue, with strength continuing into Q2. Desktop: Desktop revenue increased 3% YoY. Data Products: Contribution ex-tech from data products increased 81% YoY, driven by growing licensing momentum for Nexen's exclusive ACR data. Display: Contribution ex-tech from display increased 57% YoY. Private Marketplaces (PMPs): Contribution ex-tech from PMPs decreased 17% YoY. Profitability: Adjusted EBITDA was $16.3 million with a 19% margin as a percentage of contribution ex-tech, ahead of Wall Street consensus. Non-IFRS diluted earnings per share was $0.06, down from $0.16 in Q1 2025.

Risks & headwinds

- Forward-looking statements are inherently subject to known and unknown risks and uncertainties that could cause actual results to differ materially from projections, including unexpected changes in business conditions, macroeconomic conditions, and industry trends. Additional detailed risk factors are disclosed in Nexen's most recent Form 20-F filing with the SEC. - Broader macroeconomic and advertising industry uncertainty remains, which is outside of Nexen's full control and informed the company's conservative approach to guidance updating. - The emerging AI-driven shift in the advertising industry creates structural uncertainty, though management believes Nexen's positioning leaves it well-placed to gain share from this shift.

Analyst Q&A

• Q: What factors are driving the strong surge in new enterprise client signings, which have already surpassed all of 2025's total in the first months of 2026? Is it CTV differentiation, new AI capabilities, or a combination?

  A: Growth is driven by a combination of all of Nexen's integrated platform strengths, including strong built-in data connectivity through the company's DMP, recent AI tool upgrades that have improved platform efficiency and campaign performance, upgraded core algorithms that deliver better campaign results, end-to-end integration with the company's SSP and growing CTV and mobile in-app inventory. Upcoming events including the FIFA World Cup and U.S. midterm elections, which favor Nexen's CTV strengths, are also driving advertiser interest.

• Q: What is the total addressable market for Nexen's new TV home screen inventory product, and will OEMs lock this inventory behind their own closed ad ecosystems instead of working with Nexen?

  A: The TAM is very large, as consumers spend an average of 10.5 minutes per day on their TV home screen, creating massive untapped impression volume. Nexen's solution converts this historically direct-only inventory to programmatic, which delivers incremental revenue to OEMs that they would not otherwise capture, giving OEMs little reason to block access. Multiple major DSPs have already partnered or are onboarding to buy this inventory, creating strong market demand.

• Q: Why does full-year guidance only call for 10% contribution ex-tech growth, despite 13% Q1 growth and commentary about accelerating momentum through the second half? Is this conservatism or driven by idiosyncratic factors?

  A: The muted guidance increase reflects intentional conservatism amid ongoing broader macroeconomic and advertising industry uncertainty, which Nexen cannot fully control. Management is seeing stronger than expected current momentum, but prefers to update guidance gradually rather than overpromising, and will raise guidance further if performance remains strong and market conditions stabilize. The conservatism is a mix of macro industry factors and prudence around new product adoption timelines.

• Q: Where is the company prioritizing investment spending that led to maintained full-year EBITDA guidance despite raised top-line guidance? Is it focused on sales/marketing or R&D?

  A: Roughly 80% of incremental investment is going to product, technology, and AI platform innovation, which drives higher utilization from both new and existing clients. Nexen has already received strong market feedback that its agentic AI capabilities are among the most advanced in the industry. The remaining 20% goes to sales and marketing to support growing adoption of the enhanced platform capabilities.