Nexxen International Ltd. Q1 FY2025 earnings call

• Strong Q1 performance with record results driven by CTV strength.
• Launch of nexAI, a comprehensive suite of generative AI and machine learning powered features enhancing the end-to-end platform.
• End-to-end platform enables customers to onboard data, gain insights, extend audience reach, plan media strategies, activate campaigns, optimize, and measure results within a single platform.
• Partnerships like Tubi expanding into the UK, validating the strategy and strengthening market position.
• Continued talent acquisition, including strengthening executive and mid-level management teams, and expanding sales forces in U.S. and Europe.
• Share repurchase activity, with $32.9 million invested in repurchasing ~3.7 million shares in Q1 and a new $50 million share repurchase program launched.

In Q1, Nexxen generated contribution ex-TAC of $75 million, a Q1 record with 8% year-over-year growth. Programmatic revenue reached $71.8 million, a Q1 record with 10% YoY growth. CTV was the primary growth driver, with Q1 CTV revenue at $26.4 million, a 40% YoY growth, accounting for 37% of programmatic revenue. Video revenue expanded to 75% of programmatic revenue in Q1 2025 from 66% in Q1 2024. Self-service contribution ex-TAC grew 32%, P&P revenue rose 12% YoY, while display contribution ex-TAC decreased 22%. Adjusted EBITDA was $23.1 million, a 95% increase from Q1 2024, with an adjusted EBITDA margin of 31% of contribution ex-TAC.

• Reaffirming full-year 2025 guidance: contribution ex-TAC expected to be approximately $380 million, programmatic revenue to represent ~90% of full-year revenue, adjusted EBITDA ~$125 million.
• Confident in full-year guidance assuming no material deterioration in economic or advertising conditions, supported by ongoing spend consolidation, growing industry recognition, sustained CTV revenue strength, growth in new partnerships, and encouraging ad spend patterns in Q2.
• Cautious about macro-economic shocks, tariff changes, or policy shifts that could impact market sentiment and advertising demand.

• Potential impact of macro-economic shocks, tariff changes, or policy shifts on market sentiment, consumer behavior, and advertising demand.
• These factors could affect market conditions and advertising demand, though Nexxen is well-positioned to support customers in various environments.

Q: What's seen so far in Q2 and commentary on verticals?

A: Geo-political environment changing, softness in April due to tariff war, but well-diversified across verticals with some softness compensated by other verticals growing. Not over-indexed with any vertical.

Q: On increased familiarity and sales force hiring?

A: Rebranding and repackaging improved messaging, rise of data importance resonating well, sales force hiring dovetailing into better understanding and adoption of offerings.

Q: Google outcome impact?

A: Unclear when/what will happen, but Google verdict could help open Internet, no extra investment needed as core business can utilize opportunities with current cost structure.

Q: Full year guidance and CTV vs platform improvements?

A: CTV revenues expected to be ~40% of programmatic revenues, no specific consideration of Google verdict impact yet, can bear increased fill and win rates with current cost structure.

Q: Live sports strategy and partnerships?

A: Live sports popular among users and advertisers, ongoing process to add more content, advertisers, and DSPs, relationship with VIDAA and Hisense helpful.

Q: Revenue growth acceleration and share repurchase?

A: Trade Desk had high growth traditionally, Nexxen in integration phase post-rebranding and acquisition, improving execution and talent acquisition expected to drive growth in next 1-2 years.

Q: Tubi's Super Bowl impact recurring?

A: No material expected change in content consumption trends, people switch content but no major or massive change envisioned.

Q: Partnerships driving full-year guidance?

A: Well-diversified over verticals and partners, not reliant on any single partner, scale and diversification to compensate if needed.

Q: DSP and SSP percentage and future?

A: ~50% of DSP buys go through SSP, expects to increase to 60% in next three years as more inventory and data are onboarded.

Q: Expenses and adjusted EBITDA margin long-term?

A: Q1 EBITDA beat from top line hit, reversal in allowance, better utilization, and slower talent onboarding; long-term adjusted EBITDA margin expected to reach 40s in 3-5 years with GenAI and initiatives.