Nexxen reaffirms guidance after strong first quarter

20th May 2024 10:21

(Sharecast News) - Advertising technology company Nexxen International reported record programmatic revenue and significant growth in adjusted EBITDA in its first-quarter results on Monday.

The AIM-traded firm said its contribution ex-traffic acquisition costs (TAC) came in at $69.7m, reflecting a 4% organic increase from $66.9m in the first three months of 2023.

That growth was driven by a strong performance in programmatic revenue, display, mobile video, audio, data products, and private marketplace (PMP) deals, despite a decline in connected television (CTV) revenue.

Programmatic revenue reached a record $65.6m, a 5% increase from $62.5m in the same period last year, supported by year-on-year increases in programmatic display and mobile and desktop video revenue.

However, CTV revenue decreased 11% to $18.8m, from $21.3m in the first quarter of 2023.

The decline was attributed to reduced CTV advertising activity from small and mid-sized agency customers, who preferred lower-cost programmatic display and mobile and desktop video solutions.

Despite that, Nexxen saw sequential growth in CTV revenue into the second quarter, driven by improving market conditions and its partnerships with Alphonso and LG Electronics.

CTV revenue constituted 29% of programmatic revenue in the three month period ended 31 March, down from 34% in the same period last year, while programmatic revenue accounted for 88% of total revenue, up from 87% in the prior year.

Adjusted EBITDA rose 34% to $11.9m, from $8.9m in the first quarter of 2023, with adjusted EBITDA margins improving to 17% on a contribution ex-TAC basis and 16% on a revenue basis, compared to 13% and 12%, respectively, a year ago.

Video revenue remained a significant part of Nexxen's programmatic revenue, at 66% in the first quarter, though down from 75% in the same period last year.

Despite that decrease, the company said it remained well-positioned for long-term video revenue growth.

As of 31 March, Nexxen had net cash of $144.9m, comprising cash and cash equivalents of $244.9m, offset by $100m in principal long-term debt.

On 9 April, Nexxen fully repaid that debt, expanding its undrawn revolving credit facility from $80m to $90m.

The company completed a $20m share repurchase programme and launched an additional $50m programme.

Nexxen said it intended to prioritise capital allocation towards share repurchases, strategic internal growth, innovation investments, and ongoing business needs.

The company reaffirmed its full-year 2024 guidance for contribution ex-TAC and adjusted EBITDA.

"In the first quarter, we completed our rebrand, enhanced our data suite with premium on-the-go streaming data, and expanded our TV partnerships, now boasting strong relationships with all the world's major CTV OEMs," said chief executive officer Ofer Druker.

"Positioned as a go-to strategic partner at the forefront of the TV and video AdTech ecosystems, Nexxen is poised to capitalise on a growing opportunity in an improving market."

Druker noted that the company also recently introduced its Nexxen Data Platform, enabling better data monetisation, forged new partnerships with industry leaders, and boosted spending and product adoption among its largest clients.

"These achievements, combined with our visibility into the remainder of the year, enable us to confidently reaffirm our full year guidance."

At 0953 BST, shares in Nexxen International were up 5.43% at 237.74p.

Reporting by Josh White for Sharecast.com.