Nexxen International(NEXN) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2023, the company generated contribution ex-TAC of $76.6 million, reflecting an 18% growth from $64.9 million in Q3 2022 [46] - For the nine months ended September 30, 2023, contribution ex-TAC was $223.7 million, an 8% increase compared to $206.7 million in the same prior year period [46] - Adjusted EBITDA for Q3 2023 was $21.3 million, down from $30.1 million in Q3 2022, and for the nine months, it was $51.2 million compared to $108 million in the same prior year period [58] - The adjusted EBITDA margin for Q3 2023 was 27% on a revenue basis, down from 43% in Q3 2022 [60] Business Line Data and Key Metrics Changes - Programmatic revenue for Q3 2023 was $74.2 million, reflecting a 23% increase from $60.1 million in Q3 2022 [49] - CTV revenue for Q3 2023 was $19.6 million, a decrease of 21% from $24.7 million in Q3 2022 [51] - Contribution ex-TAC from mobile increased 20% year-over-year, while display increased 138% year-over-year [52] Market Data and Key Metrics Changes - The company observed strength in shopping and food verticals during Q3 2023, but softness in the CPG vertical and CTV due to reduced advertising demand [47] - Programmatic revenue as a percentage of total revenue increased to 93% in Q3 2023, compared to 85% in Q3 2022 [50] Company Strategy and Development Direction - The company is focusing on scaling mid to long-term revenue-generating initiatives and increasing engagement with advertisers and publishers [12] - A rebranding to Nexxen International is planned, with a shareholder vote in December [17] - The integration of Amobee is expected to enhance tech and data capabilities, particularly in DSP and TV planning features [18] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic headwinds and uncertainty, which are expected to limit advertising demand and budgets [64] - The company anticipates contribution ex-TAC for full-year 2023 to be in the range of approximately $310 million to $315 million [65] - Management expressed confidence in the company's future growth prospects and the potential for share repurchase programs [41][42] Other Important Information - The company has a net cash position of $98.9 million and $80 million undrawn on its revolving credit facility [62] - A new $20 million ordinary shares repurchase program is pending approval from the Israeli Court [40] Q&A Session Summary Question: Guidance for the end of November and December - Management sees stabilization in the macro environment but remains cautious about revenue hitting by the end of the year [74] Question: Confidence in CTV market despite macro impacts - Management believes they are well-positioned for future growth in CTV, with strong capabilities in targeting and measurement [76][79] Question: Focus on partnerships and their contributions - Management clarified that partnerships are aimed at enhancing capabilities and market reach rather than direct financial contributions [80][82] Question: Positioning for cookie deprecation - The company is prepared for the deprecation of cookies, leveraging its end-to-end solution to reduce dependency [87] Question: Deceleration in Q4 guidance - Management attributes cautious guidance to ongoing macroeconomic instability and advertisers' cautious spending [90]