Nexxen International(NEXN) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, Contribution ex-TAC was $97.8 million, reflecting a 7% year-over-year decrease or a 1% decrease excluding political advertising [19] - Programmatic revenue was $94.3 million, down 4% year-over-year but up 2% excluding political [19] - Adjusted EBITDA for Q4 was $33.9 million, representing a 35% margin as a percentage of Contribution ex-TAC [21] - Non-IFRS diluted earnings per share was $0.33 in Q4 compared to $0.48 in Q4 2024 [22] - For full year 2025, Contribution ex-TAC retention rate declined to 92% from 102% in 2024 [21] Business Line Data and Key Metrics Changes - Contribution ex-TAC from data products increased 51% year-over-year [20] - CTV revenue declined 19% year-over-year in Q4 to $30.1 million [20] - Desktop video revenue increased 21% year-over-year [20] - Mobile video revenue declined 9% [20] Market Data and Key Metrics Changes - According to eMarketer, over 80% of mobile ad spend occurred in apps in 2025, with mobile expected to account for over two-thirds of total digital ad spend by 2027 [11] - Nielsen reports that viewers spend an average of about 10 minutes per day on Smart TV home screens, making it a valuable advertising surface [8] Company Strategy and Development Direction - The company plans to expand its enterprise solutions and has doubled its enterprise customer base in 2025 [6][7] - Investments in AI and infrastructure are aimed at enhancing programmatic trading growth and supporting long-term revenue durability [5][12] - The launch of a programmatic Smart TV on-screen advertising solution is expected to create a new growth channel for advertisers [9][10] - The company is focusing on building partnerships with leading DSPs to enhance its market position [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to expand margins over time through disciplined cost management and anticipated benefits from AI initiatives [22] - The company expects contribution ex-TAC in the range of $375 million-$390 million for 2026, representing over 8% year-over-year growth at the midpoint [25] - Early 2026 performance is trending ahead of expectations, driven by strong January and February results [26] Other Important Information - The company repurchased 1.44 million shares in Q4, investing approximately $10.8 million [22] - A new program of up to $40 million for share repurchase has been approved to begin after the current program concludes [23] - The company plans to invest an additional $50 million in its partnership with V in Q3 2026 [23] Q&A Session Summary Question: Impact of AI on 2025 results and CTV growth in 2026 - Management noted that AI is reshaping user engagement, leading to a decline in traditional browsing, which has prompted a shift towards CTV and in-app mobile solutions [31][32] Question: Update on data revenue and growth guidance for 2026 - Management highlighted that ACR data is becoming increasingly valuable for DSPs, and they expect to see growth in data-related revenues as partnerships expand [43][50] Question: Contribution of political advertising to growth and acquisition interest - Management indicated that while political advertising is not a major focus yet, they anticipate strong interest and engagement as the political season progresses [89][92]