Nexxen International (NEXN) Q4 2017 earnings summary

Executive summary

• FY2017 revenue rose 68% to $210.9m, supported by new international offices and acquisitions of Adinnovation and Tremor Video DSP.

• Tremor Video DSP added brand advertising to performance marketing, expanded US reach and completed integration ahead of schedule; it was profitable in 2017.

• Adjusted EBITDA reached $34.2m versus $25.7m in 2016, ahead of market expectations.

Financial highlights

• Revenue was $210.925m versus $125.861m; mobile in-app non-video revenue grew 35% YoY.

• Gross profit increased 75% to $80.575m from $45.981m; gross margin expanded to 38.2% from 36.5%.

• Operating profit was $17.627m versus $19.733m; adjusted to exclude purchased-intangible amortization and business-combination expenses, operating profit was $30.609m versus $22.910m.

• Net income was $13.759m versus $16.469m; diluted EPS was $0.2161 versus $0.2592.

• Operating cash flow rose to $30.757m from $20.285m.

Outlook and guidance

• 2018 sales momentum continued with an expanding Tier 1 client base and growing contributions from new international offices, especially Asia-Pacific; guidance targeted significant YoY growth in line with market expectations.

• Continued investment in R&D, sales and marketing, and new geographies; further acquisitions remained under consideration, with potential targets in discussion.

• The January 2018 equity raise was intended to reduce debt and provide funding capacity for prospective acquisitions.