Nexxen International (NEXN) Q4 2018 earnings summary

Executive summary

• FY18 revenue rose 31.3% to $276.9m and Adjusted EBITDA increased 29% to $44.1m, ahead of initial guidance; gross margin and operating profit also improved.

• Strategic priorities centered on higher-quality earnings, margin improvement, operating efficiencies, technology investment and international expansion.

Financial highlights

• Revenue was $276.9m, up 31.3% YoY; gross profit rose 38% to $111.4m, with gross margin at 40.25% versus 38.2%.

• Operating profit increased 52% to $26.7m; net profit was $22.2m versus $13.8m in 2017.

• Adjusted EBITDA was $44.1m versus $34.2m; adjustments include amortization, share-based payments, acquisition-related costs and extraordinary income.

• Basic EPS was $0.3281 versus $0.2249; diluted EPS was $0.3179 versus $0.2161. Adjusted for purchased-intangible amortization and business-combination costs, diluted EPS was $0.4442 versus $0.3929.

• Operating cash flow rose to $37.5m from $30.8m; year-end cash was $67.1m and net cash was $54.4m, versus net debt of $4.0m a year earlier.

Outlook and guidance

• FY18 Adjusted EBITDA was in line with management expectations and significantly ahead of guidance issued at the start of the year.

• Early FY19 trading was mixed: Tremor Video DSP expectations remained strong, while performance marketing faced supply-chain headwinds and later customer engagement.

• RhythmOne merger was expected to add quality supply, create synergies and reduce volatility in performance marketing; sustainable margin improvement remained a priority for Tremor Video DSP.