Nexxen International (NEXN) Q4 2019 earnings summary

Executive summary

• FY19 was a repositioning year, with the RhythmOne merger completed in April and strategy shifted toward video advertising; integration delivered $40m of annualised cost savings.

• Revenue grew 18% to $325.8m and adjusted EBITDA rose 37% to $60.4m, while reported operating profit and net profit declined amid integration costs, higher share-based payments and acquired-intangible amortization.

Financial highlights

• Revenue was $325.8m, up 18% YoY from $276.9m; gross profit increased 24% to $138.5m from $111.4m.

• Operating profit fell 88% to $3.2m from $26.7m; net profit declined 72% to $6.4m from $22.5m.

• Adjusted EBITDA increased 37% to $60.4m from $44.1m; operating cash inflow rose to $45.1m from $37.5m.

• Cash and cash equivalents were $79.0m at year-end; net cash was $76.9m after the 2019 buyback and $5m Alphonso data prepayment.

Outlook and guidance

• COVID-19 was expected to affect near-term performance, but the duration and scale of the impact were uncertain; management said it would monitor conditions and update market guidance as appropriate.

• 2020 mitigation actions included accelerating Unruly integration, launching or enhancing capabilities, and monitoring costs; the self-serve platform was expected to contribute growth in H2 2020.

• Longer-term priorities include US organic growth, expanding CTV and PMP/self-serve offerings, international expansion, and selective acquisitions.