Nexxen International (NEXN) Q4 2022 earnings summary

Executive summary

• Record FY 2022 Contribution ex-TAC of $309.7m and Adjusted EBITDA of $144.9m, with a 47% Adjusted EBITDA margin on Contribution ex-TAC despite weaker advertising demand.

• Completed the Amobee acquisition and a $25m VIDAA investment, expanding linear TV planning, CTV data and platform reach.

• CTV revenue reached a record $97.2m, up 21% YoY; 79% of Contribution ex-TAC came from Video, including CTV.

Financial highlights

• Revenue was $335.3m, down 2.0% from $341.9m; Amobee added $36.8m after its September 12 closing, offsetting part of the $43.5m standalone revenue decline.

• Adjusted EBITDA was $144.9m versus $161.2m in 2021; margin was 43% of revenue and 47% of Contribution ex-TAC.

• IFRS net income was $22.7m versus $73.2m; operating profit was $44.8m versus $74.5m.

• Gross profit margin increased to 82% from 79%, as cost of revenue declined faster than revenue.

• Net cash was $115.5m at year-end; operating cash flow was $83.0m and free cash flow conversion was 96%.

Outlook and guidance

• VIDAA investment and Hisense relationship are expected to generate meaningful revenue starting in late 2023.

• Amobee integration is expected to deliver $65m in annualized operating cost synergies; approximately $50m in annualized savings had been achieved, with bulk technology integration and DSP consolidation targeted by end-H1 2023.

• Continued investment in CTV, video, data and platform technology is planned, alongside evaluation of selective strategic M&A.

• Management cautioned that inflation, interest rates, geopolitical uncertainty, recession concerns and supply constraints could continue to weigh on advertising activity through 2023 and beyond.