Rosenblatt has started coverage on Nexxen (NEXN, Financial) with a "Buy" recommendation and a $15 price target. The firm highlights Nexxen's distinct capability of integrating both demand-side platform (DSP) and supply-side platform (SSP) functionalities, setting it apart from other industry players that focus on one aspect exclusively.
The company's recent strategic acquisitions have expanded its capabilities in connected TV and DSP, although they initially caused challenges in growth and cash flow throughout 2022 and early 2023. However, Nexxen has now realigned its fundamentals, matching the performance of its peers and capitalizing on market opportunities.
Despite these positive developments, Rosenblatt notes that NEXN's stock valuation is currently undervalued. The firm expresses confidence that this situation is likely to improve, reflecting the company's strengthened position and potential for growth.
NEXN Key Business Developments
Release Date: March 05, 2025
- Contribution ex-TAC: $105.2 million in Q4, an all-time quarterly record, with 16% year-over-year growth.
- Programmatic Revenue: $98.7 million in Q4, reflecting 15% growth from Q4 2023.
- CTV Revenue: $37 million in Q4, representing 86% growth from Q4 2023.
- Adjusted EBITDA: $44.3 million in Q4, a 38% increase from Q4 2023, with a margin of 42%.
- Net Cash from Operating Activities: $52.3 million in Q4, compared to $43.6 million in Q4 2023.
- Cash and Cash Equivalents: $187.1 million as of December 31, 2024.
- Non-IFRS Diluted Earnings per Share: $0.48 in Q4 2024, compared to $0.20 in Q4 2023.
- Share Repurchase: Approximately 4.5 million ordinary shares repurchased in Q4, reflecting an investment of $20.1 million.
- 2025 Outlook: Expected contribution ex-TAC of approximately $380 million and adjusted EBITDA of approximately $125 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nexxen International Ltd (NEXN, Financial) achieved record quarterly and annual Contribution ex-TAC for programmatic revenues and CTV revenue results in 2024.
- The successful integration of Amobee in 2023 enhanced Nexxen's enterprise DSP capabilities, data capabilities, and CTV and omnichannel offerings.
- Nexxen's end-to-end platform and robust DSP and SSP technologies provide a competitive edge in the CTV market.
- The company plans to deepen its AI capabilities in 2025, which is expected to enhance platform usability and improve targeting precision.
- Nexxen's CTV revenue grew by 86% year-over-year in Q4 2024, driven by strong sales execution and improved macroeconomic conditions.
Negative Points
- Nexxen experienced a year-over-year decrease in mobile video revenue and within its travel and education verticals.
- The macroeconomic environment remains fragile, which could impact future performance.
- Despite strong growth, the data product segment is still relatively small in terms of revenue contribution.
- The company anticipates an increase in stock-based compensation expenses in 2025 due to a higher share price.
- Nexxen's transition from IFRS to US GAAP accounting is still under consideration, which may involve complexities and adjustments.
