6
March 2024
Nexxen International
Ltd
("Nexxen" or
the "Company")
Nexxen Reports
Results for the Fourth Quarter and Year Ended December 31,
2023
Achieved full year 2023
Contribution ex-TAC and Adjusted EBITDA above the midpoints of the
Company's guidance
Grew programmatic revenue
9% for full year 2023 vs. 2022; expanded programmatic revenue to
90% of full year 2023 revenue from 82% in 2022
Launched new $20 million
Ordinary share repurchase program
Nexxen International
Ltd. (AIM/NASDAQ: NEXN) ("Nexxen" or the "Company"),
a global, unified advertising technology platform
with deep expertise in video and Connected TV
("CTV"), announced today its financial
results for the fourth quarter and year ended December 31,
2023. The Company's financial results for the fourth quarter and
year ended December 31, 2023, as well as the fourth quarter ended
December 31, 2022, reflect the combined financial performance of
Nexxen and Amobee, while comparative figures for the year ended
December 31, 2022 include Amobee contribution only from September
12, 2022 through December 31, 2022.
Financial
Summary
·
Contribution
ex-TAC: Generated Contribution
ex-TAC of $90.5 million in Q4 2023, reflecting a 12% decrease from
$103.0 million in Q4 2022, and Contribution ex-TAC of $314.2
million for the year ended December 31, 2023, reflecting a 1%
increase compared to $309.7 million for the year ended December 31,
2022. Weakness in Q4 2023 Contribution ex-TAC was a byproduct of
reduced managed service, video, and CTV spending from some of the
Company's highest-spending agency customers it is heavily indexed
to, as well as Nexxen discontinuing less profitable relationships
with certain customers. Full year 2023 Contribution ex-TAC was also
affected by challenging advertising conditions throughout the year
which disproportionately impacted budgets and spending for several
of the Company's small- and mid-sized agency customers, a notable
decline in the Company's non-core business focused on legacy
non-programmatic performance-related activities, and challenges
stemming from the initial integration of Amobee's and Nexxen's
sales teams, technology stack, and management teams. Nexxen
believes its sales team is well-positioned to drive growth in 2024
as it is now exclusively focused on selling as opposed to
integration initiatives and is equipped with a significantly
enhanced platform featuring in-demand tech and data capabilities.
Nexxen is cautiously optimistic that macroeconomic and advertising
conditions will improve in 2024, potentially driving increased
budgets and spending for its larger customers.
·
Programmatic
Revenue: Programmatic revenue was
$86.0 million in Q4 2023, reflecting a 9% decrease from $94.5
million in Q4 2022, while programmatic revenue was $299.0 million
for the year ended December 31, 2023, reflecting a 9% increase
compared to $274.4 million for the year ended December 31, 2022.
Reduced programmatic revenue in Q4 2023 compared to Q4 2022 was a
byproduct of lower overall Contribution ex-TAC driven by weaker
comparative advertising demand and spending from some of the
Company's larger customers, while increases for the year ended
December 31, 2023, compared to the year ended December 31, 2022,
were driven largely by the completed integration of Amobee, which
included a strong programmatic revenue footprint.
·
CTV
Revenue: CTV revenue was $19.9
million in Q4 2023, compared to $33.0 million in Q4 2022. CTV
revenue was impacted by a combination of factors including the
SAG-AFTRA strike, and reduced CTV spending from some of the
Company's largest small- and mid-sized agency customers.
Importantly, these customers continued to spend within Nexxen's
broader platform offerings during Q4 2023 but largely selected the
Company's lower-cost, performance-based programmatic solutions,
such as mobile video and display. The Company believes this was a
result of cost-savings efforts and the continued evolution of
on-the-go streaming preferences as consumers increasingly stream
content on mobile phones and tablets, in addition to CTVs, all of
which are options the Company can flexibly service advertising
customers across. CTV revenue was $85.5 million for the year ended
December 31, 2023, reflecting a 12% decrease from $97.2 million for
the year ended December 31, 2022. The Company believes it will
achieve CTV revenue growth in 2024 amidst optimism that
macroeconomic conditions will improve, and its larger customers'
budgets and spending will increase.
·
CTV and
Programmatic Revenue Percentages: CTV revenue during the three and twelve months ended December
31, 2023 represented 23% and 29% of programmatic revenue,
respectively, compared to 35% for the same prior year periods.
Programmatic revenue increased to 90% of revenue for the three and
twelve months ended December 31, 2023, compared to 88% and 82% of
revenue, respectively, for the same prior year periods.
·
Adjusted
EBITDA: Generated Adjusted EBITDA
of $32.0 million for the three months ended December 31, 2023, and
$83.2 million for the twelve months ended December 31, 2023,
compared to $36.9 million and $144.9 million for the same prior
year periods. Year-over-year decreases were attributable to the
integration of Amobee, whose business lines operate at a lower
profitability profile than Nexxen's pre-acquisition standalone
business, and reduced spending from some of the Company's largest
customers throughout 2023 compared to 2022.
·
Adjusted EBITDA
Margins: Achieved a 35% Adjusted
EBITDA Margin on a Contribution ex-TAC basis, and 33% on a revenue
basis, for the three months ended December 31, 2023, compared to
36% on a Contribution ex-TAC basis, and 34% on a revenue basis for
the three months ended December 31, 2022. Nexxen achieved an
Adjusted EBITDA Margin of 26% on a Contribution ex-TAC basis, and
25% on a revenue basis, for the twelve months ended December 31,
2023, compared to 47% on a Contribution ex-TAC basis, and 43% on a
revenue basis for the twelve months ended December 31, 2022. The
Company anticipates Adjusted EBITDA Margins will expand in full
year 2024 compared to full year 2023 amidst expectations for
increased Contribution ex-TAC.
·
Video
Revenue: Video revenue continued to
represent most of the Company's programmatic revenue at 67% and 69%
for the three and twelve months ended December 31, 2023,
respectively, compared to 80% and 89% for the three and twelve
months ended December 31, 2022, respectively.
·
Liquidity
Resources: As of December 31, 2023,
the Company had net cash of $134.3 million, consisting of cash and
cash equivalents of $234.3 million, offset by approximately $100.0
million in principal long-term debt, as well as $80 million undrawn
on its revolving credit facility. The Company's net cash balance as
of March 4, 2024, increased to approximately $146.0 million. The
Company intends to prioritize near-term cash resources on strategic
internal growth investments and initiatives and its ongoing
Ordinary share repurchase program, as well as future potential
share repurchase programs. The Company does not anticipate any
major near-term acquisitions as it believes its technology and data
stack now offers the necessary components to enable market share
gains within the digital advertising ecosystem.
"Q4 2023 capped off a
transformational year for Nexxen. In 2023 we achieved a key
milestone by rebranding from Tremor International. Also, through
the significant investment of focus and resources, we efficiently
combined two massive technology platforms and employee bases,
successfully completing the integration of Amobee, our largest
acquisition ever. This combination created a state-of-the-art
data-driven end-to-end platform built through approximately $1
billion of cumulative R&D investment, and loaded with in-demand
tech, planning, video, CTV, and data capabilities critical to
helping our customers succeed in the digital advertising
ecosystem," said Ofer Druker, CEO of Nexxen.
Mr. Druker added, "In 2024, we are
continuing to focus on expanding our base of end-to-end customers
leveraging us for multiple enterprise tech and data solutions,
growing our data licensing revenue, and expanding our streaming,
TV, and agency partnerships to drive growth and increased
profitability, against a macroeconomic backdrop we are cautiously
optimistic is showing signs of improvement. With the integration of
Amobee now complete, we believe we can shift our primary investment
focus towards innovation and our share repurchase program to
generate long-term value for our customers and
shareholders."
Operational Highlights
·
Completed
rebrand to Nexxen (from Tremor International), better positioning
the Company with customers and investors
o Simplified and enhanced the holistic value proposition of the
Company's advanced data-driven tech stack.
o Updated the Company's parent name to Nexxen International
Ltd. and changed its stock tickers in the U.S. and U.K. markets
from "TRMR" to "NEXN" in January 2024.
o Celebrated the Company's rebranding at NASDAQ's Closing Bell
ceremony on February 28, 2024, generating further momentum with
customers and investors, and increased industry
awareness.
·
Investment in
VIDAA enabled the creation of new data licensing revenue streams,
reflecting an exciting growth opportunity
o Nexxen is generating notable initial demand for automatic
content recognition ("ACR") data licensing partnerships from major
third-party DSPs, agencies, and key research and measurement
players within the industry seeking to leverage the Company's
exclusive global access to VIDAA's rapidly growing smart TV data
footprint.
o This high-margin annually recurring data licensing revenue is
expected to reflect a significant growth opportunity for Nexxen,
while also enabling greater resiliency in the Company's revenue
base, as the Company believes the revenue is less susceptible to
volatility in advertising demand conditions.
·
Significantly
expanded TV Intelligence data footprint through exclusive
partnership with PeerLogix and continued growth by VIDAA; now
offering solution in U.S. and U.K. with further international
expansion expected in 2024
o Nexxen entered a new exclusive partnership with PeerLogix, an
audience discovery platform, to augment the Company's TV
Intelligence solution with premium on-the-go streaming viewership
data from platforms like Netflix, Hulu, and Disney+. TV
Intelligence is an expansive dataset inclusive of Set-Top Box
("STB"), ACR, and cross-screen panel data that can offer insights
on TV and streaming viewership data across approximately 50 million
households in the U.S. alone, enabling more effective targeting for
customers across the TV and streaming ecosystem.
o VIDAA, Hisense's primary CTV operating system, whose global
ACR data can be exclusively monetized and distributed by Nexxen
through at least the end of 2026, grew its reach to over 25 million
Connected TVs during 2023, significantly expanding and enhancing
Nexxen's TV viewership data footprint. According to VIDAA, this
number has already increased to over 26 million Connected TVs thus
far in 2024.
o Launched TV Viewership Audiences in the U.K. while expanding
the Company's TV Intelligence offering in the U.S., generating
notable and increased adoption during Q4 2023. The Company expects
further growth in both markets in 2024.
o The Company expects to launch its TV Intelligence solution in
additional major international markets in 2024, enhancing and
expanding the Company's international CTV growth opportunity.
·
Scaled and
expanded CTV partnership roster; established relationships with
more of the world's major smart TV OEMs
o Expanded the Company's strategic partnership with TCL FFALCON
("TCL") beyond solely granting advertising customers access to CTV
and OTT supply in the TCL channel, to also exclusively sell TCL's
native display inventory as a preferred supply partner.
o Following Nexxen's settlement and partnership agreement with
Alphonso Inc. and LG Electronics, Inc., the Company now holds
relationships with a larger base of the world's major smart TV
OEMs.
o Partnered with out-of-home ("OOH") advertising group, Taiv,
to broaden Nexxen's CTV OOH opportunities for clients across the
advertising ecosystem. The partnership delivers immersive, high
impact ad experiences by reaching audiences on screens in U.S.
sports bars and restaurants, hitting another CTV touchpoint within
Nexxen's larger CTV OOH offering.
·
Nexxen
Discovery's audience finding and targeting capabilities generating
increased adoption and significant interest ahead of the 2024 U.S.
election cycle
o Nexxen Discovery, the
Company's data fueled B.I. tool, has been adopted by key industry
partners and is generating significant interest with political
advertisers and agencies ahead of the 2024 U.S. election
cycle.
o While political has not
historically been a material vertical for Nexxen, with the addition
of Nexxen Discovery to the Company's product portfolio, and an
increased dedicated sales focus on the vertical, Nexxen anticipates
growth within the vertical in 2024 in an election year where
eMarketer estimates over $12 billion in U.S. political ad spending.
·
Added a
significant number of new customers on the buy- and sell-sides of
the ecosystem during the three and twelve months ended December 31,
2023, while retaining the vast majority of the Company's
highest-spending customers throughout 2023
o Nexxen DSP added 111 new actively-spending first-time
advertiser customers during Q4 2023 across entertainment, food and
beverage, automotive, and finance verticals, as well as others.
This figure included 14 new enterprise self-service advertiser
customers, highlighted by some of the world's largest and
most-recognized CTV publishers, broadcasters, and Consumer Packaged
Goods ("CPG") companies, as well as three new independent agencies
leveraging the Company's solutions in a self-service capacity. The
Company added 334 new actively-spending first-time advertiser
customers for the twelve months ended December 31, 2023.
o Nexxen SSP added 89 new supply partners, including 78 in the
U.S., during Q4 2023, across several verticals and formats,
including CTV, broadcast TV, mobile, and mobile gaming. The Company
added 372 new supply partners during the twelve months ended
December 31, 2023, including 327 in the U.S.
o The Company achieved a 73% net revenue retention rate for the
year ended December 31, 2023, compared to 80% for the year ended
December 31, 2022. The decrease was driven by reduced budgets for
some of the Company's largest small- and mid-sized agency customers
due to challenging macroeconomic conditions, which drove lower
overall spending and shifts to lower-cost options within Nexxen's
broader product ecosystem, as well as Nexxen discontinuing less
profitable relationships with certain customers.
Launched $20 Million
Ordinary Share Repurchase Program
o On December 20, 2023, the Company launched a new $20 million
Ordinary share repurchase program, following approval from the
Israeli Court and the Company's Board of Directors.
o The Company repurchased 221,506 shares during Q4 2023 at an
average price of 201.01 pence, reflecting a total investment of
£446,139, or $565,714.
o The Company's Ordinary share repurchase program will continue
until the earlier of June 18, 2024 and the date the program is
completed. The share repurchase program does not obligate Nexxen to
repurchase any particular amount of Ordinary Shares and the program
may be suspended, modified, or discontinued at any time at the
Company's discretion, subject to applicable
law.
o Upon completion of the current share repurchase program, the
Company's Board of Directors intends to evaluate the implementation
of an additional share repurchase program, subject to then current
market conditions and obtaining requisite regulatory approval,
including, if required, approval from the Israeli Court.
Reached Favorable Settlement
Agreement with Alphonso Inc. and LG Electronics, Inc. ("LGE") and
Entered into Multi-Year Strategic Partnership
o On February 28, 2024, Nexxen announced it reached a favorable
settlement agreement and launched a three-year strategic
partnership with Alphonso Inc. and LGE, resolving the disputes
underlying the complaints, and concluding the parties'
litigation.
o The executed settlement agreement includes a cash component
and a commercial strategic partnership. Through the partnership and
settlement agreement, Alphonso Inc. will grant Nexxen limited
access to monetize a portion of LG's premium CTV inventory and will
also leverage Nexxen's data-driven discovery and segmentation
tools.
Financial
Guidance
o Management believes ongoing macroeconomic headwinds and
uncertainty may continue to limit near-term budgets and spending
for some of the Company's largest small- and mid-sized agency
customers, drive continued managed service softness, and cause
customers to continue to focus spending on lower-cost solutions
within Nexxen's broad suite of offerings, but is cautiously
optimistic these customers will revert to the Company's premium
solutions amidst anticipated improvement in macroeconomic and
advertising demand conditions.
o Management also believes the Company is well-placed to
capitalize on industry growth trends following the completed
integration of Amobee given its unique positioning to flexibly
serve customers on both sides of the ecosystem across formats and
devices, expand its end-to-end customer base, increase its base of
customers leveraging multiple enterprise tech and data solutions,
grow its data licensing revenue, and increase its agency and TV
partnerships. Management also anticipates Adjusted EBITDA Margin
expansion and CTV revenue growth in full year 2024 compared to full
year 2023, and Nexxen provides the following financial
guidance:
· Full
year 2024 Contribution ex-TAC in a range of approximately $340
- $345 million
· Full
year 2024 Adjusted EBITDA of approximately $100 million
· Full
year 2024 Programmatic revenue to reflect approximately 90% of full
year 2024 revenue
Fourth Quarter and Full Year
2023 Financial Highlights ($ in millions, except per share
amounts)
|
Three months ended December
31
|
Twelve months ended December
31
|
|
|
|
|
2023
|
2022
|
%
|
|
IFRS highlights
|
|
|
|
|
|
|
Revenues
|
95.9
|
107.7
|
(11%)
|
332.0
|
335.3
|
(1%)
|
|
Programmatic Revenues
|
86.0
|
94.5
|
(9%)
|
299.0
|
274.4
|
9%
|
|
Operating Profit (loss)
|
9.6
|
10.8
|
(11%)
|
(17.0)
|
44.8
|
(138%)
|
|
|
|
|
|
|
|
|
|
Net Income (loss) Margin on a
Gross Profit basis
|
5%
|
6%
|
|
(10%)
|
9%
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income
(loss)
|
5.3
|
9.8
|
(45%)
|
(18.1)
|
16.2
|
(212%)
|
|
Diluted earnings (loss) per
share
|
0.02
|
0.03
|
(36%)
|
(0.15)
|
0.15
|
(201%)
|
|
|
|
|
|
|
|
|
|
Non-IFRS highlights
|
|
|
|
|
|
|
Contribution ex-TAC
|
90.5
|
103.0
|
(12%)
|
314.2
|
309.7
|
1%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
32.0
|
36.9
|
(13%)
|
83.2
|
144.9
|
(43%)
|
|
Adjusted EBITDA Margin on a
Contribution ex-TAC basis
|
35%
|
36%
|
|
26%
|
47%
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS net Income
|
14.5
|
22.2
|
(35%)
|
32.2
|
91.8
|
(65%)
|
|
Non-IFRS Diluted earnings per
share
|
0.10
|
0.15
|
(35%)
|
0.22
|
0.60
|
(63%)
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter and Full Year
2023 Financial Results Webcast and Conference Call
Details
· Nexxen International Fourth Quarter and Twelve Months Ended
December 31, 2023 Earnings Webcast and Conference
Call
· March 6, 2024, at 6:00 AM PT / 9:00 AM ET / 2:00 PM
GMT
·
Webcast
Link: https://edge.media-server.com/mmc/p/93my32xz
·
Participant
Dial-In Numbers:
o U.S. / Canada Participant Toll-Free Dial-In Number: (888)
596-4144
o U.K. Participant Toll-Free Dial-In Number: +44 800 260
6470
o International Participant Toll-Free Dial-In Number: (646)
968-2525
o Conference ID: 5462475
Use of Non-IFRS Financial
Information
In addition to our IFRS results,
we review certain non-IFRS financial measures to help us evaluate
our business, measure our performance, identify trends affecting
our business, establish budgets, measure the effectiveness of
investments in our technology and development and sales and
marketing, and assess our operational efficiencies. These non-IFRS
measures include Contribution ex-TAC, Adjusted EBITDA, Adjusted
EBITDA Margin, Non-IFRS Net Income, and Non-IFRS Earnings per
share, each of which is discussed below.
These non-IFRS financial measures
are not intended to be considered in isolation from, as substitutes
for, or as superior to, the corresponding financial measures
prepared in accordance with IFRS. You are encouraged to evaluate
these adjustments and review the reconciliation of these non-IFRS
financial measures to their most comparable IFRS measures, and the
reasons we consider them appropriate. It is important to note that
the particular items we exclude from, or include in, our non-IFRS
financial measures may differ from the items excluded from, or
included in, similar non-IFRS financial measures used by other
companies. See "Reconciliation of Revenue to Contribution ex-TAC,"
"Reconciliation of Total Comprehensive Income (Loss) to Adjusted
EBITDA," and "Reconciliation of Net Income (Loss) to Non-IFRS Net
Income," included as part of this press release.
o Contribution
ex-TAC: Contribution ex-TAC for
Nexxen is defined as gross profit plus depreciation and
amortization attributable to cost of revenues and cost of revenues
(exclusive of depreciation and amortization) minus the Performance
media cost ("traffic acquisition costs" or "TAC"). Performance
media cost represents the costs of purchases of impressions from
publishers on a cost-per-thousand impression basis in our non-core
Performance activities. Contribution ex-TAC is a supplemental
measure of our financial performance that is not required by, or
presented in accordance with, IFRS. Contribution ex-TAC should not
be considered as an alternative to gross profit as a measure of
financial performance. Contribution ex-TAC is a non-IFRS financial
measure and should not be viewed in isolation. We believe
Contribution ex-TAC is a useful measure in assessing the
performance of Nexxen, because it facilitates a consistent
comparison against our core business without considering the impact
of traffic acquisition costs related to revenue reported on a gross
basis.
o Adjusted
EBITDA: We define Adjusted EBITDA
for Nexxen as total comprehensive income (loss) for the period
adjusted for foreign currency translation differences for foreign
operations, foreign currency translation for subsidiary sold
reclassified to profit and loss, financing expenses (income), net,
tax expenses, depreciation and amortization, stock-based
compensation, restructuring, acquisition-related costs and other
expenses, net. Adjusted EBITDA is included in the press release
because it is a key metric used by management and our board of
directors to assess our financial performance. Adjusted EBITDA is
frequently used by analysts, investors, and other interested
parties to evaluate companies in our industry. Management believes
that Adjusted EBITDA is an appropriate measure of operating
performance because it eliminates the impact of expenses that do
not relate directly to the performance of the underlying
business.
o Adjusted
EBITDA Margin: We define Adjusted EBITDA
Margin as Adjusted EBITDA on a Contribution ex-TAC
basis.
o Non-IFRS Income (Loss) and
Non-IFRS Earnings (Loss) per Share:
We define non-IFRS earnings (loss) per share as
non-IFRS income (loss) divided by non-IFRS weighted-average shares
outstanding. Non-IFRS income (loss) is equal to net income (loss)
excluding stock-based compensation, and cash- and non-cash-based
acquisition and related expenses, including amortization of
acquired intangible assets, merger-related severance costs, and
transaction expenses. In periods in which we have non-IFRS income,
non-IFRS weighted-average shares outstanding used to calculate
non-IFRS earnings per share includes the impact of potentially
dilutive shares. Potentially dilutive shares consist of stock
options, restricted stock awards, restricted stock units, and
performance stock units, each computed using the treasury stock
method. We believe non-IFRS earnings (loss) per share is useful to
investors in evaluating our ongoing operational performance and our
trends on a per share basis, and also facilitates comparison of our
financial results on a per share basis with other companies, many
of which present a similar non-IFRS measure. However, a potential
limitation of our use of non-IFRS earnings (loss) per share is that
other companies may define non-IFRS earnings per share differently,
which may make comparison difficult. This measure may also exclude
expenses that may have a material impact on our reported financial
results. Non-IFRS earnings (loss) per share is a performance
measure and should not be used as a measure of liquidity. Because
of these limitations, we also consider the comparable IFRS measure
of net income.
We do not provide a reconciliation
of forward-looking non-IFRS financial metrics, because reconciling
information is not available without an unreasonable effort, such
as attempting to make assumptions that cannot reasonably be made on
a forward-looking basis to determine the corresponding IFRS
metric.
The information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 (as implemented into English law) ("MAR"). With the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
About Nexxen
Nexxen empowers advertisers,
agencies, publishers and broadcasters around the world to utilize
video and Connected TV in the ways that are most meaningful to
them. Comprised of a demand-side platform (DSP), supply-side
platform (SSP), ad server and data management platform (DMP),
Nexxen delivers a flexible and unified technology stack with
advanced and exclusive data at its core. Our robust capabilities
span discovery, planning, activation, measurement and optimization
- available individually or in combination - all designed to enable
our partners to reach their goals, no matter how far-reaching or
hyper niche they may be. For more information, visit
www.nexxen.com
Nexxen is headquartered in Israel
and maintains offices throughout the United States, Canada, Europe
and Asia-Pacific, and is traded on the London Stock Exchange (AIM:
NEXN) and NASDAQ (NEXN).
For further information please contact:
Nexxen International Ltd.
Billy Eckert, Vice President of Investor Relations
ir@nexxen.com
Caroline Smith, Vice President of
Communications
csmith@nexxen.com
KCSA (U.S. Investor Relations)
David Hanover, Investor Relations
nexxenir@kcsa.com
Vigo Consulting (U.K. Financial PR & Investor
Relations)
Jeremy Garcia / Peter Jacob / Aisling Fitzgerald
Tel: +44 20 7390 0230 or nexxen@vigoconsulting.com
Cavendish Capital Markets Limited
Jonny Franklin-Adams / Charlie Beeson / George Dollemore (Corporate
Finance)
Tim Redfern / Harriet Ward (ECM)
Tel: +44 20 7220 0500
Forward Looking
Statements
This press release contains
forward-looking statements, including forward-looking statements
within the meaning of Section 27A of the United States Securities
Act of 1933, as amended, and Section 21E of the United States
Securities and Exchange Act of 1934, as amended.
Forward-looking statements are identified by words such as
"anticipates," "believes," "expects," "intends," "may," "can,"
"will," "estimates," and other similar expressions. However, these
words are not the only way Nexxen identifies forward-looking
statements. All statements contained in this press release that do
not relate to matters of historical fact should be considered
forward-looking statements, including without limitation statements
regarding anticipated financial results for full year 2024 and
beyond; anticipated benefits of Nexxen's strategic transactions and
commercial partnerships; anticipated features and benefits of
Nexxen's products and service offerings; Nexxen's positioning for
accelerated growth and continued future growth in both the US and
international markets in 2024 and beyond; Nexxen's medium- to
long-term prospects; management's belief that Nexxen is
well-positioned to benefit from future industry growth trends and
Company-specific catalysts; the Company's expectations with respect
to Video revenue; the potential negative impact of ongoing
macroeconomic headwinds and uncertainty that have limited
advertising activity and the anticipation that these challenges
could continue to have an impact for the remainder of 2024 and
beyond; the Company's plans with respect to its cash reserves and
its intent to not undertake any major acquisitions in the
near-term; its continued focus in 2024 on expanding its base of
end-to-end customers, growing data licensing revenue and expanding
its streaming, TV, and agency partnerships to drive growth and
increased profitability; the expectation of launching its TV
Intelligence solution in additional major international markets in
2024, enhancing and expanding the Company's international CTV
growth opportunity; the anticipated benefits from the Company's
investment in VIDAA and its enhanced strategic relationship with
Hisense; the anticipated benefits of the rebranding of the Tremor
group to Nexxen, and the Company's plans with respect thereto, as
well as any other statements related to Nexxen's future financial
results and operating performance. These statements are neither
promises nor guarantees but involve known and unknown risks,
uncertainties and other important factors that may cause Nexxen's
actual results, performance or achievements to be materially
different from its expectations expressed or implied by the
forward-looking statements, including, but not limited to, the
following: negative global economic conditions; global conflicts
and war, including the current terrorist attacks by Hamas, and the
war and hostilities between Israel and Hamas and Israel and
Hezbollah, and how those conditions may adversely impact Nexxen's
business, customers, and the markets in which Nexxen competes;
changes in industry trends; the risk that Nexxen will not realize
the anticipated benefits of its acquisition of Amobee and strategic
investment in VIDAA; and, other negative developments in Nexxen's
business or unfavourable legislative or regulatory developments.
Nexxen cautions you not to place undue reliance on these
forward-looking statements. For a more detailed discussion of these
factors, and other factors that could cause actual results to vary
materially, interested parties should review the risk factors
listed in the Company's most recent Annual Report on Form 20-F,
filed with the U.S. Securities and Exchange
Commission (www.sec.gov)
on March 7, 2023. Any forward-looking
statements made by Nexxen in this press release speak only as of
the date of this press release, and Nexxen does not intend to
update these forward-looking statements after the date of this
press release, except as required by law.
Nexxen, and the Nexxen logo are
trademarks of Nexxen International Ltd. in the
United States and other countries. All other trademarks are
the property of their respective owners. The use of the word
"partner" or "partnership" in this press release does not mean a
legal partner or legal partnership.
Reconciliation of Total Comprehensive Income (Loss)
to Adjusted EBITDA
|
Three months
ended
December
31
|
Twelve months ended December
31
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
Total comprehensive income (loss)
|
5,341
|
9,796
|
(45%)
|
(18,127)
|
16,238
|
(212%)
|
|
Foreign currency translation
differences for foreign operation
|
(2,114)
|
(4,735)
|
|
(2,126)
|
6,499
|
|
|
Foreign currency translation for
subsidiary sold reclassified to profit and loss
|
-
|
-
|
|
(1,234)
|
-
|
|
|
Tax expenses
|
6,487
|
5,040
|
|
2,503
|
19,688
|
|
|
Financial expense (income),
net
|
(105)
|
717
|
|
2,008
|
2,327
|
|
|
Depreciation and
amortization
|
21,047
|
17,184
|
|
78,285
|
42,700
|
|
|
Stock-based
compensation
|
1,386
|
7,986
|
|
19,169
|
50,505
|
|
|
Acquisition related
costs
|
-
|
93
|
|
171
|
6,085
|
|
|
Restructuring
|
-
|
307
|
|
796
|
307
|
|
|
Other expense
|
-
|
540
|
|
1,765
|
540
|
|
|
Adjusted EBITDA
|
32,042
|
36,928
|
(13%)
|
83,210
|
144,889
|
(43%)
|
|
Reconciliation of Revenue to Contribution
ex-TAC
|
Three months ended December
31
|
Twelve months
ended
December
31
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
Revenues
|
95,916
|
107,697
|
(11%)
|
331,993
|
335,250
|
(1%)
|
Cost of revenues (exclusive of
depreciation and amortization)
|
(17,886)
|
(17,265)
|
|
(62,270)
|
(60,745)
|
|
Depreciation and amortization
attributable to Cost of Revenues
|
(13,682)
|
(11,810)
|
|
(50,825)
|
(25,367)
|
|
Gross profit (IFRS)
|
64,348
|
78,622
|
(18%)
|
218,898
|
249,138
|
(12%)
|
Depreciation and amortization
attributable to Cost of Revenues
|
13,682
|
11,810
|
|
50,825
|
25,367
|
|
Cost of revenues (exclusive of
depreciation and amortization)
|
17,886
|
17,265
|
|
62,270
|
60,745
|
|
Performance media cost
|
(5,392)
|
(4,695)
|
|
(17,810)
|
(25,524)
|
|
Contribution ex-TAC (Non-IFRS)
|
90,524
|
103,002
|
(12%)
|
314,183
|
309,726
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Non-IFRS Net
Income
|
Three months
ended
December
31
|
Twelve months
ended
December
31
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
Net Income (loss)
|
3,227
|
5,061
|
(36%)
|
(21,487)
|
22,737
|
(195%)
|
Acquisition related
costs
|
-
|
93
|
|
171
|
6,085
|
|
Amortization of acquired
intangibles
|
14,931
|
8,496
|
|
42,952
|
20,768
|
|
Restructuring
|
-
|
307
|
|
796
|
307
|
|
Stock-based compensation
expense
|
1,386
|
7,986
|
|
19,169
|
50,505
|
|
Other expense
|
-
|
540
|
|
1,765
|
540
|
|
Tax effect of Non-IFRS adjustments
(1)
|
(5,086)
|
(262)
|
|
(11,153)
|
(9,130)
|
|
Non-IFRS Income
|
14,458
|
22,221
|
(35%)
|
32,213
|
91,812
|
(65%)
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted (in millions) (2)
|
147.5
|
147.6
|
|
145.2
|
153.1
|
|
|
|
|
|
|
|
|
Non-IFRS diluted Earnings Per Share (in
USD)
|
0.10
|
0.15
|
(35%)
|
0.22
|
0.60
|
(63%)
|
|
|
|
|
|
|
|
|
|
|
|
(1) Non-IFRS income includes the
estimated tax impact from the expense items reconciling between net
income (loss) and non-IFRS income
(2) Non-IFRS earnings per share is
computed using the same weighted-average number of shares that are
used to compute IFRS earnings per share
Somekh Chaikin
17 Ha'arba'a Street, PO Box
609
KPMG Millennium Tower
Tel Aviv 6100601, Israel
+972 3 684 8000
Auditors' Report to
the Shareholders of Nexxen International Ltd. (Formerly -Tremor
International Ltd.)
We have audited the accompanying consolidated
statements of financial position of Tremor International Ltd. and
its subsidiaries (hereinafter - "the Company") as of December 31,
2023 and 2022 and the related consolidated statements of operation
and other comprehensive income, statements of changes in equity and
statements of cash flows, for each of the three years in the period
ended December 31, 2023. These financial statements are the
responsibility of the Company's Board of Director and of its
Management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards in Israel, including standards
prescribed by the Auditors Regulations (Manner of Auditor's
Performance) - 1973. Such standards require that we plan and
perform the audit to obtain reasonable assurance that the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by Management, as well as evaluating the overall financial
statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the consolidated financial position of the Company and
its subsidiaries as of December 31, 2023 and 2022 and their results
of operations, changes in equity and cash flows for each of the
three years in the period ended December 31, 2023, in accordance
with International Financial Reporting Standards (IFRS).
Somekh Chaikin
Member Firm of KPMG International
March 6, 2024
KPMG Somekh Chaikin, an Israeli
partnership and a member firm of the KPMG global organization of
independent member firms affiliated with
KPMG International Limited, a private English company limited by
guarantee
NEXXEN INTERNATIONAL LTD.
(FORMERLY TREMOR INTERNATIONAL LTD.)
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(Audited)
|
|
|
|
December 31
|
|
|
|
|
2023
|
|
2022
|
|
|
Note
|
|
USD
thousands
|
Assets
|
|
|
|
|
|
|
ASSETS:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
10
|
|
234,308
|
|
217,500
|
Trade receivables, net
|
|
8
|
|
201,973
|
|
219,837
|
Other receivables
|
|
8
|
|
8,293
|
|
23,415
|
Current tax assets
|
|
|
|
7,010
|
|
750
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
|
451,584
|
|
461,502
|
|
|
|
|
|
|
|
Fixed assets, net
|
|
5
|
|
21,401
|
|
29,874
|
Right-of-use assets
|
|
6
|
|
31,900
|
|
23,122
|
Intangible assets, net
|
|
7
|
|
362,000
|
|
398,096
|
Deferred tax assets
|
|
4
|
|
12,393
|
|
18,161
|
Investment in shares
|
|
18
|
|
25,000
|
|
25,000
|
Other long-term assets
|
|
|
|
525
|
|
406
|
|
|
|
|
|
|
|
TOTAL NON-CURRENT ASSETS
|
|
|
|
453,219
|
|
494,659
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
|
904,803
|
|
956,161
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
Current maturities of lease
liabilities
|
|
6
|
|
12,106
|
|
14,104
|
Trade payables
|
|
9
|
|
183,296
|
|
212,690
|
Other payables
|
|
9
|
|
29,098
|
|
44,355
|
Current tax liabilities
|
|
|
|
4,937
|
|
9,417
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
|
229,437
|
|
280,566
|
|
|
|
|
|
|
|
Employee benefits
|
|
|
|
237
|
|
238
|
Long-term lease
liabilities
|
|
6
|
|
24,955
|
|
15,234
|
Long-term debt
|
|
11
|
|
99,072
|
|
98,544
|
Other long-term
liabilities
|
|
|
|
6,800
|
|
8,802
|
Deferred tax
liabilities
|
|
4
|
|
754
|
|
1,162
|
|
|
|
|
|
|
|
TOTAL NON-CURRENT LIABILITIES
|
|
|
|
131,818
|
|
123,980
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
|
361,255
|
|
404,546
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY:
|
|
15
|
|
|
|
|
Share capital
|
|
|
|
417
|
|
413
|
Share premium
|
|
|
|
410,563
|
|
400,507
|
Other comprehensive
loss
|
|
|
|
(2,441)
|
|
(5,801)
|
Retained earnings
|
|
|
|
135,009
|
|
156,496
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY
|
|
|
|
543,548
|
|
551,615
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
904,803
|
|
956,161
|
|
|
|
|
|
|
Chairman of the Board of
Directors
|
CEO
|
CFO
|
|
|
|
|
|
|
|
|
|
|
|
Date of approval of the financial
statements: March 6, 2024.
The accompanying notes are an integral part of these
consolidated financial statements.
NEXXEN INTERNATIONAL
(FORMERLY TREMOR INTERNATIONAL LTD.)
CONSOLIDATED
STATEMENTS OF OPERATION AND OTHER COMPREHENSIVE INCOME
(LOSS)
(Audited)
|
|
|
Year
ended
December 31
|
|
|
|
2023
|
|
2022
|
|
2021
|
|
Note
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Revenues
|
12
|
|
331,993
|
|
335,250
|
|
341,945
|
|
|
|
|
|
|
|
|
Cost of Revenues (Exclusive of
depreciation and amortization shown separately below)
|
13
|
|
62,270
|
|
60,745
|
|
71,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
expenses
|
|
|
49,684
|
|
33,659
|
|
18,422
|
Selling and marketing
expenses
|
|
|
105,914
|
|
89,953
|
|
74,611
|
General and administrative
expenses
|
14
|
|
51,051
|
|
68,005
|
|
63,499
|
Depreciation and
amortization
|
|
|
78,285
|
|
42,700
|
|
40,259
|
Other expenses (income),
net
|
|
|
1,765
|
|
(4,564)
|
|
(959)
|
|
|
|
|
|
|
|
|
Total operating costs
|
|
|
286,699
|
|
229,753
|
|
195,832
|
|
|
|
|
|
|
|
|
Operating Profit (loss)
|
|
|
(16,976)
|
|
44,752
|
|
74,462
|
|
|
|
|
|
|
|
|
Financing income
|
|
|
(8,192)
|
|
(2,284)
|
|
(483)
|
Financing expenses
|
|
|
10,200
|
|
4,611
|
|
2,670
|
|
|
|
|
|
|
|
|
Financing expenses, net
|
|
|
2,008
|
|
2,327
|
|
2,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before taxes on income
|
|
|
(18,984)
|
|
42,425
|
|
72,275
|
|
|
|
|
|
|
|
|
Tax benefit (expenses)
|
4
|
|
(2,503)
|
|
(19,688)
|
|
948
|
|
|
|
|
|
|
|
|
Profit (loss) for the year
|
|
|
(21,487)
|
|
22,737
|
|
73,223
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) items:
|
|
|
|
|
|
|
|
Foreign currency translation
differences for foreign operations
|
|
|
2,126
|
|
(6,499)
|
|
(2,632)
|
Foreign currency translation for
subsidiary sold reclassified to profit and loss
|
|
|
1,234
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss) for the
year
|
|
|
3,360
|
|
(6,499)
|
|
(2,632)
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the
year
|
|
|
(18,127)
|
|
16,238
|
|
70,591
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
Basic earnings (loss) per share (in
USD)
|
16
|
|
(0.15)
|
|
0.15
|
|
0.51
|
Diluted earnings (loss) per share
(in USD)
|
16
|
|
(0.15)
|
|
0.15
|
|
0.48
|
The
accompanying notes are an integral part of these consolidated
financial statements.
NEXXEN INTERNATIONAL LTD.
(FORMERLY TREMOR INTERNATIONAL LTD.)
CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY
(Audited)
|
Share
capital
|
|
Share
premium
|
|
Other comprehensive income
(loss)
|
|
Retained
Earnings
|
|
Total
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2021
|
380
|
|
264,831
|
|
3,330
|
|
60,472
|
|
329,013
|
Total Comprehensive income (loss) for the
year
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
|
-
|
|
-
|
|
73,223
|
|
73,223
|
Other comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation
|
-
|
|
-
|
|
(2,632)
|
|
-
|
|
(2,632)
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the
year
|
-
|
|
-
|
|
(2,632)
|
|
73,223
|
|
70,591
|
Transactions with owners, recognized directly in
equity
|
|
|
|
|
|
|
|
|
|
Revaluation of liability for put
option on non- controlling interests
|
-
|
|
-
|
|
-
|
|
64
|
|
64
|
Own shares acquired
|
(3)
|
|
(6,640)
|
|
-
|
|
-
|
|
(6,643)
|
Share based
compensation
|
-
|
|
41,822
|
|
-
|
|
-
|
|
41,822
|
Exercise of share
options
|
17
|
|
1,353
|
|
-
|
|
-
|
|
1,370
|
Issuance of shares
|
47
|
|
136,111
|
|
-
|
|
-
|
|
136,158
|
Issuance of Restricted
shares
|
1
|
|
(1)
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2021
|
442
|
|
437,476
|
|
698
|
|
133,759
|
|
572,375
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income (loss) for the
year
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
|
-
|
|
-
|
|
22,737
|
|
22,737
|
Other comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
Foreign Currency
Translation
|
-
|
|
-
|
|
(6,499)
|
|
-
|
|
(6,499)
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive Income (loss) for the
year
|
-
|
|
-
|
|
(6,499)
|
|
22,737
|
|
16,238
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners, recognized directly in
equity
|
|
|
|
|
|
|
|
|
|
Own shares acquired
|
(50)
|
|
(86,202)
|
|
-
|
|
-
|
|
(86,252)
|
Share based
compensation
|
-
|
|
47,049
|
|
-
|
|
-
|
|
47,049
|
Exercise of share
options
|
21
|
|
2,184
|
|
-
|
|
-
|
|
2,205
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2022
|
413
|
|
400,507
|
|
(5,801)
|
|
156,496
|
|
551,615
|
The
accompanying notes are an integral part of these consolidated
financial statements.
NEXXEN INTERNATIONAL LTD.
(FORMERLY TREMOR INTERNATIONAL LTD.)
CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY (Cont.)
(Audited)
|
Share
capital
|
|
Share
premium
|
|
Other comprehensive income
(loss)
|
|
Retained
Earnings
|
|
Total
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2023
|
413
|
|
400,507
|
|
(5,801)
|
|
156,496
|
|
551,615
|
Total Comprehensive Income (loss) for the
year
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
-
|
|
-
|
|
-
|
|
(21,487)
|
|
(21,487)
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
|
Foreign Currency
Translation
|
-
|
|
-
|
|
2,126
|
|
-
|
|
2,126
|
Foreign Currency Translation for
subsidiary sold
|
-
|
|
-
|
|
1,234
|
|
-
|
|
1,234
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive Income (loss) for the
year
|
-
|
|
-
|
|
3,360
|
|
(21,487)
|
|
(18,127)
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners, recognized directly in
equity
|
|
|
|
|
|
|
|
|
|
Own shares acquired
|
(8)
|
|
(9,306)
|
|
-
|
|
-
|
|
(9,314)
|
Share based
compensation
|
-
|
|
19,141
|
|
-
|
|
-
|
|
19,141
|
Exercise of share
options
|
12
|
|
221
|
|
-
|
|
-
|
|
233
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2023
|
417
|
|
410,563
|
|
(2,441)
|
|
135,009
|
|
543,548
|
The
accompanying notes are an integral part of these consolidated
financial statements.
NEXXEN INTERNATIONAL LTD.
(FORMERLY TREMOR INTERNATIONAL LTD.)
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Audited)
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
Profit (loss) for the
year
|
|
(21,487)
|
|
22,737
|
|
73,223
|
Adjustments for:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
78,285
|
|
42,700
|
|
40,259
|
Net financing expense
|
|
1,699
|
|
2,147
|
|
2,023
|
Loss from disposals of fixed and
intangible assets
|
|
2
|
|
542
|
|
-
|
Loss (gain) on leases
modification
|
|
119
|
|
56
|
|
(377)
|
Loss (gain) on sale of business
unit
|
|
1,765
|
|
-
|
|
(982)
|
Share-based compensation and
restricted shares
|
|
19,169
|
|
50,505
|
|
42,818
|
Tax (benefit) expense
|
|
2,503
|
|
19,688
|
|
(948)
|
Change in trade and other
receivables
|
|
30,603
|
|
57,050
|
|
(11,676)
|
Change in trade and other
payables
|
|
(43,077)
|
|
(100,145)
|
|
26,845
|
Change in employee
benefits
|
|
(1)
|
|
(179)
|
|
(69)
|
Income taxes received
|
|
352
|
|
1,175
|
|
2,231
|
Income taxes paid
|
|
(8,721)
|
|
(14,784)
|
|
(3,185)
|
Interest received
|
|
8,016
|
|
2,103
|
|
496
|
Interest paid
|
|
(8,486)
|
|
(587)
|
|
(570)
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
|
60,741
|
|
83,008
|
|
170,088
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Change in pledged deposits,
net
|
|
1,498
|
|
(213)
|
|
(11)
|
Payments on finance lease
receivable
|
|
1,112
|
|
1,306
|
|
2,454
|
Repayment of long-term
loans
|
|
51
|
|
-
|
|
-
|
Acquisition of fixed
assets
|
|
(4,495)
|
|
(6,433)
|
|
(3,378)
|
Acquisition and capitalization of
intangible assets
|
|
(15,126)
|
|
(8,750)
|
|
(4,966)
|
Proceeds from sale of business
unit
|
|
-
|
|
1,180
|
|
415
|
Investment in shares
|
|
-
|
|
(25,000)
|
|
-
|
Acquisition of subsidiaries, net
of cash acquired
|
|
-
|
|
(195,084)
|
|
(11,001)
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
(16,960)
|
|
(232,994)
|
|
(16,487)
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Acquisition of own
shares
|
|
(9,518)
|
|
(86,048)
|
|
(6,643)
|
Proceeds from exercise of share
options
|
|
233
|
|
2,205
|
|
1,370
|
Leases repayment
|
|
(17,262)
|
|
(12,018)
|
|
(10,009)
|
Issuance of shares, net of
issuance cost
|
|
-
|
|
-
|
|
134,558
|
Receipt of long-term debt, net of
transaction cost
|
|
-
|
|
98,917
|
|
-
|
Payment of financial
liability
|
|
-
|
|
-
|
|
(2,414)
|
Net cash provided by (used in)
financing activities
|
|
(26,547)
|
|
3,056
|
|
116,862
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
and cash equivalents
|
|
17,234
|
|
(146,930)
|
|
270,463
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF
YEAR
|
|
217,500
|
|
367,717
|
|
97,463
|
EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH
EQUIVALENTS
|
|
(426)
|
|
(3,287)
|
|
(209)
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AS OF THE END OF
YEAR
|
|
234,308
|
|
217,500
|
|
367,717
|
The
accompanying notes are an integral part of these consolidated
financial statements.
NEXXEN INTERNATIONAL LTD. (FORMERLY TREMOR
INTERNATIONAL LTD.)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 1:
GENERAL
a. Reporting
entity:
Nexxen International Ltd. (the "Company" or "Nexxen
International"), formerly known as Tremor International Ltd., was
incorporated in Israel under the laws of the State of Israel on
March 20, 2007. The ordinary shares of the Company are listed on
the AIM Market of the London Stock Exchange and the American
Depositary Shares ("ADSs"), each of which represents two ordinary
shares of the Company, represented by the American Depositary
Receipts ("ADR") are listed on the Nasdaq Capital Market. The
address of the registered office is 82 Yigal Alon Street Tel-Aviv,
6789124, Israel.
Nexxen International is a global Company
offering a unified data-driven end-to-end software platform that
supports a wide range of media types (e.g., video, display, etc.)
and devices (e.g., mobile, Connected TVs, streaming devices,
desktop, etc.), creating an efficient marketplace where advertisers
(buyers) are able to purchase high quality advertising inventory
from publishers (sellers) in real-time and at scale. Nexxen
International's technology stack is comprised of a Demand Side
Platform ("DSP"), Supply-Side Platform ("SSP"), Ad Server, and Data
Management Platform ("DMP"), empowering customers on both the buy-
and sell-sides of the ecosystem to leverage a full suite of
data-driven planning and technology solutions to achieve greater
efficiency, effectiveness, and outcomes in their advertising
efforts. The Company's DSP solution is delivered through wholly
owned subsidiary Nexxen Inc. (formerly known as Amobee Inc. and
which also includes Tremor Video Inc.'s activity that was
transferred to Nexxen Inc. in 2023) and is designed to assist
customers in a self-managed or full-service capacity to plan and
execute digital marketing campaigns in real-time across various ad
formats. The Company's SSP solution (delivered through Nexxen Group
LLC, formerly known as Unruly Group, LLC) is designed to monetize
digital inventory for publishers by enabling their content to have
the necessary code and requirements for programmatic advertising
integration, and provides access to significant amounts of data and
unique demand to drive more effective inventory management and
revenue optimization. The Company's "DMP" integrates both its DSP
and SSP solutions, enabling advertisers and publishers to use data
from various sources, including web, social media, Connected TV and
linear TV, and mobile devices, to optimize results of their
advertising campaigns. Following the acquisition of Nexxen Inc.,
the Company gained a Linear TV Planning feature, enabling sellers
at national broadcasters to generate linear TV plans during and
after upfronts. Nexxen International Ltd. is headquartered in
Israel and maintains offices throughout the U.S., Canada, EMEA and
Asia-Pacific.
On June 12, 2023, the Company
initially rebranded all of its core products and platforms under
the unified Nexxen brand. On January 2, 2024, the Company's name
was officially changed to Nexxen International Ltd. and, in
connection with the change, its stock ticker on both the NASDAQ and
London Stock Exchange changed from "TRMR" to "NEXN". The Company
believes rebranding and unifying under Nexxen has enhanced its
commercial focus, and has better conveyed the holistic value
proposition of its end-to-end technology stack to the market for
its next phase of growth. As part of the rebranding, the Company
changed the expected useful life of its previous brands, which
completed by the end of the year. See Note 7.
b.
Definitions:
In these financial statements -
The Company
|
-
|
Nexxen International
Ltd.
|
|
|
|
The Group
|
-
|
Nexxen International Ltd. and its
subsidiaries.
|
|
|
|
Subsidiaries
|
-
|
Companies, the financial statements
of which are fully consolidated, directly, or indirectly, with the
financial statements of the Company such as Nexxen Group LLC,
Unruly Holding Ltd, Tremor Video Inc, Nexxen Inc.
|
|
|
|
Related party
|
-
|
As defined by IAS 24, "Related
Party Disclosures".
|
NOTE 2:
BASIS OF
PREPARATION
a. Statement of
compliance:
The consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board ("IASB").
The consolidated financial statements were
authorized for issue by the Company's Board of Directors on March
5, 2024.
b. Functional
and presentation currency:
These consolidated financial statements are
presented in US Dollars (USD), which is the Company's functional
currency, and have been rounded to the nearest thousand, except
when otherwise indicated. The USD is the currency that represents
the principal economic environment in which the Company
operates.
c. Basis
of measurement:
The consolidated financial statements have been
prepared on a historical cost basis except for the following assets
and liabilities:
• Deferred and current tax assets and liabilities
• Provisions
• Derivatives
• Investment in shares
For further information regarding the measurement of
these assets and liabilities see Note 3 regarding material
accounting policies.
d. Use of
estimates and judgments:
The preparation of financial statements in
conformity with IFRS requires management of the Group to make
judgments, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from
these estimates.
The preparation of accounting estimates used in the
preparation of the Group's financial statements requires management
of the Group to make assumptions regarding circumstances and events
that involve considerable uncertainty. Management of the Group
prepares estimates on the basis of past experience, various facts,
external circumstances, and reasonable assumptions according to the
pertinent circumstances of each estimate.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimates are revised and in any future
periods affected.
Information about assumptions made by the Group with
respect to the future and other reasons for uncertainty with
respect to estimates that have a significant risk of resulting in a
material adjustment to carrying amounts of assets and liabilities
in the next financial year are included in Note 6, on leases, with
respect to determining the lease term and determining the discount
rate of a lease liability, in Note 7, on intangible assets,
with respect to the accounting of software development
capitalization and impairment testing for goodwill, in Note 4, on
Income Tax, with respect to uncertain tax position, in Note 18 on
investments in shares.
e. Change in classification:
The Company changed the classification of the
current maturities of the unfavorable contract from other payables
to other long-term liabilities. Comparative amounts were
reclassified for consistency in the amount of USD 1,350
thousand.
f.
Determination of fair value:
Preparation of the financial statements requires the
Group to determine the fair value of certain assets and
liabilities. When determining the fair value of an asset or
liability, the Group uses observable market data as much as
possible. There are three levels of fair value measurements in the
fair value hierarchy that are based on the data used in the
measurement, as follows:
•
Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities.
•
Level 2: inputs other than quoted prices included within Level 1
that are observable, either directly or indirectly.
•
Level 3: inputs that are not based on observable market data
(unobservable inputs).
Further information about the
assumptions that were used to determine fair value is included in
the following notes:
• Note 17, on
share-based compensation;
• Note 18, on
financial instruments;
•
Note 18, on investments in shares.
NOTE 3:
MATERIAL ACCOUNTING
POLICIES
The accounting policies set out below have been
applied consistently for all periods presented in these
consolidated financial statements and have been applied
consistently by the Group.
a. Financial instruments:
1) Non-derivative
financial assets
The Company's non-derivative financial assets, which
are measured at amortized cost, mainly consist of accounts
receivable which are held to collect and deposits. Accounts
receivable represent amounts owed by customers resulting from
business transactions, and they are recognized at their original
invoiced values, adjusted for expected credit losses. Loss rates
are based on historical collection experience, while taking into
consideration current customer information, collection history, and
other relevant data at each reporting period.
The Company's non-derivative financial assets, which
are measured at fair value through profit and loss, consist of
investment in shares. Net gains and losses are recognized in profit
or loss, finance income/expenses.
2) Non-derivative
financial liabilities
The Company's non-derivative financial liabilities
mainly include trade and other payables, and loan, all measured at
amortized cost.
3) Treasury
shares:
When share capital recognized as
equity is repurchased by the Group, the amount of the consideration
paid, which includes directly attributable costs, net of any tax
effects, is recognized as a deduction from equity. Repurchased
shares are classified as a deduction in Share Premium.
b.
Fixed Assets:
Fixed assets are measured at cost less accumulated
depreciation. The cost of fixed assets includes expenditure that is
directly attributable to the acquisition of the asset. Depreciation
is provided on all property and equipment at rates calculated to
write each asset down to its residual value (assumed to be nil),
using the straight-line method, over its expected useful life as
follows:
|
Years
|
Computers and servers
|
3-5
|
Office furniture and
equipment
|
3-17
|
Leasehold improvements
|
The shorter of the lease term and
the useful life
|
c.
Intangible assets and liabilities:
1) Software
development:
Expenditure on research activities, undertaken with
the prospect of gaining new scientific or technical knowledge and
understanding, is recognized in profit or loss when incurred.
Development activities involve a plan or design for
the production of new or substantially improved products and
processes. Development expenditure is capitalized only if
development costs can be measured reliably, the product or process
is technically and commercially feasible, future economic benefits
are probable, and the Group has the intention and sufficient
resources to complete development and to use or sell the asset. The
expenditure capitalized in respect of development activities
includes the cost of direct labor costs that are directly
attributable to preparing the asset for its intended use. Other
development expenditure is recognized in profit or loss as
incurred.
The estimated useful lives of developed software are
three years.
2) Goodwill:
The Group has identified its entire operation as a
single cash generating unit (CGU). The Company conducts an annual
assessment of goodwill impairment on an annual basis, at year end.
According to management assessment as of December 31, 2023, no
impairment in respect to goodwill has been recorded. See note
7.
3) Amortization:
Internally generated intangible assets, such as
software development costs, are not systematically amortized as
long as they are not available for use, i.e., they are not yet on
site or in working condition for their intended use. Goodwill is
not systematically amortized as well but is tested for impairment
at least once a year.
Amortization is recognized in the statements of
operation and other comprehensive income (loss) on a straight-line
basis over the estimated useful lives of the intangible assets from
the date they are available for use.
The estimated useful lives for the current and
comparative periods are as follows:
Trademark
|
Fully depreciated, See note
7
|
Software (developed and
acquired)
|
3 years
|
Customer relationships
|
3-6 years
|
Technology
|
3-5.25
years
|
4) Unfavorable contracts
In the business combinations of Nexxen Inc., the
Company recognizes a liability for contracts when their terms are
unfavorable compared to market terms, to represent the off-market
element at the acquisition date. As of December 31, 2023, the
aggregated liability balance, in the amount of USD 6.7 million, is
entirely classified as long-term.
d.
Share Based Compensation:
Compensation expense related to stock options,
restricted stock units and performance stock units. The Group's
employee stock purchase plan is measured and recognized in the
consolidated financial statements based on the fair value of the
awards granted. The fair value of each option award is estimated on
the grant date using the Black-Scholes option-pricing model.
Stock-based compensation expense related to stock options and
restricted stock is recognized over the requisite service periods
of the awards.
Determining the fair value of stock options awards
requires judgment. The Company's use of the Black-Scholes option
pricing model requires the input of subjective assumptions. The
assumptions used in the Company's option-pricing model represent
management's best estimates. These estimates involve inherent
uncertainties and the application of management's judgment.
These assumptions and estimates are as follows:
Risk-Free Interest Rate. The risk-free interest rate
is based on the yields of U.S. Treasury securities with maturities
approximating the expected term of the awards.
Expected Term. The expected term of an award is
calculated based on the vesting date and the expiration date of the
award.
Volatility. The Company determined the price
volatility based on daily price observations over a period
equivalent to the expected term of the award.
Dividend Yield. The dividend yield assumption is
based on the Company's history and current expectations of dividend
payouts.
Fair Value of Common Stock. The fair value of common
stock is based on the closing price of the Company's common stock
on the grant date.
e.
Employee benefits:
1) Post-employment
benefits:
The Group's main post-employment benefit plan is
under section 14 to the Severance Pay Law ("Section 14") for the
Israeli employees and under section 401K for US employees, which is
accounted for as a contribution plan. In addition, for certain
employees, the Group has an additional immaterial plan that is
accounted for as a defined benefit plan. These plans are usually
financed by deposits with insurance companies or with funds managed
by a trustee.
2) Short-term
benefits:
Short-term employee benefit obligations are measured
on an undiscounted basis and are expensed as the related service is
provided or upon the actual absence of the employee when the
benefit is not accumulated (such as maternity leave).
A liability is recognized for the amount expected to
be paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the
obligation can be estimated reliably. The employee benefits are
classified, for measurement purposes, as short-term benefits or as
other long-term benefits depending on when the Group expects the
benefits to be wholly settled.
f. Revenue
recognition:
The Group generates revenue from transactions where
it provides access to a platform for the purchase and sale of
digital advertising inventory. Its customers are both ad buyers,
including brands and agencies, and digital publishers.
The Group generates revenue through platform fees
that are tailored to fit the customer's specific utilization of its
solutions and include: (i) a percentage of spend, (ii) flat fees
and (iii) fixed costs per mile ("CPM"). CPM refers to a payment
option in which customers pay a price for every 1,000 impressions
an advertisement receives.
The Company maintains agreements with each publisher
and buyer in the form of written service agreements, which set out
the terms of the relationship, including payment terms and access
to the Group's platforms.
Publishers provide digital advertising inventory to
the Group's platform in the form of advertising requests, or ad
request. When the Group receives ad requests from a publisher, it
send bid requests to buyers, which enable buyers to bid on sellers'
digital advertising inventory according to a predefined set of
parameters (e.g., demographics, intent, location, etc.). Winning
bids create advertising, or paid impressions, for the publisher to
present to the buyers.
The Group generates revenue from its Programmatic
and Performance activities. Programmatic revenue is derived from
the end-to-end platform of programmatic advertising, which uses
software and algorithms to match buyers and sellers of digital
advertising in a technology-driven marketplace. Performance revenue
is derived from non-core activities, consisting of mobile-based
activities that help brands reach their users.
The Company concluded that its Programmatic activity
(i) does not have manual control over the process, (ii) the Company
is not primarily responsible for fulfillment, (iii) the Company has
no inventory risk and (iv) the Company obtains only momentary a
title to the advertising space offered via the end-to-end
platform.
As a result, the Group reports its Programmatic
business, tech stack, features, business models and activity as an
agent and therefore presented revenue from Programmatic on a net
basis.
For the Performance activity the Company is the
primary obligor to provide the services and, as such, revenue is
presented on a gross basis.
Management is focused on driving growth with the
Programmatic activity through the end-to-end platform, while the
Performance activity is declining over time.
The Group estimates and records reduction to revenue
for volume discounts based on expected volume during the incentive
term.
The Group generally invoices buyers at the end of
each month for the full purchase price of ad impressions monetized
in that month. Accounts receivables are recorded at the amount of
gross billings for the amount it is responsible to collect and
accounts payable are recorded at the net amount payable to
publishers. Accordingly, both accounts receivable and accounts
payable appear large in relation to revenue reported on a net
basis.
g.
Classification of expenses
Cost of revenue
Cost of revenues (exclusive of depreciation and
amortization) primarily consists of hosting fees and data costs for
both Programmatic and Performance activities, as well as media
costs for Performance activities that are directly attributable to
revenue generated by the Company and generally based on the revenue
share arrangements with audience and content partners. See Note
13.
Research and development
Research and development expenses
consist primarily of compensation and related costs for personnel
responsible for the research and development of new and existing
products and services. Where required, development expenditures are
capitalized in accordance with the Company's standard internal
capitalized development policy in accordance with IAS 38 (also see
Note 3c(1)). All research costs are expensed when
incurred.
Selling and marketing
Selling and marketing expenses
consist primarily of compensation and related costs for personnel
engaged in customer service, sales, and sales support functions, as
well as advertising and promotional expenditures.
General and administrative
General and administrative
expenses consist primarily of compensation and related costs for
personnel, and include costs related to the Company's facilities,
finance, human resources, information technology, legal
organizations and fees for professional services. Professional
services are principally comprised of external legal, and
information technology consulting and outsourcing services that are
not directly related to other operational expenses.
h.
Financing income and expenses:
Generally, foreign currency differences from a
monetary item receivable from or payable to a foreign operation,
including foreign operations that are subsidiaries, are recognized
in profit or loss in the consolidated financial statements.
Foreign exchange gains and losses arising from a
monetary item receivable from or payable to a foreign operation,
the settlement of which is neither planned nor likely in the
foreseeable future, are considered to form part of a net investment
in a foreign operation and are recognized in other comprehensive
income (loss), and are presented within equity as part of the
currency translation reserve.
Financing income mainly comprises foreign currency
gains and interest income.
Financing expense primarily includes exchange rate
differences, interest and bank fees.
Foreign currency gains and losses
on financial assets and financial liabilities are reported on a net
basis as either financing income or financing expenses depending on
whether foreign currency movements are in a net gain or net loss
position.
i. Taxes on
income
The Company operates in multiple
tax jurisdictions.
Offset of deferred
tax assets and liabilities
Deferred tax assets and
liabilities are offset if there is a legally enforceable right to
offset current tax liabilities and assets, and they relate to
income taxes levied by the same tax authority.
Uncertain tax
positions
A provision for uncertain tax
positions, including additional tax and interest expenses, is
recognized when it is more likely than not that the Group will have
to use its economic resources to pay the obligation.
j. Leases:
Leased assets and lease liabilities
Contracts that award the Group
control over the use of a leased asset for a period of time in
exchange for consideration, are accounted for as leases. Upon
initial recognition, the Group recognizes a liability at the
present value of the balance of future lease payments (these
payments do not include certain variable lease payments), and
concurrently recognizes a right-of-use asset at the same amount of
the lease liability, adjusted for any prepaid or accrued
lease payments or provision for impairment, plus initial direct
costs incurred in respect of the lease.
Since the interest rate implicit
in the Group's leases is not readily determinable, the incremental
borrowing rate of the lessee is used. Subsequent to initial
recognition, the right-
of-use asset is accounted for
using the cost model and depreciated over the shorter of the lease
term or useful life of the asset.
Variable lease payments
Variable lease payments that
depend on an index or a rate, are initially measured using the
index or rate existing at the commencement of the lease and are
included in the measurement of the lease liability. When the cash
flows of future lease payments change as the result of a change in
an index or a rate, the balance of the liability is adjusted
against the right-of-use asset.
Depreciation of right-of-use asset
After lease commencement, a
right-of-use asset is measured on a cost basis less accumulated
depreciation and accumulated impairment losses and is adjusted for
re-measurements of the lease liability. Depreciation is calculated
on a straight-line basis over the useful life or contractual lease
period, whichever earlier, as follows:
□
Buildings
1-8.5 years
□
Data
centers
1-5.5 years
k.
Initial application of new standards, amendments to standards and
interpretations
Amendment to IAS 1, Presentation of Financial Statements:
"Disclosure of Accounting Policies.
As a result of applying the
Amendment, the extent of the accounting policy disclosure provided
in the financial statements for 2023 was reduced and adjusted
according to the Company's specific circumstances.
l. New standards, amendments
to standards and interpretations not yet adopted:
Amendment to IAS 1, Presentation of Financial
Statements: Classification of Liabilities as Current or Non-Current
and subsequent amendment: Non-Current Liabilities with
Covenants.
The Group is examining the effects
of the Amendment on the financial statements with no plans for
early adoption.
NOTE 4: INCOME
TAX
a. Details
regarding the tax environment of the Israeli companies:
1) Corporate tax
rate
Taxable income of the Israeli companies is subject
to the Israeli corporate tax at the rate of 23% in the years 2023,
2022 and 2021.
2) Benefits under the
Law for the Encouragement of Capital Investments (Investment
Law)
The Investment Law provides tax benefits for Israeli
companies meeting certain requirements and criteria. According to
the Investment Law, a flat rate tax applies to companies eligible
for the "Preferred Enterprise" status. In order to be eligible for
Preferred Enterprise status, a company must meet minimum
requirements to establish that it contributes to the country's
economic growth and is a competitive factor for the gross domestic
product.
The Investment Law also added a new tax benefit
tracks effective January 1, 2017 for a "preferred technological
enterprise" and a "special preferred technological enterprise" that
awards reduced tax rates to a technological industrial enterprise
for the purpose of encouraging activity relating to the development
of qualifying intangible assets.
Preferred technological income that meets the
conditions required in the law, will be subject to a reduced
corporate tax rate of 12%, and if the preferred technological
enterprise is located in Development Area A to a tax rate of
7.5%.
The Investment Law also provides that no tax will
apply to a dividend distributed out of preferred income to a
shareholder that is an Israeli resident company. A tax rate of 20%
shall apply to a dividend distributed out of preferred income and
preferred technological income, to an individual shareholder or
foreign resident, subject to double taxation prevention
treaties.
On May 16, 2017, the Knesset Finance Committee
approved Encouragement of Capital Investment Regulations (Preferred
Technological Income and Capital Gain of Technological Enterprise)
- 2017 (hereinafter: "the Regulations"), which provides rules for
applying the "preferred technological enterprise" and "special
preferred technological enterprise" tax benefit tracks including
the Nexus formula that provides the mechanism for allocating the
technological income eligible for the benefits.
The Company obtained tax rulings confirming that the
Company is eligible for the benefits under the Investment Law. The
tax rulings which were obtained applied for the years
2017-2021. The Company approached the Israeli Tax Authority
on December 28, 2023, for the renewal of the tax ruling, regarding
industrial enterprise and preferred technological enterprise, for
the next five years beginning in 2022. The tax ruling has not been
accepted yet.
b.
Details regarding the tax environment of the non-Israeli
companies:
Non-Israeli subsidiaries are taxed according to the
tax laws in their countries of residence as reported in their
statutory financial statement prepared under local accounting
regulations.
c. Carry
forward losses
(1)
Israel
As of December 31,
2023, the net operating
loss carryforwards, or NOLs are approximately USD 20.4 million
(2022: nil), and
the Capital Loss to carry forward is approximately USD 3 million
(2022: USD 0.1 million). The losses carryforward do not expire
under Israeli tax laws.
(2)
US
The Group submit a US federal
consolidated tax return.
Provisions enacted in the Tax Cuts
and Jobs Act in 2017 related to the capitalization for tax purposes
of research and experimental expenditures ("R&E") became
effective on January 1, 2022. These new R&E provisions require
us to capitalize certain research and experimental expenditures and
amortize them on the U.S. tax return over five or fifteen years,
depending on where these costs are conducted. The tax expense in
the U.S. would increase as a result, unless these provisions are
modified through legislative processes in the future. The Company
applies the new enacted act in the current year tax provision and
the deferred tax asset.
The Group has several U.S. federal
NOLs, following previous acquisitions:
1. Approximately USD
100.8 million, which will expire starting 2038. As of December
31, 2023, the NOLs
are approximately USD 56.7 million (2022: USD 65.7 million).
2. Approximately
USD 315 million
which can be utilized over the next 52 years.
As of December 31,
2023, the NOLs are
approximately USD 307.2 million (2022:
USD 315 million).
In addition, the Group has
USD 0.5 million
NOLs from previous years.
In addition, the Capital Loss to
carry forward is approximately USD 27.7 million (2022: nil). Capital losses
can be carried back for three years, and forward for five
years.
Additionally, for tax years
beginning after December 31, 2017, the Tax Cuts and Jobs Act limits
the NOL deduction to 80% of taxable income, repeals carryback of
all NOLs arising in a tax year ending after 2017 and permits
indefinite carryforwards for all such NOLs. NOL's arising in a tax
year ending on or before 2017 can offset 100% of taxable income,
are available for carryback, and expire 20 years after
they
arise. It should be noted that the
Coronavirus Aid, Relief and Economic Security ("CARES") Act
suspended the 80% limitation for tax years 2018, 2019 and 2020and
allowed for a 5-year carryback for NOLs for tax years beginning
after December 31, 2017, and before January 1, 2021.
Pursuant to Section 382 of the
Internal Revenue Code, the acquired companies in the US underwent
ownership changes for tax purposes (i.e., a change of more than 50%
in stock ownership involving 5% shareholders) on the acquisition
date. As a result, the use of the Company's total US NOL
carryforwards and tax credits generated prior to the ownership
change is subject to annual use limitations under Section 382 and
potentially also under section 383 of the Code and comparable state
income tax laws.
(3)
International
As of December 31,
2023, the NOLs are
approximately USD 19.2 million (2022: USD 22.3 million).
In addition, the Capital Loss to
carry forward is approximately USD 0.9 million (2022: nil). The
ability to carry losses forward (or backwards) depends on the
specific jurisdiction which the Company operates in.
d.
Composition of income tax benefit:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
Current tax expense (income)
|
|
|
|
|
|
|
Current year
|
|
(2,331)
|
|
14,378
|
|
7,220
|
|
|
|
|
|
|
|
Deferred tax expense (income)
|
|
|
|
|
|
|
Creation and reversal of temporary
differences
|
|
4,834
|
|
5,310
|
|
(8,168)
|
|
|
|
|
|
|
|
Tax expenses
(benefit)
|
|
2,503
|
|
19,688
|
|
(948)
|
The following are the domestic and foreign
components of the Group's income taxes:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
Domestic
|
|
(5,352)
|
|
5,766
|
|
4,995
|
US
|
|
8,712
|
|
11,578
|
|
(961)
|
International
|
|
(857)
|
|
2,344
|
|
(4,982)
|
|
|
|
|
|
|
|
Tax expenses (benefit)
|
|
2,503
|
|
19,688
|
|
(948)
|
e.
Reconciliation between the theoretical tax on the pre-tax profit
and the tax expense:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
Profit (Loss) before taxes on
income
|
|
(18,984)
|
|
42,425
|
|
72,275
|
|
|
|
|
|
|
|
Primary tax rate of the
Company
|
|
23%
|
|
23%
|
|
23%
|
|
|
|
|
|
|
|
Tax calculated according to the
Company's primary tax rate
|
|
(4,366)
|
|
9,758
|
|
16,623
|
|
|
|
|
|
|
|
Additional tax (tax saving) in
respect of:
|
|
|
|
|
|
|
Non-deductible expenses net of tax
exempt income (*)
|
|
3,329
|
|
11,642
|
|
(3,364)
|
Difference between measurement
basis of income/expenses for tax purposes and measurement basis of
income/expenses for financial reporting purposes
|
|
-
|
|
(654)
|
|
-
|
Effect of reduced tax rate on
preferred loss (income)
|
|
4,963
|
|
(4,625)
|
|
(7,226)
|
Utilization of tax losses from
prior years for which deferred taxes were not created
|
|
(90)
|
|
(2,539)
|
|
(1,117)
|
Effect on deferred taxes at a rate
different from the primary tax rate
|
|
892
|
|
2,697
|
|
(3,329)
|
Recognition of deferred taxes for
tax losses and benefits from previous years for which deferred
taxes were not created in the past
|
|
(4,852)
|
|
(1,104)
|
|
(4,586)
|
Recognition in temporary
differences for which deferred taxes are not recognized
|
|
656
|
|
35
|
|
-
|
Foreign tax rate
differential
|
|
1,971
|
|
4,478
|
|
2,051
|
|
|
|
|
|
|
|
Tax (benefit) expenses
|
|
2,503
|
|
19,688
|
|
(948)
|
|
|
|
|
|
|
|
Effective income tax
rate
|
|
(13%)
|
|
46%
|
|
(1%)
|
(*) including non-
deductible share-based compensation expenses.
NOTE 5: FIXED ASSETS,
NET
|
|
Computers and Servers
|
|
Office
furniture and equipment
|
|
Leasehold improvements
|
|
Total
|
|
|
USD
thousands
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2022
|
|
8,839
|
|
445
|
|
770
|
|
10,054
|
|
|
|
|
|
|
|
|
|
Exchange rate
differences
|
|
53
|
|
41
|
|
20
|
|
114
|
Additions *
|
|
8,375
|
|
5
|
|
5
|
|
8,385
|
Business combinations
|
|
22,256
|
|
351
|
|
647
|
|
23,254
|
Disposals
|
|
(892)
|
|
(28)
|
|
(336)
|
|
(1,256)
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2022
|
|
38,631
|
|
814
|
|
1,106
|
|
40,551
|
|
|
|
|
|
|
|
|
|
Exchange rate
differences
|
|
(7)
|
|
(13)
|
|
(23)
|
|
(43)
|
Additions *
|
|
3,783
|
|
63
|
|
779
|
|
4,625
|
Disposals
|
|
(482)
|
|
(114)
|
|
(94)
|
|
(690)
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2023
|
|
41,925
|
|
750
|
|
1,768
|
|
44,443
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2022
|
|
5,698
|
|
269
|
|
623
|
|
6,590
|
|
|
|
|
|
|
|
|
|
Exchange rate
differences
|
|
57
|
|
41
|
|
18
|
|
116
|
Disposals
|
|
(890)
|
|
(28)
|
|
(336)
|
|
(1,254)
|
Additions
|
|
4,957
|
|
61
|
|
207
|
|
5,225
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2022
|
|
9,822
|
|
343
|
|
512
|
|
10,677
|
|
|
|
|
|
|
|
|
|
Exchange rate
differences
|
|
(9)
|
|
(8)
|
|
(1)
|
|
(18)
|
Disposals
|
|
(482)
|
|
(111)
|
|
(93)
|
|
(686)
|
Additions
|
|
12,314
|
|
210
|
|
545
|
|
13,069
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2023
|
|
21,645
|
|
434
|
|
963
|
|
23,042
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
2023
|
|
20,280
|
|
316
|
|
805
|
|
21,401
|
As of December 31,
2022
|
|
28,809
|
|
471
|
|
594
|
|
29,874
|
|
|
|
|
|
|
|
|
|
* As of December 31,
2023, USD
2,030 thousand additions
have not been paid (2022: USD 1,900 thousand).
NOTE 6: LEASES
a. Leases in
which the Group is the lessee:
The Group applies IFRS 16, Leases. The Group has
lease agreements with respect to the following items:
- Offices;
- Data
center;
1) Information
regarding material lease agreements:
a) The Group leases Offices mainly in
the United States of America (US), Israel, Canada and UK with
contractual original lease periods ends between the years 2024 and
2028 from several lessors.
A lease liability in the amount of USD
21,381 thousand and USD 18,513 thousand as of December 31,
2023, and December 31, 2022, respectively, and right-of-use asset
in the amount of USD 11,027 thousand and USD 7,753 thousand as of
December 31, 2023, and December 31, 2022, respectively have been
recognized in the statement of financial position in respect of
leases of offices.
b) The Group leases data center and
related network infrastructure with contractual original lease
periods ends between the years 2024 and 2028. The Group did not
assume renewals in determination of the lease term unless the
renewals are deemed to be reasonably assured at lease
commencement.
A lease liability in the amount of USD 15,680
thousand and USD 10,825 thousand as of December 31, 2023, and
December 31, 2022, respectively, and right-of-use asset in the
amount of USD 14,888 thousand and USD 10,520 thousand as of
December 31, 2023, and December 31, 2022, respectively have been
recognized in the statement of financial position in respect of
data centers.
2) Lease
liability:
Maturity analysis of the Group's lease
liabilities:
|
|
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Less than one year
(0-1)
|
|
12,106
|
|
14,104
|
One to five years (1-5)
|
|
24,955
|
|
15,234
|
|
|
|
|
|
Total
|
|
37,061
|
|
29,338
|
|
|
|
|
|
Current maturities of lease
liability
|
|
12,106
|
|
14,104
|
|
|
|
|
|
Long-term lease
liability
|
|
24,955
|
|
15,234
|
3) Right-of-use assets
- Composition:
|
Offices
|
|
Data
center
|
|
Total
|
|
USD
thousands
|
|
|
|
|
|
|
Balance as of January 1, 2022
|
5,424
|
|
2,849
|
|
8,273
|
|
|
|
|
|
|
Business Combinations
|
6,103
|
|
10,633
|
|
16,736
|
Depreciation and amortization on
right-of-use assets
|
(4,533)
|
|
(4,693)
|
|
(9,226)
|
Additions
|
1,113
|
|
1,783
|
|
2,896
|
Lease modifications
|
(74)
|
|
-
|
|
(74)
|
Disposals
|
(205)
|
|
(52)
|
|
(257)
|
Exchange rate
differences
|
(75)
|
|
-
|
|
(75)
|
|
|
|
|
|
|
Balance as of December 31, 2022
|
7,753
|
|
10,520
|
|
18,273
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinuance of
consolidation
|
(64)
|
|
-
|
|
(64)
|
Depreciation and amortization on
right-of-use assets
|
(4,422)
|
|
(10,579)
|
|
(15,001)
|
Net additions
|
7,871
|
|
14,969
|
|
22,840
|
Lease modifications
|
20
|
|
|
|
20
|
Disposals
|
(119)
|
|
(22)
|
|
(141)
|
Exchange rate
differences
|
(12)
|
|
-
|
|
(12)
|
|
|
|
|
|
|
Balance as of December 31, 2023
|
11,027
|
|
14,888
|
|
25,915
|
|
|
|
|
|
|
4) Amounts recognized
in statement of operation:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Interest expenses on lease
liability
|
|
(1,885)
|
|
(587)
|
|
(570)
|
|
Depreciation and amortization of
right-of-use assets
|
|
(15,001)
|
|
(9,226)
|
|
(6,334)
|
|
Gain (loss) recognized in profit
or loss
|
|
(119)
|
|
(74)
|
|
7
|
|
|
|
|
|
|
|
|
|
Total
|
|
(17,005)
|
|
(9,887)
|
|
(6,897)
|
|
5) Amounts recognized
in the statement of cash flows:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Cash outflow for leases
|
|
(19,147)
|
|
(12,605)
|
|
(10,579)
|
|
b. Leases in
which the Group is a lessor:
1) Information
regarding material lease agreements:
The Group subleases offices at the US for periods
expiring in 2027.
2) Net investment in
the lease:
Presented hereunder is the movement in the net
investment in the lease:
|
|
Offices
|
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Balance as of January 1,
|
|
4,849
|
|
5,682
|
|
|
|
|
|
Sublease receipts
|
|
(1,112)
|
|
(1,306)
|
Additions
|
|
2,248
|
|
310
|
Business combinations
|
|
-
|
|
163
|
|
|
|
|
|
Balance as of December 31,
|
|
5,985
|
|
4,849
|
3) Maturity analysis
of net investment in finance leases:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Less than one year (0-1)
|
|
1,772
|
|
1,084
|
One to five years (1-5)
|
|
4,213
|
|
3,765
|
|
|
|
|
|
Total net investment in the lease as of December
31,
|
|
5,985
|
|
4,849
|
4) Amounts recognized
in statement of operation:
|
|
Offices
|
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Gain from finance
subleases
|
|
-
|
|
-
|
|
301
|
|
Financing income on the net
investment in the lease
|
|
221
|
|
199
|
|
245
|
|
|
|
|
|
|
|
|
|
Total
|
|
221
|
|
199
|
|
546
|
|
NOTE 7: INTANGIBLE
ASSETS, NET
|
|
Software
|
|
Trademarks
|
|
Customer relationships
|
|
Technology
|
|
Goodwill
|
|
Total
|
|
|
USD
thousands
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1,
2022
|
|
24,687
|
|
36,367
|
|
50,108
|
|
53,192
|
|
156,712
|
|
321,066
|
Exchange rate
differences
|
|
(50)
|
|
(1,262)
|
|
(1,455)
|
|
(548)
|
|
(3,216)
|
|
(6,531)
|
Additions
|
|
8,750
|
|
-
|
|
-
|
|
-
|
|
-
|
|
8,750
|
Disposals
|
|
(1,199)
|
|
(19,570)
|
|
(2,393)
|
|
(4,851)
|
|
-
|
|
(28,013)
|
Business combinations
|
|
-
|
|
7,654
|
|
29,169
|
|
85,684
|
|
92,244
|
|
214,751
|
Balance as of December 31,
2022
|
|
32,188
|
|
23,189
|
|
75,429
|
|
133,477
|
|
245,740
|
|
510,023
|
Exchange rate
differences
|
|
25
|
|
485
|
|
455
|
|
272
|
|
874
|
|
2,111
|
Additions
|
|
15,187
|
|
-
|
|
-
|
|
-
|
|
-
|
|
15,187
|
Disposals
|
|
(12)
|
|
(23,674)
|
|
(1,845)
|
|
-
|
|
(262)
|
|
(25,793)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31,
2023
|
|
47,388
|
|
-
|
|
74,039
|
|
133,749
|
|
246,352
|
|
501,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1,
2022
|
|
14,876
|
|
29,786
|
|
28,223
|
|
39,961
|
|
-
|
|
112,846
|
Exchange rate
differences
|
|
2
|
|
(585)
|
|
(914)
|
|
(198)
|
|
-
|
|
(1,695)
|
Additions
|
|
6,189
|
|
2,514
|
|
9,289
|
|
10,257
|
|
-
|
|
28,249
|
Disposals
|
|
(659)
|
|
(19,570)
|
|
(2,393)
|
|
(4,851)
|
|
-
|
|
(27,473)
|
Balance as of December 31,
2022
|
|
20,408
|
|
12,145
|
|
34,205
|
|
45,169
|
|
-
|
|
111,927
|
Exchange rate
differences
|
|
15
|
|
355
|
|
353
|
|
157
|
|
-
|
|
880
|
Additions
|
|
7,172
|
|
11,174
|
|
12,407
|
|
21,499
|
|
--
|
|
52,252
|
Disposals
|
|
(12)
|
|
(23,674)
|
|
(1,845)
|
|
-
|
|
-
|
|
(25,531)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31,
2023
|
|
27,583
|
|
-
|
|
45,120
|
|
66,825
|
|
-
|
|
139,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2023
|
|
19,805
|
|
-
|
|
28,919
|
|
66,924
|
|
246,352
|
|
362,000
|
As of December 31, 2022
|
|
11,780
|
|
11,044
|
|
41,224
|
|
88,308
|
|
245,740
|
|
398,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized development costs
Development costs capitalized in
the period amounted to USD 14,222 thousand (2022: USD
8,743 thousand) and were
classified under software.
Acceleration
of Trademarks
As detailed in Note 1, following
the decision to rebrand to Nexxen, the Group accelerated the
amortization of its trademark assets, whose useful life ended on
December 31, 2023.
Impairment testing for intangible assets
The Company's qualitative
assessment during the years ended December 31, 2023, and December 31,
2022, did not indicate
that it is more likely than not that the recoverable amount of its
intangible assets, and other long-lived assets is less than their
aggregate carrying amount.
As of December 31,
2023, and as of December
31, 2022, the estimated recoverable amount based on Company's
market value was lower than the carrying amount, and therefore the
recoverable amount was estimated based on value in use and was
determined by discounting the future cash flows. The estimated
value in use was higher than the carrying amount, and therefore
there was no need for impairment.
Key assumptions used in the calculation of
recoverable amounts are as of December 31, 2023:
Post-tax discount
rate
14% (WACC)
Terminal value growth
rate
3%
EBITDA growth rate
26%-42%
Key assumptions used in the calculation of
recoverable amounts are as of December 31, 2022:
Post-tax discount
rate
15% (WACC)
Terminal value growth
rate
3%
EBITDA growth rate
21%-33%
The cash flow
projections include specific estimates for four years and a
terminal value growth rate thereafter. EBITDA growth
rate is expressed as the annual growth rate in the initial five
years of the plans used for impairment testing and has been mainly
based on past experience and management expectations.
NOTE 8: TRADE AND
OTHER RECEIVABLES
|
|
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Trade receivables:
|
|
|
|
|
Trade receivables
|
|
219,396
|
|
229,975
|
Allowance for expected credit
losses
|
|
(17,423)
|
|
(10,138)
|
|
|
|
|
|
Trade receivables, net
|
|
201,973
|
|
219,837
|
|
|
|
|
|
Other receivables:
|
|
|
|
|
Prepaid expenses
|
|
4,988
|
|
14,425
|
Loan to a third party
|
|
104
|
|
-
|
Institutions
|
|
1,309
|
|
1,281
|
Pledged deposits
|
|
1,569
|
|
3,036
|
Acquisition consideration
adjustment
|
|
-
|
|
4,673
|
Other
|
|
323
|
|
-
|
|
|
|
|
|
|
|
8,293
|
|
23,415
|
NOTE 9: TRADE AND
OTHER PAYABLES
|
|
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Trade payables
|
|
183,296
|
|
212,690
|
|
|
|
|
|
Other payables:
|
|
|
|
|
|
|
|
|
|
Contract liabilities
|
|
8,366
|
|
6,540
|
Wages, salaries and related
expenses
|
|
13,319
|
|
24,539
|
Provision for vacation
|
|
1,922
|
|
1,869
|
Institutions
|
|
1,603
|
|
1,659
|
Interest to pay
|
|
1,757
|
|
1,504
|
Pledged deposits
|
|
284
|
|
362
|
Others
|
|
1,847
|
|
7,882
|
|
|
|
|
|
|
|
29,098
|
|
44,355
|
NOTE 10:
CASH AND CASH EQUIVALENTS
|
|
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Cash
|
|
105,997
|
|
173,568
|
Bank deposits
|
|
128,311
|
|
43,932
|
|
|
|
|
|
Cash and cash
equivalents
|
|
234,308
|
|
217,500
|
The majority of cash and cash
equivalents bear interest of 3% to 5.5%.
The Group's exposure to credit, and currency risks
are disclosed in Note 18 on financial instruments.
NOTE 11: LONG-TERM DEBT
In September 2022, Nexxen Group US Holdings Inc.
(formerly known as Unruly Group US Holding Inc.) entered into a USD
90 million senior secured term loan facility (the Term Loan
Facility) and a USD 90 million senior secured revolving credit
facility (the Revolving Credit Facility and, together with the Term
Loan Facility, collectively, the Credit Facilities). The Company
used the net proceeds of the Term Loan Facility and USD 10 million
of net proceeds of the Revolving Credit Facility to finance the
acquisition of Nexxen Inc. The loan period is 3 years from the date
it was obtained.
The Company is obligated to pay a commitment fee on
the undrawn amounts of the Revolving Credit Facility at an annual
rate, determined by the Company's total net leverage ratio. The
Credit Facilities require compliance with various financial and
non-financial covenants, including affirmative and negative
covenants. The financial covenants require that the total net
leverage ratio not exceed 3x and the interest coverage ratio not be
less than 4x, in each case measured as of the end of each fiscal
quarter. As of December 31, 2023, the Company is in compliance with
all related covenants.
During the twelve-month periods ended December 31,
2023, the Company recognized interest expenses in the amounts of
USD 6,854 thousand. Total interest paid during the twelve months
ended December 31, 2023, was USD 6,601 thousand.
NOTE 12: REVENUES
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Programmatic
|
|
299,005
|
|
274,355
|
|
266,616
|
|
Performance
|
|
32,988
|
|
60,895
|
|
75,329
|
|
|
|
|
|
|
|
|
|
|
|
331,993
|
|
335,250
|
|
341,945
|
|
For the year ended December 31,
2023, no individual buyer accounted for more than 10% of revenue.
For the year ended December 31, 2022 one buyer represents 10.7% of
revenue. For the year ended December 31, 2021 one buyer represents
13.6% of revenue.
NOTE 13: COST OF
REVENUE
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Programmatic
|
|
44,385
|
|
35,110
|
|
31,572
|
|
Performance
|
|
17,885
|
|
25,635
|
|
40,079
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
62,270
|
|
60,745
|
|
71,651
|
|
NOTE 14:
GENERAL AND ADMINISTRATIVE EXPENSES
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Wages, salaries and related
expenses
|
|
21,835
|
|
18,933
|
|
17,755
|
|
Share base payments
|
|
12,121
|
|
31,878
|
|
32,250
|
|
Rent and office
maintenance
|
|
2,432
|
|
319
|
|
549
|
|
Professional expenses
|
|
7,686
|
|
12,233
|
|
7,136
|
|
Doubtful debts
|
|
4,337
|
|
(3,167)
|
|
4,958
|
|
Acquisition costs
|
|
171
|
|
6,012
|
|
253
|
|
Other expenses
|
|
2,469
|
|
1,797
|
|
598
|
|
|
|
|
|
|
|
|
|
|
|
51,051
|
|
68,005
|
|
63,499
|
|
NOTE 15:
SHAREHOLDERS' EQUITY
Issued and paid-in share capital:
|
|
Ordinary Shares
|
|
|
2023
|
|
2022
|
|
|
Number
of shares
|
|
|
|
|
|
Balance as of January 1
|
|
144,477,962
|
|
154,501,629
|
Own shares held by the
Group
|
|
(2,729,597)
|
|
(16,906,795)
|
Share based
compensation
|
|
4,413,644
|
|
6,883,128
|
|
|
|
|
|
Issued and paid-in share capital
as of December 31
|
|
146,162,009
|
|
144,477,962
|
|
|
|
|
|
Authorized share
capital
|
|
500,000,000
|
|
500,000,000
|
Rights attached to share:
The holders of ordinary shares are entitled to
receive dividends as declared from time to time and are entitled to
one vote per share at general meetings of the Company. All shares
rank equally with regard to the Company's residual assets.
Own shares acquisition:
During 2022, the Board of Directors approved the
share buyback programs of up to USD 95 million of its ordinary
shares out of which the Group repurchased 16,906,795 ordinary
shares in aggregate amount of USD 86.3 million and during 2023, the
Company repurchased 2,505,851 ordinary shares in aggregate amount
of USD 8.7 million which was financed by existing cash
resources.
On December 18, 2023, the Company has received
approval from the Israeli court for its motion to buy back an
additional USD 20 million of its ordinary shares from time-to-time
through June 18, 2024. In 2023, the Company repurchased 221,506
ordinary shares in aggregate amount of USD 0.6 million which
was financed by existing cash resources.
In addition, in July 2023, the Group repurchased
2,240 restricted ordinary shares that did not vest from one of its
employees for no consideration.
NOTE 16:
EARNINGS (LOSS) PER SHARE
Basic earnings
(loss) per share
The calculation of basic earnings (loss) per share
as for the year ending December 31, 2023, 2022 and 2021 was based
on the profit (loss) for the year divided by a weighted average
number of ordinary shares outstanding, calculated as follows:
Profit (loss) for
the year:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Profit (loss) for the
year
|
|
(21,487)
|
|
22,737
|
|
73,223
|
|
Weighted average
number of ordinary shares:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
Shares
of NIS 0.01 par value
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary
shares used to calculate basic earnings (loss) per share as at
December 31
|
|
143,589,188
|
|
149,937,339
|
|
144,493,989
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share (in USD)
|
|
(0.15)
|
|
0.15
|
|
0.51
|
|
Diluted earnings
(loss) per share
The calculation of diluted earnings (loss) per share
as of December 31, 2023, 2022 and 2021 was based on profit (loss)
for the year divided by a weighted average number of shares
outstanding after adjustment for the effects of all dilutive
potential ordinary shares, calculated as follows:
Weighted average
number of ordinary shares (diluted):
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
Shares
of NIS 0.01 par value
|
|
|
|
|
|
|
|
|
Weighted average number of
ordinary shares used to calculate basic earnings per
share
|
|
143,589,188
|
|
149,937,339
|
|
144,493,989
|
|
Effect of share options on
issue
|
|
-
|
|
3,120,304
|
|
8,212,903
|
|
|
|
|
|
|
|
|
|
Weighted average number of
ordinary shares used to calculate diluted earnings per
share
|
|
143,589,188
|
|
153,057,643
|
|
152,706,892
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (in USD)
|
|
(0.15)
|
|
0.15
|
|
0.48
|
|
At December 31, 2023 6,749
thousand share options, RSUs and PSUs (in 2022 and 2021: 8,851
thousand and 3,061 thousand, respectively) were excluded from the
diluted weighted average number of ordinary shares calculation as
their effect would have been anti-dilutive.
NOTE 17:
SHARE-BASED COMPENSATION ARRANGEMENTS
a. Share-based compensation plan:
The terms and conditions related to the grants of
the share options programs are as follows:
·
All the share options that were granted are
non-marketable.
·
All options are to be settled by physical
delivery of ordinary shares or ADSs.
·
Vesting conditions are based on a service period
of between 0.5-4 years.
b. Stock
Options:
The number of share options is as follows:
|
|
Number
of options
|
|
Weighted average
exercise price
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Thousands)
|
|
(USD)
|
|
|
|
|
|
|
|
|
|
Outstanding of 1 January
|
|
4,772
|
|
6,026
|
|
7.31
|
|
6.54
|
Forfeited during the
year
|
|
(721)
|
|
(828)
|
|
6.33
|
|
7.61
|
Exercised during the
year
|
|
(346)
|
|
(1,046)
|
|
0.67
|
|
1.96
|
Granted during the year
|
|
-
|
|
620
|
|
-
|
|
7.22
|
|
|
|
|
|
|
|
|
|
Outstanding of December
31
|
|
3,705
|
|
4,772
|
|
7.91
|
|
7.31
|
Exercisable of December 31
|
|
2,086
|
|
1,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total expense
recognized in the year ended December 31, 2023, with respect to the
options granted to employees, amounted to approximately USD 2,429
thousand (2022: USD 5,867 thousand).
c.
Restricted Share Units:
During 2023 and 2022, the Group granted 352,800 and
777,448 Restricted Share Units (RSUs) to its executive officers and
employees, respectively.
The number of restricted share units is as
follows:
|
|
Number
of RSU's
|
|
Weighted-Average Grant Date Fair Value
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at 1
January
|
|
5,288
|
|
8,146
|
|
8.277
|
|
8.606
|
Forfeited during the
year
|
|
(254)
|
|
(261)
|
|
6.275
|
|
9.948
|
Exercised during the
year
|
|
(3,295)
|
|
(3,374)
|
|
8.208
|
|
8.091
|
Granted during the year
|
|
353
|
|
777
|
|
2.160
|
|
4.596
|
|
|
|
|
|
|
|
|
|
Outstanding at December
31
|
|
2,092
|
|
5,288
|
|
7.601
|
|
8.277
|
|
|
|
|
|
|
|
|
|
The total expense recognized in the year ended
December 31, 2023, with respect to the RSUs granted to employees,
amounted to approximately USD 13,356 thousand (2022: USD 31,923
thousand).
d. Performance
Stock Units:
During 2023 and 2022, the Group granted 143,700 and
168,048 Performance Stock Units (PSUs) to its executive officers,
respectively.
The number of performance stock
units is as follows:
|
|
Number
of PSU's
|
|
Weighted-Average Grant Date Fair Value
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January
1
|
|
1,992
|
|
4,486
|
|
8.937
|
|
6.796
|
Forfeited during the
year
|
|
(254)
|
|
(80)
|
|
6.328
|
|
9.952
|
Exercised during the
year
|
|
(930)
|
|
(2,582)
|
|
9.320
|
|
4.891
|
Granted during the year
|
|
144
|
|
168
|
|
2.160
|
|
4.453
|
|
|
|
|
|
|
|
|
|
Outstanding at December
31
|
|
952
|
|
1,992
|
|
8.238
|
|
8.937
|
The vesting of the PSUs is subject to continuous
employment and compliance with the performance criteria determined
by the Company's Remuneration Committee and the Company's Board of
Directors.
The total expense recognized in the year ended
December 31, 2023, with respect to the PSUs granted to employees,
amounted to approximately USD 3,384 thousand (2022: USD 12,715
thousand).
e. Expense recognized in the statement of
operation and other comprehensive income is as follows:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
3,740
|
|
10,594
|
|
7,094
|
|
Research and
development
|
|
3,308
|
|
8,034
|
|
3,474
|
|
General and
administrative
|
|
12,121
|
|
31,877
|
|
32,250
|
|
|
|
|
|
|
|
|
|
|
|
19,169
|
|
50,505
|
|
42,818
|
|
NOTE 18:
FINANCIAL INSTRUMENTS
a.
Overview:
The Group has exposure to the following risks from
its use of financial instruments:
□ Credit risk
□ Liquidity risk
□ Market risk
This note presents quantitative and qualitative
information about the Group's exposure to each of the above risks,
and the Group's objectives, policies and processes for measuring
and managing risk.
In order to manage these risks and as described
hereunder, the Group executes transactions in derivative financial
instruments. Presented hereunder is the composition of the
derivatives:
|
|
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Derivatives presented under current assets
|
|
|
|
|
Forward exchange contracts used
for hedging
|
|
123
|
|
-
|
|
|
|
|
|
Derivatives presented under current
liability
|
|
|
|
|
Forward exchange contracts used
for hedging
|
|
-
|
|
(209)
|
|
|
|
|
|
Total
|
|
123
|
|
(209)
|
b. Risk
management framework:
The Board of Directors has overall responsibility
for the establishment and oversight of the Group's risk management
framework. The Board is responsible for developing and monitoring
the Group's risk management policies.
The Group's risk management policies are established
to identify and analyze the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the
Group's activities. The Group, through its training and management
of standards and procedures, aims to develop a disciplined and
constructive control environment in which all employees understand
their roles and obligations.
The Group Audit Committee oversees how management
monitors compliance with the Group's risk management policies and
procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group. The Group
Audit Committee is assisted in its oversight role by Internal
Audit. Internal Audit undertakes both regular and ad hoc reviews of
risk management controls and procedures, the results of which are
reported to the Audit Committee.
c. Credit
risk:
The Group's credit risk is arise from the risk of
financial loss if a customer or counterparty to a financial
instrument fails to meet its contractual obligations.
The carrying amount of financial assets represents
the maximum credit exposure.
The maximum exposure to credit risk at the reporting
date was as follows:
|
|
December 31
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Cash and cash
equivalents
|
|
234,308
|
|
217,500
|
Trade receivables, net
(a)
|
|
201,973
|
|
219,837
|
Other receivables
|
|
1,996
|
|
7,709
|
Long term deposit
|
|
525
|
|
406
|
|
|
|
|
|
|
|
438,802
|
|
445,452
|
(a) At December 31, 2023,
the Group included provision for doubtful debts in the amount of
USD 17,423 thousand (December 31, 2022: USD 10,138 thousand) in
respect of collective impairment provision and specific debtors
that their collectability is in doubt.
As of December 31, 2023, two
buyers accounted for 16.2% and 16.5% of trade receivables. As of
December 31, 2022, two buyers accounted for 15.7% and
14.1% of trade receivables.
|
|
Allowance for Doubtful debts
|
|
|
2023
|
|
2022
|
|
|
USD
thousands
|
|
|
|
|
|
Balance at January 1
|
|
10,138
|
|
13,870
|
Allowance for doubtful debts
expenses (income)
|
|
7,622
|
|
(3,167)
|
Discontinuance of
consolidation
|
|
(275)
|
|
-
|
Write-off
|
|
(22)
|
|
(542)
|
Exchange rate
difference
|
|
(40)
|
|
(23)
|
|
|
|
|
|
Balance at December 31
|
|
17,423
|
|
10,138
|
d. Liquidity
risk:
Liquidity risk is the risk that the Group will
encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or
another financial asset. The Group's approach to managing liquidity
is to ensure, as far as possible, that it has sufficient liquidity
to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
As of December 31, 2023, and December 31, 2022, the
Group's contractual obligation of financial liability is in respect
of leases, trade, and other payables in the amount of USD thousand
and USD 332,782 thousand and USD 361,820 thousands,
respectively.
The contractual maturity of the financial liability
that is less than one year is in the amount of USD 201,955 thousand
and USD 239,240 thousand for December 31, 2023, and December 31,
2022, respectively.
e. Market
risk:
Market risk is the risk that changes in market
prices, such as foreign exchange rates, the CPI, interest rates and
equity prices will affect the Group's income or the value of its
holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within
acceptable parameters, while optimizing the return.
At December 31, 2023, USD 14,027 thousand are
held in AUD, USD 5,653 thousand are held in NIS, USD 4,571 thousand
are held in EUR, USD 2,981 thousand are held in SGD, USD 2,692
thousand are held in CAD, USD 2,665 thousand are held in GBP, USD
2,040 thousand are held in JPY, USD 1,493 thousand are held in
other currencies and the remainder held in USD.
As of December 31, 2023, no
individual vendor accounted for more than
10% of trade payables. As of December 31, 2022, one vendor
accounted for 12.7% of trade payables.
f.
Sensitivity analysis:
A change as of December 31 in the exchange rates of
the following currencies against the USD, as indicated below, would
have affected the measurement of financial instruments denominated
in a foreign currency and would have increased (decreased) profit
or loss and equity by the amounts shown below (after tax). This
analysis is based on foreign currency exchange rate that the Group
considered to be reasonably possible at the end of the reporting
period. The analysis assumes that all other variables, in
particular interest rates, remain constant and ignores any impact
of forecasted sales and purchases.
|
|
2023
|
|
2022
|
GBP/USD
|
|
+10%
|
|
-10%
|
|
+10%
|
|
-10%
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
|
Profit / (Loss)
|
|
(1,832)
|
|
1,832
|
|
(2,893)
|
|
2,893
|
Increase / (Decrease) in
Shareholders' Equity
|
|
(9)
|
|
9
|
|
(94)
|
|
94
|
|
|
2023
|
|
2022
|
NIS/USD
|
|
+10%
|
|
-10%
|
|
+10%
|
|
-10%
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
|
Profit / (Loss)
|
|
353
|
|
(353)
|
|
(139)
|
|
139
|
Increase / (Decrease) in
Shareholders' Equity
|
|
384
|
|
(384)
|
|
(107)
|
|
107
|
|
|
2023
|
|
2022
|
SGD/USD
|
|
+10%
|
|
-10%
|
|
+10%
|
|
-10%
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
|
Profit / (Loss)
|
|
(2,348)
|
|
2,348
|
|
(2,615)
|
|
2,615
|
Increase / (Decrease) in
Shareholders' Equity
|
|
(6)
|
|
6
|
|
(320)
|
|
320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Linkage and foreign
currency risks
Currency
risk
The Group is not exposed to currency risk on sales
and purchases that are denominated in a currency other than the
respective functional currency of the Group, the USD. The principal
currencies in which these transactions are denominated are GBP,
NIS, EURO, CAD, SGD, MXN, AUD and JPY.
At any point in time, the Group aims to match the
amounts of its assets and liabilities in the same currency in order
to hedge the exposure to changes in currency.
In respect of other monetary assets and liabilities
denominated in foreign currencies, the Group ensures that its net
exposure is kept to an acceptable level by buying or selling
foreign currencies at spot rates when necessary to address
short-term imbalances.
Interest rate
risk
The Group has a cash flow risk due to its
variable-rate debt instruments. A 5% increase in the interest
rate would result in a loss and a decrease in shareholders' equity
of USD 3.7 million. However, it will be offset by a gain and
shareholders' increase of USD 2.8 million due to available cash and
cash equivalents. As a result, there would be a net effect of USD
0.9 million.
g. Level 3 financial instruments carried at fair
value
On August 18, 2022, the Company completed a USD 25
million investment in VIDAA, a smart TV operating system, streaming
platform, and subsidiary of Hisense. Through its investment, the
Company received a 2.5% equity stake in VIDAA, a multi-year
extension to exclusively share of VIDAA's global ACR data for
targeting and measurement across the Company's platform, and ad
monetization exclusivity on VIDAA media in the U.S., U.K., Canada,
and Australia
The investment in shares is a financial asset
measured at fair value through profit or loss under level 3.
|
|
December 31, 2023
|
December 31, 2022
|
|
|
Level 3
|
Level 3
|
|
|
USD
thousands
|
USD
thousands
|
|
|
|
|
|
|
|
|
|
Financial assets
measured at fair value
|
|
|
|
|
|
|
|
|
through profit or
loss:
|
|
|
|
|
|
|
|
|
Investment in shares
|
|
25,000
|
25,000
|
Valuation processes
used by the Company
The fair value of non-marketable shares is
determined by external valuer on an annual basis.
The principal unobservable inputs
are as follows:
· The
estimated royalties from App share and remote-control button which
is based on the expected increase in market share.
· The
average operating profit margin which is based on the stage of
research and development.
·
The discount rate, which is based on the
risk-free rate for 10-year debentures issued by the government in
the relevant market, adjusted for a risk premium to reflect both
the risk of investing in equities, the systematic risk of company
and entity specific risk to the extent not already reflected in the
cash flows.
h. Financial instruments measured at
fair value for disclosure purposes only.
The fair value of the long term debt is estimated by
discounting future principal and interest cash flows by the market
interest rate of 7.064% on the date of measurement which is USD
97,291 thousands.
NOTE 19:
RELATED PARTIES
Compensation and
benefits to key management personnel
Executive officers also participate in the Company's
share option programs. For further information see Note 17
regarding share-based compensation.
Compensation and benefits to key management
personnel (including directors) that are employed by the Company
and its subsidiaries:
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
11,527
|
|
30,914
|
|
31,283
|
|
Other compensation and
benefits
|
|
3,988
|
|
4,433
|
|
6,752
|
|
|
|
|
|
|
|
|
|
Total
|
|
15,515
|
|
35,347
|
|
38,035
|
|
NOTE 20:
SUBSIDIARIES
Details in respect
of subsidiaries:
Presented hereunder is a list of the Group's
subsidiary:
|
Principal
|
The
Group's ownership interest
|
|
location of
the
|
in the
subsidiary for the
year
ended
|
|
Company's
|
|
Name of company
|
|
|
|
Taptica Inc
|
USA
|
100%
|
100%
|
Tremor Video Inc
|
USA
|
100%
|
100%
|
Adinnovation Inc
|
Japan
|
-
|
100%
|
Taptica UK
|
UK
|
100%
|
100%
|
YuMe Inc*
|
USA
|
100%
|
100%
|
Perk.com Canada Inc
|
Canada
|
100%
|
100%
|
R1Demand LLC*
|
USA
|
100%
|
100%
|
Nexxen Group LLC (f/k/a Unruly
Group LLC)
|
USA
|
100%
|
100%
|
Nexxen Group US Holdings Inc.
(f/k/a Unruly Group US Holding Inc)*
|
USA
|
100%
|
100%
|
Nexxen Holdings Ltd (f/k/a Unruly
Holdings Limited)*
|
UK
|
100%
|
100%
|
Nexxen Group Ltd (f/k/a Unruly
Group Limited)*
|
UK
|
100%
|
100%
|
Unruly Media GmbH
|
Germany
|
100%
|
100%
|
Unruly Media Pte Ltd*
|
Singapore
|
100%
|
100%
|
Nexxen Pty Ltd (f/k/a Unruly Media
Pty Ltd)
|
Australia
|
100%
|
100%
|
Unruly Media KK
|
Japan
|
100%
|
100%
|
Unmedia Video Distribution Sdn
Bhd
|
Malaysia
|
100%
|
100%
|
SpearAd GmbH
|
Germany
|
100%
|
100%
|
Nexxen Inc. (f/k/a Amobee
Inc)*
|
USA
|
100%
|
100%
|
Amobee EMEA Limited
|
UK
|
100%
|
100%
|
Amobee International
Inc
|
USA
|
100%
|
100%
|
Amobee Ltd
|
Israel
|
100%
|
100%
|
Amobee Asia Pte
Ltd*
|
Singapore
|
100%
|
100%
|
Amobee ANZ Pty Ltd
|
Australia
|
100%
|
100%
|
*
Under these companies,
there are seventeen (17) wholly owned subsidiaries that are inactive and in
liquidation process.
NOTE 21:
OPERATING SEGMENTS
The Group has a single reportable segment as a
provider of marketing services.
Geographical
information
In presenting information on the basis of
geographical segments, segment revenue is based on the geographical
location of consumers.
|
|
Year
ended
December 31
|
|
|
2023
|
|
2022
|
|
2021
|
|
|
|
USD
thousands
|
|
|
|
|
|
|
|
|
America
|
|
311,780
|
|
303,106
|
|
304,686
|
|
APAC
|
|
6,537
|
|
20,031
|
|
20,931
|
|
EMEA
|
|
13,676
|
|
12,113
|
|
16,328
|
|
|
|
|
|
|
|
|
|
Total
|
|
331,993
|
|
335,250
|
|
341,945
|
|
NOTE 22:
CONTINGENT LIABILITY
On May 18, 2021, the Company filed a complaint
against Alphonso, Inc. ("Alphonso") in the Supreme Court of the
State of New York, County of New York (the "Court"), asserting
claims for breach of contract, tortious interference with business
relations, intentional interference with contractual relations,
unjust enrichment, and conversion.
The lawsuit arose out of Alphonso's breach of a
Strategic Partnership Agreement and an Advance Payment Obligation
and Security Agreement (the "Security Agreement") with us, and LG
Electronics Inc.'s ("LG") tortious interference with the Company's
contractual relationships and business relations and related
misconduct. On February 23, 2024, the Company entered into a
settlement and release agreement with Alphonso and LG and the
parties have agreed to dismiss the Alphonso Lawsuit.
In March 2023, Alphonso remitted USD 11.3 million to
the Company, comprising USD 7.25 million related to a secured
advance repayment and USD 4.1 million related to additional
interest, penalties and fees including reimbursement of certain
legal fees.
On June 21, 2022, Alphonso filed a complaint against
the Company in the United States District Court for the Northern
District of California, asserting claims for misappropriation of
trade secrets under federal and state law. On October 11, 2023,
Alphonso dismissed its claims in the lawsuit with prejudice. On
October 25, 2023, the Company filed a bill of costs to recover
allowable legal costs from Alphonso. The Company's request for tax
costs is pending with the Court.