Filing identity and reporting period
The supplied filing is Tremor International Ltd.’s annual report on Form 20-F for the fiscal year ended December 31, 2021, filed March 15, 2022. It is not identified in the filing as Nexxen International Ltd., and it reports annual results rather than a standalone 2021 fourth quarter. Financial statements are audited and prepared under IFRS in U.S. dollars.
Tremor operates a digital advertising platform connecting advertisers and publishers, with demand-side, supply-side and data-management products and an emphasis on video and connected TV (CTV). It acquired SpearAd in October 2021.
Key financial metrics
Unless noted otherwise, amounts are in U.S. dollars; financial statement figures are in millions.
| Metric | 2021 | 2020 | Change / context |
|---|---|---|---|
| Revenue | $341.9 | $211.9 | Up 61.4% |
| Gross profit | $253.7 | $132.5 | Up 91.4%; 2021 gross margin 74.2% |
| Operating profit (loss) | $74.5 | ($6.0) | Operating margin 21.8% in 2021 |
| Profit for the year | $73.2 | $2.1 | Net margin 21.4% versus 1.0% |
| Total comprehensive income | $70.6 | $5.0 | Includes foreign currency translation loss of $2.6 in 2021 |
| Adjusted EBITDA (non-IFRS) | $161.2 | $60.5 | Adjusted EBITDA margin 47% versus 29% |
| Operating cash flow | $170.1 | $35.2 | Strong increase year over year |
| Cash and cash equivalents at year-end | $367.7 | $97.5 | Includes IPO proceeds |
- Programmatic revenue was $266.6 million, up about 65%; Performance revenue was $75.3 million, up about 50%.
- Video revenue rose 69% to $242.7 million. CTV revenue increased 118% to $80.3 million and represented 30% of Programmatic revenue.
- Contribution ex-TAC, a non-IFRS measure, was $302.0 million versus $184.3 million. Those figures imply growth of about 64%; elsewhere the filing describes the increase as 164%, an apparent inconsistency to verify.
- Net cash used in investing was $16.5 million, including $11.0 million for acquisitions, intangible assets and fixed-asset spending. Financing cash flow was positive $116.9 million, chiefly reflecting $134.6 million of net IPO proceeds.
- Working capital was $331.3 million. Total liabilities were $230.4 million, including $15.0 million of lease liabilities; the filing reports no significant long-term loans.
Material changes versus 2020
- Revenue growth reflected stronger Programmatic activity, CTV adoption and use of self-service offerings. Management attributed approximately $105 million of the revenue increase to Programmatic growth.
- Operating performance improved substantially, while general and administrative expense more than doubled to $63.5 million. The increase included $22.8 million in share-based compensation tied to executive and director awards, $6.0 million in doubtful-debt expense, IPO-related costs and higher public-company costs.
- Operating cash flow increased to $170.1 million from $35.2 million. Trade receivables and payables both rose; working-capital timing and collections remain relevant to cash conversion.
- Cash increased substantially following the Nasdaq IPO, which generated approximately $134.6 million net. The company also spent $6.6 million on share repurchases before terminating its prior buyback program in March 2021.
- Comparisons with 2019 require care: from January 2020, Programmatic revenue was reported net rather than gross after the company concluded it acted as agent. The filing provides adjusted, non-IFRS 2019 revenue only for comparability.
Outlook, risks, contingencies and unusual items
- The filing does not provide formal company revenue or earnings guidance for 2022. Management said it believed liquidity was sufficient for current needs and expected to generate or obtain adequate cash for 2022 and longer-term requirements.
- Management’s strategy focuses on video and CTV, product and technology investment, customer expansion, international growth and potential acquisitions. It expects technology and development spending to rise; returns on investment are uncertain and may affect near-term profitability.
- Industry forecasts cited by management—including digital advertising market growth—are third-party estimates, not company guidance. Management cautioned that market projections may not materialize.
- Customer concentration increased: one buyer represented 13.6% of 2021 revenue. Two buyers accounted for 17.1% and 16.9% of year-end trade receivables. The allowance for doubtful debts was $13.9 million, versus $9.0 million in 2020; average DSO was 86 days and DPO 78 days.
- Key business risks include reliance on major buyers and publishers, advertising-market cyclicality and seasonality, privacy and data-protection regulation, restrictions on cookies and device identifiers, CTV adoption, competition, fraud and cybersecurity, and third-party infrastructure and data providers. COVID-19 and supply-chain constraints continued to affect some advertiser verticals. Foreign exchange and geopolitical conditions, including risks associated with operations in Israel, also bear watching.
- The company and Alphonso, Inc. have filed competing commercial claims in New York and were in written discovery. Tremor says the court enjoined Alphonso from using Tremor confidential information but did not grant relief on the other claims. A separate patent assertion by AlmondNet had not resulted in a filed claim; the company assessed material loss as remote but said it could not reasonably estimate potential impact.
- Unusual items include substantial IPO-related equity awards and share-based compensation. The filing reports $42.8 million of 2021 share-based compensation and $2.9 million of IPO-related one-time costs in its Adjusted EBITDA reconciliation.
- After year-end, the board approved a buyback plan of up to $75 million, commencing March 1, 2022 and scheduled to continue until September 1, 2022 or completion. The company does not anticipate paying dividends in the foreseeable future.
Most important facts for investors to verify
- Confirm issuer identity: this document names Tremor International Ltd., whereas the request metadata names Nexxen International Ltd.
- Review the audited IFRS statements and non-IFRS reconciliations, especially the stated 164% Contribution ex-TAC growth versus the approximately 64% implied by disclosed amounts.
- Assess revenue quality and concentration, including the 13.6% buyer share, receivable concentration, bad-debt allowance and collection trends.
- Evaluate how sustainable 2021 growth and margins are, separating video/CTV and Programmatic performance from Performance activity, seasonality and pandemic recovery effects.
- Reconcile liquidity and cash generation with working-capital needs, lease obligations, acquisition spending, share-based compensation and the post-year-end buyback.
- Track developments in the Alphonso litigation, privacy and consent regulation, cookie and identifier changes, and the company’s renewal of its Israeli preferred-technological-enterprise tax ruling.