Nexxen International Ltd. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023; audited consolidated financial statements prepared under IFRS in U.S. dollars. This is an annual report, not a standalone Q4 filing, so the supplied text does not provide clear Q4-only financial results. The 2023 comparison with 2022 is affected by Amobee, acquired in September 2022: 2023 includes a full year of Amobee, while 2022 includes it only from the acquisition date.
Business context
Nexxen operates a global digital advertising platform spanning demand-side and supply-side platforms and data management tools, with an emphasis on video and connected TV (CTV). It reported 1,008 active customers and 1,636 active publishers at year-end. The company completed integration of Amobee during 2023 and adopted the Nexxen name and NEXN ticker in January 2024.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $332.0 million | $335.3 million |
| Gross profit | $218.9 million; 65.9% of revenue | $249.1 million; 74.3% of revenue |
| Operating profit (loss) | $(17.0) million | $44.8 million |
| Profit (loss) for the year | $(21.5) million; $(0.15) per share | $22.7 million; $0.15 per share |
| Total comprehensive income (loss) | $(18.1) million | $16.2 million |
| Adjusted EBITDA (non-IFRS) | $83.2 million; 25.1% margin | $144.9 million; 43.2% margin |
| Contribution ex-TAC (non-IFRS) | $314.2 million | $309.7 million |
| Cash from operating activities | $60.7 million | $83.0 million |
| Cash and cash equivalents | $234.3 million | $217.5 million |
| Long-term debt, principal | $100.0 million | Not stated here on a comparable principal basis |
Net cash, as defined by the company as cash less long-term debt, was $134.3 million. Working capital was $222.1 million. The balance sheet reported $99.1 million of long-term debt and $37.1 million of lease liabilities. Operating cash flow fell from 2022; investing cash use was $17.0 million and financing cash use was $26.5 million in 2023. Capital expenditures were $19.8 million.
Material changes versus prior year
- Revenue declined 1.0%. Programmatic revenue rose to $299.0 million from $274.4 million, while Performance revenue fell to $33.0 million from $60.9 million. Management attributed the overall decrease primarily to lower advertising demand and reduced campaign budgets.
- Video revenue fell 14.7% to $207.5 million; CTV revenue fell 12% to $85.5 million. Video represented 62% of total revenue. Customers shifted toward lower-cost formats and inventory.
- Gross profit declined $30.2 million. Operating results swung from a $44.8 million profit to a $17.0 million loss, and Adjusted EBITDA decreased 42.6%.
- Research and development expense increased 47.6% to $49.7 million; selling and marketing expense increased 17.7% to $105.9 million. Depreciation and amortization rose 83.3% to $78.3 million, including amortization related to acquired assets and accelerated write-off of former trademarks after rebranding.
- General and administrative expense declined 24.9% to $51.1 million, partly reflecting lower share-based compensation and acquisition costs. The expected-credit-loss allowance increased; trade receivables were $202.0 million net of a $17.4 million allowance, up from $10.1 million.
Liquidity, debt, outlook and risks
Management stated that working capital was sufficient for current needs and that it expected adequate cash to meet requirements in 2024 and over the longer term. The company had a $90 million secured term loan and a $90 million revolving facility, of which $10 million was drawn at closing; it reported $80 million of remaining revolver capacity. The facilities mature September 15, 2025, are secured, and include quarterly covenants requiring net leverage no greater than 3x and interest coverage of at least 4x. Nexxen reported compliance at December 31, 2023. Average DSO was 99 days and DPO 97 days.
No specific financial guidance is provided in the supplied filing text. Management expected macroeconomic uncertainty and its effects on advertising demand to continue into 2024 and potentially beyond. It cited inflation, interest rates, supply constraints, recession concerns and geopolitical hostilities as factors that weighed on advertiser spending. Management sees longer-term opportunity in programmatic advertising, video and CTV, but acknowledged that recovery, customer spending and margin expansion are uncertain.
- Demand and concentration: Advertising spend is cyclical and seasonal; customer and publisher agreements generally lack minimum commitments. No buyer exceeded 10% of 2023 revenue, but two buyers represented 16.2% and 16.5% of year-end trade receivables. Customer Contribution ex-TAC retention was 73%, down from 80%.
- Data, privacy and technology: The business depends on data access, tracking technologies, cookies and consent frameworks, all subject to changing regulation and platform policies. Cybersecurity, fraud, service availability and third-party hosting are additional risks.
- Israel-related exposure: The filing describes potential operational disruption from regional hostilities and employee reserve duty; seven management employees and 21 non-management employees in Israel had been called to serve.
- Legal matter: Nexxen and Alphonso/LG entered a settlement and release agreement on February 23, 2024, after the reporting date, and agreed to dismiss Nexxen’s lawsuit. Alphonso’s separate trade-secret claims had been dismissed with prejudice in October 2023; Nexxen’s request for certain legal costs remained pending.
- Other notable items: Nexxen repurchased 2.7 million ordinary shares in 2023 for approximately $9.3 million and began a new authorized $20 million repurchase program in December. It does not anticipate paying dividends in the foreseeable future. The $25 million VIDAA investment remained valued at $25 million at year-end using Level 3 inputs.
Important facts for investors to verify
- Review the audited financial statements and notes for the precise effects of Amobee integration, acquired-asset amortization and the comparability of 2023 and 2022 results.
- Track programmatic growth against declines in Video, CTV and Performance, and assess whether the 73% customer retention rate stabilizes.
- Monitor operating cash generation, receivable collections and credit-loss allowances, as well as DSO/DPO and working-capital needs.
- Confirm debt balances, interest costs, revolver availability, covenant headroom and the September 2025 maturity profile.
- Assess whether management’s impairment assumptions for goodwill and other intangibles remain supportable; the filing reports no impairment despite market value being below carrying value.
- Check the settlement’s final dismissal and the outcome of the pending legal-cost request. Also verify any implications of the cover-page indication that the filing reflects correction of an error; the supplied text does not clearly explain the correction.