Tremor International - Q2 and H1 2023 Results
17/08/2023 07:00
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RNS Number : 5659J Tremor International Ltd 17 August 2023
17 August 2023
Tremor International Ltd
("Tremor" or the "Company")
Tremor International Reports Results for the Three and Six Months Ended
June 30, 2023
Adjusted EBITDA significantly rebounded by 137%, and Adjusted EBITDA Margin
doubled, in Q2 2023 compared to Q1 2023; Company expects further improvement
to Adjusted EBITDA and Adjusted EBITDA Margin in H2 2023 vs. H1 2023
Generated significant programmatic revenue and CTV revenue in Q2 and H1 2023,
driven by strategic investments and product development in Company's core
growth drivers
Rebranded products and platforms as Nexxen, successfully simplifying the value
proposition of the Company's horizontal technology ecosystem, while driving
greater customer adoption of multiple solutions and better positioning the
Company to accelerate future revenue growth
Completed the integration of Amobee following consolidation of Tremor Video
and Amobee DSPs into the significantly enhanced Nexxen DSP, further
strengthening the Company's comprehensive unified data-driven CTV and
video-focused suite of technology solutions
Tremor International Ltd. (AIM/NASDAQ: TRMR) ("Tremor" or the "Company"), a
global leader in data-driven video and Connected TV ("CTV") advertising
technology, offering a unified platform that enables advertisers to optimize
campaigns and media companies to maximize inventory yield, announced today its
financial and operating results for the three and six months ended June 30,
2023. The Company's financial results for the three and six months ended June
30, 2023, reflect the combined performance of Tremor International and Amobee,
while comparative figures for the three and six months ended June 30, 2022, do
not include results from Amobee.
Financial Summary
· Contribution ex-TAC: Generated Q2 2023 Contribution ex-TAC of $80.2
million, compared to $70.8 million in Q2 2022, reflecting a year-over-year
increase of 13%, and H1 2023 Contribution ex-TAC of $147.1 million, reflecting
an increase of 4% compared to $141.8 million in H1 2022. The Company also
experienced 20% growth in Contribution ex-TAC in Q2 2023, compared to $66.9
million generated during Q1 2023. The Company benefitted from the strong
performance of its core strategic growth drivers, including programmatic
revenue and CTV revenue. These increases were partially offset by an
anticipated decrease in the Company's non-core performance activity, as well
as a continued weakened advertising demand environment driven by challenging
and uncertain macroeconomic conditions.
· Programmatic Revenue: Achieved Q2 2023 programmatic revenue of $76.3
million, reflecting an increase of 26% from $60.7 million in Q2 2022, as well
as H1 2023 programmatic revenue of $138.8 million, reflecting a 16% increase
from $119.8 million in H1 2022. The Company also experienced 22% growth in
programmatic revenue from $62.5 million generated during Q1 2023. These
increases reflect the Company's strategic focus on expanding its programmatic
revenue footprint following the completed integration of Amobee.
· CTV Revenue: Expanded CTV market share, generating CTV revenue of $24.7
million and $45.9 million, respectively, for the three and six months ended
June 30, 2023, reflecting year-over-year increases of 5% and 17%,
respectively, compared to $23.6 million and $39.4 million during the same
prior year periods. The Company also achieved 16% growth in CTV revenue in Q2
2023, compared to $21.3 million in Q1 2023.
· CTV and Programmatic Revenue Percentages: CTV revenue during the
three and six months ended June 30, 2023 reflected 32% and 33% of programmatic
revenue, respectively, compared to 39% and 33%, respectively, for the same
prior year periods, attributable to a significant increase in programmatic
revenue. Programmatic revenue increased to 91% and 89% of revenue,
respectively, for the three and six months ended June 30, 2023, compared to
80% and 76% of revenue, respectively, for the same prior year periods.
· Adjusted EBITDA: Generated Q2 2023 Adjusted EBITDA of $21.0 million,
reflecting a significant 137% improvement from $8.9 million in Q1 2023.
Increased Adjusted EBITDA during Q2 2023, compared to Q1 2023, was primarily
driven by cost benefits related to the completed integration of Amobee as well
as increased Contribution ex-TAC in Q2 2023 compared to Q1 2023. Q2 2023
Adjusted EBITDA of $21.0 million compared to $39.1 million generated during Q2
2022. The Company generated Adjusted EBITDA of $29.9 million in H1 2023, which
compared to $77.8 million in H1 2022. The Company continues to anticipate
generating increased Adjusted EBITDA and Adjusted EBITDA Margins in H2 2023,
compared to H1 2023, based on expectations for increased Contribution ex-TAC
in H2 2023 vs. H1 2023 and H2 2022.
· Adjusted EBITDA Margins: Significantly improved Adjusted EBITDA
Margin in Q2 2023 to 25% on a revenue basis, and 26% on a Contribution ex-TAC
basis, compared to 12% on a revenue basis and 13% on a Contribution ex-TAC
basis in Q1 2023. Q2 2023 Adjusted EBITDA Margins compared to 52% on a revenue
basis and 55% on a Contribution ex-TAC basis in Q2 2022, prior to the
Company's acquisition and integration of Amobee which was generating losses
when first acquired. The Company achieved an Adjusted EBITDA Margin of 19% on
a revenue basis and 20% on a Contribution ex-TAC basis in H1 2023, compared to
an Adjusted EBITDA Margin of 50% on a revenue basis and 55% on a Contribution
ex-TAC basis in H1 2022.
· Video Revenue: Video revenue continued to represent a majority of the
Company's programmatic revenue at approximately 71% and 73%, respectively, for
the three and six months ended June 30, 2023, compared to 93% for the same
prior year periods. Video revenue is expected to increase as a percentage of
programmatic revenue over time as the Company continues to attract new
customers and benefit from video-related cross-selling opportunities following
the integration of Amobee.
· Liquidity Resources: As of June 30, 2023, the Company had net cash of
$94.2 million, consisting of cash and cash equivalents of $195.0 million,
offset by $100.0 million in principal long-term debt and $0.8 million of
capital leases (consisting entirely of the Company's server leases), as well
as $80 million undrawn on its revolving credit facility. The Company intends
to leverage its considerable net cash reserves to fund its existing operations
and to support future strategic investments and initiatives, including
potential future share repurchase programs and acquisitions.
"We were incredibly pleased to achieve our goal of efficiently completing the
integration of Amobee, which featured a tech-rich platform and much larger
employee base than Tremor at the acquisition's close, and to have met our
total annualized operating cost synergy target. We accomplished these goals
while doubling our Adjusted EBITDA Margin quarter-over-quarter during Q2 2023,
underscoring the efficiency of our horizontal operating model and proven track
record of successfully integrating large-scale acquisitions. We believe we
possess one of the most comprehensive and scaled CTV- and video-focused AdTech
platforms in the open internet, boasting differentiated and exclusive data,
planning, activation, targeting, and measurement solutions. Our unified
technology suite is purpose-built for advertisers, agencies, CTV publishers
and broadcasters to significantly optimize returns and effectively meet their
goals and KPIs within CTV," said Ofer Druker, Chief Executive Officer of
Tremor International.
Mr. Druker added, "The unification of our robust, data-driven, and highly
synergistic platforms, alongside our strategic rebrand as Nexxen, better
positions the Company with significantly added scale, and a simplified value
proposition, to hold a leadership position in the future CTV advertising
ecosystem. We believe that the addition of critical newly-gained capabilities,
including holistic linear and CTV cross-planning, and the ability to leverage
and organize significant amounts of data to enhance audience knowledge, to
more effectively find and target audiences simultaneously across web, social
media, and TV, bodes well for the Company's future growth prospects."
"While we remain excited for the future and are confident our CTV-related
investments will pay off over the long term, accelerated revenue growth has
taken longer than initially anticipated. We believe macroeconomic uncertainty
is impacting major advertisers' and agencies' budgets and willingness to spend
during H2 2023, particularly in managed service campaigns, which we believe
will also drive cautiousness in willingness to adopt new products and
platforms over the period. We are also experiencing longer, and more complex,
sales cycles related to our strategic focus on driving larger enterprise deals
with major advertisers, agencies, and CTV players, while our enhanced focus on
driving growth in our core programmatic and enterprise businesses has
contributed to a changed revenue mix shift and lower overall take rates for
the Company. We believe impacts from these combined factors will alleviate
over time and that we will be better positioned than ever for success, and
growth within CTV, when budgets expand and the spending environment improves,"
concluded Mr. Druker.
Operational Highlights
· Completed the technology integration of Amobee, creating one of the
most comprehensive unified data-driven CTV and video-focused AdTech platforms
in the open internet
o The Company achieved its target of completing the majority of the
technology integration of Amobee by the end of Q2 2023.
o Achieved anticipated annualized operating cost synergies of $65 million by
the end of Q2 2023, in line with the Company's expectations.
o Successfully combined the Tremor Video and Amobee DSPs into the
significantly enhanced Nexxen DSP, creating one of the most scaled, effective,
and efficient enterprise DSP solutions for finding audiences, targeting and
measurement, and planning and activating campaigns within the TV ecosystem.
· Rebranded the Company's major products and platforms as Nexxen,
successfully generating significant momentum and positive response from
customers, partners, and prospective customers
o The rebranding has simplified and streamlined the value proposition of the
Company's unified data-driven horizontal platform for its sales team,
customers, and prospective customers, generating strong initial support in the
market, particularly as the Company's sales team has achieved greater success
seamlessly packaging multiple technology solutions for customers.
o The Company intends to change its listed parent Company name from Tremor
International Ltd. to Nexxen International Ltd., subject to shareholder
approval at the Company's upcoming Annual General Meeting ("AGM") later in
2023, the date of which will be announced in due course.
· Integration of Amobee drove the creation and greater adoption of
several new highly innovative technology features and capabilities, as well as
new partnerships
o Launched self-service cross-platform planner, a first-to-market
technology, which the Company believes positions it very strongly for the
future of TV advertising as linear broadcasters increasingly seek to expand
into CTV to reach desired audiences and enhance returns on advertising spend.
Major broadcasters and advertising agencies continue to adopt and express
interest in the tool following extensive and ongoing testing.
o Incorporated Nexxen Discovery technology into the Company's broader suite
of solutions and capabilities. Nexxen Discovery assists advertisers in
leveraging and organizing significant amounts of data to find audiences
simultaneously across web, social media, and TV and effectively target them.
The technology enables customers to more efficiently and effectively plan
campaigns, and optimize returns on ad spending, when leveraging this powerful
data to activate in campaigns through the Nexxen DSP. We believe the tool is a
proven differentiator for the Company and can generate significant traction
with customers.
o Created a first-to-market Green Media Product ("GMP") for CTV via global
partnership with Scope3. The partnership enables Scope3's carbon emission
measurement methodology to be applied to CTV inventory with buyers able to
access GMP curated deals through the Nexxen SSP to achieve performance goals
while mapping and measuring carbon emissions of their media spend within CTV.
This has generated significant interest from, and adoption by, agencies, as
sustainability has become an increasingly core focus for agencies and their
customers.
· Achieved significant increase in new advertiser and supply partner
adoption, as well as examples of customers adopting multiple additional
technology solutions, while successfully retaining the overwhelming majority
of major customers during both Q2 and H1 2023
o Nexxen DSP (formerly Tremor Video and Amobee) added 65 new
actively-spending first time advertiser customers during Q2 2023, including 30
new enterprise self-service advertiser customers, and 110 new
actively-spending first time advertiser customers during H1 2023, across
travel, CPG, and entertainment verticals, as well as others.
o Nexxen SSP (formerly Unruly) added 112 new supply partners, including 100
in the US, during Q2 2023 as well as 174 new supply partners during H1 2023,
including 149 in the US, across several verticals and formats including CTV,
broadcast TV, live sports, and gaming.
o Nexxen CTRL (the combined Nexxen SSP and Nexxen Ad Server), the Company's
self-service platform for publishers, saw PMP ("Private Marketplace") revenue
increase by 217% during Q2 2023 compared to Q2 2022 and by 229% during H1 2023
compared to H1 2022. Growth in PMP business is outpacing growth in all other
business units within the Company, driven by a strategic shift of sales
resources and efforts into this segment.
o Nexxen Studio (formerly Tr. ly) continued to expand its CTV creative
solutions, launching the industry's first voice-activated ad able to run
across all CTV environments while also generating a 50% increase in adoption
of the Company's turnkey CTV creative solutions in Q2 2023 compared to Q2
2022, and a 10% increase in H1 2023 compared to H1 2022. Nexxen Studio also
achieved a 308% increase in the volume of creatives running through Nexxen
PMPs in Q2 2023 compared to Q2 2022, as well as a 149% increase in H1 2023
compared to H1 2022. In H1 2023, 86% of Nexxen's CTV campaigns with creative
upgrades featured Nexxen Studio's QR codes.
o H/L, a multiservice and independent agency, following its successful
collaboration with the Nexxen DSP, expanded its product adoption to leverage
more of the Company's horizontal platform, adding Nexxen Discovery, automatic
content recognition ("ACR") data through the Company's global exclusive
relationship with VIDAA, and the Company's cross channel-technology.
· The Company continues to expect to generate added revenue related to
its investment in VIDAA beginning later in 2023 and beyond, amidst recent
significantly increased scale, distribution, and market share gains by VIDAA
and Hisense
o VIDAA, the fastest-growing smart TV operating system among the top Smart
TV manufacturers in the world, significantly expanded its distribution, and
currently serves as the operating system for over 21 million Connected TVs in
approximately 180 countries. The Company expects growing revenue opportunities
related to VIDAA's increasing scale through its investment in the operating
system, which enabled global ACR data exclusivity as well as ad monetization
exclusivity on VIDAA media in the US, UK, Canada, and Australia for several
years.
o According to data from AVC Revo, Hisense (including Toshiba) held the
fastest growth rate in the world for global TV shipments during H1 2023,
shipping approximately 12.4 million TV sets worldwide, reflecting an increase
of roughly 22% compared to H1 2022. Hisense's global shipment share increased
to approximately 14%, a record high for Hisense, as Hisense continued to rank
second in the world for global TV shipments share. As Hisense continues to
grow its share of global smart TV shipments, the Company is expected to
increasingly benefit from its investment in VIDAA, a subsidiary of Hisense,
which serves as Hisense's main CTV operating system.
Financial Guidance
o Management continues to expect increased Contribution ex-TAC,
programmatic revenue, and CTV revenue in H2 2023 compared to H1 2023 and H2
2022, with the majority of H2 2023 growth anticipated during Q4 2023.
o Management continues to anticipate programmatic revenue will reflect
approximately 90% of the Company's full year 2023 revenue.
o Management expects increased Adjusted EBITDA and Adjusted EBITDA Margins
in H2 2023 compared to H1 2023, however, does not expect Adjusted EBITDA and
Adjusted EBITDA Margins in H2 2023 to be higher than results generated in H2
2022.
o Management believes that challenging macroeconomic conditions have driven
reduced budgets and will reduce advertising spending across the industry
during H2 2023, particularly in managed service campaigns, and that major
advertisers will remain cautious and less willing to adopt new products and
platforms over the period. Management also believes that longer and more
complex sales cycles attributable to the Company's strategy to drive larger
multi-technology-solution enterprise deals, as well as a changing revenue mix
shift amidst the Company's enhanced focus on its core programmatic business,
and enterprise business, and continued expected declines in its non-core
performance business during H2 2023 vs. H2 2022, will result in
weaker-than-previously anticipated full year 2023 financial results. As a
result of these combined factors, Tremor International is lowering its full
year 2023 expectations to:
· Full year 2023 Contribution ex-TAC in a range of
approximately $320 - $330 million compared to previous expectations for
approximately $400 million
· Full year 2023 Adjusted EBITDA in a range of approximately $85 - $90
million compared to previous expectations for a range of approximately $140 -
$145 million
Financial Highlights for the Three and Six Months Ended June 30, 2023 ($ in
millions, except per share amounts)
Three months ended June 30 Six months ended June 30
2023 2022 % 2023 2022 %
IFRS highlights
Revenues 84.2 75.8 11% 156.0 156.7 (0%)
Programmatic Revenues 76.3 60.7 26% 138.8 119.8 16%
Operating Profit (loss) (8.0) 15.5 (151%) (23.2) 29.8 (178%)
Net Income (loss) Margin on a Gross Profit basis (%10) %12 (23%) 16%
Total Comprehensive Income (loss) (3.6) 2.4 (250%) (20.9) 11.6 (279%)
Diluted earnings (loss) per share (0.04) 0.05 (184%) (0.16) 0.12 (238%)
Non-IFRS highlights
Contribution ex-TAC 80.2 70.8 13% 147.1 141.8 4%
Adjusted EBITDA 21.0 39.1 (46%) 29.9 77.8 (62%)
Adjusted EBITDA Margin on a Contribution ex-TAC basis 26% 55% 20% 55%
Non-IFRS net Income (loss) 9.3 25.2 (63%) 4.3 52.7 (92%)
Non-IFRS Diluted earnings (loss) per share 0.06 0.16 (60%) 0.03 0.33 (91%)
Three and Six Months Ended June 30, 2023 Financial Results Webcast and
Conference Call Details
· Tremor International Three and Six Months Ended June 30,
2023 Earnings Webcast and Conference Call
· August 17, 2023, at 6:00 AM PT, 9:00 AM ET, and 2:00 PM BST
· Webcast Link: https://edge.media-server.com/mmc/p/92qjxsbm
(https://edge.media-server.com/mmc/p/92qjxsbm)
· Participant Dial-In Numbers:
· US / Canada Participant Toll-Free Dial-In Number: (800) 715-9871
· UK Participant Toll-Free Dial-In Number: +44 800 260 6466
· International Participant Dial-In Number: (646) 307-1963
· Conference ID: 9380678
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 (Loss)," included as part of this press release.
o Contribution ex-TAC: Contribution ex-TAC for Tremor International 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 Tremor
International, 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 Tremor International as total
comprehensive income (loss) for the period adjusted for foreign currency
translation differences for foreign operations, financing expenses, net, tax
benefit, depreciation and amortization, stock-based compensation,
restructuring, acquisition and IPO-related costs and other expenses (income),
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 Tremor International
Tremor International, the parent Company of the Nexxen portfolio of
advertising technology products and platforms, 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), Tremor International, through its Nexxen-branded products and
platforms, delivers a flexible and unified technology stack with advanced and
exclusive data at its core. The Company's robust capabilities span discovery,
planning, activation, measurement, and optimization - available individually
or in combination - all designed to enable partners to reach their goals, no
matter how far-reaching or hyper niche they may be.
Tremor International 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: TRMR) and NASDAQ (TRMR).
For more information, visit www.tremorinternational.com
(http://www.tremorinternational.com) and to learn more about the Company's
recent rebranding, please visit www.nexxen.com (http://www.nexxen.com) .
For further information please contact:
Tremor International Ltd.
Billy Eckert, Vice President of Investor Relations
ir@tremorinternational.com
KCSA (U.S. Investor Relations)
David Hanover, Investor Relations
tremorir@kcsa.com (mailto:tremorir@kcsa.com)
Vigo Consulting (U.K. Financial PR & Investor Relations)
Jeremy Garcia
Kate Kilgallen
Tel: +44 20 7390 0230 or tremor@vigoconsulting.com
(mailto:tremor@vigoconsulting.com)
finnCap Ltd.
Jonny Franklin-Adams / Charlie Beeson / George Dollemore (Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
Tel: +44 20 7220 0500
PR Contact
Caroline Smith
VP, Communications, Nexxen
csmith@nexxen.com (mailto:csmith@nexxen.com)
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 Tremor 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 Q3 2023, Q4 2023, H2 2023, and full year
2023; anticipated benefits of Tremor's strategic transactions and commercial
partnerships; anticipated features and benefits of Tremor's products and
service offerings; Tremor's positioning for accelerated revenue growth and
continued future growth in both the US and international markets in 2023 and
beyond; Tremor's medium- to long-term prospects; management's belief that
Tremor is well-positioned to benefit from anticipated future industry growth
trends and Company-specific catalysts; the Company's expectations with respect
to Video revenue; the potential negative impact of inflationary pressures,
rising interest rates, geopolitical and macroeconomic uncertainty, recession
concerns, and widespread global supply chain issues that have limited
advertising activity and the anticipation that these challenges could continue
to have an impact for the remainder of 2023 and beyond; the Company's plans
with respect to its cash reserves; the anticipated benefits from the Company's
investment in VIDAA and its enhanced strategic relationship with Hisense; the
anticipated benefits from the Amobee acquisition; statements regarding the
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
Tremor'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 Tremor'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, and how those conditions may adversely
impact Tremor's business, customers, and the markets in which Tremor competes;
changes in industry trends; the risk that Tremor will not realize the
anticipated benefits of its acquisition of Amobee and strategic investment in
VIDAA; and, other negative developments in Tremor's business or unfavourable
legislative or regulatory developments. Tremor 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
Tremor's most recent Annual Report on Form 20-F, filed with the U.S.
Securities and Exchange Commission (www.sec.gov
(https://www.globenewswire.com/Tracker?data=gPgQB1DRd3uO04Pe1Nw8HIpq46d0Dt1v2Oxk6rZfSqGQFu9JJd9FAB5SQGpGWUSLBV6GTasGV0uIK2SWvdiElw==)
) on March 7, 2023. Any forward-looking statements made by Tremor in this
press release speak only as of the date of this press release, and Tremor does
not intend to update these forward-looking statements after the date of this
press release, except as required by law.
Tremor, and the Tremor logo are trademarks of Tremor 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 June 30 Six months ended June 30
2023 2022 % 2023 2022 %
($ in thousands)
Total comprehensive income (loss) (3,616) 2,413 (250%) (20,905) 11,647 (279%)
Foreign currency translation differences for foreign operation (759) 4,858 (1,379) 6,988
Foreign currency translation for subsidiary sold reclassified to profit and (1,234) - (1,234) -
loss
Tax (benefit) expenses (4,601) 6,942 (1,140) 10,190
Financial expense, net 2,254 1,266 1,496 993
Depreciation and amortization 19,933 7,630 36,922 15,357
Stock-based compensation 6,495 15,324 13,569 31,353
Acquisition related costs - 709 - 1,307
Restructuring 796 - 796 -
Other expense 1,765 - 1,765 -
Adjusted EBITDA 21,033 39,142 (46%) 29,890 77,835 (62%)
Reconciliation of Revenue to Contribution ex-TAC
Three months ended June 30 Six months ended June 30
2023 2022 % 2023 2022 %
($ in thousands)
Revenues 84,246 75,828 11% 155,983 156,702 (0%)
Cost of revenues (exclusive of depreciation and amortization) (14,604) (13,019) (30,701) (29,416)
Depreciation and amortization attributable to Cost of Revenues (12,489) (3,803) (24,416) (7,632)
Gross profit (IFRS) 57,153 59,006 (3%) 100,866 119,654 (16%)
Depreciation and amortization attributable to Cost of Revenues 12,489 3,803 24,416 7,632
Cost of revenues (exclusive of depreciation and amortization) 14,604 13,019 30,701 29,416
Performance media cost (3,994) (4,996) (8,875) (14,853)
Contribution ex-TAC (Non-IFRS) 80,252 70,832 13% 147,108 141,849 4%
Reconciliation of Net Income (Loss) to Non-IFRS Net Income
Three months ended June 30 Six months ended June 30
2023 2022 % 2023 2022 %
($ in thousands)
Net Income (loss) (5,609) 7,271 (177%) (23,518) 18,635 (226%)
Acquisition related costs - 709 - 1,307
Amortization of acquired intangibles 10,214 3,870 17,857 7,885
Restructuring 796 - 796 -
Stock-based compensation expense 6,495 15,324 13,569 31,353
Other expense 1,765 - 1,765 -
Tax effect of Non-IFRS adjustments ((1)) (4,312) (2,012) (6,132) (6,478)
Non-IFRS Income 9,349 25,162 (63%) 4,337 52,702 (92%)
Weighted average shares outstanding-diluted (in millions) (2) 144.9 156.9 145.0 158.5
Non-IFRS diluted Earnings Per Share (in USD) 0.06 0.16 (60%) 0.03 0.33 (91%)
(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
Auditor's Review Report to the Shareholders of Tremor International Ltd.
Introduction
We have reviewed the accompanying financial information of Tremor
International Ltd. and its subsidiaries (hereinafter - "the Company")
comprising the condensed consolidated interim statement of financial position
as of June 30, 2023, the related condensed consolidated interim statements of
operation and other comprehensive income for the six and three month periods
then ended and the related condensed consolidated interim statements of
changes in equity and cash flows for the six-month period then ended. The
Board of Directors and Management are responsible for the preparation and
presentation of this interim financial information in accordance with IAS 34
"Interim Financial Reporting". Our responsibility is to express a conclusion
on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements
(Israel)2410 , "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" of the Institute of Certified Public
Accountants in Israel. A review of interim financial information consists of
making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards in Israel and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying financial information was not prepared, in all
material respects, in accordance with IAS 34.
Somekh Chaikin
Member Firm of KPMG International
August 16, 2023
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
June 30 December 31
2023 2022
USD thousands
Assets
ASSETS:
Cash and cash equivalents 195,046 217,500
Trade receivables, net 178,506 219,837
Other receivables 8,421 23,415
Current tax assets 2,554 750
TOTAL CURRENT ASSETS 384,527 461,502
Fixed assets, net 24,267 29,874
Right-of-use assets 35,259 23,122
Intangible assets, net 381,247 398,096
Deferred tax assets 23,709 18,161
Investment in shares 25,000 25,000
Other long-term assets 711 406
TOTAL NON-CURRENT ASSETS 490,193 494,659
TOTAL ASSETS 874,720 956,161
Liabilities and shareholders' equity
LIABILITIES:
Current maturities of lease liabilities 12,295 14,104
Trade payables 150,528 212,690
Other payables 27,793 44,355
Current tax liabilities 10,348 9,417
TOTAL CURRENT LIABILITIES 200,964 280,566
Employee benefits 249 238
Long-term lease liabilities 27,970 15,234
Long-term debt 98,805 98,544
Other long-term liabilities 10,041 8,802
Deferred tax liabilities 864 1,162
TOTAL NON-CURRENT LIABILITIES 137,929 123,980
TOTAL LIABILITIES 338,893 404,546
SHAREHOLDERS' EQUITY:
Share capital 410 413
Share premium 405,627 400,507
Other comprehensive loss (3,188) (5,801)
Retained earnings 132,978 156,496
TOTAL SHAREHOLDERS' EQUITY 535,827 551,615
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 874,720 956,161
Chairman of the Board of Directors Chief Executive Officer Chief Finance Officer
Date of approval of the financial statements: August 16, 2023
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATION AND OTHER COMPREHENSIVE
INCOME (LOSS)
(Unaudited)
For the six months For the three months ended June 30
ended June 30
2023 2022 2023 2022
USD thousands USD thousands
Revenues 155,983 156,702 84,246 75,828
Cost of revenues (Exclusive of depreciation and amortization shown separately 30,701 29,416 14,604 13,019
below)
Research and development expenses 27,076 13,581 13,829 7,198
Selling and marketing expenses 55,976 40,708 27,402 20,348
General and administrative expenses 26,705 32,925 14,669 12,154
Depreciation and amortization 36,922 15,357 19,933 7,630
Other (income) expenses, net 1,765 (5,103) 1,765 -
Total operating costs 148,444 97,468 77,598 47,330
Operating profit (loss) (23,162) 29,818 (7,956) 15,479
Financing income (4,331) (1,027) (1,404) (315)
Financing expenses 5,827 2,020 3,658 1,581
Financing expenses, net 1,496 993 2,254 1,266
Profit (loss) before taxes on income (24,658) 28,825 (10,210) 14,213
Tax benefit (expenses) 1,140 (10,190) 4,601 (6,942)
Profit (loss) for the period (23,518) 18,635 (5,609) 7,271
Other comprehensive income (loss) items:
Foreign currency translation differences for foreign operation 1,379 (6,988) 759 (4,858)
Foreign currency translation for subsidiary sold reclassified to profit and 1,234 - 1,234 -
loss
Total other comprehensive income (loss) for the period 2,613 (6,988) 1,993 (4,858)
Total comprehensive income (loss) for the period (20,905) 11,647 (3,616) 2,413
Earnings per share
Basic earnings (loss) per share (in USD) (0.16) 0.12 (0.04) 0.05
Diluted earnings (loss) per share (in USD) (0.16) 0.12 (0.04) 0.05
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Share capital Share premium Other comprehensive loss Retained earnings Total
USD thousands
For the six months ended
June 30, 2023
Balance as of January 1, 2023 413 400,507 (5,801) 156,496 551,615
Total comprehensive income (loss) for the period
Loss for the period - - - (23,518) (23,518)
Other comprehensive income:
Foreign currency translation - - 1,379 - 1,379
Foreign currency translation for subsidiary sold reclassified to profit and - - 1,234 - 1,234
loss
Total comprehensive income (loss) for the period - - 2,613 (23,518) (20,905)
Transactions with owners, recognized directly in equity
Own shares acquired (7) (8,741) - - (8,748)
Share based compensation - 13,632 - - 13,632
Exercise of share options 4 229 - - 233
Balance as of June 30, 2023 410 405,627 (3,188) 132,978 535,827
For the six months ended
June 30, 2022
Balance as of January 1, 2022 442 437,476 698 133,759 572,375
Total comprehensive income (loss) for the period
Profit for the period - - - 18,635 18,635
Other comprehensive loss:
Foreign currency translation - - (6,988) - (6,988)
Total comprehensive income (loss) for the period - - (6,988) 18,635 11,647
Transactions with owners, recognized directly in equity
Own shares acquired (22) (45,256) - - (45,278)
Share based compensation - 28,074 - - 28,074
Exercise of share options 12 1,993 - - 2,005
Balance as of June 30, 2022 432 422,287 (6,290) 152,394 568,823
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30
2023 2022
USD thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit (loss) for the period (23,518) 18,635
Adjustments for:
Depreciation and amortization 36,922 15,357
Net financing expense 1,324 914
Loss (gain) on leases change contracts (164) 56
Share-based compensation 13,569 31,353
Loss on sale of business unit 1,765 -
Tax expenses (benefit) (1,140) 10,190
Change in trade and other receivables 54,399 33,018
Change in trade and other payables (71,846) (53,772)
Change in employee benefits 14 (188)
Income taxes received 159 948
Income taxes paid (6,273) (10,845)
Interest received 3,845 1,027
Interest paid (5,046) (211)
Net cash provided by operating activities 4,010 46,482
CASH FLOWS FROM INVESTING ACTIVITIES
Change in pledged deposits, net 890 (85)
Payments on finance lease receivable 559 536
Acquisition of fixed assets (2,099) (794)
Acquisition and capitalization of intangible assets (7,560) (3,034)
Proceeds from sale of business unit - 489
Acquisition of subsidiaries, net of cash acquired - (52)
Net cash used in investing activities (8,210) (2,940)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of own shares (8,952) (44,208)
Proceeds from exercise of share options 233 2,005
Leases repayment (8,525) (4,159)
(17,244) (46,362)
Net cash used in financing activities
Net decrease in cash and cash equivalents (21,444) (2,820)
CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF PERIOD 217,500 367,717
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (1,010) (3,541)
CASH AND CASH EQUIVALENTS AS OF THE END OF PERIOD 195,046 361,356
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: GENERAL
a. Reporting entity:
Tremor International Ltd. (the "Company" or "Tremor International"), formerly
known as Taptica 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.
Tremor International is a global Company offering an 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) at
scale. Tremor Video Inc ("Tremor Video'') and Nexxen Inc (formerly known as
Amobee Inc.), a wholly owned subsidiaries, are the Company's Demand Side
Platform ("DSP") providing full-service and self-managed marketplace access to
advertisers and agencies in order to execute their digital marketing campaigns
in real time across various ad formats. Nexxen Group LLC (formerly known as
Unruly Group, LLC /RhythmOne, LLC), provides access to the Sell Side Platform
("SSP") which is designed to monetize digital inventory for publishers and app
developers by enabling their content to have the necessary code and
requirements for programmatic advertising integration. The SSP provides access
to significant amounts of data, unique demand, and a comprehensive product
suite to drive more effective inventory management and revenue
optimization. The Company also provides a Data Management Platform ("DMP")
solution which integrates both DSP and SSP solutions enabling advertisers and
publishers to use data from various sources in order to optimize results of
their advertising campaigns. Following Nexxen Inc's acquisition the Company
also acquired a Linear TV Planning feature which allows sellers at national
broadcasters to generate linear TV plans during and after upfronts. Tremor
International Ltd. is headquartered in Israel and maintains offices throughout
the US, Canada, EMEA and Asia-Pacific.
New Brand Update
On June 12, 2023, the Company rebranded all of its core products and platforms
under the Nexxen brand. The Company believes the rebranding and unification
under Nexxen will enhance its commercial focus, and better convey the holistic
value proposition of its horizontal technology stack to the market for the
Company's next phase of growth. As part of the new rebranding, the Company
changed the expected useful life of the previous brands, which supposed to be
completed by the end of the year.
b. Definitions:
In these financial statements -
The Company - Tremor International Ltd.
The Group - Tremor 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 condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and do not include all the
information required for full annual financial statements. They should be read
in conjunction with the financial statements for the year ended December 31,
2022 (hereinafter - "the annual financial statements").
The condensed consolidated interim financial statements were authorized for
issue by the Company's Board of Directors on August 16, 2023.
b. Use of estimate and judgment:
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.
c. Change in classification
During the six months ended June 30, 2023, 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.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by the Company in these condensed consolidated
interim financial statements are the same as those applied by the Company in
its annual financial statements, there was no change in accounting policies or
any new relevant standards during the reporting period.
NOTE 4: LEASES
Material lease agreements entered into during the reporting period
During the six months ended June 30, 2023, the Group entered into a new lease
agreement for data center and related network infrastructure with contractual
original lease period of 5.5 years. Accordingly, on lease commencement, the
Group recognized in the statement of financial position a lease liability in
the amount of USD 8,831 thousand that is measured at the present value of the
outstanding lease payments at that time, and concurrently recognized a
right-of-use asset in the same amount.
In addition, the Group entered into new lease agreements for offices in the US
with contractual original lease periods of 3.75 to 6 years from several
lessors. Accordingly, on lease commencement, the Group recognized in the
statement of financial position a lease liability in the amount of USD 8,968
thousand that is measured at the present value of the outstanding lease
payments at that time, and concurrently recognized a right-of-use asset in the
same amount.
NOTE 5: 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 acquired by the Group (2,505,851) (7,401,470)
Share based compensation exercise to shares 1,343,642 3,887,518
Issued and paid-in share capital as of June 30 143,315,753 150,987,677
Authorized share capital 500,000,000 500,000,000
1) 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.
2) Own shares acquisition:
On September 20, 2022, the Board of Directors approved a USD 20 million share
repurchase program under which the Company is authorized to purchase up to USD
20 million of its Ordinary Shares. The share repurchase program was completed
in the first quarter of 2023. 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.
NOTE 6: EARNINGS PER SHARE
Basic earnings per share:
The calculation of basic earnings per share for the six and three months ended
June 30, 2023, and 2022, was based on the profit (loss) for the periods
divided by a weighted average number of ordinary shares outstanding,
calculated as follows:
Profit (loss) for the period:
Six months ended
June 30
2023 2022
USD thousands
Profit (loss) for the period (23,518) 18,635
Three months ended
June 30
2023 2022
USD thousands
Profit (loss) for the period (5,609) 7,271
Weighted average number of ordinary shares:
Six months ended
June 30
2023 2022
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 142,990,666 153,609,625
per share
Basic earnings (loss) per share (in USD) (0.16) 0.12
Three months ended
June 30
2023 2022
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 142,612,533 153,093,909
per share
Basic earnings (loss) per share (in USD) (0.04) 0.05
Diluted earnings per share:
The calculation of diluted earnings per share for the six and three months
ended June 30, 2023, and 2022, was based on profit (loss) for the period
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:
Six months ended
June 30
2023 2022
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 142,990,666 153,609,625
per share
Effect of share options issued - 4,904,789
Weighted average number of ordinary shares used to calculate diluted earnings 142,990,666 158,514,414
per share
Diluted earnings (loss) per share (in USD) (0.16) 0.12
Three months ended
June 30
2023 2022
Shares of NIS
0.01 par value
Weighted average number of ordinary shares used to calculate basic earnings 142,612,533 153,093,909
per share
Effect of share options issued - 3,768,860
Weighted average number of ordinary shares used to calculate diluted earnings 142,612,533 156,862,769
per share
Diluted earnings (loss) per share (in USD) (0.04) 0.05
For the six and three month periods ended June 30, 2023, 1,985,302 thousand
and 2,295,486 thousand share options were excluded from the diluted weighted
average number of ordinary shares calculation as their effect would have been
anti-dilutive.
NOTE 7: 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
Forfeited (507) (586) 6.17 7.05
Exercised (346) (941) 2.02 1.97
Granted - 620 - 7.22
Outstanding of June 30 3,919 5,119
Exercisable of June 30 1,559 1,216
c. Information on measurement of fair value of share-based
compensation plans:
The fair value of employees share options is measured using the Black-Scholes
formula. Measurement inputs include the share price on the measurement date,
the exercise price of the instrument, expected volatility, expected term of
the instruments, expected dividends, and the risk-free interest rate.
The total expense recognized in the six months period ended June 30, 2023, and
2022, with respect to the options granted to employees, amounted to
approximately USD 1,486 thousand and USD 3,272 thousand, respectively.
The total expense recognized in the three months period ended June 30, 2023,
and 2022, with respect to the options granted to employees, amounted to
approximately USD 755 thousand and USD 1,915 thousand, respectively.
d. Restricted Share Units (RSU):
The number of restricted share units is as follows:
Number of RSUs Weighted-Average Grant Date Fair Value
2023 2022 2023 2022
(Thousands)
Outstanding at 1 January 5,288 8,146 8.277 8.606
Forfeited (119) (142) 7.273 10.085
Exercised (990) (1,308) 9.002 8.819
Granted - 252 - 7.095
Outstanding at June 30 4,179 6,948 8.135 8.786
The total expense recognized in the six months period ended June 30, 2023, and
2022, with respect to the RSUs granted to employees, amounted to approximately
USD 8,429 thousand and USD 19,447 thousand, respectively.
The total expense recognized in the three months period ended June 30, 2023,
and 2022, with respect to the RSUs granted to employees, amounted to
approximately USD 3,938 thousand and USD 9,253 thousand, respectively.
e. Performance Stock Units (PSU):
The number of performance stock units is as follows:
Number of PSUs Weighted-Average Grant Date Fair Value
2023 2022 2023 2022
(Thousands)
Outstanding of January 1 1,992 4,486 8.937 6.796
Forfeited (16) - 7.541 -
Exercised (8) (1,639) 9.349 2.090
Granted - 48 - 7.095
Outstanding of June 30 1,968 2,895 8.948 9.477
The vesting of the PSUs is subject to continued employment and compliance with
the performance criteria determined by the Company's Compensation Committee
and the Company's Board of Directors.
The total expense recognized in the six months ended June 30, 2023, and 2022,
with respect to the PSUs granted to employees, amounted to approximately USD
3,654 thousand and USD 8,634 thousand, respectively.
The total expense recognized in the three months ended June 30, 2023, and
2022, with respect to the PSUs granted to employees, amounted to approximately
USD 1,802 thousand and USD 4,156 thousand, respectively.
f. Share based expense recognized in the statements of
operation and other comprehensive income is as follows:
Six months ended
June 30
2023 2022
USD thousands
Selling and marketing 2,603 6,846
Research and development 2,478 4,593
General and administrative 8,488 19,914
13,569 31,353
Three months ended
June 30
2023 2022
USD thousands
Selling and marketing 1,399 3,680
Research and development 1,205 2,472
General and administrative 3,891 9,172
6,495 15,324
NOTE 8: LONG-TERM DEBT
In September 2022, Nexxen Group US Holdings Inc. (formerly known as Unruly
Group US Holding Inc.) entered into a $90 million senior secured term loan
facility (the Term Loan Facility) and a $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 $10 million of net proceeds of the
Revolving Credit Facility to fund a portion of the cash consideration required
to close its acquisition of Nexxen Inc. (see also note 11 to the Company's
annual financial statements).
During the six and three month periods ended June 30, 2023, the Company
recognized interest expenses in the amounts of USD 3,183 thousand and USD
1,657 thousand, respectively. Total interest paid during the six months ended
June 30, 2023, was USD 4,180 thousand.
NOTE 9: OPERATING SEGMENTS
The Company has a single reportable segment as a provider of marketplace for
digital marketing services.
Geographical information:
In presenting information on the basis of geographical segments, segment
revenue is based on the geographical location of consumers.
Six months ended
June 30
2023 2022
USD thousands
America 144,988 142,718
APAC 4,219 8,422
EMEA 6,776 5,562
Total 155,983 156,702
Three months ended
June 30
2023 2022
USD thousands
America 79,562 66,520
APAC 1,288 6,490
EMEA 3,396 2,818
Total 84,246 75,828
NOTE 10: 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. On September 10, 2021, the Company
amended its complaint against Alphonso and added LG Electronics, Inc. ("LGE")
as a Defendant. 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 the Company, Alphonso and LGE's tortious
interference with Tremor's contractual relationships and business relations,
and related misconduct.
On May 24, 2021, Alphonso filed a complaint against the Company in the Supreme
Court of the State of New York, County of New York, asserting claims for
breach of contract, unfair competition, and tortious interference with
business relations. Alphonso, LGE, and the Company are currently engaged in
depositions and expert discovery.
On June 21, 2022, Alphonso, Inc. ("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 July 19, 2022, Alphonso also filed a motion for a
preliminary injunction. On October 31, 2022, the Court denied Alphonso's
motion for a preliminary injunction. Alphonso and the Company are currently
engaged in fact discovery. The Company believes that the likelihood of a
material loss is remote but at this point is unable to reasonably estimate any
potential loss and financial impact to the Company resulting from this matter.
In March 2023, Alphonso remitted USD 11.3 million to the Company, comprising
USD 7.25 million related to a secured advance repayment under the Security
Agreement and USD 4.1 million related to additional interest, penalties and
fees including reimbursement of certain legal fees. The matter is ongoing, and
the Company is seeking additional damages and other relief.
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