Tremor International - Q3 & 9-Month 2023 Results
22/11/2023 07:00
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RNS Number : 2074U Tremor International Ltd 22 November 2023
22 November 2023
Tremor International Ltd
("Tremor" or the "Company")
Tremor International Reports Results for the Three and Nine Months Ended
September 30, 2023
Achieved 18% year-over-year Contribution ex-TAC growth in Q3 2023, driven by a
23% increase in programmatic revenue
Nexxen Discovery, Cross-Platform-Planner, enhanced enterprise DSP, and
fast-scaling VIDAA ACR data footprint in U.S. and U.K. generating significant
multi-solution partnership interest and opportunities and opening additional
revenue channels with new and existing customers
Recent senior sales and marketing hires driving enhanced stability and greater
expertise, strongly positioning the Company for accelerated future
Contribution ex-TAC growth and improved profitability as the rebrand to Nexxen
continues to generate further traction with customers and industry partners
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 nine months ended September
30, 2023. The Company's financial results for the three and nine months ended
September 30, 2023, reflect the combined performance of Tremor International
and Amobee, while comparative figures for the three and nine months ended
September 30, 2022 include Amobee contribution from September 12, 2022 through
September 30, 2022.
Financial Summary
· Contribution ex-TAC: Generated Contribution ex-TAC of $76.6 million
and $223.7 million for the three and nine months ended September 30, 2023,
respectively, compared to $64.9 million and $206.7 million for the three and
nine months ended September 30, 2022, reflecting year-over-year increases of
18% and 8%, respectively. Growth was driven by significantly increased
programmatic revenue following the completed integration of Amobee, despite
challenging macroeconomic conditions continuing to drive cautiousness in the
advertising demand environment. Notably, the Company has not experienced
material negative impacts on its Contribution ex-TAC, business activities, or
operations as a result of the October 7(th) terrorist attack on Israel, or
ongoing conflict. The overwhelming majority of the Company's Contribution
ex-TAC (over 85%) is generated in the United States, where the largest base of
its employees are located.
· Programmatic Revenue: Expanded programmatic revenue to $74.2 million
and $213.0 million for the three and nine months ended September 30, 2023,
respectively, compared to $60.1 million and $179.9 million for the three and
nine months ended September 30, 2022, reflecting year-over-year increases of
23% and 18%, respectively. Increases were driven by the Company's strategic
focus on programmatic activities and the completed integration of Amobee,
which featured a strong programmatic revenue footprint.
· CTV Revenue: Generated CTV revenue of $19.6 million in Q3 2023,
reflecting a 21% decrease compared to $24.7 million in Q3 2022. The Company
generated CTV revenue of $65.6 million for the nine months ended September 30,
2023, reflecting a 2% increase compared to $64.1 million for the nine months
ended September 30, 2022. CTV revenue in Q3 2023 was negatively impacted by
reduced CTV advertising demand early in the quarter, particularly in July, as
challenging macroeconomic conditions drove softness in managed service and
caused customers to temporarily shift spending from CTV into lower-cost mobile
and desktop options, as well as display. While CTV advertising conditions have
stabilized compared to July 2023, the Company expects its customers will
continue to favor its lower-cost solutions due to ongoing market headwinds and
continued macroeconomic uncertainty through at least the remainder of 2023.
· CTV and Programmatic Revenue Percentages: CTV revenue during the
three and nine months ended September 30, 2023 reflected 26% and 31% of
programmatic revenue, respectively, compared to 41% and 36%, for the same
prior year periods, attributable to a significant increase in programmatic
revenue. Programmatic revenue increased to 93% and 90% of revenue for the
three and nine months ended September 30, 2023, respectively, compared to 85%
and 79% of revenue for the same prior year periods.
· Adjusted EBITDA: Generated Adjusted EBITDA of $21.3 million and $51.2
million for the three and nine months ended September 30, 2023, respectively,
compared to $30.1 million and $108.0 million during the three and nine months
ended September 30, 2022, respectively. Year-over-year decreases were
attributable to the integration of Amobee, which generated significant losses
when first acquired, as well as a weaker comparative advertising demand
environment earlier in 2023.
· Adjusted EBITDA Margins: Achieved a 28% Adjusted EBITDA Margin on a
Contribution ex-TAC basis, and 27% on a revenue basis, for the three months
ended September 30, 2023, compared to 46% on a Contribution ex-TAC basis, and
43% on a revenue basis for the three months ended September 30, 2022. The
Company also achieved an Adjusted EBITDA Margin of 23% on a Contribution
ex-TAC basis, and 22% on a revenue basis, for the nine months ended September
30, 2023, compared to 52% on a Contribution ex-TAC basis, and 47% on a revenue
basis for the nine months ended September 30, 2022. The Company expects to
increase Adjusted EBITDA Margins over time, particularly as macroeconomic and
advertising demand conditions improve, as the Company's operating model
provides strong and increasing degrees of operating leverage.
· Video Revenue: Video revenue continued to represent the majority of
the Company's programmatic revenue at approximately 66% and 70% for the three
and nine months ended September 30, 2023, respectively, compared to 93% for
the same prior year periods. Year-over-year decreases were attributable to
significantly increased programmatic revenue, the addition of Amobee, which
featured a strong display revenue base, as well as declines in video revenue
driven by challenging market conditions. The Company expects to increase video
revenue over time by attracting new customers and through cross-selling
opportunities created by the Amobee acquisition, particularly as advertising
conditions and demand for the Company's CTV solutions improve.
· Liquidity Resources: As of September 30, 2023, the Company had net
cash of $98.9 million, consisting of cash and cash equivalents of $199.1
million, offset by approximately $100.0 million in principal long-term debt
and $0.2 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 prioritize using its cash resources in the
near-term for internal growth initiatives, supporting ongoing business needs,
and potential future share repurchase programs. Notably, the Company's Board
of Directors intends to authorize the repurchase of up to $20 million of its
Ordinary shares, pending approval by the Israeli court. The Company's Board of
Directors also indicates that, should the Company's Ordinary shares continue
to trade at prices that the Company believes reflect discounted valuation
levels, and if the Company remains cash generative in the future, it would
consider launching additional future share repurchase programs following the
completion of the potential new $20 million Ordinary share repurchase program,
to capitalize on what the Company believes reflects a discounted valuation
opportunity in its shares that can generate long-term value for its
shareholders. Over the intermediate- and long-term the Company will also
consider leveraging its cash resources for future potential strategic
investments, initiatives, and acquisitions.
"Our teams and significantly enhanced platform continued to generate strong
momentum following the completed integration of Amobee. We were also very
pleased to further strengthen our organization through several key sales and
marketing team hires, including a new Chief Marketing Officer with significant
product marketing expertise, that we are confident will contribute to
accelerated long-term programmatic, enterprise, CTV, and video revenue growth,
as well as greater demand across our product ecosystem," said Ofer Druker,
Chief Executive Officer at Tremor International. "Our innovative recently
added tech and data solutions, including Nexxen Discovery and our
Cross-Platform Planner, alongside the fast-growing scale of our global ACR
data footprint through VIDAA, and rebrand to Nexxen, have collectively
resulted in notable increased interest from major advertisers, agencies, and
TV players, opening doors to significant partnership opportunities and
additional revenue channels with new and existing customers."
Mr. Druker added, "While the advertising industry's recovery remains uneven as
headwinds persist, our diversified model, highlighted by the ability to
provide a variety of differentiated and comprehensive solutions to both sides
of the ecosystem, and seamlessness across linear and CTV advertising, enables
durability and strategic flexibility to quickly react to, and best capitalize
on, evolving industry trends and market dynamics. Our platform offers a great
value proposition and features advanced tools and data that we believe drive
better returns and greater efficiency for customers, positioning us to attract
new partners and higher levels of spending now, and in the future TV
advertising ecosystem. We continue to have unwavering confidence in our
long-term competitive positioning and strategy, and believe that as
macroeconomic conditions improve, and as CTV advertising demand expands, we
are very well-placed to generate Contribution ex-TAC growth, significantly
improve profitability, achieve outsized market share gains, and further our Ad
Tech leadership position."
Operational Highlights
· Recently added technology and data solutions, including Nexxen
Discovery and Cross-Platform Planner, driving increased partnership interest
and expanded relationships with customers
o First-to-market Cross-Platform Planner (linear TV and CTV) generating
early adoption by major industry partners including A+E Networks, FOX Corp and
TelevisaUnivision.
o H/L expanded its product relationship with Nexxen beyond the Company's
enterprise DSP to include additional solutions such as Nexxen Discovery,
automatic content recognition ("ACR") data through VIDAA, and the Company's
cross-channel technology.
· Strengthened sales and marketing team through several important
hires, further bolstering expertise across advertising ecosystem, and strongly
positioning the Company to accelerate future growth within its core strategic
focuses
o Substantially increased sales and marketing team expertise through the
addition of new Chief Marketing Officer, Ben Kaplan, who brings significant
product marketing experience and who has led teams across major tech and media
companies including Meredith Corporation, X (formerly known as Twitter), and
most recently Pubmatic, as well as Vice President of Enterprise Sales, Ariel
Deitz, most recently with Amazon Ads.
o Successfully filled several key sales team vacancies in major metro areas
including New York and Los Angeles, providing critical depth in pivotal growth
regions, and reinforcing the ability to grow demand for the Company's
enterprise, programmatic, CTV, video, and data solutions over time.
· The Company continued to grow its new advertiser customer and supply
partner base and retained the overwhelming majority of major customers during
the three and nine months ended September 30, 2023, while generating traction
introducing its recently added solutions
o Nexxen DSP added 113 new actively-spending first-time advertiser customers
during Q3 2023 across retail, travel, and CPG verticals, as well as others,
including 11 new enterprise self-service advertiser customers, highlighted by
some of the world's largest and most-recognized technology companies and
apparel brands. The Company added 223 new actively-spending first-time
advertiser customers for the nine months ended September 30, 2023.
o Nexxen SSP added 109 new supply partners, including 100 in the U.S.,
during Q3 2023, across several verticals and formats including CTV, broadcast
TV, and mobile, with notable recent momentum amongst mobile gaming publishers.
The Company added 283 new supply partners in the nine months ended September
30, 2023, including 249 in the U.S.
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 98% during Q3 2023 compared to Q3 2022 and by 156% for the nine
months ended September 30, 2023, compared to the same prior year period.
o Nexxen Studio continued to generate impressive growth amongst enterprise
clients leveraging the Company's creative services, highlighted by a 58% and
79% increase in demand for the three and nine months ended September 30, 2023,
respectively, compared to the same prior year periods. Nexxen Studio also
released a fully revamped Creative Insights suite of products during Q3 2023,
including its proprietary and cutting-edge Active Attention measurement
solution.
· VIDAA's continued growth enabled the Company to begin accelerating
monetization related to its investment in VIDAA through increased demand for
the Company's scaling ACR data offering in the U.S., and the recent launch of
its ACR data offering in the U.K.
o After successfully monetizing VIDAA's ACR data in the U.S. for CTV
targeting and measurement, the Company recently launched its ACR data offering
in the U.K., which it believes reflects a significant value proposition for
customers in the region given the size of the Company's audience reach in that
market. The launch of the Company's ACR data offering in the U.K. is expected
to generate revenue for the Company beginning in Q4 2023 and is expected to
continue to generate revenue through at least the remainder of the Company's
exclusivity period with VIDAA over the next several years.
o The Company intends to launch its ACR data offering in Australia in Q1
2024, which is expected to generate revenue beginning in early 2024 and
continue generating revenue through at least the remainder of the Company's
exclusivity period with VIDAA over the next several years.
o The Company believes, following its ACR data offering launches in the U.S.
and U.K., and through its impending launch in Australia, that it is strongly
positioned to generate material and growing revenue opportunities through its
VIDAA investment, which enabled global ACR data exclusivity for CTV targeting
and measurement, as well as ad monetization exclusivity on VIDAA media in the
U.S., U.K., Canada, and Australia, for several years.
· Partnered with Lumen and TVision to deliver the first omnichannel
Attention Measurement solution for advertisers across CTV, online video
("OLV") and display
o The global partnership with Lumen and TVision augments the launch of
Nexxen's full Attention Measurement offering, which spans the lifecycle of an
advertiser's campaign, from creative testing to media curation to real-time
measurement and optimization, all through Nexxen's end-to-end platform. By
leveraging all elements of the offering, advertisers can plan against,
activate on, and optimize for consumer attention across screens, including
CTV.
o Nexxen's holistic Attention Measurement offering encompasses three main
elements: pre-campaign planning via active attention analysis and creative
optimization, provided by in-house creative agency Nexxen Studio; activation
via Lumen's Attentive Private Marketplaces ("aPMPs"), delivered for the first
time by Nexxen on CTV, and measurement and reporting powered by TVision data
and the Lumen Attention Measurement Dashboard.
Nexxen Rebrand Update
· In June 2023, the Company announced that it rebranded the products
and platforms within its portfolio to Nexxen to simplify and streamline the
value proposition of its unified data-driven platform for its sales team,
customers, and prospective customers.
· Subject to shareholder approval at the Company's upcoming Annual
General Meeting ("AGM") in December 2023, the Company intends to change its
listed parent Company name from Tremor International Ltd. to Nexxen
International Ltd.
· The Company does not currently anticipate any changes to its Ordinary
share or ADR structure in connection with the proposed parent Company name
change, nor does it expect changes to the Company's CUSIP, ISIN or SEDOL code.
· Should shareholders approve, the Company's Ordinary shares and ADRs
will trade under the new name on both the London Stock Exchange and NASDAQ
shortly thereafter, under the ticker "NEXN". The vote results will be
published on the Company's investor relations website following the AGM.
The Company Intends to Launch a New $20 Million Ordinary Share Repurchase
Program, Subject to Israeli Court Approval
· In September 2023, the Company filed a motion with the Israeli court,
seeking approval to authorize a new share repurchase program for a further $20
million of its Ordinary shares. Should the motion be approved, the Company's
Board of Directors intends to authorize the purchase of up to $20 million of
its Ordinary shares on the AIM Market (the "Authority") shortly thereafter.
· If approved, the new share repurchase program would be financed
through existing cash resources.
· The potential new share repurchase program would follow the recent
completion of two previous share repurchase programs in which the Company
invested a combined $95 million in its Ordinary shares from March 1, 2022
through March 31, 2023, repurchasing roughly 19.4 million Ordinary shares, or
approximately 13% of outstanding Ordinary shares.
· Should the Company's Ordinary shares continue to trade at prices that
the Company believes reflect discounted valuation levels, and if the Company
remains cash generative in the future, the Company's Board of Directors would
consider launching additional future share repurchase programs following the
completion of the potential impending $20 million Ordinary share repurchase
program and seek further approvals from the Israeli Court as required. The
Company's Board of Directors believes repurchasing the Company's shares
reflects a strong investment opportunity that can generate long-term value for
its shareholders.
Financial Guidance
o While management has observed some evidence of ad market stabilization,
particularly since July 2023, it believes the recovery will remain uneven and
that ongoing macroeconomic headwinds and uncertainty will limit advertising
demand and budgets, drive continued managed service softness, and cause its
customers to focus near-term spending on lower-cost solutions (such as
display) through at least the remainder of 2023. As a result, Tremor
International provides the following guidance:
· Full year 2023 Contribution ex-TAC in a range of
approximately $310 - $315 million
· Full year 2023 Adjusted EBITDA in a range of approximately $80 -
$85 million
· Programmatic revenue to reflect 90% of the Company's full year
2023 revenue
o Management continues to believe the combination of the Company's
diversified and durable business model, focus on core strategic growth
drivers, enhanced ability to drive multi-solution enterprise deals, greater
stability following the completed integration of Amobee, and growing demand
for its programmatic solutions and recently added products, will strongly
position the Company for outsized long-term market share gains, particularly
as CTV advertising demand conditions improve, and as the Company's recently
strengthened sales and marketing team continues to gain further traction.
Financial Highlights for the Three and Nine Months Ended September 30, 2023 ($
in millions, except per share amounts)
Three months ended September 30 Nine months ended September 30
2023 2022 % 2023 2022 %
IFRS highlights
Revenues 80.1 70.9 13% 236.1 227.6 4%
Programmatic Revenues 74.2 60.1 23% 213.0 179.9 18%
Operating Profit (loss) (3.4) 4.1 (183%) (26.6) 33.9 (178%)
Net Income (loss) Margin on a Gross Profit basis (2%) (2%) (16%) 10%
Total Comprehensive Income (loss) (2.6) (5.2) (51%) (23.5) 6.4 (464%)
Diluted earnings (loss) per share (0.01) (0.01) 86% (0.17) 0.11 (253%)
Non-IFRS highlights
Contribution ex-TAC 76.6 64.9 18% 223.7 206.7 8%
Adjusted EBITDA 21.3 30.1 (29%) 51.2 108.0 (53%)
Adjusted EBITDA Margin on a Contribution ex-TAC basis 28% 46% 23% 52%
Non-IFRS net Income 13.4 16.9 (21%) 17.8 69.6 (74%)
Non-IFRS Diluted earnings per share 0.09 0.11 (16%) 0.12 0.44 (72%)
Three and Nine Months Ended September 30, 2023 Financial Results Webcast and
Conference Call Details
· Tremor International Three and Nine Months Ended September 30,
2023 Earnings Webcast and Conference Call
· November 22, 2023, at 6:00 AM PT, 9:00 AM ET, and 2:00 PM GMT
· Webcast Link: https://edge.media-server.com/mmc/p/z32ry2bb
(https://edge.media-server.com/mmc/p/z32ry2bb)
· 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 Toll-Free Dial-In Number: (646)
307-1963
· Conference ID: 2427130
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 / Peter Jacob / Aisling Fitzgerald
Tel: +44 20 7390 0230 or tremor@vigoconsulting.com
(mailto:tremor@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
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 H2 2023, Q4 2023, full year 2023, and
beyond; 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 future industry growth trends and
Company-specific catalysts; the Company's expectations with respect to Video
revenue; the anticipated impact of the Company's bolstering of its sales and
marketing organization, including the impact of several new key hires; the
potential negative impact of inflationary pressures, rising interest rates,
geopolitical and macroeconomic uncertainty, conflict and war, 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 Company's partnership with Lumen and TVision;
the anticipated benefits from the Amobee acquisition; 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 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,
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 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 September 30 Nine months ended September 30
2023 2022 % 2023 2022 %
($ in thousands)
Total comprehensive income (loss) (2,563) (5,205) (51%) (23,468) 6,442 (464%)
Foreign currency translation differences for foreign operation 1,367 4,246 (12) 11,234
Foreign currency translation for subsidiary sold reclassified to profit and - - (1,234) -
loss
Tax (benefit) expenses (2,844) 4,458 (3,984) 14,648
Financial expense, net 617 617 2,113 1,610
Depreciation and amortization 20,316 10,159 57,238 25,516
Stock-based compensation 4,214 11,166 17,783 42,519
Acquisition related costs 171 4,685 171 5,992
Restructuring - - 796 -
Other expense - - 1,765 -
Adjusted EBITDA 21,278 30,126 (29%) 51,168 107,961 (53%)
Reconciliation of Revenue to Contribution ex-TAC
Three months ended September 30 Nine months ended September 30
2023 2022 % 2023 2022 %
($ in thousands)
Revenues 80,094 70,851 13% 236,077 227,553 4%
Cost of revenues (exclusive of depreciation and amortization) (13,683) (14,064) (44,384) (43,480)
Depreciation and amortization attributable to Cost of Revenues (12,727) (5,925) (37,143) (13,557)
Gross profit (IFRS) 53,684 50,862 6% 154,550 170,516 (9%)
Depreciation and amortization attributable to Cost of Revenues 12,727 5,925 37,143 13,557
Cost of revenues (exclusive of depreciation and amortization) 13,683 14,064 44,384 43,480
Performance media cost (3,543) 5,976 (12,418) (20,829)
Contribution ex-TAC (Non-IFRS) 76,551 64,875 18% 223,659 206,724 8%
Reconciliation of Net Income (Loss) to Non-IFRS Net Income
Three months ended September 30 Nine months ended September 30
2023 2022 % 2023 2022 %
($ in thousands)
Net Income (loss) (1,196) (959) 25% (24,714) 17,676 (240%)
Acquisition related costs 171 4,685 171 5,992
Amortization of acquired intangibles 10,164 4,387 28,021 12,272
Restructuring - - 796 -
Stock-based compensation expense 4,214 11,166 17,783 42,519
Other expense - - 1,765 -
Tax effect of Non-IFRS adjustments ((1)) 65 (2,390) (6,067) (8,868)
Non-IFRS Income 13,418 16,889 (21%) 17,755 69,591 (74%)
Weighted average shares outstanding-diluted (in millions) (2) 145.5 153.3 144.6 156.5
Non-IFRS diluted Earnings Per Share (in USD) 0.09 0.11 (16%) 0.12 0.44 (72%)
(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
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
September 30 December 31
2023 2022
USD thousands
Assets
ASSETS:
Cash and cash equivalents 199,077 217,500
Trade receivables, net 187,997 219,837
Other receivables 9,041 23,415
Current tax assets 3,469 750
TOTAL CURRENT ASSETS 399,584 461,502
Fixed assets, net 21,373 29,874
Right-of-use assets 31,863 23,122
Intangible assets, net 371,000 398,096
Deferred tax assets 17,925 18,161
Investment in shares 25,000 25,000
Other long-term assets 687 406
TOTAL NON-CURRENT ASSETS 467,848 494,659
TOTAL ASSETS 867,432 956,161
Liabilities and shareholders' equity
LIABILITIES:
Current maturities of lease liabilities 11,084 14,104
Trade payables 152,753 212,690
Other payables 29,863 44,355
Current tax liabilities 1,145 9,417
TOTAL CURRENT LIABILITIES 194,845 280,566
Employee benefits 241 238
Long-term lease liabilities 25,742 15,234
Long term debt 98,939 98,544
Other long-term liabilities 9,596 8,802
Deferred tax liabilities 685 1,162
TOTAL NON-CURRENT LIABILITIES 135,203 123,980
TOTAL LIABILITIES 330,048 404,546
SHAREHOLDERS' EQUITY:
Share capital 413 413
Share premium 409,744 400,507
Other comprehensive loss (4,555) (5,801)
Retained earnings 131,782 156,496
TOTAL SHAREHOLDERS' EQUITY 537,384 551,615
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 867,432 956,161
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATION AND OTHER COMPREHENSIVE
INCOME (LOSS)
(Unaudited)
Nine months ended Three months ended September 30
September 30
2023 2022 2023 2022
USD thousands USD thousands
Revenues 236,077 227,553 80,094 70,851
Cost of Revenues (Exclusive of depreciation and 44,384 43,480 13,683 14,064
amortization shown separately below)
Research and development expenses 39,652 21,818 12,576 8,237
Selling and marketing expenses 81,556 59,447 25,580 18,739
General and administrative expenses 38,067 48,461 11,362 15,536
Depreciation and amortization 57,238 25,516 20,316 10,159
Other expenses (income), net 1,765 (5,103) - -
Total operating costs 218,278 150,139 69,834 52,671
(26,585) 33,934 (3,423) 4,116
Operating Profit (Loss)
Financing income (6,121) (1,870) (1,790) (843)
Financing expenses 8,234 3,480 2,407 1,460
Financing expenses, net 2,113 1,610 617 617
Profit (Loss) before taxes on income (28,698) 32,324 (4,040) 3,499
Tax benefit (expenses) 3,984 (14,648) 2,844 (4,458)
Profit (Loss) for the period (24,714) 17,676 (1,196) (959)
Other comprehensive income (loss) items:
Foreign currency translation differences for foreign operation 12 (11,234) (1,367) (4,246)
Foreign currency translation for subsidiary sold reclassified to profit and 1,234 - - -
loss
Total other comprehensive income (loss) 1,246 (11,234) (1,367) (4,246)
Total comprehensive income (loss) (23,468) 6,442 (2,563) (5,205)
Earnings per share
Basic earnings (loss) per share (in USD) (0.17) 0.12 (0.01) (0.01)
Diluted earnings (loss) per share (in USD) (0.17) 0.11 (0.01) (0.01)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Share capital Share premium Other comprehensive income 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 period
Profit (Loss) for the period - - - (24,714) (24,714)
Other comprehensive Income:
Foreign Currency Translation - - 12 - 12
Foreign currency translation for subsidiary sold reclassified to profit and - - 1,234 - 1,234
loss
Total comprehensive Income (loss) for the period 413 400,507 (4,555) 131,782 528,147
Transactions with owners, recognized directly in equity
Own shares acquired (7) (8,741) - - (8,748)
Share based payments - 17,749 - - 17,749
Exercise of share options 7 229 - - 236
Balance as of September 30, 2023 413 409,744 (4,555) 131,782 537,384
Balance as of January 1, 2022
Total Comprehensive income (loss) for the period 442 437,476 698 133,759 572,375
Profit for the period - - - 17,676 17,676
Other comprehensive Income:
Foreign Currency Translation - - (11,234) - (11,234)
Total comprehensive Income (loss) for the period 442 437,476 (10,536) 151,435 578,817
Transactions with owners, recognized directly in equity
Own shares acquired (41) (74,959) - - (75,000)
Share based payments - 39,109 - - 39,109
Exercise of share options 17 2,059 - - 2,076
Balance as of September 30, 2022 418 403,685 (10,536) 151,435 545,002
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30
2023 2022
USD thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit (loss) for the period (24,714) 17,676
Adjustments for:
Depreciation and amortization 57,238 25,516
Net financing expense 1,889 1,537
Loss (gain) on leases change contracts (115) 56
Share-based payment 17,783 42,519
Loss on sale of business unit 1,765 -
Tax expenses (benefit) (3,984) 14,648
Change in trade and other receivables 43,987 41,282
Change in trade and other payables (68,326) (73,315)
Change in employee benefits 7 (176)
Income taxes received 269 948
Income taxes paid (8,185) (13,017)
Interest received 5,655 1,685
Interest paid (6,142) (298)
17,127 59,061
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Change in pledged deposits 1,007 1,455
Leases Receipt 863 833
Acquisition of fixed assets (2,933) (1,011)
Acquisition and capitalization of intangible assets (11,387) (4,869)
Acquisition of subsidiaries, net of cash acquired - (199,928)
Investment in shares - (25,000)
Proceeds from sale of business unit - 857
Repayment of long-term loans 24 -
Net cash used in investing activities (12,426) (227,663)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of own shares (8,952) (75,000)
Proceeds from exercise of share options 236 2,076
Receipt of long-term debt, net of debt cost - 98,977
Leases repayment (12,575) (7,082)
(21,291) 18,971
Net cash provided by (used in) financing activities
Net decrease in cash and cash equivalents (16,590) (149,631)
CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF PERIOD 217,500 367,717
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (1,833) (6,515)
CASH AND CASH EQUIVALENTS AS OF THE END OF PERIOD 199,077 211,571
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