Internet analyst, for those of you who I haven't met. Very excited to have Nexxen with us today. And we have Sagi Niri, who is the company's CFO. So Sagi, thank you very much for being here. I think maybe we could start off, you know, ad tech, I think is—there are a lot of different market participants, and sometimes folks get, you know, confused by all the moving pieces. You have a lot of different components of ad tech. So maybe, you know, for those of you who haven't, you know, discovered your business within ad tech, can you give us, like, a general overview of the company and where you sit?
Yeah, it's a good question, but a tricky one. So I think that Nexxen International is really one of the single end-to-end ad tech player. And when I'm saying end-to-end, I mean that we have a DSP, which is the platform that enables the advertisers and the agencies to run their campaigns and stories and services that we want to sell and to cater. On the other side, we have the SSP, which is the platform that helps the inventory holder, the publisher, the broadcasters, to have their inventory in order that the DSP will monetize it. And in the middle, we have a DMP, which is a data management platform.
And within this DMP, which is a very unique piece for a company like us, we are utilizing all the first-party data, third-party data, contextual data, third-party DMPs data, ACR-exclusive data, in order to enable the customers to have a better segmentation, find the right audience, and have better performance metrics at the end of the day.
That's a perfect overview, in a very, confusing space. Can you maybe discuss, like, you know, what you're most focused on, highlight what steps you've maybe taken, over the last year and a half to solidify your position in the market?
Yes. So in the last 1.5 year, or maybe a little bit more than that, we acquired a company that was called Amobee. We consolidated and fully integrated this company into our tech stack, so now we have only one unified platform. And what we got from the Amobee acquisition is different components that I didn't even touch, which one of them is called the Discovery Tool, which help the advertisers to find the right audience and the right segments in order to run their campaigns seamlessly and in the most accurate way. Second, we got Cross Planner, which enables broadcasters to find the right inventory and to cater it to the right agencies or advertisers. And we developed a digital Cross Planner, or a CTV Cross Planner, on top of that.
So now if someone wants to find the same audience and not to duplicate an audience, both in linear TV and in CTV, it can do it through our above operations. I think that what we did in the last year, or the last two years, consolidated and integrated everything into one place. We rebranded the company and called it now Nexxen. We put the right infrastructure in place, mainly within our sales force. And everything that we did, of course, was in a very shitty macroeconomic environment. And I think that now we are very, very focused on our DMP and our data capabilities, which is the gate to bring the big guys and to help them cater their services and their goods in order to find the right users.
Okay. All right, perfect. I won't walk through all the details of the first quarter, but you had a better first quarter. Left the full year guide unchanged, but maybe can you walk through, you know, what you're seeing and hearing from your clients, today about the back half of the year? You know, it sounds like you're expecting an uptick, particularly with CTV. So I guess, what's driving that view when you talk to your clients?
Okay. I think that one of our claim to fame is that we are all around streaming, so around 30% of our revenues are being generated through CTV devices, and 66% are being generated through video format. So I think that we are very focused on that. As we are seeing today, you know, we are talking about Q1, but we are already more close to the end of Q2, so we are seeing a massive trend with, in our internal CTV numbers, so it's moving way, way up. We are going to do much more than we did in Q1, and even more than we did in Q2 2023. I think that H2, you know, this year you have the political potential budget that will flow through.
Again, it's connected to the discovery tool and to all the data components that we can allow this, Republicans and Democrats to use. So we are seeing a huge engagement from different agencies that are dealing with political budgets because we find this tool to be very effective in order to find the right audiences. So we are very focused on that. And I think that 2024 began with a better macro. I can't say, you know, the macro that was, I don't know, before COVID or who knows when it was like in full capacity.
But I think that we are seeing a better macro, and I think that H2, around seasonality and around other things, we will have a much better H2 than H1, and for sure, a much better H2 in 2024 than we had in H2 2023.
You know, you brought up the election cycle, which is typically a lot of TV, CTV, video. I guess, how material is that, you know, for the back half, you know, especially around Q4?
So I think that in previous cycles, it wasn't a substantial revenue generator for Nexxen, but this year, because of the new capabilities that we have and the acquired through Amobee and our own development around the DMP, we are seeing a much more massive engagement over that, so it's going to be substantial. On top of that, we just announced, like one month ago, that we got into a partnership with Stagwell.
Yep.
Which is a huge agency, which has a lot of political budget as well, and we are going to be their tech partner. So we are going to utilize all the Discovery Tool and the other data components in order to utilize their campaigns. So I think this year, for the first time in the election cycle, we will have a substantial revenue from that.
Okay. All right, perfect. Maybe we could completely switch topics and talk about the push out of cookie deprecation on Chrome, which I don't know if some of you have been following, it keeps getting pushed out, but cookies are going away at some point early 2025. Excuse me, yeah, early 2025. I guess, can you talk about how you have prepared for those changes? 'Cause they are going to come probably at some point. So changes in identity and privacy, you know, regulation generally, and then also you mentioned, you know, the data platform. How does having that, you know, unique access to data differentiate your platform, and enable you to gain market share?
First of all, I think that I said that we around generating around 30% of our revenues through CTV, but we are generating at least 30% through our mobile devices. So around 60% or even more than 60% of our revenue is already not really connected to cookies, because CTV and mobile are not connected to cookies. So only we have an exposure of 40% of our revenue to this cookie deprecation. And I have a request. I hope that Google will do it at last because we are postponing it for the last 2 years. I think for us, it's not a challenge, it's an opportunity.
Yeah.
Because we are really the only player within the ad tech sector that has its own DMP and own exclusive agreements with different players. I think that for us, it's an opportunity, and as we saw it, you know, Stagwell came, they did a tender or RFP with different players, and at the end of the day, they decided that Nexxen International will be their DMP in order to utilize the campaign. So I think the TV intelligence, the contextual abilities, the first and third party data, the exclusive agreement with PeerLogix, which allows us to retarget and target through mobile phones, all of that are allowing us to have a really scaled and seamless ID graph, which at the end of the day, this is what the advertisers are looking for, and their customers, of course.
So I think that we are well positioned, and for us, the cookie deprecation is a blessing, and we are seeing more and more of engagement from other players like Stagwell, in order to utilize our DMP.
I also hope that Google does it soon, so that when we're sitting here 1 year from now, I'm not asking you the same question like I've been doing for the past 3 years. Can we switch to CTV a bit more? So depending on what forecast you look at, linear TV budgets are still enormous, $130 billion-$150 billion, depending on who you ask. That all needs to convert to CTV at some point. I guess, you know, can you walk us through where you sit in the CTV ecosystem? You also have some access to unique data, unique inventory. I guess, how does that help with your go-to-market strategy?
So today, we are partnering with all the major OEMs. I'm sure that we are not missing anyone. We just re-engage with LG Ads, which we has litigation for the last three years. We got into a settlement agreement where they are opening their inventory for us to monetize as well. So I think that now we have all the connection in the industry that we need. Second, we have, as you said, an exclusive ACR data with VIDAA, which is the operating system of Hisense and Toshiba. Hisense and Toshiba is the most growing OEM in the world, and as an outcome, VIDAA is the most or the fastest-growing operating system within TVs. And we got into a scale or into a mass that it's now critical.
We have around 25 or more than 25 million screens connected worldwide. Of course, this enables us to target much more. On top of that, we have this exclusive data that we can also enable others to use. So we are seeing, you know, engagement from other DSPs, agencies, measurement companies, service companies, and others in order to utilize this data. And for us, you know, it's a very profitable line of business. It's recurring, it's a SaaS revenue, and it's 100% profitability because we are paying for VIDAA regardless. So I think that we are well positioned over there.
You know, I think one thing that people maybe get confused by is they think you can only use the VIDAA data on that operating system, but it's a lot broader than that. So when you're saying other DSPs and other folks in the industry are taking your data and utilizing it elsewhere, I'm assuming you can use it kind of anywhere, right? Not even just limited to CTV. Is that fair?
Anywhere, yeah.
Yeah.
Exactly. And by the way, for the first half of your question, you know, I'm not living in the, in the U.S., and when you are coming to the U.S. and getting into your hotel room, you're opening the TV. It's linear TV.
Yeah.
... listen, I get like every five minutes, I'm getting five minutes of advertising, which is not targeted, not correlates to anything, not related to anything. So in my eyes, people that are still, you know, spending or investing their money in linear TV, it's really—I don't have a good answer of why people are doing that. And I think that linear TV will stay forever, but the critical mass of this spending over there is going in the next two to three years, fully allocated into CTV. And I think, again, we are in the right place in order to utilize this huge potential.
You preempted one of my other questions, which is-
Yeah.
No, that's all right. 'Cause you're giving the answer that I kind of hoped you were gonna give, because we've been talking about how we think 2025, 2026, it's not going to make any sense for linear budgets to stay as big as they are, because now you have all of this, you know, inventory in a CTV environment that didn't exist before. So now there's a real, real reason for that, you know, ad buying to shift over to CTV.
I think you are totally right, and I think that, you know, the accelerator even for that, because it's only makes sense, is now we are seeing the move of live sport from the old linear players into the CTV players. And I think this is like the final stroke that, you know, will move everything into that. Because people... You know, we stayed at the linear TV only because of live sport.
Right.
Mainly because of live sport. Now that live sport is moving into CTV, everyone will move over there.
Yeah, and it gives you the opportunity to actually show an ad while the game's still going on. Like, the natural commercial breaks are kind of irrelevant in a CTV environment.
Yeah, and the targeting, you know, is-
The targeting, yeah.
I don't want to see an advertising of old grandmother diapers. It's nice, but it's not relevant to me. I prefer to see, you know, Call of Duty advertising-
Right
... and then buy the game. Really.
Yeah.
It's all around targeting, and today, people are not like, you know, spending their budget running over net. Every campaign has a specific metric and performance key that this advertiser is looking for, and we, as a company, as a tech company, need, you know, to win every campaign and to bring in the right performance and the right audience. So everything is around targeting, really. If you are seeing CTV, in couple of days, you will see the right ads that, you know, you want to buy a Nike shoes, or you want to go to the Caribbean or whatever, but it will be the right ad.
Yep. Yeah, that makes sense. I got us a little off track, but can we- I want to go back to the VIDAA data access and the, the licensing of that data. Over time, how, how material do you think that could be, you know, within the realm of your entire business?
So I think on the first layer, it helps us to bring more clients and to target much more accurate the campaigns of these clients. So this will evolve over time, as long as they will have more screens and we will have more clients. Probably, it will contribute more to our net revenues. Other than that, you know, as you said, we can do with it worldwide, whatever we want, not only on CTV. So it will grow. We started already in 2024. We already signed two contracts regarding that. It will generate something around a couple of millions in net revenues in 2024, but it can get in two years to, I don't know, $20 million-$30 million even a year without doing anything.
Yeah. Okay. You touched on this a little bit, you know, talking about just the access to inventory in a CTV environment. You know, a lot of times the headlines will say like: "Oh, we're opening up to The Trade Desk and Google," just to pick two names. I think a lot of times, the opening up the inventory to the SSP side, the sell side, to help the publishers to monetize their inventory, people kind of look past it a little bit. So is that, A, is that accurate? And B, it seems like you do have access to even like, you know, the Netflix inventories, companies like that, where they're opening up to the sell side. Is that a fair representation?
Yeah, it's a fair. It's very fair. I think that at the end of the day, you know, our platform and other platforms are working in a programmatic world, which is very agnostic to anything. All the decision are being made by algorithms, bidders, and other stuff. And as you said, we are not a closed garden and not a closed environment, so we have, like, the end-to-end. And of course, we can utilize some of our demand that is coming towards directly our DSP through our SSP, as long as the bidder and the algorithm will say this is the right way in order to maximize the ROI of the client. If not, we will buy it on Magnite or PubMatic or wherever. But we are connected to all the other players within our industry.
And having said that, in our industry, we are calling it frenemies, we are friends and enemies. So we are helping The Trade Desk to monetize their demand over our inventory. We are helping Magnite to monetize their inventory over our demand. So it's working like in a circle. So yes, we didn't win, like, the Netflix direct relation. Having said that, we are working with The Trade Desk, we are working with Magnite, so we will be open to Netflix inventory. There is no one, even Google, that can monetize 100% of Netflix inventory.
Right
... unfortunately. So at the end of the day, they want as much partners in order to try to get to a maximum monetization of this inventory. So part of it will come through us. So I don't really need a direct relationship-
Right
... in order to monetize this inventory.
Yep. Okay. All right, perfect. Maybe we could talk about the competitive landscape a little bit more... you already touched on this, but you're more diverse than you were before, fully integrated. I guess, do you see other folks maybe adopting the strategy of an end-to-end platform? And I guess, you know, just how do you see your competitive positioning today, and where do you think your biggest opportunity is that maybe isn't, you know, baked into numbers or things that people aren't talking about?
It's a good question. You know, we went into this end-to-end ecosystem like 4 years ago or 5 years ago. I think that at that time, at that point of time, people asked us if we don't have any conflict of interest, and we are serving the publishers from broadcasters from one side and the advertisers from the other side. I think, you know, in a programmatic world, as I said, all the decision are being made by technology, bidders, and algorithms, and they are choosing whatever they think is the best way in order to utilize the campaign. In my eyes, it wasn't a question, and there isn't or wasn't any conflict of interest.
What we are seeing in the last three years is that the other DSPs, let's say, the traders, Viant, or the other SSPs, let's say, Magnite and PubMatic, are moving into end-to-end flow, i.e., the SSPs, Magnite, are going directly into advertisers in order to try to utilize the direct demand on their platform. Having said that, they don't have the technology piece. So we are doing it in a way which can work, but they don't have a real DSP with a real bidder that is taking the right decision. And for that, our performance and our key metrics that we are giving or allowing our customer is much better. So we are seeing people moving end-to-end, not saying it out loud, because five years ago they said, "Hey, guys, what are you doing?
You have conflict of interest." So they are doing that, but they don't have the complete ecosystem. And I think that within this ecosystem, the one thing that really differentiates us today is the DMP. Nobody has this capability. Of course, we can be connected to third-party DMPs, but we don't really control that, and nobody can allow them their first-party data because they don't have a DMP in order to have it. So I think we are focusing really today on our data capabilities, and this is a foot in the door to a lot of different players. And after we are getting these players into our ecosystem, of course, we can allow them other capabilities as SSP, DSP, Discovery Tool, Cross Planner, or whatever they are seeking.
Okay.
So data is now our main focus and the foot in the door to any big player.
Okay. Before I ask my next set of questions, I just want to make sure no one has any questions in the audience. And if you do, happy to take it, if you want to raise your hand. I want to dive into the Stagwell relationship a little bit more. So I know you talked about, it's mostly about the DMP, but I guess... And if you don't want to talk about Stagwell per se, how, you know, as you add more relationships like those, how material do you think they can be? And I guess, you know, why are those types of companies choosing to partner with a company with Nexxen specifically?
Yeah, that's a good question. I think that, you know, I don't have the answer regarding Stagwell or code name Stagwell. I think that they went into the market and choose Nexxen to be their tech partner, mainly around data, because they acknowledge and they saw the ID graph that we can allow them, so they liked it very much. I think, again, Stagwell is a huge company. I think that they are doing something around a couple of billions of dollars in spending money, and probably 50% of it is programmatic and within the what we are calling the ad tech world. So I think it can be substantial.
As long as we will execute, and we will do a good job, and it will be seamlessly, and their clients will be happy, and we'll meet their performance metrics, they can shift more and more and more towards our ecosystem. At the end of the day, they can choose either a couple of streams, they are working with us. They can pay for the ID graph itself, they can not pay for the ID graph and execute the campaign through our DSP, and then I'm getting my money through the DSP fees. Or they can even do it through my DSP and my SSP, and then I'm getting full profitability, and then they will get, you know, discounts or whatever.
So I think they have different ways in order to utilize it, but the basic way is to, you know, get the data, and then they can choose whatever they want to do with it. And for that, they need to pay. So it can be very substantial, it can be... I don't want to say not substantial to, you know-
It's early, like this is brand new.
It's very early.
Yeah.
You know, in our industry, the minute you are, like, signing a contract and getting into testing and retesting and getting to the right place, it's taking a quarter.
Yeah.
After that, within Stagwell, they have, like, 100 different agencies, and you need to educate and convince all of the agencies that, you know, Nexxen is the right partner. So it will take a couple of quarters in order to get to a full scale. I think that in H2, probably we will generate with us $ a couple of million. In 2025, probably much more, and in 2026 and beyond, it can be, it can be huge.
Yeah. I think Stagwell is very tech-focused as well, so the fact that you were part of this broad RFP process and ultimately won the deal, I think, you know, speaks volumes.
Yeah, I agree.
... Let's switch to capital allocation strategy. So you just paid off your outstanding long-term debt in April. You've got this buyback program. Amobee's fully integrated now. What else should we be thinking about in terms of, you know, your tech stack, if you think you need to add anything, or just general capital allocation thoughts?
I can share that we are not engaged in any active M&A, and I think that after, like, really extensive five years of integrating and consolidating other than Amobee, other companies, I think that we have the most depth tech stack within the ad tech environment. I'm taking Google now out. So I think we have all the capabilities that we need, and now our only thing is to really execute on the base of that ecosystem. As you said, we did, like, $120 million of buyback in the last two years, and we just announced a $50 million buyback that we are already utilizing.
Other than that, of course, we are cash generative and with no debt, so most of the money that we are generating either will go to buybacks or not either, and on top of that, will go into internal investment in our technology. And when I'm saying technology, it's specifically on data initiatives and within data, on AI and machine learning initiatives. Just to, you know, for you to understand, for example, in the next couple of weeks, we are going to have two new AIs or ChatGPT-like tools within our different capabilities.
So, for example, in the Discovery Tool, we are going to have a window, and then an advertiser can come and say, "Hey, guys, I want to understand- I want an audience of males in the age of 35 and more that's watched last night the NBA game and looked for a car in the last month." Boom, segmentation, click of a button, the campaign is running on our DSP. So it's very seamlessly, it's very easy, and it will cause, it will cause the advertiser to allocate more towards our ecosystem, and of course, to get better KPIs within his campaign. The other part, for example, within our DSP, again, a ChatGPT box, AI, I want to understand what are the sites that I'm getting the best viewability in my campaign that is running. Okay, these are the sites.
Okay, now I want to understand what sites I need to add in order to get more viewability. Okay, these are the sites. Again, push of a button, campaign is being utilizing better performance, more revenues, better profitability for us. Very easy. So these are the things that we are now focused on, data and within data, AI, and machine learning. Of course, you know, developing our bidders and algorithm to do a much better job, and the sky is the limit.
Yeah, that's where the industry is headed, so that, that makes sense. We're going to do a lightning round. We've got two minutes left. So two last questions. One is, we get questions about how you might be able to improve the liquidity of the stock. Do you have any general thoughts there? Last one is, you know, speaking with you offline, not necessarily today and Billy, I can just feel that you guys feel like you're in a much better position to just execute now that Amobee's integrated. You know, give a, you know, give us the pitch, so to speak. You know, why is now the time to do a deep dive on, on Nexxen, and where would you focus investors?
So I think that after two challenging years of consolidation in a very crappy macro, I think that now everything that we wanted is in place. So if in the last two years, we were, like, 90% focused internally and 10% focused outside of the company, now it's the other way around. Regarding liquidity, I think it's composed out of two main answers. One is executing. So in the last two years, we didn't execute as much as we wanted, but I think that now, as you said, we're in a much better place. Everything is in place. We have all the capabilities, the right salespeople, the right focus, the right capabilities. We are seeing the engagement, and hopefully, it will translate into revenues and scaling up and getting the company to the right place.
I think that when we reaffirm our guidance, I think that now even we are feeling even stronger around our guidance to 2024, because we are seeing all the fruits of the last two years getting into the right place. We are seeing the CTV growth, the video growth, the data growth, and everything around that. And I think that other part of the liquidity, probably, you know, when we came and did the dual listing into Nasdaq, we said that we want to come to Nasdaq because this is our market. So probably, hopefully, in the short range of time, we will be solely traded in Nasdaq, and we will delist from the U.K., which will make our structure a little bit simplified and will give us much more liquidity only on one exchange.
Okay. All right, perfect. I think we will leave it there. Thank you very much for being here.
Thank you.