Good afternoon, ladies and gentlemen, and welcome to the Nexxen International Limited investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it is appropriate to do so. Before we begin, we would just like to submit the following poll, which will just appear on your screens now, and I would now like to hand you over to the team from Nexxen International. Good afternoon.
Thank you, Operator. Hello, everyone, and welcome to our call discussing proposed resolutions we've brought forth to be voted on by our shareholders at our upcoming AGM on December 20th to change our stock exchange and trading structure. With us on the line today for prepared remarks is Nexxen's Chief Financial Officer, Sagi Niri. And following the prepared remarks, Sagi will also be joined by the company's Chief Executive Officer, Ofer Druker, and Chief Legal Officer, Amy Rothstein, to answer questions. During today's conference call, we will make forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. We advise caution in reliance on forward-looking statements.
These statements include, without limitation, statements and projections regarding our anticipated future financial and operating performance, market opportunity, growth prospects, strategy, anticipated benefits related to the potential changes in the company's trading security structure and timing thereof, forward-looking views on macroeconomic and industry conditions, as well as any other statements concerning the expected development, performance, and market share or competitive performance relating to our products or services. All forward-looking statements are based on information available to us as of the date of this call. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those implied by these forward-looking statements, including unexpected changes in our business, shareholders not approving the proposed resolutions, or unexpected changes in macroeconomic or industry conditions.
More detailed information about these risk factors and additional risk factors are set forth in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled Risk Factors in our most recent annual report on Form 20-F. Nexxen does not intend to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. At this time, it is my pleasure to introduce Sagi Niri, CFO of Nexxen. Sagi, please go ahead.
Thanks, Billy. As we announced, our board approved submission of several changes to our stock exchange and trading structure for shareholders to vote on at our upcoming AGM on December 20th, which we believe will benefit Nexxen and its investors over the long term. As such, we wanted to hold today's call to explain our rationale as well as the process and timing for potentially changing our company's trading structure and to answer questions. Over the last several quarters, we've significantly advanced our tech, data, and CTV capabilities. We've rebranded to clarify our platform's value proposition and bolstered our sales team and efforts, the combination of which drove record Q3 results, and we believe has positioned us for strong and sustainable long-term growth.
After achieving these milestones, our business performance and industry spending has taken a massive leap forward, and now we believe it is the time for our market and trading structure to do the same. If shareholders approve the proposed resolutions, the intended changes include exchanging our NASDAQ-listed ADRs for NASDAQ-listed ordinary shares and terminating the ADR facility, conducting a reverse stock split of our ordinary shares at a two-for-one ratio, which will allow for a one-to-one exchange from ADRs to ordinary shares and delisting from AIM to trade solely on the NASDAQ in the U.S. under the ticker symbol NEXN. With respect to ADR holders, contingent upon shareholders' approval of the proposed resolution, such holders would receive a 30-day notice setting forth the proposed changes to the ADR program and related deposit agreements.
These changes would include a mandatory exchange feature upon termination of the ADR facility and notice that ADR holders would receive ordinary shares upon termination. During the period between now and the potential exchange to ordinary shares, ADR holders could continue to hold and trade our ADRs on NASDAQ, and ordinary shareholders could continue to hold, trade, or sell our ordinary shares through depositary interest on the AIM or exchange them into ADRs and participate in the mandatory exchange.
Following the conclusion of the ADR notice period and related SEC review, it is intended that on or around February 14th, 2025, the deposit agreement would be amended for these changes. The reverse split would become effective such that every two ordinary shares would be consolidated into one ordinary share. Our NASDAQ-listed ADRs would then be exchanged for NASDAQ-listed ordinary shares on a one-for-one basis, and the ADR facility would be terminated.
Additionally, as a final step to the process, on or around February 14th, 2025, the company would delist from AIM. Thereafter, holders of depositary interest formerly trading on AIM or ordinary shares would work with their brokers to position their securities to be tradable on NASDAQ. By executing this specific approach and strategy in the aforementioned order, we help minimize liquidity risk for the shareholders and reduce or eliminate U.K. tax complications, including the Stamp Duty tax. Any shareholders who do not provide instruction to their brokers prior to the delisting will then hold illiquid depositary interest until such time that they can work with their brokers to reposition the ordinary shares underlying the depositary interest to be tradable on the NASDAQ.
Assuming our shareholders approve the proposed resolution at the upcoming AGM, we believe this initiative and strategy will benefit Nexxen's long-term capital appreciation potential and shareholders for several key reasons. For one, we believe these changes position us far more strongly to attract new U.S. investors into our stock. Shifting our focus toward attracting U.S. investors creates more opportunity for Nexxen. Over 60% of the world's equity assets under management are held by U.S. investors, and roughly 50% of global equity market value trades on U.S. exchanges, making it the world's largest and most liquid equity market by far. We believe our ADR structure has precluded a significant amount of U.S. investors from buying and holding our ADRs due to their investment mandates, which prevent ADRs ownership. So exchanging our NASDAQ-listed ADRs to NASDAQ-listed ordinary shares opens Nexxen up to an additional base of potential new U.S. investors.
Additionally, our depositary interest trading in the U.K. and ADRs trading in the U.S., which each represent two ordinary shares per ADR, has created added complexity for U.S. investors and sell-side analysts, which we believe has deterred many from investing the time needed to research the company, regardless of how strong our business performs. And we believe these changes can help alleviate that issue. We also believe consolidating our trading into a sole U.S. ordinary share listing will attract new U.S. investors who may have viewed our limited liquidity as a barrier to entry, which was feedback we commonly received. Additionally, we believe the single listing will help better align our stock with other U.S.-listed asset companies currently trading at higher multiples than Nexxen and reduce price volatility that can result from a dual listing.
Index inclusion potential is another reason we believe this trading structure change has benefited Nexxen and shareholders over the long term. Because of our non-U.S. domicile, ADR structure, and depositary interest trading in the U.K., our eligibility for and inclusion in indices has been very limited, especially compared to other U.S.-listed ad companies. If shareholders approve the proposed resolution, we believe we would become eligible for acceptance into some well-known indices, which in turn could attract interest from large passive investors as well as others that track major indices and purchasing activity from index funds. Many other small-cap U.S.-listed tech and ad companies have index investor ownership that represents a notable percentage of their shares outstanding, while Nexxen currently has minimal index investor ownership, making future index inclusion a potential catalyst for our stock.
Finally, because of our dual listing, we divert time-consuming and duplicative employee efforts, ensuring reporting and regulatory compliance in the U.S. and U.K., and expand internal and external resources on listing, exchange, regulatory, consulting, legal, compliance, and other fields across two markets. We believe the proposed changes will eliminate these costs and duplicative efforts and streamline some of our internal operations. From our perspective, we believe the answer is clear and that these proposed changes can help advance Nexxen's positioning in the capital markets, reduce previous barriers to entry for U.S. investors, and better position us for future potential stock price appreciation, the combination of which could benefit the company and its shareholders tremendously. We hope our shareholders and those on the line with us today agree with our perspective and rationale, and with that, we're happy to take questions.
Perfect. Ofer, Sagi, if I may just jump back in there, and thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the top right-hand corner of your screen. But Jeremy, at this point, sir, if I may hand over to you to chair the Q&A with the team, and if I pick up from you at the end, that'd be great. Thank you.
Thank you. We've had a number of questions submitted for the call, so I'll run through them now with management's best placed to answer them. So first question. As a U.K. holder, how do I convert my ordinary shares to ADRs upon or ahead of the delisting, and are there any tax implications?
Thanks for the question, Jeremy. Amy, do you want to take the answer?
Yeah, I can take that one. So while you can exchange your ADRs at any time, similar to what you can do today in your ordinary course, and can continue to do so before the delisting, it may result, however, in adverse tax consequences, and you should consult your tax advisors. In general, if a U.K. shareholder wants to hold our securities after the delisting, we suggest that you provide your instructions to your broker to reposition the securities in our new depositary interest facility at the time the delisting occurs versus exchanging your ADRs prior to that time. As we noted, that may result in some adverse tax implications, and we encourage everyone to reach out again to your tax advisor.
Whether you give your instructions prior to the delisting or for any reason you're unable to and have to do it after the delisting, we have put in place a process that we believe will allow for a smooth and efficient transfer. Once you reposition them into our new DI facility, any transactions, whether it's a sale or acquiring new shares in the company, should occur pretty smoothly and very timely. We have been provided a high level of comfort from all of our partners that we've engaged in this process.
Okay. Next question. How much index demand do you expect in 2025 related to this move?
Okay. Good question. I think that we can't really guarantee that we will get admitted to the index. And if we are admitted, we can't guarantee the level of demand. However, we've been advised and we did a couple of analyses, and we believe that as part of being a solely traded company on NASDAQ with ordinary shares, we should expect around tens of millions of demand from different indices.
Fine. Okay. Next question. How much do you believe liquidity will increase, and do you think it'll be enough, or will you need to do a tender offer or something similar? Will you leverage the share buyback to support shares if many are traded back into the market?
Okay. So I think that since we announced that we are going to delist, we are seeing a very increased liquidity trend in the London Stock Exchange and in NASDAQ. So although it's tough to estimate exactly how much it will increase, we believe liquidity will increase dramatically for several reasons, including the fact that these moves will consolidate, of course, two exchanges into a trade on only one market. And per the last piece of the question, we believe that our buyback is in place in order to help to support the stock as long as we believe that it's undervalued.
Okay. Thank you. Have you already seen interest increase from U.S. investors, and do you believe these changes that you've announced overall will attract new investors?
Okay. So this question is a little bit similar to the last one, but I think, as I said, we are seeing already an increased trading within our stock in both markets. And we believe that when we'll go into one market, probably in that specific market, the liquidity will go even higher because if you want to trade our share, it will be only in one place. We think that the new structure will better position us in the market generally. And for one, many investors in the U.S. couldn't hold our ADRs because of their investment mandates.
So, of course, the change and the dissolving of the ADRs into ordinary shares will help alleviate that issue. And, of course, the limited liquidity we had in the past in both exchanges was also a key barrier to entry by U.S. investors. So by consolidating both trading into one market, we believe it will help the liquidity profile, which will help new U.S. investors to get into the share and, of course, encourage them to take larger positions.
Okay. Thank you. Many of the reasons given for a single listing on the NASDAQ seem logical and sensible. The funds raised at the time of the dual listing were at a reasonable price and the actions not too dilutive. I would ask, though, given the reasoning at the time for having a dual listing ADR shares listed on NASDAQ and AIM and the time and expense of advisors, lawyers, why is it there are so many of the issues that you say are causing problems were not identified at that time?
So I think the move into dual listing was a first phase, and I think we said it when we did the IPO on NASDAQ, in order to be at some point of time fully listed only on NASDAQ. Most of our market, all of our peers, the industry themselves, valuation, and a lot of other aspects that are relating to that are being much more valued within the U.S. market. So I think we knew all of these issues, but this was the fact at the day or the reality at the day that we did the dual listing, and we were trying to understand when is the right point of time in order to move only to the U.S. listing.
We think that now, when we are seeing the level of liquidity and when we are seeing the current trending and the trend that the company is in, we think that this is the right time for us in order to move completely into the U.S. market and increase the liquidity, bring much more U.S.-based investors into the share, take care of the valuation from many reasons that we discussed, and this is the right time for us.
Okay. There's a question here on transferring shares from AIM to NASDAQ, but I think we've already covered that one in a previous question. So I'll move on to the last question, and this is, will you shift to GAAP accounting and away from IFRS? And will this be forced? And if it's not forced, would you do it proactively?
So yes, this is something that we are considering. So being traded only on the U.S. market and probably in order to attract more U.S. investors and to be included in more indices, we will transfer at some point of time to U.S. GAAP accounting reporting. We can, by the way, maintain both of them, like report on IFRS and do a U.S. GAAP reconciliation. Probably this is what we will do in the first phase. And even if we will not force to do that, probably in one year or around that point of time, we will go full into U.S. GAAP reporting, again, in order to attract more U.S. investors and to be included in more indices.
Okay. Thank you. We've had a number of other questions, but they've already been answered through the narrative, through the presentation itself, and through some of these questions already. So I'll now hand the call back to Ofer, who I think will just provide a few closing remarks. Ofer, over to you.
Thank you very much. I want to thank all our shareholders in the U.K. for the consistent support over the years in the company and believe in the company and staying with us in this journey and being part of the journey. I think that I hope that it's not the end of the mutual journey. I think that most of you can hold shares also in the U.S., and we hope that the move to the U.S.
will bring the value and the prosperity that we are looking for. I think that we did a great journey over the last few years, and we are entering now a new era for the company, which is very important for the development of the company in the future. I want to thank you for that. And as I said, hopefully, to keep you in the shareholders of the company in the future. So thank you very, very much for all your trust and your support and happy holidays. Thank you very much.
That's great. And thank you all for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Nexxen International Limited, we would like to thank you for attending today's presentation. That now concludes today's session. So go.