All right, why don't we go ahead and get started. Thanks for joining us at the Raymond James TMT and Consumer Conference this year. I'm Andrew Merok. I cover advertising technology and digital media here at RJ, and we're thrilled to have with us the Nexxen team of Chance Johnson, the Chief Commercial Officer, and Billy Eckert, the Head of IR. So we'll go through some of the interesting features of the Nexxen story and, yeah, have a good conversation here. So Billy, Chance, thanks for joining us.
Thanks so much, Andrew.
Happy to be here.
Awesome. So why don't we start with the 30,000-foot view? So for those who maybe aren't as familiar with Nexxen, can you give a quick overview of the company and where you sit within the digital advertising ecosystem?
Yeah, I'm happy to take that one. So we built Nexxen as an end-to-end platform. T o give a little bit more definition of what we mean by end-to-end, so most players in our industry represent either publishers or advertisers, and they build out tools specifically to support one side or the other. Nexxen is one of the first companies to bring that fully together in an integrated way, where we're benefiting the buy side and we're benefiting the sell side in a way that makes it a much smoother transaction, a much more efficient transaction, and in doing so allows our customers on both sides to drive better performance, better return on their ad spend, and overall more money going towards working media, which drives better outcomes for the whole industry, not just for our customers.
Great. So why don't we start with a couple of macro-oriented questions? Because I think that's been a topic of investor discussion, and we've heard kind of some inconsistent feedback from some of the companies in the space coming out of the 3Q earnings cycle and just kind of the broader concerns around consumer health. You guys called out a bit of softness in certain verticals in 4Q to date on your recent call. As we get farther into 4Q, how are things playing out versus expectations?
Yeah, I think things are looking okay. So there is definitely some uncertainty that's been called out without question. That uncertainty has a lot to do with some of the macro conditions. Certainly, tariffs are playing a big part of it. W hat we're seeing is certain verticals are experiencing some level of softness. When that happens, though, it creates an opportunity for other verticals to come in and potentially access media at a more efficient price. So while some verticals are a little bit softer, we're actually seeing an increase in other verticals and overall getting to a much healthier position than we were a little bit earlier in the quarter.
Great. That's kind of interesting. I mean, can you kind of quantify maybe some of the verticals that you called out as a little bit softer and those who are maybe taking advantage of a more accommodating media environment?
Yeah, sure. So we work a lot in retail, for example. So retailers that had been shipping products from overseas, there's a lot of uncertainty in their business and a lot of different scenarios that they're planning for. T hey're not necessarily pulling back budgets and saying, "You're just going to stop spending." They're just being much more cautious about where they can spend, right? That's an obvious one. There are other markets that are seeing that as an opportunity and coming in and acquiring that media a little bit more efficiently and overall driving better performance for their business.
The nice thing about it, though, is because we have the end-to-end platform, we're able to offset some of that softness with higher margins on the overall business. We have a much bigger TAM than a lot of our competitors that focus on one side or the other. So again, it's a net benefit for us while we kind of deal with some of the turbulence coming from the macro uncertainty.
Really interesting, and not to belabor the point here, but it sounds like there's a little bit of adaptation that especially the retail vertical might be doing in terms of sort of a new normal post-tariff and trade disruption kind of world. I guess maybe can you talk about to the extent that you've seen that, what some of the behavioral changes are, and especially those retail customers?
It changes the dynamics of their pricing, right, so if you are, for example, a retailer that had been acquiring goods from China or across from Asia and the volatility of the tariffs and the expectations, these are very large organizations that have financial goals of their own to hit, and when their costs go up as related to tariffs or some of the other issues that they might exist in the supply chain, they're obviously going to have to cut back a little bit, or, and this is an advantage for Nexxen, they have to get much more aggressive with their performance, and when customers and advertisers start looking at every dollar of media spend and where it's going, that's when we can approach them with opportunity.
Because we represent both sides, we can be much more efficient from a pricing perspective than a lot of our competitors that represent only one side. W e can bring them solutions that allow them to access media at a much more efficient price, drive better performance, so still hit their return on ad spend goals, exceed their return on ad spend goals, and maybe hit their financial goals without actually dropping their overall ad spend too much.
Unfortunately, in our industry, whenever there is some uncertainty in a macro environment, marketing is the easiest thing to slow down. T hen it takes a little bit longer to rebound. W hat we saw over the past several years, and certainly since 2020, there's been a lot of scenarios of macro uncertainty, is that money doesn't go away. It comes back in a much bigger and more robust way to kind of offset some of that softness, and so that's what we're leaning into and we're optimistic about.
Got it. T hen you keep mentioning the Nexxen end-to-end model, which obviously is a very important differentiator and selling point. O ne of the big industry themes and investor debates that we've been hearing is kind of that blurring of the buy side versus supply side sort of demarcation that we had seen in the past. So how is that end-to-end nature and DNA of Nexxen kind of positioning you as others are making that shift?
Yeah, a couple of things. So first, it's great to see because it's validating for us. We were certainly the first company of our size to go this direction. We started the end-to-end path in 2019 at a time when everybody was saying the opposite, where you have to be specialized and you have to be focused. So the fact that we're seeing a lot more companies blur those lines, to use your words, as an industry, we've captured this term, called convergence, which is the buy and sell side coming together. I still feel like we have a really, really strong position because we've been doing this for about six years. Y ou can cobble together different pieces and have access to supply, but there's very few companies, if any, that have exactly what we have, which is deeply integrated technology.
Not to get too into the weeds of our tech platform, but it's connected through a data platform. The difference there is data flows organically from the buy side to the sell side, driving better performance. Ultimately, we're able to represent both sides equally in the transaction and just make it much more seamless and drive performance. Again, higher yield, publishers make more money, advertisers get better return. There's almost no company that can acquire or just do a few partnerships to stitch together something that can compete at that level. We feel like we're protected and we're happy to see many of our competitors follow our path.
That's really interesting. That kind of brings me on to my last sort of overall industry point before we get into some of the particulars in the Nexxen story. That theme of performance, we're hearing it more and more as we go along, especially in 2025, even in platforms and formats that were kind of traditionally considered more brand-oriented or had brand KPIs to them. Again, I think you touched on it a bit in your last answer, but if you could elucidate any further how having all those different components of the stack allows you to meet performance objectives for some of your customers.
Yep. So it's a great question, by the way, because as an industry, we've talked about outcomes for a very long time. What's powerful about the last year or two is so much data has come into our platform and into the industry in general that we're able to measure it in a much more effective way, right? We can be so much more specific about the performance of a particular ad unit. So a couple of things are happening. One is we're able to just drive better price. So naturally, anytime you can offer the same thing as somebody else for less price, it's going to perform a little bit better. W e're also layering in different data signals that are driving better performance. W e're lucky enough to strike this long-term partnership with VIDAA, the operating system for Hisense and Toshiba and several others.
And through 2029, we have exclusive access to their ACR data. What ACR data is essentially listening to everything you're watching on the television, and then we can take that data and apply it to the open web and have a much cleaner view of who an individual is and a much higher likelihood that when we deliver an ad, it's going to be very relevant to what that person needs to see or wants to see and hopefully lead them into conversion. So that data that we're bringing in just allows us to be so much more robust with the data access that we have, drive better performance, and then shine a light and be able to measure it more cleanly than we have in the past. In the old ways, it was just very rudimentary tools to have a general sense of how something was performing. Now we can really, really pinpoint exactly what's driving performance and then optimize towards that outcome.
Really interesting. I'd like to drill down on that VIDAA point in a second, but before we do, just kind of looking at CTV from a higher level, I think we're seeing a little bit of disruption, some turbulence in the CTV space, especially around pricing and CPMs and things like that. How do you navigate the near-term volatility and what do you see as the opportunity for Nexxen when the space stabilizes?
To answer that question very bluntly, we view it as a benefit for Nexxen, and I'll explain why. The near-term volatility has a couple of things at play. It is the macro uncertainty, which we talked about earlier. Maybe the bigger issue is there has just been a flood of inventory that has come into the market. Like any auction, supply and demand, when you have more supply than you have demand, price comes down, right? The vast majority of CTV was transacted on a one-to-one basis. I go exactly to the publisher that I want to buy from, they give me a piece of paper, and I buy directly, right? Now, so much inventory has come into the market, it's brought those prices down, but it's also starting to change the buying habits.
This is where it's an advantage for Nexxen in that so much more CTV is transacted programmatically today than it was even a year ago, and we're seeing a big shift towards programmatic. When CTV inventory, high-quality, premium CTV inventory is transacted programmatically, that's an opportunity for our business. It's an opportunity for our advertisers too because they no longer have to have all these different views of where their money is going. They could log into our platform and see their CTV, they can see their mobile app, they can see their web, they can see their video, everything in one place. It makes their life a little bit easier, and they can be much more granular with how they optimize. There is a little bit of uncertainty in the short term.
CPMs have definitely come down, but we look at it as a big upside for us in 2026 because we not only have the CTV data coming from the TV set-top boxes, but we also have actual inventory from the OEMs with Hisense and Toshiba where we're able to access home screen. So the first thing you do when you open your TV, we can reach you there in a more meaningful way. So a lot of opportunity in spite of some of the short-term uncertainty.
Maybe why don't we double-click on the home screen point that you just made there. So can you talk about that launch of the programmatic smart TV home screen activation solution? Seems like a pretty interesting product with some significant potential. Are you seeing demand for it already? C an you just talk about what it is and why customers would be interested?
Yeah, it's a very big deal. W e're seeing a lot of demand for it right away. M aybe I'll back up and just explain what home screen is, right?
Sure.
Anytime you turn on your smart TV, whatever brand of TV it is, there's a screen that pops up before you decide what to watch. I n that screen, on average, somebody's looking for something to watch for about 10 minutes a day. So you have this very captive audience of someone or a group of people staring at a big screen that's most likely in the living room, and you have this opportunity to engage with them. So with our relationship with VIDAA, we now have access to all of that home screen inventory as well as some of their streaming CTV inventory. T hen we're going beyond just the Hisense and Toshiba to several other OEMs as well.
What we're looking at is one of the only tech companies that has the data platform that we talked about, the DSP and SSP end-to-end, and exclusive access to data and inventory. That's a really important thing because there's a lot of companies in our space and agencies and brands sometimes have a difficult time sifting through all the different nuanced differentiation. When we can go to agencies and brands and say, "We have exclusive data, we have exclusive media, and we have a best-in-class tech platform," it allows us to skip the line and get ahead of just about everybody else because they have something, we have something that they want and maybe more importantly, something they need to deliver on. There's only so many OEMs in the world, and we're lucky enough to be with a couple of them.
Yeah. That kind of leads me into that question on VIDAA that I hinted at earlier. It's something that you've made some pretty significant investment in and then expanded that investment. So obviously something that you find a lot of value in for the long-term progression of the company. W hat should we be looking at as 2026 opportunities from this VIDAA relationship? From an external perspective, how can we identify the value that it's adding to the Nexxen platform?
Yeah. It's a great question. So part of the investment that we've made in VIDAA, the $60 million commitment that we've made in them, which actually makes us the second largest shareholder in VIDAA outside of Hisense themselves, is to grow and expand their footprint. Where VIDAA has a massive footprint and is already number one in certain markets is largely international, right?
Across Europe, certainly APAC. T he investment that we've made is to expand their footprint across the US and Canada where we have a lot of our business. So we should see a short-term impact on revenue where we're filling. I think the longer-term impact is it allows us to negotiate more strategic deals with DSPs, right? So you know some of the largest DSPs in the space. It gives us some leverage to make sure that when they look at shrinking their supply footprints, right? SPO, as we call it, supply path optimization. It ensures that we are there to capture a bigger piece of that pie because we can give them something that some of our competition cannot.
You know, and one thing I want to double-click on, Andrew, too, I think it's probably something that maybe is misunderstood or not appreciated enough in our multiples is that $60 million investment in VIDAA. The commercial benefits that Chance touched on are pretty obvious, right? It gives us unique differentiators on the data and media side, gives us an accelerator opportunity in CTV. I think what people lose is the fact that VIDAA is a pretty coveted asset.
There are new investors that are potentially looking to get involved in the story. O ver time, in addition to the commercial upside, there's the opportunity where as VIDAA's valuation grows, so too does the value of our investment. T his is a company with very ambitious growth plans. It wouldn't shock me if sometime over the next couple of years, few years, those guys look to IPO as well, which would, of course, benefit our investment too.
Very interesting. Something to keep in mind there. T hen we had some news this morning about the Nexxen live sports programming opportunity here. So I guess if you could maybe double-click on that and let us know why that's such a value-add for Nexxen?
The number one thing buyers want to be associated with in a CTV environment is live sports because it captures attention and it's almost always a sit-down moment, right? It is appointment viewing depending on the sport. We're lucky enough to be in business with VIDAA and subsequently Hisense, who has sponsored the World Cup, right? So a big part of what we're planning for is offering advertisers seamless ways to activate media and data to be able to capture audiences, not only reach them in that exact moment where they're watching the World Cup or they're watching NBA or NFL or college football, but you now know a lot about that audience, right? So to reach someone in that moment is very expensive. So maybe you want to do it and maybe you don't. W hat we can also do is now extend that audience out.
So we know this is somebody who's been watching a lot of World Cup. Maybe some of the other brands that are involved in the World Cup or competitors of sponsors of the World Cup can now access that audience at a much, much lower cost and drive better results. So the combination of being able to reach audiences in that exact moment where they're watching live programming, but then also know that about them and then deliver powerful audience packages to our clients is critical. I t's the single biggest ask we get when we talk to agencies and brands is like, can we be involved in live sports? The answer with Nexxen has always been yes. It's just now much available in a much more robust way.
I think that packaging aspect is really helpful because there's so much information out there, so much inventory out there. Obviously, live sports is one of those things where people want to focus on it, but it can get maybe lost in some of the complexity of the space.
Absolutely.
Okay. Really, really interesting there, and then I did want to touch on the Nexxen Data Platform while we still have time here. How has the scaling of that helped you win spend, and what types of initiatives do you have in your pipeline for kind of strengthening the value proposition?
Yeah. Great question. First, it is the single biggest driver of new business within our company, especially on the enterprise side. We have all of these advertisers that have so much access to data, but they don't know what to do with it, right? There are customers that we work with that have millions, tens of millions of a database of customers that they're just sitting on. T hey're able to take all of that information that they have about their customers, where they live, what they bought, their age, demo, geo, and then push that into our data platform. I t's not just, okay, now it's in a platform, you can enrich it with all the other data signals.
So especially for brands and agencies that are trying to do more with the data assets they have, it's critical for them to have a tool like ours that allows them to ingest directly into the platform. B ecause it's end-to-end, that data lives in our universe. So we can push it to the supply side for publishers, we can activate it on the demand side for advertisers, and there's no breakage. You're not jumping from platform to platform. Google did us all a favor when they announced that they were sort of like going cookies away because it had just made us get a lot smarter about how we're tracking our audiences across the web.
Because there are no more cookie signals or very few of them, Nexxen is one of the only companies that can make sure that there is no breakage between what you're putting into the platform and what you're ultimately reaching as far as your audience. If you have a client who has 50 million customers and they assign a huge value to that audience base, if you're working with a company that is an SSP and a DSP that are not integrated, you could lose half of that. You're losing 25 million records. You're losing information on 25 million of your companies by selecting a company that's not an end-to-end one like Nexxen. It's very big. Then as far as investment, sorry, I went long there because I get excited about it.
It's worth it.
The single biggest investment we're making in the platform was within AI, so certainly from an internal workflow perspective, allowing us to build products more efficiently requires fewer headcounts, so it has a big impact on EBITDA, but the big thing is everything we do is for our customers, right, so we're giving customers the tools to be able to make complex decisions in near real time, engaging with the platform just like you would engage with your LLM, your ChatGPT, whatever your preference is, and it allows our customers to activate campaigns maybe would have taken five, six, 10, 12 people. Now you can do it with one person, maybe working half the time, so it just allows for efficiency on both sides. Efficiency is nice, but it drives better results, so you can be efficient and drive better performance. So a no-brainer for a lot of our customers, and that's what they want to hear about.
Makes a lot of sense. Maybe a question that you could possibly both have input into, maybe Chance from the operational side and Billy from the financials, but these DSP-related headwinds that we've heard you and some of your peers call out over the course of the 3Q earnings cycle, I guess, how are they trending now? How is that platform adjustment that they made kind of playing out as we get farther from the event?
Yeah. So I mean, supply path optimization is a big topic within our industry. A ll DSPs are exploring it, and we call that one in particular. T he advantage that we have there is we do have something unique and differentiated that is not widely available. So unlike some of our competitors who maybe will experience some of these challenges over the long term, we can go back and maybe negotiate preferred deals with some of our DSP partners because we can give them access to something that they didn't have. I t's just harder to walk away from a Nexxen than it is many of the other SSPs that are out there.
The good news is we saw definitely some softness from this particular DSP October, November, but we've started to see that rebound pretty substantially. T he nice thing is we've reset at a new baseline. We feel like the risk going forward is relatively low, and there actually is a good chance that we start to see those numbers get back and remain what they were before. So definitely a short-term setback, but long-term, I think could be a benefit to us and maybe for some of our competitors, it'll continue to be a challenge. Billy, what do you think?
No, I think that's exactly right, Chance. I think when you look at the reduction that we had in our Full Year Q4 guide, a lot of it was related to this sort of short-term impact from this DSP customer. What's encouraging, as Chance said, is they are starting to ramp their spend with us again, and a lot of it had to do with kind of ramp timing, so these guys spent very aggressively with us in Q3, Q4 last year.
That's right.
They did come down a little bit more than we were expecting this year, but as Chance mentioned, they're now at kind of a more normalized baseline. W hen you look at the uniqueness of our model and some of the media and data assets that we have, if this spend had gone away from, let's call it just a singular side of SSP without these unique media or data assets, it'd be very hard to get that spend back over time. B ecause we have this unique relationship with VIDAA and the programmatic home screen opportunity, it gives us a lever to get a lot of that spend back, and it's something that we're excited about for 2026 and beyond.
All right. We will keep an eye on that. T hen, Billy, while I have you here, let's talk about some of the key investment areas to position the company well for 2026 and beyond. Obviously, some of the AI-enabled product is something that I think you're leaning into, the data assets, the VIDAA relationship. I f you had to kind of stack rank, what are some of the most important things that you're putting investment behind? How would you characterize that?
Yeah. So as Chance mentioned, I think AI is going to be a big one. One of the things that's beneficial about our platform is the interconnectivity of it. So having a DSP, having a data platform, having an SSP, creative solutions, ad server, AI can make all of that a lot more powerful, especially within the data platform because when you think about it, AI is only as powerful as the data signals it sits on. So because we have this robust data platform fueled by significant first-party data, a lot of third-party vendor relationships, it gives us a big edge in AI where we can use AI and invest in it not only to make the user interface better, but to also make performance better, which is ultimately how you win in this industry.
With regards to investment in AI, again, we believe not only can it help differentiate our platform further to drive top-line growth, but as Chance mentioned, the internal efficiency gains that we're seeing, when you think about it from sort of a go-forward hiring standpoint, it's very likely that we wouldn't have to hire as much because the AI is doing a lot of the things that humans would have done in the past. So that can obviously benefit margins in perhaps 2026, but certainly over time.
W ith the savings that we can achieve on the product side, it allows us to invest a lot more strategically in high-level sales, our data teams, our commercial, our media teams to really capitalize on the opportunity that we not only have with VIDAA, but really across the board for our company. AI, of course, is going to be a big focus of investment for ours. The other thing, as you mentioned too, is VIDAA. We just upped our investment in VIDAA. We announced it recently by $35 million. We deployed $20 million of it in Q3, and the remaining $15 million will be in Q3 2026.
Got it. Got it. T hen maybe kind of continuing that theme, maybe on capital allocation. So Nexxen had been an acquisitive company. Paused that after the Amobee deal. S ince you've leaned into share repurchases, you bought back nearly or actually over a third of the company now. You've made some comments about potentially returning to the M&A market. So what types of solutions would you be interested in? How do you feel about valuations in the space right now, and how do you balance that versus your ongoing buybacks?
Yeah. So let's talk about capital allocation generally. Obviously, we're thinking we could spend cash in a few positive ways. So for one, we're coming up on the end of our $20 million repurchase program. We announced last month our intention to launch a new $40 million program. So look out for that sometime later this month. Hopefully, we'll get the authorization for it to be able to launch it. When you look at our comparative multiples against many of the other players in the space, like we're trading at around three times EBITDA. You have companies in the space trading at six times, high single digits, low double digits, mid-teens. S ome of those companies, compared to us, are actually not even growing.
So when I think about the opportunity to buy our stock back at this level of multiple with the growth levers that we have in 2026, it's a really compelling use of cash for us. So I would say that buybacks would definitely continue to be a priority. The other thing that I mentioned, of course, on capital allocation is the $15 million that we'll do on VIDAA in Q3. T hen in the M&A landscape, our core platform has the major components that we need to win in market now. We have a very strong enterprise self-service DSP, the data platform, the SSP, creative solution, ad server. So when I think about what we truly need from a core product perspective, a lot of the baseline is already set. W hen you think about the evolving trends in the industry, let's focus more on LLM-driven or AI-driven traffic shifts.
What we think internally at Nexxen is that can possibly be an accelerant to advertising and CTV. A lso another area that we're really interested in is mobile in-app partnerships or potential acquisition opportunities. Those tend to be insulated a little bit more from those LLM-driven traffic shifts. CTV is something that we have a very strong footprint in. P erhaps when I think about going forward on the M&A front, a potential mobile in-app partnership or acquisition or mobile in-app SDK acquisition could be something that would be interesting to kind of further future-proof our business going forward.
Very interesting. We'll keep an eye out, and so in our last minute or two here, I always ask, what is the one thing you're most excited about in the Nexxen story for 2026? Since we have two people here, I'll give you one each, but you've got about 30 seconds apiece.
The single biggest thing for me is the VIDAA relationship, right? We have exclusivity there. We're one of the very few companies in the world that have exclusive access to premium CTV, premium home screen units at scale across multiple OEMs and data platform and a DSP and an SSP. T hat combination is really powerful. So I'm very excited for that. We've had the data piece. Starting in January, we have full access to the inventory piece. I think it is just the unlock we needed to accelerate the business in 2026.
I would actually echo what Chance said. For me personally, VIDAA is the most exciting. S elfishly, for my role specifically, the opportunity to go out and engage with investors, while obviously our latest set of results pushed the stock down a little bit, it's created a strong buying opportunity over time for investors. So for me to be able to go out and engage with investors at an EV/EBITDA at three times versus some of the higher EV/EBITDA multiples in the industry with some of the growth opportunities that we have in 2026, the fact that we're very strong fundamentally, we buy back a ton of stock, it's all a recipe for investors to potentially get involved at these levels. O ver time, assuming that everything plays out the way that we expect it to, make some money on the investment.
We'll be keeping our finger on the pulse. I want to thank you guys for joining us, Chance Johnson, Chief Commercial Officer, and Billy Eckert, Head of IR at Nexxen. Thank you.
Thanks, Andrew.
All right.