NEXN

Welcome to Nexxen's Q2 earnings call. At this time, participants are in a listen-only mode with a question-and-answer session to follow at the end of the presentation. This call is being recorded and a replay will be made available on Nexxen's investor relations website. I will now hand the call over to Billy Eckert, Vice President of Investor Relations, for introductions and the reading of the safe harbor statement. Billy, please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Nexxen's Q2 earnings call. During today's call, we will discuss our financial and operating results for the three and six months ended June 30th, 2026, as well as our forward-looking guidance. With us on today's call are Ofer Druker, Nexxen's Chief Executive Officer, and Sagi Niri, the company's Chief Financial Officer. This morning, we issued a press release which you can access on our IR website at investors.nexxen.com. During today's call, we will make forward-looking statements. All statements other than statements of historical fact may be deemed forward-looking. We advise caution in relying on them. These statements include, without limitation, statements and projections regarding our anticipated future financial and operating performance, market opportunity, growth prospects, strategy, and financial outlook.

They also include, without limitation, statements regarding our partnerships and anticipated benefits related to those partnerships, as well as expected benefits from our growth initiatives and platform investments. In addition, we may provide forward-looking views on macroeconomic and industry conditions and other statements regarding the expected development, performance, market share, or competitive position of our products and 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 statements. These include, among other things, unexpected changes in our business or 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 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. Additionally, the company's press release and management statements during this call will include discussions of certain measures and financial information in IFRS and non-IFRS terms. We refer you to the company's press release for additional details, including definitions of non-IFRS items and reconciliations of IFRS to non-IFRS results. At this time, it is my pleasure to introduce Ofer Druker, CEO of Nexxen. Ofer, please go ahead.

Thanks, Billy. Q2 was another strong quarter as we delivered record results well ahead of consensus estimates, highlighted by our best CTV revenue quarter in company history. Our outperformance enabled us to raise our full-year contribution ex-TAC and programmatic revenue guidance for the third time this year and reflects continued execution against our long-term strategy. The investment we have made across the major elements of our platform, alongside our enhanced AI capabilities and tighter, sharper go-to-market approach, are improving execution. These investments are translating into stronger adoption, accelerating spend ramp, and growing platform usage by clients and partners. We have continued to onboard a growing number of enterprise customers, and as they scale spend and adopt more solutions, we believe they will support our growth in the H2 and over the coming years.

We are also strengthening our CTV leadership through our growing strategic commercial initiatives and innovations like Nexxen TV Home Screen. At the same time, we have continued to expand in AI-resilient channels such as mobile in-app, reinforcing several long-term growth drivers. As AI reshapes programmatic advertising, we believe differentiation will be driven not simply by AI capabilities, but by the strength of the integrated platform on which those capabilities are built and the core platform elements that power them, including proprietary data, exclusive media assets, and open interoperable technology. Those are areas where Nexxen has built a durable competitive advantage through both our differentiated products and integrated end-to-end platform strategy, enabling us to innovate across the programmatic value chain. While many view AI as mainly efficiency tool, we are using AI primarily to drive growth by delivering stronger outcomes and expanding the benefits customers can realize from our platform.

We strongly believe that nexAI can represent a meaningful long-term strategic growth engine for Nexxen, not just a productivity enhancer. Over the last several quarters, we have made significant strides in our enterprise go-to-market execution while enhancing our DSPs' full-funnel performance, usability, and integration with nexAI. The investments we have made are helping us attract enterprise customers with large, more recurring budgets and fueling deeper platform-wide engagement. In Q2, we announced our new DSP UI and enhanced nexAI DSP assistance, both of which are seeing growing usage across our enterprise customer base while improving performance and efficiency. Customers are also benefiting from our DSP's tighter integration with Nexxen Discovery, our proprietary audience insights and segmentation solution. This deeper integration is helping customers identify and activate new audiences using differentiated insights to expand, reach, and drive stronger outcomes.

We also significantly enhance our first-party data onboarding capabilities, enabling advertisers to move audiences from uploads to activation within 24 hours. Alongside our enhanced unified identity graph, these innovations simplify activation, strengthen intelligence, improve effectiveness, and accelerate campaign execution. Built upon our DSP's direct integration with Nexxen Discovery, our proprietary data assets, and our SSP premium media supply, these enhancements are strengthening an already differentiated enterprise value proposition. They are delivering even stronger results and driving customer adoption across more of our end-to-end solutions. For example, after initially onboarding as a DSP customer, Toyota expanded to leverage our data capabilities, Nexxen Discovery, and our media supply, generating approximately 2.7x the return on ad spend and a 62% reduction in cost per vehicle sold. Supported by growing adoption and innovation, enterprise spend increased by over 25% year-over-year in Q2, and our pipeline remains strong.

Additionally, the number of advertisers activated through enterprise customers increased from less than 400 in Q2 2025 to over 750 in Q2 2026, with each leveraging more than one solution across our platform. Our CTV momentum continued in Q2 as we deliver CTV revenue growth of 33% year-over-year, with year-over-year momentum carrying into Q3. Growth was broad-based as customers continued to increase spend across our integrated CTV technology solutions, exclusive TV data assets, and premium media. As enterprise customers continue scaling spend and new publishers on board, we believe we are well positioned to extend our CTV revenue footprint over the long term. Momentum behind Nexxen TV Home Screen, our industry-first programmatic smart TV home screen ad activation solution, also continues to build.

We expect Nexxen TV Home Screen to begin contributing more meaningfully to revenues in Q4, with contribution ramping throughout 2027, supported by a strong pipeline across demand and OEM partners. Looking ahead, we are also continuing to expand our performance-based CTV capabilities, which we believe can further support our long-term CTV revenue growth opportunity. Beyond CTV, we are also continuing to benefit from execution against our mobile in-app strategy, which helped drive significant year-over-year mobile revenue growth in Q2, with year-over-year momentum continuing into Q3. Our SDK integration with Unity and others have strengthened our position in this AI-resilient channel, expanding monetization opportunities across our platform. We continue to believe mobile in-app will remain a durable long-term growth driver. Beyond improving our platform today, we are also positioning Nexxen for the next evolution of programmatic advertising, where AI agents increasingly help advertisers and agencies plan and execute campaigns.

We believe nexAI represents a core differentiator built on the advantages of our end-to-end platform, proprietary data, premium media assets, and audience intelligence. Today, nexAI is already helping drive stronger customer outcomes, accelerating adoption, and beginning to contribute to revenue growth, and we believe its value will continue to expand over time. Our initial focus with nexAI has been on expanding its in-platform agentic capabilities across the campaign lifecycle. We already have agents assisting customers with reporting, audience research, QA, and troubleshooting, and we plan to introduce additional agents supporting media planning, audience creation, optimization, and advanced creative automation soon. As these capabilities continue to mature, we believe they will further support growing enterprise and publishers' engagements. During Q2, we also announced nexAI interoperability, which will enable our AI agents to connect with external AI agents through open standards such as MCP and agent-to-agent interoperability.

This will allow advertisers and agencies to access Nexxen's data, audience intelligence, and activation capabilities directly from the AI tools and environments they already use. We believe interoperability will become more and more important as enterprises build out their own AI ecosystems. Our strategy is to ensure that whether campaigns are run on Nexxen or through our customers' own AI assistants, we remain a trusted source of data intelligence and campaign execution across those workflows, as well as an integral part of our partners' AI infrastructure. Additionally, we are continuing to expand our dedicated AI teams to increase our focus on accelerating product innovation. Today, AI supports approximately 95% of our software development efforts, enabling our teams to deliver new capabilities faster while enhancing efficiency and supporting long-term operating leverage. We expect these benefits to continue scaling into late 2026 and beyond.

In closing, we are continuing to execute against our strategy while investing in the priorities we believe matter most: accelerating enterprise adoption, growing our CTV leadership, deepening our mobile in-app footprint, enhancing our data capabilities, and advancing our AI leadership through expanded nexAI products and solutions. Together, we believe these investments are strengthening our competitive position while creating several durable long-term growth drivers. in H2, we expect to continue executing strongly and to also generate incremental revenues around the U.S. midterm elections, which are expected to represent a strong political advertising cycle. To support our next phase of growth, we have also made important enhancements to our leadership team. Chance Johnson, our former Chief Commercial Officer, has been promoted to President of Nexxen.

Chance will focus on strengthening Nexxen's relationship with strategic clients and partners by better demonstrating how the company's connected, robust, and differentiated full platform capabilities can uniquely position them for success in the market. Kara Puccinelli, formerly our Chief Customer Officer, has assumed the role of Chief Commercial Officer and will continue managing the company's enterprise offering. Finally, Ken Suh, formerly Nexxen's Chief Strategy Officer, has assumed the role of Chief Business Officer, continuing to position the company to capitalize on growth opportunities across its exchange business, particularly within mobile, in-app, and CTV.

Chance, Kara, and Ken's leadership role strengthen our commercial organization, unify execution, and position us to accelerate growth across our core drivers, including enterprise, CTV, and mobile. I have the utmost confidence in each of them. As CEO, I will continue focusing on Nexxen's short-term execution and long-term strategy while supporting our leadership team as we execute against that strategy. With that, I will turn the call to Sagi.

Thank you, Ofer. Our momentum from Q1 extended into Q2, as we once again generated record results that exceeded Wall Street consensus, fueled by continued disciplined execution across our core programmatic growth drivers. In Q2, we delivered contribution ex-TAC of $97.8 million and Q2 record reflecting an 11% year-over-year increase. Programmatic revenue was $95.2 million, up 12% year-over-year, also representing a Q2 record. Our outperformance in the quarter was driven by strength within CTV, mobile data products, and displays supported by growth across our entertainment, automotive, and health verticals. In contrast, contribution ex-TAC from desktop and our non-programmatic business lines declined year-over-year, and we observed softness within our travel vertical. During Q2, we initiated a strategic wind down of our non-programmatic influencer marketing business, Rhythm Influence.

The wind down resulted in restructuring expenses in the quarter, but we do not expect it to have a material impact on contribution ex-TAC or Adjusted EBITDA in H2. We are continuing to evaluate strategic options for our remaining non-programmatic business line to further improve our business mix and sharpen our programmatic focus. Growth in the quarter was highlighted by CTV as we delivered all-time record quarterly CTV revenue of $37.8 million, up 33% year-over-year. That year-over-year momentum has continued to this point in Q3. CTV revenue growth was broad-based across our platform and not concentrated in any one particular area of the business. Mobile revenue increased 23% year-over-year in Q2, driven by execution against our mobile in-app strategy, and that year-over-year strength has also continued into Q3. Contribution ex-TAC from data products, CMPs, and display increased 46%, 23% and 18% year-over-year respectively, while desktop revenue declined by 13%.

Adjusted EBITDA for Q2 came in ahead of Wall Street consensus at $27.6 million, representing a 28% margin as a percentage of contribution ex-TAC. The year-over-year change in Adjusted EBITDA primarily reflects increased investment across AI, data infrastructure, go-to-market execution and platform capabilities to support the company's long-term growth opportunities. We remain confident in our ability to expand margins over time through execution against our end-to-end enterprise strategy, nexAI-driven operational efficiencies, and disciplined cost management. In Q2, we generated $61.3 million of operating cash flow compared to $17.4 million in Q2 2025. Our cash and cash equivalents increased significantly quarter-over-quarter to $132 million as of June 30th, reflecting strong operating performance as well as the collection of receivables outstanding at the end of Q1. We continue to maintain a debt-free balance sheet with an additional $50 million of available capacity under our revolving credits facility.

Non-IFRS diluted earnings per share was $0.23 in Q2 compared to $0.29 in Q2 2025. On capital allocation, we did not repurchase any shares during Q2. We prioritize maintaining financial flexibility while evaluating disciplined M&A opportunities alongside opportunities to deploy capital across our long-term strategic priorities, including continuing investment in AI, data, platform capabilities, and go-to-market execution. Nexxen has authorization to initiate a new repurchase program of up to $40 million. We also expect to complete our additional $50 million investment in VIDAA during Q3, bringing our total investment to $60 million and our equity ownership stake to approximately 6%. Additionally, we are continuing to evaluate disciplined strategic opportunities that can further strengthen our mobile in-app, CTV data, and AI capabilities and accelerate long-term programmatic revenue growth. Turning to our outlook, we are raising our full-year 2026 contribution ex-TAC and programmatic revenue guidance last provided on June 16th.

We now expect contribution ex-TAC in the range of $388 million-$402 million, up from our previous guidance of $385 million-$400 million, representing approximately 12% year-over-year growth at the midpoint. Programmatic revenue is now expected in the range of $380 million-$393 million, up from our previous guidance of $377 million-$391 million, representing approximately 13% year-over-year growth at the midpoint. This reflects our first top-line guidance raise this year. Since issuing initial full-year guidance in March, we've increased the midpoint of our contribution ex-TAC growth estimate from approximately 8% to approximately 12%, and the midpoint of our programmatic revenue growth estimate from approximately 10% to approximately 13%. We are reaffirming our full-year 2026 Adjusted EBITDA guidance, which we continue to expect in the range of $122 million-$132 million, representing approximately 10% year-over-year growth and a 32% margin on a contribution ex-TAC basis at the midpoint.

Our reaffirmed Adjusted EBITDA guidance primarily reflects our expectation to continue investing across our strategic growth initiatives and platform capabilities in H2. Our outperformance in Q2 alongside continued momentum into Q3 and increased visibility into the remainder of the year enable us to increase our contribution ex-TAC and programmatic revenue guidance. We are seeing continued year-over-year momentum across our core drivers to this point in Q3 and believe growth in the back half will be driven by accelerating enterprise customer engagement, growing end-to-end utilization, and continued strength within CTV, mobile, and data products. We continue to believe Nexxen TV Home Screen will further support our long-term end-to-end CTV revenue opportunity, with initial meaningful contribution expected in Q4 and increasing throughout 2027 and beyond. Additionally, we expect incremental contribution ex-TAC benefits in H2 around the U.S. midterm election cycle.

To support our growth drivers, we will continue investing in AI, data, infrastructure, go-to-market execution, and our CTV and mobile in-app capabilities to enhance performance, capitalize on the revenue opportunities ahead, and extend long-term operating leverage. In summary, we believe Nexxen is well-positioned not only for the H2, but also for leadership in the next generation of programmatic advertising, supported by our strong financial position, improving business mix, and accelerating growth profile. We are continuing to execute while building upon the advantages of our end-to-end platform and doubling down on our most compelling growth opportunities across enterprise, CTV, mobile in-app, data, and AI.

Through disciplined execution and continued investment across our platform and highest priority growth engine, we believe Nexxen is poised to deliver sustainable, profitable growth while creating long-term value for both customers and shareholders. As always, we thank our shareholders, employees, and partners for their support. Operator, we will now take questions.

At this time, if you would like to ask a question, press star, followed by the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from Jason Kreyer with Craig-Hallum.

Thank you, guys. Pretty impressive growth in Connected TV, particularly taking into consideration the turnaround that you guys have orchestrated there over the last couple of quarters. Can you just talk about what has driven that turnaround or the primary growth drivers in Connected TV, and then what is your view of the durability of those growth rates?

Thank you, Jason. It's Ofer. I agree. I think that we see growth across all elements of our company, but it's really meaningful to see the growth over the CTV year-over-year. It's coming from a few things that we've done lately, but most of that is better execution in generally speaking, meaning bringing more sales, more demand sources into the mix. We spoke about the growth of our enterprise solution, and we are incentivizing our clients that are using our enterprise solution to buy on our properties of the CTV. So we see growth also from that direction coming in. Lately, we also issue new initiatives around data and the native CTV ads that we on-screen, that we basically launch programmatically, that's bringing a lot of interest.

It's still not kicking in in revenue, but it's bringing interest and people are more open to work with us and starting to move spend to our direction. On the other side, I think that our immediate team is doing a great job managing the relationship with our partners on the CTV front, bringing new clients and new partners into the mix. All of that together, we see growth coming in. When you look at the numbers, not just percentage, we see that it's massive and it's growing. Of course, it's super important, and we'll keep emphasizing that.

Thanks, Ofer. I've got a follow-up for Sagi. I just wanted to ask about operating expenses on the outlook there. We've seen accelerating growth over the last couple of quarters that's been paired with just a little bit of contraction on EBITDA margins. I know you've made some investments there, but can you just talk about the outlook for OpEx and thus the outlook for EBITDA margin expansion in the coming quarters?

Sure, Jason. Thanks. I think that what we are seeing is intentional strategic growth investment. As Ofer mentioned, it is all around. It is around AI, data, infrastructure, platform capabilities, enterprise go-to market, strategic partnerships and other. Of course, it is affecting our cost structure in 2026. I think that on the long term, EBITDA objective, it is still unchanged. As we disclosed it in our analyst day a couple of months ago, it is still on the long term, we are aiming to get to the 40%. In 2026, our guidance is reflecting 32% on adjusted EBITDA margin, which is a little bit, 1% less than what we had in 2025. I think that we are seeing that the intentional investment is fruitful, and we are doing right, and we are taking the more market share.

Going into 2027, although it is a little bit initial, we are seeing that some efficiencies that we already put in place in the last couple of months and ahead of us and reflecting 2026, not materially and to some extent, is going to be much more material in 2027. We feel that we can reach 34% EBITDA margin already in 2027. So I think it is like a transformational year around investment in our cost structure, but it soon will show the right fruit and scale the expansion of our margin.

All right. Got it. Thank you.

Allow me just to say one more sentence, Jason. I think that the investment is shown in the growth. We are growing a midpoint for the full-year according to our basically guidance, around 13% year-over-year, which is, in our eyes, it is a very good event. Of course, the growth that you just mentioned on CTV and the growth that we are reporting on in mobile in-app, all of that is coming also from investment. Together with AI, that we put a lot of resources and attention to that, but we can discuss it. It is bringing a lot of fruits already, and we believe that it will be the foundation of the company in the next couple of years. Thank you.

Your next question is from Matt Swanson with RBC Capital Markets.

Hey, guys. This is Simran on for Matt Swanson. Congrats on the quarter. For my first question, you framed nexAI as a growth engine and not just a productivity enhancer. Can you walk through the specific mechanism of how AI will help drive incremental revenue today versus improving internal efficiency?

Of course. In general, of course, AI, for a long time until now, in the last 18 or so months, brought mostly efficiency. But lately, we integrated very deeply into our product, and we see that basically it's creating two things. First of all, when people are testing our platform, basically, together with AI, they are getting much better outcome from their campaigns that they are running with us. It's not just in efficiency, but also in general outcomes that they are basically running. It's basically driving them to move more of their budget to us. Most of the companies in our industry are not working with one provider. They are working with a few.

But if someone of these providers is generating better results, of course, they will shift their budget from other providers to this provider, which is, in this case, us, because of the results that we are driving, and we see growth that is coming from better performance of our platforms, thanks to AI. The second thing is basically when people are pitching our technology and product and platform to new clients, and they are showing the importance not just of an efficiency, which is there also of course, but also of the outcomes that they can generate. It's helping us to onboard more clients on our platform and getting them to run, as I mentioned, more budget with us, which is basically generating growth. I think that also the AI is open to us, better monetization of our own platform.

In general, we believe that the power of AI or nexAI is not coming just from the AI, but also of the fundamental platform that is based on and working with and integrated in. We feel that we have a very big advantage because we are end-to-end, and it's driving better results for the people and the clients that are basically utilizing our platform together with AI tools.

Okay, got it. That's helpful. In the quarter, it looks like enterprise spend was growing nicely, and you have customers using more than one solution. Is that primarily driven by go-to-market execution, or is it more of the newer products that are resonating with customers? Just more broadly, what's been working well that's been helping drive this adoption?

I think that it's starting with better go-to market that we implemented in the last 12 months or so. It comes with great talent and better training to the people that we got. They learn how to basically package it and present it better, that people will understand the value of the full platform that we can offer, as we indicated with the results that we already mentioned in my script. In general, I think that this is one, the go-to market. The second thing is, basically as I mentioned before, people are running on a few platforms, and when they see that one of the platforms is delivering to them better results, they are shifting more and more spend.

In this case, we see agencies or clients moving more lines of business to us, and agencies moving more products, more of their customers to run on our platform because of the results, and also, I'm sure because of the efficiency. Altogether, we see growth in the number of customers that we are running on our enterprise solution, which is, of course, encouraging. As we indicated in the call, this is the foundation of our growth in the future. So it's super important that people will learn, understand what is the value, get better outcomes, and shift budget to us in order to grow their business. We are making everything that we can, of course, in order to deliver to them the best outcomes in the condition and the efficiency that they need in order to run their business.

Great. Thanks, guys. Congrats again.

Thank you.

Your next question comes from Andrew Marok with Raymond James.

Hi. Thanks for taking my questions. Maybe first, this was the Q1 in quite a while where you haven't bought back shares. So maybe two questions on that. First, what were some of the specific signals you're seeing out of your product efforts so far that's giving you the confidence that internal reinvestment is the right move? And then second, what types of M&A opportunities are raising your interest right now as you cited in your prepared remarks?

Okay. Thank you for your question. I think that it's a combination of a few things what you just said. First of all, self-investment doesn't show sometimes a risk. It's showing an opportunity, meaning we believe and we show, we basically demonstrated that the extra investment that we made in the past 12 months in our own business basically generated for us better results as we indicated the growth of year-over-year according to our guidance of 13% on the programmatic level, which is, for us, it's considered meaningful and good results. We see that when we are investing back in our business and grow our operation, we are driving better growth to the company, which is a good signal. The second thing about buyback, we acquired in the last few years about 40% of our company share. We invested about $250 million.

We believe that we are not removing this tool from the table, and we feel that we need to look at it and examine this opportunity again, how we can basically utilize it. Side by side with that, in parallel to that, we are looking also at opportunities to make acquisition that will not be massive, will not create a disruption to the business that we are running now, but can touch points and increase the capabilities in certain areas, in the areas of growth.

Meaning some of them around CTV, some of them around in-app mobile, and of course, AI, that can basically provide us additional advantages in this field. We have the cash. We have no debt. We are generating cash. We are looking at all the opportunities and all the tools, the variety of tools that we have in front of us. Meaning acquisition, as I mentioned right now, continuing buyback, and of course, keep investing in ourselves, which is already delivering very good results.

Great. Thank you. If I can maybe sneak in one more. We've heard the automotive vertical as being a drag for some of your peers, and that vertical just kind of being generally soft on an industry basis. In your remarks, you cited it as a growth vertical. You had a case study there in your remarks as well. So I guess what were some of the reasons why you're able to beat the general industry trend of softness there? Thank you.

Of course. I think that all the industry, and especially car industry also, they know what they are looking for. There are very good KPIs that they are trying to achieve when they are running their campaigns and budgets. I think that we are able to serve them well. I think that, again, when you are talking an overall slowdown, we are still a part of this industry, and we are able to satisfy some of the needs, and we are growing the interaction and success with these providers. I think that it is probably what people are reporting about is more about a general macroeconomics or taxation that was happening at the beginning of the year, and basically slowed down some of this.

As I mentioned in our case studies, we generate great success with these clients, and we are working hard in order to bring more clients to our platform in order to utilize the success and the platform that we created here that can drive them amazing results, efficiency, and save resources when they are basically trying to get new clients.

Great. Thank you.

Thank you.

Your next question is from Laura Martin with Needham & Company.

Good morning. This is Dan calling, talking for Laura. CTV revenue hit an all-time record, and it is representing 40% of programmatic revenue. I am curious as to how much of this acceleration is driven by native home screen ad units and the ACR data integration through the VIDAA partnership versus core stream inventory. As a follow-up to that, what does the pricing CPM environment look like heading into the H2 of 2026? Thanks, and congratulations.

Of course. Thank you, Dan. When we are looking at our CTV, the good news is this growth is without most of the elements that you just indicated, meaning it is still. I strongly believe, we strongly believe in what we built here about the CTV on screen because of a few reasons, and I will elaborate to the people that may be less aware of that. There are hundreds of millions of TV, CTV sets in the world. They are already showing ads on their platform when you are launching the TV, but until now, it was not programmatic. We were the first to basically enable these OEMs to run programmatic advertising on the screens, and we are working very hard with VIDAA, with others in order to basically provide them this capability in order to run programmatically on their TV screen.

Since there are hundreds of millions of TVs outside, the volume of the media is huge. This is a very unique media because it is encouraging engagement. It is getting a lot of attention when the user is launching his TV because you are there, you are in front of him, and if you are putting the right ad at the right time, there is a very good chance that the outcome will be good. First result that we show already shows very good traction to that, but it is still early in our revenue. It is not contributing this growth. This growth is coming from business initiative growth in our business, as I mentioned before. I feel that the next wave of growth will come from a few things. First of all is the native ads.

The second thing is the increased activity on business initiatives that we are doing now around so many projects and things that we are working with our clients and partners in order to drive. The third element is also the data. For the last few years, we are carrying the flag of data because we put it in front of the advertisers its importance in order to create audiences, build segmentation, measure the results, and so on. We feel that now it's becoming more and more evident to all the industry that it's super important, including to our clients, and it's driving more spend coming to our platform overall, not just to VIDAA, but across the board. What we see is that the way that we are basically utilizing the data on our platform is helping us to generate better results.

People are, again, like to spend where it's working for them, so they're moving the spend to us. I feel that while we show great results in Q2, it's still without this initiative of Nexxen TV Home Screen, that is going to kick in mostly in Q4, but mainly in 2027 and forward. The rest of the initiatives that we see are supporting the growing and generating better outcome also at the CTV front, and we are getting a lot of interest from advertisers, agencies, publishers in order to increase the work around our CTV activity because it's working very well for them and, of course, for us.

Great. Thank you.

Thank you.

Your next question is from Tyler DiMatteo with BTIG.

Great. Morning. Thank you for taking the question. Ofer, a quick question on the CTV industry today and some of the dynamics. I guess I'm curious to hear your take on the competitive dynamics in CTV and maybe what you guys are seeing when you're going to market and winning customers, and just what that looks like and maybe how that's changed. Then secondarily, broadly speaking, on the programmatic side, I guess what inning do you think that we are in terms of programmatic adoption with a lot of the customers that you're speaking to, and just broadly, some of the newer customer wins that you're having.

Thank you for the question, first of all, Tyler. From the CTV, of course, the CTV is becoming the center stage together, and it's connected and getting more closer and more connected also to mobile in-app. That's why we invested also in this field, because we learned that, and both of them are. Again, sorry for jumping back, but it's like these two elements for us, is bringing a lot of capability to utilize data that we got and we are harvesting in order to basically better target, better create audiences with our clients, and generate results from these two platforms, which are super important for us and represent the big majority of our revenue today.

I think the CTV players, CTV companies, are looking to increase their revenues in a way that is unique, that they will be able to maintain or grow their CPM levels, thanks to utilizing data layers on top of their media and making it smarter for the clients to buy. When we are talking about the native ads that I mentioned before with the major OEMs, when we look at them, of course, they have huge amount of media, huge amount of user base that they can better monetize with programmatic activity. We are hoping, and we are doing our best, and we are, as I mentioned, we are the first to launch this product, and it's already active. Still not in major volumes that is influencing our numbers, but it's working.

All these elements, I think, show that OEMs are open to generate more revenue channels from their properties, from their investment that they made, and they are open, of course, to this programmatic sales. When we are looking at the market going forward, I think that it will just evolve. I think that CTV is becoming, again, more and more central point for people to target, to try and get for advertisers to get the attention of their user base or potential user base, and also to generate outcomes as we see. This is also why it's important to utilize the data in order to generate measurement and to show and to demonstrate to the clients that basically their efforts are bringing fruits, or how to improve their campaigns in order to generate fruits.

I think that it's maturity, it's growth, and it's a main interest of this industry that it will grow. We see the big mobile in-app providers and advertisers are now looking also on the CTV in order to utilize this media in order to generate and increase their reach and get more results from their campaigns. So in general, I think that the CTV, when I'm looking at that, is moving ahead with maturity, with technology, with generating not just eyeballs but also results. This is very encouraging, of course.

Thanks for that, Ofer. Appreciate it.

Thank you.

Your next question is from Barton Crockett with Rosenblatt.

Okay, thanks for taking the question. I guess, a couple of things. One is, could you talk through in a little bit more detail how you were able to raise your contribution ex-TAC outlook but not raise the EBITDA? What is it that you're spending more on than you anticipated before you saw this revenue come in? That would be the first question.

Okay. As we mentioned, of course, in most cases, you need first to invest in order to grow your business. Apart from that, and Sagi maybe can elaborate more, the ratio between the dollar and the new shekel, where we have about 25% of our employees, is hurting us also from a profitability point of view. Again, we believe that in order to generate growth, you need to invest. We invested, I think, and the good news is that we didn't just invest, but we also saw that we are generating growth together with that, in parallel to that, which is a very good sign. We see that the growth is coming in areas that we wanted that to grow, like CTV, in-app mobile.

Contribution ex-TAC, when it's growing by 30% year-over-year on, as I mentioned, on a yearly basis, according to our guidance, it's very promising. We have some factors that are hurting us, like the ratio between the dollar and the shekel, that Sagi can provide a little bit more color. This is, of course, things that we cannot control. We can adjust some of our activity in order to deal with it, but we cannot control that. In general, I feel that this investment is the right thing in order to grow the business, to take market share. In parallel to that, we are working in order to optimize our operation in order to get to a point that the growth will basically compensate on the EBITDA side.

Okay.

Sagi, can you give a little bit more colors about the FX?

Sure. Yes. I think on top of what Ofer just mentioned, around 20% of our employees are in Israel, outside of the U.S., and because of the FX headwind fluctuation, we got hit from our infrastructure around end count mainly of around, let's say, on a half-year basis, it's somewhere around $2.5 million that we are, cost us more without really changing anything.

Okay, so that's the bulk of the delta there. All right. The second thing that I was curious about is you guys continue to talk about having opportunities for M&A, saving some capacity for that. You've been saying that for some time. I was wondering if you could give us an update on to what degree are you actually engaged in discussions around M&A, or is this still just a general look-see as opposed to discussion, and your appetite to kind of add debt to support acquisitions, given that you're now debt-free, but presumably have some capacity?

I didn't understand the last sentence, what you meant by that. Can you clarify?

You're talking about interest in acquisitions. Are you actually in discussions-

Yeah.

With entities, or is this just a general thought, maybe we could do something, without anything specific happening?

Okay. I got it now. Thank you. What we did until now, we basically sourced, first of all, the areas that we feel that we can use, as I mentioned, not a major acquisition, but an acquisition that can add to us capabilities and enhance our capabilities for the future, mainly around a product that is related to the activities that we want to build. We basically source the places or the areas that we want to make this investment. We made already some shortlist of companies that can be a potential target for this acquisition. I believe that in the next six to nine months, we will make a move on that.

It's not happening overnight, and we feel that this is the right time, which is about four years after we made the last acquisition of Amobee, and the integration and the consolidation, and then the rebranding took a lot of our attention. Now we are in a very good position with execution and results, and we do not want to make an acquisition that will create a disruption. We are looking at an acquisition that will mainly touch locally some of our business units and will enable us to increase our capabilities. We will be able to share more in the next six to nine months, I guess. I estimate.

Your next question is from Brianna Diaz with Citizens.

Great. Thanks so much for taking my question. Just on Nexxen TV Home Screen, you highlighted Nexxen TV Home Screen as a meaningful contributor beginning in Q4 with an acceleration through 2027. Can you just talk about the size of this opportunity and the visibility you have into this, or early demand that gives you confidence in that outlook?

Of course. Thank you, Brianna, for this question. We are working here in both ways. First of all, we prove the capability to run what we wanted to do. Basically, to run different formats programmatically on the home screen with everything that is attached to that, like targeting, measurement, of course, counting, and all that. We already start running campaigns with leading companies globally that are happy with the results that they are generating on this format that we are running. We basically engage with the big DSP. Like you saw, they gave it that we signed with The Trade Desk, but we are also in engagement with other companies like we already notify, and we are working with them on integration. We need to understand that the technical integration, while it's taking time, it's the first move.

Then the teams need to educate their clients about what this media can bring to them, why they should utilize it, what is the importance of that, and all of that is, of course, taking time. Then we are talking about also of our clients, that we are educating them about the benefit of running this type of ads on this type of media. It is a process. It is not overnight. From the other side, we are talking to other OEMs, not just VIDAA and the names that we mentioned, but also other companies in order to show them how they can basically utilize this. We are getting good response on that. But again, it is like every integration, and it takes time for them to basically integrate it into their systems.

Even when we have cases that it is ready and it is working, it will take time to move budgets, major budget into this mix because of all the points that I said about the demand side. So we believe that in Q4, we see already a pipeline, and we believe that in 2027, it will become more and more mainstream, that people will utilize these capabilities and will direct some of their spend to native ads on CTV, on on-screen, which we believe that we deliver a very good platform for that. It will become meaningful mostly in 2027, during probably the H2 of the year. Because of the size of our activity, it is very meaningful on CTV, of course.

Got it. If I can just squeeze one other question in. Just following up on the prior question, understood FX, but on investments overall, where are the three top areas where you are investing in today? Then as you look ahead in 2027, are those the same three areas or is there a potential for that to shift given a potential acquisition over the next six to nine months?

Okay. We do not think that it will change next year. We are already in August. So we do not think that it is like we will change the focus of where we are investing. We are investing in AI. When we understand that something will become massive and major in this industry, you need to put effort in that. You need to bring talent into that. You need to shift talent into that. That is exactly what we are doing with AI. So we are basically shifting more and more resources into building it, and it is showing rewards, as I mentioned before. I think that we will keep doing that in 2027. Also, in infrastructure, that we are investing in order to increase our capabilities and growth. That is also based, of course, of your capability of bandwidth, QPS and stuff like that we are doing.

It is related also to effort and investment in manpower. The last point is, of course, in the organization itself, to increase the mid-management when it is needed, to increase the efficiency and the ability to move fast when we recognize a good opportunity, and we are investing in these areas. It is not coming in a conjunction to what I said about acquisitions. I think that it is complementary to them. I think that the points that we are invested in this year will also serve us in next year, and we will keep investing in them. We believe, as I mentioned, that the growth of revenues will basically compensate on this transition year, that we are investing more than we usually do in order to generate growth.

Great. Thank you so much.

Thank you.

Your final question is from Nat Schindler with Scotiabank.

Hi, this is Steve on for Nat Schindler. Just one question here. Enterprise engagement, end-to-end platform utilization, and AI adoption were highlighted repeatedly in the press release. My question is, what metrics or milestones should investors watch over the next 12 months to determine whether those initiatives are translating into durable share gains and not simply stronger near-term spending trends? Thank you.

Okay. Hi, Nat. Of course. I think that the investors and analysts should look at the results at the end of the day, overall net revenue growth, which is the purpose of this investment. When we are looking at this, what you mentioned, end-to-end investment is true. We see that when clients are running on our more than one side, meaning more than one of our platforms, not just the DSP, but also using our DMP and connected to our media properties, they are generating much better results. It's growing our revenues. It's building more connectivity and more loyalty with these clients. I feel that the major test is revenue. We are happy that we show and demonstrate that we are able to grow 13% year-over-year on the programmatic level.

That, as I mentioned, we feel that it's meaningful, showing growth, and of course, growth around the CTV, that is very meaningful, 32%, on relatively big number of revenue per quarter. That is showing that we are on the right spot. We need to keep growing, and we need to keep investing in order to generate this type of growth. We believe that, as we mentioned, this year is a transition, and we'll see the additional growth coming in next year. Most of the time, you need, first of all, to build a foundation, invest more in order to generate additional revenues in the near-term future, and not, as you mentioned, long-term and over time.

Great. Thank you.

There are no further questions at this time. I will now turn the call back over to Mr. Druker for any closing remarks.

Thank you. I just want to thank our clients, partners, shareholders, and of course, our employees for a great effort and bringing their talent and their energy in order to drive this great result that we reported today. We really strongly believe in what we created and the future of the company. With the trends that we recognize in the market, we feel that we invested in the right strategy, technology, and product marketing, meaning how we are basically demonstrating it to the market. We are hoping to keep demonstrating like we basically were able to do this quarter and into the near future and the long term. Thank you, everyone, for your support, and thank you again.

Ladies and gentlemen, this concludes today's conference call. Thank you for joining. You may now disconnect.

Thank you.

Welcome to Nexxen's first quarter earnings call. At this time, participants are in a listen-only mode with a question and answer session to follow at the end of the presentation. This call is being recorded, and a replay will be made available on Nexxen's Investor Relations website. I'll now hand the call over to Billy Eckert, Vice President of Investor Relations, for introductions and reading of the safe harbor statement. Billy, please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Nexxen's first quarter earnings call. During today's call, we will discuss our financial and operating results for the three months ended March 31, 2026, as well as our forward-looking guidance. With us on today's call are Ofer Druker, Nexxen's chief executive officer, and Sagi Niri, the company's chief financial officer.

This morning, we issued a press release which you can access on our IR website at investors.nexxen.com. During today's call, we will make forward-looking statements. All statements other than statements of historical fact may be deemed forward-looking. We advise caution in relying on them. These statements include, without limitation, statements and projections regarding our anticipated future financial and operating performance, market opportunity, growth prospects, strategy, and financial outlook.

They also include, without limitation, statements regarding our partnerships and anticipated benefits related to those partnerships, as well as expected benefits from our growth initiatives and platform investments. In addition, we may provide forward-looking views on macroeconomic and industry conditions and other statements regarding the expected development, performance, market share, or competitive position of our products and 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 statements. These include, among other things, unexpected changes in our business or 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 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. Additionally, the company's press release and management statements during this call will include discussions of certain measures and financial information in IFRS and non-IFRS terms. We refer you to the company's press release for additional details, including definitions of non-IFRS items and reconciliations of IFRS to non-IFRS results. At this time, it is my pleasure to introduce Ofer Druker, CEO of Nexxen. Ofer, please go ahead.

Thanks, Billy. We have had a strong start to the year, delivering record Q1 results and continued momentum into Q2, enabling us to raise our full-year guidance, which Sagi will expand upon. In Q2, Contribution ex-TAC, programmatic revenue, and CTV revenue are trending ahead of our expectation following a record April and a strong start to the month of May.

We are happy to report strong execution on the strategy we laid out and on the steps we have taken to support it, including advancing our enterprise go-to-market efforts to reach more clients and partners in the U.S. and globally, continuing to enhance the platform's full funnel performance and usability through integration with our unique data, media, and growing AI capabilities, and extending our CTV leadership through our first-mover advantage in programmatic Smart TV Home Screen advertising, which we expect to support CTV revenue growth.

Expanding our mobile in-app footprint to strengthen long-term growth, durability, and resilience to AI-driven disruption. This execution is translating into measurable results across the business. We have made targeted investment to strengthen and differentiate our DSP, capitalizing on the advantage we have built over the past several years around data, direct connectivity to premium media, and more recently, accelerating AI capabilities and enablement.

Our AI capabilities are becoming more and more important to customer decisions to work with Nexxen and grow their spend and platform utilization over time. In late 2025, we invested in growing our enterprise teams and enhancing our go-to-market strategy through both new hires and internal resource shift, which is paying off through increased enterprise partnerships and Contribution ex-TAC growth. In 2026, we have already onboarded more new enterprise clients than we did in all of 2025.

Based on current expectations, these customers each have the potential to generate more than $1 million of spend annually. Early indicators point to larger budgets, higher recurrence, and deeper engagement, with enterprise spend expected to accelerate in the second half and beyond through increasing full stack adoption, growing wallet share, and new customer additions.

As part of our strategy to more deeply integrate our data into our DSP's activation stack, we enhance connectivity with our discovery tool, enabling proprietary insight to flow directly into activation. Based on internal analysis, the discovery assistant helped customers reduce audience research time by over 40% year-over-year in Q1. Enhancements to our DSP assistant are also improving optimization, QA, and troubleshooting, driving over 90% year-over-year efficiency gains across key workflows.

We are also expanding programmatic access to scaled AI resilient media, unlocking high attention, performance-driven mobile in-app and CTV native on-screen media for advertisers. nexAI, our branded suite of platform-wide AI capabilities and solutions, is at the core of our strategy and is reinforcing our tech stacks value proposition acting as a force multiplier.

We believe we have a structural AI advantage due to our end-to-end model, enabling nexAI to operate across the full campaign life cycle and drive more efficient, higher-performing planning, activation, and optimization. Our AI approach combines data, machine learning, generative AI, and agentic capabilities to deliver speed, performance, and automation across advertisers workflow.

While Nexxen and others are working towards fully autonomous advertising, we are deliberately differentiating with a core focus on transparency and customer control to enhance decision-making and performance. Our goal is to empower buyers, not bypass them.

As trust builds, these systems can take on greater responsibility, progressing from insight to assisted execution to higher level of automation, driving productivity without disrupting how partners operate. We are also aligning with standards such as AdCP and integrating our agentic solution with MCP and broader agent-to-agent workflows, enabling interoperability across AI-driven environments and positioning Nexxen to lead in the new era of programmatic advertising.

As part of this, we are actively contributing to the IAB Agentic Ad Management Protocols, helping shape the standards that will define how agent-based advertising system operate across the ecosystem. In 2026, we will expand nexAI within our SSP to enhance publisher performance and monetization and introduce more autonomous deal creation, negotiation, and management solution for advertiser customers. Internally, our AI capabilities are expected to drive increasing efficiency, faster development timelines, and operating leverage with benefit scaling into late 2026 and beyond.

As mentioned, we are already seeing success with our AI strategy, which has been integral to our winning and retaining clients and partners across the ecosystem. CTV revenue returned to growth in Q1, increasing 12% year-over-year with momentum building into Q2 and a clear path to acceleration in the second half and beyond. Driven by our industry-first programmatic Smart TV on-screen ad activation solution, Nexxen TV Home Screen.

With Nexxen TV Home Screen, we are not just enhancing our CTV differentiation, we are defining and leading a new programmatic category. This offering enable advertisers to access high attention, non-skippable CTV inventory at scale through existing programmatic workflows, unlocking the full potential of a surface where consumers spend over 10 minutes per day on average. Historically, this inventory has been transacted through direct deals and ad servers, limiting scale and efficiency for advertisers while constraining monetization for OEMs.

By bringing this surface into programmatic, we are unlocking a sizable under-monetized opportunity for advertisers and OEMs, and are capitalizing on our first-moving advantage. Our solution is now live across VIDAA-powered devices and leading DSPs and agencies, including The Trade Desk, StackAdapt, Basis, H&L, and others are onboarding and expected to start scaling spend soon.

We are also rapidly growing our home screen reach and monetization potential. We initially launched with programmatic access to over 25 million VIDAA-powered home screens and have since expanded our footprint through partnership with additional OEMs. We secured programmatic access to TCL's native on-screen inventory globally, including exclusivity on select native placement in the U.S. and Canada on TCL Android TV devices. Additionally, we gain programmatic access to TiVo EDGE native on-screen inventory in North America and the U.K.

These partnerships have increased our base by nearly 10 million devices. We expect to expand to more by year-end. We also expanded our partnership with LG and are now testing activating their native on-screen inventory through Nexxen platform, further reinforcing our role in enabling programmatic workflows across this premium and rapidly growing CTV category. Nexxen TV Home Screen represents a clear structural growth driver for our CTV business, one that accelerates our enterprise strategy and expands our end-to-end CTV revenue opportunities.

Our exclusive ACR data from VIDAA also continues to drive licensing momentum, creating incremental high-margin revenue opportunities. In Q1, Adform joined as a partner, expanding a growing roster that includes leading platforms such as The Trade Desk, StackAdapt, and Yahoo DSP, further validating the value and scalability of our data revenue strategy. Our mobile in-app supply expansion is enhancing our growth profile in an AI-resilient channel supported by secular tailwinds.

Mobile revenue increased 18% year-over-year in Q1. We see early signs of acceleration. We have strengthened our position through direct SDK integration with Unity and others, expanding access to scale high-quality supply, driving strong performance, and enabling greater platform-wide monetization. Mobile in-app is becoming critical for advertisers seeking measurable, performance-driven outcomes in high engagement environment with strong identity and signal quality, areas where our platform is advantaged.

We believe mobile in-app will represent a meaningful growth driver while reinforcing our AI resilience, revenue diversification, and enterprise opportunity. In closing, we believe our integrated platform, differentiated CTV and data offering, and AI innovation are establishing Nexxen as an industry leader and must-have partner. As we move into the second half, we see catalysts that can further accelerate our momentum.

The FIFA World Cup and U.S. midterm election cycle represent meaningful incremental revenue opportunities where we are well-positioned to capture spend. For the World Cup, this is driven by Nexxen TV Home Screen, Nexxen Sports, and our exclusive data, while our political solutions, growing partnership, and expanded access to budget across both sides of the aisle position us to capitalize on what is expected to be a strong political ad cycle.

As our platform strengthens, we expect to attract greater enterprise spend, expand profitability, and reinvest to scale performance and adoption, reinforcing a powerful growth flywheel. The industry shift towards AI-driven, data-rich advertising defined by performance aligns directly with our strengths, positioning us for share gains in the quarters and years ahead. With that, I will turn the call to Sagi.

Thank you, Ofer. Q1 marked a clear financial inflection point with record results that exceeded both our expectation and Wall Street consensus. Importantly, momentum is carried into Q2, supported by broad-based strength across our programmatic business lines. In Q1, we delivered contribution ex-TAC of $84.5 million, a Q1 record reflecting a 13% year-over-year increase driven by robust programmatic growth.

Programmatic revenue was $81.9 million, up 14% year-over-year, also representing a Q1 record. This performance underscores the success of our deliberate mix shift towards durable, higher growth, higher quality programmatic channels. This progress reflects our platform investment in disciplined execution as we scale our programmatic capabilities, advance our enterprise strategy, and strengthen our position across mobile in-app, CTV, and data. We expect each of these drivers to accelerate through 2026 and beyond.

Performance in the quarter was driven by broad-based strength across our programmatic channels, particularly within CTV, mobile, data products, and display, supported by growth across our entertainment, retail, finance, government, and automotive verticals.

In contrast, Contribution ex-TAC from our non-programmatic business lines, which we are actively evaluating strategic options for, declined by approximately $560,000 year-over-year, and we saw softness within our education vertical. CTV returned to growth in the quarter with record Q1 CTV revenue of $29.4 million, up 12% year-over-year. We are seeing continued momentum into Q2 and remain confident in CTV as a core growth engine for 2026 and beyond.

This is supported by multiple catalysts, including increasing utilization of our robust CTV data, technology and media offerings, as well as the FIFA World Cup, the U.S. midterm elections, and growing adoption of Nexxen TV Home Screen. Our expansion within mobile in-app is also delivering results. Mobile revenue increased 18% year-over-year in Q1, with strength continuing in Q2. Desktop revenue also increased 3% year-over-year.

Elsewhere, Contribution ex-TAC from data products and display increased 81% and 57% year-over-year respectively, while Contribution ex-TAC from PMPs decreased 17%. Adjusted EBITDA for Q1 was $16.3 million, ahead of Wall Street consensus, representing a 19% margin as a percentage of Contribution ex-TAC. We remain confident in our ability to expand margins over time through greater enterprise adoption, increased end-to-end platform utilization, disciplined cost management, and growing benefits from nexAI.

In Q1, we used $21 million in net cash from operating activities compared to generating $19.3 million in Q1 2025. As of March 31st, we had $94.6 million in cash and cash equivalents, no long-term debt, and $50 million available under our revolving credit facility.

The year-over-year decrease in operating cash flow, as well as the sequential decline in cash and cash equivalents, largely reflect changes in working capital, including collection expected to normalize in Q2 2026 alongside strategic investments. Non-IFRS diluted earnings per share was $0.06 compared to $0.16 in Q1 2025. On capital allocation, we repurchased roughly 1.1 million shares in Q1, investing approximately $7.2 million.

From March 2022 through the end of Q1 2026, we repurchased approximately 40% of our outstanding shares, investing roughly $265.3 million. During the quarter, we completed our previous $20 million share repurchase program. In addition, we have authorization to initiate a new program of up to $40 million.

We also remain on track to invest an additional $15 million in VIDAA in Q3 2026, bringing our total investment to $60 million, reflecting an approximately 6% equity stake. We continue to believe this investment, alongside our commercial partnership, drives compounding value. As VIDAA expands its Smart TV footprint, it increases the value of our data exclusivity, expands our monetization opportunities, and drives equity upside benefiting Nexxen and its shareholders.

At the same time, we are continuing to evaluate targeted, smaller-scale strategic opportunities to accelerate programmatic revenue growth and strengthen our position across mobile in-app, CTV, and data. Turning to our outlook, we are raising our full-year 2026 Contribution ex-TAC and programmatic revenue guidance following outperformance in Q1, continuing momentum into Q2, and expected acceleration in the second half. We now expect Contribution ex-TAC in the range of $382 million-$397 million, up from our previous guidance of $375 million-$390 million, representing over 10% year-over-year growth at the midpoint.

Programmatic revenue is now expected at the range of $374 million-$388 million, up from our previous guidance of $367 million-$381 million, representing approximately 12% year-over-year growth at the midpoint. We continue to expect Adjusted EBITDA in the range of $122 million-$132 million, representing approximately 10% year-over-year growth and a 33% margin at the midpoint.

As mentioned, we are seeing continuing momentum into Q2, which we believe reflects the early payoff from our investments in platform scale, enterprise go-to-market execution, mobile in-app expansion, and our strategic partnership with VIDAA. Looking ahead, we expect 2026 growth to be driven by increasing enterprise adoption, growing end-to-end platform utilization, accelerating CTV revenue, scaling mobile in-app contribution, and continued data revenue momentum.

We believe Nexxen TV Home Screen represents a significant opportunity in 2026 and beyond, given our first-mover advantage and its early traction across industry leaders. We expect revenue contribution to scale over time with the potential to represent a meaningful percentage of Contribution ex-TAC in future years. To support our growth drivers, we will continue investing in AI, data infrastructure, and our CTV and mobile in-app capabilities to enhance performance, fuel growth, and expand operating leverage.

We are encouraged by our first quarter results and the continued trends we are seeing into Q2. What we are seeing is not just improvement. It is sustained acceleration across our core growth engines, particularly in CTV, mobile in-app, and data, supported by increasing enterprise adoption, deeper end-to-end platform utilization, and disciplined execution across our teams.

With momentum, clear competitive advantages, a profitable and cash-generative model, and a disciplined, flexible capital allocation framework, we believe we are well positioned to deliver durable growth, expanding profitability, and increasing long-term shareholder value. As always, we thank our shareholders, employees, and partners for their support and look forward to hosting our upcoming Investor Day on June 16th. Operator, we are now ready to take questions.

Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad to join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Participants may ask one question and one follow-up during their turn and can just simply join the queue again after that if they have more questions. Thank you. Your first question comes from Matthew Swanson from RBC Capital Markets. Please go ahead.

Great. Thank you. Congratulations on such a strong start to the year. I wanted to click on the enterprise go-to-market success, especially kind of that idea of signing more enterprise customers year to date than all of 2025. I mean, is it the CTV differentiation, the new AI capabilities that are kinda driving these conversations, or maybe a combination of both?

Hi, Matt. Thank you for the question. I will give some color on that. Our DSP basically is winning more clients now and more attention because of the situation that is placed inside our platform that includes also our DMP.

Very strong connection to data, and it's helping for people to take decision to choose this DSP as their major DSP. Apart from that, all the tools that we created lately around the AI, most of them in the last 12-18 months were directed to the DSP side and to the audience side, to the data side, which is basically enabling to use the platform in a much, much more efficient manner with less effort and with great results. Because also our algorithm were upgraded in the last few years.

The operational-- When people are operating the DSP, they are generating better results. Not just that, through the AI, they're able to basically conduct it in a much more efficient manner and to integrate data, unique data and data into the mix and generate better results. Apart from that is the connection, of course, to our SSP and the CTV part, which is growing, as you can see also by the report.

Apart from that, we are now that didn't affect it yet, but it's building up all the issue of the native ads on the CTV front of the surface of the operating system, which will, I'm sure, will launch late this quarter, but effect in Q3 and Q4, which is giving people additional and new exciting way to generate results, to get engagement with users on the big screen.

I think all of that together, meaning the algorithm, the platform, the new UI that we generated, the AI that we built on top of that, the connection to data and the connection to the CTV inventory and to the in-app and other inventories of media, which are very robust, all of them together are providing us like a strong start for the year.

I think that also getting people prepared for the new, you know, two events that's supposed to happen in the second half of the year, starting even from next month, is the World Cup in soccer and the midterm election. That, of course, will be heavily relying also on CTV. Our advantages on this front is pushing the people to use our platform.

That's super helpful. If I can kind of, maybe double-click on the CTV growth, just 'cause, I mean, it's great to see that return to a positive number this quarter. The home screen product obviously is comping kind of off of zero from a growth rate perspective, so that's beneficial. What else is going well that really, like, turned around the CTV growth?

I think again, I think that it's the growth of the full platform, meaning all the elements of the platform, which is integrating data, unique data like the ACR data in some cases, 70 different partners from data that we are basically providing in order to improve measurement and targeting.

Signing new publishers all the time, growing our roster of publishers. I think that also we're starting to see, like, the first signs of CTV performance influencing our numbers, and we are of course, going to put more emphasis on that in the future and grow this segment. All of that together, when you are driving good results on the enterprise, on the strategic sales, which mean our sales team on the ground are able to secure more deals that are pushing also for CTV.

Our trading is getting better on the open market. All of that together is supporting the CTV that come with, as I mentioned, the performance element that is starting to kick in, and I'm sure that it will grow. In general, we generate better results. That's, as you indicated rightfully, it's even before we felt the acceleration thanks to the native ads that we believe that will start kicking in and making a big effect again in the second half of the year.

All right. Congratulations again. Thanks.

Thank you, Matt.

Your next question comes from Andrew Marok from Raymond James. Please go ahead.

Hi, thanks for taking my questions. My first is on the home screen inventory access. I think you kinda hinted at this on your prepared remarks as you're talking about expansion into the second half of the year. What do you think the TAM is here for your ability to access home screen ad inventory? Are there anybody who might wanna lock that behind their own operating system or own ad tech infrastructure? I have a follow-up.

Yeah, of course. Great, Andrew. I think that the TAM of that is huge because the number of impression that people are exposed when they're launching their TVs is really meaningful. According to Nielsen re-reports and studies.

There is about 10.5 minutes a day that the user is being exposed to the interface of his operating system before he choose a channel that he wants to basically utilize or click on and get in. There is a lot of impressions a lot of opportunities to show ads to these users in a very unique environment with high engagement. If you think just on VIDAA, there is tens of millions of TVs around the globe that we can reach out.

Add to that the agreements that we signed with other partners with TiVo and TCL, and our ability to run on other platforms soon, that we will announce soon. Together with the ability that we generated that, we turn it into programmatic. It's not a new location. It was always there.

The big change that we done a few weeks, a few months ago, sorry, was in order to turn this into a programmatic activity that enable advertisers to run programmatically with all the ways that they are used in order to run a campaign, to measure, to integrate targeting and so on. We see very great response from the market. We announced the first partnership with The Trade Desk, which we are very happy about a few months ago, we hope to launch it very, very soon.

The idea is to use basically all the infrastructure or a lot of the infrastructure with The Trade Desk, which is very present among so many clients, globally, in order to present to them the new opportunity with all the capabilities and the also the standards and the reputation of The Trade Desk in order to start buying this inventory from us.

There are more DSPs like StackAdapt, Basis, and more to come that are showing interest. We are already partnered with these two, but are more that are joining and making the right adjustment in order to be able to operate on this interface.

I'm sure that in this strategy of us to move this media into programmatic instead of just running it with an ad server, I think this will be a winning, a winning solution for the market and basically for the OEMs that we are working with. About what you mentioned about getting into their closed gardens and so on.

I believe that what we are able to generate to most of them is incremental revenues, so I don't see any real reason for them to block or to avoid using this technology in the future because they can run whatever they want with their strong sales teams and strategy. We can for sure deliver for them additional revenue programmatically through the strong partnerships that we build and through our strong sales team, which is a global one.

Great. Thank you. Really appreciate the detail. Then maybe a follow-up for Sagi. This is a little bit of a nitpick considering how good the numbers were this quarter. Looking at the cost of revenue line, that was a little bit higher than I think I was expecting. Just if you could give us a little bit of color on that kind of cost of revenue going forward and how the mix in formats and things like that might affect it as we look to forecast the rest of the year. Thank you.

Sure, Andrew. Thanks. I think, you know, we raised the top-line guidance, of course driven by the stronger than expected Q1 execution. Of course we are seeing it continued into Q2. Of course, as Ofer mentioned, we are expecting acceleration in the second half across core programmatic businesses.

I think we maintain the Adjusted EBITDA guidance range as we are continuing to investing in strategic growth initiatives that will support long-term revenue growth, platform differentiation and market share expansion. I think for your like specific question, we are continuing to invest behind, you know, key growth areas, including enterprise adoption, as Ofer mentioned, AI capabilities, data CTV and platform innovation. We are not seeing like a specific, you know, pressure on our gross margin.

It's just, as you mentioned, some of it is the mix of things, some of it is other stuff, but I don't think we will see like a material or even non-material change to our gross profit going forward. I think that despite, you know, the continued investment that we are doing, we are expecting full year Adjusted EBITDA margin and gross margin to remain generally consistent with previous years' levels.

Okay. Thank you.

Your next question comes from Jason Kreyer from Craig-Hallum. Please go ahead.

Great, thank you. I wanted to stick on the topic of the home screen expansion, specifically adding TCL and TiVo. Is there any different scope to what you're doing there versus what you're doing with VIDAA? What are the logical cross-sell opportunities as you land that home screen capability? You know, do you see other routes of monetization with these partners? Thanks.

Thank you for your question, Jason. Basically we are looking to expand our activity, you know, on top of what we got with VIDAA because we get to get more reach in the market, in every market that we are operating. Really we approach other partners, other potential partners, OEMs in this industry in order to offer them the solution.

Also our PR that we mentioned that we issued in November basically brought us a lot of interest from publishers and OEMs that wants to utilize this media programmatically. It's not different. We are working by IAB standard, so it's not that we are creating like different mechanism from each one of them.

It's like taking some time to set the location to integrate the right ads in the right place in order to generate the most of that and to be able to increase the reach for every client that is launching a campaign on our platform, generally speaking. I think that around that, it's a blessing that more people are coming. We are able to increase the reach for advertisers to get it more interesting for them. In the end of the day, most of the advertisers when they are issuing a new activity, they want to know what is the incremental.

In this case, of course, joining all these OEMs to the mix is increasing the incremental for them and making that more interesting. Regarding cross-sale and stuff like that, of course, when people are buying from your media, people usually advertise. I'm not saying everyone, but most of them likes to manage their campaigns on one platform that enable them to measure results apple to apples, to see if they can shift budget between channels of revenues and media that they are running.

Basically, when they will run with us on this native ad, which is super interesting for them, high engagement and so on, probably they will start running with us or increase their spend in other formats like in-stream CTV, in-video, in-app, and so on, which is of course open a lot of new discussion and enhancing core discussion and partnership that we got, which of course is good for us.

Wonderful. Thank you.

Your next question comes from Brianna Diaz from Citizens. Please go ahead.

Great. Thank you so much for taking my question. My first just double-clicking on the enterprise opportunity. You shared that each new enterprise customer has the potential to generate more than $1 million in annual spend. How should we think about the ramping up in the curve for these new enterprise customers that are joining the platform?

How should we think about the levers that are contributing most to the ramp? Then just my second question is, video stepped down from 72% last quarter to 65% of programmatic revenue. Can you just help us understand the changes in the mix shift and what's driving that step down or just underlying strength in display?

Hey, I will take the second question. Did you ask around the decrease in our video revenue?

Yeah, the video, mix of programmatic.

Yeah. Okay. First of all, programmatic revenue as a total went up. If you're talking specifically on video, as we said, like, long time ago and for the last couple of years, we are very focused on video as a format, which is the most growing and the most engaging and on CTV and mobile as the most dominant and AI resilient devices.

I think that when you are looking on the, you know, on the, on the total picture, you can see, you know, maybe a momentary drop in our video percentage. I think that in absolute numbers, it didn't went down, but in percentage it is because we grew different formats in Q1 specifically.

I think that on a yearly basis, probably it will go higher and it will be more close to the 70%. I think some of the Nexxen home screen ecosystem is affected by that because some of the advertisers that are going over there are using display or native display, what we are calling, and some of them are using video in-streams format as well. I think over time it will change from native display into in-stream video. For now, most of the advertisers are looking for this native display. This is like the momentary impact on our video revenue.

Brianna, on the other question that you asked about the one million dollar, we just wanted to show that the number of clients that basically joined our platform in the last few months are meaningful, meaning that they can deliver at least like minimum of $1 million with us. Of course, we believe that it will grow more than one.

They will deliver revenues to us or work with us for more than $1 million a year. We wanted to set some sort of a base so you will understand when we are talking about number of clients that are joining, it's a meaningful one to deliver at least that we believe that they will deliver at least $1 million in revenue in 12 months.

The second thing, your question that you asked for about is this the element of growth. We believe since our investment in Amobee in the end of 2022, we believe that we need to have a strong DSP and relationship with advertisers. That's why we acquired Amobee. That's why we integrated.

That's why in the last few, in the few months, but in the last 1.5 years, we are moving more and more resources into the enterprise solution. We added strong talent from the industry. We promoted people in our company to support this activity. We see success. We believe that this engine of growth for us is very meaningful already now.

In the years to come, it will be the majority of the revenues from net revenue perspective like in two years from now and so on, it will be the massive revenue generator for us. We are making the right investment. Also, as I mentioned around innovation and AI, innovation in everything that is supporting the DSP, meaning connection to unique data, connection to special media resources and so on, mainly CTV, but also in-app and so on, which is AI resilient, in order to open up more opportunities with clients. We see very good traction in the market right now.

People are adopting our technology, are happy with the results, and we believe that it will just enhance and accelerate in the rest of the year and will influence our revenues until the end of the year, but also in the years to come.

Great. Thank you so much.

You're welcome.

Your next question comes from Maria Ripps from Canaccord. Please go ahead.

Great. Thanks for taking my questions. I just wanted to ask about your momentum in mobile. With Unity and others now sort of integrated via SDK, how large is the SDK sort of integration pipeline beyond what's been announced so far? I guess, at what point does mobile in-app becomes large enough to contribute more meaningfully to consolidated revenue growth?

Sorry, just the last question? The last point? I didn't understand.

Yeah. It's just at what point does mobile in-app becomes large enough to contribute more meaningfully, to become a more meaningful contributor to your overall sort of financials?

Okay. All this agreement, we started this in-app stuff, in-app activity acceleration last year when we adopted this strategy to focus on media channels that are less affected by AI, or we call it AI resilience.

We believe that we know that web search and all that, we never touched in the past also sales, but web, we started to become drive revenues through that, and we believe that it will be more difficult. We said, "Okay, we will now basically focus on CTV." We developed this native ads activity in the end of last year. We made last year moves, the first move in mobile in-app in order to be efficient at growing in that. We feel that last year was a good start.

We saw meaningful revenues coming in. We're accelerating now with Unity and other brands that we joined. Unity is a massive partner that we believe that we can grow a lot of revenue with them. We believe in mobile in-app in general.

We feel that the relationship that we got with Unity, the mutual interest, the great technologies on both sides, the great branding that we have on both sides will help us to grow the revenues to be very meaningful. In general, mobile is already massive in our revenues. It's about 40%, and it's very meaningful already. If you look at CTV, it's close to 35, a little bit more than 35%. I think that on that front, we are already in a good place.

Together, it's more than 75% of our revenues in general. We believe that we are in good spot. We believe that the two media channels that will grow in the years to come, and even until the end of the year, but mostly in the years to come, will be CTV and mobile in-app.

That's why we are basically now structuring this agreement with mobile app, mobile in-app partners and also, of course, with CTV OEMs that are helping us to grow our reach, as I explained before, in order to have, like, more efficient, to offer like a better solution for clients that wants to work with us and need to get an extra reach, an incremental reach to their offering.

Got it. That's very helpful. My second question is, you're investing another $15 million in Q3, so that brings total to $60 million. It represents a 6% equity stake. Can you maybe help us understand sort of the return framework here? Is the value here primarily in the commercial relationship and data exclusivity? Do you see a path here to a liquidity event for the equity stake itself?

I think you touched a very good point. I think both. Meaning our commercial activity with the VIDAA/Hisense is growing year over year. We believe that in the next 24 months is the year that we will see the fruits of the hard work that we've done in the last few years in order to build this relationship and to nourish them and to build technologies that can really serve both sides in the equation.

On a separate path, VIDAA has their own agenda, which is a very interesting company. They are one of the most growing OEM distributed TVs in the market. They are like number two or number three in the market, depends where you are measuring and looking at, but it's very impressive.

There is no doubt that CTV is a major force and super important platform in this marketplace. When we're looking at VIDAA and on every initiative that they choose to take and to build, we believe in their management, in their support that they are getting from Hisense in order to take it to the next level.

Their ambitions are to, of course, to turn this company to be a leading one in the market. We, we believe in this statement and this opportunity, which will increase the value of the company and will generate for us also equity value, which is bigger than the investment that we made.

Got it. That's very helpful. Thank you.

Thank you.

Your next question comes from Barton Crockett from Rosenblatt. Please go ahead.

Thanks for taking the question. I was curious about the seeming kind of disconnect between the first quarter Contribution ex-TAC growth of 13%, the commentary around acceleration in April and May, and more to come with the FIFA World Cup in June and political in the fall. The guidance would call for deceleration for the year to a 10% Contribution ex-TAC growth. Is, you know, is that conservatism or, you know, is there some other explanation for why the guidance doesn't match the discussion of acceleration?

Thank you, Barton. It's a great question. It's helping us also to explain. Basically, in this case, when you look at also the results of the other companies, you don't see impressive growth in most of the other companies. Of course, there is a lot of risk factor in the market, still there, no change.

We prefer to be conservative, so we increase the guidance in a number that we feel that is the right one for this period of time. We will keep watching our performance, which as we said in Q2, we still feel strong momentum and above expectation, which is good for us. When the time will come and we will assess if we can increase, further increase the guidance that we are giving.

In this case, when we are looking around in the market and there is a lot of, a lot of elements around that are basically making it easier for us to be conservative when you look at them, because we don't want to overpromise in this case. We see that we are delivering well.

We see in Q1, we feel that the momentum continue in Q2, we can always keep increasing the guidance as the time pass, and we get more confidence that the market is stable and going to the right direction. What you mentioned is super true. The market shows that there is opportunities to grow further through the FIFA World Cup games, which increase commercial activity and the midterm election that's supposed to do that also.

We are optimistic, but at the same time, we are careful, and we want to do step by step.

Okay. Thank you for that. One other topic I'm curious about. You'd mentioned that you're supporting agentic and you've got some MCP capability. Curious if you would see the future evolving to a world where agencies and marketers will be running access to many kind of marketing platforms through some type of orchestration layer within an LLM or chatbot like Claude.

If so, if everything's gonna be going through Claude to orchestrate access to multiple different advertising kind of venues, does that mean anything for take rates, customer relationships, go-to-market? You know, your thoughts about how that evolves.

Again, thank you for the good question. I think that the agentic, we are dipping into that. We are working very closely with all the, everything that is happening in the market around this technology that can basically assist companies like us.

We are adapting MCP and AGCP in order to be able to utilize better our capabilities and to integrate agentic elements into our technology. I believe that agentic connection between companies will grow. I'm not sure that it, I think that it will accelerate things. I'm not sure it will replace people that are salespeople, because in the end of the day, you need people to create a relationship in this stage.

A lot of this industry is still pending on relationship and good employees and talent in your company that will give the intuition, the direction, the thought leadership around these things in order to generate better results.

For sure, it will make things faster, it will make things much efficient, and it will, it can, it can grow a partnership based on technology connection and not just handshake like it used to be maybe a few years ago. I believe that AI is like challenging us all the time and creating new fronts for us, which is a good thing. We feel that we are in the right position because I just want to remind you, the forum, that we are end-to-end solution.

When you're end-to-end solution, the number of data points to the AI is very big, it's high, and you can influence the journey of the campaign in so many points, which is very helpful. The second thing is that our emphasis on data is helping us to feed the AI with more information in order to get the right decisions.

The way that we choose to implement the AI is innovative, it's more transparent, it's more friendly to the users. It's like communicating with the people, not a black box that basically is being integrated. We are getting a lot of great response from our clients to this approach and to this technology that we built, and we feel that we are on the right path to that.

I think that in the near future, there is more and more companies that are talking to us about integration, that are talking to us about how to integrate basically these capabilities. I'm sure that in the near future, which is couple of months here, we are not talking about years, we'll see more usage of agentic solution in the industry of the advertisers, and we will be one of the leaders on that front. Okay, thank you.

Your next question comes from Tyler DiMatteo from BTIG. Please go ahead.

Great. Thanks for taking the question. Ofer, I wanted to follow up on Barton's comments there because that's where I was gonna go. How much of the conservatism in the guide is predicated on overall macro and kind of some of those comments around the industry versus something more idiosyncratic in nature versus product adoption rates for the home screen, for example. How much of the conservatism is split between the two?

You know, you need to assess every morning when you wake up, what's going on in the market. In general, we believe that everything that we control, we can of course manage, like processes, adoption mostly, issuing of new products and so on. In general, I think that you usually need to look at the market in a more careful manner.

Like I said, I think that we raised the consensus. We are in good momentum. We want to keep some sort of conservativity around the decisions that we are making because when we are looking at things, not in everything we control 100% of the effort. When we are talking about partnership, you need two for tango.

When you're looking at the economy, of course we are not controlling the ecosystem. I think that it's a mix of both in general.

Yeah. Just to add to Ofer, you know, if you could promise us that macro will stay the same as it was up to date, we may increase the guidance more. I think the current guidance is reflecting a prudent approach, given the broader macroeconomic and advertising market environment.

Okay, great. Then a follow-up for Sagi. On the EBITDA and the operating expense contribution to the business, if you had to prioritize kinda where the investment dollars are going, is it more about sales and marketing and the go-to-market and customer acquisition? Is it more about kind of tech and development and AI investments? Can you help us kind of frame up, like, where the dollars are going in terms of the reaffirmation of the EBITDA guide?

Yeah, sure. I think that, you know, we will continue to invest in our key growth areas as Ofer mentioned. It's a good question. I think that most of our dollars are going into investment in AI capabilities, data and platform innovation because this is like It's not a bottleneck, but this is where we are seeing after we are deploying a new feature or a new capability, we are seeing like, you know, greater utilization of existing clients over our platform and ecosystem, and of course, generating more revenue and more cash for us.

The second thing is that when everything is going, you know, so good and you are seeing the engagement, and you are engaging new clients as well because I have to tell you, I was in couple of our agentic AI presentation to different partners. I didn't really.

They don't owe us anything because some of them are existing clients and some of them were new. Everyone said that we have the most robust and the most advanced capabilities around agentic AI that they saw. I think most of the money, if I need like 80/20, is going to innovation, product development. Of course, in order to follow that and in order to fulfill all the great engagement and adoption of our platform, we need to invest more in sales and marketing.

I think we are investing in both, but most of the, of the resources and most of the effort is going to product technology and capabilities.

Great. Thanks, guys. Really appreciate the time.

Thank you. I just want to use the last, I don't know, one, two minutes that I have your attention in order to close this session by saying that we see the results from our strategic decisions, that we did great execution, drive improved results. We strongly support our strategy around our adoption and strongly promoting our DSP to focus on the AI resilient media channels of the CTV native and the in-app mobile, and to keep pushing and integrating and innovate around AI, which we strongly believe in, and we believe that will bring us a lot of value because of the points that I mentioned.

I want to thank all our teams around the globe for their hard work, for their commitment, and for the great achievement that they generated in the past few months. Thank you very much, everyone.

Ladies and gentlemen, thank you all for joining, and that concludes today's conference call. All participants may now disconnect. Thank you.

Thank you.