Nexxen (NEXN) Q2 FY26 earnings call: guidance and Q&A

What factors are driving the strong CTV growth, and how sustainable are these growth rates?

The impressive CTV growth is attributed to better execution, increased sales, incentivizing enterprise clients to utilize CTV properties, and new data initiatives. While Nexxen TV Home Screen is not yet a significant revenue contributor, it's generating interest. The media team is also expanding partnerships. Management views the growth as massive and expects it to continue.

“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.”

asked by Jason Kreyer · answered by Ofer Druker

Why are operating expenses increasing, leading to a contraction in EBITDA margins, and what is the future outlook for margin expansion?

Increased OpEx reflects intentional strategic investments in AI, data, infrastructure, platform capabilities, and go-to-market. While the 2026 adjusted EBITDA margin guidance is 32% (a slight decrease from 2025), the long-term target of 40% remains. Efficiencies from these investments are expected to drive a 34% EBITDA margin in 2027. FX headwinds also contributed to increased costs.

“And we feel that we can reach 34% EBITDA margin already in 2027. So I think it's 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.”

asked by Jason Kreyer · answered by Sagi Niri

How does nexAI contribute to incremental revenue growth today, beyond just improving internal efficiency?

nexAI drives incremental revenue by enabling clients to achieve significantly better campaign outcomes, which encourages them to shift more of their advertising budget to Nexxen. It also facilitates the onboarding of new clients by demonstrating superior performance and efficiency. The end-to-end platform integration with nexAI provides a distinct competitive advantage.

“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 basically driving them to move more of their budget to us.”

asked by Simran Biswal · answered by Ofer Druker

Why were no shares repurchased this quarter, what gives confidence in internal reinvestment, and what types of M&A opportunities are being pursued?

Internal investments have yielded strong results, including 13% programmatic growth, validating this use of capital. Share buybacks (historically $250M, acquiring 40% of shares) are still an option. M&A focus is on smaller, non-disruptive acquisitions that enhance capabilities in CTV, mobile in-app, and AI. A shortlist of targets exists, with a move anticipated in the next 6-9 months.

“We made already like some shortlist of companies that can be like a potential target for this acquisition. And I believe that in the next 6 to 9 months, we will make a move on that.”

asked by Andrew Marok · answered by Ofer Druker

To what extent is CTV growth driven by Nexxen Home Screen/ACR data integration versus core stream inventory, and what is the CPM environment like?

Current CTV growth is primarily driven by business initiatives, data utilization, and increased client/partner activity, not yet by significant revenue contribution from Nexxen Home Screen. Nexxen Home Screen, a unique programmatic solution for smart TV home screens, is expected to become a meaningful revenue driver from Q4 2026 and ramp in 2027. Data utilization on the platform is crucial for generating better results and attracting more ad spend.

“The good news is this growth is without most of the elements that you just indicated, meaning it's still -- I strongly believe, we strongly believe in what we built here about the CTV Home Screen because of a few reasons... But it's still early in our revenue. It's not like contributing this growth.”

asked by Daniel Medina · answered by Ofer Druker

What specific metrics should investors monitor over the next 12 months to assess the success of enterprise, end-to-end platform, and AI adoption initiatives in driving durable share gains?

Investors should primarily focus on overall net revenue growth. The end-to-end platform utilization, which drives better results and client loyalty, contributes to this. Key indicators of success include the 13% programmatic growth and 33% CTV growth. Management emphasizes that continued investment is necessary to sustain this growth.

“I think that investors and analysts should look at the results in (sic) [ at ] the end of the day, overall net revenue growth, which is the purpose of this investment.”

asked by Steven Hromin · answered by Ofer Druker