Nexxen International Ltd. (LON:NEXN) continues to cement its position as a frontrunner in digital advertising, achieving exceptional results in the third quarter of 2024. According to Cavendish analysts Michael Hill and Kimberley Carstens, the company’s Q3 net revenue grew by an impressive 12% year-on-year, reaching $85.5 million—a quarterly record. This strong performance outpaced consensus estimates by 1%, and its adjusted EBITDA growth of 49% surged to $31.6 million, an astounding 31% above expectations.
“Nexxen’s differentiated, end-to-end platform has continued to strengthen and scale in challenging conditions. Over the past two years, numerous initiatives have driven its momentum, and we expect this trend to deliver strong growth in the coming years,” observed Michael Hill.
A Record-Breaking Quarter
Nexxen’s programmatic revenue reached a new high of $81.6 million, representing 10% year-on-year growth, driven largely by its flourishing Connected TV (CTV) segment. This segment achieved 52% year-on-year growth, amassing $29.7 million in Q3 revenue. The performance reflects Nexxen’s ability to capitalise on market trends, such as the growing shift in ad spend towards digital video and connected TV platforms.
Guided by its upgraded EBITDA forecast of $107 million for FY24, Nexxen is positioned to outperform, with Cavendish analysts upgrading their FY24E and FY25E EBITDA forecasts by 7% and 3%, respectively.
Strategic Partnerships and Innovations Powering Success
Nexxen’s growth has been bolstered by strategic initiatives and collaborations, including partnerships with leading players such as Alphonso, LG Electronics, Roku, and Vevo. The company has also launched cutting-edge solutions like the Nexxen Data Platform and a self-service Deal Marketplace, which enhance transparency and usability for advertisers.
Cavendish analyst Kimberley Carstens highlighted, “The continued integration of advanced tools and partnerships, such as the Alphonso-LG partnership, underscores Nexxen’s ability to scale its platform, generate premium inventory, and drive advertiser adoption.”
A Robust Financial Position
Nexxen’s strong financial health is another key factor in its success. With a net cash position of $166.5 million, the company has announced a further $50 million buyback programme. This move reflects Nexxen’s confidence in its future growth and commitment to delivering shareholder value.
Furthermore, Cavendish analysts believe Nexxen International’s trading metrics demonstrate its deep undervaluation compared to US peers, such as Magnite and The Trade Desk. At just 3x forward EV/EBITDA, Nexxen is poised for significant upside, supported by a target price of 1,000p—a 242% increase from its current trading level.
In Summary
Nexxen International’s Q3 2024 results showcase its ability to thrive amid industry challenges while maintaining an innovative edge. With strong operating and financial momentum, the company is well-positioned to benefit from the ongoing structural shift in advertising. As Cavendish’s Michael Hill concluded, “Nexxen is excellently positioned to capitalise on the structural growth in connected TV and digital video advertising, and we expect this momentum to continue well into FY25 and beyond.”
The future looks bright for Nexxen as it continues to lead the way in the dynamic digital advertising space.
