Nexxen International Ltd. Q1 FY2026 Earnings Call

Welcome to Nexxen's First Quarter Earnings Call. At this time, participants are in a listen-only mode. 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 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 investor relations 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. Please exercise 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 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's 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/VIDAA revenue are trending ahead of our expectations 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; extending our CTV/VIDAA leadership through our first-mover advantage in programmatic smart TV/VIDAA home-screen, which we expect to support CTV/VIDAA revenue growth; and 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 shifts, 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 enhanced 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/VIDAA native home-screen media for advertisers. NextAI, our branded suite of platform-wide AI capabilities and solutions, is at the core of our strategy and is reinforcing our tech stack's value proposition, acting as a force multiplier. We believe we have a structural AI advantage due to our end-to-end model, enabling NextAI 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 agenting capabilities to deliver speed, performance, and automation across advertisers' workflows. 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 levels of automation, driving productivity without disrupting how partners operate. We are also aligning with standards such as ADSP, and integrating our Agen.T 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 protocol, helping shape the standards that will define how agent-based advertising systems operate across the ecosystem. In 2026, we will expand NextAI within our SSP to enhance publisher performance and monetization and introduce more autonomous deal creation, negotiation, and management solutions for advertisers and customers. Internally, our AI capabilities are expected to drive increasing efficiency, faster development timelines, and operating leverage, with benefits scaling into late 2026 and beyond. As mentioned, we are already seeing success with our AI strategy, which has been integral to winning and retaining clients and partners across the ecosystem. CTV/VIDAA 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. This is driven by our industry-first programmatic smart TV/VIDAA home-screen ad activation solution, Nexxen TV/VIDAA On Screen. With Nexxen TV/VIDAA On Screen, we are not just enhancing our CTV/VIDAA differentiation, we are defining and leading a new programmatic category. This offering enables advertisers to access high-attention, non-skippable CTV/VIDAA 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-mover advantage. Our solution is now live across V-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 V-powered home screens and have since expanded our footprint through partnerships with additional OEMs. We secured programmatic access to TCL's native home-screen inventory globally, including exclusivity on select native placements in the U.S. and Canada on TCL Android TV/VIDAA devices. Additionally, we gained programmatic access to TiVo's native home-screen inventory in North America and the U.K. This partnership has increased our base by nearly 10 million devices, and we expect to expand to more by year end. We also expanded our partnership with LG and are now testing activation of their native home-screen inventory through the Nexxen platform, further reinforcing our role in enabling programmatic workflows across this premium and rapidly growing CTV/VIDAA category. Nexxen TV/VIDAA On Screen represents a clear structural growth driver for our CTV/VIDAA business—one that accelerates our enterprise strategy and expands our end-to-end CTV/VIDAA revenue opportunities. Our exclusive ACR data 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 and we see early signs of acceleration. We have strengthened our position through direct SDK integration with Unity and others, expanding access to scaled, 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 environments with strong identity and signal quality, 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/VIDAA and data offering, and AI innovation are establishing Nexxen as an industry leader and a 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/VIDAA On Screen, NEXXEN Sports, and our exclusive data, while our political solutions, growing partnerships 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 expectations and Wall Street consensus. Importantly, momentum carried into Q2, supported by broad-based strength across our programmatic business line. 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 to our durable, higher-growth, higher-quality programmatic channel. This progress reflects our platform investments and 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 thousand year-over-year and we saw softness within our education vertical. CTV/VIDAA returned to growth in the quarter, with record Q1 CTV/VIDAA revenue of $29.4 million, up 12% year-over-year. We are seeing continued momentum in Q2 and remain confident in CTV/VIDAA as a core growth engine for 2026 and beyond. This is supported by multiple catalysts, including increasing utilization of our robust CTV/VIDAA data, technology and media offering, as well as the FIFA World Cup, the U.S. midterm elections, and growing adoption of Nexxen TV/VIDAA On 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 extend margin over time through greater enterprise adoption, increased end-to-end platform utilization, disciplined cost management, and growing benefits from NextAI. In Q1, we used $21 million in net cash from operating activities, compared to generating $19.3 million in Q1 2025. As of March 31, 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 reflects changes in working capital, including collections that we expect 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 2026, we repurchased approximately 40% of our outstanding shares, investing roughly $265 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 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 we expand its smart TV/VIDAA 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, CTV/VIDAA and data. Turning to our outlook, we are raising our full-year 2026 contribution ex-TAC and programmatic revenue guidance following outperformance in Q1, continued momentum into Q2, and expected acceleration in the second half. We now expect contribution ex-TAC in the range of $382 million to $397 million, up from our previous guidance of $375 million to $390 million, representing over 10% year-over-year growth at the midpoint. Programmatic revenue is now expected in the range of $374 million to $388 million, up from our previous guidance of $367 million to $381 million, representing 12% year-over-year growth at the midpoint. We continue to expect adjusted EBITDA in the range of $122 million to $132 million, representing approximately 10% year-over-year growth, and a 33% margin at the midpoint. As mentioned, we are seeing continued 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/VIDAA revenue, scaling mobile in-app contribution, and continued data revenue momentum. We believe Nexxen TV/VIDAA On 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, our CTV/VIDAA and mobile in-app capabilities. 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 team. 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 16. Operator, we are now ready to take questions.

Thank you. And we will now begin the question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad to join the queue. If you would like to withdraw your question, simply press 1 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 simply join the queue again after that if they have more questions. Thank you. And your first question comes from Matt Swanson from RBC Capital Markets. Please go ahead.

Thank you. Congratulations on such a strong start to the year. I wanted to click on the enterprise go-to-market success, especially that idea of signing more enterprise customers year-to-date than all of 2025. Is it the CTV/VIDAA differentiation, the new AI capabilities that are 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 is winning more clients now with more attention because of the situation that is in our platform, which includes our PMPs, a very strong connection to data, and it is helping people decide to choose this DSP as their main DSP. Apart from that, all the tools that we created lately—most of them in the last 12 to 18 months—were directed to the DSP side and to the audience and data side, which is enabling use of the platform in a much more efficient manner with less effort and with great results. Also, our algorithm was upgraded in the last few years, so when people operate the DSP, they generate better results. Through AI, they are able to conduct operations much more efficiently and integrate unique data into the mix to generate better outcomes. Apart from that is the connection, of course, to our SSP and the CTV/VIDAA part, which is growing as you can see in the report. We are now building up the native home-screen experience on the CTV/VIDAA front, which we launched late this quarter, but the effect will be more visible in Q3 and Q4. This gives people an additional and new exciting way to generate results and get engagement with users on the big screen. So I think all of that together—the upgraded algorithm, the new UI, the AI we built, the connection to unique data, and the connection to CTV/VIDAA inventory and robust in-app media—are providing us a strong start to the year. I also think that the upcoming events that start next month, the World Cup and the midterm election, are pushing people to use our platform.

That is super helpful. If I can double-click on the CTV/VIDAA growth, it is great to see that return to a positive number this quarter. The home-screen product is comping off zero from a growth rate perspective, so that is beneficial. What else is going well that really turned around the CTV/VIDAA growth?

I think it is the growth of the full platform, meaning all the elements integrating unique data like ACR data and many third-party partners that we provide to improve measurement and targeting, assigning new publishers and growing our roster of publishers. We are starting to see the first signs of CTV/VIDAA performance influencing our numbers, and we will emphasize that more in the future. Our sales team on the ground is able to secure more deals that push for CTV, and our trading is being paid better on the open market. That performance element is beginning to kick in, and I am sure it will grow. Even before the acceleration from native home-screen ads, which we believe will have a big effect in the second half of the year, we are already generating better results.

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. You kind of hinted at this in your prepared remarks and expansion into the second half of the year. What do you think the TAM is for your ability to access home-screen ad inventory? Is there anybody who might want to lock that behind their own operating system or ad tech? And I have a follow-up.

Great question, Andrew. The TAM is huge because the number of impressions when people launch their TVs is meaningful. According to Nielsen reports and studies, there is about 10.5 minutes a day that the user is exposed to the interface of their operating system before they choose a channel. There are a lot of impressions and opportunities to show ads in a very engaging environment. If you think about VIDAA, there are tens of millions of TVs around the globe that we can reach. Add to that agreements we signed with partners like TiVo and TCL and other platforms we will announce soon—turning this into programmatic is the big change. It enables advertisers to run programmatically with all the measurement and targeting capabilities they expect. We have seen a great response from the market. We announced the first partnership with The Trade Desk, and we hope to launch very soon. More DSPs like StackAdapt, Basis, and others are showing interest and joining. Regarding the possibility of OEMs locking this behind their own operating system, I believe we can generate incremental revenue for them programmatically, so I do not see a real reason for them to block or avoid using this technology. They can still run their own direct sales, but we offer an additional programmatic revenue stream through our partnerships and global sales efforts.

Great. Thank you. I appreciate the detail. Follow-up for Sagi: the cost of revenue line was a little higher than I expected. Can you give color on cost of revenue going forward and how mix in formats might affect it as we forecast the rest of the year?

Sure, Andrew. We raised the top-line guidance driven by stronger-than-expected Q1 execution and continued momentum into Q2, and we expect acceleration in the second half across core programmatic businesses. We maintained the adjusted EBITDA guidance range as we continue to invest in strategic growth initiatives that support long-term revenue growth, platform development and market share expansion. Per your specific question on gross margin and cost of revenue, we are continuing to invest behind key growth areas including enterprise adoption, AI capabilities, data, CTV/VIDAA and platform innovation. We are not seeing specific pressure on gross margin; some of the change you noticed is due to mix and other timing items. We do not expect a material change to our gross profit going forward, and despite continued investment we expect full-year adjusted EBITDA margin and gross margin to remain generally consistent with prior-year levels.

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

Great. Thank you. I wanted to stick on the home-screen expansion, specifically adding TCL and TiVo. Is there any different scope to what you are doing there versus what you are doing with VIDAA? And what are the logical cross-sell opportunities as you land that home-screen capability? Do you see other routes of monetization with these partners?

Thanks, Jason. We are expanding activity on top of what we have with VIDAA to get more reach in every market we operate. We approach other OEMs to offer the solution. Our PR last year brought a lot of interest from publishers and OEMs who want to utilize media programmatically. We are working to IAB standards, so we are not creating different mechanisms for each partner, but integration takes time to set the placements and ensure ads are in the right place to maximize yield and reach for every client. Joining additional OEMs increases incremental reach for advertisers and makes the opportunity more interesting for them. Regarding cross-sell, when advertisers buy media with us on a native home-screen placement, many prefer to manage campaigns on one platform to measure results apples-to-apples. As they run on our native home-screen, they will likely increase spend in other formats with us—such as in-stream CTV, video, and in-app—which opens new discussions and deepens partnerships.

Thank you.

Your next question comes from Matt Condon from Citizens. Please go ahead.

Great. Thank you so much for taking my question. First, 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 ramp curve for these new enterprise customers and the levers contributing most to the ramp? And my second question: video stepped down from 72% last quarter to 65% of programmatic revenue. Can you help us understand the mix shift and what is driving that step down—underlying strength in display, for example?

I'll take the second question first on the decrease in our video mix percentage. Programmatic revenue as a total went up. The absolute dollars in video did not go down substantially; the percentage decreased because we grew other formats in Q1, specifically native display on the home-screen and mobile in-app. Over time we expect video to return closer to prior percentages on a full-year basis as native home-screen placements evolve from display into more in-stream video usage. For now, many advertisers are using native display placements, which impacted the video percentage in Q1.

On the enterprise customers and the $1 million number, we wanted to show that the clients joining our platform in the last few months are meaningful—they can deliver at least $1 million with us in a 12-month period. We believe that number will grow over time. Since our investment in Amobee in 2022, we have focused on building a strong DSP and relationships with advertisers, which is why we acquired Amobee and integrated it. In the last 12 to 18 months we shifted resources to this solution, added industry talent, and promoted people internally to support this activity, and we are seeing success. This growth engine is meaningful already and will be a majority of revenues from a net revenue perspective over the next few years. We're investing in innovation and AI, connecting to unique data and premium media—primarily CTV and in-app—so we can open more opportunities with clients. Adoption is strong and accelerating.

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

Great. Thanks for taking my questions. Regarding momentum in mobile: with Unity and others integrated via SDK, how live is the SDK integration pipeline beyond what has been announced so far? And at what point does mobile in-app become large enough to contribute more meaningfully to consolidated revenue growth?

We started the mobile in-app acceleration last year when we adopted the strategy to focus on AI-resilient media channels. Last year was a good start and we saw meaningful revenues. We're accelerating now with Unity and other partners; Unity is a massive partner with significant potential. Mobile is already a large part of our revenues—around 40%—and overall it's a very meaningful channel. We believe the two media channels that will grow most in the coming years are CTV/VIDAA and mobile in-app, which is why we're structuring agreements with mobile in-app partners and CTV OEMs to grow reach and offer more efficient, incremental solutions to clients.

Got it. That is very helpful. My second question: you are investing another $15 million in Q3 bringing total to $60 million for roughly a 6% equity stake. Can you help us understand the return framework? Is the value primarily in the commercial relationship and data exclusivity, or do you see a path to a liquidity event for the equity stake itself?

You raised a very good point. It is both. Our commercial activity with VIDAA/Hisense is growing year-over-year. We believe in the next 24 months we'll see the fruits of the work we've done to build the relationship, technology, and integrations. VIDAA is a fast-growing OEM with strong distribution and ambitions to be a leading platform. We believe in their management and support from Hisense, and we think their ambitions will increase the value of their company. That should generate equity value for us beyond the initial investment.

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

Okay. Thanks for taking the question. I'm curious about the seeming disconnect between the first-quarter contribution ex-TAC growth of 13%, commentary around acceleration in April and May and more to come with the FIFA World Cup in June and political in the fall, and yet the guidance implies deceleration for the year to about 10% contribution ex-TAC growth. Is that conservatism, or is there another explanation for why guidance does not match the discussion of acceleration?

Great question, Barton. It helps to explain our approach. While we see strong performance and momentum, we also see broader market uncertainty with various risk factors. We prefer to be conservative. We increased guidance to a level we feel is reasonable for this period. We will continue to monitor performance—Q2 is strong and above expectations—and if conditions continue to improve, we can increase guidance further. But given the broader market and the desire not to overpromise, we chose a prudent step.

Thanks. One other topic: you're supporting Agen.T and have some MCP capabilities. Do you see a future where agencies and marketers run access to multiple marketing platforms through an orchestration layer within an LLM or chatbot? If everything goes through an orchestration LLM, does that change take rates, customer relationships, or go-to-market?

Great question. We're working closely with the technology trends in the market and are adopting MCP and integrating Agen.T elements into our technology. Agentic connections between companies will grow and accelerate operations, but I don't think it will fully replace people—relationships and salespeople remain important today. AI will make things faster and more efficient and allow partnerships to be more technology-driven. Because we are an end-to-end solution with strong data, we can feed AI with many data points across the campaign journey, which is an advantage. Our approach focuses on transparency and customer control rather than a black box, and we've received strong feedback from clients. We expect increased usage of agentic solutions in the near future and aim to be one of the leaders in that transition.

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

Great. Thanks for taking the question. Ofer, how much of the conservatism in the guidance is predicated on overall macro and industry comments versus idiosyncratic items or product adoption rates for home-screen? How much is split between the two?

You need to assess market conditions daily. In general, everything we control—product development and adoption—we manage. But macro conditions and partnerships are outside our full control. The conservatism is a mix of both: we are confident in our execution and product adoption but remain cautious given the broader market environment.

To add to Ofer, if macro stayed exactly as it is today, we could consider increasing guidance further, but the current guidance reflects a prudent approach given broader macroeconomic and advertising market conditions.

Thanks. Follow-up for Sagi: on EBITDA and operating expense contribution, where are the investment dollars going? More toward sales and marketing and go-to-market, or more toward tech, development, and AI investments? How should we think about the reaffirmation of the EBITDA guide relative to where dollars are allocated?

Good question. We will continue to invest in our key growth areas. Most of our dollars are going into AI capabilities, data and platform innovation, because deploying new features and capabilities drives greater utilization by existing clients and increases revenue. That said, we also need to invest in sales and marketing to support adoption and scale. Roughly speaking, the majority of the resources—perhaps an 80/20 split—are focused on product, technology and capabilities, with the remainder supporting commercial execution.

I just want to use the last minute to close by saying we see results from our strategic decisions and great execution driving improved results. We strongly support our strategy around adoption and promoting our DSP to focus on AI-resilient media channels—CTV/VIDAA native and in-app mobile—and to keep pushing and innovating around AI. We believe this will bring significant value. I want to thank our teams around the globe for their hard work, commitment, and the great achievements over 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.