Earnings Call Transcript
Nexxen International Ltd. (NEXN)
Earnings Call Transcript - NEXN Q3 2023
Operator, Operator
Welcome to Tremor International's Conference Call for the Three and Nine months Ended September 30th, 2023. 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 conference call is being recorded and a replay of today's call will be made available on the Investor Relations section of Tremor's 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.
Billy Eckert, Vice President of Investor Relations
Thank you, operator. Good morning, everyone, and welcome to Tremor International's financial and operating results call for the three and nine months ended September 30th, 2023. With us on today's call are Ofer Druker, Tremor'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 investor.tremorinternational.com. During today's conference call, we will make forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. We advise caution and reliance on forward-looking statements. These statements include, without limitation, statements and projections regarding our anticipated future financial and operating performance, market opportunity, growth prospects, strategy, financial outlook, partnerships and anticipated benefits related to those partnerships and forward-looking views on macroeconomic and industry conditions, as well as any other statements concerning the expected development, performance and market share or competitive performance relating to our products or 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 forward-looking statements, including unexpected changes in our business or unexpected changes 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 risks and uncertainties listed in the section entitled Risk Factors in our most recent Annual Report on Form 20-F. Tremor 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 conference 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 reconciliation of IFRS to non-IFRS results. At this time, it is my pleasure to introduce Ofer Druker, CEO of Tremor International. Ofer, please go ahead.
Ofer Druker, CEO
Thank you, Billy, and welcome to everyone joining us today. I will begin by providing an overview of our results and strategic initiatives, then we'll turn the call over to our CFO, Sagi Niri, to discuss our financials. We will then open the call for questions. Please note, results for the three and nine months ended September 30, 2023, reflect the combined performance of Tremor International and Amobee, while results from the same prior year periods include Amobee contributions from September 12, 2022, through September 30, 2022. I would like to start today's call by thanking everyone who has reached out and extended their thoughts, prayers, and sympathies following the October 7 terrorist attack on Israel, where our company is headquartered and where many of our employees and their families go home. Your support means a lot to us and is greatly appreciated. While Tremor International is a global ad tech company, we generate the vast majority of our contribution from over 85% in the U.S., which is also where the overwhelmingly largest base of our employees is located. Despite the conflict weighing heavily on our thoughts and despite certain Israel-based team members being called to active duty, we are doing our best to keep our business activities and operations relatively unaffected by the situation. We commend the bravery of our active duty employees in service to their country and intend to honor them by working hard to continue providing best-in-class service and solutions to our customers and partners in their absence and supporting them and their families in every way we can. With the holistic integration of Amobee, which emphasizes bringing its valuable employees, customers and technology into our company, and the initial revamp to Nexxen behind us, in Q3 we focused primarily on scaling mid to long-term revenue generating initiatives and increasing engagement and awareness with advertisers and publishers, particularly through a demonstration of our new and recently enhanced capabilities. During the quarter, we deepened the relationship with existing customers and emphasized introducing our capabilities and solutions to new potential partners while bolstering our sales and marketing team to position us for accelerated growth within our core strategic drivers, CTV, video and data. The rebrand to Nexxen is still in the early stages, as it has improved our positioning by simplifying our story and providing valuable positioning for customers and prospects, enabling our sales team to seamlessly package several solutions and create a pathway to expand sustained revenue per account growth through increased cross-selling opportunities. We also believe we have further amplified the power of our rebrand by recently installing a new Chief Marketing Officer with a strong product marketing background, who joined us from one of our closest ad tech peers. We feel the experience and expertise in product marketing he brings to our organization is a perfect fit and comes at the right time to expand on our groundwork initially laid by the rebrand. We believe we have built one of the most comprehensive platforms in all of ad tech for our customers across the ecosystem, which includes major advertisers, agencies, and media partners. And now we feel our marketing efforts need to generate further momentum with customers and prospects to complement and better highlight the strength of our technology and data product suite. While it's definitely a work in progress, we believe we are now better positioned to highlight the meaningful holistic value of our unified platform. Our main goal now is to showcase how our partners can leverage our platform's multiple offerings to simplify activation efforts to advance data-driven targeting and measurement solutions and achieve their goals through a media platform that enables them to maximize the value of their first-party data while realizing significant cost benefits only possible through partnering with a holistic platform like ours. The next step in enhancing our market position through our rebrand is to change the name of the parent company from Tremor International to Nexxen International. Our shareholders will vote at our AGM in December. Assuming the vote passes, our intent is to trade under the new company name shortly thereafter and to change the stock ticker in both markets from TRMR to NEXN. We do not currently anticipate any changes to our ordinary share or ADR structure in connection with the name or ticker changes. In addition to recently enhancing our marketing efforts and sales positioning, the successful integration of Amobee has significantly boosted our tech and data capabilities, particularly through enhanced DSP and TV planning features and has enabled the creation and addition of powerful solutions we believe are pivotal for driving enhanced relevancy, efficiency, and better returns for our customers. We believe Amobee has already added a tremendous amount of value on this front and uniquely positioned us while positioning us strongly for success in the future TV advertising ecosystem. Over the past few months, we have seen a dramatic increase in the level and frequency of conversation about linear shifting and converging with digital. It's clear to us that major players in the advertising industry understand this is an important and rapidly evolving trend and reality they need to address. We believe capable technology partners like us with robust cross-platform capabilities are best positioned to help them achieve continuous success converting linear budgets into digital. It's a long adoption process; however, we believe we have unique products that fulfill the needs of the major players that advertise across linear TV and that already currently utilize CTV or plan to do so in the near future. Now it's time to market the product and create a solid base of partnerships that will fuel our future CTV growth as we become more active in assisting with the convergence between linear and digital. We believe Nexxen has a critical advantage on this front and is well positioned for this development specifically through the first-to-market cross-platform planner we launched in April. The cross-platform planner creation was made possible by the linear planning tools we gained through Amobee that were developed for years prior to the acquisition. The solution enables customers to realistically plan campaigns across linear and CTV and also allocate budgets between formats at the push of a button. The planner has already driven early adoption by major industry partners, including A+E Networks, FOX, and TelevisaUnivision, and we expect others to follow suit over time. The solution is providing us a strong foundation for opening significant partnership discussions and we believe we will experience strong growth related to this tool over the intermediate and long-term. We will continue to work tirelessly on further integration of this solution into new and current partnerships as we are confident it reflects a strong potential future growth driver for the business that can deliver significant value by attracting new customers and enticing existing customers to increase spending on our platform. For our customers, success is often a byproduct of efficiently and effectively ensuring their messages reach the widest and most likely to buy audience on the right screen at the right time. However, before a campaign is activated through existing channels, success begins with customers finding and understanding their audience by having a grasp on what content their targets are consuming. This is a strong indicator of trends they are following, interests they have and future purchasing behavior. Nexxen Discovery, our data-fueled BI tool, also gained through our Amobee acquisition, optimizes these efforts by enhancing audience insights and has been generating immense interest with prospective customers and partners in essentially every demo and across a wide range of use cases. Customers leveraging the solution are able to integrate powerful audience consumption data and transform audience insights across web, social media, and TV into their planning efforts to then activate in campaigns through our DSP, providing a seamless and frictionless experience. Customers that previously had to leverage several partners for audience discovery, cross-screen planning, activation, and measurement are finding that working with a single partner that can do it all, including offering TV data unavailable anywhere else, reflects an obvious value proposition for the simplicity, efficiency, and increased returns it enables. We also believe Nexxen Discovery will be instrumental in providing significant value for customers seeking solutions in advance of and around the 2024 U.S. election cycle, thanks to its segmentation capabilities and valuable audience insights, which can provide unique feedback for partners that choose to leverage it. The addition of tools like Nexxen Discovery into our platform also highlights a notable and growing opportunity for us to deepen relationships and expand revenue footprints with customers. Our enhanced product offerings and rebrand will drive continued momentum that can create similar success stories where partners expand adoption behind a single product to take greater advantage of our broader ecosystem. Overall, the Amobee acquisition added complementary and highly synergistic features that we believe, when combined with our pre-existing capabilities, has resulted in one of the most comprehensive and data-rich platforms in all of ad tech, purpose-built to help customers meet and exceed their video and CTV advertising goals. We feel we are now unmatched in our ability to assist customers on both sides of the ecosystem across their entire workflow, from audience discovery through measurement and cross-format, including linear and CTV, all within one unified platform with endless possibilities. We are also incredibly excited to share that we have recently begun the process of accelerating monetization related to our exclusive global access to VIDAA ACR data, gained through our investment in VIDAA. As a reminder, VIDAA is a fast-growing CTV operating system and subsidiary of Hisense. We have already been monetizing VIDAAs ACR data in the U.S. for CTV targeting and measurement. However, we very recently also launched the data offering in the U.K., which we believe is unique and offers a significant value proposition for customers in the market given the size and scale of the growing audience reach we have there. The offering launch in the U.K. is expected to start generating revenues in the current quarter; however, we believe revenue related to the U.K. launch will scale significantly in 2024 and that the offering will continue to generate revenues throughout our productivity period over the next several years. We intend to launch the ACR Data Offering next in Australia during Q1 2024 and are excited for the benefit that we can enable for our customers there, as we also have a significant audience reach in that region. We believe the impending launch in Australia can also generate strong revenue opportunities for us in 2024 and beyond. It is clear to us that VIDAAs global ACR data type is becoming extremely attractive to advertisers, agencies, and targeting and measurement partners in major markets. Our sales team has done a great job already generating interest within the industry for this scale and growing ACR data footprint, and we believe this key differentiator can bring truly significant revenues to the company over time through both new and existing customers. VIDAA's rated growth has been fueled by the ongoing expansion of its parent company, Hisense, which continues to grow its CTV shipment volume at the world's fastest rate in Q2. According to our research, Hisense continues to rank second globally for TV shipment volume, holding a roughly 14% global shipment volume share, while shipments increased 19.3% year-over-year. In Q2, Hisense expanded global market share by 1.6% year-over-year, also reflecting the fastest expansion rate by any TV brand globally. As demand for Hisense connected TVs powered by the VIDAA operating system continues to grow, driven by consumer desire for high-quality low-cost smart TV options, we believe our company and its customers will increasingly benefit from our strategic investment in VIDAA. The trend of expanding our advertiser-to-supply partner base, while retaining major customers, continued in Q3 and was driven by demand for our newly launched and recently enhanced product, as well as our rebrand and sales and marketing field improvements. In Q3 2023, the company added one other new actively spending first-time advertiser customer across retail, travel, finance, and CPG verticals, as well as others. This also included the addition of 11 new enterprise self-service advertiser customers highlighted by some of the world's largest and most recognizable technology companies. Over the first nine months of 2023, the company added 223 new actively spending first-time advertised customers. Nexxen Studio, formerly Truly, continued to generate impressive growth amongst enterprise clients, highlighted by 58% and 79% increase in demand for the three and nine months ended September 30, 2023, respectively. The company also added 109 new supply partners, including 100 in the U.S. during Q3, across several verticals and formats including CTV, Broadcast TV, and mobile, with notable recent momentum amongst mobile gaming publishers. Over the first nine months of 2023, we added 283 new supply partners, 249 of which were in the U.S. Our ability to expand revenue relationships and product adoption with customers attracts new partners and generates continued momentum through our rebrand enhancements and improved tech and data solutions contributing to notable year-over-year growth in Q3. Despite challenging market conditions driving continued cautiousness in the spending environment, particularly in managed service, we generated contribution ex-TAC of $76.6 million in Q3 2023, which reflects year-over-year growth of 18%, compared to $64.9 million in Q3 2022. For the nine months ended September 30, 2023, we generated contribution ex-TAC of $223.7 million, which reflects 8% year-over-year growth, compared to $206.7 million in the same prior year period. Contribution ex-TAC growth was largely attributable to significant growth in programmatic revenue as our core business benefited from increased demand for our programmatic solutions, as well as the integration of Amobee, which featured a strong programmatic footprint. During Q3, we generated programmatic revenues of $74.2 million, which reflects a 23% growth from $60.1 million in Q3 2022. For the nine months ended September 30, 2023, we generated programmatic revenues of $230 million, reflecting 18% growth from $179.9 million in the same prior year period. We believe the industry will further embrace programmatic advertising over time to automate the purchase of video and CTV inventory, and that we are still in the early innings of this long-term trend that we are heavily indexed to, and we are strategically prepared for. We also continue to further strengthen our impressive talent base across all major focus areas of the company. As I mentioned earlier, we hired a new Chief Marketing Officer, Ben Kaplan, who we are very excited about and who brings significant and direct ad tech product marketing experience to our organization. Ben has led teams across major tech and media companies such as Meredith, Twitter, and most recently PubMatic, and it is already clear that his product marketing expertise will strongly complement our rebrand and be a great asset to us going forward. Additionally, as we scale our enterprise customer base following our recent enhancements, we were excited to add Ariel Deitz as our new VP of Enterprise Sales, who comes to us from Amazon, Inc. We also see several other sales hires being made, bringing experienced sales veterans to enhance and expand our team in key metro areas like New York and Los Angeles. We believe we now have the right structure and team members in place to best showcase the value proposition of our comprehensive suite of offerings and that we are well positioned to accelerate long-term growth and share gains through the combined strength of our people and platforms. Finally, I am pleased to report that our Board intends to approve the launch of a new $20 million Ordinary Shares Repurchase Program pending approval from the Israeli Court, which is expected in the near term. Assuming we obtain court approval, the new potential program will be financed through existing cash resources and would follow two previous programs in which we invested a combined $95 million in our ordinary shares, repurchasing roughly 13% of shares outstanding. Looking ahead, we believe investing in our business to drive growth, as well as repurchasing our shares represents the best mid-term capital allocation priorities to generate long-term shareholder value. Our shares remain at a discount valuation level, and if the company remains cash-generative in the future, the Board also indicated it would consider pursuing additional future share repurchase programs after completing the impending potential $20 million ordinary share repurchase program and is willing to seek future approval from the Israeli Court as required. The Board has high confidence in the company's future growth prospects and believes repurchasing its shares at current levels reflects a strong long-term investment opportunity for the company and its shareholders. As always, we will also continue to evaluate acquisition opportunities over the intermediate and long-term, giving our historical success, integrating them to create value for our customers, business, and shareholders. However, for now, we are confident in the strategic competitive positioning and breadth of our platform's current offerings. With that, it's my pleasure to turn the call over to Sagi.
Sagi Niri, CFO
Thank you, Ofer. Today, I will review the highlights and key financial and operational drivers of our performance over the three and nine months ended September 30, 2023, and we'll also discuss our forward-looking guidance. As a reminder, results for the three and nine months ended September 30, 2023, reflect the combined performance of Tremor International and Amobee, while results for the three and nine months ended September 30, 2022, include Amobee's contribution only from September 12, 2022, through September 30, 2022. For the three months ended September 30, 2023, we generated contribution ex-TAC of $76.6 million, reflecting 18% growth from $64.9 million in Q3 2022. For the nine months ended September 30, 2023, we generated contribution ex-TAC of $223.7 million, reflecting an increase of 8%, compared to $206.7 million in the same prior year period. Contribution ex-TAC growth over both periods was driven largely by a significant increase in programmatic revenue. We experienced strength in shopping and food verticals during Q3 2023, as well as in mobile, desktop, display, and PMPs. Conversely, softness was observed within our CPG vertical and within CTV, as challenging market conditions drove reduced advertising demand and softness in managed service, particularly in July, causing customers to temporarily shift spending from CPG into lower-cost options such as desktop and mobile as well as display. While we believe conditions in the CTV advertising market have stabilized, compared to July, we expect ongoing market uncertainty and managed service toughness to constrain advertising budgets and drive customers to continue leveraging our lower-cost solutions through at least the end of 2023. Programmatic revenue for the three months ended September 30, 2023, was $74.2 million, which reflected a significant 23% increase, compared to $60.1 million in Q3 2022. For the nine months ended September 30, 2023, we generated programmatic revenue of $213 million, reflecting an 18% increase from $179.9 million in the same prior year period. Programmatic revenue as a percentage of revenue increased dramatically to 93% in Q3 2023 and 90% for the nine months ended September 30, 2023, compared to 85% in Q3 2022 and 79% for the nine months ended September 30, 2022. The increase was driven by our strategic shift of sales resources and focus into programmatic business, as well as the added programmatic footprint gained through Amobee. CTV revenue for Q3 2023 was $19.6 million, which reflected a decrease of 21% from $24.7 million in Q3 2022. As I mentioned, the year-over-year decrease in CTV revenue was largely driven by weakness earlier in Q3, particularly in July. As macro uncertainty drove managed service softness, causing customers to temporarily shift spending from higher-cost options like CTV into lower-cost options like mobile and desktop as well as display. To highlight this point, contribution ex-TAC from mobile increased 20% year-over-year. Contribution ex-TAC from display increased 138% year-over-year. And contribution ex-TAC from desktop increased 38% year-over-year in Q2. While we are seeing our customers focus on near-term spending in lower-cost options, where we are still able to provide value-added solutions to assist them, we continue to expect CTV to remain a key center of investment and long-term growth driver for the company. We expect our recently enhanced suite of premium CTV solutions will continue to drive increased long-term future industry demand, particularly as macro headwinds and uncertainty inevitably ease over time and add budget and spending extend. For the nine months ended September 30, 2023, we generated CTV revenue of $65.6 million, which reflected a 2% increase from $64.1 million in the same prior year period. Video revenue continued to account for a majority of our programmatic revenue at 66% in Q3 2023 and 70% for the nine months ended September 30, 2023. Video revenue as a percentage of programmatic revenue was 93% for the three and nine months ended September 30, 2022. Year-over-year decreases in Q3 were attributable to the addition of Amobee, which had a historically stronger display revenue base. Year-over-year decline in CTV revenue driven by challenging market conditions and significant year-over-year increases in programmatic revenue. Despite the short-term customer spending focus on lower-cost options outside of CTV, which we expect to shift over time as demand for our CTV solution increases and as market conditions improve, our impressive ability to increase contribution ex-TAC in Q3 and over the first nine months of 2023, despite a lack of significant growth in CTV, highlights the strength and durability of how our diversified revenue model provides. It also further supports our belief that as market conditions improve and customers shift more aggressively into CTV advertising in the future, we are very well positioned for outside long-term market share gain. Given our vast capabilities and footprint and how heavily indexed we are to CTV, the new customer base added through Amobee, which has historically relied more on display solutions, provides a significant long-term growth runway to cross-sell our video and CTV capabilities and grow our overall video revenue footprint. We strongly believe that our pre-existing and newly launched solution will enable us to expand the base of customers gained through the Amobee acquisition that leverage us for multiple video-centric solutions in the future and also attract new video customers to our platform over time. During the three and nine months ended September 30, 2023, we generated $21.3 million and $51.2 million of adjusted EBITDA respectively, which compared to $30.1 million and $108 million in the same prior year period. The year-over-year decrease in adjusted EBITDA was driven by the acquisition and integration of Amobee, which was generating significant losses when we first acquired the company, as well as a weaker comparative advertising demand environment earlier in 2023. We will continue to work towards further optimizing our cost structure and improving efficiencies to improve profitability. We believe as we generate higher levels of contribution ex-TAC that the majority of increased contribution ex-TAC will flow through to adjusted EBITDA, given the strength of our operating model, which provides a strong and increasing degree of operating leverage. For Q3 2023, we generated an adjusted EBITDA margin of 27% on a revenue basis and 28% on a contribution ex-TAC basis, compared to 43% and 46% respectively during Q3 2022. For the nine months ended September 30, 2023, we generated an adjusted EBITDA margin of 22% on a revenue basis and 23% on a contribution ex-TAC basis, compared to 47% and 52% respectively in the same prior year period. Turning to our cash flow, we generated $13.1 million in net cash from operating activities during Q3 2023 and $17.1 million for the nine months ended September 30, 2023, after generating net cash from operating activities of $12.6 million during Q3 2022 and $59.1 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, we incurred approximately $6 million in severance and retention bonus-related costs associated with the reorganization of Amobee employees into the Tremor International base. As of September 30, we had $98.9 million in net cash, as well as $80 million undrawn on our revolving credit facility. We intend to leverage our considerable cash reserves for the ongoing needs of the business, investments in internal growth initiatives, and future potential share repurchase programs in the near to intermediate term to support other future potential intermediate and long-term strategic investments and acquisitions. We also generated non-IFRS diluted earnings per ordinary share of $0.09 in Q3 2023 and $0.12 for the nine months ended September 30, 2023 versus non-IFRS diluted earnings per ordinary share of $0.11 in Q3 2022 and $0.44 for the nine months ended September 30, 2022. Finally, I'll now turn to our outlook. While we've seen evidence of ad market stabilization, particularly since July, we are also seeing signs that the recovery will remain uneven and that ongoing macroeconomic headwinds and uncertainty will limit advertising demand and budgets, drive continued managed service softness, and cause our customers to continue to focus near-term spending on our lower-cost solutions, such as display, through at least the remainder of 2023. As a result, for the full-year 2023, we now expect contribution ex-TAC in a range of approximately $310 million to $315 million and adjusted EBITDA in a range of approximately $80 million to $85 million and continue to anticipate that programmatic revenue will reflect approximately 90% of our full-year revenue. We continue to believe that the combination of our durable business model and diversified revenue stream, focus on core strategic growth drivers, enhanced ability to drive multi-solution enterprise deals, greater stability following the completed integration of Amobee, and growing demand for our programmatic solution and recently added product will strongly position the company for outside future market share gain, contribution ex-TAC growth, and improved profitability, particularly as CTV advertising demand conditions improve, and as our rebrand and recently strengthened sales and marketing team continue to gain traction. With my remarks completed, I'll turn the call back to Ofer.
Ofer Druker, CEO
Thank you, Sagi. With Amobee’s team members and technology successfully integrated into our business, we believe we have developed and now operate one of the most comprehensive TV and video-focused platforms in the market, differentiated by unmatched data power solutions that enable better outcomes and greater efficiency for customers across the entire advertising value chain. The integration of Amobee further accelerated our product innovation leadership role and enabled us to launch sought-after and desperately needed solutions that we believe will deepen our relationships with customers, attract new customers and further position us as a trusted industry partner and leader in the combined future CTV and TV advertising ecosystem. Moving forward, the core focus will now be to build on the initial success and momentum generated through our rebrand by ensuring our marketing and sales efforts strongly complement and best emphasize the strength of our platform. We are confident we have made important steps on this front that will better position us for 2024 and beyond. We believe the combination of our rebrand alongside our strengthened sales and marketing organization positions us much more strongly to showcase how our current and future customers can best leverage one data-fueled platform to meet and exceed their advertising goals and KPIs. We also believe we will be able to achieve significant future share gains, grow contribution ex-TAC, and improve profitability over time, particularly as market conditions improve and as customers continue to embrace and increase spending within our data-driven suite of programmatic CTV and video solutions. We have many reasons to be excited and look forward to continuing to provide best-in-class service and solutions to our customers and partners. I would like to thank all of our employees and shareholders for their continued support, and operator we will now take questions.
Operator, Operator
Thank you. Our first question comes from Matt Swanson with RBC Capital Markets. Please go ahead.
Matt Swanson, Analyst
Yes, thank you for taking the questions. And I, of course, would like to extend my thoughts and prayers to you and your employees impacted by the war in Israel. But maybe starting with you, Sagi, and kind of where you left off on the comments, looking at the guidance, thinking about the macro environment you've seen in October and then November to-date, can you just kind of help us think about what your guidance implies for the end of November and December? And basically, like, are you thinking of the macro getting better, stabilizing, kind of like you've seen, or getting worse within that context?
Sagi Niri, CFO
Thank you, Matt. Yes, I think as I said, we are seeing—like in October, November, December is already underway. We are seeing stabilization in the macro. Of course, it's not as it was before the macro challenges and headwinds hit all of us. I think the guidance that we gave is cautious and conservative. We have a lot of different deals that are being handled as we are talking. But since we are not sure everything is going to hit our revenues by the end of the year, and maybe some will move into 2024, we're trying to be as cautious as we can.
Matt Swanson, Analyst
Yeah, that's helpful. And then maybe this is for Ofer and Sagi. You know, the strategic gains we've been talking about, especially the cross-platform planner, and then Nexxen Discovery sounds exciting, and seeing some more traction from the ACR data, it's obviously getting offset a little bit by the macro currently. So could you just maybe give us a little more color on the CTV market specifically about what's giving you confidence that you are making those strategic gains, even though the macro is kind of impacting some of the top line results from that?
Ofer Druker, CEO
Of course, thank you, Matt, and thank you also for your support. When we look at the CTV market in general, we have been in this business for only five years, and we invested two years ago in VIDAA in order to create the ACR. Now it's operational in the U.S. and also in the U.K. Next quarter, we are going to push it also to Australia. And then we will probably announce more markets where we are going to launch our ACR solution. And I think this is like, of course, all our initiatives, including the cross-platform, are being shadowed a little bit by the macroeconomic situation because people are spending less on CTV, which is a more expensive format, as Sagi indicated. People are moving more of their attention to more performance-oriented formats like display, mobile, and so on. But in general, when you look at the ecosystem, and we have some luck that we are the last to report, so we can hear the rest of our peers talking about it. Many people spoke about the conversion between linear and digital CTV, basically. And we believe we are the most ready around that. Why? Because, basically, through the acquisition of Amobee that we made a little over a year ago, we acquired the ideology that there's a very strong linear planning tool, one of a kind in the industry. We added to that the cross-platform solution that we launched in April, which has already been integrated and used by a few of the biggest broadcasters. And now we are moving the attention also to the demand side for that. I think that linear advertisers in general understand now that in order to reach their audience, they need to also expand and reach digital and CTV in order to be effective as linear shrinks. This will continue to shrink probably in the next couple of years. So they need to do that. The only platform that is ready as a cross-platform is ours today in the market. I believe that when macroeconomics change, the adoption of this platform and usage of the platform will grow, together with our readiness, which is early next year, to offer it to demand-side partners, that will be able, basically to use it, and also to utilize our CTV marketplaces in order to extend their reach as needed. I totally agree with you. CTV macroeconomic conditions are not great for the flourishing of CTV at this moment. But I think that when you look at the mid-term and long-term, we have built the capabilities around targeting and measurement through the ACR data that we acquired. We have the cross-planning solution, and we have all the tools that we developed before that. In general, we believe that we are able to offer a very comprehensive solution to people that are using CTV or linear advertisers that want to expand or need to expand to CTV. I think that we are there and hopefully when market conditions improve, people will be able to see that in full scale, our capabilities and we will enjoy the growth that is associated with that. I hope that I answered your question.
Matt Swanson, Analyst
Yes, that was great. Thank you.
Ofer Druker, CEO
Thank you.
Operator, Operator
Our next question comes from Laura Martin with Needham. Please go ahead.
Laura Martin, Analyst
Hi, can you hear me? Okay, you guys always.
Ofer Druker, CEO
Always. Hi, Laura.
Laura Martin, Analyst
Great. Hi there. Okay, so I want to focus on partnerships. You brought up partnerships a couple of times, Ofer. But I noticed you're petitioning the Israeli courts to buy in another $20 million of shares, and you just finished buying $95 million of shares. So typically, partnerships bring money with them, which obviously you don't need or you wouldn't be buying shares. So can you talk about what you're looking for from your partnerships you're mentioning?
Ofer Druker, CEO
So I don't think that we are talking about partnerships that are supposed to bring us money. We are looking at partnerships that can give us capabilities or reach to market and stuff like that. We are, of course, a cash-generating company and we have cash—net cash of close to $100 million. So we are not looking for partnerships that will give us money; we are not looking for investment. We are generating cash and we are cash positive. We are buying shares because for two reasons. First, we have already fulfilled a lot of our ambitions around acquisitions in the past few years. The last acquisition was last year when we acquired Amobee, a massive company with a lot of capabilities that are now added into our stack. Integrating all the companies into our company was a huge effort. That came after additional three acquisitions we made in the last four years. So we are not looking for additional acquisitions in the near future. When you have cash like we do and are generating cash, we think that according to the share price we are witnessing now, it makes sense for us to repurchase our shares in order to support the shareholders and potential investors that will come to the company. And this is the best usage of cash, as you see it right now.
Sagi Niri, CFO
Yes, it's the best investment we see outside now.
Ofer Druker, CEO
Yes.
Laura Martin, Analyst
Okay, but the capabilities you're looking for in partnerships are more new products or add-on platforms or like what you did with VIDAA?
Ofer Druker, CEO
So partnerships are a wide definition. We have, for example, the partnership with VIDAA that gave us the ACR data, gave us media on CTV, and provides a lot of access to data that we need in several different markets. But we have a lot of partnerships that we hold with measurement companies, targeting companies, and media companies. So it's a very wide definition. Usually, we engage in partnerships in order to create integration with partners that add complementary capabilities or can use our technology in order to achieve their goals. We are always looking for good partners that can grow with us in our business.
Laura Martin, Analyst
Okay. Super helpful. And then can you— I think Google is finally going to deprecate cookies after pushing it off four times. Can you remind us how much of your ad targeting comes from cookies and how you guys are positioned over 2021 as Google finally starts deprecating cookies starting in Q1 of '24?
Ofer Druker, CEO
Okay. So we have our graph. We have, of course, the fact that we are an end-to-end solution, which is reducing the dependency on the usage of cookies. The fact that we are heavy on CTV also reduces this dependency. So I think that, in general, we are getting ready for that. In general, I believe that our end-to-end solution will give us an advantage if it happens because of the fact that we are sitting on both sides, and we can create the match even without cookies in most cases. So I think that we are in a very good position on that front.
Laura Martin, Analyst
Okay. And your comment followed by Matt's question earlier, you're guiding for a dramatic deceleration in Q4, and we're already sitting here six weeks into the quarter. And your ex-TAC revenue has been accelerating in every quarter to date, like really nice growth in the third quarter. So congratulations on that. But you're showing negative year-over-year growth in your guidance for Q4. So I just wanted to push on that a little bit and find out what you've seen in the first six weeks of this quarter that is so decelerated, like what verticals specifically have so decelerated from that wonderful Q3 18% revenue growth rate?
Ofer Druker, CEO
So I think that, Laura, again, the fact that we are coming great with our growth is helping us to look at other people and what they are seeing and thinking. I think that there is a lot of instability in the market. So people are feeling that advertisers are more cautious about their spending. Sometimes they are creating orders and then delaying them or minimizing them and so on. So I think that the macro is still affecting us, and we want to be on the conservative side of that matter. The second thing is we have a lot of partnerships and agreements that we are doing with companies that are supposed to use our services, but we think that we're taking into account the possibility that some will flip into Q1 instead of happening this quarter. So we are trying to be cautious around our guidance. But I think the major thing is the macroeconomic conditions are a little bit better than the beginning or middle of the year, but are still not great in Q4. You see the hesitance of the advertisers and their cautiousness about investing their money right now in advertising equity.
Laura Martin, Analyst
Okay. Thank you very much.
Ofer Druker, CEO
Thank you.
Operator, Operator
Our next question comes from Andrew Marok with Raymond James. Please go ahead.
Andrew Marok, Analyst
Great. Thanks for taking my questions. I wanted to dig in a little bit on your recent leadership hires in the sales and marketing organization. Just any color you can provide there on any potential changes in strategy, how your incoming leadership tends to think about the overall sales and marketing strategy, if that differs from what you have now?
Ofer Druker, CEO
Of course. Thank you for this question. So I will start with marketing, if you don't mind. Well, when we look at what we did in the past year or so, we basically took a very big company like Amobee and integrated it into Tremor. Just to give you a little bit of scale, Amobee was 1.5 times the size of Tremor, in general, with a lot of technology that was developed and acquired over more than 10 years. So when we connected everything together, we took the best of every solution, and we sunset some of our solutions we sold. We had a lot of brands that we were using like Tremor, Unruly, and Amobee, and so on. We basically rebranded, but it's not enough to rebrand. You need to do a lot of work about your offering in the market to make it more simple for the salespeople and the market to understand what you are offering. So we looked for a CMO who has a very strong product marketing experience that can help us connect the dots and explain it in a meaningful manner to the market. This will make the story simple and also for the salespeople to compare and understand it much easier and to offer without confusing the clients or using too many names as we have before. So that's a massive change that we've done. The rebrand and the hiring of this CMO are key factors we believe will lead us to the next level. On the sales side, when we look at the sales side, one of the reasons we acquired Amobee was the strong enterprise solution that was there. They developed that over many, many years. To build an enterprise solution sounds easy, but it has a lot of layers to it and comes with a lot of professional people that know how to support the clients, explain to them how to use it, guide, train, and give them a lot of ecosystem around the DSP itself to support its day-to-day work. Basically, offering this enterprise solution is a different sale than selling managed solutions. We wanted to keep the enterprise solution alive and kicking, and we're hiring now people that will be able to sell it in the market. That's why we are bringing new people to the enterprise side who will be able to offer this to new clients, to agencies, and to dependent agencies, to brands that are looking for a solution. I feel that this is important because the sale of an enterprise solution is a little bit different from selling managed solutions or PMPs and so on; it's a longer process and requires different approaches. We need people with experience to handle that, and this is what we are doing now.
Andrew Marok, Analyst
Got it. Thank you for that. And then one more on the macro, I'm afraid. So in terms of customers seeking kind of lower-priced formats, like one thing that we've heard across the space this quarter is that CPMs on non-CTV video are coming down. If there is a flight to discounted inventory or lower-priced inventory, I may have expected non-CTV video to be a little bit stronger for you guys. Is there anything else at play there? Or is it really just customers are seeking the lowest CPMs on an absolute basis, which is driving more strength in mobile and desktop? Thank you.
Ofer Druker, CEO
I think it's a combination of two things. First of all, it's what you said about buying cheaper CPMs, basically. But the second thing is also performance metrics. I think that still, as we discussed in several of our earnings calls in the past, we believe that CTV will also become a performance-oriented platform, but it will take time. So I think that right now, when people are looking for performance in this macroeconomic situation, they are mostly exploring different solutions and formats than CTV, which has more traditional track records proving that generous performance—such as display, OLV, mobile, and so on—and less TV. However, we feel that when macroeconomics improve again, I think people will shift their attention back to CTV. This is essential, and I think that this is important to remember that some of the key verticals that we are tackling with CTV like automotive, and entertainment have not been in great shape in the last six months, some of them facing strikes and slowdowns. Therefore, we feel that these elements also influence the CTV market in general, even for the people who are willing to pay CTV to reach their target audiences.
Andrew Marok, Analyst
Thank you.
Ofer Druker, CEO
Thank you.
Operator, Operator
Our next question comes from Andrew Boone with JMP Securities. Please go ahead.
Andrew Boone, Analyst
Good morning and thanks for taking my question. I'd also like to just say, hey, we're thinking about you guys as the Israel conflict continues to progress. Going back to Laura's question on thinking through the Q4 '23 guide. The run rate now implies something that's fairly negative into 2024. Is there any way that you can help us understand organic growth maybe for Q3 or any thoughts on 2024 as we begin to really fine-tune our estimates for next year?
Sagi Niri, CFO
Yes, Andrew. Thanks. We are not guiding the market regarding like providing a four-month guidance for 2024. I think that when—as Ofer mentioned, we are seeing all the opportunities that are laid in front of us, the different capabilities and products that we can enable for different players within the industry, and the deals that we are now trying to facilitate through Q4 and maybe Q1. I think that to say that we will be in the lower double-digit growth is something that we can stand behind.
Andrew Boone, Analyst
That's very helpful. And then Sagi, another one for you. In your prepared comments, you said Tremor will work towards further optimizing our cost structure. Can you talk about what's left in the business to optimize, or maybe areas that there can be additional efficiencies runup?
Sagi Niri, CFO
Yes. I think we did a lot during 2023. We optimized our cost structure over the year. We are doing it from time to time on an ongoing basis regardless of any acquisition or restructuring. I think we are seeing some of the products we've inherited through the Amobee acquisition and other acquisitions that we can optimize the structure of the R&D teams over there because now we are more familiar with the tools, and we can enhance efficiency. Of course, some of this is part of implementing different AI solutions in order to make our work better, faster, and cheaper. Other than that, I think sales and marketing, we will continue to invest in. The other supporting departments, we are optimizing as we move forward. So most of the optimization will come from R&D probably and taking our resources and getting more out of that, potentially with a lower staff count.
Andrew Boone, Analyst
And then the last one for me is, Ofer historically, Tremor Nexxen has been kind of built by M&A. Amobee is now fully integrated. How do you think about M&A going forward as you guys have kind of a new streamlined run rate business?
Ofer Druker, CEO
So we just finished the integration of Amobee. I think that we mentioned in previous calls that was also slow us down is because we needed to work very hard on the integration. I think that we need to give the company some space now to get together and to start performing on the assets that we have. When we are looking at our technological assets, I think that we have everything that we need; we can always enhance something. However, I think that we have a very strong DSP that is basically a result of numerous DSPs that we integrated into one technology and we did it with best-of-breed technology around the DSP. We have a DMP, we have an SSP, we have a server for CTV, we have planning tools, we have discovery tools; we have all the technology that we can really dream of. I think that if we do make an additional acquisition, we are always looking at capabilities, clients, or additional territories or geographies that we want to include in our growth. However, in the near future, it’s less of an issue. And I think that, like we indicated, the best investment we see now is to repurchase our shares whenever we can in order to support our growth and provide value returns for our shareholders.
Andrew Boone, Analyst
Thank you.
Ofer Druker, CEO
Thank you.
Operator, Operator
Our next question comes from Eric Martinuzzi with Lake Street. Please go ahead.
Eric Martinuzzi, Analyst
I wanted to better understand the Q4 guide. Your contribution ex-TAC is based on the outlook. You expect it to be up about 15% quarter-on-quarter. I'm wondering how you would compare that with normal seasonality?
Sagi Niri, CFO
Yes. So I think the numbers that you extracted from our guidance are, of course, the correct ones. As we said, we have many deals going on in Q4, which is historically the strongest quarter of the year. Seasonality is eating away at that. While we wanted to assume that we were going to do better in Q4, we also have a lot of new revenue streams that require longer sales cycles, and it requires more time for us to educate clients on what exactly we are providing and how we operate. So some of the deals that we assume would happen in Q4 may transition to Q1. Again, I think, as Ofer mentioned, the macro is creating a little bit of a hurdle year after year. Companies do not want to sign a new contract for a new product tool in Q4 and prefer to do it at the beginning of a new year. So this is the reasoning behind why we're growing only 15%. And of course, Q4 is typically the strongest.
Eric Martinuzzi, Analyst
Okay. And then a layer deeper on CTV. CTV revenue declined from Q2 to Q3, essentially going from around $25 million in Q2 to $20 million in Q3. What is implied in the Q4 outlook, the CTV increase? And if so, what’s the expectation?
Ofer Druker, CEO
I think that there are a few reasons for the pressure on CTV we indicated, and I believe it may have started earlier this quarter. We are talking about macroeconomics. So as we noted, people are looking for lower CPM pressures on costs. Even if they're buying, they are buying at lower CPMs, which results in lower revenues for companies like ours in ad tech. The second thing is also the verticals that were historically strong on CTV, like entertainment and automotive, have faced their internal issues, which have affected their spending metrics. As noted, budgets are shifting from CTV to performance-based spending. So even if companies are willing to buy CTV, due to the current macroeconomic situation, and with the caution they are taking, they prefer to allocate spend elsewhere, such as mobile, desktop, and OLV. We have the tools, as I mentioned earlier, such as the ACR that we're expanding into new growing territories, as well as the cross-platform innovations to help drive growth in demand for CTV and to offer something unique in the market that captures the attention of advertisers.
Eric Martinuzzi, Analyst
But do you expect it to grow sequentially?
Ofer Druker, CEO
We expect it to grow, but we don't know; we believe that, in general, if macroeconomic conditions improve, we will see a much bigger opportunity for us. However, if the macroeconomic conditions keep pushing the market down, our growth will be limited. But in general, we believe it will continue growing.
Eric Martinuzzi, Analyst
Thank you.
Ofer Druker, CEO
Thank you.
Operator, Operator
Our last question comes from Mark Kelley with Stifel. Please go ahead.
Mark Kelley, Analyst
Great. Thank you. Two quick ones. Sorry to go back to the macro. But I guess how would you frame the visibility into next year at this point? I know, obviously, last year, budgets really didn't come to fruition or people didn't have visibility until February or March. Is it better this year? I guess that's the first thing. And then the second thing, just back on CTV, with more inventory coming online, CPMs and CTV have come down as well. So I guess, what's the bigger factor in your eyes in terms of the cautiousness in CTV? Is it the absolute CPM of the inventory that is out there? Or is it the services component of CTV, and folks are just not willing to pay the markup for your services? I guess how would you kind of parse those two dynamics out? Thank you.
Ofer Druker, CEO
Okay. I will start with the visibility you mentioned about next year. Typically, only in the middle of Q4, you start seeing. We see that earlier, but the push for next year starts in the second half of Q4. Basically, people shift gears and look at the next year, 2024. It’s too early to say. As we mentioned last year, it was only February or March when people could give a better picture about the year. I think especially when having a situation with macroeconomic conditions like ours, it’s tough to predict now what will happen at the end of 2024. Nonetheless, we have two revenue streams. One of them is more infrastructure and selling platforms, and we see interest there; we have new platforms that we are marketing, such as the ACR, cross-platform, discovery tools, which we believe will be deployed in the upcoming six weeks, even if it might slip slightly into Q1. The other stream relates to business bookings, and we believe that in six weeks, we will start to see an acceleration and will be able to gauge it during the mid-Q1 planning period for advertisers for 2024. So it’s too early for now, but we are certainly optimistic as we have many more products and capabilities that should help us grow our revenues next year. Regarding your second question about CTV: it's important to remember that it's not one metric; it’s not just one factor influencing something. Multiple elements are contributing to CTV's slower pace, as we have just noted. There are several factors at play, including customers migrating towards performance metrics combined with lower advertisement, and the cautiousness around today's market.
Mark Kelley, Analyst
Understood. Thanks very much.
Ofer Druker, CEO
Thank you.
Operator, Operator
This concludes today's conference call. Thank you for joining us. You may now disconnect.