Nexxen International's Q1 2025 Surge: A Compelling Buy Signal in Ad Tech

The digital advertising landscape is undergoing a seismic shift, and Nexxen International (NASDAQ: NEXN) is at the epicenter. The company’s Q1 2025 results—boasting a 40% surge in CTV revenue, a 95% jump in EBITDA, and aggressive buybacks—signal a turning point. Backed by its AI-driven differentiation and fortress-like balance sheet, Nexxen is primed to capitalize on the consolidation of ad tech. This is a rare opportunity to buy a leader at a valuation discount.

CTV Dominance: The Engine of Growth

Nexxen’s Connected TV (CTV) revenue soared to $26.4 million in Q1, up 40% year-over-year, now accounting for 37% of programmatic revenue. This segment’s rapid expansion reflects the company’s strategic focus on high-margin video and streaming content. Partnerships with platforms like FOX Sports, DirecTV, and Tubi (now expanded into the U.K.) have amplified inventory reach, while AI-driven targeting tools like nexAI optimize ad performance.

The CTV boom isn’t just about volume—it’s about profitability. Video revenue now makes up 75% of programmatic sales, up from 66% a year ago, as advertisers shift budgets to premium, data-rich environments. Nexxen’s 15% increase in monthly active users further underscores its grip on this critical space.

Margin Expansion: A Structural Turnaround

Nexxen’s Adjusted EBITDA jumped to $23.1 million in Q1, a 95% year-over-year increase, with margins expanding to 31%—nearly double the 17% recorded in Q1 2024. This isn’t just a one-time win. Management has reengineered operations, cutting costs and streamlining its technology stack. The Contribution ex-TAC metric (excluding traffic acquisition costs) rose 8% to $75 million, proving that Nexxen’s efficiencies are here to stay.

The company’s non-IFRS net income surged 808% to $10.6 million, a stark contrast to peers still grappling with margin pressures. This margin resilience positions Nexxen to outperform even as ad markets face softness in Q2.

Buybacks and Balance Sheet: A Shareholder’s Dream

Nexxen’s $500 million capital return plan is a masterstroke. By April 2025, it had already repurchased 12 million shares, with $39 million remaining under its latest $50 million program. Since 2022, the company has reduced shares outstanding by 29.2%, directly boosting per-share metrics.

With $164.7 million in cash and a $90 million undrawn credit facility, Nexxen has no debt and ample liquidity to fund growth or repurchases. This financial flexibility is a moat in uncertain times.

AI Differentiation: Nexxen’s Secret Weapon

While competitors play catch-up, Nexxen is leading with nexAI, its generative-AI platform now adopted by dozens of clients. This tool automates data analysis, ad targeting, and campaign optimization—reducing costs and boosting ROI for advertisers. Meanwhile, Nexxen U, an educational initiative, trains professionals in converging media technologies, deepening customer relationships.

These initiatives aren’t just nice-to-haves; they’re revenue engines. By monetizing AI through SaaS-like services, Nexxen is diversifying away from cyclical ad spend and into recurring streams.

Navigating Macro Risks

Critics will point to Q2’s soft ad market—a byproduct of U.S. trade policy uncertainty and economic caution. But Nexxen’s diversified client base (101 new advertisers in Q1, including enterprise self-service clients) and CTV focus insulate it from broad declines. Management reaffirmed full-year guidance of $380 million Contribution ex-TAC and $125 million EBITDA, underpinned by long-term contracts and geographic expansion.

Valuation: A Discounted Leader

Nexxen trades at a P/E of 23.7 and EV/EBITDA of 5.6x—35% below the sector median of 8.75x. This discount ignores its margin outperformance and CTV leadership. Peers like Prime Industries (28x P/E) and Globtech (22x P/E) command higher multiples despite weaker growth trajectories.

The recent reverse split (1-for-50) has already begun narrowing the valuation gap, as institutional investors like Marshall Wace LLP and Renaissance Technologies have piled in.

Conclusion: A Buy Signal for the Long Run

Nexxen International is a turnaround story with scale—combining margin strength, CTV dominance, and AI innovation at a deeply undervalued price. With $18–$20 price targets achievable by year-end 2025, now is the time to act.

The risks? Sure—ad markets could stay soft, and AI adoption might lag. But Nexxen’s fortress balance sheet, diversified client roster, and structural growth in CTV/SaaS make it a rare buy in a volatile sector.

The signal is clear: NexN is a buy below $13/share. The upside is compelling, and the risks are manageable. This is a stock to own for the next decade—and the entry point is now.