Nexxen (NEXN) Q3 2026 earnings review
Nexxen's profit climbs, but its sales growth slows
Nexxen, which runs software for buying and selling ads, earned more on steady spending, but its sales growth slowed. Net revenue, its main sales measure, rose 8%, a weaker pace than in the first half. Nexxen kept its full-year outlook after three increases, so by our math core profit must climb about 43% in the fourth quarter.
| Net revenue (contribution ex-TAC) | $100.3M +8% from a year ago |
|---|---|
| Core profit, excluding one-offs (adjusted EBITDA) | $34.5M +22% from a year ago |
| Connected TV revenue | $34.1M +39% from a year ago |
| Full-year outlook | Unchanged middle of the range: 12% net revenue growth |
⚖️ Verdict: ⚪ Neutral
The story is unchanged, because profit recovered but the outlook still needs a record finish to the year. The good news: connected TV, meaning ads on internet-linked TV sets, grew 39%, and costs barely moved. The bad news: by our math, ad sales outside TV screens shrank 2%, despite election spending.
The question now is whether TV advertising can lift Nexxen while its other ad lines weaken. Either TV keeps its pace after the weak 2025 comparisons pass, or the jump came mostly from that easy base. Results from early 2027 will settle it.
🐂 Bull Case
Connected TV Ad Sales Rose 39%
Connected TV (CTV) means ads shown on internet-linked television sets, and Nexxen has built its plan around it. It sold a record $34.1 million of these ads in the third quarter, 39% more than a year earlier.
Part of that gain reflects a weak base, because CTV sales fell 17% in the same quarter of 2025. Against the third quarter of 2024, the rise is about 16% by our math. The risk on the other side is a sharp slowdown once those weak quarters drop out of the comparison.
What to watch: TV revenue growth in the first half of 2027, when Nexxen laps gains of 12% and 33%. Growth well above the company-wide rate then would show TV winning new budgets, not just recovering lost ones.
Net Revenue From Large Clients Grew Over 40%
Enterprise customers are large brands and agencies that run campaigns themselves on Nexxen's ad-buying software. Net revenue from this group, the measure Nexxen calls contribution ex-TAC, grew more than 40% from a year ago. Several of these clients named its data and AI tools as the reason, the company said.
Eight agencies and holding companies now test or use Nexxen inside their own AI systems, where its AI agents handle tasks such as reporting. This matters because clients who buy directly use Nexxen's data, TV supply and software together, so a rival has a harder job winning them away.
What to watch: a dollar figure for enterprise revenue. Chief executive Ofer Druker has said this group should supply most of net revenue within about two years, and only a dollar figure shows how close it is.
Operating Costs Held Still While Revenue Rose 9%
Nexxen spent heavily on AI, data and sales in the first half, so core profit fell even as revenue rose. The third quarter broke that pattern. Spending on research, sales and administration totalled $55.3 million, almost exactly the year-earlier figure, while revenue climbed 9%.
- Research and development: 13.7% of revenue, down 1.9 percentage points
- Sales and marketing: 30.7% of revenue, down 1.3 points
- Administration: 9.3% of revenue, down 1.3 points
- Core profit margin, excluding one-offs: 34% of net revenue, against 30%
This matters because almost all of the margin gain came from these three cost lines, not from cheaper ad delivery. Chief executive Ofer Druker described the quarter as "returning to Adjusted EBITDA growth and margin expansion". But spending also dropped about $4.5 million from the second quarter by our math, so one quarter cannot show a lasting change.
What to watch: spending on research, sales and administration in the fourth quarter, due early next year. Costs near this level would let most extra revenue reach profit, as the full-year plan requires.
Positives this quarter didn't test
Two standing strengths got praise in the release but no new figures, so this quarter neither confirmed nor weakened them.
- Ads inside phone apps: Nexxen called them a source of strength but gave no growth rate, after gains of 18% in Q1 and 23% in Q2; a rate in the next report would show whether the trend held.
- Data products: Nexxen linked Shopify sales data and Acxiom, Omnicom's consumer data unit, to its system; a revenue figure for data sales would show whether these deals pay.
🐻 Bear Case
Ad Sales Outside Connected TV Fell 2%
Chief executive Ofer Druker spoke of "momentum accelerating across our key growth engines". The overall numbers point the other way. Growth in net revenue, Nexxen's main sales measure, slowed for a second straight quarter, even though U.S. midterm election ads added spending, the company said.
- Net revenue growth: 8.4% in Q3, after 11.4% in Q2
- Automated ad sales outside connected TV: down about 2% by our math
- Same measure in Q1 and Q2: up about 15% and 1%
- Video share of automated ad sales: 66%, against 70% a year earlier
This matters because connected TV, meaning ads on internet-linked TV sets, now supplies all the growth in automated ad sales. The rest, which includes websites and phone apps, went from strong growth to a decline within two quarters. Nexxen does not report its desktop website sales, the part most exposed if people swap web searches for AI chatbots.
What to watch: automated ad sales minus TV sales in the fourth quarter, a figure readers can work out from Nexxen's own numbers. A second decline would mean its growth rests on TV alone.
The Year's Profit Target Needs a Record Q4
Nexxen did not change its 2026 target for core profit, a measure that leaves out interest, tax, depreciation, share-based pay and one-offs. After nine months, core profit stands 4% below the same period of 2025. So the unchanged target asks a lot of the fourth quarter.
By our math, the middle of the range needs a fourth-quarter margin of about 43% of net revenue. Nexxen reached 42% in the fourth quarter of 2024, when presidential election ads lifted sales. It says "most incremental Contribution ex-TAC", meaning most extra net revenue, will reach core profit.
What to watch: fourth-quarter core profit, due early next year. A result near the middle of the target would show that the third quarter's cost control was a lasting change.
Risks this quarter didn't answer
Six standing risks got no new numbers in the release, so each stays open until Nexxen discloses the figure named below.
- TV Home Screen, ads on smart-TV start screens: no revenue figure yet; the first one would show whether it adds to 2027 growth.
- AI buying agents: no figure for the fee Nexxen keeps on each ad, the number that would show any squeeze.
- Large outside buyers: no customer concentration figure after one buyer's cut in late 2025.
- Acquisitions: no deal named; the first purchase since 2022 would test execution.
- Influencer marketing: Nexxen closed RhythmInfluence with no material profit effect; the fate of its other non-automated lines is still open.
- Israel: no cost figure for the regional war.
👓 Other Themes
Buybacks Will Restart Late in Q4
Nexxen bought back no shares for a second straight quarter, keeping cash free while it weighs small acquisitions. It extended its $40 million buyback authorization and expects to restart purchases in the second half of the fourth quarter. The Israeli company also completed a $15 million follow-on stake in V, the smart-TV software maker formerly called VIDAA, lifting its holding to about 6%.
Election Ads Helped Q3 and Early Q4
U.S. midterm election campaigns spent money through Nexxen in the third quarter and early in the fourth, the company said, without giving an amount. That spending will not recur in 2027, but Nexxen "does not expect political revenue comparisons to represent a meaningful growth headwind in 2027". Without the figure, readers cannot separate election money from the underlying trend.
💲 Other KPIs
Free cash flow reached about $38.9 million by our math, 45% above a year ago. Cash generation has stayed positive since the first quarter, when slow collections from customers pushed it below zero. Spending on equipment and capitalized software took 7% of revenue, against 9% a year earlier.
Money customers owe Nexxen rose 18% from a year ago, about twice the pace of revenue. The advertising software group also owes more to publishers: trade payables reached $246.9 million, up 22%. Because it collects from advertisers and pays sites and apps, the two balances largely offset, and cash still increased.
The diluted share count, which includes options, edged up again while buybacks stayed paused. It reached 59.0 million, against 57.5 million in the fourth quarter of 2025. A year earlier it stood at 59.5 million, so the yearly decline has nearly vanished, and per-share profit no longer gets help from a shrinking count.
🔮 Guidance
Unchanged. Nexxen still plans about 12% growth in net revenue this year. By our math, that leaves about $112.3 million for Q4, up 15%. The base is soft, because Q4 2025 shrank after one large buyer pulled back. Against Q4 2024, the target needs only about 7% growth, and Nexxen called October its best sales month ever.
Unchanged. The advertising software group still plans about 13% growth in automated ad sales. By our math, Q4 then needs about $111.5 million, an 18% gain and twice the third-quarter pace. Each of the three raises earlier this year was smaller than the one before. Election spending and TV ads support the target, but sales outside TV fell in Q3.
Unchanged again. The plan still has core profit, excluding one-offs, up about 10% this year. By our math, Q4 must deliver about $48.6 million, a 43% rise and a quarterly record. Nexxen expects profit and its margin to improve from both Q3 and last year. That looks reachable only if costs stay near third-quarter levels.
❓ Key Questions
How much revenue does TV Home Screen bring in?
Nexxen says its ads on smart-TV start screens are scaling as planned but has never given a figure. Without one, readers cannot judge whether TV growth has a new source once the weak 2025 comparisons end.
What share of net revenue comes from enterprise clients?
Nexxen reports only that this group grew over 40%. Chief executive Ofer Druker has said it should supply most of net revenue; a dollar figure would show how far it has to go.
Why are automated ad sales outside TV shrinking?
By our math, automated ad sales outside connected TV fell about 2% in Q3. Nexxen should say how much comes from desktop websites and how fast that part is declining.
Does the 34% margin goal for 2027 still hold?
Nexxen said last quarter that core profit could reach 34% of net revenue in 2027. The release did not repeat it, and the 2026 plan already needs a fourth-quarter margin near 43%.
How large an acquisition is Nexxen considering?
Nexxen paused buybacks for two quarters to keep cash for small acquisitions, and it holds $152.9 million with no long-term debt. Readers need the size and focus of any deal before buybacks restart.