Magnite(MGNI) - 2025 Q2 - Quarterly Results

Executive Summary & Business Highlights Magnite's Q2 2025 performance exceeded guidance, driven by strong CTV and DV+ growth, achieving positive net income and an optimistic full-year outlook Q2 2025 Performance Highlights Magnite reported strong Q2 2025 results, exceeding guidance for total top-line and Adjusted EBITDA, with revenue growing 6% year-over-year and Contribution ex-TAC increasing 10% year-over-year, driven by robust performance in both CTV and DV+ segments, achieving positive net income and significant Adjusted EBITDA growth Q2 2025 Key Financial Highlights | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YoY Change | | :-------------------------- | :-------- | :-------- | :--------- | | Revenue | $173.3M | $162.9M | 6% | | Contribution ex-TAC | $162.0M | $146.8M | 10% | | CTV Contribution ex-TAC | $71.5M | | 14% | | DV+ Contribution ex-TAC | $90.4M | | 8% | | Net income (loss) | $11.1M | ($1.1M) | NM | | Adjusted EBITDA | $54.4M | $44.7M | 22% | | Adjusted EBITDA margin | 34% | 30% | 4 ppt | | Non-GAAP earnings per share | $0.20 | $0.14 | 43% | | Operating cash flow | $33.9M | | | - DV+ Contribution ex-TAC marked twenty consecutive quarters of growth[5] Q3 2025 & Full-Year 2025 Outlook Magnite provided Q3 2025 guidance and reinstated its full-year 2025 expectations, anticipating continued strong growth in Contribution ex-TAC and Adjusted EBITDA, alongside an increased target for Adjusted EBITDA margin expansion and free cash flow growth Q3 2025 and Full-Year 2025 Expectations | Metric | Q3 2025 Guidance (in millions) | Full-Year 2025 Expectations | | :------------------------------------ | :----------------------- | :-------------------------- | | Total Contribution ex-TAC | $161M - $165M | Growth above 10% | | Total Contribution ex-TAC (ex-political) | | Mid-teens growth | | CTV Contribution ex-TAC | $71M - $73M | | | CTV Contribution ex-TAC (ex-political) | 17% - 20% growth | | | DV+ Contribution ex-TAC | $90M - $92M | | | Adjusted EBITDA operating expenses | $109M - $111M | | | Adjusted EBITDA growth | | Mid-teens percentage | | Adjusted EBITDA margin expansion | | At least 150 bps (from 100 bps) | | Free cash flow growth | | High-teens to 20% | CEO Commentary CEO Michael G. Barrett highlighted exceeding Q2 guidance, particularly from DV+, and anticipates accelerated second-half 2025 growth in both CTV and DV+, noting CTV growth was fueled by new partnerships, SMB advertisers, buyer marketplaces, and live sports, while DV+ improvement is due to partner and product progress, with potential future benefits from antitrust rulings - CEO Michael G. Barrett stated, "We delivered total top-line results and Adjusted EBITDA that exceeded our guidance for the second quarter, with significant upside from DV+"[4] - Anticipates acceleration in second-half 2025 growth for both CTV and DV+, despite macro uncertainties[4] - CTV growth driven by new/expanded partnerships, entry of SMB advertisers, critical role in buyer marketplaces, and success in live sports[4] - DV+ growth profile is improving due to partner and product progress, even prior to benefits from any remedies resulting from the antitrust ruling against Google[4] Company Information This section outlines Magnite's business, forward-looking statements, and investor and media contact information About Magnite Magnite is the world's largest independent sell-side advertising company, enabling publishers to monetize content across various screens and formats, including CTV, online video, display, and audio, with its platform trusted by leading agencies and brands globally to access high-quality ad inventory and execute billions of advertising transactions monthly - Magnite (NASDAQ: MGNI) is the world's largest independent sell-side advertising company[2][12] - Provides technology for publishers to monetize content across CTV, online video, display, and audio[12] - Operates globally with offices across North America, EMEA, LATAM, and APAC[12] Forward-Looking Statements This section provides a cautionary disclaimer regarding forward-looking statements, emphasizing that they are based on current expectations and are subject to known and unknown risks and uncertainties, advising investors that actual results may differ materially and to review SEC filings for detailed risk factors, with no obligation for the company to update these statements unless legally required - Forward-looking statements are based on expectations, assumptions, estimates, and projections, identifiable by terms such as "may," "will," "expect," and "believe"[13] - Statements cover future financial performance, acquisitions, macroeconomic conditions, growth of ad-supported programmatic CTV, data usage, client relationships, and regulatory impacts[13] - Actual results may differ materially due to known and unknown risks, uncertainties, and other factors discussed in SEC filings, including the Annual Report on Form 10-K[13][14] Investor Relations & Media Contacts Contact information for investor relations and media inquiries is provided for stakeholders seeking further information about Magnite - Investor Relations Contact: Nick Kormeluk, (949) 500-0003, nkormeluk@magnite.com[24] - Media Contact: Charlstie Veith, (516) 300-3569, press@magnite.com[24] Conference Call & Webcast Details Details for the conference call and webcast to discuss Magnite's second quarter 2025 results are provided, including access numbers for live participation and replay options - Live conference call held on August 6, 2025, at 1:30 PM (PT) / 4:30 PM (ET)[9] - Domestic callers can dial (844) 875-6911, international callers (412) 902-6511, with a passcode to join the Magnite conference call[10] - A simultaneous audio webcast and replay are available at http://investor.magnite.com under "Events and Presentations"[10][11] Financial Results Summary This section summarizes Magnite's Q2 and first-half 2025 consolidated financial performance, detailing key operational metrics and channel contributions Second Quarter 2025 Consolidated Results Magnite's consolidated financial summary for Q2 2025 and the six months ended June 30, 2025, demonstrates significant year-over-year improvements across key metrics, including revenue, gross profit, Contribution ex-TAC, net income, and Adjusted EBITDA, reflecting strong operational performance Q2 2025 and Six Months Ended June 30, 2025, Consolidated Financial Summary | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YoY Change | 6 Months 2025 (in millions) | 6 Months 2024 (in millions) | YoY Change | | :--------------------- | :-------- | :-------- | :--------- | :------------ | :------------ | :--------- | | Revenue | $173.3M | $162.9M | 6% | $329.1M | $312.2M | 5% | | Gross profit | $108.4M | $100.3M | 8% | $201.4M | $183.7M | 10% | | Contribution ex-TAC | $162.0M | $146.8M | 10% | $307.8M | $277.3M | 11% | | Net income (loss) | $11.1M | ($1.1M) | NM | $1.5M | ($18.8M) | NM | | Adjusted EBITDA | $54.4M | $44.7M | 22% | $91.2M | $69.8M | 31% | | Adjusted EBITDA margin | 34% | 30% | 4 ppt | 30% | 25% | 5 ppt | | Basic and diluted EPS | $0.08 | ($0.01) | NM | $0.01 | ($0.13) | NM | | Non-GAAP earnings per share | $0.20 | $0.14 | 43% | $0.32 | $0.20 | 60% | Contribution ex-TAC by Channel In Q2 2025, Connected TV (CTV) continued to be the largest contributor to Magnite's Contribution ex-TAC, demonstrating strong year-over-year growth, followed by Mobile and Desktop channels, a trend consistent for the six months ended June 30, 2025 Contribution ex-TAC by Channel (Q2 2025 and Six Months Ended June 30, 2025) | Channel | Q2 2025 (Amount in thousands) | Q2 2025 (%) | Q2 2024 (Amount in thousands) | Q2 2024 (%) | 6 Months 2025 (Amount in thousands) | 6 Months 2025 (%) | 6 Months 2024 (Amount in thousands) | 6 Months 2024 (%) | | :------ | :--------------- | :---------- | :--------------- | :---------- | :--------------------- | :---------------- | :--------------------- | :---------------- | | CTV | $71,543 | 44% | $62,953 | 43% | $134,768 | 44% | $117,847 | 43% | | Mobile | $63,772 | 39% | $57,713 | 39% | $121,780 | 39% | $111,012 | 40% | | Desktop | $26,641 | 17% | $26,097 | 17% | $51,256 | 17% | $48,457 | 17% | | Total | $161,956 | 100% | $146,763 | 100% | $307,804 | 100% | $277,316 | 100% | Non-GAAP Financial Measures Explanation This section defines Magnite's key non-GAAP financial measures, including Contribution ex-TAC, Adjusted EBITDA, and Non-GAAP earnings per share, explaining their calculation and utility Overview of Non-GAAP Measures Magnite utilizes non-GAAP financial measures, including Contribution ex-TAC, Adjusted EBITDA, Non-GAAP Income (Loss), and Non-GAAP Earnings (Loss) per share, to provide a consistent view of its business performance and trends, with these measures supplementary to GAAP results and not intended as substitutes, and reconciliations provided to their most comparable GAAP measures - Non-GAAP measures are used to evaluate business consistently, measure performance, identify trends, and assess operational efficiencies[15] - These measures are not substitutes for GAAP results, and reconciliations to comparable GAAP measures are provided[16] - Reconciliation of non-GAAP financial expectations to GAAP is not provided due to the variability and uncertainty of future charges[17][18] Contribution ex-TAC Definition Contribution ex-TAC is a non-GAAP financial measure calculated as gross profit plus cost of revenue, excluding traffic acquisition cost (TAC), considered a useful metric for consistently comparing the company's core business performance without the impact of TAC, which represents payments to sellers for advertising inventory - Contribution ex-TAC is calculated as gross profit plus cost of revenue, excluding traffic acquisition cost (TAC)[19] - TAC represents payments to sellers for the sale of advertising inventory through the platform[19] - It is a useful measure for consistent comparison of the core business without considering the impact of TAC[19] Adjusted EBITDA Definition Adjusted EBITDA is a non-GAAP measure defined as net income (loss) adjusted for stock-based compensation, depreciation and amortization (including acquired intangibles), impairment charges, interest, taxes, foreign exchange, acquisition-related items, and other non-core expenses, used by management and investors to evaluate performance, but with limitations as it does not reflect cash requirements for certain items like asset replacement or taxes - Adjusted EBITDA excludes stock-based compensation, depreciation and amortization, impairment charges, interest, taxes, foreign exchange, acquisition and related items, and non-operational real estate and other expenses[20] - It is used by investors and analysts to measure performance without regard to items that vary substantially, and by management for planning, performance measurement, and compensation[21] - Limitations include not reflecting cash requirements for asset replacement, income taxes, working capital needs, capital expenditures, or contractual commitments[21] Non-GAAP Income (Loss) and Non-GAAP Earnings (Loss) per Share Definition Non-GAAP earnings (loss) per share is derived by dividing Non-GAAP income (loss) by Non-GAAP weighted-average shares outstanding, with Non-GAAP income (loss) adjusting net income (loss) by excluding stock-based compensation, M&A/restructuring costs, amortization of acquired intangibles, foreign currency gains/losses, debt-related items, non-operational real estate, and the tax impact of these adjustments, aiming to provide a clearer view of ongoing operational performance - Non-GAAP earnings (loss) per share is calculated as non-GAAP income (loss) divided by non-GAAP weighted-average shares outstanding[23] - Non-GAAP income (loss) excludes stock-based compensation, M&A/restructuring costs, amortization of acquired intangibles, foreign currency gains/losses, debt extinguishment/refinancing, non-operational real estate, Convertible Senior Notes interest expense, and the tax impact of these items[23] - This measure is useful for evaluating ongoing operational performance and facilitating comparisons with other companies, though definitions may vary[23] Condensed Consolidated Financial Statements This section presents Magnite's condensed consolidated balance sheets, statements of operations, cash flows, and earnings per share calculations Condensed Consolidated Balance Sheets Magnite's balance sheet as of June 30, 2025, shows a slight increase in total assets, primarily driven by accounts receivable, while cash and cash equivalents decreased, and total liabilities also increased, mainly due to a significant rise in current debt, partially offset by a decrease in non-current debt Condensed Consolidated Balance Sheets (Selected Items) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :---------------------------------- | :----------------------------- | :------------------------------- | :----- | | Cash and cash equivalents | $426,004 | $483,220 | ($57,216) | | Accounts receivable, net | $1,303,042 | $1,200,046 | $102,996 | | TOTAL CURRENT ASSETS | $1,756,520 | $1,703,180 | $53,340 | | TOTAL ASSETS | $2,927,147 | $2,854,768 | $72,379 | | Accounts payable and accrued expenses | $1,530,389 | $1,466,377 | $64,012 | | Debt, current, net | $207,862 | $3,641 | $204,221 | | TOTAL CURRENT LIABILITIES | $1,764,955 | $1,495,984 | $268,971 | | Debt, non-current, net | $348,556 | $550,104 | ($201,548) | | TOTAL LIABILITIES | $2,158,680 | $2,086,550 | $72,130 | | TOTAL STOCKHOLDERS' EQUITY | $768,467 | $768,218 | $249 | Condensed Consolidated Statements of Operations For Q2 2025, Magnite reported a significant turnaround from a net loss to a net income, driven by a 6% increase in revenue and improved operating income, with total expenses decreasing slightly year-over-year for the quarter, contributing to the positive income from operations Condensed Consolidated Statements of Operations (Selected Items) | Item | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Revenue | $173,332 | $162,880 | $329,103 | $312,199 | | Total expenses | $151,373 | $153,306 | $308,508 | $316,453 | | Income (loss) from operations | $21,959 | $9,574 | $20,595 | ($4,254) | | Total other expense, net | $9,862 | $6,025 | $18,985 | $17,763 | | Net income (loss) | $11,139 | ($1,078) | $1,505 | ($18,835) | | Basic EPS | $0.08 | ($0.01) | $0.01 | ($0.13) | | Diluted EPS | $0.08 | ($0.01) | $0.01 | ($0.13) | - Stock-based compensation expense for Q2 2025 was $19,558 thousand, a slight decrease from $19,660 thousand in Q2 2024[29] - Total depreciation and amortization expense for Q2 2025 was $12,210 thousand, down from $14,236 thousand in Q2 2024[29] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities decreased compared to the prior year period, net cash used in investing activities increased, primarily due to higher purchases of property and equipment, and net cash used in financing activities also increased significantly, mainly driven by treasury stock purchases and taxes paid related to net share settlement Condensed Consolidated Statements of Cash Flows (Selected Items) | Item | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $21,089 | $29,156 | | Net cash used in investing activities | ($33,255) | ($22,556) | | Net cash used in financing activities | ($47,385) | ($5,646) | | CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ($57,216) | $245 | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period | $426,004 | $326,464 | - Purchases of property and equipment increased to $26,891 thousand in 6M 2025 from $15,040 thousand in 6M 2024[31] - Purchase of treasury stock amounted to $22,880 thousand in 6M 2025, compared to none in 6M 2024[31] - Taxes paid related to net share settlement increased to $27,258 thousand in 6M 2025 from $12,743 thousand in 6M 2024[31] Calculation of Basic and Diluted Earnings (Loss) Per Share This section details the calculation of basic and diluted earnings (loss) per share for Magnite, showing the net income (loss) and weighted-average common shares outstanding used for these GAAP metrics, with basic and diluted EPS for Q2 2025 at $0.08, a significant improvement from a loss of $0.01 in Q2 2024 Basic and Diluted Earnings (Loss) Per Share | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) (in thousands) | $11,139 | ($1,078) | $1,505 | ($18,835) | | Weighted-average common shares outstanding (basic) (in thousands) | 141,654 | 140,551 | 141,752 | 139,924 | | Basic earnings (loss) per share | $0.08 | ($0.01) | $0.01 | ($0.13) | | Weighted-average shares used to compute diluted EPS (in thousands) | 148,260 | 140,551 | 149,184 | 139,924 | | Diluted earnings (loss) per share | $0.08 | ($0.01) | $0.01 | ($0.13) | Reconciliations of Non-GAAP Financial Measures This section details reconciliations of Magnite's non-GAAP financial measures to GAAP, covering Contribution ex-TAC, Adjusted EBITDA, and Non-GAAP income and EPS Reconciliation of Revenue to Gross Profit to Contribution ex-TAC This reconciliation illustrates the calculation of Contribution ex-TAC by starting with revenue, subtracting cost of revenue to arrive at gross profit, and then adding back the portion of cost of revenue that excludes traffic acquisition cost (TAC), with Q2 2025 Contribution ex-TAC reaching $161.9 million, an increase from $146.8 million in Q2 2024 Reconciliation of Revenue to Gross Profit to Contribution ex-TAC | Item | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Revenue | $173,332 | $162,880 | $329,103 | $312,199 | | Less: Cost of revenue | $64,953 | $62,606 | $127,752 | $128,508 | | Gross Profit | $108,379 | $100,274 | $201,351 | $183,691 | | Add back: Cost of revenue, excluding TAC | $53,577 | $46,489 | $106,453 | $93,625 | | Contribution ex-TAC | $161,956 | $146,763 | $307,804 | $277,316 | Reconciliation of Net Income (Loss) to Adjusted EBITDA This reconciliation details the adjustments made to net income (loss) to arrive at Adjusted EBITDA, including adding back non-cash expenses like stock-based compensation and depreciation/amortization, as well as other non-core items, with Q2 2025 Adjusted EBITDA at $54.4 million, a 22% increase from $44.7 million in Q2 2024, reflecting improved operational profitability Reconciliation of Net Income (Loss) to Adjusted EBITDA | Item | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net income (loss) | $11,139 | ($1,078) | $1,505 | ($18,835) | | Stock-based compensation expense | $19,558 | $19,660 | $40,767 | $40,491 | | Depreciation and amortization expense (excl. acquired intangibles) | $9,320 | $6,662 | $17,538 | $12,640 | | Amortization of acquired intangibles | $2,890 | $7,574 | $10,273 | $15,163 | | Interest expense, net | $5,071 | $6,793 | $10,248 | $14,751 | | Provision (benefit) for income taxes | $958 | $4,627 | $105 | ($3,182) | | Foreign exchange (gain) loss, net | $4,944 | $516 | $7,161 | ($1,799) | | Loss on extinguishment of debt | — | — | $2,152 | $7,387 | | Other debt refinancing expense | — | — | $967 | $3,140 | | Non-operational real estate and other (income) expense, net | $511 | ($7) | $475 | $17 | | Adjusted EBITDA | $54,391 | $44,747 | $91,191 | $69,773 | Reconciliation of Net Income (Loss) to Non-GAAP Income This reconciliation adjusts net income (loss) by adding back various non-cash and non-recurring expenses, such as stock-based compensation, M&A/restructuring costs, and debt-related expenses, and then applying a tax effect to arrive at Non-GAAP income, with Q2 2025 Non-GAAP income at $30.4 million, up from $21.5 million in Q2 2024 Reconciliation of Net Income (Loss) to Non-GAAP Income | Item | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net income (loss) | $11,139 | ($1,078) | $1,505 | ($18,835) | | Stock-based compensation expense | $19,558 | $19,660 | $40,767 | $40,491 | | Merger, acquisition, and restructuring costs (incl. acquired intangibles amortization, excl. stock-based comp) | $2,890 | $7,574 | $10,273 | $15,163 | | Foreign exchange (gain) loss, net | $4,944 | $516 | $7,161 | ($1,799) | | Loss on extinguishment of debt | — | — | $2,152 | $7,387 | | Other debt refinancing expense | — | — | $967 | $3,140 | | Non-operational real estate and other (income) expense, net | $511 | ($7) | $475 | $17 | | Interest expense, Convertible Senior Notes | $422 | $422 | $843 | $843 | | Tax effect of Non-GAAP adjustments | ($9,074) | ($5,603) | ($15,896) | ($16,939) | | Non-GAAP income | $30,390 | $21,484 | $48,247 | $29,468 | Reconciliation of GAAP EPS to Non-GAAP EPS This reconciliation details the calculation of Non-GAAP earnings per share by adjusting GAAP net income (loss) and weighted-average shares outstanding for various non-GAAP items, including the dilutive effect of equity instruments and Convertible Senior Notes, with Q2 2025 Non-GAAP EPS at $0.20, a 43% increase from $0.14 in Q2 2024 Reconciliation of GAAP EPS to Non-GAAP EPS | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | GAAP earnings (loss) per share: Basic | $0.08 | ($0.01) | $0.01 | ($0.13) | | GAAP earnings (loss) per share: Diluted | $0.08 | ($0.01) | $0.01 | ($0.13) | | Non-GAAP income (in thousands) | $30,390 | $21,484 | $48,247 | $29,468 | | Non-GAAP earnings per share | $0.20 | $0.14 | $0.32 | $0.20 | | Weighted-average shares used to compute basic EPS (in thousands) | 141,654 | 140,551 | 141,752 | 139,924 | | Dilutive effect of weighted-average common stock options, RSUs, and PSUs (in thousands) | 6,602 | 4,972 | 7,397 | 4,672 | | Dilutive effect of weighted-average ESPP shares (in thousands) | 4 | 55 | 35 | 60 | | Dilutive effect of weighted-average Convertible Senior Notes (in thousands) | 3,210 | 3,210 | 3,210 | 3,210 | | Non-GAAP weighted-average shares outstanding (in thousands) | 151,470 | 148,788 | 152,394 | 147,866 |