Summary of Magnite (MGNI) FY Conference Call - August 18, 2025 Company Overview - **Company**: Magnite (MGNI) - **Industry**: Digital Advertising, specifically focusing on Supply-Side Platform (SSP) for Connected TV (CTV) and programmatic advertising Key Points and Arguments 1. **Investment Case**: Magnite is positioned for growth despite a challenging macro ad environment, with a revenue growth of over 10%, EBITDA growth of 15%, and free cash flow growth of 20% in recent years [6][7][8] 2. **Market Position**: Magnite is the second-largest SSP with a 6% market share, significantly behind Google at 60% but ahead of PubMatic at 4% [12] 3. **Growth Drivers**: The company has seen improved growth rates due to exclusive partnerships and a shift in how publishers view SSPs, moving from multiple partners to a single trusted partner for monetization [10][15][16] 4. **Connected TV (CTV) Revenue**: CTV accounted for 44% of revenues last quarter, with expectations for continued growth in this segment [24][26] 5. **Programmatic Advertising**: The shift towards programmatic advertising is accelerating, with significant growth opportunities as more businesses, including SMBs, enter the market [21][22] 6. **SpringServe Platform**: The integration of SpringServe enhances operational efficiency and customer retention, with a 75% crossover of customers using both ad serving and SSP services [40][41] 7. **Market Conditions**: The overall marketplace is stable, with growth driven by unique deals and partnerships, despite some caution due to broader economic conditions [52][53] 8. **Antitrust Context**: The upcoming Google antitrust trial is seen as a potential catalyst for market share shifts, with expectations that behavioral remedies could lead to significant share gains for Magnite [61][68][70] Additional Important Insights 1. **Long-Tail Publishers**: The decline in click-through rates due to AI search trends primarily affects lower-quality publishers, while Magnite's business remains insulated due to its focus on premium publishers [28][30][34] 2. **Market Share Potential**: If Google’s market share were to decline due to antitrust actions, Magnite could potentially capture a significant portion of that share, translating to substantial revenue increases [67][69] 3. **Clearline Initiative**: This initiative aims to provide a more competitive pricing structure for programmatic guaranteed deals, allowing for more direct transactions between buyers and publishers [46][50] 4. **Future Outlook**: The company is optimistic about future growth, citing a strong pipeline of new partnerships and the ability to convert these into revenue [78] This summary encapsulates the key insights from the conference call, highlighting Magnite's strategic positioning, growth potential, and the implications of the evolving digital advertising landscape.

Financial Data and Key Metrics Changes - Total revenue for Q2 was $173 million, up 6% from 2024, with contribution ex TAC at $162 million, an increase of 10% [24] - Adjusted EBITDA grew 22% year over year to $54 million, reflecting a margin of 34%, compared to 30% last year [27] - Net income was $11 million for the quarter, compared to a net loss of $1 million for 2024 [26] Business Line Data and Key Metrics Changes - CTV contribution ex TAC was $72 million, up 14% year over year, or 15% excluding political contributions [24] - DV plus contribution ex TAC was $90 million, an increase of 8% from the second quarter last year [24] - Contribution ex TAC mix for Q2 was 44% CTV, 39% mobile, and 17% desktop [25] Market Data and Key Metrics Changes - The strongest performing verticals were technology, health and fitness, and financial, while the auto sector was the weakest [25] - The company is seeing significant growth in the commerce media space, with new partnerships including Western Union and PayPal [13] Company Strategy and Development Direction - The company is focused on expanding its CTV business through new partnerships and technology enhancements, particularly in programmatic advertising [7][10] - There is a strong emphasis on AI integration within the company's products to enhance targeting and inventory categorization [17][18] - The company is preparing for potential market share shifts due to the antitrust ruling against Google, which could benefit its DBplus business significantly [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2025, expecting growth rates to accelerate, particularly in CTV [21] - The overall ad spend environment appears less volatile, allowing the company to reinstate its full-year guidance [23][30] - Management remains cautious but confident in navigating the current environment, with a focus on strategic investments in growth areas [31][32] Other Important Information - The company reported a cash balance of $426 million at the end of Q2, with net leverage remaining at 0.6x [28] - Capital expenditures for the year are expected to be approximately $60 million, with a focus on transitioning to on-premises infrastructure [31] Q&A Session Summary Question: Can you discuss the recent partnerships and market momentum? - Management highlighted strong traction in the marketplace, particularly in CTV, and noted a modular approach to product offerings that has been successful [35] Question: What is the potential impact of the Google antitrust case? - Management indicated that while the specifics of the remedies are uncertain, they believe any changes will create a more level playing field that could benefit Magnite significantly [36][70] Question: What is driving the reiteration of the prior guidance? - Management noted that the ad spend market has stabilized more than initially feared, allowing for a more optimistic outlook [40][41] Question: How is the company positioned regarding AI developments? - Management discussed the integration of AI capabilities to enhance inventory discovery and targeting, which is expected to drive revenue growth [102] Question: What are the expectations for live sports contributions? - Management acknowledged that while live sports are still in early stages, there is significant potential for growth as more events transition to programmatic sales [54]

Financial Data and Key Metrics Changes - Total revenue for Q2 was $173 million, up 6% from 2024 [24] - Contribution ex TAC was $162 million, up 10%, exceeding the high end of guidance [24] - Adjusted EBITDA was $54 million, growing 22% with a margin of 34% compared to 30% last year [28][23] - Net income was $11 million for the quarter compared to a net loss of $1 million for 2024 [27] Business Line Data and Key Metrics Changes - CTV contribution ex TAC was $72 million, up 14% year over year or 15% excluding political [24] - DV plus contribution ex TAC was $90 million, an increase of 8% from the second quarter last year [24] - Contribution ex TAC mix for Q2 was 44% CTV, 39% mobile, and 17% desktop [25] Market Data and Key Metrics Changes - Significant growth came from partnerships with Roku, Netflix, LG, Warner Bros. Discovery, and Paramount [7] - The SMB segment is expected to explode over the next three to five years, driven by specialized DSPs [10] - The company is seeing share gains in DV plus from some of the largest DSPs [13] Company Strategy and Development Direction - The company is focused on deepening partnerships with major agency HoldCo's and expanding its CTV technology [10][12] - Continued investment in live TV, Clearline, and Curation offerings is planned as these areas represent attractive growth opportunities [21] - The company is preparing for potential outcomes from the antitrust ruling against Google, which could shift market share [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic downsides were not as pronounced as initially feared, leading to stronger than expected growth [23] - The company expects growth rates to accelerate in the second half of 2025, particularly in CTV ex political [21] - Management remains cautious with Q3 and full year expectations but is optimistic about the overall ad spend environment stabilizing [30] Other Important Information - The company is developing AI capabilities as a core product focus, including audience discovery and inventory categorization [16][17] - The cash balance at the end of Q2 was $426 million, with plans to pay off convertible notes at maturity [29] - The company intends to continue its share repurchase program, with $88 million remaining [30] Q&A Session Summary Question: Can you discuss the broader momentum and new partnerships? - Management highlighted the traction in the marketplace, particularly in CTV, and the success of their modular product approach [36] Question: What is the base case regarding the Google antitrust case? - Management stated that it is difficult to predict outcomes until remedies are ruled by the judge, but they see merit in potential civil actions [37] Question: What is driving the reiteration of the prior guidance? - Management noted that the ad spend market has stabilized, leading to comfort in reiterating full year expectations [40][41] Question: How do you view the impact of AI on your business? - Management expressed confidence that AI tools will enhance inventory discovery and targeting, leading to increased revenue [102] Question: What is the outlook for live sports contribution? - Management indicated that while it is still early, they are optimistic about the potential contributions from live sports partnerships [53] Question: How is Magnite positioned with platform companies? - Management noted that there is a realization among platform owners that they are under-monetizing inventory without third-party demand [58] Question: What are the implications of the Google antitrust ruling? - Management believes that any remedies resulting in a more level playing field will be beneficial for their business and could shift market share [20][21]

Industry Overview - The digital advertising industry is rapidly transforming due to advancements in AI, privacy regulations, and diverse media channels, leading to increased digital ad spending as marketers shift budgets from traditional formats to online platforms [1][3] - Global digital ad spending was valued at $600 billion in 2024 and is projected to reach $1.5 trillion by 2034, with a CAGR of 9.47% from 2025 to 2034 [3] Company Analysis: Taboola (TBLA) - Taboola is a global leader in performance advertising, connecting thousands of advertisers to approximately 600 million daily users through its Realize platform [2] - The company has shifted focus from native advertising to performance advertising, reflecting the rising demand for comprehensive performance solutions beyond traditional platforms [4] - Taboola's revenue growth strategy includes enhancing Realize's capabilities and refining its go-to-market strategy, resulting in a 3% revenue growth, 53% increase in adjusted EBITDA, and 48% improvement in operating cash flow in Q1 2025 [5] - For 2025, Taboola expects revenues between $1.84 billion and $1.89 billion, with net income projected between $122 million and $128 million [6] - The company is investing around 8% of 2024 revenues in R&D to advance AI features and has expanded its share repurchase authorization by $200 million [6] Company Analysis: Magnite (MGNI) - Magnite operates as a leading supply-side platform (SSP) in the Connected TV (CTV) ad-tech sector, processing billions of impressions monthly [7][10] - The company has established significant partnerships with major players like Netflix, Roku, and Warner Bros. Discovery, enhancing its market position [8][10] - Magnite's strategy focuses on continuous investment in technology and expanding its sales organization, capitalizing on the shift towards CTV advertising [10] - The company is projected to benefit from increased regulatory scrutiny on Google, which may shift publisher preference towards independent platforms like Magnite [8][11] - For 2025, Magnite's revenues and EPS are expected to increase by 14% and 15.5% year-over-year, respectively [14] Financial Metrics - Taboola is trading at a forward P/E of 19.9, while Magnite is at 45.5, both below their respective three-year medians [9][17] - Year-to-date, MGNI shares have gained 51%, while TBLA shares have lost 2% [18]

Core Insights - Amazon Publisher Services (APS) and Magnite have announced a deeper collaboration to enhance streaming TV advertising through APS' Transparent Ad Marketplace and Magnite's SpringServe [1][4] - This partnership aims to provide publishers with better access to high-quality demand and offers Magnite increased access to streaming TV inventory on Amazon devices [1][4] Company Collaboration - The collaboration builds on previous integrations between Amazon Ads and Magnite, with Magnite being a launch partner for APS' Transparent Ad Marketplace in 2016 and joining Amazon Ads' Certified Supply Exchange Program in 2024 [2] - The integration allows for centralized reporting and access to unique demand, as expressed by Rose McGovern from DIRECTV Advertising [3] Strategic Goals - Magnite's President, Sean Buckley, emphasized the goal of connecting advertisers to premium streaming inventory on Fire TV devices through this collaboration [4] - Scott Siegler from APS highlighted the shared objective of maximizing the effectiveness of streaming TV advertising to enhance consumer ad experiences [4] Company Overview - Magnite is recognized as the world's largest independent sell-side advertising company, facilitating monetization for publishers across various formats including CTV, online video, display, and audio [5] - The company operates globally with offices in major cities across North America, EMEA, LATAM, and APAC, executing billions of advertising transactions monthly [5]

Financial Data and Key Metrics Changes - Q1 2025 total revenue was $156 million, up 4% from Q1 2024, with contribution ex TAC at $146 million, an increase of 12% [21][25] - Adjusted EBITDA grew 47% year-over-year to $37 million, reflecting a margin of 25%, compared to 19% in Q1 2024 [6][25] - Net loss for the quarter was $10 million, improved from a net loss of $18 million in Q1 2024 [25][26] Business Line Data and Key Metrics Changes - CTV contribution ex TAC was $63 million, up 15% year-over-year, exceeding guidance [21][22] - DV plus contribution ex TAC was $83 million, an increase of 9% from the previous year, also exceeding guidance [22][25] - Contribution ex TAC mix for Q1 was 43% CTV, 40% mobile, and 17% desktop [23] Market Data and Key Metrics Changes - Strong growth in CTV driven by partnerships with major players like Roku, Netflix, and Warner Bros. Discovery [7][10] - Agency marketplaces powered by Clearline product remain a bright spot, with strong support from buyers like GroupM and Omnicom [11] - Live sports segment saw growth with nearly 20 partners using live stream acceleration technology [12] Company Strategy and Development Direction - The company is focused on enhancing its CTV capabilities through the next generation of SpringServe, set for general availability in July [8][9] - Emphasis on programmatic CTV as a structural advantage over legacy SSPs, aiming to capture more market share as budgets flow into CTV [13][18] - Investment in AI and machine learning to improve operational efficiency and audience targeting capabilities [15][16] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the resilience of ad spend, with CTV contribution ex TAC growing in the mid-teens in Q2 [20][19] - Caution expressed regarding potential dampening of growth rates due to tariff-related economic uncertainty [20][29] - Anticipation of significant upside from the recent antitrust ruling against Google, which could level the playing field in the ad tech industry [17][18] Other Important Information - Cash balance at the end of Q1 was $430 million, down from $483 million at the end of Q4 2024, attributed to seasonality and share repurchases [26][27] - The company has reduced its Term Loan B interest rate, resulting in annual interest savings of approximately $2.7 million [27] Q&A Session Summary Question: What is the potential opportunity from the Google antitrust case? - Management believes that behavioral remedies could provide immediate benefits, while structural changes may take longer [34] - Each 100 basis point increase in market share could result in approximately $50 million in contribution ex TAC [35][36] Question: How does the new SpringServe platform differentiate Magnite? - The integration of ad server and SSP capabilities creates a more efficient path to premium CTV inventory, enhancing competitive advantage [40][41] Question: What are the trends in customer and advertiser conversations? - Conversations indicate a cautious but steady ad spend, with no significant cuts reported, although some sectors like European auto are experiencing declines [51][52] Question: How is the pricing environment in CTV? - There has been a decline in CPMs due to increased supply, but this is expected to lead to more programmatic transactions, benefiting the company [77][78] Question: What is the outlook for small and medium brands in CTV? - The decline in CPMs has created a more accessible entry point for SMBs to test CTV advertising [87] Question: How is Magnite involved in enhancing user targeting for Netflix? - The company is actively participating in building out features that enhance audience targeting, which could lead to higher value services [92]

Financial Highlights Q1 2025 May 7, 2025 Magnite SÿĄă HÿrĀor FORWARD-LOOKING STATEMENTS This presentation and management's prepared remarks during the conference call referred to above include, and management's answers to questions during the conference call may include, forward-looking statements, including statements based upon or relating to our expectations, assumptions, estimates, and projections. In some cases, you can identify forward-looking statements by terms such as "may," "might," "will," "objec ...

Financial Data and Key Metrics Changes - Magnite generated contribution ex-TAC of $607 million and processed ad spend of over $6 billion, achieving record highs for the company [9][10] - Adjusted EBITDA reached $197 million, with free cash flow of $118 million, both record figures [10][39] - Total revenue for Q4 was $194 million, up 4% from Q4 2023, while contribution ex-TAC was $180 million, an increase of 9% [39][40] - Net income for the quarter was $36 million, compared to $31 million for Q4 2023, with GAAP earnings per diluted share increasing 50% to $0.24 [45][46] Business Line Data and Key Metrics Changes - CTV contribution ex-TAC increased 23% year-over-year, while DV+ contribution ex-TAC grew only 1% due to unusual spending patterns post-election [11][40] - CTV accounted for 43% of contribution ex-TAC, with mobile at 40% and desktop at 17% [41] - The company reported strong growth in CTV driven by ad spend growth and a stabilizing year-over-year average take rate [12] Market Data and Key Metrics Changes - Significant growth in CTV was noted from partners like Roku, LG, Vizio, and Netflix, with expectations for continued growth in live sports [13][14] - The DV+ business experienced a post-election spending pause, leading to a drop in CPMs by 15% to 20% [36][37] - Political advertising contributed approximately 6.5% to contribution ex-TAC in Q4, while for the full year it was 3.2% [41][123] Company Strategy and Development Direction - The company is focused on expanding its CTV platform and enhancing its technology stack, including the introduction of generative AI tools [20][21] - Magnite aims to differentiate itself from competitors by emphasizing its unique technology and direct relationships with major streaming platforms [24][30] - The company is optimistic about the growth of its agency marketplaces and the potential for new revenue streams from data initiatives [16][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the rebound of the DV+ business and the overall strength of the CTV market [17][38] - The company anticipates total contribution ex-TAC to grow above 10% in 2025, with adjusted EBITDA expected to grow in the mid-teens [51][52] - Management highlighted the importance of maintaining a healthy value exchange between buyers and sellers in the open Internet ecosystem [31][87] Other Important Information - The company ended the year with $483 million in cash and a net leverage ratio reduced to 0.4% [39][48] - Capital expenditures for 2024 were $52 million, with expectations of approximately $60 million for 2025, primarily focused on tech stack efficiency [47][80] Q&A Session Summary Question: Context on Q1 guidance and early 2025 trends - Management noted a rebound in DV+ growth in the mid to high single digits, while CTV typically sees lower growth in Q1 [56][57] Question: SMB participation in CTV - Management indicated that new entrants need to couple CTV ads with DV+ metrics to assess efficacy, highlighting a significant appetite for CTV [60][62] Question: Medium-term growth expectations for CTV - Management expects to outpace market growth, projecting closer to 20% CTV growth when excluding political contributions [66][72] Question: GenAI strategy and CapEx implications - The focus of new tools is to enhance existing client efficiency and revenue, with CapEx aimed at optimizing tech stack costs [78][80] Question: OpenPath economics and CPM pressures - Management clarified that OpenPath does not significantly change publisher revenue, and CPMs dropped due to reduced demand in Q4, with a rebound seen in early 2025 [94][96] Question: CTV business mix and future contributions - Management expects a stable mix in CTV revenue, with potential shifts as more publishers rely on Magnite for demand [128][130]