MAGNITE, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• CTV Business: Continued strong growth in Q4 driven by ad spend growth and a better product mix. Key partners included Roku, LG, Vizio, Walmart, Disney, Fox, Warner Discovery, Paramount, and Netflix.
• DV+: Rebounded to mid-to-high single-digit growth in early 2025. Audio, part of the DV+ supply footprint, was a growth driver.
• AI Initiatives: Launched new client-facing tools powered by generative AI, such as a generative AI feature for the curator product, a yield optimization engine in DV+, and a content classification tool in CTV.
• Trade Desk Response: Argued that SSPs are still necessary as OpenPath is just one DSP and publishers lack the technology and data for yield management; Magnite's tech is purpose-built for CTV.

Segment Performance

• CTV: Q4 contribution ex-TAC increased 23% year-over-year, outpacing guidance of 18% - 21%, and for full year 2024, CTV contribution ex-TAC grew 19%.
• DV+: Q4 contribution ex-TAC grew 1% due to post-election spend patterns, but rebounded to mid-to-high single-digit growth in early 2025.
• Full-year 2024: Generated record contribution ex-TAC of $607 million, processed ad spend of over $6 billion, adjusted EBITDA of $197 million, and $118 million of free cash flow. Contribution ex-TAC mix for Q4 was 43% CTV, 40% mobile, and 17% desktop.

Guidance

• Q1 2025: Contribution ex-TAC expected in the range of $140 million to $144 million; contribution ex-TAC attributable to CTV in the range of $61 million to $63 million; contribution ex-TAC attributable to DV+ in the range of $79 million to $81 million; adjusted EBITDA operating expenses between $111 million and $113 million.
• Full-year 2025: Total contribution ex-TAC to grow above 10% (excluding political), adjusted EBITDA to grow in the mid-teens, adjusted EBITDA margin to expand at least 100 basis points over 2024, free cash flow to grow in the high teens to 20%; total CapEx expected to be approximately $60 million.

Risks

• Post-election Volatility: Unusual spend patterns in DV+ post-election led to Q4 underperformance.
• Competition: Competition from players like Trade Desk and Amazon could impact the open Internet ecosystem and growth.

Question and Answer

Q: Jason Kreyer on Q1 slowdown in CTV and SMB participation A: David Day stated Q1 CTV growth was within expectations; Michael Barrett mentioned SMBs are in early stages with appetite but need to couple CTV and DV+ metrics.

Q: Dan Kurnos on CTV growth medium-term and data initiatives A: Michael Barrett said CTV was expected to outpace the market, and data initiatives were to increase revenue with existing clients.

Q: Laura Martin on open Internet health and Amazon's impact A: Michael Barrett said the open Internet was healthy, and Amazon was a buyer of open Internet inventory and a partner.

Q: Shweta Khajuria on OpenPath economics and CPMs A: Michael Barrett explained OpenPath fees were unchanged for publishers; David Day said CPMs dropped in Q4 but rebounded in Jan/Feb.

Q: Matt Swanson on CTV mix shift and partnership impact A: David Day said CTV mix was stable, and partnerships take time to ramp.

Q: Aaron Flack on DV+ post-election volatility and Magnite SSP differentiators A: David Day said DV+ volatility was unique; Michael Barrett stated Magnite SSP differentiators included global demand and yield management.

Q: Eric Martinuzzi on political contribution ex-TAC A: David Day said political contribution ex-TAC for full year 2024 was 3.2%.

Q: Arthur Ong on cost per ad request efficiency A: David Day said efficiency gains came from brains behind ad request processing, cloud optimization, and on-prem migration.