MAGNITE, INC. Q1 FY2025 earnings call

CTV business had strong performance in Q1, driven by relationships with large industry players and the launch of the next-generation SpringServe platform. DV+ rebounded with broad market recovery. AI played a role in cost efficiency and product development. The Google antitrust ruling could bring significant upside for the DV+ business.

CTV contribution ex-TAC was $63 million, up 15% year-over-year, accounting for 43% of contribution ex-TAC revenue. DV+ contribution ex-TAC was $83 million, an increase of 9% from Q1 last year. The contribution ex-TAC mix for Q1 was 40% CTV, 40% mobile, and 17% desktop.

For Q2, contribution ex-TAC is expected to be in the range of $154 million to $160 million. Due to tariff-related economic uncertainty, guidance ranges were widened and full year 2025 expectations were not reaffirmed. CTV contribution ex-TAC is anticipated to be in the range of $70 million to $72 million, DV+ in $84 million to $88 million, and adjusted EBITDA operating expenses are between $110 million and $112 million.

Macro economic factors may dampen growth rates. Uncertainty exists regarding the timing and nature of remedies in the Google antitrust case.

Q: Good to see the nice bounce back in DV+. Wanted to start with two on the Google case. Just one if there's any way you can just loosely size up what you think the opportunity would be as you see it? And then two, do you think the opportunity for Magnite has to wait for the structural divestiture? Or do you think there are opportunities for Magnite during some of these behavioral changes that could be implemented earlier.

A: Yes. Hey, Jason, great question. Why don't I take the second part of it and then David can address the first part. No, yes, this is a very good observation, the structural and non-structural. And it is our understanding that while they pursue what is more than likely going to be an appeal process and the structural piece will take some time, obviously the remedy that could be put in place is more behavioral and we would stand to benefit instantly from that. So yes, we don't, this used to be kind of conjectured that oh my God, this could be five years out, appeal, appeal. But in the way this is moving, you could see remedies put in place, as early as beginning of 2026. And as long as those remedies mirrored what they're trying to accomplish, which is more of a level, fair playing field, we would be in business from the get go. So yes, we're very excited about the way it's passing.

Q: To try to quantify the impact, I think maybe an easy way to think about that is if you think about market share today we estimate that Google has more than 60% in DV+ and we have something in the mid-single digits, say, every 100 basis point increase in market share for us would result in roughly $50 million in contribution ex-TAC. And so if you think about, so I guess the way to think about that is how much market share could Google lose and then how much would we pick up? And of course we'd at a minimum pick up our proportional share. And we actually think we're positioned to pick up, you know, maybe more than our current proportional share. And so if our market share goes from 6% to 7%, it's almost a 20% increase in revenue. And of course, we would expect that to be potentially significant higher. And from a flow through perspective, what's interesting is that we're already looking at all the same ad requests that Google's looking at. And so we have expanded most of our cost today in looking at those ad requests. And so to the extent we have additional revenue, it's coming from a higher fill rate. And that higher fill rate comes at a very high flow through to adjusted EBITDA and to free cash flow. So more than 90% we estimate would flow through to the bottom line. So it's a very significant and positive impact to our margins and free cash flow.

A: Yes. To try to quantify the impact, I think maybe an easy way to think about that is if you think about market share today we estimate that Google has more than 60% in DV+ and we have something in the mid-single digits, say, every 100 basis point increase in market share for us would result in roughly $50 million in contribution ex-TAC. And so if you think about, so I guess the way to think about that is how much market share could Google lose and then how much would we pick up? And of course we'd at a minimum pick up our proportional share. And we actually think we're positioned to pick up, you know, maybe more than our current proportional share. And so if our market share goes from 6% to 7%, it's almost a 20% increase in revenue. And of course, we would expect that to be potentially significant higher. And from a flow through perspective, what's interesting is that we're already looking at all the same ad requests that Google's looking at. And so we have expanded most of our cost today in looking at those ad requests. And so to the extent we have additional revenue, it's coming from a higher fill rate. And that higher fill rate comes at a very high flow through to adjusted EBITDA and to free cash flow. So more than 90% we estimate would flow through to the bottom line. So it's a very significant and positive impact to our margins and free cash flow.