Magnite, Inc. Q2 FY2025 earnings call

• Q2 came in strong with total top line exceeding guidance. CTV contribution ex-TAC grew 14% (15% excluding political) and DV+ grew 8%. Adjusted EBITDA was $54 million, up 22% with a margin of 34%. • CTV business driven by deepening relationships with industry's largest streamers, growth in SMB trends, agency marketplaces, and programmatic live sports. Launched new CTV platform SpringServe in general availability. • DV+ contribution ex-TAC up 8% due to new product functionality and early contributions from recent partners. • AI capabilities being developed and embedded, including traffic shaping, audience discovery, and an LLM for CTV inventory categorization. • Antitrust ruling against Google is seen as potentially driving upside for DV+ business, with potential share shift and civil damages possible.

In Q2 2025, CTV contribution ex-TAC was $72 million, up 14% year-over-year (15% excluding political) and at the top end of guidance. DV+ contribution ex-TAC was $90 million, an increase of 8% from Q2 2024 and above the top end of guidance. The contribution ex-TAC mix for Q2 was 44% CTV, 39% mobile, and 17% desktop.

• Q3 contribution ex-TAC expected to be in the range of $161 million to $165 million (9% growth at midpoint, 13% excluding political). CTV contribution ex-TAC range $71 million to $73 million (nearly 12% growth at midpoint, over 18% excluding political). DV+ contribution ex-TAC range $90 million to $92 million (7% growth at midpoint, 10% excluding political). • Full-year contribution ex-TAC growth above 10% (excluding political), adjusted EBITDA to grow mid-teens. Adjusted EBITDA margin expansion guidance increased to at least 150 basis points from 100 basis points previously. Free cash flow to grow high teens to 20%. Total CapEx expected to be approximately $60 million for the year.

• Uncertainty around the implementation and impact of antitrust remedies related to Google, including potential delays or changes in the remedy phase. • Risks associated with civil litigation for potential damages, with unknown timing and outcome. • Continued macroeconomic and ad spend environment uncertainties that could impact business performance.

Q: Congrats on the great quarter and outlook. Talk about broader momentum and Google's impact and civil damages.

A: Michael Barrett discusses strong momentum with exciting partnerships and modular product approach. On Google, remedies not yet ruled, but sees potential share shift and civil damages with merit.

Q: What is driving the reiteration of prior guide given the raise in Q3?

A: David Day says ad spend market stabilized more than feared, with strength in CTV and DV+ business leading to reinstatement of full-year guidance.

Q: Thoughts on Agentic in marketplace and live sports contribution?

A: Michael Barrett notes AI doesn't directly impact CTV and mobile app business much, and live sports is early but encouraging with partnerships like FanDuel.

Q: DV+ engagements with platform companies and Netflix Ads Suite integration?

A: Michael Barrett says Magnite is pole position as partners open up, and Netflix Ads Suite partnership is strong with Magnite expected to be a big client on run rate.

Q: Antitrust commentary and timing of behavioral remedies?

A: Aaron Saltz explains court may implement remedies pending appeal to rectify illegal conduct.

Q: Margin improvement sustainability and CTV limiting factors?

A: David Day says margin improvement has sustainable components but some onetime factors, and CTV limiting factors include linear still being around and measurement challenges.

Q: Partner roster programmatic penetration and Google Ad Tech outcomes?

A: Michael Barrett says programmatic is accelerating in streaming, and Google remedy may open opportunities but focus on current share shift first.

Q: AI capabilities and M&A?

A: Michael Barrett talks about LLM use for CTV inventory categorization and M&A stance of organic growth but open to strategic acquisitions.