Magnite, Inc. Q3 FY2025 earnings call

CTV Performance - CTV contribution ex-TAC grew 18% and 25% excluding political, driven by growth of largest publisher partners, significant traction with agency marketplaces, ClearLine adoption, positive SMB trends and programmatic expansion in live sports. - Notable partnerships include Netflix, Roku, Warner Bros. Discovery, etc. - ClearLine continues to gain momentum with over 30 clients and has seen key enhancements. - Streamer.ai acquisition has led to positive client wins like ITV and Wolt. ### AI Efforts - Delivered progress with Agentic technologies, integration of Ad context protocol and Model Context Protocol. - ClearLine is being built on MCP Rails with AI assistance and Agentic workflows. ### Google Ad tech Trial - Judge Brinkema concluded a two-week trial on the remedies phase, post-trial briefing filed and closing arguments scheduled for November 17. Structural and behavioral remedies remain on the table, and Magnite thinks any decision helping restore competition is a win.

In Q3, CTV contribution ex-TAC grew 18% and 25% excluding political. DV+ continued to perform well, growing in line with expectations. Total revenue for Q3 was $179 million, up 11% from Q3 of 2024. Contribution ex-TAC was $167 million, up 12%, exceeding the high end of the guidance range. CTV contribution ex-TAC was $76 million, up 18% year-over-year or 25% excluding political, exceeding the top end of the guidance range. DV+ contribution ex-TAC was $91 million, an increase of 7% or 10%, excluding political from the third quarter of last year. The contribution ex-TAC mix for Q3 was 45% CTV, 39% mobile and 16% desktop.

Fourth Quarter - Contribution ex-TAC expected to be in the range of $191 million to $196 million, growth of 6% to 9% or 13% to 16% excluding political. - CTV contribution ex-TAC expected to be in the range of $87 million to $89 million, growth of 12% to 14% or 23% to 25% excluding political. - DV+ contribution ex-TAC expected to be in the range of $104 million to $107 million, growth of 2% to 5% or 7% to 10% excluding political. ### 2025 Full Year - Continue to expect total contribution ex-TAC growth above 10% or mid-teens excluding political, adjusted EBITDA to grow in the mid-teens with margin expansion of approximately 180 basis points at the midpoint, and CapEx to be approximately $80 million. ### 2026 - Expect contribution ex-TAC growth for 2026 to be at least 11%, get back into target margin range of 35% at the low end inclusive of investment in people and CapEx of approximately $60 million.

Google Ad tech Trial - Uncertainty around the outcome of the remedies, including structural and behavioral remedies, which could impact the business. ### Macro Environment - Softening macro environment with factors like drop in vertical spend in automotive, technology and Home and Garden, and spend movement from online video to CTV. ### Trade Desk Change - Impact on DV+ due to Trade Desk's software change prioritizing OpenPath as a default path for supply, although bulk of the impact is expected to have occurred.

Q: Shyam Patil of Susquehanna asked about The Trade Desk, Kokai and OpenPath and Magnite's value add.

A: Michael Barrett said Trade Desk made a software change, Magnite worked with major buyers to reconnect, bulk of impact on DV+ already occurred and they feel confident going forward.

Q: Daniel Kurnos of The Benchmark Company asked about Amazon partnership and SMB marketplace.

A: Michael Barrett said spend from leading DSPs strong, SMB is exciting with Streamer.ai acquisition helping, and Streamer product offered to help folks attract SMB dollars.

Q: Jason Kreyer of Craig-Hallum asked about Magnite's role in agentic world and live sports.

A: Michael Barrett said Magnite plays role in audience creation, live sports inventory programmatically is accelerating with Disney as key partner.

Q: Shweta Khajuria of Wolfe Research asked about Google AdTech case and 2026 guidance.

A: Michael Barrett said encouraged by remedies hearings, David Day said 2026 guide is conservative with no Google remedy outcomes baked in and potential upside from deals and AI initiatives.

Q: Laura Martin of Needham asked about CTV CPMs and CapEx/FTEs.

A: Michael Barrett said CTV CPMs have been stable, David Day said CapEx for data center expansion and FTEs for product and internal efficiencies are separate decisions.

Q: Barton Crockett of Rosenblatt asked about 2026 outlook and behavioral remedies.

A: David Day said 2026 guide has conservatism and reversion to mean, Michael Barrett said behavioral remedies could impact 2026 with unified pricing possible quickly.

Q: Zach Cummins of B. Riley asked about CTV budget shift and Netflix.

A: David Day said budget shift to CTV could continue, Michael Barrett said Netflix relationship is strong and progressing as expected.

Q: Robert Coolbrith of Evercore ISI asked about Trade Desk change and share gain.

A: Michael Barrett said excited about opportunity as demand side looks at reselling issue, Magnite is principal with direct publisher footprint.

Q: Unknown Analyst of Lake Street Capital Markets asked about Google and publisher RFP activity.

A: Michael Barrett said no shift in publisher RFP activity to Magnite yet as structure remains same.