Sign in

    MAGNITE (MGNI)

    MGNI Q3 2024: 30% Cost Cut Boosts Margins, Netflix/Disney Rollout

    Reported on Jun 10, 2025 (After Market Close)
    Pre-Earnings Price$13.49Last close (Nov 7, 2024)
    Post-Earnings Price$13.51Open (Nov 8, 2024)
    Price Change
    $0.02(+0.15%)
    • Expanding Key Partnerships: The call highlighted strong partnerships, such as the ongoing Netflix rollout and the expansion of the Disney relationship—both expected to drive higher revenue contributions and tougher competitive positioning over time.
    • Operational Efficiency and Cost Reduction: Management emphasized a roughly 30% reduction in cost per ad request driven by improved filtering and traffic shaping, signaling enhanced margins and scalability.
    • Shift to Biddable Programmatic in Premium CTV: The evolution to biddable programmatic selling, especially among high-quality CTV partners, is expected to yield higher take rates and improve overall economics, reinforcing a positive long-term outlook.
    • Declining Managed Services Revenue: The managed service business accounted for only 4% of total contribution ex-TAC in Q3 and fell about 20% YoY, indicating a shift from higher-margin managed services to lower-margin programmatic sales, which might hurt overall contribution margins.
    • Regulatory and Market Uncertainty in DV+: With no definitive update on ongoing regulatory and court decisions affecting Google and SSPs, there remains uncertainty around structural changes in the DV+ space, potentially impacting future revenue and margins.
    • Uncertain Transition to Biddable Programmatic in CTV: While the move to a biddable model may eventually improve take rates, the market is still evolving with legacy direct sales and hesitancy among premium publishers, leaving near-term revenue growth and margin expansion in CTV uncertain.
    1. Capital & Costs
      Q: Net leverage target and AI savings?
      A: Management noted the balance sheet is strong with net leverage at 0.9x—below their 1x target—while AI and filtering initiatives have trimmed processing costs by roughly 30%, supporting ongoing share repurchases and efficiency improvements.

    2. Partnership Growth
      Q: Netflix ramp and Disney expansion?
      A: They highlighted that Netflix’s rollout is in early stages with potential to become one of the largest revenue drivers in 2025, and a renewed, expanded Disney deal now includes live sports and podcasts, which should improve overall economics.

    3. Programmatic Evolution
      Q: Bidded programmatic improving take rate?
      A: Management explained that as more advertisers shift to biddable programmatic in CTV, the move enhances take rates compared to traditional publisher-sold models, which is expected to boost margins over time.

    4. Cost Efficiency
      Q: How achieved 30% cost cut per ad request?
      A: They described a real-time filtering and traffic shaping process that directs only the most valuable ad requests to the right buyers, effectively reducing costs by 30% and improving operational efficiency.

    5. Disney Economics
      Q: Are Disney deal economics shifting?
      A: The management noted the Disney expansion brings higher take rate opportunities when Magnite sources demand programmatically, reflecting a transition from lower-margin direct sales to more lucrative, biddable transactions.

    Research analysts covering MAGNITE.