MAGNITE, INC. (MGNI)·Q4 2024 Earnings Summary

Executive Summary

• Q4 delivered solid top-line and profitability, with revenue $194.0M (+4% YoY), Contribution ex-TAC $180.2M (+9% YoY), and Adjusted EBITDA $76.5M (42% margin), while non-GAAP EPS was $0.34 and GAAP diluted EPS $0.24 .
• CTV outperformed: CTV Contribution ex-TAC rose 23% YoY to $77.9M, above the $75–$77M guide, driven by ad spend growth and SpringServe adoption; DV+ grew 1% YoY amid an unusual post-election pause, with CPMs down 15–20% in Nov–Dec and missing the typical holiday ramp .
• Outlook: Q1’25 Contribution ex-TAC guided to $140–$144M (CTV $61–$63M; DV+ $79–$81M) and for FY’25, total ex-TAC growth “above 10%” (mid-teens ex-political), ≥100 bps Adjusted EBITDA margin expansion, mid-teens EBITDA growth, and FCF growth high-teens to 20% .
• Stock reaction catalysts: confidence from DV+ rebound to mid-to-high single-digit growth early 2025, robust CTV momentum (above guide), and FY’25 margin/FCF expansion; management’s strong rebuttal of potential disintermediation via OpenPath may ease structural concerns .

What Went Well and What Went Wrong

• What Went Well

  • CTV outperformance: CTV Contribution ex-TAC +23% YoY to $77.9M, above the $75–$77M guide; management cited ad spend growth and SpringServe ad serving as key drivers .
  • Record profitability and cash generation: Adjusted EBITDA $76.5M (42% margin) and Q4 operating cash flow $64.4M; year-end cash and equivalents $483.2M .
  • Strategic wins and product traction: Partnerships and platform differentiation (e.g., LG Ad Solutions renewal; TCL selection; ClearLine growth and agency marketplaces) underpin CTV scale and demand facilitation .

• What Went Wrong

  • DV+ softness: Post-election demand pause led to CPMs -15% to -20% into year-end; DV+ ex-TAC grew only 1% YoY, pulling total results below the high end of expectations .
  • Mixed category demand: Weakness in consumer categories, health & fitness, retail, automotive, and food & beverage weighed on DV+ in Q4 (political ~6.5% of ex-TAC the lone bright spot) .
  • Take rate pressure in prior quarters (context): While stabilizing, CTV take rates remain at the lower end given publisher-sold programmatic mix; mix normalization continues over time as biddable programmatic increases .

Financial Results

Notes: Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Contribution ex-TAC .

Segment/channel mix (Contribution ex-TAC):

Additional KPIs and balance sheet:

Context on non-GAAP adjustments and definitions are provided in the press release (e.g., Contribution ex-TAC, Adjusted EBITDA, non-GAAP EPS, and margin definitions; reconciliations included) .

Guidance Changes

Note: No prior company guidance existed for Q1’25 or FY’25 metrics; these are initial disclosures .

Earnings Call Themes & Trends

Management Commentary

• “We generated contribution ex-TAC of $607 million and processed ad spend of over $6 billion. We generated adjusted EBITDA of $197 million and $118 million of free cash flow, all record highs for Magnite.” (Michael Barrett) .
• “For Q4, CTV contribution ex-TAC increased 23% year-over-year, outpacing our guidance… DV+… came in lighter… due to unusual spend patterns post election… [but] has rebounded since the start of 2025.” (Michael Barrett) .
• “Immediately following the election, CPMs dropped significantly, 15% to 20% down through the end of the quarter… we did not see the normal holiday ramp in our DV+ business.” (David Day) .
• “In CTV, we’ve typically had Q1 as kind of a low point in our year-over-year growth… [Q1 CTV guide is] within expectations.” (Management) .
• On OpenPath: “OpenPath doesn’t replace the need for yield management or a mediation layer… economics are unchanged for publishers… SpringServe remains central.” (Michael Barrett) .

Q&A Highlights

• DV+ dynamics: Management detailed the post-election demand air-pocket (CPMs -15% to -20%) and lack of holiday ramp, contrasted with a strong rebound into Q1’25 across most verticals, supporting the view the Q4 softness was anomalous .
• CTV seasonality and guide: Q1 is a seasonal low point for CTV growth; guide reflects normal seasonality despite strong Q4 CTV performance .
• AI and CapEx: 2025 CapEx ≈$60M focused on migrating workloads on-prem (ROI gains vs cloud); gen AI tools expected to enhance client efficiency and revenue without large incremental LLM cloud costs .
• Guidance and flow-through: FY’25 ex-TAC growth above 10% (mid-teens ex-political) with ≥100 bps margin expansion; incremental revenue above plan flows through to EBITDA at higher rates .
• Political mix: ~6.5% of Q4 ex-TAC; ~3.2% for FY’24 .

Estimates Context

• S&P Global Wall Street consensus (EPS, revenue) for Q4’24 was unavailable at the time of analysis due to data access limits. As a result, we cannot quantify beats/misses vs consensus for Q4’24 or Q1’25; note that CTV exceeded internal guidance, while total Q4 was below the high end driven by DV+ softness .

Key Takeaways for Investors

• CTV strength is intact: Q4 CTV ex-TAC +23% YoY to $77.9M, above guide; management expects to outgrow the CTV market in 2025, with Netflix ramp a key tailwind .
• DV+ volatility appears transient: Post-election softness (CPMs -15–20%) reversed in early 2025 to mid/high-single-digit growth, reducing risk of structural impairment .
• Margin and FCF expansion in 2025: Company targets ≥100 bps Adjusted EBITDA margin expansion, mid-teens EBITDA growth, and high-teens to 20% FCF growth, aided by tech stack efficiency and on-prem migration .
• Platform differentiation vs disintermediation fears: Management’s detailed rebuttal of OpenPath emphasizes the need for yield management and diverse demand aggregation; SpringServe and Magnite’s mediation layer remain central to publisher economics .
• Balance sheet flexibility: Year-end cash $483.2M and net leverage 0.4x provide capacity to navigate macro and invest in growth (e.g., live sports, ClearLine, curation, AI) .
• Strategic partnerships broaden supply and demand: Renewed LG Ad Solutions and TCL partnerships reinforce OEM/CTV footprint; ClearLine and agency marketplaces continue to gain traction .
• Short-term setup: Q1 seasonality and DV+ normalization suggest a constructive near-term, while FY’25 guidance and operational efficiency actions support medium-term re-rating potential .

Appendix: Why Q4 Landed Where It Did

• Positive variance drivers: CTV exceeded internal guide as ad spend growth and SpringServe adoption supported monetization; Adjusted EBITDA margin held at 42% on disciplined OpEx and efficiency gains .
• Negative variance drivers: DV+ underperformed given a post-election demand pause and CPM pressure, atypical vs 2020/2022; political mix was elevated at ~6.5% of ex-TAC .
• Non-GAAP considerations: Non-GAAP EPS ($0.34) and Adjusted EBITDA exclude stock-based comp, amortization of acquired intangibles, FX, acquisition/restructuring items, interest impacts, and tax effects, with reconciliations provided in the press release .