Earnings call transcript Q2 2023

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Operator

Good day and welcome to the Magnite Second Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there'll be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Nick Kormeluk of Investor Relations. ahead. go Please

Nick Kormeluk

and quarter operator, everyone. to Welcome Thank earnings good conference second XXXX call. Magnite's you, afternoon

As a reminder, this conference call is being recorded.

the CFO. Joining David on call Barrett, Michael me CEO, Day, our are and

we I to on Investor website would Relations financial accompany presentation. point that our today's like to highlight have out slides posted

concerning remind limited started, forward-looking macroeconomic anticipated may prepared be potential our to that be remarks to include and strategic we get the business. you will that Before answers including factors information not but statements, statements I will and including performance our to questions our financial on considered objectives of impacts

subject These not risks, uncertainties, known other are events different reflect to achievements and factors performance. They and future or our materially cause by be that or our from and forward-looking current projected and performance, are statements expectations assumptions actual results to of with statements. implied to on results, respect guarantees unknown views based may future estimates, or and

these no our in forward-looking including the our report XX-K. A discussion reports XX-Q forth is quarterly on SEC periodic or the undertake provide Form on and assumptions and of risks. annual report with We and filed quarter company's obligation set XXXX second to XXXX uncertainties, risks, statements Form other relevant

non-GAAP highlights greater the posted additional we our to deck our metrics times your offer earnings reflect press GAAP and reported results commentary questions, is will EBITDA our previously measures business. accurately dynamics Investor Our and what can to in as acquisition and more on ex-TAC. At release non-GAAP include the in including financial provide Adjusted our into we be contribution financial non-GAAP share. response in traffic for referred of today per insights found to ex-TAC or Reconciliations metrics cost less Relations Revenue income may to website. between that

website on webcast may an may Please be in not nature financial additional the we one-time update release, learn about detail replay to the press these SEC visit periodic to encourage access metrics. deck, today's advised call of Magnite. be I future Investor and our or you this to Relations that more and highlights reports, of provide may our

over go will Michael, now to ahead. Michael. call please the turn I

Michael Barrett

QX Thank a for contribution will That adjusted ex-TAC grew Nick. XX%. was million discuss and a you, Total margin $XX EBITDA by detail. revenue of which with quarter margin X%, Magnite. in solid the David grew at in said, bankruptcy, XX%, MediaMath negatively came impacted were EBITDA and more

ex-TAC bright was of technical on refocused XX% business, clear business year-over-year again, grew a year industry-wide in improvements, a activity. completed our despite DV+ our weakness contribution online gains. as DV+ Once market video our we an spot consolidated ago, showing a share About and number CPMs

on platform greater seeing expect of the to we up forward. DV+ us of and moving strength performance. in for ad spend our enhancements, focus results more put our those And business partners, freed This optimizations needs the We're now efforts.

a CTV X%. the ex-TAC contribution grew front, On healthy

far managing plan from against We a continued this market to is that quarter normal. well challenging while our execute through

and service by pressure, budget in upon to in began service as driven our auto macro particularly Starting in June, the we based ad were campaigns managed softness and see paused challenges verticals. large managed several media business entertainment

at calls, highest our As operates we've managed business earning rate. discussed in previous service take our

sports spend than to The of weaker the advertiser ad events significant. So the and upfronts coming anticipated, saw good flow challenge through industry to excluding sentiment current which environment. indicator is a live also in TV financials are

scatter the will be programmatic that in services Several hope trends like largest getting note, largely streaming deployed partners positive we from truly a On and that The benefit the remain QX. which market, Magnite. into taking CTV services the and players, TV also are broadcasters, buyers smaller quarter plus their the and accelerated spend programmatic this cautious and were are that in trends about would budgets and publishers. upfronts, all significant fastest-growing the serious could is most intact share those OEMs of streaming

in this We Discovery, who Warner and own partners, toward inventory seeing moving Brothers, shift our are manifest including Roku, executions. programmatic direct itself traditional are Vizio Disney, transactions from away more and sold

health our for we While is CTV positive near-term negatively impacting it financials. this market and programmatic trend believe is long-term the of business, our the

simple. The reason is

growing to showing deals a not mix As all spend part of take bigger becoming our rates. with they in rate is move revenue higher large than at would our industry lower they're and far but our ad sellers are ad In revenue QX, suggest. up at those of market greater grew publisher a share on significantly programmatic, services our What's a direct-sold we're forecast. that our direct financials rate relying than spend

more started take opportunity from that said, and to the time. Netflix being to full the its of winning at Magnite that efforts. move see work CTV over With we rate premium in shift these the here, companies, we services top-tier we even them, we swing and with can huge a get programmatic clients long-term to types is is hasn't we so closer higher delivering more the know experience, value, higher programmatic

this and we industry-leading It's new that execute to products our makes share? combination expand introducing can what continuing market services. innovative value a on So growing us of existing on confident generation

demand, premium agencies we're by SpringServe business marketplaces to and accelerating our win front, our efforts. to to new clients up-sell clients expand auctions proprietary further proprietary existing bringing ad-serving other running the higher-value direct SSP continue SPO formats services and tiles publishers private SpringServe, On continue between those and to and going create to

one quarter, new introduced new new partnership. future we two this innovative front, the offerings On and and

for We them I linear ClearLine, to self-service directly which the is to strongly product's in bring ability video a solution interest as buying this mentioned agencies. there's programmatic budgets First, believe agencies. unlock strategic and efficiently to

Germany Camelot, X Performance GroupM, our and In and partners, the Group, of MiQ list launch has fact, Media, Horizon we Brand recently GSD&M, announced ClearLine expanded to Stagwell using include Network. that Omnicom Media agencies beyond

Brothers Fox momentum launch seen ClearLine Nine, Digital, also side DirecTV Networks, partners where has Disney LG DISH we've the and A&E sell added Vizio. and to robust our Discovery advertising, media, AMC Warner Networks, advertising, on

in we identity data data of owners and Second, Magnite buyers are to advertising more. and including a introduced to media maximize a assets, omnichannel datasets a storefront, that audience sellers they for partners products value it match enabling their having and June, Access, data solution easier make of and the DMP, a secure suite

mutual And clients integration server, we others access including are many and ad FreeWheel of to their this earlier in available testing reach year. and clients the track Parts of largest to of programmers today are on this are wider finally month, availability an enabling world's announced broadcasters and with and clients data better work needs. systems channels, programmatic seamlessly which for maximize allow and it advertiser integration frequency experience. across ultimately to Magnite but this and capping, across also does sales creatives, their improves consumer other only to the their unifies view ad Not yield of our

clients. expect as our quarters few grow these to we're revenue the it but footprint. value our and We this up, role positively a a believe efforts influence bullish We will further opportunities for for our the our for take will both us industry on ramp it partner the to to integration strategic increase opens and

that we began the and CTV focus of have will toward And even innovation our acquisition now leadership our advances more that platform years we apply SpotX position. integration that technology completed ago, with two

very we our both pleased summary, and DV+ In business how share and our are gains performing, with is CTV. in

for shift opportunity spend to with to us So growth significant relationship the has some the our CTV pressure. The rapid and represents premium industry's with a players. ad programmatic come near-term top revenue expand

and the to on have I'm opportunity. this resources confident execute the we that strategy

With call over David? that, I'll David turn on for financials. more the the to detail

David Day

XX%, ex-TAC and within our reported our very for DV guidance Thanks, the for range X% business QX Magnite. midpoint well. contribution from was XXXX million, Total million, Michael. up solid QX results our $XXX CTV ex-TAC and of guidance. Contribution a was $XXX plus QX quarter was at revenue performed We total up and

up of year. year. $XX ex-TAC CTV QX or last DV+ million compared an from to last from X% contribution million, $XX ex-TAC XX% increase contribution $XX was million, was

QX ex-TAC desktop. mix CTV, was and XX% contribution mobile, XX% for Our XX%

well relative perspective, From a to International and particularly growth technology media and weaker, a From lead perspective, double a geographic showed while relatively rate over at CTV. in overall increasing US. were vertical travel strength entertainment continues our the

a and May paused highlight April we're In seeing, to our and to Michael managed continued notably as slower campaigns few like flow trends are I'd which and was general, order guide. CTV softer impacting was alluded service June weaker QX In by grow particular, our evidenced to. business expected. than

represented roughly in half from in in premium revenue OEMs creating significant in of and negatively Also QX contribution broadcasters, related mind CTV challenges. are second smaller opportunity and the comp to term. some short X% CTV which plus The QX keep taking spend impacting is XXXX creating political services, that trends, while long-term share XXXX ex-TAC X% publishers, additional

an XX% to of continued area be with quarter. the DV+ growth strength in

We continued DV+ the formats. native innovate of formats to excited programmatic DV+ to are across launch that in allowing offer and key ad native target publishers with demand

new publishers to their We will our DV+ supply. better bring to enable that continue products to monetize will

compared which second million same expenses, of the driven our $XXX $XX increase the resulting in to operating from period year million Total the platform non-cash cost includes quarter amortization a primarily accelerated $XXX with for increased by ago to of million revenue consolidation.

as million in higher million of result expense bad expense the a bankruptcy. to operating was than $XX debt due was that EBITDA recognized Adjusted expectations $X.X MediaMath our

MediaMath our platform range. impact, $XX of travel second increase Excluding return for was year, low was the Last compared Net payroll adjusted to expenses higher the EBITDA million XXXX The expense, expenses, second quarter $XX would aforementioned for event-related have loss to quarter operating and million. at the the driven loss end for by year-over-year net guidance MediaMath the $XX costs. was expenses, of quarter million. the been of office, and expense

previously of amortization debt quarter, the was and million the both adjusted the for was margin of impact EBITDA the for from bad $X.X $XX XX% mentioned year quarter include results expense. Adjusted $XX million negative EBITDA in expense. reflect million second Our which the this accelerated

ex-TAC. for percentage EBITDA per compared calculate of second the basic a Note of quarter to was our that GAAP and we of loss second adjusted XXXX. of as loss $X.XX for margin quarter share XXXX the diluted a $X.XX contribution

negative second expense $X.XX on of $X.XX per was share non-GAAP per to XXXX a QX. a of loss earnings $XX $X.XX impact on accelerated GAAP share year. negative of impact The million amortization reported had in per in earnings the last of quarter compared and Non-GAAP share $X.XX

share to The per income are and non-GAAP results included earnings reconciliations our QX with non-GAAP release. press

for will the million Fully outstanding shares share diluted of $XXX non-GAAP for the QX expense amount final completion prior second million million of XXXX. $X There amortization $XXX consolidation. per second utilized basic our CTV for the earnings of to this and weighted in were recognize the platform average of average quarter. accelerated We year weighted shares diluted quarter were

purchases expenditures for Apple and $X including equipment internal-use the costs both of capitalized quarter. million software property were development and

reminder, our $X cash Operating was servers flow of for we about As expected $XX the lower to be quarter. repurposing the less CapEx DV+ to our than this by year is adjusted on-prem the CapEx as for XXXX, pipelines. a CTV platform EBITDA, which define aided SpotX million million

expense Our for the $X net was interest quarter million.

$XX discount purchased in retired resulting of notes value of $XX a cash XX%. During in and the second using quarter, convertible our million we in face million

value Our $XX convertible $XXX to total was $XXX note our second balance total note the quarter reducing from through convertible par million. million repurchases million

to authorizing previous shares we've the XXXX. has program With convertible our of through million plan. board to $XXX our these And repurchase up common debt or repurchase August completed a approved use of purchases, new

at Our quarter. last an million, $XXX end at $XXX increase cash was end the the QX million of of balance from

sequentially the X.X was ratio down X.X from at end QX. the at end leverage times net times of Our of QX,

expect the two be year-end. meaningfully below to ratio We at times

cash self-fund healthy the in reduce business a debt business, generates Our to position. strong and flow investments model our maintain flexibility providing cash

generate to will relates the in share seasonally in significant second and best cash especially it debt half XXXX, expect cash to to strong to continue we use and free continued our repurchases. reduction evaluate as We our of

year. for now share and our for the thoughts will third expectations quarter I full the

the contribution expect million we million. range be quarter, ex-TAC third to $XXX to the For of in $XXX

to ex-TAC the in expect to attributable CTV to contribution $XX million. of We range $XX be million

of $XX We attributable range $XX contribution expect to to the the to ex-TAC DV+ million million. in be

which to expect EBITDA XX% of operating adjusted EBITDA at million million QX between margin midpoint. adjusted We the approximately $XX and expenses $XX for implies be

we XXXX, growth rate in ex-TAC year our full mid the contribution be high-single-digits. For to the expect to

CTV the QX closer year-over-year. and expect For guidance QX, be we improve from much flat growth to to to

We would expense. excluding anticipate adjusted comparable MediaMath XXXX EBITDA of the be bad with impact debt

million $XX EBITDA million. be between For QX, operating we expenses expect and to adjusted $XX

it expect exceed continued flow we expectation to free $XXX be And unchanged is expect million. CapEx Our we million. to lastly, less and than cash $XX to

performance company's for quarter was solid. Overall, the second the

flow has positioned XX% of maturity. allowed strong are us well their generation before cash with financially our retire well We to that converts

we opportunities significant capabilities, omnichannel to ahead positioned have SSP. We as of the our leverage leading are us and independent uniquely

ability are excited in our our We delivering to about feel continue confident positive position results. and

let's the line Q&A. With open that, for

Operator

We comes begin from the Instructions] question-and-answer will [Operator Craig-Hallum. ahead. Our question Please now session. Kreyer from Jason first go

Jason Kreyer

rate? going take or biddable that's something a spend rate trouble participants you, bit a private time I'm that's move an that's having can Thank you to and some an a TV? purely a are what's connected about just guys. to Michael, of happening little inventory like Great. or take talking just a the higher you in more reconciling auction direct from volumes bigger the trade-off, lower from inventory Like, seeing

Michael Barrett

address to happy Jason, that. Yeah,

deals so of two with out as a an the And inventory When are the you that rate. have of it's quarter, giving right? primarily things. that OEMs highest shifted exceptional kind and broadcasters to it forward into and and year, XX% quite business, Jason, the look exist that plus impact run the seeing revenue impact. quarter, surge the it direct. group, the services managed canceled does we're deals, guidance abrupt in we're an CTV net data call mix have Three or service to that the premium try yes, for So, and so of publisher-sold of know, you sell that that prefer take XX%, to things, the was that The to is in the which didn't was the and folks around of kind carries at by last Roku programmatic throw if TV the shifted other

the with players the CTV sales larger platform. the they so on teams, share exacerbated And direct shift

a things. seeing of couple you're So

Like come ever domain their auctions. sell the really of You're open those to seeing the they shift directly. from market world into really stuff lean really like players. an ever that wasn't didn't own They

that lot the environment. sell a they'll they they right of the exclusively because, was talked took spend dollars and that. in But muted As more like about, what evolves, we've over direct, we think of air comfortable a now, and as time, really went between cohort. with dollars room the be our any it again, to in, new came the dollars revenue did that then come we talked into about to rate new And that new environment, almost that dislocation which growth it spend out

environment, right to the spend other X.X buyers onto So to now, it a as It was quarters they a the its flight know pretty spend transition into returns publishers. way we of quality, play to out. relatively dealing way there's find But best. flight its to with just spend open and scarce quick in for security like will And flight kind a will auctions. that think find from normal, folks

understand, you helps that hopefully, Jason, -- that's what so And we saw.

Jason Kreyer

that that another continue some going that clearly, two that is direct. play confidence confidence a that or mean, you're two question. comes time? a you I guess that -- inventory Where that as Magnite from a inventory do back does over premium transition? you're I if sold helps. this role, or year to to quarter you've seeing view And transition got that like mean, some of or I come So to be begs

Michael Barrett

Okay.

and processed go I it's deals the know sold traditionally right? server, there's So direct I'd to sell be ad clear, very So but that nuanced, by very publisher are in.

I'm and about involvement we SpringServe as in me we its sends the no have sold and publisher And programmatic. that in sold platform, creative involved, publisher insertion Magnite that talking the me unless here occurs Magnite. order, -- that's an e-mails What it's direct. Someone

is workflow. to programmatic wallet And about. so group now press the in done on platform, do agrees goes That's Disney how the how can agency the the always want I'm hands share the they getting that. what been And outsized campaign they world. this it domain buy has an to always plays of keyboard, but play they've Jason, talking programmatically, from publisher. -- This on But just just a because of and largely button, live. They

all them our team gets into demand that that us more and kind of into an is know available that So buyers have invite which is, confidence will because move we inventory programmatic, where more said conduct as gives and along, eventually want auction and involved. they publishers will what more more those as more more And world, and demand get we the have auction. inventory, facilitation they'll programmatic,

and We've it this platform. years, DV+ seen So actually the on we very certain seen play play on out we've the confident. in over are out publishers

things increase transition So talked us we of to SpringServe, to give those we're well confidence there's we incredibly that increase those positioned upsell, rate. bring, about, value that all the ergo things all the great ClearLine, take

Jason Kreyer

for the the Thanks in detail, hop back will Michael. queue. I

Michael Barrett

All right.

Operator

The from ahead. next from comes Susquehanna. Patil question Please Shyam go

Shyam Patil

CTV He, I you're to of and big your about question. out just we growth, XX% programmatic talked next of that kind that thinking that talked transition what's how second as just the then other transition Are how large guys mean how CTV guess seeing, the to look services And And Like you second mix up the as that look know you growth? color and helpful. half, for X% about direct, think just is customers growth, to on especially guys. direction? I I after, with that next you which is of CTV right of right year as managed and think kind business? year? XX% kind a growth? year the follow to way wanted about, But quick CTV with -- out way that And to kind CTV this could kind and the the the you really of -- get gave if to looking in that out move you of big about, I what's piece --

the year, scatter the think Thank On in the actually talked being weakness you and CTV? that's later you you upfront of and if about you. programmatic might if market the stronger potentially moving do towards upfront, when that's happening, kind know

Michael Barrett

bet. You

them think I got I all. So

of these is these question I it how again dollars and the So their is today going amount big changed. that to business hasn't be. first could how want changed. emphasize The to inventory sell how players players has big

In to is on direct CTV business direct players, other few some our bring market team the In auctions. cases, publisher platform, deals. right will close sales the we'll find is world, open the do a it. but XX% it. We'll in very industry do not handful do, So buyer It streaming deal. the of players Very and cases, few now. bring open an the

not world. a like it's So DV+

publishers. So for What's concentration we're take to and I'm us saying changed of again what side And not the incredibly enhance sell we that for over buy and that's the so think rate just is on the gives time, I spend particular products and services the both the hope those is that all side changed. positioned have, there. well

far pace fully growth, define to Magnite XXXX all. normal we that can the If faster intend CTV a rate, of normal growth what you As to returns normal, this define at that. hasn't grow changed than as market or

from paused, a actor will streaming caveat QX, And less upfronts when will what on standpoint, of and plus of So have do of well create friction was the that and spend I beneficiary choices. programming way always just that's enemy to. traditionally, of that It's spend will of an But little by back spin scatter. actually the outpace we're And are think the that QX, a upfront lot the its very their upfront could like there's will new impact that the is a of been broadcast. been market that of because services incredibly growth held on has externalities scatter. which CTV. people strike programming, resuming question But the an a it really I we saying muted that the creation kind that a we pause library. positioned when weak find writer in, of a does it the feel hoping the of not some it's streaming, think really lack upfront in returns well might end lastly, to return that because kick confident or in downstream. help that There's the of definitely through

Shyam Patil

Thank you the for Great. color. all

Operator

go comes The next from question Please Laura ahead. Needham. Martin from

Laura Martin

Hey, there.

Michael Barrett

Hey, Laura

Laura Martin

Hi there.

the guys primary XX% XX%. I are to need you morning's we down, which this from question, And numbers, down address you think open, today. round So competitor your is was let big

whereas, Desk So X%. Trade is down

position Wall wrong, you DSPs. to So hear in question wrong. doomed, Street the than to why I think is is a saying somehow Please that SSPs they is that's are Street Wall address worse I'd essentially why like but respond are as strategic

Michael Barrett

don't Well, and think the each read we it way, of particular performances of category. I with not has necessarily it some that the certainly And company Laura. to do

you think than in competitor world cited. platform. the significantly in grew business DV+ we I markedly on our that ad not is increased, actually the our And noted, ad decreased, suppressed the of CPMs. spend has increased our a is significantly as difference spend CTV We markedly performance -- different

poised we're itself to out. this I So well think play for externally

of out magnificent Trade to confidence on to of we'll where see over a their the case DSP the in that spend that has almost world think the Desk, become shakeout. beneficiary of play great job have And you're they've the we and platform point the a going done SSP duopoly. consolidated side, I be that on time,

Laura Martin

My up second following is on one upfront. Okay.

their that's be So Netflix, I upfront, all closed CW today, pretty and more. There think end. and much the one might ABC

guys had big Internet, year scatter competitive -- to of where out this more a of their lot flexibility contracts get they advantage gave which a you commitment, One open ad is of the we've things heard the that like and this compete. was

scatter advantages draconian negotiate that on So view guys, power ecosystem actually of the less you point of as where the are your upfront the that? much competitive valuable? market mean in terms What's linear as to compete the does digital by that didn't have

Michael Barrett

That's have a been cogen the this programmatic year, I was of then maybe great that would kind they ago, thrown a got question. years might all essentially because a kid's X.X say table and observation they to claiming with this just of believe closed, upfronts the their if above I But year, their morning you Disney scatter. that recently that look I in programmatic percentage that at XX%. upfront read is

programmatic part and upfront tune out of $X. maybe is of So now to the of the $X every

so is programmatic And therefore, that upfront losers, winter a lot winner, is streaming a scatter about streaming think upfront. I part distinction of less that the defined now parcel and

Laura Martin

Thank very you interesting. Totally much.

Michael Barrett

you, Thank Laura.

Operator

next Please from ahead. The Nick question Zangler from comes Stephens. go

Nick Zangler

the I the impacting you How be wondering at ClearLine year any if your guidance the was reception about might the within of in new product spend from from contribution could how been And quarter there? has aimed ClearLine for talk directing right contribution CTV? the rest agencies.

Michael Barrett

the bandwagon, have the And right is definitely right to. a mid over feel it our be customers lot to time it. longer jumped offering minimis, the will I'll that guidance don't product for Nick, and of the of and term, as though around baked contribution has we're it we let handle in excitement already kind will. the provided. strong, that it's Yes. It's that if into on botched David revenue. de we There's a of you it. by has at ClearLine noted the incredibly been contributor seemingly folks as reception to that material list the -- But if I ClearLine chime David any The he feels

Nick Zangler

or inflects still it like next growth rates? year though, you is CTV the this two, like think small? do Within too just Or that

Michael Barrett

No.

say client the marketplace, I takes clients before, the because crawl longest had for to time too it and been you think of of look idea kind walk saw wouldn't folks deals the some for like get at a definitely concept. where I that if the announced onboard been look, from it to a product the beta different it's and the period And we in them run. their using have the while of that acclimated GroupM we

ended the plays out quarters. sense it think So cite I think of over contribution rates there'd if able the end I CTV. on and weren't to be coming itself of But ClearLine to we XXXX our a disappointment some growth

Nick Zangler

then more just they're capabilities. partnership if of detail guys out you recent just And I it. way, the what Obviously, are on just what doing an last FreeWheel. SSP Got could competitor with looking are in SSP you. you exactly Thank a to sounds the together like, yours. one, wanted you're for But flesh and see It for economics combining Magnite?

Michael Barrett

Yes. Sure, Nick.

targeting some it for to in broadcasters our ops other. It have that here. these Magnite. serving in wasn't server be easiest here, right? separate makes talking And are the lift extra always programmatic a for over ways, working because each functionality, that's it's whether our liked do always capabilities, at people broadcasters. the these clients ad facilitation programmatic our unchanged, They're broadcasters to honest, FreeWheel are have it So work us with The all using functionality, over they demand systems which our is The functionality. to two

FreeWheel. ad each to and it for efficient capabilities, This your programmatic FreeWheel, so other use us talk that makes FreeWheel and making integration So the to use technical talking programmatic seamless Magnite use inventory. announcement serving them for of server to a the was direct of the a sold combination in to most quite broadcasters capabilities real time have that talking you're

breakthrough partnership, of respect is we in a the I the So think broadcast needs the folks, space. this partners programmatic we our and meets and this really think FreeWheel

Nick Zangler

you. Thank it. appreciate Much Great.

Operator

from Company. go ahead. next Dan the Kurnos Benchmark from The Please comes question

Daniel Kurnos

guys fill maybe it investors variable this. Good -- of take will afternoon. because the aforementioned increase a dump develop things. broadcasters accretive you the Thanks. of especially bit if about Michael, even at pipe is them the here But with the today I'm here. single-digit new a have be the this, can services, to value-add, margin not just seems high rate for some in as rather you things rum a But Great. sure little me rephrase conversation take correct of I how if massively at you businesses than point I low at can if even server, place I'm have always that And mean terms oversimplify you managed preached in scale. to ad some wrong, like just rate. risk

So I'm see kind kind of Or me I that about hold said? wrong. just just thinking of help if what on

Michael Barrett

lot. the and we're were feeling to to or of strategy were the right ago services a Magnite I it. suite profile CTV way. that life's direct and it and it. market I don't how billion most buy different world not CTV, in the of broadcasters changed how most what's think now mean it speaking, the the They going have I generally But programmatic product our to TV shifted good. you they it's just ended they is of decidedly terms linear this And by broadcasters, margin how goes Like we that nailed going buy want to the Buyers a that we imbalance highest year to OEMs it's was anymore. some $XX programmatic And we -- use a offerings. it our mean dollars Dan, that of if plus had that's not the think to really want in No, and like is sold embrace pubs of good. of is soften.

spend that wishes' towards towards so that And wishes of it all Disney comes shiny this new the right goes sudden, a in. and inventory. Guess what? inventory and spend over it. all of and There's goes And a it's

at hit the So if of on of of good. right now. never I the But nail we think head can the that that's XX% take market imbalance you period kind it the going down through and nadir resumes this growth we think never of and a anything upsell this expansion. does this over we're there'll phenomenon But because really we're be at time. rate, think truly time, life And just occurred is in rates we

Daniel Kurnos

have that video before Can talked part on that helpful. you're it. behind sort now mean the launching. that of follow if that a you've that past redeploying up take planning or? help That's guys, have. of to integration So you just I like obviously, and you redeploy you and time -- you Got and to the DV+ rate those year assets assets us it of And side seen for really got now incrementally on chance some through to about trough with think you question. sort meant you've for we've that products good over kind this what on of the feels new the invest guys you, believe

think to are aggressively, capital of things invest willingness so your more kind give bit about the guys Just us the when a turn, kind or us of work. maybe little you margin poised help

Michael Barrett

it there. killed Dan, think Yes. you I

freed It CTV. and to that up we right operated all bandwidth having now freed and we're think that platforms three we've OLV going people one We up X. right. I of all DV+. platform. is exactly in DV+ creativity. the very from And streaming our Rubicon sunset It Telaria innovation. it's running on brought the and think that platform, you're legacy business, now we inventory legacy it freed-up this platform that legacy had SpotX the In This together phase through the platforms,

think people up XXX just now people. So on don't we is focused night and XXX consolidating because double oh, platforms, streaming. innovating on even day working XXX% down use case I and it's bandwidth read These their poor time is, bring were people now to on the and

we FTEs like But were obviously, case we could more poor assets, investing with think just because of look collapse here is the on think resources well itself, gained the And is at by people bringing CTV, XX just more story and we're time day. I so positioned. jobs. long-term incredibly that two growth for the existing really where our I every doing If use revenue presented we this

Daniel Kurnos

it. Got appreciate for Michael. Really color, the it. Thanks all

Operator

from Please question Securities. Thornton Matthew ahead. go from Thanks, next Dan. Truist The comes

Matthew Thornton

guys. through color I well thinking XQ afternoon, across us you if guidance you're could, Two, as the terms in what you're F&E year for services verticals? as the Good Just in on and half can Okay. assuming what on walk of CTV. assuming of and XQ the for more back

smaller thoughts that maybe Any program from there in helpful. term. a short-term of Thank So well. or a from to wonder I bit You you. as you also well? RTB talk the blue handful chip, exacerbates blue-chip shift a color as if Are would tail it short the orders to about be maybe publishers players in seeing

Michael Barrett

sure, Yes, Matt.

it. I got You were I think little garbled, a but

to of service hearing half of some back it coming but height lot they on shortages not that think but we're emboldened think model campaigns more that's of production. shortages, the chip was truly regional need It's to a that should troubled Media that kind bad of QX, autos. have rebound. has where reignite auto of So bit like to they're lot, verticals disruption pandemic, battery from pausing in whether I little feel it what are the launches as And supply. at still year, be. be I still want of the do with entertainment to might they the What sell, slower particularly in as managed and or A in new there's they by don't they is the dealers lack later. by not of

library mark. I now tune I see are new that's a not in for deep and them. think in that of if don't existing so think question there's media I people it production, shows we whoosh the But to libraries. kind entertainment advertising spend seeing are of you're to new myself. see watch and get that People

anything line? you to we verticals, in year trend As or do that into other a the any have of might any half David, see second the opinion insight from

David Day

I ones. No, big the you covered think

Michael Barrett

Matt. Okay. And then, definitely, yes,

growing grow can't And been there -- that cannibalization, impossible we words, if spend disproportionate is if the So to it it's in script. all CTV think revenue, net to for in is our the hasn't other spend talked platform about be spend. in significantly I new it so some right?

hitting publishers more some was rates auction-oriented have had be now that gone take premium that So more higher that to publishers it were had of sold open that to deals. spend programmatic hub

the of you XX%, So back as the be what we rising we XX%, and get higher I occurred. every we're the coming think new OEMs. broadcaster TV also will then analysts and journey disproportionately have with if are some the be that is our to think great of favor that's fed Again, dollars that seeing predicting publishers. to spend plus kind shift in in cohort And a that's of everything and services will bringing will normal service worked that mouth value in market,

Operator

B. from The next question Please go comes Riley Dan Securities. ahead. from Day

Dan Day

taking the question. Thanks Hey, guys. for

from any friction asked down because in third I my Just buying reallocated there's and a much like guide CTV. between potential the going DSPs. MediaMath in is quarter that not player understanding of spend getting

challenge in the But side. that it So you the on be anything, would third right DBs now? a is if quarter I assume for more

Michael Barrett

private a No, you Dan, it, the our its from all rare most on works and because into but be of ecosystem, the to out. But by as home way while that spend of And was spend it's large, some DV+, activated. exceptions a deals take point found tracking DV+ that with back platform.

David Day

cash sadly a hit, than it kind of Other was . a nothing Great. burger

Dan Day

about Maybe soft give Understood. you guide quarter talk fourth sort a of the just what's to confidence revenue. giving the for here CTV

to flat quarter close people that for haven't quarter. year-over-year We said -- Is you fourth the current beyond to seen sort for opine the think CTV. of willing out I

publishers, just it informing actual that Just visibility Just definitely is conversations advertisers, what at XQ all? commentary? that's with

David Day

appeared for to an here. the a campaigns service We managed as Michael team a very have all, lot sales but feedback Yes. be than with that our team. air the sales that getting it's of I rather we paused described taken pocket approach, earlier, cautious completely off first a those of, spent for team table. some think our time months of few of would mentioned say, sort

on And front. the healthy, have do service an so on that we as so share perspective, the front. some with the the think And we of spend ad business business, then actually is comfortable managed rest from Michael mentioned, recovery I are and very continued growth

these take lift for some levels. those we provide believe, least we momentum forward, still, return move rates, it's even and so at at And to to as us reduced

Dan Day

Thanks, Okay. guys.

Michael Barrett

Thanks.

David Day

Thanks.

Operator

question Nollen next go from comes from Macquarie. The ahead. Tim Please

Tim Nollen

very All day. of the topic the much. right. Thanks Obviously is CTV

I've discussion way if transparency tools. there's and So opting this, go the may programmatic means over in, maybe another improve wonder can correlation got point issues that sold which recently related to things that? there's And all. wonder been what of measurement network you to I just to in direct if be in one then so, of of CTV. clarification. do factoring that more And any of into is I using any question to and help And at instead more if groups

CTV. exclusively I or US think we're talking mostly

international mention the did double is growing You rate.

going now if that's US of also wonder the in So if on the this I outside just there's any of sort US that's happening dynamic

Michael Barrett

and the lot listen, the questions. I -- Great probably with bets they are know, to marketers scarce, that less. a when I Yes. tend dollars stick think safe experiment people

And a of with do than lack does it so Harbor fraud do to kind for to I or looking think that ocean. a is with perhaps visibility less of rocky in just Safe

One world. those publisher at of we've deal our things CTV issues the all. about had is deal the don't with platform never aggregators we in because direct, We

every direct publisher, with relationship them. So we a we know have

our on really level. has XXX% at visibility visibility as fraud fraud So platform, platform, our on never existed

micro predominantly international a standpoint, not Magnite. in from more role. is a don't macro, Magnite think I from And DV+. So but a a has Maybe standpoint, that played for

rate in over-index and they So that on will was DV+ peers not those markets. the the our is surprising outperform that their growth if it what

marketplace through the have a mostly Australian it to it's We CTV, broadcasters. as footprint strong very but in relates

so marketplace. you're the phenomenon that here is And some that of the seeing same in

broadcasters, right sell So top it's phenomenon we're tier and direct, they to like pubs that unique sold America I a occur now. not think the seeing that North so

Tim Nollen

Okay. very much. Thanks Great.

Operator

question Is ahead. on mute. next Shweta Khajuria from Evercore. The from ISI. Hi. your comes Please line go

Michael Barrett

Hi, Shweta. We you. can't hear

Operator

any to is like to Barrett, CEO, remarks. I Michael This back his like turn closing session. would line for coming our concludes through. question-and-answer not the over conference Looks

Michael Barrett

I'd Yes, the report for effort like another strong thank required diligent the you, to Thank Magnite to quarter. team Jason.

migration internal to the deliver to transition CTV We partners. attention to many the are thank smooth platform, thrilled for to for particularly integration. teams like which and a work I complete additional CTV required the would our new platform completing our significant responsible

XXth and Nick with August conference look participating XXnd. with many be marketing So QX on thank We events. Mid-Atlantic of August in post will to investor with our much. in IRO virtual at you a forward RBC Craig-Hallum virtual you on will speaking Canabo our host so meetings upcoming tomorrow.

in We New will attending September the Xth New on be York the marketing Xth. York in on and Conference Benchmark

Truist Truist be joining in XXth. marketing September for We marketing Thank on be September the in have Nick evening. also for XXs. Francisco you great on XXth. in Summit participate a We'll and San Virtual will will with September London on

Operator

The Thank presentation. today's for conference concluded. attending has you now

You may now disconnect.

Magnite (MGNI) 9 Aug 232023 Q2 Earnings call transcript