• Contribution ex-TAC: $607 million for the full year 2024.
• Processed Ad Spend: Over $6 billion.
• Adjusted EBITDA: $197 million for the full year 2024.
• Free Cash Flow: $118 million for the full year 2024.
• CTV Contribution ex-TAC: $78 million in Q4, up 23% year over year.
• DV+ Contribution ex-TAC: $102 million in Q4, up 1% year over year.
• Total Revenue: $194 million in Q4, up 4% from Q4 2023.
• Net Income: $36 million for Q4 2024.
• GAAP Earnings Per Share: $0.24 for Q4 2024.
• Non-GAAP Earnings Per Share: $0.34 for Q4 2024.
• Operating Cash Flow: $64 million for Q4 2024.
• Cash Balance: $483 million at the end of Q4 2024.
• Capital Expenditures: $12 million for Q4 2024, $52 million for the full year.
• Net Leverage Ratio: 0.4x at the end of Q4 2024.

• Warning! GuruFocus has detected 7 Warning Signs with MGNI.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Magnite Inc (NASDAQ:MGNI) exceeded top-line guidance growth in Connected TV (CTV) for Q4, with a 23% year-over-year increase in CTV contribution ex-TAC.
• The company achieved record highs in contribution ex-TAC of $607 million, adjusted EBITDA of $197 million, and free cash flow of $118 million for the year.
• Magnite Inc (NASDAQ:MGNI) reported strong growth from major partners like Roku, LG, Vizio, Walmart, Disney, Fox, Warner, Discovery, and Paramount, with Netflix continuing to ramp up.
• The company is optimistic about its AI initiatives, which include new client-facing tools powered by generative AI to enhance operational efficiencies and drive value for partners.
• Magnite Inc (NASDAQ:MGNI) has a robust capital structure, ending the year with $483 million in cash and a net leverage ratio reduced to 0.4x.

Negative Points

• The DV+ business experienced a disappointing Q4 with only 1% contribution ex-TAC growth due to unusual post-election spend patterns.
• There was a significant drop in CPMs in the DV+ business post-election, leading to underperformance compared to expectations.
• The company faced soft vertical demand in DV+ across 13 of the 18 categories tracked, with notable pullbacks in consumer categories, health and fitness, retail, automotive, and food and beverage.
• Magnite Inc (NASDAQ:MGNI) anticipates a slowdown in CTV growth in Q1 2025, reflecting typical seasonal patterns.
• The company faces competitive challenges from initiatives like Trade Desk's OpenPath, which could impact the SSP landscape.

Q & A Highlights

Q: Can you provide context on the expected slowdown in Connected TV (CTV) for Q1 2025? A: David Day, CFO, explained that Q1 is typically a low point for year-to-year growth in CTV. However, they are seeing a nice rebound in DV+ with growth in the mid to high single digits, which is running nicely.

Q: How is Magnite working with small and medium-sized businesses (SMBs) to bring greater budget online for CTV? A: Michael Barrett, CEO, mentioned that they are in the early stages of bringing performance advertisers on board, who are used to DV+ metrics. The goal is to expand the pie beyond shifting dollars from linear to streaming, aiming for a broader advertiser base. Magnite's role is to provide great supply to these advertisers globally.

Q: What are the growth expectations for CTV ex-TAC business, and how do data initiatives fit into the growth strategy? A: Michael Barrett stated that they expect to outgrow the market, which is projected to be in the mid-teens. They anticipate Netflix to be one of their largest CTV clients by the end of 2025. Data initiatives are seen as a new revenue opportunity, allowing publishers and Magnite to participate in data economics.

Q: Can you elaborate on the Gen AI strategy for 2025 and its impact on CapEx? A: Michael Barrett noted that Gen AI tools are aimed at existing clients to increase revenue. David Day added that the CapEx increase is not related to Gen AI but rather to optimizing their tech stack, particularly moving some activities from AWS to on-prem to reduce costs.

Q: How does Magnite differentiate its SSP from Trade Desk's OpenPath? A: Michael Barrett highlighted that Magnite provides global demand and yield management, ensuring publishers get the best rates. OpenPath is a valuable demand source but lacks the comprehensive demand and yield optimization that Magnite offers.

Q: What caused the CPM pressure in DV+ during Q4, and what is the outlook for 2025? A: David Day explained that there was a drop in demand post-election, which was unusual compared to previous cycles. However, demand has rebounded in January and February, giving confidence for 2025.

Q: How should we think about the monetization of AI curation and agency marketplaces in 2025? A: Michael Barrett indicated that these partnerships are strategic and will take time to ramp up. They are expected to contribute to general revenue growth over time rather than causing a sudden increase.

Q: What are the top differentiators of Magnite's SSP versus OpenPath? A: Michael Barrett emphasized that Magnite brings comprehensive global demand and yield management, ensuring publishers receive the best possible rates, unlike OpenPath, which is primarily a demand source.

Q: How did political spending impact Magnite's financials in 2024? A: David Day noted that political spending accounted for 6.5% of contribution ex-TAC in Q4 and 3.2% for the full year.

Q: What is the outlook for CTV business mix in 2025 and beyond? A: David Day mentioned that the mix has been stable, but they anticipate bringing more demand as Magnite, especially with the expansion of media plans and reliance on Magnite for demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.