Q2 2024 Magnite Inc Earnings Call

August 7, 2024

Operator: Good day, and welcome to the Magnite second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Nick Kormeluk of Investor Relations. Please go ahead.

Operator: Good day, and welcome to the Magnite second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.

Operator: And welcome to the Magnite second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Nick Kormeluk of Investor Relations. Please go ahead.

Speaker Change: Good day and welcome to the Magnite second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.

Operator: After today's remarks, there will be an opportunity to ask questions. Tasky question, you may press star then one on your touch tone phone. To withdraw your question, please press star, then two.

Speaker Change: After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Nick Kormeluk of Investor Relations. Please go ahead.

Operator: Please note, this event is being recorded.

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

Nick Kormeluk: Thank you, operator.

Nick Kormeluk: Thank you, operators, and good afternoon, everyone. Welcome to Magnite's second quarter 2024 earnings conference call. As a reminder, this conference call is being recorded. Joining me on the call today are Michael Barrett, CEO, and David Day, our CFO. I would like to point out that we

Nick Kormeluk: Good afternoon, everyone. Welcome to Magnite second quarter 2024 earnings conference call. As a reminder, this conference call is being recorded. Joining me on the call today are Michael Barrett, CEO, and David Day, CFO. I would like to point out that we have posted financial highlights on our Investor Relations website to accompany today's presentation.

Nick Kormeluk: Thank you, operator, and good afternoon, everyone. Welcome to Magnite's second quarter 2024 earnings conference call. As a reminder, this conference call is being recorded. Joining me on the call today are Michael Barrett, CEO , and David Day, our CFO . I would like to point out that we have posted financial highlight slides on our investor relations website to accompany today's presentation.

Nick Kormeluk: I would like to point out that we have posted financial highlight slides on our investor relations website to accompany today's presentation. Before we get started, I will remind you that our prepared remarks and answers to questions will include information that might be considered to be forward-looking statements, including but not limited to statements concerning our anticipated financial performance and strategic objectives, including the potential impacts of macroeconomic factors on our business. These statements are not guarantees of future performance.

Nick Kormeluk: They reflect our current views with respect to future events and are based on assumptions and estimates and subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievement to be materially different from expectations or results projected or implied by forward-looking statements. The discussion of these and other risks, uncertainties, and assumptions is set forth in the company-specific reports filed with the SEC, including our second quarter 2024 quarterly report on Form 10-Q and our 2023 annual report on Form 10-K. We undertake no obligation to update forward-looking statements or relevant risks.

Nick Kormeluk: Before we get started, I'll remind you that I'll prepare remarks and answer to questions will include information that might be considered to be forward-looking statements, including, without limited statements concerning our anticipated financial performance and strategic objectives, including the potential impacts of macroeconomic factors on our business. These statements are on guarantees of future performance. They look like our current user perspective future events and are based on assumptions and estimates and subject to known and unknown lists and certain keys in other factors. It may call our actual results performance or achievement in materially different from expectations or results projected or implied by forward-looking statements.

Speaker Change: Before we get started, I'll remind you that our prepared remarks and answers to questions will include information that might be considered to be forward-looking statements, including but not limited to statements concerning our anticipated financial performance and strategic objectives.

Nick Kormeluk: including the potential impacts of macroeconomic factors on our business. These statements are not guarantees of future performance. They reflect our current views with respect to future events and are based on assumptions and estimates and subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievement to be materially different from expectations or results projected or implied by forward-looking statements. The discussion of these and other risks, uncertainties, and assumptions is set forth in the company-specific reports filed with the SEC, including our second quarter 2024 quarterly report on Form 10-Q and our 2023 annual report on Form 10-K. We undertake no obligation to update forward-looking statements or relevant risks.

Nick Kormeluk: including the potential impacts of macroeconomic factors on our business.

Nick Kormeluk: These statements are not guarantees of future performance, they reflect our current views with respect to future events and are based on assumptions and estimates.

Nick Kormeluk: and subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievement to be materially different from expectations or results projected or implied by forward-looking statements.

Nick Kormeluk: The discussion of these and other risks and certainties and assumptions is set forth in the company specific reports filed with the FCC, including our second quarter 2024 quarterly report on form 10-Q and our 2023 annual report on form 10-K. We undertake no obligation to update forward-looking statements or relevant risks.

Speaker Change: The discussion of these and other risks, uncertainties, and assumptions is set forth in the company-specific reports filed with the SEC, including our second quarter 2024 quarterly report on Form 10-Q and our 2023 annual report on Form 10-K . We undertake no obligation to update forward-looking statements or relevant risks.

Nick Kormeluk: Our commentary today will include non-gas financial measures, including contribution extract or less traffic acquisition costs, adjusted EBITDA, and non-GAAP income per share. Reconciliation between GAAP and non-GAAP metrics for recorded results can be found in our earnings press release and in the financial highlights deck that is posted on our Investor Relations website. At times, and in response to your questions, we may offer additional metrics to provide greater insight to the dynamics of our business. Please be advised that the additional detail may be one time in nature, and we may or may not provide an update on the future of these metrics.

Nick Kormeluk: Our commentary today will include non-GAAP financial measures, including Contribution X-TAC for less traffic acquisition costs, adjusted EBITDA, and non-GAAP income per share. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and in the financial highlights deck that is posted on our investor relations website. At times, in response to your questions, we may offer additional metrics to provide greater insight into the dynamics of our business.

Speaker Change: Our commentary today will include non-GAAP financial measures, including contribution ex-tac or less traffic acquisition costs, adjusted EBITDA, and non-GAAP income per share.

Speaker Change: Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and in the financial highlights deck that is posted on our investor relations website.

Nick Kormeluk: At times, in response to your questions, we may offer additional metrics to provide greater insight into the dynamics of our business. Please be advised that this additional detail may be one-time in nature, and we may or may not provide an update on the future of these metrics. I encourage you to visit our Investor Relations website to access our press release, financial highlights deck, periodic SEC reports, and the webcast replay of today's call to learn more about Magnite. I want to thank you for joining us today.

Speaker Change: At times, in response to your questions, we may offer additional metrics to provide greater insight into the dynamics of our business. Please be advised that this additional detail may be one-time in nature, and we may or may not provide an update on the future of these metrics.

Nick Kormeluk: I encourage you to visit our investor relations website to access our press release, financial highlights deck, periodic SEC reports, and the webcast replay, if it is called, to learn more about magnetic.

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

Speaker Change: I encourage you to visit our Investor Relations website to access our press release, financial highlights deck, periodic SEC reports, and the webcast replay of today's call to learn more about Magnite. I will now turn the call over to Michael. Michael, please go ahead.

Nick Kormeluk: I will now turn the call over to Michael. Michael, please go ahead. Thank you.

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

Michael Barrett: Thank you, Nick. It's been a very exciting 90 days or so since we last reported. We delivered strong Q2 results that once again exceeded our top-line guidance, and we reinforced our leadership in CTV with the Netflix win. We are absolutely thrilled to have been chosen by Netflix as a programmatic SSP partner. The deal has created significant momentum for our business, with new and existing partners and customers asking us how we can do more for them and help them move faster into programmatic CTV advertising.

Michael Barrett: Thank you, Nick. It's been a very exciting 90 days just since we last reported. We delivered strong Q2 results that once again exceeded our top line guidance, and we reinforced our leadership in CTV with the Netflix win. We are absolutely thrilled to have been chosen by Netflix as a programmatic SSP partner. The deal has created significant momentum for our business, with new and existing partners and customers asking us how we can do more for them and help them move faster into programmatic CTV advertising. Our win in the competitive mode, the competitive mode we have built is the result of our investment in numerous features and capabilities that took years to assemble, integrate, and transform.

Michael: Thank you, Nick.

Michael: It's been a very exciting 90 days or so since we last reported. We delivered strong Q2 results that once again exceeded our top-line guidance, and we reinforced our leadership in CTV with the Netflix win.

Michael: We are absolutely thrilled to have been chosen by Netflix as a programmatic SSP partner. The deal has created significant momentum for our business with new and existing partners and customers asking us how we can do more for them and help them move faster into programmatic CTV advertising.

Michael Barrett: Our win in the competitive moat we have built is a result of our investment in numerous features and capabilities that took years to assemble, integrate, and transform. It clearly demonstrates the breadth and depth of what we offer in CTV and validates the work we've been doing to create the world's leading, holistic, programmatic CTV platform. We look forward to supporting Netflix's programmatic launch starting this summer and ramping throughout 2025, and we've been working at a feverish pace with them since the announcement in May. For the quarter, CTV contribution XTAC grew 12% year over year, and DV Plus contribution XTAC grew 7%.

Michael Barrett: Our win in the competitive moat we have built is a result of our investment in numerous features and capabilities that took years to assemble, integrate, and transform. It clearly demonstrates the breadth and depth of what we offer in CTV and validates the work we've been doing to create the world's leading holistic programmatic CTV platform. We look forward to supporting Netflix's programmatic launch starting this summer and ramping throughout 2025. And we've been working at a feverish pace with them since the announcement in May. For the quarter, CTV contribution XTAC grew 12% year over year, and DV Plus contribution XTAC grew 7%.

Michael: Our win in the competitive moat we have built is a result of our investment in numerous features and capabilities that took years to assemble, integrate, and transform.

Michael Barrett: It clearly demonstrates the breadth and depth of what we offer in CTV. Invalidates the work we've been doing to create the world's leading holistic programmatic CTV platform.

Michael: It clearly demonstrates the breadth and depth of what we offer in CTV and validates the work we've been doing to create the world's leading holistic programmatic CTV platform.

Michael Barrett: William. We look forward to supporting Netflix's programmatic launch starting the summer in ramping throughout 2025, and we've been working at a feverish pace with them since the announcement in May. For the quarter, CTV contribution extract grew 12 percent year over year, and DV Plus contribution extract grew 7 percent. Key drivers of CTV performance were strong overall ad spend growth, increasing programmatic adoption by the industry's largest players in ad serving strength. Our ad spend for the quarter continued to pace above 20 percent. Regarding CPM trends in CTV, we've seen flight decreases year over year. However, we believe these are supply driven by the largest industry players scaling their CTV inventory and not from a drop-off in demand.

Michael: We look forward to supporting Netflix's programmatic launch starting this summer and ramping throughout 2025, and we've been working at a feverish pace with them since the announcement in May.

Michael: For the quarter, CTV contribution XTAC grew 12% year-over-year, and DVPlus contribution XTAC grew 7%.

Michael Barrett: Key drivers of CTV performance were strong overall ad spend growth and increasing programmatic adoption by the industry's largest players in the ad serving space. Our ad spend for the quarter continued to pace above 20 percent. Regarding CPM trends in CTV, we've seen slight decreases year-over-year.

Michael: Key drivers of CTV performance were strong overall ad spend growth.

Michael: increasing programmatic adoption by the industry's largest players in ad serving strength.

Michael: Our ad spend for the quarter continued to pace above 20%.

Michael: Regarding CPM trends in CTV, we've seen slight decreases year over year. However, we believe these are supply-driven by the largest industry players scaling their CTV inventory and not from a drop-off in demand.

Michael Barrett: However, we believe these are supply-driven by the largest industry players scaling their CTV inventory and not from a drop-off in demand; volume increases have significantly offset CPM reductions, and we believe these trends of accelerating programmatic adaptation will continue. The expansion of supply sources makes programmatic selling even more important. Lower CPMs and better targeting in programmatic CTV also help facilitate the entry of newer CTV buyers who may be more ROI and price sensitive.

Michael Barrett: However, we believe this is supply driven by the largest industry players scaling their CTV inventory and not from a drop in demand; volume increases have significantly offset CPM reductions, and we believe these trends of accelerating programmatic adaptation will continue. The expansion of supply sources makes programmatic selling even more important. Lower CPMs and better targeting in programmatic CTV also help facilitate the entry of newer CTV buyers who may be more ROI and price sensitive.

Michael Barrett: Volume increases have significantly offset CPM reductions, and we believe these trends of accelerating programmatic adoption will continue. The expansion of supply sources makes programmatic selling even more important. Lower CPMs and better targeting in programmatic CTV also help facilitate the entry of newer CTV buyers who may be more ROI and price-sensitive. We believe these trends are very powerful in expanding industry programmatic participation and growing our accessible tab.

Michael: Volume increases have significantly offset CPM reductions and we believe these trends of accelerating programmatic adaption will continue.

Michael: The expansion of supply sources makes programmatic selling even more important. Lower CPMs and better targeting in programmatic CTV also help facilitate the entry of newer CTV buyers who may be more ROI and price sensitive.

Michael Barrett: We believe these trends are very powerful in expanding industry programmatic participation and growing our accessible TAM. In addition to the Netflix win, I also want to highlight two of our other big partnerships. The first is United Airlines, where we recently announced that Magnite will be the centralized ad platform for in-flight entertainment. This demonstrates our continued growth in the commerce media space with one of the largest airlines in the world choosing Magnite as their exclusive partner as they enter the programmatic advertising arena.

Michael: We believe these trends are very powerful in expanding industry programmatic participation and growing our accessible TAM.

Michael Barrett: In addition to the Netflix win, I also want to highlight two of our other big partnerships. First is United Airlines, where we recently announced that Magnet will be the centralized ad platform for Inflate entertainment. This demonstrates our continued growth in the commerce media space, with one of the largest airlines in the world choosing Magnet as their exclusive partner as they enter the programmatic advertising arena. The second is Roku, where we have announced an expansion of our seven-year partnership in support of powering the new Roku Exchange. The Roku Exchange connects to the programmatic ecosystem through an integration with Magnet.

Michael Barrett: The second is Roku, where we have announced an expansion of our seven-year partnership in support of powering the new Roku Exchange, which connects to the programmatic ecosystem through an integration with Magnite. In addition to connecting Roku with third-party buyers, we're also providing them with incremental advertising opportunities through our ClearLine and agency marketplace solutions, as well as our demand facilitation team. ClearLine, our self-service direct buying platform, is continuing to gain adoption, and we are seeing very good growth, albeit off of a small base.

Michael: In addition to the Netflix win, I also want to highlight two of our other big partnerships. First is United Airlines, where we recently announced that Magnite will be the centralized ad platform for in-flight entertainment.

Michael: This demonstrates our continued growth in the commerce media space with one of the largest airlines in the world choosing Magnite as their exclusive partner as they enter the programmatic advertising arena.

Michael: The second is Roku, where we have announced an expansion of our seven-year partnership in support of powering the new Roku exchange.

Speaker Change: The Roku Exchange connects to the programmatic ecosystem through an integration with Magnate.

Michael Barrett: In addition to connecting Roku with third-party buyers, we are also providing them with incremental advertising opportunities to our clear line and agency marketplace solutions, as well as our demand facilitation team. Clearline, our self-service direct buying platform, is continuing to gain adoption, and we are seeing very good growth, albeit off of a small base. It has traction with numerous agencies and multiple brands that are in testing and early development. Our exclusive Media Ocean partnership also represents a big opportunity for Clearline, and we are launching our first campaigns with them this quarter. Our deep and evolving partnerships with the likes of Netflix, Disney, Roku, Warner Brothers Discovery, Paramount, Fox, Samsung, LG, and Vizio ensure we have a valuable long-term role in the growth of the CTV market.

Michael: In addition to connecting Roku with third party buyers, we are also providing them with incremental advertising opportunities through our clear line and agency marketplace solutions as well as our demand facilitation team.

Michael: Clearline, our self-service direct buying platform, is continuing to gain adoption and we are seeing very good growth, albeit off of a small base. It has traction with numerous agencies and multiple brands that are in testing and early development.

Michael Barrett: It has traction with numerous agencies and multiple brands that are in testing and early development. Our exclusive MediaOcean partnership also represents a big opportunity for ClearLine, and we are launching our first campaigns with them this quarter. Our deep and evolving partnerships with the likes of Netflix, Disney, Roku, Warner Bros. Discovery, Paramount, Fox, Samsung, LG, and Vizio ensure we have a valuable long-term role in the growth of the C

Michael: Our exclusive MediaOcean partnership also represents a big opportunity for ClearLine, and we are launching our first campaigns with them this quarter.

Michael: Our deep and evolving partnerships with the likes of Netflix, Disney, Roku, Warner Bros. Discovery, Paramount, Fox, Samsung, LG, and Vizio ensure we have a valuable long-term role in the growth of the CTV market.

Michael Barrett: In fact, some of the fastest-growing accounts this quarter included Roku, Warner, Disney, LG, and Paramount, with much of the growth coming from our spring-serve and Magnet streaming SSP combination, which gives us a big advantage as a programmatic first-partner relative to the competition and continues to differentiate us in market. Our tools are deeply embedded within our clients' work well, whether it be creative review, ad-potting logic, or audience tools, and from the client's perspective, the combined implementation of our ad-cermin capabilities and FSP looks more like a typical enterprise software solution. We believe this stickiness creates a meaningful mode and barrier to entry for others, and in our case, the barriers not just workflow from ad operations, is also in the form of superior monetization.

Michael Barrett: In fact, some of the fastest-growing accounts this quarter included Roku, Warner, Disney, LG, and Paramount, with much of the growth coming from our SpringServe and Magnite streaming SSP combination, which gives us a big advantage as a programmatic first partner relative to the competition and continues to differentiate us in the market. Our tools are deeply embedded within our clients' workflows, whether it be creative review, ad placement logic, or audience tools, and from the client's perspective, the combined implementation of our ad serving capabilities and FSP looks more like a typical enterprise software solution.

Michael: In fact,

Michael: Some of the fastest-growing accounts this quarter included Roku, Warner, Disney, LG, and Paramount with much of the growth coming from our SpringServe and Magnite streaming SSP combination.

Michael: which gives us a big advantage as a programmatic first partner relative to the competition and continues to differentiate us in market.

Michael: Our tools are deeply embedded within our clients' workflow.

Michael: whether it be creative review, ad potting logic, or audience tools. And from the client's perspective, the combined implementation of our ad serving capabilities and FSP looks more like a typical enterprise software solution.

Michael Barrett: We believe this stickiness creates a meaningful moat and barrier to entry for others. And in our case, the barrier is not just workflow format operations; it is also in the form of superior monetization. Our strategic partners view us as part of their core ad operations platform, and having more than one solution would complicate workflow and be comparable to running two ERPs or two CRFs. Now to DV Plus.

Michael Barrett: We believe this stickiness creates a meaningful moat and barrier to entry for others. And in our case, the barrier is not just workflow from operations; it is also in the form of superior monetization. Our strategic partners view us as part of their core ad operations platform, and having more than one solution would complicate workflow and be comparable to running two ERPs or two CRFs. Now to DV Plus.

Michael: We believe this stickiness creates a meaningful note and barrier to entry for others.

Michael: And in our case, the barrier is not just workflow for meta-operations, it is also in the form of superior monetization.

Michael Barrett: Our strategic partners, the US, as part of their core ad operations platform, and having more than one solution, would complicate workflow and be comparable to running two ERPs or two CRSs.

Michael: Our strategic partners view us as part of their core ad operations platform, and having more than one solution would complicate workflow and be comparable to running two ERPs or two CRMs.

Michael Barrett: Now to DV plus. Q2 once again finished strong with contributions. X-TAC growth is 7%. Our results continue to be driven by adding scale, improving efficiencies through traffic shaping, improving monetization and performance with AI, and by investing in formats such as native, audio, podcasts, and digital out of home. On the AI front, you may have seen our release last Thursday that our new feature within Demand Manager using machine learning. The new feature finds the optimal configurations in a publisher's pre-bid wrapper per impression in real time. It has the potential to rapidly enhance billions of impressions to improve performance versus manual configuration.

Michael Barrett: Q2 once again finished strong with contributions from XTAC growth of 7%. Our results continue to be driven by adding scale, improving efficiency through traffic shaping, improving monetization and performance with AI, and by investing in formats such as native, audio, podcasts, and digital out of home. On the AI front, you may have seen our release last Thursday about our new feature within Demand Manager using machine learning. The new feature finds the optimal configurations in a publisher's pre-bid wrapper per impression in real-time and has the potential to rapidly enhance billions of impressions to improve performance versus manual configuration.

Speaker Change: Now to DV+.

Speaker Change: Q2 once again finished strong with contributions XTAC growth of 7%.

Speaker Change: Our results continue to be driven by adding scale, improving efficiency through traffic shaping, improving monetization and performance with AI, and by investing in formats such as native, audio, podcast, and digital out-of-home.

Speaker Change: On the AI front, you may have seen our release last Thursday about our new feature within Demand Manager using machine learning.

Speaker Change: The new feature finds the optimal configurations in a publisher's pre-bid wrapper per impression in real-time and has the potential to rapidly enhance billions of impressions to improve performance versus manual configuration.

Michael Barrett: In the broader industry, as I'm sure you're aware, Google recently announced they will not deprecate their party cookies. Frankly, we're not surprised with their decision, given some of the challenges David acknowledged with the rollout. In any event, we've done deep testing and work with Google so that we are prepared to support Privacy Sandbox for a feature iteration of it for those that may want it. Although our position has always been that cookies being deprecated was not a meaningful risk for our business in the long term, we do believe the decision does release some short-term uncertainty and potential CPM volatility, so we view it as a net positive.

Michael Barrett: In the broader industry, as I'm sure you're aware, Google recently announced they will not deprecate third-party cookies. Frankly, we're not surprised by their decision, given some of the challenges they've acknowledged with the rollout. In any event, we've done deep testing and worked with Google so that we are prepared to support Privacy Sandbox for a future iteration of it for those that may want it. Although our position has always been that cookies being deprecated was not a meaningful risk for our business in the long term, we do believe the decision does relieve some short-term uncertainty and potential CPM volatility, so we view it as a net positive.

Speaker Change: In the broader industry, as I'm sure you're aware, Google recently announced they will not deprecate third-party cookies.

Speaker Change: Frankly, we're not surprised with their decision given some of the challenges they've acknowledged with the rollout.

Speaker Change: In any event, we've done deep testing and work with Google so that we are prepared to support Privacy Sandbox for a future iteration of it for those that may want it.

Speaker Change: Although our position has always been that cookies being deprecated was not a meaningful risk for our business in the long term, we do believe the decision does relieve some short-term uncertainty and potential CPM volatility, so we view it as a net positive.

Michael Barrett: Regardless of Google's decision, we continue to believe that a decrease through alliance and third-party cookies and other non-transparent tracking methods are positive for the industry, and the future is bright for an identity model powered by sellers who are better positioned to obtain user data and consent for implementing first-party identifiers.

Michael Barrett: Regardless of Google's decision, we continue to believe that a decreased reliance on third-party cookies and other non-transparent tracking methods is positive for the industry, and the future is bright for an identity model powered by sellers who are better positioned to obtain user data and consent for implementing first-party identifiers. In closing, we delivered a strong first half and are thrilled with the momentum in our business and the ever-growing roster of CTV partners that have selected Magnite.

Speaker Change: Regardless of Google's decision, we continue to believe that a decreased reliance on third-party cookies and other non-transparent tracking methods are positive for the industry, and the future is bright for an identity model powered by sellers who are better positioned to obtain user data and consent.

Michael Barrett: In closing, we delivered a strong first half in our throw with the momentum in our business and the ever-growing raster CTV partners that have selected Magnet. The strategic investments we've made to create the world's leading holistic programmatic CTV platforms have clearly paid off, and we are excited about the acceleration in our growth rate in CTV for the remainder of the year.

Speaker Change: for implementing first-party identifiers.

Speaker Change: In closing, we delivered a strong first half and are thrilled with the momentum in our business and the ever-growing roster of CTV partners that have selected Magnite.

Michael Barrett: The strategic investments we've made to create the world's leading holistic programmatic CTV platform have clearly paid off, and we are excited about the acceleration in our growth rate in CTV for the remainder of the year. With that, I'll turn the call over to David for more details on the financials.

Speaker Change: The strategic investments we've made to create the world's leading holistic programmatic CTV platform have clearly paid off, and we are excited about the acceleration in our growth rate in CTV for the remainder of the year.

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

Speaker Change: With that, I'll turn the call over to David for more details on financials. David?

David Day: Thanks, Michael. We are very pleased with another strong quarter with our recent customer wins and with the resulting momentum we're seeing in our business. We believe we're continuing to take share as our ad spend growth is outpacing the market. As Michael mentioned, we again exceeded expectations for total and CTV contribution next track, along with his strong performance in BB Plus. Total revenue for Q2 was $163 million of 7% from Q2 to 2023. Contribution next track was $147 million, up 9%. CTV contribution next track was $63 million of 12% year over year and above the top end of our guidance range.

David Day: We are very pleased with another strong quarter and with the recent customer wins and the resulting momentum we're seeing in our business. We believe we're continuing to take share as our ad spend growth is outpacing the market.

David: Thanks, Michael.

David: We are very pleased with another strong quarter, with our recent customer wins, and with the resulting momentum we're seeing in our business.

David: we believe we're continuing to take share as our ad spend growth is outfacing the market

David Day: As Michael mentioned, we again exceeded expectations for total and CTV contribution next tax, along with a strong performance in VB+. Total revenue for Q2 was $163 million, up 7% from Q2 2023. Contribution X-TAC was $147 million, up 9%. CTV Contribution X-TAC was $63 million, up 12% year-over-year and above the top end of our guidance range. We saw very strong growth in ad spend and continued momentum with our Spring Serve ad-serving business. Our CTV outperformance was once again driven by our programmatic offerings.

David Day: As Michael mentioned, we again exceeded expectations for total and CTV contribution next tax, along with a strong performance in VB+. Total revenue for Q2 was $163 million, up 7% from Q2 2023. Contribution X-TAC was $147 million, up 9%. CTV Contribution X-TAC was $63 million, up 12% year over year, and above the top end of our guidance range. We saw very strong growth in ad spend and continued momentum with our Spring Serve ad serving business. Our CTV outperformance was once again driven by our programmatic offerings.

David: As Michael mentioned, we again exceeded expectations for total and CTV contribution X-TAC along with a strong performance in VB+.

Speaker Change: revenue for q two was one hundred and sixty three million dollars of seven percent from q two two thousand and twenty three

Speaker Change: Contribution X-TAC was $147 million, up 9%.

Speaker Change: CTV Contribution XTAC was $63 million, up 12% year-over-year, and above the top end of our guidance range. We saw very strong growth in ad spend and continued momentum with our Spring Serve ad-serving business.

David Day: We saw very strong growth in ad spend and continued momentum with our spring serve ad serving business. Our CTV outperformances once again driven by our programmatic offerings. BB Plus contribution next track was $84 million and increased from $79 million, or 7%, compared to the second quarter last year. Our contribution next track connects for Q2 is 43% CTV, 39% mobile, and 18% desktop. From a vertical perspective, health and fitness, automotive, and retail were our strongest performing categories. Categories that did not perform as well were travel, technology, and style and fashion. Total block rate expenses, which includes costs of revenue for the second quarter, were $153 million, a decrease from $224 million for the same period last year.

David: Our CTV outperformance was once again driven by our programmatic offerings.

David Day: DV Plus contribution XTAC was $84 million, an increase from $79 million, or 7% compared to the second quarter last year. Our contribution XTAC mix for Q2 was 43% CTV, 39% mobile, and 18% desktop. From a vertical perspective, health and fitness, automotive, and retail were our strongest performing categories; categories that did not perform as well were travel, technology, and style and fashion.

David Day: DV Plus contribution XTAC was $84 million, an increase from $79 million or 7% compared to the second quarter last year. Our contribution XTAC mix for Q2 was 43% CTV, 39% mobile, and 18% desktop. From a vertical perspective, health and fitness, automotive, and retail were our strongest performing categories. Categories that did not perform as well were travel, technology, and style and fashion.

Speaker Change: DV Plus contribution X-TAC was $84 million, an increase from $79 million, or 7% compared to the second quarter last year.

Speaker Change: Our contribution XTAC mix for Q2 is 43% CTV, 39% mobile, and 18% desktop.

Speaker Change: From a vertical perspective, health and fitness, automotive, and retail were our strongest performing categories.

Speaker Change: Categories that did not perform as well were travel, technology, and style and fashion.

David Day: Total operating expenses, which includes costs of revenue, for the second quarter were $153 million, a decrease from $224 million for the same period last year. The primary driver of the decrease was the result of the SPOTX acquired intangible assets that became fully amortized in the third quarter of last year. Adjusted EBITDA operating expenses for the second quarter were $102 million, within our guidance range. The increase from $97 million last year was primarily driven by higher personnel-related costs due to annual merit increases and modest increased hiring and additional cloud computing expenses.

David Day: Total operating expenses, which includes cost of revenue for the second quarter, were $153 million, a decrease from $224 million for the same period last year. The primary driver of the decrease was the result of the SPOTX acquired intangible assets that became fully amortized in the third quarter of last year. Adjusted EBITDA operating expenses for the second quarter were $102 million, within our guidance range. The increase from $97 million last year was primarily driven by higher personnel-related costs due to annual merit increases and modest increased hiring and additional cloud computing expenses.

Speaker Change: Total operating expenses, which includes costs of revenue for the second quarter, were $153 million, a decrease from $224 million for the same period last year.

David Day: The primary driver of the decrease was the result of the spot X acquired intangible assets that became fully amortized in the third quarter of last year. A jet CTV with operating expense for the second quarter was $102 million within our guidance range. The increase from $97 million last year was primarily driven by higher personnel related costs due to annual merit increases and modest increased hiring and additional. Net loss was $1 million for the quarter compared to net loss for the second quarter of 2023 of $74 million. A jet CTV dog grew 20% year over year and was $45 million with a margin of 30%, which compares to $37 million in a margin of 28% last year.

Speaker Change: The primary driver of the decrease was the result of the SPOTX acquired intangible assets that became fully amortized in the third quarter of last year.

Speaker Change: Adjusted EBITDA operating expense for the second quarter was $102 million within our guidance range.

Speaker Change: The increase from 97 million last year was primarily driven by higher personnel-related costs due to annual merit increases and modest increased hiring and additional cloud computing expenses.

David Day: The net loss was $1 million for the quarter compared to a net loss for the second quarter of 2023 of $74 million. Adjusted EBITDA grew 20% year over year and was $45 million with a margin of 30%, which compares to $37 million and a margin of 28% last year. As a reminder, we calculate adjusted EBITDA margin as a percentage of contribution excess. Gap loss per basic and diluted share was 1 cent for the second quarter of 2024 compared to a loss of 54 cents for the second quarter of 2023.

David Day: The net loss was $1 million for the quarter compared to a net loss for the second quarter of 2023 of $74 million. Adjusted EBITDA grew 20% year over year and was $45 million with a margin of 30%, which compares to $37 million and a margin of 28% last year. As a reminder, we calculate adjusted EBITDA margin as a percentage of contribution excess. Gap loss per basic and diluted share was $0.01 for the second quarter of 2024 compared to a loss of $0.54 for the second quarter of 2023.

Speaker Change: Net loss was $1 million for the quarter, compared to net loss for the second quarter of 2023 of $74 million.

Speaker Change: Adjusted EBITDA grew 20% year-over-year and was $45 million with a margin of 30% which compares to $37 million and a margin of 28% last year.

David Day: As a reminder, we calculated just the DVDM margin as a percentage of contribution next time. Gap loss for basic and deluded share was $1 million for the second quarter of 2024 compared to a loss of $54 million for the second quarter of 2023. Non-GAAP earnings per share in the second quarter of 2024 grew 56% and was $14 million compared to $9 million last year. Reconciliation of non-GAAP income and non-GAAP earnings per share are included with our Q2 results press release. Our cash balance to the end of Q2 was $326 million, an increase of $74 million from $253 million at the end of the first quarter.

Speaker Change: As a reminder, we calculate adjusted EBITDA margin as a percentage of contribution XFAC.

Speaker Change: Gap loss per basic and diluted share was $0.01 for the second quarter of 2024 compared to a loss of $0.54 for the second quarter of 2023.

David Day: Non-GAAP earnings per share in the second quarter of 2024 grew 56% and was $0.14 compared to $0.09 last year. Reconciliations of non-GAAP income and non-GAAP earnings per share are included with our Q2 results press release. Our cash balance at the end of Q2 was $326 million, an increase of $74 million from $253 million at the end of the first quarter. The increase was due to typical seasonality in our business. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs, were $15 million for the quarter. Operating cash flow, which we define as a Jeff Sediva dot less CapEx, was $30 million for the quarter. Our net interest expense for the quarter was $7 million.

David Day: Non-GAAP earnings per share in the second quarter of 2024 grew 56% and was $0.14 compared to $0.09 last year. Reconciliations of non-GAAP income and non-GAAP earnings per share are included with our Q2 results press release. Our cash balance at the end of Q2 was $326 million, an increase of $74 million from $253 million at the end of the first quarter. The increase was due to typical seasonality in our business. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs, were $15 million for the quarter. Operating cash flow, which we define as a Jeff Sidiba dot less CapEx, was $30 million for the quarter. Our net interest expense for the quarter was $7 million.

Speaker Change: non-GAAP earnings per share in the second quarter of 2024 grew 56% and was $0.14 compared to $0.09 last year.

Speaker Change: Reconciliations of non-GAAP income and non-GAAP earnings per share are included with our Q2 results press release.

Speaker Change: Our cash balance at the end of Q2 was $326 million, an increase of $74 million from $253 million at the end of the first quarter. The increase was due to typical seasonality in our business.

David Day: The increase was due to technical seasonality in our business. Alex, capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs for $15 million for the quarter. Operating cash flow, which we define as a justhadeeva dot, left cap ex, was $30 million for the quarter. Our net interest expense for the quarter was $7 million. Our net leverage was 1.3x at the end of Q2, reflecting the expected improvement from 1.7x at the end of Q1. The sequential improvement is due to the normal seasonality in our business. We expect to see net leverage improvements continue in Q3 and Q4 this year and expect the net leverage of 1x or less by the end of the year.

Speaker Change: Capital expenditures, including both purchases of property and equipment, and capitalized internal use software development costs, were $15 million for the quarter.

Speaker Change: Operating cash flow, which we define as a just sediva da, let's cap X, was $30 million for the quarter. Our net interest expense for the quarter was $7 million.

David Day: Our net leverage was 1.3x at the end of Q2, reflecting the expected improvement from 1.7x at the end of Q1. This sequential improvement is due to the normal seasonality in our business. We expect to see net leverage improvements continue in Q3 and Q4 this year and expect net leverage of 1x or less by the end of the year. In addition, for our regular RSU vesting during the quarter, we utilize the withhold-to-cover method to cover employee taxes, thereby reducing dilution by withholding 385,000 shares for $4 million.

Speaker Change: Our net leverage was 1.3x at the end of Q2, reflecting the expected improvement from 1.7x at the end of Q1. The sequential improvement is due to the normal seasonality in our business.

Speaker Change: We expect to see net leverage improvements continue in Q3 and Q4 this year and expect net leverage of 1x or less by the end of the year.

David Day: In addition, for our regular RSU besting during the quarter, we utilize the withhold to cover method to cover employee taxes, thereby reducing dilution by withholding $385,000 for $4 million. Year to date to the second quarter, using the withhold to cover, we've reduced delusion by 1.3 million shares for $13 million, or nearly 1% of shares outstanding. We also had $125 million of capacity available at quarter end in our authorized share or confirmed repurchase program.

Speaker Change: In addition, for our regular RSU vesting during the quarter, we utilize the withhold-to-cover method to cover employee taxes.

Speaker Change: thereby reducing dilution by withholding 385,000 shares for $4 million.

David Day: Year-to-date through the second quarter, using withhold to cover, we've reduced dilution by 1.3 million shares for $13 million, or nearly 1% of shares outstanding. We also had $125 million of capacity available at quarter end in our authorized share or convert repurchase program. I will now share our expectations for the third quarter and full year. For the third quarter, we expect Contribution X-TAC to be in the range of $146 to $150 million.

David Day: Year-to-date through the second quarter, using withhold to cover, we've reduced dilution by 1.3 million shares for $13 million, or nearly 1% of shares outstanding. We also had $125 million of capacity available at quarter end in our authorized share or convert repurchase program. I will now share our expectations for the third quarter and full year. For the third quarter, we expect contribution X-tax to be in the range of $146 to $150 million.

Speaker Change: Year-to-date, through the second quarter, using Withhold to Cover, we've reduced dilution by 1.3 million shares for $13 million, or nearly 1% of shares outstanding.

Speaker Change: We also had $125 million of capacity available at quarter end in our authorized share or convert repurchase program.

David Day: I will now share our expectations for the third quarter and full year. For the third quarter, we expect contribution x tax to be in the range of $146 to $150 million. Contribution x tax attributable to CTV to accelerate to a range of 62 to 64 million dollars, reflecting the year-to-year growth of 20% at the midpoint. Contribution x tax attributable to BV plus to be in the range of 84 to 86 million dollars. We anticipate EBITDA operating expenses to be between $101 and $103 million, which implies adjusted EBITDA margin of approximately 31% for Q3 at the midpoint.

David Day: Contribution XTAC attributable to CTV is expected to accelerate to a range of $62 to $64 million, reflecting year-over-year growth of 20% at the midpoint. Contribution X-TAC attributable to VB+ is expected to be in the range of $84 to $86 million. We anticipate EBITDA operating expenses to be between $101 and $103 million, which implies an adjusted EBITDA margin of approximately 31% for Q3 at the midpoint. Our Q3 expectations across CTV and DV Plus reflect a slow start to political ad spend in July due to the extraordinary circumstances surrounding both parties, although we've seen some improvement.

Speaker Change: I will now share our expectations for the third quarter and full year.

Speaker Change: For the third quarter, we expect Contribution X-TAC to be in the range of $146 to $150 million.

David Day: Contribution XTAC attributable to CTV is expected to accelerate to a range of $62 to $64 million, reflecting year-over-year growth of 20% at the midpoint. Contribution X-TAC attributable to VB+ is expected to be in the range of $84 to $86 million. We also expect to be net income and EPS positive for the full year on a gap basis. Q2 was another solid quarter for Magnite. I'm also excited about growing opportunities in the commerce media space and our new relationship with United as a marquee example.

Speaker Change: contribution tack attributable to ccttv to accelerate to a range of sixty two to sixty four million dollars reflecting year-over-year growth of twenty percent at the midpoint

Speaker Change: Contribution X-TAC attributable to VB+, to be in the range of $84 to $86 million.

Speaker Change: We anticipate EBITDA operating expenses to be between $101 and $103 million, which implies a just EBITDA margin of approximately 31% for Q3 at the midpoints.

David Day: Our Q3 expectations across CTV and DV Plus reflect a slow start to political ahead spend in July due to the extraordinary circumstances surrounding both parties, although we've seen some improvement. For the full year, we are reaffirming that we expect contribution x tax to grow at least 10% with CTV to grow faster than DV plus. The adjusted EBITDA margin to expand 100 to 150 basis points over 2023, a adjusted EBITDA growth in the midteens with an even higher growth and free cash flow, and we now expect total cat-backs to be approximately $50 million. We also expect to be net income and EPS positive for the full year on a GAAP basis.

Speaker Change: Our Q3 expectations across CTV and DV Plus reflect a slow start to political ad spend in July due to the extraordinary circumstances surrounding both parties, although we've seen some improvement.

David Day: For the full year, we are reaffirming that we expect Contribution XTAC to grow at least 10%, with CTV to grow faster than DD+ and Adjusted EBITDA margin to expand 100 to 150 base points over 2023, a JetSediva. Growth in the mid-teens with an even higher growth in free cash flow, and we now expect total CapEx to be approximately $50 million. We also expect to be net income and EPS positive for the full year on a GAAP basis. Q2 was another solid quarter for Magnite.

Speaker Change: For the full year, we are reaffirming that we expect Contribution XTAC to grow at least 10%, with CTV to grow faster than DV+.

Speaker Change: adjusted EBITDA margin to expand 100 to 150 base points over 2023, adjusted EBITDA growth in the mid-teens with an even higher growth in free cash flow, and we now expect total capex to be approximately 50 million dollars.

Speaker Change: we also expects to the net income and eps positive for the full year on a gaap basis

David Day: Q2 was another solid quarter for Magnite. I'm particularly excited about our new relationship with Netflix and the opportunity we have to help them grow their advertising business. I'm also excited about growing opportunities in the commerce, media space, and our new relationship with United as a marquee example. We have significant momentum in our business and exciting opportunities ahead.

David Day: I'm particularly excited about our new relationship with Netflix and the opportunity we have to help them grow their advertising business. I'm also excited about growing opportunities in the commerce media space and our new relationship with United as a marquee example. We have significant momentum in our business and exciting opportunities ahead. With that, let's open the line for Q&A.

Speaker Change: Q2 is another solid quarter for Magnite. I'm particularly excited about our new relationship with Netflix and the opportunity we have to help them grow their advertising business.

Speaker Change: I'm also excited about growing opportunities in the commerce media space and our new relationship with United as a marquee example. We have significant momentum in our business and exciting opportunities ahead.

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

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Shyam Patil from Susquehanna. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using the speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

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

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster.

Operator: At this time, we'll pause momentarily to assemble our roster.

Shyam Patil: Our first question comes from Shyam Patil from Susquehanna. Please go ahead. Okay, guys, congrats on a great quarter and all the long-distance partnership wins. I had a couple of questions. The first one was on some of the partnerships. Netflix, Roku; obviously some really good partnerships. Can you maybe talk a little bit about how you expect them to ramp throughout the second half of this year and next year and how we should be thinking about just the revenue contribution. You can talk about that for both of those.

Speaker Change: Our first question comes from Shyam Patil from Susquehanna. Please go ahead.

Michael Barrett: Hey guys, congrats on a great quarter and all the recent partnership wins. I had a couple of questions. The first one was on some of the partnerships. You know, Netflix, and Roku; obviously, some really good partnerships. Can you maybe talk a little bit about how you expect them to ramp throughout the second half of this year and next year and kind of how we should be thinking about just the revenue contribution, to the extent you can talk about that for both of those. And then, second question, on political advertising, can you talk a little bit about how you're expecting that to look in the third quarter and fourth quarter, if there's any finer points you can put on that?

Questioner: Hey guys, congrats on a great quarter and all the long-reaching partnership wins. I had a couple of questions. The first one was about some of the partnerships. You know, Netflix, Roku, obviously some really good partnerships. Can you maybe talk a little bit about how you expect them to ramp throughout the second half of this year and next year and kind of how we should be thinking about just the revenue contribution, the extent you can talk about that for both of those? And then, on political advertising, can you talk a little bit about how you're expecting that to look in the third quarter and fourth quarter, if there's any finer points you can put on that?

Shyam Patil: Hey guys, congrats on a great quarter and all the long-reaching partnership wins. I had a couple of questions. The first one was on some of the partnerships.

David Day: Sure, Steve, I'll take that. Yeah, and those partnerships, you know; we defer to Netflix on the timing of their ramp. They've discussed that, you know, they'll be launching this summer and into this fall and then really ramping up in 2025. United is a fairly new partnership, and it will take some time for them to ramp up. And so, you know, those two are not significant impacts considered in our revenue for the remainder of this year. With Roku and that expansion, I think, you know, we're seeing, you know, some growth there, and we're seeing, you know, some ramp-up.

Shyam Patil: Netflix, Roku, obviously some really good partnerships. Can you maybe talk a little bit about how you expect

Speaker Change: them to ramp throughout the second half of this year and next year.

Speaker Change: and kind of how we should be thinking about just...

Speaker Change: the revenue contribution, the extent you can talk about that for both of those.

Shyam Patil: And then second question, on political advertising, can you talk a little bit about how you're expecting that to look in the third quarter and fourth quarter? Is there any finer point you could put on that? Thank you.

Operator: Good day, and welcome to the Magnite Second Quarter 2024 earnings call. All participants will be in listen only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.

Speaker Change: And then, second question.

Speaker Change: On political advertising, can you talk a little about how you're expecting that to look in the third quarter and fourth quarter, if there's any finer point you can put on that? Thank you.

David Day: Sure, David, I'll take that. Yeah, on those partnerships, we defer to Netflix on the timing of their ramp. They've discussed that they'll be launching this summer into this fall and then really ramping in 2025.

Speaker Change: Sure, David, I'll take that. Yeah, and those partnerships, you know, we defer to Netflix on the timing of their ramp. They've discussed that.

Nick Kormeluk: I would now like to turn the conference over to Nick Kormeluk of investor relations. Please go ahead. Thank you, operator. Good afternoon, everyone. Welcome to Magnite Second Quarter 2024 earnings conference call. As a reminder, this conference call is being recorded.

Speaker Change: They'll be launching, you know...

Speaker Change: this summer and into this fall and then really ramping in 2025.

David Day: United is a fairly new partnership, and that will take some time to ramp up. And so for those two, there are not significant impacts considered in our revenue for the remainder of this year. With Roku and that expansion, we're seeing some growth there, and we're seeing some ramp up.

Speaker Change: United is a fairly new partnership and that will take some time to ramp up.

Nick Kormeluk: Joining me on the call today are Michael Barrett, CEO, and David Day, or CFO. I would like to point out that we have posted financial highlights on our investor relations website to accompany today's presentation. Before we get started, I'll remind you that I'll prepare remarks and answer to questions will include information that might be considered to be forward-looking statements, including without limited statements concerning our anticipated financial performance and strategic objectives, including the potential impacts of macroeconomic factors on our business.

Speaker Change: And so, you know, those two, I, you know, there are, they're not.

Speaker Change: significant impacts considered in our revenue for the remainder of this year with Roku and that expansion I think you know we're seeing you know some some growth there and we're seeing you know some some some ramp up

Nick Kormeluk: These statements are on guarantees of future performance. They look like our current user perspective future events and are based on assumptions and estimates and subject to known and unknown lists and certain keys in other factors. It may call our actual results performance or achievement in materially different from expectations or results projected or implied by forward-looking statements.

David Day: Political is really interesting. If these really unusual events in July, there was a significant pause in political spending. So we're a little cautious on that front. What's challenging politically is 80% of that spend occurs in the eight to ten weeks running up to the election. And so how much of that occurs in September before the Q3 cutoff versus Q4 is always hard to gauge. And so we're trying to be somewhat conservative given the potential volatility in the political spend and in our quarterly guidance in that cutoff and trying to estimate where that will land.

David Day: Politics is really interesting, you know, with these really unusual events in July, there was, there was a significant pause in political spending. So we're a little, a little cautious on that front. What's challenging politically is, you know, 80% of that spend occurs in the 8 to 10 weeks running up to the election. And so, you know, how much of that occurs in September before the Q3 cutoff versus, you know, Q4 is always hard, hard to gauge.

Speaker Change: Political is really interesting.

Speaker Change: You know, with these really unusual events in July , there was a significant pause in political spending, so we're a little cautious on that front. What's challenging political is, you know, 80% of that spend occurs in the 8 to 10 weeks.

Speaker Change: you know, running up.

Speaker Change: to the election.

Speaker Change: And so...

Nick Kormeluk: The discussion of these and other risks and certainties and assumptions is set forth in the company specific reports filed with the FCC, including our Second Quarter 2024 quarterly report on form 10Q and our 2023 annual report on form 10K.

Speaker Change: You know, how much of that occurs, you know, in September before the Q3 cutoff versus, you know, Q4 is always hard to gauge, and so...

David Day: And so, you know, we're trying to be somewhat, you know, conservative, given the potential volatility in the political spend and in our, you know, quarterly guidance and that cutoff and, you know, trying to estimate, you know, where that will land. Michael, do you have anything else to add? No, perfect.

Speaker Change: You know, we're trying to be somewhat, you know, conservative given the potential volatility in the political spin and in our, you know, quarterly guidance, you know, and that cut off and, you know, trying to estimate, you know, where that will land.

Nick Kormeluk: We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-gas financial measures, including contribution extract or less traffic acquisition costs, adjusted EBITDA and non-gap income per share. Reconciliation between gap and non-gap metrics for recorded results can be found in our earnings press release and in the financial highlights deck that is posted on our investor relations website. At times and response to your questions, we may offer additional metrics to provide greater insight to the dynamics of our business. Please be advised that the additional detail may be one time in nature, and we may or may not provide an update on the future of these metrics.

Michael Barrett: Michael, do you have anything else? No, perfect.

Michael Barrett: Michael, if you've got anything else, perfect.

Speaker Change: Michael, do you have anything else to add? No, perfect.

Michael Barrett: Great, thank you, guys.

Omar Dessouky: The next question comes from Omar Dessuke from Bank of America. Please go ahead. Hey, guys.

Operator: The next question comes from Omar Dasuki from Bank of America.

Speaker Change: Great, thank you guys.

omar suki: The next question comes from Omar Dasuki from Bank of America. Please go ahead.

Arthur Chu: Hey guys, this is Arthur.

Arthur Oliver: This is Arthur Oliver. Thanks for taking the question. Maybe just a quick clarification guidance that they have a follow-up question if I could. In the press release, I think there was a commentary around that. There's a commentary about like you guys expect in growth acceleration in the second half of 2024. I just wanted to clarify: are you expecting quarter of a quarter? Arthur, I think we lost two. Operator, I'm not sure if you still have Arthur on your end. Sorry, can you guys hear me? Yeah, Omar, I can hear you. Operator, are you there? Jason?

Arthur Chu: Thanks for taking my question. Maybe just a quick clarification and guidance. I may have a follow-up question, if you could. In the press release, I think there was a commentary around that. It was a commentary about, like, you guys expecting growth acceleration in the second half of 2024. I just wanted to clarify, are you expecting quarter-over-quarter acceleration?

Arthur Chu: Thanks for taking my question. Maybe just a quick clarification, guys, if I could. In the press release, I think there was a commentary around that. It was a commentary about, like, you guys expecting growth acceleration in the second half of 2024. I just wanted to clarify, are you expecting quarter-over-quarter acceleration?

omar suki: Hey guys, this is Arthur Oliver. Thanks for taking my question. Maybe just a quick clarification and guidance. I may have a follow-up question if I could.

Speaker Change: In the press release, I think there was a commentary around that, it was a commentary about like you guys expecting growth acceleration in the second half of 2024. I just wanted to clarify, are you expecting quarter-over-quarter acceleration? Yeah, sure. I think we lost you, Operator. I'm not sure if... Yeah.

Nick Kormeluk: I encourage you to visit our investor relations website to access our press release financial highlights deck periodic SEC reports and the webcast replay if it is called to learn more about magnetic.

Operator: Hey, Arthur, I think we lost you. Operator, I'm not sure if you still have Arthur on your end. Sorry, could you guys hear me?

Arthur Chu: Hey, Arthur, I think we lost you. Operator, I'm not sure if you still have Arthur on your end. Sorry, could you guys hear me?

Michael Barrett: I will now turn the call over to Michael. Michael, please go ahead. Thank you, Nick.

Speaker Change: Do you still have Arthur on your end?

Speaker Change: Sorry, could you guys hear me?

Operator: Omar, I can hear you.

Michael Barrett: It's been a very exciting 90 days just so since we last reported. We delivered strong Q2 results that once again exceeded our top line guidance, and we reinforced our leadership in CTV with the Netflix win. We are absolutely thrilled to have been chosen by Netflix as a programmatic SSP partner. The deal is created significant momentum for our business with new and existing partners and customers asking us how we can do more for them and help them move faster into programmatic CTV advertising.

Speaker Change: Yeah, I can't.

Operator: Operator, are you there? Jason? Yes. Can you guys hear me? I can hear you.

Speaker Change: Omar, I can hear you.

Operator: Yes. Can you guys hear me? I can hear you. Okay, it seems like we've lost audio for the question that was being asked. Operator, can you hear us, Jason? Can you try and let us know if you're still there on the line? I can hear you. Can you hear me?

Speaker Change: Operator, are you there? Jason? Yes. Can you guys hear me? I can hear you.

Operator: I can hear you.

Speaker Change: Hold on.

Operator: Okay, it seems like we've lost the audio for the question that was being asked.

Operator: Okay, it seems like we've lost the audio for the question that was being asked. Operator, can you hear us, Jason? Can you chime in and let us know if you're still there on the line? I can hear you.

Speaker Change: Okay, it seems like we've lost audio for the question that was being asked.

Michael Barrett: Our win in the competitive mode, the competitive mode we have built is the result of our investment in numerous features and capabilities that took years to assemble, integrate and transform. It clearly demonstrates the breadth and depth of what we offer in CTV. Invalidates the work we've been doing to create the world's leading holistic programmatic CTV platform.

Speaker Change: Operator, can you hear us? Jason, can you chime in and let us know if you're still there on the line? I can hear you. Can you hear me?

Operator: And I can hear you. Can you hear me? Can you hear me, guys?

Operator: Can you guys even move to the next question? Hi, can you hear me, Nick? All right, well, let's try the next questioner. Jake, the operator says they can hear us. If everybody can just stare at us for a moment, we'll dial right back in. Everyone else has left a call. It looks like no one else is going to join this call.

Operator: Can you hear me, guys? I think we can move to the next question.

Operator: Can you hear me, guys? We're going to need to move on to the next question.

Jason: Can you hear me guys?

Nick Kormeluk: Hi, can you hear me, Nick? All right, let's try the next questioner. J.P. Parker. If the operator says they can hear us, if everybody can just bear with us for a moment, we'll

Nick Kormeluk: Hi, can you hear me, Nick? All right, let's try the next questioner. J.P. Parker. If the operator says they can hear us, if everybody can just bear with us for a moment, we'll...

Speaker Change: Alright, let's try the next questioner.

Nick Kormeluk: If the operator says they can hear us, if everybody can just bear with us for a moment, we'll dial right back in. Everyone else has left the call. It looks like no one else is going to join this call. Goodbye.

Operator: If the operator says they can hear us, if everybody can just bear with us for a moment, we'll dial right back in. Everyone else has left the call. It looks like no one else is going to join this call. Goodbye.

Speaker Change: If the operator says they can hear us, if everybody can just bear with us for a moment, we'll dial right back in.

Speaker Change: Everyone else has left the call. It looks like no one else is going to join this call. Goodbye.

Operator: Goodbye. The partners, everybody, while we try and reconnect with these speakers. Pardon me, everybody. We have reconnected with the speakers. You may proceed.

Operator: Pardon us, everybody, while we try and reconnect with the speakers.

Michael Barrett: For the quarter, CTV contribution extract grew 12 percent year over year, and DV plus contribution extract grew 7 percent. Key drivers of CTV performance were strong overall ad spend growth, increasing programmatic adoption by the industry's largest players in ad serving strength. Our ad spend for the quarter continued to pace above 20 percent. Regarding CPM trends in CTV, we've seen flight decreases year over year. However, we believe these are supply driven by the largest industry players scaling their CTV inventory and not from a drop off in demand.

Speaker Change: while we try and reconnect with the speakers.

Operator: Steven Seagal, David Day, Shyam Patil, Nick Kormeluk, Arthur Chu, Daniel Day, Shweta Khajuria, Matthew Thornton, Daniel Day, Shyam Patil, Nick Kormeluk, Arthur Chu, Aaron Flack, Nick Kormeluk, Nick Kormeluk.

Operator: David Day, Shweta Khajuria, Nick Kormeluk, Eric Martinuzzi, Nick Kormeluk, Aaron Flack

Michael Barrett: Volume increases have significantly offset CPM reductions and we believe these trends of accelerating programmatic adoption will continue. The expansion of supply sources makes programmatic selling even more important. Lower CPMs and better targeting in programmatic CTV also help facilitate the entry of newer CTV buyers who may be more ROI and price sensitive. We believe these trends are very powerful in expanding industry programmatic participation and growing our accessible tab.

Operator: Pardon me, everybody. We have reconnected with the speakers. You may proceed.

Speaker Change: Pardon me everybody, we have reconnected with the speakers. You may proceed.

Operator: Apologize to you all that we lost the audio. Arthur, if you could recover your question, we'll jump right back into it.

Nick Kormeluk: Apologize to you all that we lost the audio. Arthur, if you could recover your question, we'll jump right back into it.

Operator: I apologize. All that we lost audio.

Arthur Oliver: Arthur, if you could recover your question, we'll jump right back into it. I just wanted to make a quick ask a quick clarification on the guidance. I think on the press release, there was a commentary around you guys expecting growth acceleration in the second half of 2024. I wanted to clarify, are you guys expecting quarter-to-quarter acceleration in 3Q and 4Q on a sequential basis? So 3Q would be an accelerating versus 2Q, and then Q4 would be accelerating versus Q3.

Speaker Change: Apologize all that we lost audio. Arthur, if you could recover your question, we'll jump right back into it.

Arthur Chu: I just wanted to, you know, make a quick – ask for quick clarification on the guidance. I think in the press release, there was commentary around you guys expecting growth acceleration in the second half of 2024. I wanted to clarify, are you guys expecting quarter-over-quarter acceleration in 3Q and 4Q on a sequential basis? So, 3Q would be an acceleration versus 2Q, and then Q4 would be an acceleration versus Q3. And they have a follow-up question, if I could. Thank you.

Arthur: I just wanted to, you know, make a quick, ask a quick clarification on the guidance. I think on the press release, there was a commentary around you guys expecting growth acceleration in the second half of 2024.

Michael Barrett: The second is Roku, where we have announced an expansion of our seven-year partnership in support of powering the new Roku exchange. The Roku exchange connects to the programmatic ecosystem through an integration with Magnet. In addition to connecting Roku with third-party buyers, we are also providing them with incremental advertising opportunities to our clear line and agency marketplace solutions, as well as our demand facilitation team. Clearline, our self-service direct buying platform, is continuing to gain adoption and we are seeing very good growth, albeit off of a small base.

Speaker Change: I wanted to clarify, are you guys expecting quarter or quarter acceleration in 3q and 4q on a sequential basis? So 3q would be an accelerating versus 2q, and then q4 would be accelerating versus q3. And then I have a follow-up question, if I could.

Arthur Oliver: And they have a follow-up question if I could. Thank you.

Operator: Thank you.

David Day: Sure. Yeah, I mean, And particularly focus on CTV growth, you know, we guided to 20% year over year growth, which is a, you know, an acceleration, you know, and will lead to, you can bear the first half of the year, the second half of the year, overall acceleration from, you know, we're only, we're giving specific guidance on, on Q3 and not Q4, so more to come there, but we're, we're really, we feel really good about our CTV business.

David Day: Sure. Yeah, I mean, And particularly focus on CTV growth, you know, we guided to 20% year over year growth, which is a, you know, an acceleration, you know, and will lead to, you can bear the first half of the year, the second half of the year, overall acceleration from, you know, we're only we're giving specific guidance on on Q3 and not Q4, so more to come there, but we're, we're really, we feel really good about our CTV business.

David Day: Sure. Yeah, I mean, and particularly focus on CTV growth, you know, we guided to 20% year-over-year growth, which is a, you know, an acceleration, you know, and we'll lead to, you can bear the first half of the year, the second half of the year, overall acceleration. From, you know, we're only giving specific guidance on Q3 and not Q4, so more to come there, but we're really, we feel really good about our CTV business. You can see that the CTV revenue growth, you know, the gap between that and our ad spend growth is narrowing because of the accelerated growth in CTV revenue, and so, you know, really bullish on our CTV business.

Speaker Change: Thank you.

Speaker Change: Sure, um, yeah, I mean, uh, uh,

Speaker Change: and particularly focus on CTV growth. You know, we guided to 20% year-over-year growth, which is a, you know, an acceleration.

Speaker Change: You know, and we'll lead to, you can bear the first half of the year to second half of the year overall acceleration. From, you know, we're only, we're giving specific guidance on Q3 and not Q4, so more to come there, but.

Michael Barrett: It has traction with numerous agencies and multiple brands that are in testing and early development. Our exclusive media ocean partnership also represents a big opportunity for Clearline, and we are launching our first campaigns with them this quarter.

Speaker Change: We're really, we feel really good about our CTV business. You can see that.

David Day: You can see that the CTV revenue growth, the gap between that and our ad spend growth is narrowing because of the accelerated growth in CTV revenue. And so, you know, we were really bullish on our CTV business.

Michael Barrett: Our deep and evolving partnerships with the likes of Netflix, Disney, Roku, Warner Brothers Discovery, Paramount, Fox, Samsung, LG, and Visio, ensure we have a valuable long-term role in the growth of the CTV market. In fact, some of the fastest-growing accounts this quarter included Roku, Warner, Disney, LG, and Paramount with much of the growth coming from our spring-serve and Magnet streaming SSP combination, which gives us a big advantage as a programmatic first-partner relative to the competition and continues to differentiate us in market.

Speaker Change: The CTV revenue growth, you know, the gap between that and our ad spend growth is narrowing because of the accelerated growth in CTV revenue. And so, you know, we're really bullish on our CTV business.

Arthur Oliver: Appreciate it. Thank you.

David Day: I appreciate it, thank you. And maybe just a quick follow-up question on CTV's take rate. I'm wondering if you guys could talk a little bit about how CTV take rate has trended sequentially in the quarter. And just given some of the dynamics on the supply side with more Netflix and Prime Video inventory coming online, has your outlook on take rate changed if you're looking down, say, like six months or a year down the road? Thank you.

Questioner: I appreciate it, thank you. And maybe just a quick follow-up question on CTV's take rate. I'm wondering if you guys could talk a little bit about how CTV take rate has trended sequentially in the quarter. And just given some of the dynamics on the supply side with more Netflix and Prime Video inventory coming online, has your outlook on take rate changed if you're looking down, say, like six months or a year down the road? Thank you.

David Day: And maybe just a quick, you know, follow-up question on CTV take rate. I'm wondering if you guys could talk about how, you know, CTV take rate has trended sequentially in a quarter, and, you know, just given some of the dynamics on the supply side with, you know, more Netflix and Prime Video even to become the online, has your outlook on take rate changed, if you're looking down, say like six months or a year, down the road. Thank you. Yeah, I think to, you know, we don't give specific take rates, but I think to continue on the narrative that we've had the last several quarters, the premium inventory that's still, you know, wishing on to the market has come in at our lower take rate earning levels, but we're laughing the most significant decrease from last year, and so, the rate of decline in our average take rate, which is due to that continuing mix change, has slowed quite significantly, and so we're, I wouldn't say we're bottoming out, but we're sort of hitting that point of stabilization, and that's why you see the commented earlier, you see this significant acceleration in our actual revenue growth, as over time, it will continue to come closer and closer to our ad spend growth in the CTV business, so we, you know, continue, we expect those trends to continue, we expect, you know, continued adoption of programmatic in CTV, and so we expect those ad spend growth rates to, you know, remain high, you know, greater than 20 percent, as we've had over the last, you know, handful of quarters going forward.

David Day: Yeah, I think to, you know, we don't give specific take rates, but I think to continue on the narrative that we've had the last several quarters, the premium inventory that's still, you know, whooshing onto the market, it's coming in at our lower take rate earnings levels, but we're lapping the most significant decrease from last year. And so the rate of decline in our average take rate, which is due to that continuing mix change, has slowed quite significantly.

Speaker Change: Appreciate it. Thank you. And maybe just a quick follow-up question on CTV take rate. I'm wondering if you guys could talk a little bit about how CTV take rate has trended sequentially in the quarter. And just given some of the dynamics on the supply side with more Netflix and Prime Video inventory coming online.

Speaker Change: Has your outlook on tech trade changed if you're looking down say like six months or a year down the road? Thank you

Michael Barrett: Our tools are deeply embedded within our clients' work well, whether it be creative review, ad-potting logic, or audience tools, and from the client's perspective, the combined implementation of our ad-cermin capabilities and FSP looks more like a typical enterprise software solution. We believe this stickiness creates a meaningful mode and barrier to entry for others, and in our case, the barriers not just workflow from ad operations, is also in the form of superior monetization.

Speaker Change: Yeah, I think to, you know, we don't give specific take rates, but I think to continue on the narrative that we've had the last several quarters, the, the...

Speaker Change: premium inventory that's still, you know, whooshing onto the market.

Speaker Change: It's coming in at our lower take rate earning levels.

Speaker Change: but we're lapping the most significant decrease from from last year and so the rate of decline in our average take rate which is due to that continuing mix change has slowed quite significantly and so we're

Michael Barrett: Our strategic partners, the US, as part of their core ad operations platform, and having more than one solution would complicate workflow and be comparable to running two ERPs or two CRS.

David Day: And so we're, we're, I wouldn't say we're bottoming out, but we're sort of hitting that point of stabilization. And that's why you see, as I commented earlier, this significant acceleration in our actual revenue growth, as over time, it will continue to come closer and closer to our ad spend growth in this CTV business. So we, you know, continue, we expect those trends to continue; we expect, you know, continued adoption of programmatic in CTV.

David Day: And so we're, I wouldn't say we're bottoming out, but we're sort of hitting that point of stabilization. And that's why you see, as I commented earlier, this significant acceleration in our actual revenue growth, as over time, it will continue to come closer and closer to our ad spend growth in the CTV business. So we expect those trends to continue; we expect, you know, continued adoption of programmatic in CTV. And so we expect those ad spend growth rates to, you know, remain high, greater than 20%, as we've had over the last handful of quarters going forward.

Speaker Change: We're...

Speaker Change: I wouldn't say we're bottoming out, but we're sort of hitting that point of...

Michael Barrett: Now to DV plus. Q2 once again finished strong with contributions X-TAC growth is 7%. Our results continue to be driven by adding scale, improving efficiencies through traffic shaping, improving monetization and performance with AI, and by investing in formats such as native, audio, podcasts, and digital out of home.

Speaker Change: Stabilization. And that's why you see, as I commented earlier, you see this

Speaker Change: significant acceleration in our actual revenue growth.

Speaker Change: As over time, it will continue to come closer and closer to our ad spend growth in the CTV business.

David Day: And so we expect those ad spend growth rates to, you know, remain high, greater than 20%, as we've had over the last handful of quarters. Going forward, Michael, if you have anything else you want to add? No, I think that guy covers it all.

Speaker Change: We expect those trends to continue. We expect...

Michael Barrett: On the AI front, you may have seen our release last Thursday that our new feature within demand manager using machine learning. The new feature finds the optimal configurations in a publisher's pre-bid wrapper per impression in real time. It has the potential to rapidly enhance billions of impressions to improve performance versus manual configuration.

Speaker Change: continued adoption of

Speaker Change: programmatic in CTV. And so we expect those ad spend growth rates to, you know, remain high, you know, greater than 20%, as we've had over the last, you know, handful of quarters.

Michael Barrett: I don't mind if you have anything else going on ahead. No, I think that got it; it captures it off.

Michael Barrett: I don't know, Michael, if you have anything else you want to add? No, I think that kind of captures it all.

Speaker Change: going forward. I don't know, Michael, if you have anything else you want to add? No, I think that guy captures it all.

Arthur Oliver: Got it, that's guys, super hot, we're having a quarter. Thanks.

Arthur Chu: Got it. Thanks, guys. I'm super happy with the congratulations.

Operator: Got it. Thanks, guys. I'm super happy with the congratulatory card.

Speaker Change: Got it. Thanks, guys. Super happy with the congratulatory card.

Michael Barrett: In the broader industry, as I'm sure you're aware, Google recently announced they will not deprecate their party cookies. Frankly, we're not surprised with their decision given some of the challenges David acknowledged with the rollout. In any event, we've done deep testing and work with Google so that we are prepared to support privacy sandbox for a feature iteration of it for those that may want it. Although our position has always been that cookies being deprecated was not a meaningful risk for our business in the long-term, we do believe the decision does release some short-term uncertainty and potential CPM volatility, so we view it as a net positive.

Jason Crier: The next question comes from Jason Crier from Craig Hallum. Please go ahead. Great, thank you guys. Michael, Netflix has been pretty vocal about, you know, deploying this programmatic ad strategy. You know, can you just talk about what you think that means for your role in the industry, and maybe what that means for your existing relationships with other Mars? Yeah, Jason, thanks for the question. Yeah, I think Netflix has been quite vocal about leaning into a programmatic, and I think you kind of see that trend line across all the big streamers. I think one of the takeaways from the recently completed upfront season was, you know, I don't think everyone was all that pleased with the final CPMs, but it seemed like the numbers all kind of came in online, maybe slightly up for some of the big streamers, but programmatic definitely a bigger piece of the spend puzzle, and we think that any dollars that haven't been deployed in the upfront are primed for a programmatic going forward in, you know, kind of the spot market.

Operator: The next question comes from Jason Kreyer on behalf of Craig Hallam. Please go ahead.

Jason Kreyer: The next question comes from Jason Kreyer on behalf of Craig Hallam. Please go ahead.

Speaker Change: thanks that

Speaker Change: The next question comes from Jason Kreyer from Craig Hallam. Please go ahead.

Michael Barrett: Great, thanks you guys. Michael, Netflix has been pretty vocal about, you know, deploying this programmatic ad strategy. Can you talk about what you think that means for your role in the industry and maybe what that means for your existing relationships with other streamers?

Jason Kreyer: Great. Thank you, guys. Michael, Netflix has been pretty vocal about, you know, deploying this programmatic ad strategy. Can you talk about what you think that means for your role in the industry and maybe what that means for your existing relationships with other streamers?

Jason Kreyer: Great, thank you guys. Michael, Netflix has been pretty vocal about, you know, deploying this programmatic ad strategy. You know, can you talk about what you think that means for your role in the industry and maybe what that means for your existing relationships with other streamers?

Michael Barrett: Yeah, Jason, thanks for the question. Yeah, I think Netflix has been quite vocal about leaning into programmatic, and I think you kind of see that trend line across all the big streamers. You know, I think one of the takeaways from the recently completed upfront season was that I don't think everyone was all that pleased with the final CPMs, but it seemed like the numbers all kind of came in online, maybe slightly up for some of the big streamers.

Michael Barrett: Yeah, Jason, thanks for the question. Yeah, I think Netflix has been quite vocal about leaning into programmatic. And I think you kind of see that trend line across all the big streamers. You know, I think one of the takeaways from the recently completed upfront season was, I don't think everyone was all that pleased with the final CPMs, but it seemed like the numbers all kind of came in online, maybe slightly higher for some of the big streamers, but programmatic, definitely a bigger piece of the spend puzzle.

Speaker Change: Yeah, Jason, thanks for the question.

Speaker Change: Netflix has been quite vocal about leaning into programmatic and I think you kind of see that trend line across all the big streamers. You know I think one of the takeaways

Speaker Change: from the recently completed upfront season was

Michael Barrett: But programmatic is definitely a bigger piece of the spend puzzle, and we think that any dollars that haven't been deployed in the upfront are prime for programmatic going forward and, you know, kind of the spot market. So, you know, I think that anytime someone comes to market with kind of a heavy programmatic focus, they're answering what buyers are wanting. And so I think that more and more you're going to see programmatic play a bigger role in terms of the streamer's revenue, just given the fact that that's what the buyers want. They want a more efficient way to buy, they want targeting, and that's what programmatic supplies, and Netflix is certainly part of that equation.

Speaker Change: You know, I don't think everyone was all that pleased with the...

Speaker Change: final CPMs, but it seemed like the numbers all kind of came in online, maybe slightly up for some of the big streamers, but programmatic, definitely a bigger piece.

Michael Barrett: And we think that any dollars that haven't been deployed in the upfront are prime for programmatic going forward and, you know, kind of the spot market. So, you know, I think anytime someone comes to market with kind of a heavy programmatic focus, they are answering what buyers are wanting. And so I think that more and more you're going to see programmatic play a bigger role in terms of the streamer's revenue, just given the fact that that's what the buyers want. They want a more efficient way to buy, they want targeting, and that's what programmatic supplies, and Netflix is certainly part of that equation.

Speaker Change: of the Spend Puzzle, and we think that any dollars that haven't been deployed in the upfront are prime for programmatic going forward in, you know, kind of the spot market. So, you know, I think...

Michael Barrett: So, you know, I think anytime someone comes to market with kind of a heavy programmatic focus, it's answering what buyers are wanting. And so I think that more and more you're going to see programmatic play a bigger role in terms of the streamers' revenue, just given the fact that that's what the buyers want. They want a more efficient way to buy; they want targeting, and that's what programmatic supplies, and Netflix is certainly part of that equation. Thank you.

Speaker Change: Any time someone comes to market with kind of a heavy programmatic...

Speaker Change: focus.

Speaker Change: answering what buyers are wanting and so I think that more and more you're going to see

David Day: With that, I'll turn the call over to David for more details on financials. David? Thanks, Michael. We are very pleased with another strong quarter with our recent customer wins and with the resulting momentum we're seeing in our business. We believe we're continuing to take share as our ad spend growth is outpacing the market. As Michael mentioned, we again exceeded expectations for total and CTV contribution next track, along with his strong performance in BB Plus.

Speaker Change: programmatic play a bigger role in terms of the streamers revenue just given the fact that that's what the buyers want they want to

Speaker Change: more efficient way to buy, they want targeting, and that's what programmatics applies, and Netflix is certainly part of that equation.

Michael Barrett: Thank you. And then, as you've been working with Netflix over the last couple of months, any learnings on their strategy or what they wish to deploy, or any changes to your view of the size of the Netflix opportunity?

Michael Barrett: And then, as you've been working with Netflix over the last couple of months, any learnings on their strategy or what they wish to deploy, or any changes to your view of the size of the Netflix opportunity? You know, nothing that we haven't already talked about in the script or that they haven't talked about. I think, as David said at the top of the call, we mark off of Netflix comms in this area, and so there'll be the ones that will be giving you a better understanding of what their go-to-market strategy might be, timing, et cetera.

Speaker Change: Thank you. And then as you've been working with Netflix over the last couple of months, any learnings on their strategy or what they wish to deploy, or any changes to your view of the size of the Netflix opportunity?

David Day: Total revenue for Q2 was $163 million of 7% from Q2 to 2023. Contribution next track was $147 million up 9%. CTV contribution next track was $63 million of 12% year over year and above the top end of our guidance range. We saw very strong growth in ad spend and continued momentum with our spring serve ad serving business. Our CTV outperformances once again driven by our programmatic offerings. BB Plus contribution next track was $84 million and increased from $79 million or 7% compared to the second quarter last year.

Michael Barrett: No, nothing that we haven't already talked about in the script or that they haven't talked about. I think, as David said at the top of the call, we mark off Netflix comms in this area, and so they'll be the ones that will be giving a better understanding of what their go-to-market strategy might be, timing, etc. But as it relates to what we feel Netflix could represent to us from the size of a client, I would say we still feel very comfortable with the kind of direction we've given there.

Speaker Change: No, nothing that we haven't already talked about in the script or that they haven't talked about. I think, uh, it's David.

David: set at the top of the call were

Speaker Change: We mark off of Netflix comms in this area and so They'll be the ones that would be giving a better understanding of what their go-to-market strategy might be timing etc. But

Michael Barrett: But as it relates to what we feel, Netflix could represent to us from a size of a client, I would say we still feel very comfortable with the kind of direction we've given there.

Speaker Change: As it relates to what we feel Netflix could represent to us from a size of a client, I would say we still feel very comfortable with the kind of direction we've given there.

Michael Barrett: One quick one just on D.V. Plus, the growth was a little bit slower this quarter. It seems like that's consistent with the Q3 guide. Is that related to political, or is there anything else going on there? You know, there's always some volatility in the D.V. Plus line. You know, we saw mobile little lighter growth rate, but nothing to point a finger at, so we kind of put in that normal volatility bucket. I think we're also given all the macro swirl and concerns. We're certainly trying to be a little cautious in our guide for the remainder of this year, given all of the challenges going on from a macro perspective, geopolitical perspective, and political perspective directly.

David Day: Our contribution next track connects for Q2 is 43% CTV, 39% mobile and 18% desktop. From a vertical perspective, health and fitness, automotive and retail were our strongest performing categories. Categories that did not perform as well were travel, technology and style and fashion. Total block rate expenses, which includes costs of revenue for the second quarter were $153 million at decrease from $224 million for the same period last year. The primary driver of the decrease was the result of the spot X acquired intangible assets that became fully amortized in the third quarter of last year.

David Day: One quick one just on DV Plus. The growth was a little bit slower this quarter. It seems like that's consistent with the Q3 guide. Is that related to politics, or is there anything else going on there? You know, there's always some.

Speaker Change: One quick one just on DV Plus. The growth was a little bit slower this quarter. It seems like that's consistent with the Q3 guide. Is that related to political or is there anything else going on there?

David Day: You know, there's always some volatility in the DV plus line. You know, we saw mobile, a little lighter growth rate, but, you know, nothing to point a finger at. So we kind of, you know, put in that normal volatility bucket. I think we're also, you know, given all the macro swirl and concerns, you know, we're certainly trying to be, you know, a little cautious in our guidance for the remainder of this year, given, you know, all of the challenges going on from a macro perspective, geopolitical perspective, and political perspective directly.

David Day: You know, there's always some volatility in the DV plus line. We saw mobile, a little lighter growth rate, but, you know, nothing to point a finger at. So we kind of put it in that normal volatility bucket. I think we're also, you know, given all the macro swirl and concerns, we're certainly trying to be, you know, a little cautious in our guidance for the remainder of this year given all of the challenges going on from a macro perspective, geopolitical perspective, and political perspective directly.

Speaker Change: You know, there's always some, you know, volatility in the DV Plus line. You know, we saw...

Speaker Change: mobile, a little lighter growth rate, but, you know, nothing to point a finger at. So we kind of, you know, put in that normal volatility bucket. I think we're also, you know, given all the macro swirl and concerns.

Speaker Change: You know, we're certainly trying to be, you know, a little cautious in our guide for the remainder of this year given, you know, all of all of the the challenges going on from a macro perspective, geopolitical perspective, and political perspective directly.

David Day: A jet CTV with operating expense for the second quarter was $102 million within our guidance range. The increase from $97 million last year was primarily driven by higher personnel related costs due to annual merit increases and modest increased hiring and additional. Net loss was $1 million for the quarter compared to net loss for the second quarter of 2023 of $74 million. A jet CTV dog grew 20% year over year and was $45 million with a margin of 30%, which compares to $37 million in a margin of 28% last year.

Jason Crier: Great. Thank you, guys.

Operator: Thank you.

Speaker Change: Great. Thank you, guys.

Laura Martin: The next question comes from Laura Martin from Needham. Please go ahead. Good morning. So, again on Netflix. So, I think Netflix would love more ad revenue faster, but that what they have found in the upfront market is that the brands they're talking to say that have to reach critical mass. Brown numbers 20 million ad driven subs here in America. Then they're under 10. So, that is my question. Can they use programmatic when they're smaller than that sort of critical reach that they need for the upfront market? Or does ad buys even in your world require bigger reach than they have with their ad driven subs in the US?

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

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

Speaker Change: Thank you.

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

Laura Martin: Good morning. So, again, on Netflix. So, I think Netflix would love more ad revenue faster, but what they have found in the up-front market is that the brands they're talking to say they have to reach critical mass. A round number is 20 million ad-driven subs here in America, and they're under 10. So, that is my question. Can they use programmatic when they're smaller than that sort of critical reach that they need for the up-front market, or do ad buys, even in your world, require bigger reach than they have with their ad-driven subs in the U.S.?

Laura Martin: Good morning, so again on Netflix. So I think Netflix would love more ad revenue faster, but what they have found in the upfront market is that the brands they're talking to say they have to reach critical mass. The round number is 20 million ad-driven subs here in America, and they're under 10. So that is my question. Can they use programmatic when they're smaller than that sort of critical reach that they need for the upfront market? Or does ad buys, even in your world, require bigger reach than they have with their ad-driven subs in the U.S.?

Laura Martin: Good morning. So, again, on Netflix. So, I think Netflix would love more ad revenue faster, but what they have found in the upfront market is that the brands they're talking to say they have to reach critical mass, round number is 20 million ad-driven subs here in America, and they're under 10.

David Day: As a reminder, we calculated just the DVDM margin as a percentage of contribution next time. Gap loss for basic and deluded share was $1 million for the second quarter of 2024 compared to a loss of $54 million for the second quarter of 2023. Non-gap earnings per share in the second quarter of 2024 grew 56% and was $14 million compared to $9 million last year. Reconciliation of non-gap income and non-gap earnings per share are included with our Q2 results press release.

Speaker Change: So that is my question. Can they use programmatic when they're smaller than that sort of critical reach that they need for the upfront market? Or does ad buys, even in your world, require bigger reach than they have with their ad-driven subs in the U.S.?

Michael Barrett: Yeah, great question, Laura, and again, would defer a lot of that to Netflix in terms of their answer to that, but my take on it is that, yeah, as long as you can provide scaled audiences that folks want, and it doesn't have to be, you know, households, it just could be demos, if you have a decent concentration of that demo, we see consistently in programmatic that folks are making those buys, because by nature, in programmatic with targeting, you're looking at a smaller universe of individuals, and ergo, I think that programmatic plays nicely into that as you start to scale up and be able to have a big seat at the upfront table.

Michael Barrett: Yeah, great question, Laura. And again, I would defer a lot of that to Netflix in terms of their answer to that. But my take on it is that, yeah, as long as you can provide scaled audiences that folks want, and it doesn't have to be, you know, households; it just could be demos. If you have a decent concentration of that demo, we see consistently in programmatic that folks are making those buys because, by nature, in programmatic with targeting, you're looking at a smaller universe of individuals. And ergo, I think that programmatic plays nicely into that as you start to scale up and be able to have a big seat at the front table.

Laura Martin: Yeah, great question.

Michael Barrett: Lauren, again, would defer a lot of that to the Netflix in terms of their answer to that. But my take on it is that, yeah, as long as you can provide scaled audiences that folks want, and it doesn't have to be, you know, households, it just could be demos. If you have a decent concentration of that demo, we see consistently in programmatic that folks are making those buys because, by nature, in programmatic with targeting, you're looking at a smaller universe of individuals and air go. I think that programmatic plays nicely into that as you start to scale up and be able to have a big seat at the upfront table.

Speaker Change: Yeah, great question, Laura, and again, would defer a lot of that to Netflix in terms of their answer to that, but my take on it is that

Speaker Change: yeah as long as you can provide scaled audiences that folks want and it doesn't have to be you households it just could be demos if you have a decent

David Day: Our cash balance to the end of Q2 was $326 million, an increase of $74 million from $253 million at the end of the first quarter. The increase was due to technical seasonality in our business. Alex, Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs for $15 million for the quarter. Operating cash flow, which we define as a justhadeeva dot, left cap ex, was $30 million for the quarter.

Speaker Change: concentration of that demo we see consistently in programmatic that folks are making those buys because by nature

Speaker Change: In programmatic with targeting, you're looking at a smaller universe of individuals in ergo. I think that programmatic plays nicely into that as you start to scale up and be able to have a big seat at the upfront table.

David Day: Our net interest expense for the quarter was $7 million. Our net leverage was 1.3x at the end of Q2, reflecting the expected improvement from 1.7x at the end of Q1. The sequential improvement is due to the normal seasonality in our business. We expect to see net leverage improvements continue in Q3 and Q4 this year and expect the net leverage of 1x or less by the end of the year. In addition, for our regular RSU besting during the quarter, we utilize the withhold to cover method to cover employee taxes, thereby reducing delusion by withholding $385,000 for $4 million. Year to date to the second quarter, using the withhold to cover, we've reduced delusion by 1.3 million shares for $13 million or nearly 1% of shares outstanding.

Laura Martin: Okay, that's super helpful. And then back on DB Plus, which I know is something that you worked hard to turn around a couple of years ago, it's still quite a bit bigger than your CTD business. And I love this new business slide that you've given us for CTD, but is there a similar slide for DB Plus and you just don't disclose it, or is it the growth, the 7% growth you're getting in DB Plus is all. Same clients; they just have to spend more. We're not getting new clients there. Yeah, Laura, I think the slide you're referring to is actually the one on the deck that talks about our recent wins, and there is some on there that's also DB plus.

Laura Martin: Okay, that's super helpful. And then back on DB+, which I know is something that you worked hard to turn around a couple years ago, it's still quite a bit bigger than your CTV business. And I love this new business slide that you've given us for CTV, but is there a similar slide for DB+, and you just don't disclose it, or is the growth, the 7% growth you're getting in DB+, all the same clients, they just have to spend more; we're not getting new clients there?

Speaker Change: Okay, that's super helpful. And then back on DV+, which I know is something that you worked hard to turn around a couple years ago,

Speaker Change: It's still quite a bit bigger than your CTV business. And I love this new business slide that you've given us for CTV, but is there a similar slide for DB+, and you just don't disclose it? Or is it the growth, the 7% growth you're getting in DB+, is all...

Speaker Change: Same clients, they just have to spend more. We're not getting new clients there.

David Day: Yeah, Laura, I think the slide you're referring to is actually the one on the deck that talks about our recent wins. And there is some on there that's also DV plus. So that does cross over both, specifically United Airlines, you know, might have some mobile, you know, mobile and desktop revenue that comes from even though it's streaming television coming on a mobile device, that'll hit those different lines. So that is really encompassing. But you know, kind of the biggest near-term wins on there do tend to focus more on CTV. Yeah, and the the

Speaker Change: Yes, Laura, I think the slide you're referring to is actually the one on the deck that talks about our recent wins, and there is some on there that's also DV Plus, so that does it.

Michael Barrett: So that does cross over both specifically United Airlines, you know, might have some mobile, you know, mobile and desktop revenue that comes from, even though it's streaming television coming on a mobile device, that will hit those different lines. And so that really is encompassing, but you know, kind of the biggest near-term wins on there do tend to focus more on CTD. Yeah, and the Amazon one too, as well. So being a preferred SSP for Amazon's DSP, that's almost exclusively DB Plus. But it's a great point.

Speaker Change: across, over boats, specifically United Airlines, you know, might have some mobile, you know, mobile and desktop revenue that comes from, even though it's streaming television coming on a mobile device, that'll hit those different lines. So that really is encompassing, but, you know, kind of the biggest near-term wins on there do tend to focus more on TGV. Yeah, and the Amazon one too, as well. So being a preferred SSP for Amazon's DSP, that's almost exclusively DV Plus. But it's a great point you bring out, Laura, and something we probably should consider in future earnings releases.

David Day: We also had $125 million of capacity available at quarter end in our authorized share or confirmed repurchase program.

David Day: Yeah, and the Amazon one too, as well. So being a preferred SSP for Amazon's DSP, that's almost exclusively DV plus. But it's a great point you bring up, Lauren, something we probably should consider in future earnings releases.

David Day: I will now share our expectations for the third quarter and full year. For the third quarter, we expect contribution x tax to be in the range of $146 to $150 million. Contribution x tax attributable to CTV to accelerate to a range of 62 to 64 million dollars reflecting the year-to-year growth of 20% at the midpoint. Contribution x tax attributable to BV plus to be in the range of 84 to 86 million dollars.

Michael Barrett: You bring out Laura and something we probably should consider in future earnings releases. Thanks, guys. Thank you very much. Thank you.

Laura Martin: Thanks, guys. Thank you very much.

Ian Peterson: Thanks. The next question comes from Ian Peterson from Evercore ISI. Please go ahead. Thank you for taking my questions to, if I may.

Speaker Change: Thanks guys. Thank you very much. Thank you.

Operator: The next question comes from Ian Peterson from Evercore ISI. Please go ahead.

Ian Peterson: The next question comes from Ian Peterson from Evercore ISI. Please go ahead.

Speaker Change: The next question comes from Ian Peterson from Evercore ISI. Please go ahead.

Ian Peterson: Thank you for taking my questions, too, if I may. First, it would be great to get some color on how the managed services business trended in Q2 and how you expect that business to trend or apply it in your Q3 guide, which shows some pretty material acceleration in CTV revenue. And my second question is around, you guys have signed a number of new partnerships in the quarter. Can you walk us through if these partnerships will require incremental investment spend or how we should think about investments Magnite needs to make in order to properly run these partnerships? Thanks.

Ian Peterson: First, it would be great to get some color on how the managed services business trended in Q2 and how you expect that business to trend or are implied in your Q3 guide, which has some pretty material acceleration. In CTV revenue. And my second question is around: you guys have signed a number of new partnerships in the quarter.

Ian Peterson: Thank you for taking my questions, too, if I may. First, it would be great to get some color on how the managed services business trended in Q2.

David Day: We anticipate EBITDA operating expenses to be between $101 and $103 million, which implies adjusted EBITDA margin of approximately 31% for Q3 at the midpoint. Our Q3 expectations across CTV and DV plus reflect a slow start to political ahead spend in July due to the extraordinary circumstances surrounding both parties, although we've seen some improvement. For the full year, we are reaffirming that we expect contribution x tax to grow at least 10% with CTV to grow faster than DV plus.

Ian Peterson: and how do you expect that business to trend or implied in your q three guid which has some pretty material acceleration in cpv revenue and my second question

Israel: Israel, you guys have signed a number of new partnerships in the quarter. Can you walk us through if these partnerships will require incremental investment spend or how we should think about investments Magnite needs to make in order to properly run these partnerships? Thanks.

David Day: Can you walk us through if these partnerships will require incremental investment spend or how we should think about investments Magnet needs to make in order to properly run these partnerships. Thanks.

David Day: Great. I'll take that on the managed service front. Yeah, I think, you know, managed service was, you know, down slightly in Q2. We expect it to be down slightly in Q3. And as we've discussed in the past, I think what you'll find is, you know, managed service one is more, it's always been a little more volatile. And so, you know, we're a little more cautious in any guidance related to managed services. And over time, you'll see managed service becoming a smaller and smaller component of our overall revenue. And so that's, you know, how we see that trending over time.

David Day: Craig, I'll take that on the managed service front. Yeah, I think, you know, me and Service was, you know, down slightly in Q2. We expected to be down slightly in Q3. And as we've discussed in the past, I think what you'll find is, you know, main service one is more, you know, it's always been a little more volatile. And so, you know, we're a little more cautious than any, you know, guidance related to manage service. And over time, you'll see managed service becoming a smaller and smaller, you know, component of our overall revenue mix. And so that's, you know, how we see that, you know, trending over time.

Speaker Change: Great, I'll take that on the managed service front.

Speaker Change: Yeah, I think, you know, NIAID service was, you know, down slightly in Q2, we expect it to be down slightly in Q3, and as we've discussed in the past, I think what you'll find is

David Day: The adjusted EBITDA margin to expand 100 to 150 base points over 2023, a adjusted EBITDA growth in the midteens with an even higher growth and free cash flow, and we now expect total cat-backs to be approximately $50 million. We also expect to be net income and EPS positive for the full year on a gap basis.

Ian Peterson: the main service

Speaker Change: One is more, you know, it's always been a little more volatile.

Ian Peterson: And so, you know, we're a little more cautious in any, you know, guidance related to managed service.

Ian Peterson: And over time, you'll see managed service.

Ian Peterson: becoming a smaller and smaller component of our overall revenue mix.

Ian Peterson: And so that's, you know, how we see that, you know, trend trending over time.

David Day: From a partnership perspective, there's really no direct incremental investment needed for the new partnerships. The only thing I'd say is if you sort of hand back to the overall CTV opportunity that all of these partnerships represent, you know, for example, live sports. I think on the margin, there's some modest, you know, engineering, you know, product and engineering, you know, hiring and a little bit of acceleration there that we think has a nice ROI. So nothing that changes fundamental, you know, dynamics of our margins or anything, but, you know, I think, I think we'll look to accelerate some of that development because the opportunity that we have ahead of us.

David Day: From a partnership perspective, there is really no direct incremental investment needed for the new partnerships. The only thing I'd say is if you sort of pan back to the overall CTV opportunity that all of these partnerships represent, you know, for example, live sports, I think on the margin there's some modest, you know, engineering, you know, product, and engineering, you know, hiring, and a little bit of acceleration there that we think has a nice ROI. So nothing that fundamentally changes the dynamics of our margins or anything, but, you know, I think we'll look to accelerate some of that development because of the opportunity that we have ahead of us.

Speaker Change: from a partnership perspective there's really no direct incremental investment needed for the new partnerships the only thing i'd say is if you sort of pan b to

Ian Peterson: The overall CTD opportunity that all of these partnerships represent

Operator: With that, let's open the line for Q&A. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using the speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster.

Ian Peterson: You know, for example, live sports, I think on the margin there's some modest...

Ian Peterson: engineering product and engineering hiring and little of acceleration there that

Ian Peterson: We think he has a nice ROI, so nothing that changes.

Shyam Patil: Our first question comes from Shyam Patil from Susquehanna, please go ahead. Okay, guys, congrats on a great quarter and all the long-distance partnership wins. I had a couple of questions. The first one was on some of the partnerships. Netflix, Roku, obviously some really good partnerships. Can you maybe talk a little bit about how you expect them to ramp throughout the second half of this year and next year and how we should be thinking about just the revenue contribution. You can talk about that for both of those.

Ian Peterson: I don't know the fundamental dynamics of our margins or anything, but I think we'll look to accelerate some of that development because of the opportunity that we have ahead of us.

Matt Swanson: Thank you. The next question comes from Matt Swanson from RBC Capital Markets. Please go ahead. Yeah, thank you guys so much for taking my question. Dave, if I ask another one on the background and just kind of how you're thinking about it and guidance.

Matt Swanson: The next question comes from Matt Swanson from RBC Capital Markets. Please go ahead. Yeah.

Operator: The next question comes from Matt Swanson from RBC Capital Markets. Please go ahead. Yeah.

Speaker Change: thank you

Ian Peterson: The next question comes from Matt Swanson from RBC Capital Markets. Please go ahead.

Matthew Swanson: Yeah, thank you guys so much for taking my question. Um, Dave, if I can ask another one on macro, and just kind of how you're thinking about it and guidance, how much differentiation, I guess, is there between the macro you see in the CTV environment versus DB plus, kind of just going back to that cyclical versus secular idea?

Matt Swanson: Yeah, thank you guys so much for taking my question. Um, David, if I can ask another one on the macro, and just kind of how you're thinking about it in guidance, how much differentiation, I guess, is there between the macro you see in the CTV environment versus DV plus, kind of just going back to that cyclical versus secular idea?

Matt Swanson: Yeah, thank you guys so much for taking my question. Um, David, if I can ask another one on the macro and just kind of how you're thinking about it in guidance. How much differentiation, I guess, is there between the macro you see in the CTB environment versus DV plus kind of just going back to that cyclical versus secular idea?

Michael Barrett: How much differentiation, I guess, is there between the macro you see in the CTV environment versus DB plus kind of just going back to that cyclical versus secular idea. Hey, Matt, it's Michael. I think if you look across the board, the categories that aren't performing as well from an ad spend standpoint tend to go across both platforms. And so I don't think that there may be some rare instances of, say, a managed service contribution, but generally speaking, when we say strength or weaknesses in categories to spend. It's meant for the fall of magnet across the board and not just focus on CTV and or DB plus.

Michael Barrett: Hey Matt, it's Michael.

Ian Peterson: Hey Matt, it's Michael. I think...

Speaker Change: If you look across the board, the categories that aren't performing as well from an ad spend standpoint.

Michael Barrett: Sure, David, I'll take that. Yeah, on those partnerships, we defer to Netflix on the timing of their ramp. They've discussed that they'll be launching this summer into this fall and then really ramping in 2025.

Michael Barrett: I think if you look across the board, the categories that aren't performing as well from an ad spend standpoint tend to go across both platforms. And so I don't think that there may be some rare instances of, say, a managed service contribution. But generally speaking, when we say strength or weaknesses in categories to spend, it's meant for all of Magnite across the board and not just a focus on CTV and or DB+. Yeah.

Michael Barrett: I think if you look across the board, the categories that aren't performing as well from an ad spend standpoint tend to go across both platforms. And so I don't think that there may be some rare instances of, say, a managed service contribution. But generally speaking, when we say strength or weaknesses in categories to spend, it's meant for all of Magnate across the board and not just focus on CTV and or DB+. Yeah. I think so.

Matt Swanson: tend to go across both platforms. And so I don't think that...

Speaker Change: there may be some rare instances of say man service contribution but is generally speaking when we say strength of weaknesses in categories spend it's meant for the all of magnet across the board and not just focusused on c t v and or dv plus yeah i think i think that said

Michael Barrett: United is a fairly new partnership and that will take some time to ramp up. And so for those two, there are not significant impacts considered in our revenue for the remainder of this year. With Roku and that expansion, we're seeing some growth there and we're seeing some ramp up.

Michael Barrett: Yeah, I think I think that said because of the expansion, you know, in CTV that that general macro impact, whatever it is, probably would look a little more muted because of the gains that we're making in the CTV. So, relatively speaking, you know, let's say there was a macro slowdown, you'd probably see it a little more cutely on the DB plus side of the business than you would on the CTV side. You know, but that's the only nuance I'd add to that. Yeah, no, that's helpful color.

David Day: Yeah, I think that said, because of the expansion in CTV, that general macro impact, whatever it is, probably would look a little more muted because of the gains that we're making in CTV. So, relatively speaking, let's say there was a macro slowdown; you'd probably see it a little more acutely on the DB plus side of the business than you would on the CTV side. You know, but that's the only nuance I'd add to that.

Michael Barrett: Yeah, I think that said because of the expansion, you know, in CTV, that that general macro impact, whatever it is, probably would look a little more muted because of the gains that we're making in CTV. So relatively speaking, you know, let's say there was a macro slowdown; you'd probably see it a little more acutely on the DB plus side of the business than you would on the CTV side. You know, but that's the only nuance I'd add to that.

Speaker Change: Because of the expansion in CTV, that general macro impact, whatever it is,

Speaker Change: And I think the second one probably would look a little more muted because of the gains that we're making in the CTV. So relatively speaking, you know, let's say there was a macro slowdown. You'd probably see it a little more acutely on the DV plus side of the business than you would on the CTV side.

Michael Barrett: Political is really interesting. If these really unusual events in July, there was a significant pause in political spending. So we're a little cautious on that front. What's challenging political is 80% of that spend occurs in the eight to ten weeks, running up to the election. And so how much of that occurs in September before the Q3 cutoff versus Q4 is always hard to gauge. And so we're trying to be somewhat conservative given the potential volatility in the political spend and in our quarterly guidance in that cutoff and trying to estimate where that will land. Michael, if you've got anything else, perfect.

Shyam Patil: Great, thank you, guys.

Speaker Change: you know, but that's the only nuance I'd add to that.

Michael Barrett: Yeah, no, that's helpful, Keller. And then, Michael, during the prepared remarks, you talked about increased interest from other partners after the Netflix deal about people trying to figure out, you know, why you won, what you're doing for them, and maybe how you can help. Obviously, you probably don't want to talk about specific names before these deals are launched, but if you guys give us some more color there, that'd be really helpful

Michael Barrett: Yeah, no, that's helpful color. And then, Michael, during the prepared remarks, you talked about increased interest from other partners after the Netflix deal, about people trying to figure out, you know, why you won, what you're doing for them, and maybe how you can help. Obviously, you probably don't want to talk about specific names before these deals are launched, but if you just give us some more color there, that'd be really helpful

Michael Barrett: And then Michael, during the prepared remarks, you talked about increased interest from other partners after the Netflix deal about people trying to figure out, you know, why you won, what you're doing for them and maybe how you can help. Obviously, I don't want to talk about specific names before these deals are launched, but if you just give us some more color there, I do really. Paul. Yeah, Matt, I think the reference there was that we work with just about every big player out there, and some will probably never work with like a YouTube. But in the ones that we do work with, what we're seeing is kind of an increase in the same store sales and that kind of halo effect of Netflix and walking clients through how we want the business, what they want of our stack. We had talked, you know, we've talked in the past before about, you know, customizing offerings on a streamer need basis. So instead of having people think of us as, oh, they have an ad server, they have an SSP, well, if someone wants three features that are ad servering features and five features that are SSP features, that's the kind of work that we're doing with these folks to get deeper into their stack, if you will, increase their monetization and increase our revenue participation.

Keller: Yeah, no, that's helpful, Keller. And then, Michael, during the prepared remarks, you talked about increased interest from other partners after the Netflix deal, about people trying to figure out, you know, why you won, what you're doing for them, and maybe how you could help.

Speaker Change: Obviously, you probably don't want to talk about specific names before these deals are launched, but if you could just give us some more color there, that'd be really helpful.

Michael Barrett: Yeah, Matt, I think the reference there was that The, we work with just about every big player out there, and some we'll probably never work with, like YouTube, but in the ones that we do work with, what we're seeing is kind of an increase in same-store sales and that kind of halo effect of Netflix in walking clients through how we run the business, what they want out of our stack. We had talked, you know, we've talked in the past about, you know, customizing offerings on a streamer need basis.

Speaker Change: that i think i the reference there was that

Speaker Change: We work with just about every big player out there. And some we'll probably never work with, like a YouTube. But in the ones that we do work with,

Omar Dessouky: The next question comes from Omar Dessuke from Bank of America. Please go ahead. Hey, guys. This is Arthur Oliver. Thanks for taking the question. Maybe just a quick clarification guidance that they have a follow-up question if I could. In the press release, I think there was a commentary around that. There's a commentary about like you guys expect in growth acceleration in the second half of 2024. I just wanted to clarify, are you expecting quarter of a quarter?

Keller: What we're seeing is kind of an increase in the same store sales, and that kind of halo effect of Netflix in walking clients through how we run the business.

Speaker Change: want of our stack. We've talked in the past before about

Omar Dessouky: Arthur, I think we lost two. Operator, I'm not sure if you still have Arthur on your end. Sorry, can you guys hear me? Yeah, Omar, I can hear you. Operator, are you there? Jason? Yes. Can you guys hear me? I can hear you. Okay, it seems like we've lost audio for the question that was being asked. Operator, can you hear us Jason? Can you try and let us know if you're still there on the line? I can hear you. Can you hear me?

Speaker Change: cuttomizing offerings not on a streamer need basis so instead of having people think of us as oh they hahave an answerver they have an ssspay well someof went

Michael Barrett: So instead of having people think of us as, oh, they have an ad server, they have an SSP, well, if someone wants three features that are ad server features and five features that are SSP features, that's the kind of work that we do with these folks to get deeper into their stack, if you will, increase their monetization, and increase our revenue participation. So I would say that I wouldn't look for huge announcements as a verification of the halo effect that we're receiving. It's more we get it through the revenue performance of CTV from the existing clients that we have.

Speaker Change: three features that are ad-serum features and five features that are SSP features. That's the kind of work that we're doing with these folks to get deeper into their stack, if you will, increase their monetization and increase our revenue participation. So I would say that

Michael Barrett: So I would say that I wouldn't look for huge announcements as a verification of the halo effect that we're receiving; it's more, look at it to the revenue performance of CTV from the existing clients that we have. Thank you.

Speaker Change: I wouldn't look for huge announcements as a verification of the halo effect that we're receiving. It's more, we get it through the revenue performance of CTV from the existing clients that we have.

Eric Martinuzzi: The next question comes from Eric Martinuzzi from Lake Street; please go ahead. Yeah, curious to get a layer deeper on the media ocean relationship there. The, as far as the ramp up in Q3 is the kind of, is the next step really educating the biceye here or there are things that you need to do on the plumbing call it behind the clear line. Yeah, great question, Eric, and it has been all plumbing to date, right? So making sure it's integrated, making sure the workflow works, billing, reconciliation, collections, all that kind of stuff. I had to make sure that was up for; that was sound in place.

Keller: Thank you.

Eric Martinuzzi: The next question comes from Eric Martinuzzi from Lake Street. Please go ahead.

Operator: The next question comes from Eric Martinuzzi from Lake Street. Please go ahead. Yeah, I'm curious to get a

Operator: Thank you. Thank you. This concludes the next question. The next question comes from Eric Martinuzzi from Lake Street. Please go ahead.

Keller: The next question comes from Eric Martinuzzi from Lake Street. Please go ahead.

Omar Dessouky: Can you guys even move to the next question? Hi, can you hear me, Nick? All right, we'll let's try the next questioner. Jake, the operator says they can hear us. If everybody can just stare at us for a moment, we'll dial right back in. Everyone else has left a call. It looks like no one else is going to join this call. Goodbye. The partners, everybody, while we try and reconnect with these speakers.

Eric Martinuzzi: Yeah, curious to get a layer deeper on the media-ocean relationship there. The, as far as the ramp-up in Q3, is the kind of, is the next step really educating the buy side here, or are there things that you need to do on the, on the,

Speaker Change: plumbing, call it, behind the clear line.

Michael Barrett: Yeah, great question, Eric, and it has been all plumbing to date, right? So, making sure it's integrated, making sure the workflow works, billing, reconciliation, collections, all that kind of stuff, had to make sure that it was up for, that it was sound and in place. A lot of that development work falls on MediOcean, so it's kind of out of our control. But now that there's water flowing through the pipes, we anticipate that we're in this next phase, and that is activation. You're right, there is an education process to it, but there are no additional resources that we need. We have our demand facilitation team that has all the relationships that exist, and MediOcean is leaning in on it as well.

Keller: Yeah, it's a great question, Eric, and it has been.

Speaker Change: all plumbing to date, right? So making sure it's integrated, making sure the workflow works, billing, reconciliation, collections, all that kind of stuff. Had to make sure that was up for, that was sound.

Eric Martinuzzi: A lot of that dev workflows on Media Ocean, so it's kind of out of our controls. But now that there's water flowing through the pipes, we anticipate that we're in this next phase. And that is activation, and you're right; there's an education process to it. But there's no additional resources that we need. We have our demand facilitation team that has all the relationships that exist. Media Ocean is leaning on it as well. You know, as we said, we're not converting dollars at a programmatic today, going through a DSP and trying to take those monies and put them through this new path of work.

Speaker Change: And in place, a lot of that dev work falls on MediOcean, so it's kind of out of our controls. But now that there's water flowing through the pipes...

Speaker Change: We anticipate that we're in this next phase, and that is activation. And you're right, there's an education process to it, but there's no additional resources that we need. We have our demand facilitation team that has all the relationships.

Speaker Change: that exist. Mediaocean is leaning in on it as well. You know, as we said, we're not converting...

Operator: As we said, we're not converting dollars that are programmatic today going through a DSP and trying to take those monies and put them through this new path of work. This is really for that kind of linear insertion order business that would be sent over via an insertion order, convincing those folks of the efficacy of the workflow of a clear line and the additional targeting that you can get from that, the reach and frequency balancing that you can get from that.

Speaker Change: dollars that a programmatic today going through a dp and trying to take those monies and bloom through this new path of work this is really for that kind of linear insertion order business

Eric Martinuzzi: This is really for that kind of linear insertion order business that would be sent over via an insertion order, convincing those folks of the efficacy of the workflow of a clear line. And the additional targeting that you can get from that, the reaching frequency balancing that you can get from that. And yeah, we expect the sales cycle to be relatively midterm to it. It's not an easy flip the switch, but we're really encouraged with the response that we're getting in some of the tests that are taking place right now.

Speaker Change: that would be sent over via an insertion order, convincing those folks of the efficacy of the workflow of Clearline and the additional targeting that you can get from that, the reach and frequency balancing that you can get from that. And, yeah, we expect the sales cycle to be...

Operator: And, yeah, we expect the sales cycle to be relatively midterm for it. It's not an easy flip the switch, but we're really encouraged with the response that we're getting and some of the tests that are taking place right now. Got it, thanks. The next question comes from Zach Cummins from B Reilly.

Speaker Change: relatively mid-term to it it's not an easy foot the switch but we're really encouraged with the response that we're getting in some of the tests that are taking place right now

Omar Dessouky: Pardon me, everybody. We have reconnected with the speakers. You may proceed. I apologize all that we lost audio. Arthur, if you could recover your question, we'll jump right back into it. I just wanted to make a quick ask a quick clarification on the guidance. I think on the press release, there was a commentary around you guys expecting growth acceleration in the second half of 2024. I wanted to clarify, are you guys expecting quarter to quarter acceleration in 3Q and 4Q on a sequential basis?

Zach Cummins: Thank you. The next question comes from Zach Cummins, from B.

Speaker Change: Got it, thanks.

Operator: The next question comes from Zach Cummins from B Reilly. Please go ahead. Hi, good afternoon. Thanks for taking my question.

Zach Cummins: Riley, please go ahead. Hi, good afternoon. Thanks for taking my question. Most of mine have already been asked by other analysts, but just serious with improving cash. You see, especially here in Q2, how are you thinking about capital allocation when it comes to potentially repurchasing shares or retiring debt at this juncture? Yeah, that's a good question. You know, as we're really happy with where we stand now from a capital structure, having completed our refinancing in January, and we're kind of set for the next handful of years. If we think about uses for our cash, you know, I'll start first with a baseline that we'd like to have, you know, 175 million, 200 million as normal, you know, kind of operational cash flow balance.

Speaker Change: The next question comes from Zach Cummins from B Riley. Please go ahead.

Zach Cummins: Hi, good afternoon. Thanks for taking my question. Most of mine have already been asked by other analysts, but...

Omar Dessouky: So 3Q would be an accelerating versus 2Q and then Q4 would be accelerating versus Q3. And they have a follow-up question if I could. Thank you. Sure. Yeah, I mean, and particularly focus on CTV growth, you know, we guided to 20% year-over-year growth, which is a, you know, an acceleration, you know, and we'll lead to, you can bear the first half of the year, the second half of the year, overall acceleration.

Zach Cummins: Just curious, with improving cash flow that you see, and especially here in Q2, how are you thinking about capital allocation when it comes to potentially repurchasing shares or retiring debt at this juncture?

David Day: Yes, that's a good question. We're really happy with where we stand now from a capital structure point of view, having completed our refinancing in January, and we're kind of set for the next handful of years. If we think about uses for our cash, I'll start with a baseline that we'd like to have $175 million, $200 million as a normal kind of operational cash flow balance. Over the next year and a half, we would put aside another $200 million to pay off the bonds that come due in March of 2026.

Speaker Change: yeah that's a good that's a that's a good question

Speaker Change: You know as we

Speaker Change: We're really happy with where we stand now from a capital structure having completed our refinancing in January , and we're kind of set for the next handful of years.

Speaker Change: If we think about uses for our cash.

Omar Dessouky: From, you know, we're only giving specific guidance on Q3 and not Q4, so more to come there, but we're really, we feel really good about our CTV business. You can see that the CTV revenue growth, you know, the gap between that and our ad spend growth is narrowing because of the accelerated growth in CTV revenue, and so, you know, really bullish on our CTV business. Appreciate it. Thank you. And maybe just a quick, you know, follow the question on CTV take rate.

Speaker Change: I'll start first with a baseline that we'd like to have $175 million, $200 million as normal kind of operational cash flow balance.

David Day: Over the next year and a half, we would like to put aside another 200 million to pay off the converts that come due in March of 2026. And so, to point, we'll have some excess cash. I think, you know, we would lean much more heavily now to, you know, perhaps opportunistic repurchasing of shares, particularly, you know, with some of the volatility in our stock price. So that would certainly be on the table. We'll also keep some powder dry if there are some, you know, tuck-ins, small acquisitions that might accelerate important CTV-related, you know, product development.

Speaker Change: Over the next year and a half, we'll, we would.

Speaker Change: We would put aside another $200 million to pay off.

David Day: And so to your point, we will have some excess cash. I think we would lean much more heavily now to perhaps opportunistic repurchasing of shares, particularly with some of the volatility in our stock price. So that would certainly be on the table. We'll also keep some powder dry if there are some tuck-ins, small acquisitions that might accelerate important CTV-related product development. So that's how I think we think about our capital allocation right now.

Speaker Change: The Converts to come due in March of 2026. And so, to your point, we will have some excess cash.

Speaker Change: i think we would lean much more heavily now

Speaker Change: to, you know, perhaps opportunistic repurchasing of shares, particularly...

Speaker Change: You know, with some of the volatility in our stock price, so...

Omar Dessouky: I'm wondering if you guys could talk about how, you know, CTV take rate has trended sequentially in a quarter, and, you know, just given some of the dynamics on the supply side with, you know, more Netflix and Prime Video even to become the online, has your outlook on take rate changed, if you're looking down, say like six month or a year, down the road. Thank you. Yeah, I think to, you know, we don't give specific take rates, but I think to continue on the narrative that we've had the last several quarters, the premium inventory that's still, you know, wishing on to the market has come in at our lower take rate earning levels, but we're laughing the most significant decrease from last year, and so, the rate of decline in our average take rate, which is due to that continuing mix change, has slowed quite significantly, and so we're, I wouldn't say we're bottoming out, but we're sort of hitting that point of of stabilization, and that's why you see the commented earlier, you see this significant acceleration in our actual revenue growth, as over time, it will continue to come closer and closer to our ad spend growth in the CTV business, so we, you know, continue, we expect those trends to continue, we expect, you know, continued adoption of programmatic in CTV, and so we expect those ad spend growth rates to, you know, remain high, you know, greater than 20 percent, as we've had over the last, you know, handful of quarters going forward. I don't mind if you have anything else going on ahead. No, I think that got it, it captures it off. Got it, that's guys, super hot, we're having a quarter. Thanks.

Speaker Change: That would certainly be on the table. We'll also keep some...

Speaker Change: powder dry if there are some, you know, tuck ins, small acquisitions that might accelerate important CTV related, you know, product development. So that's how I think we think about our capital allocation right now.

Zach Cummins: So that's how I think we think about our capital allocation right now. Got it. Well, thanks for taking my questions, and good luck with the rest of the quarter. Thanks. Appreciate it.

Speaker Change: Got it. Well, thanks for taking my questions and best of luck with the rest of the quarter.

Operator: Again, if you have a question, please press star, then 1.

Ross Compton: Again, if you have a question, please press star, then one. Our next question comes from Ross Compton from McQuarry. Please go ahead.

Speaker Change: Thanks, appreciate it.

Ross Compton: Hi, Michael. With little in the press, by the way of the upcoming Google Adject trial that sits on September, I appreciate it's going to be a long play here, but also looking at Google's network revenue, which has declined for about, I think, a quarter in a row. So are you seeing some competitive mediation for yours, and it's just P to within the space and helping DV plus results, you know, interested to hear your thoughts on kind of the moving pieces and the potential spin. Yeah, anything you have to ask. Yeah, great question. I would see that we, you know, over several quarters, if not years.

Michael Barrett: Since this investigation going on, we have definitely seen a far more level of playing field as it relates to working with Google and Google's addicts and in game in DB 360. So I don't think that anything this quarter or last quarter; I think there's accumulation of. Accumulation of practices that are more conducive to the open web, more conducive to a magnate, but I would say more on the margins. I don't think there's been any kind of sea change where the opportunities that were not afforded to us are now abundant.

Jason Crier: The next question comes from Jason Crier from Craig Hallum, please go ahead. Great, thank you guys.

Jason Crier: Michael Netflix has been pretty vocal about, you know, deploying this programmatic ad strategy, you know, can you just talk about what you think that means for your role in the industry, and maybe what that means for your existing relationships with other Mars. Yeah, Jason, thanks for the question. Yeah, I think Netflix has been quite vocal about leaning into a programmatic, and I think you kind of see that trend line across all the big streamers.

Operator: There are no more questions in the queue.

Michael Barrett: This concludes our question and answer session.

Michael Barrett: I'd like to turn the conference back over to Michael Barrett for any closing remarks. Thanks, Jason. I'd like to thank the Magnate team for delivering another great quarter that exceeded expectations. The strong performance of our team in the first half of the year has positioned us nicely for a strong finish in the third and fourth quarters. We look forward to speaking with many of you at our upcoming investor events. Bank of America will host our post Q2 virtual investor meetings tomorrow. We'll be attending meetings with Craig Hallem and Philadelphia in Baltimore on August 13th and 14th.

Jason Crier: I think one of the takeaways from the recently completed upfront season was, you know, I don't think everyone was all that pleased with the final CPMs, but it seemed like the numbers all kind of came in online, maybe slightly up for some of the big streamers, but programmatic definitely a bigger piece of the spend puzzle, and we think that any dollars that haven't been deployed in the upfront are primed for a programmatic going forward in, you know, kind of the spot market. So, you know, I think anytime someone comes to market with kind of a heavy programmatic focus, it's answering what buyers are wanting.

Michael Barrett: Nick will participate in the Cannonball IR Conference on August 16th. We'll be attending the B of A conference in New York on September 4th, the Benchmark conference in New York on September 5th, the City conference in New York on September 6th, the Wolf conference in San Francisco on September 10th. In the B rally in Lake Street conferences in New York on September the 12th. Following the conferences, Nick will be participating in investor meetings in LA on September 16th with Lake Street, Dallas on September 17th, and Austin on September 18th with Stevens. San Diego on September 19th, Lake Street, Toronto on September 24th with Benchmark, Montreal on September 25th with RBC, and in New York on September 26th with SEG.

Jason Crier: And so I think that more and more you're going to see programmatic play a bigger role in terms of the streamers revenue, just given the fact that that's what the buyers want. They want a more efficient way to buy, they want targeting, and that's what programmatic supplies and Netflix is certainly part of that equation.

Michael Barrett: Thank you all, and have a great evening.

Operator: Conference has now concluded. Thank you for attending today's presentation.

Michael Barrett: Thank you. And then as you've been working with Netflix over the last couple of months, any learnings on their strategy or what they wish to deploy or any changes to your view of the size of the Netflix opportunity? You know, nothing that we haven't already talked about in the script or that they haven't talked about. I think, as David said at the top of the call, we mark off of Netflix comms in this area, and so there'll be the ones that will be giving you a better understanding of what their go-to market strategy might be, timing, et cetera. But as it relates to what we feel, Netflix could represent to us from a size of a client, I would say we still feel very comfortable with the kind of direction we've given there.

Operator: You may now disconnect.

Michael Barrett: I think we're also given all the macro swirl and concerns. We're certainly trying to be a little cautious in our guide for the remainder of this year, given all of the challenges going on from a macro perspective, geopolitical perspective and political perspective directly.

Jason Crier: Great. Thank you, guys. Thank you.

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

Laura Martin: Good morning. So, again on Netflix. So, I think Netflix would love more ad revenue faster but that what they have found in the upfront market is that the brands they're talking to say that have to reach critical mass. Brown numbers 20 million ad driven subs here in America. Then they're under 10. So, that is my question. Can they use programmatic when they're smaller than that sort of critical reach that they need for the upfront market? Or does ad buys even in your world require bigger reach than they have with their ad driven subs in the US?

Michael Barrett: Yeah, great question. Lauren, again, would defer a lot of that to the Netflix in terms of their answer to that. But my take on it is that, yeah, as long as you can provide scaled audiences that folks want and it doesn't have to be, you know, households, it just could be demos. If you have a decent concentration of that demo, we see consistently in programmatic that folks are making those buys because by nature, in programmatic with targeting, you're looking at a smaller universe of individuals and air go. I think that programmatic plays nicely into that as you start to scale up and be able to have a big seat at the upfront table. Okay, that's super helpful.

Michael Barrett: And then back on DB plus, which I know is something that you worked hard to turn around a couple of years ago, it's still quite a bit bigger than your CTD business. And I love this new business slide that you've given us for CTD, but is there a similar slide for DB plus and you just don't disclose it, or is it the growth, the 7% growth you're getting in DB plus is all.

Michael Barrett: Same clients, they just have to spend more. We're not getting new clients there. Yeah, Laura, I think the slide you're referring to is actually the one on the deck that talks about our recent wins and there is some on there that's also DB plus. So that does cross over both specifically United Airlines, you know, might have some mobile, you know, mobile and desktop revenue that comes from, even though it's streaming television coming on a mobile device, that will hit those different lines.

Michael Barrett: And so that really is encompassing, but you know, kind of the biggest near term wins on there do tend to focus more on CTD. Yeah, and the Amazon one too as well. So being a preferred SSP for Amazon's DSP, that's almost exclusively DB plus. But it's a great point.

Michael Barrett: You bring out Laura and something we probably should consider in future earnings releases. Thanks, guys. Thank you very much. Thank you. Thanks.

Ian Peterson: The next question comes from Ian Peterson from Evercore ISI. Please go ahead. Thank you for taking my questions to if I may.

David Day: First, it would be great to get some color on how the managed services business trended in Q2 and how you expect that business to trend or are implied in your Q3 guide, which has some pretty material acceleration. In CTV revenue. And my second question is around, you guys have signed a number of new partnerships in the quarter. Can you walk us through if these partnerships will require incremental investment spend or how we should think about investments magnet needs to make in order to properly run these these partnerships. Thanks.

David Day: Thank you.

Matt Swanson: The next question comes from Matt Swanson from RBC capital markets. Please go ahead. Yeah, thank you guys so much for taking my question.

Michael Barrett: Dave, if I ask another one on the background and just kind of how you're thinking about it and guidance. How much differentiation, I guess, is there between the macro you see in the CTV environment versus DB plus kind of just going back to that cyclical versus secular idea. Hey, Matt, it's Michael. I think if you look across the board, the categories that aren't performing as well from an ad spend standpoint tend to go across both platforms.

Michael Barrett: And so I don't think that there may be some rare instances of say a managed service contribution, but generally speaking, when we say strength or weaknesses in categories to spend. It's meant for the fall of magnet across the board and not just focus on CTV and or DB plus. Yeah, I think I think that said because of the expansion, you know, in CTV that that general macro impact, whatever it is, probably would look a little more muted because of the gains that we're making in the CTV.

Michael Barrett: So relatively speaking, you know, let's say there was a macro slowdown, you'd probably see it a little more cutely on the DB plus side of the business than you would on the CTV side. You know, but that's the only nuance I'd add to that. Yeah, no, that's helpful color.

Michael Barrett: And then Michael, during the prepared remarks, you talked about increased interest from other partners after the Netflix deal about people trying to figure out, you know, why you won what you're doing for them and maybe how you can help. Obviously, I don't want to talk about specific names before these deals are launched, but if you just give us some more color there, I do really. Paul. Yeah, Matt, I think the reference there was that the we work with just about every big player out there and some will probably never work with like a YouTube but in the ones that we do work with what we're seeing is kind of an increase in the same store sales and that kind of halo effect of Netflix and walking clients through how we want the business, what they want of our stack, we had talked, you know, we've talked in the past before about, you know, customizing offerings on a streamer need basis so instead of having people think of us as, oh, they have an ad server, they have an SSP, well, if someone wants three features that are ad servering features and five features that are SSP features, that's the kind of work that we're doing with these folks to get deeper into their stack if you will, increase their monetization and increase our revenue participation.

Michael Barrett: So I would say that I wouldn't look for huge announcements as a verification of the halo effect that we're receiving, it's more, look at it to the revenue performance of CTV from the existing clients that we have. Thank you.

Eric Martinuzzi: The next question comes from Eric Martinuzzi from Lake Street, please go ahead. Yeah, curious to get a layer deeper on the media ocean relationship there.

David Day: The, as far as the ramp up in Q3 is the kind of, is the next step really educating the biceye here or there are things that you need to do on the plumbing call it behind the clear line. Yeah, great question, Eric, and it has been all plumbing to date, right? So making sure it's integrated, making sure the workflow works, billing, reconciliation, collections, all that kind of stuff. I had to make sure that was up for, that was sound in place.

David Day: A lot of that dev workflows on media ocean, so it's kind of out of our controls. But now that there's water flowing through the pipes, we anticipate that we're in this next phase. And that is activation, and you're right, there's an education process to it. But there's no additional resources that we need. We have our demand facilitation team that has all the relationships that exist. Media ocean is leaning on it as well.

David Day: You know, as we said, we're not converting dollars at a programmatic today going through a DSP and trying to take those monies and put them through this new path of work. This is really for that kind of linear insertion order business that would be sent over via an insertion order, convincing those folks of the efficacy of the workflow of a clear line. And the additional targeting that you can get from that, the reaching frequency balancing that you can get from that.

David Day: And yeah, we expect the sales cycle to be relatively midterm to it. It's not an easy flip the switch, but we're really encouraged with the response that we're getting in some of the tests that are taking place right now. Thank you.

Zach Cummins: The next question comes from Zach Cummins, from B.

Zach Cummins: Riley, please go ahead. Hi, good afternoon. Thanks for taking my question. Most of mine have already been asked by other analysts, but just serious with improving cash. You see, especially here in Q2, how are you thinking about capital allocation when it comes to potentially repurchasing shares or retiring debt at this juncture? Yeah, that's a good question. You know, as we're really happy with where we stand now from a capital structure having completed our refinancing in January and we're kind of set for the next handful of years.

Zach Cummins: If we think about uses for our cash, you know, I'll start first with a baseline that we'd like to have, you know, 175 million, 200 million as normal, you know, kind of operational cash flow balance. Over the next year and a half, we would like to put aside another 200 million to pay off the converts that come due in March of 2026. And so to point, we'll have some excess cash. I think, you know, we would lean much more heavily now to, you know, perhaps opportunistic repurchasing of shares, particularly, you know, with some of the volatility in our stock price.

Zach Cummins: So that would certainly be on the table. We'll also keep some powder dry if there are some, you know, tuck-ins, small acquisitions that might accelerate important CTV related, you know, product development. So that's how I think we think about our capital allocation right now. Got it. Well, thanks for taking my questions and that's luck with the rest of the quarter. Thanks. Appreciate it. Again, if you have a question, please press star then one.

Michael Barrett: Our next question comes from Ross Compton from McQuarry. Please go ahead. Hi, Michael. With little in the press, by the way of the upcoming Google Adject trial that sits on September, I appreciate it's going to be a long play here, but also looking at Google's network revenue, which is declined for about, I think, a quarter in a row. So are you seeing some competitive mediation for yours, and it's just P to within the space and helping DV plus results, you know, interested to hear your thoughts on kind of the moving pieces and the potential spin.

Michael Barrett: Yeah, anything you have to ask. Yeah, great question. I would see that we, you know, over several quarters, if not years. Since this investigation going on, we have definitely seen a far more level of playing field as it relates to working with Google and Google's addicts and in game in DB 360. So I don't think that anything this quarter or last quarter, I think there's accumulation of. Accumulation of practices that are more conducive to the open web, more conducive to a magnate, but I would say more on the margins. I don't think there's been any kind of sea change where the opportunities that were not afforded to us are now abundant. There are no more questions in the queue.

Operator: This concludes our question and answer session.

Michael Barrett: We look forward to speaking with many of you at our upcoming investor events. Bank of America will host our post Q2 virtual investor meetings tomorrow. We'll be attending meetings with Craig Hallem and Philadelphia in Baltimore on August 13th and 14th. Nick will participate in the Cannonball IR conference on August 16th. We'll be attending the B of A conference in New York on September the 4th, the Benchmark conference in New York on September the 5th, the city conference in New York on September the 6th, the Wolf conference in San Francisco on September 10th.

Michael Barrett: In the B rally in Lake Street conferences in New York on September the 12th. Following the conferences, Nick will be participating in investor meetings in LA on September 16th with Lake Street, Dallas on September 17th and Austin on September 18th with Stevens. San Diego on September 19th, Lake Street, Toronto on September 24th with Benchmark, Montreal on September 25th with RBC and in New York on September 26th with SEG.

Operator: Thank you all and have a great evening.

Operator: Conference has now concluded.

Operator: Thank you for attending today's presentation.

Operator: You may now disconnect.

Q2 2024 Magnite Inc Earnings Call

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