Q1 2025 Magnite Inc Earnings Call
Speaker Change: Good Day, and welcome to Magnite Q1 2025 Warnings Conference Call.
Speaker Change: All participants will be in a lesson only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
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To withdraw your question, please press star, then two [inaudible]
Please note, this event is being recorded.
Speaker Change: I would now like to turn the conference over to Nick Kormeluk in investor relations. Please go ahead.
Nick Kormeluk: P2 operator, and good afternoon everyone. Welcome to Magnite's first quarter, 2020-Fiberdick's conference call.
Speaker Change: as a reminder, this conference call is being recorded. 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 slides on our investor relations website to accompany today's presentation.
Speaker Change: Before we get started, I will remind you that our prepare 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.
Speaker Change: These statements are not guarantees a future performance. They reflect our current views with respect to future events and our based on assumptions and estimates.
Speaker Change: and subject to known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from expectations, or results projected or implied by forward-looking statements.
Speaker Change: It is a discussion of these and other risks and certainties and assumptions is set forth in the company's periodic reports filed with the SEC, including our first quarter 2025 quarterly report on form 10Q and our 2024 annual report on form 10K. We undertake no obligation
Speaker Change: Our commentary today will include non-GAAP financial measures, including contribution extract or less traffic acquisition costs, adjusted EBITDA and non-GAAP net income per share.
Speaker Change: Reconciliation between gap and non-GAAP metrics for a report of results can be found in our earnings press release in a financial highlights deck that is posted on our Industrial Relations website. At times in response to your questions, we may offer additional metrics to provide greater insights into the dynamics of our business.
Speaker Change: Please be advised that this additional detail may be one time in nature, nor may or may not provide an update on the future of these metrics.
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 It will now turn the call over to Michael, please go ahead Michael I encourage you to visit our Investor Relations website to access our press release financial highlights deck periodic SEC reports
Michael Barrett: Thank you, Nick. Q1 came in very strong and we exceeded total top line guidance with CTV growing 15 percent.
Michael Barrett: Adjusted EBITDA came in significantly above expectations at $37,000, growing 47% representing an adjusted EBITDA margin of 25% versus 19% in Kewa last year.
RCTV business continue to produce excellent resulting Q1.
Michael Barrett: Truman, primarily by the industry's largest players, wider adoption of programmatic.
Michael Barrett: continued traction with the agency marketplaces and growth in live sports.
Michael Barrett: Let me go one by one, starting with the industry's largest streamers, where we continue to deepen our relationships.
Michael Barrett: Our most significant growth came from Roku, LG, Warner Brothers Discovery, Fox, Vizio Walmart, and Netflix.
Michael Barrett: Netflix continues to roll out their programmatic business globally, most recently in Amia with further expansion coming through the rest of the year.
Michael Barrett: Magnite continues to be a critical part of Netflix's programmatic ad stack and we remain bullish about the work we're doing together.
Michael Barrett: These partnerships underscore the tremendous opportunity for Magnite and CTV, but as we said last quarter, that opportunity isn't available to legacy SSPs that don't have a purpose-built CTV ad server at the core of their platform.
Michael Barrett: Two weeks ago, we widen our lead even further by unveiling the next generation of spring serve, a unified solution that combines our ad server with the advanced programmatic capabilities of the Magnite Streaming SSP.
Stefford General Availability, Ms. July .
Michael Barrett: This new platform offers something truly differentiated for buyers, a more efficient, transparent path to premium supply, and for media owners, streamlined workflows, and smarter, more holistic yield optimization.
Michael Barrett: As more budgets flow into CTV, marketers are asking for more control, better transparency in the shortest possible path to inventory. By collapsing the ad server in SSP into one platform, we remove an entire step in the process.
Michael Barrett: Simplifying, buying, improving signal, and helping advertisers place their message where they'll have the most impact.
Michael Barrett: and for media owners in addition to increased demand from buyers, the next generation of Spring serve provides intelligent ad decisioning and dynamic mediation.
centralized deal management and unified reporting through a single user interface.
Michael Barrett: According to a recent independent study by Jones Media, Magnite represents more than 99% of US streaming supply on the Open Internet.
Michael Barrett: The New Spring serve is designed to make that inventory even more accessible, drawing more investment into CTV, and flowing more value back to publishers.
Michael Barrett: and the agency marketplace. The response has been clear. Buyers like Group M, Amikam, and the trade desk have publicly voiced their support.
Michael Barrett: as sellers like Disney, Roku, Paramount, LG, Samsung, and Warner Bros Discovery. And we've heard similar feedback from many other behind the scenes.
Michael Barrett: All of this reinforces what we said for some time. CTV advertising isn't display advertising and it can't run a display error infrastructure. The combination of our ad server and SSP gives Magnite a structural advantage.
Michael Barrett: an integrated purpose-built stack designed for the way CTV actually works and no other independent platform can match.
Michael Barrett: Agency Marketplaces, which are powered by our Clearland product, remain a bright spot for us. This has been a strong focal point for agencies and Group M, Horizon, and Densu have been aggressively working under differentiated marketplaces with the help of Magnite.
Now to live sports.
Michael Barrett: We saw a strong growth again in Q1, driven by nearly 20 partners using our live stream acceleration technology.
Michael Barrett: NCA Basketball continued to be an important live sports growth driver for K1.
Michael Barrett: Looking ahead, we're excited about major upcoming events across MLB, the NBA and WNBA, NHL playoffs as well as a wide range of college sports.
Michael Barrett: We've also increased our international sports portfolio to include opportunities with FIFA Plus, Champions League, and Liga MK.
Michael Barrett: On the product side, live sports is a top priority and we are accelerating investment in enhancements to live than pacing, predictive pre-ad requests, and live ad retention.
Michael Barrett: Stepping back all these factors in CTV have led to further stabilization of our business mix in corresponding take rate, and we believe that they make CTV less sensitive to macro volatility for several reasons.
Michael Barrett: First Programmatic CTV is TV advertising, but more targetable and measurable, and in lean times, advertisers always opt for more accountability from their ad spend.
Michael Barrett: Secondly, programmatic TV is TV advertising without the upfront guarantee, and uncertain times marketers still want to advertise, particularly in a TV-like environment, but are uncomfortable committing ads spend beyond the current quarter, which is a norm for linear TV.
Michael Barrett: Programmatic CTV provides a maximum spend flexibility, the TV environment marketers crave, and advanced analytics that can better track performance.
Michael Barrett: And lastly, in Magnite's case, programmatic CTV growth rate is roughly double the growth rate of our TV plus business, and CTV represents over 40% of our total contribution extract revenue.
Michael Barrett: So even in a macro-slam now, we'll outperform our peers who all lack meaningful revenue exposure to CTV.
Now to DV Plus.
Michael Barrett: This business had a strong bounce back quarter growing 9% contribution x-tack versus prior year.
Michael Barrett: This was primarily driven by broad market recovery with ten of our largest 11 verticals posting strong growth, faced by technology, food and beverage, retail and financials.
We also remain excited about our opportunity in audio.
and early April . Spotify announced its new Spotify ad exchange.
Michael Barrett: Now, let's pivot to AI. On the efficiency front, as we noted last quarter, our neural net and machine learning systems play a key role in cost effectively scaling our infrastructure across both data centers and the cloud. Now, let's pivot to AI.
Michael Barrett: These capabilities have contributed nicely to reductions in EBITDA op-ex, helping buyers achieve better outcomes on our platforms.
Michael Barrett: On the product side, we're excited about the momentum building generative AI into our portfolio.
Michael Barrett: Our AI-powered audience discovery feature in our curator product is now live and gaining traction.
Michael Barrett: and we have a robust pipeline of features and tools that will benefit from Gen AI going forward.
Michael Barrett: In addition, we are investing in the use of the LLMs to make our supply under management more addressable, particularly in CTV, and we expect to begin rolling out these enhancements over the coming quarters.
Michael Barrett: To conclude my comments, I want to dive deeper into the recent antitrust ruling against Google which could potentially change the entire landscape of the open internet and drive significant upside for our DV plus business.
Michael Barrett: As you know, the court found that Google had engaged in illegal monopolistic practices with respect to its ad server in ad exchange, also known as an SSPaid.
Michael Barrett: It's clear that for years, Google has been engaging in illegal practices that resulted in an unfair option within its ad server, which disproportionately drove volume through with the SSP at the expense of rival SSPs like Magnite. [inaudible]
Michael Barrett: The court has scheduled the remedy phase for September 22nd and is indicated that there will be attention to both behavioral and structural remedies.
Michael Barrett: Although the specific timing and nature of remedies are still being debated, we are highly encouraged by the court's initial ruling on liability, and we believe that it will be highly beneficial for the open internet.
Michael Barrett: resulting in more fair and transparent process and drive greater returns for publishers and advertisers.
Michael Barrett: We are looking forward to more level playing field. We are all members of the attack industry of an equal chance to compete on their own merits.
Michael Barrett: and we believe that a level playing field will significantly improve our opportunity to monetize publisher's inventory and correspondingly increase our win rate.
Michael Barrett: We estimate Google's exchange currently controls greater than 60% share in the DV Plus market, as the second largest player in the space.
We share only in the mid-single digits.
and given our leading technology and deep publisher relationships.
Michael Barrett: We believe that we are exceptionally well positioned to capture any shift in market share that occurs as a result of Google ceasing it to legal practices without changing our existing cost structure.
Speaker Change: With that, I'll turn the call over to David for more detail on financials.
Thanks, Michael.
David Day: As Michael mentioned, we had a strong start to 2025 exceeding our Q1 contribution X-TAC guidance for both CTV with growth of 15% and DV Plus, which grew 9%.
David Day: Adjusted Evidog Group 47% over the first quarter of last year with a margin of 25%, significantly above expectations.
David Day: Before diving deeper into Q1, I want to touch on what we have seen to date in Q2.
David Day: So far, we're encouraged by the resiliency of ad spend and have not seen any meaningful change from expectations.
David Day: In fact, so far in Q2, CTV contribution extract has grown in the midteens and DV plus in the mid-single digits.
David Day: If the current trends were to continue, we would not change our Q2 forecast and the full year of 2025 views we shared in late February .
David Day: However, given terra-related economic uncertainty, we believe there could be some dampening of growth rates from current levels. I'll discuss this in more detail when I provide guidance later in my prepared remarks.
David Day: CTV Contribution XTAC was $63 million, up 15% year-over-year, and above the top end of our guidance range. We saw strong performance across our business with many of our largest partners.
David Day: D.V. Plus contribution, X-TAC was $83 million, an increase of 9% from the first quarter last year. This result exceeded our guidance range as we continued to gain traction with agency deals and new publisher relationships.
David Day: our contribution ex-tack mix for Q1 was 43% CTV, 40% mobile, and 17% desktop.
David Day: From a vertical perspective, technology, financial and business services, and business services were the strongest performing categories for all formats.
David Day: Hill Laurean Expenses, which includes cost of revenue, were $157 million, a decrease from $163 million for the same period last year.
David Day: Adjusted EVA DAW operating expense for the first quarter was $109 million better than we expected and up slightly from $106 million in the same period last year.
David Day: The majority of the favorability to our guidance was driven by lower cloud computing costs and employer-employee-related expenses.
David Day: As we highlighted last quarter, our technology team continues to make strong progress in reducing per unit cloud cost, allowing us to manage significant increases in ad request volumes with only modest cost increases.
David Day: Improving scale and operational efficiency remains one of our top priorities for 2025 and a very pleased with the progress our tech team is delivering.
David Day: The majority of our Q1 and Q2 capital expenditures will be used to support our hybrid infrastructure strategy as we shift additional functions from the cloud to on-premises.
David Day: We expect these initiatives to drive meaningful margin expansion in 2026 and beyond, and we're seeing some early benefits now.
David Day: Our net loss was $10 million for the quarter compared to a net loss of 18 million for the first quarter of 2024.
David Day: Justin E. Medagru, 47% year-over-year to 37 million, reflecting a margin of 25%, which compares to 25 million in a margin of 19% last year.
David Day: This was a result of the entire revenue and robust cost management efforts.
David Day: As a reminder, we calculate adjusted EVA DOM ARGEN as a percentage of contribution next
Gaploff's Produlated Chair.
David Day: was 7 cents for the first quarter of 2025 compared to a lot of 13 cents for the first quarter of 2024. non-GAAP earnings for share for the first quarter of 2025 was 12 cents compared to 5 cents last year.
David Day: The reconciliation to non-GAAP income and non-GAAP earnings per share are included with their Q1 Results Press release.
David Day: Our cash balance yet at the end of Q1 was 430 million, a decrease from 483 million at the end of the fourth quarter.
David Day: Operating Cash Flow, which we define as a just-sative at the less CapEx, was $18 million.
David Day: Capital expenditures, including both purchases of property and equipment, and capitalized to eventually use software development costs for $19 million.
Our net interest expense from the quarter was $5 million.
David Day: Ernet Leverage was 0.6x at the end of Q1, up slightly from the fourth quarter due to the typical full cash seasonality and share repurchases.
David Day: We continue to lower our capital costs with the completion of our second successful term-long B repricing during the first quarter.
David Day: The re-pricing reduced our interest rate by an additional 75 basis points resulting in annual interest savings of approximately $2.7 million.
David Day: In total, we've been able to lower our original Termal OMB rate by 200 basis points, and our interest now stands at so for plus 3%.
David Day: I'd also like to highlight that the 205 million principal amount of our convertible notes is now classified as a current liability on the balance sheet as the notes mature in March of 2026.
David Day: We intend to pay off the converts with cash and maturity and have ample liquidity to do so.
David Day: We continue to believe our shares are undervalued at current levels and plan to continue our focus on managing shareholder dilution.
David Day: Year-to-day utilizing our Share Repurchase Program and the withhold the cover option for employee taxes from regular RSU vesting. We've effectively reduced delusion by 2.9 million shares for $43 million or $14.94 per share.
David Day: As of today, we have 88 million dollars remaining in our authorized share we purchase program, which we will continue to deploy strategically.
David Day: I will now share thoughts about the second quarter and outlook for the full year.
David Day: Due to tariff driven economic uncertainty, we have widened our typical contribution extract guidance ranges for Q2.
David Day: Although we're not currently seeing lower than expected ad spend, we've assumed some softening in the back half of Q2 related to higher risk verticals such as auto, retail, and travel.
David Day: Given that uncertainty, we're also not reaffirming our previously shared full-year 2025 expectations today.
David Day: For the second quarter, we expect contribution x-tax to be in the range of $154 to $160 million contribution x-tax attributable to CTV to be in the range of $70 to $72 million.
David Day: Contribution X-TAC, a Tributable to DV Plus to be in the range of $84 to $88 million, and we anticipate adjust to the operating expenses to be between $110 and $12 million.
David Day: which implies adjusted EBITDA margin of 29% for Q2 at the mid-point.
David Day: We are pleased with our first quarter results with our continued execution on strategic initiatives and I'm confident in our ability to successfully navigate through the current environment.
David Day: I'm also pleased with the progress our team is making in our tech stack cost efficiency efforts, which will help buffer margin pressure and down economy and set the table for stronger margin expansion in a more robust macro environment in the future.
With that, let's open the line for Q&A.
Thank you.
We will now begin the question and answer session.
Speaker Change: To ask a question, please press star then one on your telephone keypad.
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Jason Cryer: Our fourth question comes from Jason Kreyer from Craig Hallum. Please go ahead.
Jason Cryer: Great. Thank you guys. Good to see the nice pumps back in DV Plus. I'm going to start with two on the Google case. Just one, if there's any way you can just loosely size up what you think the opportunity would be as you see it. And then two, do you think the opportunities for Magnite has to wait for the structural divestiture? Or do you think there are opportunities for Magnite during some of these behavioral changes that could be implemented earlier?
Speaker Change: Yeah, hey Jason, great question. One, I think the second part of it, and then David can address the first part.
Speaker Change: No, yeah, that's a very good observation, you know, the structural and non-structural and it is our understanding that while they pursue what is more than likely going to be an appeal process .
and the structural piece will take some time, obviously.
Speaker Change: The remedy that could be put in place is more behavioral and we would stand to benefit instantly from that so yeah we don't you know this used to be kind of conjectured that oh my god this could be five years out appeal appeal but I in the way this is moving.
You know, you could see Remini's put in place [inaudible]
Speaker Change: You know, as early as beginning of 2026 and as long as those remedies mirrored what they're trying to accomplish which is more of a level fair playing field, we would be in business from the get go so yeah we're very excited about the way it's passing. Thank you very much.
Speaker Change: Yeah, to try to quantify the impact, I think maybe an easy way to think about that is, if you think about market share today, you know, we estimate that Google has more than 60% in DB Plus, and we have, you know, something in the mid-single digits, say.
Speaker Change: Every 100 basis point increase in market share for us would result in roughly 50 million in contribution
and so...
Speaker Change: You know, if you think about, so I guess the way to think about that is how much market share could Google lose and then.
Speaker Change: you know how much would we pick up and of course we'd at a minimum pick up our you know proportional share and we actually think we're positioned to pick up. [inaudible]
Speaker Change: You know, so far market share goes from 6% to 7%, you know, it's almost a 20% increase in revenue and of course we would expect that to be potentially significant higher.
and from a flow through perspective, what's interesting is that...
Speaker Change: We're already looking at all the same ad request that Google is looking at, and so we have expended most of our costs today in looking at those ad requests, and so...
Speaker Change: To the extent we have additional revenue, it's coming from a higher fill rate.
and that higher filerate. [inaudible]
Speaker Change: Cummins at a very high flow through to a justative die end of free cash flow. So more than 90 percent we estimate would flow through to the bottom line. So it's a very significant and positive impact to our margins and free cash flow.
and Nick Kormeluk.
Speaker Change: That's a lot of great color there. Thank you. Michael, one quick follow-up on the streaming side, just with this new spring surf platform that you've introduced, how can that further differentiate Magnite or widen the competitive gap with others? Thanks.
Yeah, great question, Jason. Well, you know, so...
Speaker Change: and if you think about the way the world has been set up.
Speaker Change: It's been ad server and an SSP going into the SSP going into the ad server. And so by combining our outstanding streaming capabilities from programmatic into the ad server, we are now creating the
Speaker Change: to the best premium CTV inventory in the industry. And so it just furthers, accelerates the mode that we've created as Magnite is the leading CTV first focused programmatic company.
All right, great. Thank you, guys.
Thank you.
Speaker Change: Your next question comes from the line of Shyam Patil from Susquehanna, please go ahead.
Michael David, David,
Speaker Change: Do you expect the chair gains there whenever they start to occur? I think it really is.
Speaker Change: Next here. Do you expect that to be more gradual or more dynamic?
Speaker Change: David, what did you mean by the proportional point? If you guys have mid-single digits and Google at 60, maybe just if you could just put a finer point on that. I mean, how much of that 60% do you think is?
Isum,
Speaker Change: You know, it's something you guys feel like you could really, you know, go after it potentially kind of, kind of gain over time and then I had just one more fall after that.
and I'll see you next time. Bye.
Speaker Change: Yeah, it's difficult to kind of play this game, particularly in advance of the September trial date or hearing date, but you know from what has been proposed.
Speaker Change: even by Google themselves from a Remini standpoint. And you know, it's still a bit to go in terms of fleshing at the details.
Most of it is coming across as behavioral, not...
Speaker Change: Fundamentally Rewiring, which would take time, obviously. So if we're just talking about a level playing field where...
and a jumpball in the auction.
Speaker Change: and we're going up against other SSPs that don't have a built-in advantage unfairly. You know, you could be open for business day one in that instance, so we're quite encouraged about the direction we see that heading.
Speaker Change: Yeah, and when I mentioned proportional, it's just kind of a side comment, but just saying that, you know, if Google has 60 percent, you know, market share, so that, you know, whatever. Alright.
Speaker Change: You know that that that means that the rest of us have you know split up 40% market share and so let's say Google and I'm making this up. You know loses you know. [inaudible]
Ten Billion and 15 Billion in Market Share.
Speaker Change: If we just kept our same proportion of market share, we pick up 15% of that.
but given our leadership position.
in the space.
Speaker Change: the SPO deals, the agency marketplaces that we run and so forth. There's opportunity for us to, we believe, take even more than our current share of that non-google market share. That's all I'm trying to say.
Thank you so much.
Thank you. That's our line of significant opportunities.
Speaker Change: Thank you. That's very helpful. Just on the macro and again David, I know you mentioned that the quarter-day trend.
Speaker Change: remain healthy and you kind of called out the growth rates. [inaudible]
Speaker Change: How are your customer and advertiser conversations going? Is there anything that suggests that things could change?
Speaker Change: I know, obviously, you had to be prudent with the outlook, but anything in the customer and advertise the conversations worth sharing or any further color on the macro. Thank you guys.
Speaker Change: Yeah, sure. I mean, I can help you there. You know, we were recently down at one of the bigger industry shows. It's there.
Speaker Change: Schofer, CMOs, called Possible, Donna Miami-Ridera last week, and you know, had the opportunity to, the team hosted over 130 meetings, so we had a lot of opportunity to talk to the, to buyers and, you know, it's funny. Bye.
Speaker Change: There were very little concrete examples of a pause and spend or a budget cut, just a whole lot of speculation. And so I think you see that
Speaker Change: Flavor of our guidance and simply saying it would be it's prudent.
Speaker Change: to be cautious in this environment, but I can't really point to anything where we heard one
Stopping spending, you know, there's the obvious, right? [inaudible]
Speaker Change: at European Auto that is shipping cars back to Europe and not shipping them to the U.S., wagon and advertised. But that's being offset by domestic auto advertising America made. So you know it's tends to be right now a counterbalance between those that are paused and those are continuing and constraining.
Speaker Change: But again, all the speculation is that it went an if the tariff going to place.
Speaker Change: It'll be a new phase in terms of the ad economy and based upon that kind of conjecture, we thought of prudent to put some guidance in flow into there.
Great. Thank you guys.
Bye.
Thank you.
Speaker Change: A next question comes from the line of Dan Kurnos from the benchmark company, please go ahead.
Dan Kernos: Yeah, thanks. Good afternoon. I guess I asked the first non-Google question. Michael, just, you know, we had a ton of conversation from Roku about mixed shift towards programmatic guarantee. I know you're going to tell me that all programmatic is good programmatic especially in CTV.
Dan Kernos: but to the extent that there has been sort of mixed within...
Dan Kernos: The CTV ecosystem just maybe talks through how it would impact either.
Dan Kernos: Take Raider Volumes, which you're seeing in a pricing front, and then you spent some time talking about live sports. We got the announcement, DB360 YouTube, again opening up.
Dan Kernos: that funnel. You guys have made some pretty good waves with Disney. I mean, that feels like one area that regardless of the macro is going to do particularly well. So maybe just talk about kind of the incremental shots on goal. You have there, especially that also shows more towards programmatic. Thank you.
Dan Kernos: Sure. Yeah, you know, I think if you really look at the arc of programmatic and CTV, it's so
There really isn't anything bad about any type of flavor of a transaction and programmatic. And, in fact,
Dan Kernos: You know, if we're sourcing the demand there really isn't much of a change in terms of our rate card as it relates to what type of...
Dan Kernos: whether it's an auction, whether it's an invite-only auction, whether it's PG.
P.M.P., it's kind of...
Dan Kernos: We don't really differentiate that all that much if we're sourcing demand so long story short, more programmatic is good and we're a long way away from a programmatic type. [inaudible]
Dan Kernos: having a traumatic impact on our take rate. And as it relates to...
Advertises.
Dan Kernos: Love that live environment, even in a downturn, sports is going to be just fine.
and like every other, you know, form of contents.
Dan Kernos: that's streamed, programmatic is becoming much and much a bigger player in the monetization efforts.
Dan Kernos: So we feel really encouraged across the board and we often think it sports as NFL games and the like but there is just so many because of the demise of the regional sports networks.
Dan Kernos: There's just so many streaming opportunities that sports out there that we're starting to land on our plate, where we, you know, even if Super Bowl will never be programmatically ad served.
Dan Kernos: Our Sports franchise will be just fine in thriving based upon just the sheer volume of live events that are out there.
Great, thanks Michael, appreciate it. Thanks Dan.
Thank you.
Dan Kernos: And next question comes from Laura Martin, from Needham, please go ahead.
Laura Martin: Okay, I didn't want to ask this, but now you're confusing your answers to the prior question, so when you do programmatic guaranteed and PMT, I thought that was the same rate card.
Laura Martin: But when you do a decision programmatic, which is what I would think you would be doing in live sports, isn't that twice the right car? When we're talking about mixed, mixed shift within CFTG, QTG?
Yeah, you know, Laura, I think they waved. [inaudible]
Laura Martin: Are we bringing the demand, or is the publisher bringing the demand?
Laura Martin: I wouldn't get to hung up into what type of auction package it looks like so.
Speaker Change: Yes, when we bring the demand, the take rate is significantly higher than when the publisher brings the demand. We still get paid, but that's on the lower range of our rate. So, to your point, if we're bringing demand to sports, especially maybe Tier 2 sports,
Laura Martin: dead take rate is quite attractive because we're the folks piping in the demand.
Speaker Change: Okay, great. That's what I thought. I just thought it suddenly something had changed. Okay, here's, I want to ask that possible. So what, one of my takeaways from possible, but I had never heard before.
Speaker Change: are, is I talked to two CEOs who were bringing data in one
Speaker Change: Well, I can't vouch for the delusion of the CMO that you talked to, but know it's a very real thing. We've been talking about this for a couple of quarters now. We refer to it as curation, and so this is where audience. This is time.
Segments are assembled.
Speaker Change: on the publisher slash SSP side. And DSPs said, hey, if you want to buy this travel decorated audience.
Speaker Change: You coming here and buy it as opposed to shipping the data to the DSP, having it assembled there, and quite frankly, a lot of the concern is what happens to that data when it's over there. The closer I can keep my data to my data warehouse.
Speaker Change: the more safe I feel. And so we're seeing a big bump in curation activity, audience creation at the SSP level. Now, I will say this, a lot of...
Speaker Change: It mostly is done for privacy purposes and efficiency purposes, not to cut the DSP out. The DSP still will buy that audience, maybe at a different rate, that's not I'm not privy to that, but all things been equal.
Speaker Change: What's really driving it is the efficiency of assembling it closer to home in the privacy aspect of it so that no one can create a data graph of your travel data and buy cheaper than buying your audience segments.
Speaker Change: Okay, so you guys are like aggregating more data sources so that your travel audience reaches more robust. That's why these CEOs are trying to call on you now to increase your curated quality of audience.
That's right, and we've done that with...
Speaker Change: We've done it with special ad units that people carry. There's a lot of flavors of curation and it's really, you know, you go back to the heart of the argument years ago that was.
Speaker Change: Well, BSPs are worth the 20% take rate because all the value is created there, namely, the audience creation.
Speaker Change: and now you're starting to see it on the SSP side, so I think, you know, little by little, I think the market is starting to realize that SSPs or all SSPs aren't commodities, and I think, you know, we're trying to position ourselves as that unique.
Speaker Change: SSP that's going to be quite different from the competition set.
Speaker Change: Okay, perfect, that's super helpful. And my last question is very simple. You've said in the past that you believe that Netflix will be your largest CTV revenue client by the end of 2025. Do you reiterate that guidance?
Speaker Change: I believe we qualified him by saying one of, if not our largest client on a run rate exiting the year and we stand by that firmly.
That was my last question, thanks very much.
Thanks, Laura.
Thank you.
Speaker Change: The next question comes from Robert Coolbrith from Avaco RSI, please go ahead.
Speaker Change: Great. Thank you for taking our questions. I just wanted to ask a little bit on the pricing environment in CCV right now, assuming with all the new inventory coming on board, you may be seeing a little bit of pressure there. Thank you very much.
Speaker Change: But just, if that is the case, you see marketers sort of, you know, re-investing into incremental reach in frequency, or maybe sort of pocketing some of the efficiency, just wondering if you're seeing a behavior play at one way or the other.
Speaker Change: and then wanted to go back to the Google question and just looking at the range of outcomes. I think you're beginning to go on the stretch of Michael, but on even some of the things that they proposed, like the elimination of the unified pricing rules, which I think they're still
Speaker Change: If you were to see that, even behavioral modifications that Dave sort of, you know, basically said that they would be willing to go down the road up.
Speaker Change: Do you see those as potentially translating to higher share for Magnite over time? Thank you.
Speaker Change: Yeah, I'm sure Robert, so I think I understand the first question and yeah, there's a step and we've talked about this, you know. Let it be.
Pretty much occurred
Q3 last year in his...
played out in the subsequent quarters.
Speaker Change: there's definitely been price decline in CTV as it relates to CPMs.
Speaker Change: and that, I believe, really is just a factor of supply. You're seeing just a ton of supply, particularly among.
Speaker Change: the OEMs, LG, Samsung, Visio, there are huge businesses now and they have a lot of inventory to bring to market.
Speaker Change: with the success of Disney Plus, Netflix, etc. All these ad tears coming to market, so there's never been more inventory of CTV, and that has definitely led to a recalibration of CPMs.
Speaker Change: It really doesn't play out as it relates to our business.
Speaker Change: from a take rate pressure standpoint. In fact, you might argue in a world where there is more inventory.
Speaker Change: people are going to lean more into programmatic and they're going to reward you more handsomely for bringing demand to them because they need it because they have a lot of supply. So I think we're in a really good position there long term.
and adds it relates to your second question regarding Google.
Speaker Change: I don't want to come across as me advocating for Google's proposed remedy versus the DOJs versus the industries. I'm just simply saying anything that creates a fair level of playing field and you gave an example of universal pricing.
Speaker Change: If it's fair, it's level, we're very happy. How it gets there? That's for others to determine, but we think that we will out, win our outshare a size of market share from Google, and we're related where this is all end.
David, thank you.
Thank you.
Speaker Change: Next question comes from Matt Swanson from RBC Capital Markets, please go ahead.
Yeah, thanks for taking my questions.
Speaker Change: Staying on Google but shifting gears a little bit to their decision not to be a part of cookies. I mean, obviously.
Speaker Change: This has been a will-they-won't-they for the last four years, and I don't know if anybody was really paying attention to it, if anyone relative to everything else. But do you think this changes anything in the industry, or, I mean, were preparations continuing to happen for a coquillis world, or do you think customers kind of had that on the back burner?
Yeah, I'm mad. Good question. I'm you know . . .
I think the industry has...
Okay.
Speaker Change: Showing time and time again that right up until the deadline.
Speaker Change: They're used to doing things the way they've been doing it and then forced to change, you know, GDPR comes to mind as something that also was talked about for two years and the day it was enacted people were going crazy because they...
Speaker Change: Or a little under-prepared, let's say. I think the same can be said in the cookie area except that there have been, you know, forget privacy sandbox. That thing is...
other third party attempts. [inaudible]
Speaker Change: to capture signal and replace the cookie. They're here, and they're here to stay, and they're part of our portfolio for helping monetize inventory. Keep in mind Safari browser is quite popular, and it doesn't have cookies, and so therefore you're going to need.
Speaker Change: Cookie Whist solutions out there, and I don't think that's going to, this is putting a damper on that innovation, and frankly, if it...
Speaker Change: comes to market and it's at scale and our publishers won and our buyers won it. We're the first stop they implemented at and so we have many many non third party solutions in play. And of course.
Speaker Change: with the growth of mobile app and the growth of CTV. It was never a cookie world. And, you know, with the logged in authenticated user in the CTV environment, that really is helping the audience segment creation on the publisher side at the SSP level. So that isn't going to be impacted by cookies sticking around. Thank you.
Speaker Change: and the supply side. One of the things we had talked about previously on the demand side was seeing more...
Speaker Change: No, I think, you know, if let's just say, CPM decline in CPM decline in CTV, largely during my supply, but let's be, you know, honest, there's a macro element to the ad market.
since COVID hasn't been firing on all cylinders.
So there's an element of that to it. [inaudible]
and the silver lining there.
Speaker Change: even acknowledged by the media owners with the streaming properties, is that it's created a price point of entry for these SMBs to be able to test CTV. It was never going to work at $70 CPMs.
So now it is more market-based.
you are seeing a flourishing of that. [inaudible]
Speaker Change: I mean it seems like every day there's another announcement of a company getting into that business with Jenn AI created. It's been a long time.
Speaker Change: Creative, Gen.A. I. Targeting, but ultimately what they all need is access to supply. So we're the first door knock and we feel that we're extremely well positioned to take advantage of those advertiser dollars for our media owners.
Thank you.
Thank you.
Your next question comes from the line-off.
Omar Dessouky from Bank of America, please go ahead.
Speaker Change: Hey guys, this is Arthur Ovar, thanks for taking a question. Mike, I really appreciate the color on curation, the opportunity with curation. I think Netflix also recently talked about his ambition, he has some of the capabilities of his attack.
in things including, for example, in hands, user-harkening.
Speaker Change: I'm curious how much Magnite is involved in building out these features.
Speaker Change: and if that, you know, could unlock potential for some of the more higher value services that could be take rate of creative, and as a follow-up, I guess as you've now worked in Netflix for some time, are there any new learnings from that partnership worth calling out?
Speaker Change: Yeah, thanks Arthur for the questions, you know, yeah, so I...
Speaker Change: You know, our first Gen AI product that we produced, that's in market now, is a four curation.
Speaker Change: Jerry Discoverable, and then of course we participate in the publisher fee that we charge and generally speaking curation carries a higher CPM. So the down flow of that you'll see in the economics of Magnite. So we're super bullish on it.
We love our capabilities. We just extended.
Speaker Change: the curation capabilities to the CTV platform, and so early innings, but I think this is just going to be a story, a drumbeat story for the quarters to come. And I'm sorry, Arthur, the second question was...
Learnings from Netflix.
What you're seeing is...
Speaker Change: The lyrics and effixes that Spring Survey now said that we made, and that is that when we originally had Spring Survey of the Ad Server in Magnite streaming the platform,
Speaker Change: We always thought of it as, you know, there's a customer set that requires an ad server, and they'll do spring serve, and then there's the guys that need the programmatic, which is basically the whole universe.
Speaker Change: But little by little, we started to realize that a lot of the streamers were requiring
Speaker Change: Technology that was kind of assurberish and streaming-ish, and so by combining the two of them...
Speaker Change: Nest completely with the demand sources from Magnite streaming. So that is a hundred percent some of the learnings we've taken away from some of our partnerships like Netflix.
Scott, thank you. Appreciate it.
Thank you.
Speaker Change: Thank you. Next question comes from Eric Martinuzzi from Lake Street, please go ahead.
Speaker Change: Yeah, we're just trying to get a sense for any signals from the vertical specifically on the the verticals that you're calling into question as far as the
Speaker Change: Do you have auto-retail travel, anything in the way of insertion-order evidence? Or...
Speaker Change: Purchased behaviors, anecdotal conversations, and now you said you were just at the possible conference and you weren't seeing it, but still we have this reduction in the outlook, so just wondering any data points.
Speaker Change: Yeah, I mean, well, I think the one that everyone has talked about is European Auto and the decision by, you know, the top three not-to-ship products and actually turn product around mid-stream. And so, you're definitely a real decline there, but again, it's been offset by other categories of growth. To answer your question, we've not seen any decline in any specific category that
Speaker Change: It's related to any kind of, you know, tariff-affected outcome. Just most of the talk is that, you know, generally speaking, we're talking to, you know, one of the largest companies in the world, and their belief was they were going to...
Speaker Change: He ate everything until June 1, and then at June 1, they'd start to be passing it along to the consumer. So everyone's just kind of saying...
Speaker Change: We're holding steady but if everything goes through the way it's supposed to it may not be as pretty as it is right now and so. Let's go.
Speaker Change: It was just out of the bundle. It's out of, you know, I think prunes that we reflected that, you know, those conversations into the guide. I don't know if David you have any greater detail. No, I think that's right. I mean from a secondary, you know.
and a total perspective, some of the airlines have pulled.
Speaker Change: You know, some of their guidance have talked about, you know, potential softening and some domestic travel. Again, we haven't seen it, you know, in actual activity, but you have folks, you know, talking about that.
Speaker Change: and so, yeah, I guess my analogy, very poor analogy on this, is...
You know,
Speaker Change: The weather forecast has a storm that might come your way.
You know, smart to grab your umbrella and a raincoat.
Speaker Change: and you helped the storm Peters out, or had the different direction, but it wouldn't be prudent if you didn't kind of just be ready for it and that's the way we're kind of thinking about our guidance, I guess.
Got it. Thanks for that insight.
Thank you.
Speaker Change: Next question comes from the line of Shweta Khajuria from Wolf Research. Please go ahead.
Speaker Change: Okay, thank you for taking my questions. Let me try to please.
Speaker Change: One is, could you please help us or remind us how your relationship with Amazon's DSP is different from the trade desk?
Speaker Change: and then the second is, how are you positioning? I mean, Michael, you've been in this industry for a very long time. We've seen different cycles. So, how are you positioning ahead of macro uncertainty on things that you can do and control so that when?
Speaker Change: Demand is back. You know, you're a position for outside share games. Thanks.
I would say that it's...
Speaker Change: a very similar relationship to the trade desk in the sense that like the trade desk did, you know, years ago, they had certified partners.
Speaker Change: platforms that they said they'd buy from. Their list was a bit more volumous than Amazon's, especially in the DV Plus side, so we're only one of three that are authorized to be able to do business
Speaker Change: Unfortunately, I have been in the business for a very long time. Thank you for pointing that out, Shweta. But I, you know, look at Michael.
Oh, now I feel better. You know, you know,
Speaker Change: I think that we don't believe what we're going to see if it happens is going to be structural change.
Speaker Change: We still believe that programmatic is going to grow in the years to come. We still believe that CTV is going to be a huge talent. So what we're not going to do is make...
Silly moves, to try to chase. [inaudible]
Speaker Change: You know, a mythical margin number. If we feel as though we stopped investing.
Speaker Change: to screw it for years to come and so we're going to continue to do it.
Speaker Change: We've always been very, you know, David and the team have been great in cost management. Well, obviously tight in the belts, we'll shave where we can. But you shouldn't expect from us a wholesale reduction in cost because the opportunity is too far and too great. And we have such a great position that we are going to continue to invest in that.
Okay, thanks Michael.
Thank you.
Thank you.
Speaker Change: This concludes our question and answer session. I would now like to turn the conference back over to Michael Barrett for any closing remarks.
Frank Sager,
Speaker Change: I want to thank all of you for joining us and for your support. Q2 is up to a good start and we look forward to the year ahead, especially with the momentum we have from our strengthening competitive position. Thank you very much.
Speaker Change: We look forward to speaking with many of you at a upcoming Investor event. We are participating in the Lake Street virtual NDR tomorrow.
Needham Conference in New York on the 13th
Speaker Change: RBC meetings in Montreal and Toronto on the 14th and 15th, B. Riley, Conference of Marina Del Rey on the 21st and 22nd, Craig Helm, Conference of Minneapolis on the 28th.
Speaker Change: Evercore Conference in New York on the 28th? Bank of America Conference in San Fran on June 3rd, Wolf Investor Lunch in Conference in New York on the 4th and 5th of June , Rosenblatt Virtual Conference in June the 10th.
Speaker Change: Seth Guajana, meetings in Boston, and June the 11th, Bank of America meetings in London, and June the 16th.
Speaker Change: City and UBS in Cannes and are live from Cannes webcast on June 17th and 18th and Bank of America meetings in Paris on June 24th. Thank you and have a great evening.
Thank you.
Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation.