Key Points
- Revenue of $162.9 million beat analyst consensus expectations.
- Adjusted EPS of $0.14 fell short of the $0.15 estimate.
- Gross profit surged 348% year over year to $100.3 million.
Programmatic advertising specialist Magnite (MGNI 0.95%) reported second-quarter earnings on Wednesday that beat on the top line but fell just short on the bottom line when compared to analyst consensus estimates.
Overall, the quarter demonstrated strong operational achievements in key areas such as Connected Television (CTV), but it also highlighted ongoing challenges in improving profitability.
| Metric | Q2 2024 | Analyst Estimate | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $162.9 million | $144.04 million | $152.5 million | 7% |
| Adjusted EPS | $0.14 | $0.15 | $0.09 | 56% |
| Gross profit | $100.3 million | — | $22.4 million | 348% |
| Net loss | $1.1 million | — | $73.9 million | — |
| Adjusted EBITDA | $44.7 million | — | $37.3 million | 20% |
Source: Magnite. Note: Analyst consensus estimates provided by FactSet. YOY = Year over year. EBITDA = Earnings before interest, taxes, depreciation, and amortization.
Understanding Magnite
is a leading ad tech company specializing in programmatic advertising across multiple platforms, including connected TV (CTV), mobile, and desktop. The company is focused on advancing CTV capabilities, optimizing ad inventory, and navigating the evolving digital landscape. Magnite’s platforms provide publishers with tools to manage, monetize, and optimize their ad inventory.
Recently, the company's strategic priorities have centered on expanding its leadership in the CTV sector, enhancing its omnichannel platform, and developing robust identity solutions amidst tightening privacy regulations.
Second-Quarter Highlights
7% year over year to $162.9 million, outpacing the $144.04 million expected by analysts. The company attributes this strong performance largely to its dominance in the CTV sector. Contribution ex-TAC (traffic acquisition cost) of $146.8 million was up 9% year over year.
Contribution ex-TAC attributable to CTV was $63 million, up 12% and topping management guidance of $59 to $61 million. This reflects Magnite’s successful partnerships with companies like Netflix (NFLX 2.00%) and Roku (ROKU -0.58%). President and CEO Michael G. Barrett noted, "We are working closely with them [Netflix] in support of their growing advertising business." Additionally, the company’s entry into commerce media with United Airlines (UAL 1.16%) signals a positive trajectory in CTV growth.
In other areas, Magnite's omnichannel platform continued to perform well, with contributions from DV+ (digital video and display) reaching $83.8 million, a 7% year-over-year increase. Mobile channels, which accounted for 39% of contributions, demonstrated steady demand.
On the downside, adjusted (EPS) came in at $0.14, just below the $0.15 expected. Despite this, the company showed progress in profitability metrics, with gross profit reaching $100.3 million, marking a 348% increase from $22.4 million in Q2 2023. Net loss was reduced considerably to $1.1 million from $73.9 million in the prior year's quarter.
Operational enhancements also played a role in Magnite's performance improvement. The company continues to refine its machine-learning algorithms for better bid filtering and traffic optimization. These technological advancements are crucial for maintaining a competitive edge and driving revenue growth. No updates were provided on its identity solutions this quarter, which remains a significant focus as privacy regulations evolve.
Looking Ahead
For Q3 2024, Magnite projected a contribution ex-TAC between $146 million and $150 million. The CTV contribution is expected to grow by 18%-22%, reaching between $62 million and $64 million. Meanwhile, DV+ is anticipated to be in the range of $84 million to $86 million, reflecting continued solid performance. The company reaffirmed its full-year 2024 guidance with a target of 10% growth in contribution ex-TAC and improved adjusted EBITDA margins by 100-150 basis points.
Investors should watch for continued growth in Magnite's key areas, especially within the CTV segment. Notable changes in forward guidance include an expected increment in adjusted EBITDA margin, hinting at improved operational efficiency in the coming quarters.
