Magnite, Inc (MGNI) Q1 2022 Earnings Call Transcript

Magnite, Inc (MGNI -3.30%)
Q1 2022 Earnings Call
May 04, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good evening, and welcome to the Magnite first quarter 2022 earnings conference call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions to ask questions. [Operator instructions] Please note this event is being recorded.

I would now like to turn the conference over to Nick Kormeluk, head of investor relations. Please go ahead, sir.

Nick Kormeluk -- Head of Investor Relations

Thank you, operator, and good afternoon, everyone. Welcome to Magnite's first quarter 2022 Earnings Conference Call. As a reminder, the comparisons you will see in the 10-Q as reported include the financial results of SpotX and SpringServe for Q1 2022, but for the periods prior to the acquisition dates, the results do not include SpotX or SpringServe, which were acquired on April 30, 2021, and July 1, 2021, respectively. During the course of this call, when we refer to the results and associated year-over-year comparisons with the phrase as reported, we are referring to the basis as reported in our 10-Q.

When we make comments referring to pro forma comparisons, we are including SpotX and SpringServe for the relevant pre-acquisition period in order to provide a like-for-like comparison. Please keep in mind as it relates to the SpotX and SpringServe acquisitions, prior quarterly results are estimated and unaudited. 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. 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 impact 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 achievements to be materially different from expectations or results projected or implied by forward-looking statements.

A discussion of these and other risks, uncertainties and assumptions is set forth in the company's periodic reports filed with the SEC, including our first quarter 2022 quarterly report on Form 10-Q and our 10-K. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including revenue ex-TAC or 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 incremental metrics to provide greater insights 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 webcast replay of today's call to learn more about Magnite. I will now turn the call over to Michael.

Michael, please go ahead.

Michael Barrett -- Chief Executive Officer

Thank you, Nick. We delivered strong Q1 results on total revenue, CTV revenue, adjusted EBITDA and free cash flow, and we're providing a positive outlook for Q2. David will provide greater detail on Q1 results and Q2 outlook. I'd like to use my remarks today to focus on our broader strategic view of the industry.

Recently, questions have been raised about the relevance of the sell-side platform and where it might fit in a world where sellers can connect directly to buyers. We've said before that we don't see these connections as a threat. And today, I'm going to go further and say that we see them as an indication that the SSP is becoming more valuable than ever and Magnite's independent omnichannel approach positions us to lead the group long-term. To understand our perspective, I think, it's helpful to explore the evolution of Magnite and SSPs more generally.

First, I'll focus on the role of the SSP and DS price, and then I'll transition to CTV. Let's start nearly 2000s when programmatic wasn't yet a saying and display publishers made most of their money selling ad inventory directly, which they book in their primary ad server, usually Google CFP. They sell everything they could direct and throw the remaining impressions known as reman into the bargain bin, where dozens of ad networks stocky to get first look. It was difficult and inefficient for publishers to predict which of these networks would make them the most money.

So in 2007, ad network optimizers such as the Rubicon project emerged to help publishers maximize their remnant yield. In the 2010, as programmatic buying ramped up and DSPs gradually replaced ad networks, the ad network optimize retain the SSP, managing yield across all indirect sources and offering an array of additional services, such as tools for private deals, ad quality, billing and reconciliation and real-time reporting controls. In this era, most publishers partnered with one SSP, relying on them to navigate a rapidly changing space and maximize what was quickly becoming a significant portion of the revenue. In 2015, programmatic truly peaked into high gear when publishers began calling direct and programmatic demand simultaneously, known as header bidding.

The practice is difficult to manual, but it finally put programmatic on a level playing field and publishers are relieving far less money on the table. In time, publishers learned that the more SSPs they called in their headers, the more money they made, which was once a valued one-on-one relationship became one of main, and the SSP was pushed away from its core yield management role and toward something closer to an ad exchange. At this time, we saw an opportunity to embrace the disruption by helping to make header bidding more transparent and flexible. We co-founded prebid work and open source header bidding framework, and wants Demand Manager, a suite of software that makes it easy for publishers to configure and optimize their pre-bid heaters.

As header bidding expanded and even as buyers dramatically limited their connections to only the most credible SSPs, it became increasingly clear to buyers that the header model was inefficient and expensive as it required them to bid against themselves for the same impression across multiple exchanges. The Trade Desk's recent announcement of OpenPass is, in many ways, a response to these inefficiencies by attempting to acquire supply directly from the very largest publishers. Though some publishers will add OpenPass as a demand source, we expect it will be supplementary to other sources and Pass, not a replacement for them. After all, it's not just the Trade Desk even just DSPs looking from our direct access to publishers.

It's also agencies. As a result, large publishers will need to manage and optimize a growing list of newly minted direct connections with buyers, something they can't do by adding another SSP into the header. Instead, we'll need to partner with one scaled un-conflicted SSP to unify the auction, optimize yields and deliver a full suite of seller-focused tools, including the ability to embrace and activate the shift toward seller-centric audience and identity. In many ways, this is a return to the one-on-one publisher SSP relationship that preceded header bidding.

And for several reasons, no platform is better positioned to lead in this role than Magnite. First, our deep expertise in pre-bid, now the preeminent header bidding standard and our work enhancing it, expanding it with double demand manager, puts us in a unique position to be the clear leader for yield management across every type of demand, including display, audio and video. And we've only just begun to scratch the surface on maximizing the value of each compression through machine learning and AI. Second, as the industry moves away from the third-party cookie and other buy-side identifiers toward solutions that are seller-centric, our robust audience technologies bolstered by our recent acquisitions of Nth Party and Carbon in our deal management tools, which are among the best of the business, will enable publishers to activate and monetize their audiences across every media type with an eye toward privacy and security.

Third, our relationships with brands and agencies are strong and continuously growing, which benefits our seller clients by bringing them new and unique pools of demand. Our recently announced preferred partnership with GroupM is a great example of this. And lastly, Magnite's omnichannel footprint enables us to meet our clients' needs across a wider range of channels and formats, including CTV, which other SSPs talk about doing, but no independent SSP can match our full stack of capabilities in this area. And that's a good transition to CTV, which is fundamentally different from DV+ and how it operates.

Because CTV is a world in which there's a finite amount of the available inventory and viewer experience takes precedent over CPMs, there isn't the same need for header bidding. Direct selling plays a dominant role in CTV and probably always well. Even if the means of executing these direct sales is increasingly programmatic, in many cases, there's no action at all. For this reason, our clients prefer to work primarily with Magnite and they look to us to provide far more than the highest bid.

We have a track record of building custom software and unique features for a broad range of CTV industry players. These range from device manufacturers and OEMs such as LG, Vizio, Samsung and Roku to virtual MVPDs such as Fubo, Hulu, Sling and DirecTV to digital first and free ad-supported streaming TV services like Pluto, Tubi, and Crackle and broadcasters and programmers such as Disney, Discovery, Fox, and A&E. For many of these companies, we're not just helping them sell or serve the ads, but more importantly, to manage a highly complex series of decisions that balance revenue, targeting, and enforcement of business rules, while fiercely guarding viewer experience and publisher data. Moreover, by integrating our proprietary ad service, SpringServe, we offer CTV sellers a holistic yield management solution that drives value across their entire ad business by dynamically allocating between programmatic and non-programmatic inventory, and we are constantly innovating to solve the evolving needs of CTV sellers.

For example, through Spring serves newly announced Binge watcher product, a tool set to rapidly review creatives and improve the user experience. We see our ability to address the nuanced needs of CTV clients through advanced software solutions as a formidable barrier to entry for our competitors. In the final analysis at Magnite, we believe strongly in two key principles. One, all media display CTV audio, you name it, will be bought, sold or executed programmatically, and two, sellers will always need a scaled and unconflicted agent to help them make the most of every programmatic opportunity.

A bet on Magnite is a bet on these principles. With that, I will hand the call over to David, who will provide additional detail regarding our financial performance and expectations. David?

David Day -- Chief Financial Officer

Thanks, Michael. Despite macro headwinds, we are pleased that Q1 revenue came in consistent with our guide. Adjusted EBITDA came in above our implied guidance, which resulted in strong cash flow and non-GAAP earnings per share. We also see this translating into solid guidance for Q2, but I'll cover after I discuss the first quarter results.

Total revenue for Q1 was $118.1 million. Revenue ex-TAC was $107.1 million, up 79% from Q1 2021 on an as-reported basis and a 15% on a pro forma basis. TTV revenue ex-TAC was $42.3 million in Q1 2022, up from $12 million or 253% from last year on an as-reported basis and up 27% on a pro forma basis. Mobile revenue ex-TAC grew 12% and desktop revenue ex-TAC grew 3% year over year, both on a pro forma basis.

Our revenue ex-TAC mix for Q1 2022 was 40% CTV, 35% mobile and 25% desktop. Operating expenses, which, in our case, includes cost of revenue for the first quarter, were $157.9 million versus $74.5 million in the same period a year ago. Increases were primarily driven by the acquisition of SpotX, including the amortization of acquired intangibles and by increase in personnel-related expenses. Adjusted EBITDA operating expenses, which represents the difference between revenue ex-TAC and adjusted EBITDA was $78.2 million for Q1, an increase of $3.7 million sequentially and up from $50 million in Q1 2021, also driven primarily by the acquisition of SpotX in a year-over-year comparison.

Costs for the first quarter were lower than expected, primarily driven by slower hiring, consistent with the overall labor market, lower technology and cloud costs and lower office and travel expenses in the quarter. Net loss was $44.6 million in the first quarter of 2022 as compared to a net loss of $12.9 million in the first quarter of 2021. The increase in net loss was primarily attributable to an increase in amortization of acquired intangibles related to the SpotX acquisition, which had no cash impact. Q1 2022 adjusted EBITDA was $28.8 million, an increase of 208% versus prior year, resulting in a margin of 27% as compared to adjusted EBITDA of $9.4 million or a margin of 16% in the first quarter of 2021.

This was driven by continued organic revenue growth and by the acquisition of SpotX. Note that we calculate our adjusted EBITDA margin as a percentage of revenue ex-TAC. GAAP loss per share was $0.34 for the first quarter of 2022 compared to GAAP loss per share of $0.11 in the same period in 2021. Non-GAAP earnings per share in the first quarter of 2022 was $0.08, which was up compared to non-GAAP earnings per share of $0.03 reported for the same period in 2021.

There are 132.2 million weighted average basic and diluted shares outstanding for the first quarter of 2022. Fully diluted shares utilized for non-GAAP earnings per share were $143.7 million for the first quarter of 2022. The Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs were $8.7 million for the first quarter of 2022, in line with our expectations. Operating cash flow was $20.1 million in the quarter, which we define as adjusted EBITDA less capex.

Our interest expense for Q1 2022 was $7.1 million, of which roughly $5.7 million was cash. At the end of Q1, we had $204.6 million in cash on the balance sheet. For Q1, our cash outflows included $21 million for our acquisition of carbon. Our priorities for the deployment of capital remain balanced and have not changed.

Regarding M&A opportunities, we believe that we have the core assets that we need at this point in time, although we will always consider tuck-ins or aqua hires that would expand our talent pool or accelerate our product features and functionality, such as our recent acquisitions of Nth Party and Carbon. Regarding debt, we continue to reduce our net leverage ratio, which was approximately 3.1 times at the end of Q1 as compared to 6.2 times at the time we closed SpotX the end of April last year. This represents further progress toward our ultimate goal of two times or less. As it relates to our $50 million share buyback program announced in December, we repurchased 931,000 shares for $12 million in Q1, leaving $31.9 million in the program at the end of the quarter.

In addition, for our regular RSU vesting during the quarter, we utilized the withhold to cover method to cover employee taxes withholding 315,000 shares for $4 million. As a result, share dilution was reduced by about 1.2 million shares during the quarter. We expect to continue a balanced approach to reducing leverage and share repurchases throughout the remainder of 2022. I will now share our future expectations.

We'd like to reiterate that we expect revenue ex-TAC for the full year 2022 to be well above $500 million. We expect revenue ex-TAC for the second quarter to be in the range of $123 million to $127 million. We expect revenue ex-TAC attributable to CTV for the second quarter to be in the range of $51 million to $53 million. We expect adjusted EBITDA operating expenses in Q2 to be $83 million to $85 million, implying an adjusted EBITDA margin of 33% at the midpoint.

The sequential increase in adjusted EBITDA operating expenses is primarily driven by an increase in technology infrastructure costs, hiring a full quarter impact of our return to office and the return of T&E and marketing events. For the second half of 2022, we expect quarterly adjusted EBITDA operating expenses to increase roughly $3 million to $4 million each quarter. These increases are primarily the result of return to office costs and increased head count and other technology operating costs to support our growing business. We continue to expect that capex for 2022 will be between $40 million and $45 million.

And for 2022, we continue to expect that we will generate over $100 million in free cash flow. We define free cash flow as operating cash flow less cash interest payments. We continue to target long-term annual revenue ex-TAC growth of 25% and adjusted EBITDA margins of 35% to 40%. We're very pleased with our results for the first quarter of 2022 and are optimistic about our growth trajectory, especially in the back half of the year.

We have a very attractive financial model and expect increasing flow through over time from revenue growth to adjusted EBITDA margin expansion to free cash flow. With that, let's open the line for Q&A.

Questions & Answers:

Operator

Thank you. [Operator instructions] The first question comes from the line of Laura Martin with Needham. Please go ahead.

Laura Martin -- Needham and Company -- Analyst

Hi there. Let's start with CTV. Do you feel that Netflix adding an ad there and Disney earlier than that, adding an ad here, is good for the ecosystem's cost per thousand or bad like -- and I'm looking sort of short term, long term, could you speak to these big streamers adding ad tiers in the next 12 months?

Michael Barrett -- Chief Executive Officer

Hi, Laura, it's Michael. I'll jump on that and David can pile on if you'd like. I see there's nothing but good. You know how the -- the dollars are just starting to shift from linear into CTV.

And I just will be inexorable march as more and more consumers decide to consume their entertainment, news, sports in that manner. And I think that they're going to be measured in the ad load. And so, even though there's scarcity in the market today, it's not exactly inflating prices. I think what was -- the CPMs now is the advanced targeting that you're able to do versus what Linear always had.

So I think over time, even though it's more inventory, I don't see it having a dramatic impact on CPMs because of adding more supply into the marketplace.

Laura Martin -- Needham and Company -- Analyst

David, anything from you?

David Day -- Chief Financial Officer

No, you got it covered. No.

Laura Martin -- Needham and Company -- Analyst

No. OK. So excellent. That's super helpful.

And then, secondly, you said in your prepared comments, Michael, that you thought everything was going to be programmatic. And the second thing you said was sellers will always need an independent sell-side platform. So I just wanted to push on that a little bit because we have NBC having a captive SSP and freewheel and now we have Standard being bought by Microsoft. And I do get questions from investors about why doesn't Disney just buy an SSP and do it itself.

So when you said the second thing you see is that the sellers will have to have an independent platform, is that really being borne out by the largest sellers do you think?

Michael Barrett -- Chief Executive Officer

Well, I think our -- the meaning there Laura, was that the vast majority of publishers don't have the means and/or ability to land a major tech player to bring in-house. There are obviously always examples of folks that do it. And then, of course, the pendulum swings both ways, Microsoft picked up Sander from AT&T, who tried to do it in-house and that didn't work out so great. And Fox had unruly, and they've said that in Altice, it has been rumored to be looking to move tees.

And so, I think these things are somewhat cyclical. But our meaning is that, I think folks have learned when they put all their eggs in one basket in the DV+ world as it relates to Google, a little by little over the course of 15 years, they learned that it was in the most efficient way, and they broke the system by doing pre-bid and bringing ahead of bidding into the world. And I think that -- it's not lost on folks that if your partner is independent, isn't in conflict if you don't own inventory, doesn't sell ads against other inventory, then that's in their transparent and above board? I think that our meaning of that is that the vast majority of publishers need that type of a profile of the company.

Laura Martin -- Needham and Company -- Analyst

That was helpful. Thanks very much.

Michael Barrett -- Chief Executive Officer

Thanks, Laura.

Operator

Thank you. Our next question is from the line of Jason Kreyer with Craig-Hallum. Please go ahead.

Jason Kreyer -- Craig-Hallum Capital Group -- Analyst

Hi. Thanks for taking the question guys. So kind of an inline Q1 from the topline perspective, but when we look at the Q2 guide that looks a lot more robust, particularly on the CTV side. So just curious if maybe you can parse out the puts and takes on what you saw last quarter versus how things are progressing kind of a month into Q2 here?

Michael Barrett -- Chief Executive Officer

Yes, I'll take it first and David can help as well. Yeah. So Jason, I think that -- look, we saw the same impact that others did in the face of the crisis in the Ukraine, our CPMs across the board in particularly EMEA, they plunge dramatically. A lot of big CPG multinational corporations kind of suspended spend.

And so, we definitely had headwind impacts on the Q1 results. And we see it continuing to Q2, but what changes about Q2? Well, obviously, we think that there's going to be some aiding of political that's going to kick in for midterms. We also think that we've seen some strengthening in some verticals that hadn't been back to normal since the pandemic. We also see some strength in our managed service business on the CTV side with the return of some of the important ad verticals, I wouldn't say 100% return by any stretch, but strengthening.

So we feel good about Q2 up-tick over Q1. I don't know, David, do you have any more specificity to add.

David Day -- Chief Financial Officer

Yeah. No, I think that's right. I think, I would still say cautiously optimistic in Q2, just because there's so much going on. But certainly, as Michael mentioned, as we especially get into the latter half of the year with the political, with our GroupM SPO deal, we're continuing to -- in the upfront process, agencies are really going to be pushing for greater amounts to run through programmatic.

And the feedback that we're getting from agencies is some optimism in the second half with spending and some committed budgets.

Jason Kreyer -- Craig-Hallum Capital Group -- Analyst

David, wondering if maybe you can just quantify that impact that Russia or EMEA, might have had in Q1 or your Q2 guide?

David Day -- Chief Financial Officer

Yeah. A couple of factors that we're observing, one is, we had a small number of Russian publishers who we no longer have on the exchange, that had a smaller impact. We've also seen some softening of CPMs, particularly in our DV+ business in EMEA. And we think that comes from, I suppose, some general skittishness around the Ukraine situation.

Also a lot of advertisers don't like to be advertising around these kinds of events, so even know there's a ton more inventory. There isn't as much advertising demand and also a strong dollar. So we've had -- we normally don't see, significant impacts from the normal FX volatility, but there's been a very significant strengthening in the dollar. And so, we've seen -- and so that impacts those CPMs as well.

Jason Kreyer -- Craig-Hallum Capital Group -- Analyst

Perfect. And then, just a follow-up for me, so any updates on the relationship with Disney, kind of looking at this two ways. Just first, any indications in your potential involvement within that supported Disney+? And then second, I know we're starting to approach the term on that 18-month agreement from a year ago. So just curious, if you have any thoughts on where that engagement goes from here?

David Day -- Chief Financial Officer

Yes, Jason, the relationship remains incredibly strong. The renewal is coming up, as you pointed out, but we don't perceive any material change there. And as for Disney+, I think it validates the model rate, the idea of having an ad-supported tier. And although, it's obviously Disney's decision and how they go to market with Disney+ and the other streaming assets, our understanding is it's all going to be available through Drax and obviously, we powered a nice chunk of that.

And so, therefore, we say there's nothing but a positive opportunity.

Jason Kreyer -- Craig-Hallum Capital Group -- Analyst

Perfect. Thank you.

Operator

Thank you. Our next question comes from the line of Shyam Patil with Susquehanna Financial Group. Please go ahead.

Shyam Patil -- Susquehanna International Group -- Analyst

Hey, guys. Nice quarter and outlook. I had a couple of questions. Michael, when you were talking about the ecosystem in your prepared remarks, you talked about independent at becoming more valuable.

And I know you talked about that a little bit in the first question. But can you just talk a little bit more about what kind of conversations you're having now with your larger publisher partners given OpenPass? And what do you foresee in terms of economics and market share for Magnite going forward, kind of related to OpenPass? And then second question, in terms of CTV, how are you guys thinking about the pro forma growth there throughout the year? I know you're cautiously optimistic, a lot of moving parts. So how are you guys just thinking about the pro forma growth for CTV throughout the year? And generally speaking, at a high level, what do you think is the right kind of baseline, as we kind of think about this business over the next few years? I know you said, at least, the market growth rates, but is it -- are you still thinking like, 30% plus, 40%, 50%? Just how are you thinking about this growth opportunity? Thank you.

Michael Barrett -- Chief Executive Officer

Yes. Thanks, Shyam. So I'll let David take the pro forma growth for CTV. But as it relates to OpenPass, I think it's in its nascent formation.

We have heard much from publishers other than the folks that were listed that were going to take part in the beta. I think that, as we pointed in our remarks, others will seek direct pass, particularly agencies. I think agencies feel that part of their value to their advertising clients is their relationship with publishers. The challenges, a lot of them don't have the technology to work directly with publishers.

And that's why, I think, you see deals like the GroupM deal that we announced and the OMD deal we talked about in IPG and Avas. That working with a technology partner to be -- to try to work their way out of like a header bidding open auction and more of a structured relationship with the publisher is a trend that's only going to continue. It adds a degree of complexity for our publishers, and that's why we think that -- our thesis is that an SSP will never be more valuable, because they are the ones that can help manage this complexity and manage the yield of the complexity. And the other thing that we're seeing in terms of conversations with the publishers is a growing appetite for publisher-centered first-party data.

To be completely candid, as long as the third-party cookie exists, it's going to be hard to make that like revolutionary. It might be evolutionary. But once the cookie is deprecated, I think you're going to see a big rush to first-party data being readily used by buyers that's provided by the sell side and tools, the tools that we've acquired are going to play an integral role in that. So quite excited about those developments.

And, David, maybe you want to talk about the pro forma growth CTV expectations.

David Day -- Chief Financial Officer

Yes. So we grew pro forma CTV in Q1 at 27%. And as we mentioned, especially in the second half of this year, we have some really significant tailwinds. And so, we see upside certainly to those growth rates.

And we've always talked about the CTV business being very volatile, it's nascent. And so, that will continue. But we do believe that over time, our growth rates should definitely exceed those of market, which I think folks handicap in the low 30% range right now. And so, we should take our share and then some as the market continues.

Shyam Patil -- Susquehanna International Group -- Analyst

Thank you, guys.

Operator

Thank you. Our next question comes from the line of Tim Nollen with Macquarie. Please, go ahead.

Tim Nollen -- Macquarie -- Analyst

Thanks very much. I'd like to pick up on the Q2 guidance again, please. The last couple of quarters, you've talked about a few supply chain issues in the auto business. It sounds like that seems to have moved past you now.

And in fact, it used to be something positive. If there's anything you could give us a bit more in terms of that or any other sectors that are affecting your Q2 number, because on a very difficult comparison actually in Q2, I think it's very nice to see a 25% growth forecast for the top line.And then relatedly, the newfronts and the upfronts are upon us now. I just wonder if there's any particular role you could point to that you're playing in that process and if there's any news flow to look forward to as this upfront season is upon us or not? Thanks.

David Day -- Chief Financial Officer

Yeah. I'll start with the -- go ahead.

Michael Barrett -- Chief Executive Officer

No, you.

David Day -- Chief Financial Officer

OK. Yeah, I think on Q2, we're still seeing -- I don't know that we really have the issues that we talked about. I think supply chain, particularly auto remains a challenge. Not sure that that gets resolved fully this year.

And so, we see continued headwinds there. The Ukraine situation, I think, still has a bit of a dampening effect, particularly in our EMEA business. So we factored that into our guide. But I think where we've seen improvement, I think travel, in particular, has had some rebound, still not fully back to pre-COVID levels by any margin, but we've seen significant improvement there and have expectations for growth there.

Michael Barrett -- Chief Executive Officer

Yeah. And Tim, I'll comment on the newfront, upfronts. Yeah, so just I'll kick into gear. I would say that the biggest difference this year than in previous years is the kind of direct involvement of players like Magnite in the conversation as it relates to chunks of the upfronts being allocated programmatically.

And I think if you look at the Group N premium marketplace and their partnership with us there, I think you're going to -- we certainly hope that that will have an impact in terms of moving dollars over. Whereas before, the upfronts would conclude pretty much as historically they have. And then, programmatic would probably play much more in the Spot world. There's many, many more conversations regarding having programmatic front and center in the actual upfront itself the guaranteed world.

So yeah, it's a nice development early stage and not sure that there'll be a milestone announcement or event, but hopefully, it would play through in our back half numbers, as David kind of alluded to in his prepared remarks.

Tim Nollen -- Macquarie -- Analyst

So, if I could have a quick follow-up on that, please. Michael, so does that mean more direct deals now being done with a programmatic component, which is just naturally good for your business? And would there be -- as opposed to, I guess, to kind of fall into remnant spot inventory kind of over time is kind of what you were saying, just to make sure I understand that.

Michael Barrett -- Chief Executive Officer

Yeah. That's correct that the -- buyers have always won in this, right? And it was a change for sellers who had their linear strategies, the broadcaster programmers. And so, what you're seeing now is that much more of a mutual agreement at the table, at the bargaining table during the upfront about a chunk of the dollars being allocated programmatically as part of the guarantee. So if you're an agency and you're guaranteeing one of the broadcasters $50 million, you, in the past, wanted some of that to go programmatically it was never part of the deal.

You're seeing more and more of the agreement that we agree that blend is going to be served programmatically. And so, that's -- yeah, it's the maturation that we thought was going to happen in the business. It's just that I think like, again, with feels like the GroupM deal, you're going to -- that shows you how vested they are and wanting to transact business wise this way.

Tim Nollen -- Macquarie -- Analyst

Right. And I presume there'll be good news. Any news that we do get in the next few weeks or whatever would presumably be good across the next several quarters and because this would be deals being struck across the upcoming TV seasons, right, over the next three, four quarters?

Michael Barrett -- Chief Executive Officer

That's exactly right, yeah.

Tim Nollen -- Macquarie -- Analyst

Yeah. OK. Thanks.

Operator

Thank you. Our next question comes from the line of Matt Swanson with RBC Capital Markets. Please go ahead.

Matt Swanson -- RBC Capital Markets --- Analyst

All right. Thank you so much for taking my questions. Michael, if I could ask my quarterly DV+ question. I know last quarter you didn't really want to get into the specifics of the investments.

But could you maybe just comment for us, how you feel about the progress you're making on those investments that you've done, or maybe what sort of returns you're starting to see so far?

Michael Barrett -- Chief Executive Officer

Yeah, Matt, great question. I think that as we've talked about this in the past, DV+ in a world where you're transacting hundreds of millions of options a day, every little bit tweak here or tweak their results and improvement. And if you look at the laundry list, it numbers into the hundreds of things that you can constantly be doing, some of it is fixing things. Other is innovating on things, speed of option, your hardware settings, all the way to making sure that the plumbing is clean and the connections are good with buyers and the sellers.

So it's an ongoing effort. I wish there was a seminal product or project that we could point to that once it's completed, it unlocks the flood gates. But it's a constant area of maintenance for us, innovation for us, and admittedly an area that was under maintenance or innovated over the years as we acquired the CTV assets. So we have some catch-up to do.

I'm pleased with the focus on it. I think our results can get better and improve over time. So I think that we've analyzed where we can gain improvement were our highest return for investment will be and are well-down the path in those areas.

Matt Swanson -- RBC Capital Markets --- Analyst

That's super helpful. And then, this is probably a little bit David, a little bit, Michael. But when we're thinking about the full year guide, and you mentioned Q2 starting to see some political -- obviously, the CTV environment changed so much since the last mid-term cycle. And it feels to me like mid-terms might be a little bit better positioned than general election for you because of the emphasis on targeting, right, because they're all regionalized elections.

Can you just talk a little bit maybe about how you're thinking about the political spend this year? And whether or not you do think there could be a bigger shift toward CTV?

Michael Barrett -- Chief Executive Officer

Yes, I think we feel as though if and when we see the impact of political spend for the mid-term, it will be predominantly through CTV. I think there'll be some online video bought as well. But I think CTV will be a primary focus. And you're right, it will be highly directed in those battleground states.

And you probably saw a release with that. The folks from scripts who are bundling inventory from other non-script stations to create a bigger pool of available inventory in those markets, and they're working exclusively with us on that. And so, -- and of course, we have our direct team in the middle market in the states working with the top agencies that are specialized in spend. And so, our best guess is that this mid-term probably will behave more like a general election like two years ago than it will like a traditional mid-term, especially as it relates to CTV.

So yes, we're cautiously optimistic that we're going to see some flow through in Q2 and certainly in the back half of the year. I don't know, David, if you have any other thoughts or specifics.

David Day -- Chief Financial Officer

I think you covered it. I think there'll be some flow through in Q2. I don't -- it won't be super significant. I think the vast majority will be Q3 and Q4.

And yes, as far as the volume of spend, as Michael mentioned, maybe similar to presidential and with this recently leaked news around Roe v. Wade, that would be a super charge of that spend as well. So time will tell.

Tim Nollen -- Macquarie -- Analyst

All right guys. That's super helpful. Thanks for the time

Operator

Thank you. Our next question comes from the line of Vasily Karasyov with Cannonball Research. Please go ahead.

Vasily Karasyov -- Cannonball Research -- Analyst

Thank you. Good afternoon. I wanted to ask you a question about political. And my question is this.

If you look at broadcasting companies, they -- in years when they have strong political spending, the non-political advertising revenue growth is usually depressed from what they call displacement, right? When they -- because political campaigns pay are not price sensitive, they just outbid non-political advertisers. So given that you, as an SSP are probably more on the supply constraint side, are you seeing anything like that? Is this a scenario that you're thinking about that it may not be 100% additive when all the expected political comes in. So I know we are in uncharted waters here but would appreciate your thoughts here.

Michael Barrett -- Chief Executive Officer

Yes. Vasily, it's very keen observation. And there's far less supply constraint in online video. So I think what you see in the online video is that there's just -- there's always a lot of inventory, and therefore, there's a lot less displacement.

In CTV, I think you do see some displacement, but I think that that -- any displacement is more than made up for, as you pointed out, there's not a lot of price elasticity as it relates to CPMs. And so, you're seeing higher CPMs. And so, although -- and even though inventory generally speaking, is very tight in the CTV world, it's not always all sold, and there's different dayparts and things like that where political may be less sensitive about running it. And so, I think that -- all in all, we have seen historically that even if there's a displacement, it's a net positive because of the rates as it relates to Magnite.

Vasily Karasyov -- Cannonball Research -- Analyst

Just a follow-up. If we look at the previous political cycle, did you see any displacement at all? I'm just curious.

Michael Barrett -- Chief Executive Officer

Yeah. I mean, I think that, generally speaking, especially if you get into Q4, so right at the tail end of the election cycle, those are pretty tight windows anyway. And so, there were certainly some displacement there. But as I said before, it was still a good guide because of the rates that displace these buyers were significantly higher than market.

Vasily Karasyov -- Cannonball Research -- Analyst

Great. Well, thank you very much.

Michael Barrett -- Chief Executive Officer

Thanks.

Operator

Thank you. Our next question comes from the line of Nick Zangler with Stephens. Please go ahead.

Nick Zangler -- Stephens Inc. -- Analyst

Yeah. Hey, guys. Thinking about these new AVOD services, you touched on Disney Plus, but with regard to Netflix, maybe Apple TV Plus, just in general, if you could comment on how do you think about your ability to win new business. And for these large streaming services, how long do you suspect it would take to go from having absolutely nothing to something with regard to building an ad business?

Michael Barrett -- Chief Executive Officer

Yeah. Hey, Nick, I'll jump on that one. So yeah, it's a very fair question. And then, of course, you start to ask, are you launching in the US? Are you launching in foreign countries, if you're never had an ad business before.

It's hard to predict how long it would take, especially if you're starting from scratch, but one would say it's obviously a multi-quarter journey, given the fact that you haven't even pitched your customer base on this tier, tried to figure out what the cannibalization might be, etc., etc. So I think that there's a lot more that goes into it, obviously, than just ad technology. But as it does relate to add technology, I think we are being extraordinarily well positioned as we talk about all the assets that we have and not just doing the traditional work of bringing demand like an SSP to fill these ad slots but having the server to actually serve them. And there's one thing everyone needs that it doesn't matter if you're a legacy broadcast or a new program or a platform, you need an ad server, right? You need something that can serve ads if you're going to get into the ad business.

So at the very minimum, we have the leading CTV ad server and especially if you don't have a legacy business, there's not really a need for a server that was built in the online video world that meets the conditions and rules that broadcasters needed to spread the needle between linear and streamed. So I think we feel really good about the company that we've built. And obviously, every day, we're helping these new services get off the ground and sell ads. And some of them have a direct sales team, where the rules of engagement are quite structured and others don't have any direct sellers, and they rely upon us for the vast majority of their demand.

So I just think it's a validation for the company, we've built it's a validation on the – for the consumer in terms of choice, right? And I think we've really enjoyed the position we have in the marketplace right now.

Nick Zangler -- Stephens Inc. -- Analyst

I agree. It's good to hear. And then, just one more for me, you briefly touched on it, but any update just with regard to the construction of the seller defined audiences, maybe specifically within CTV, utilizing that first-party data from publishers. I know you guys keep making acquisitions here for sure.

So are you monetizing audience segmentation and creation at all yet? And maybe you could just comment on the overall road map within seller defined audiences? Thanks.

Michael Barrett -- Chief Executive Officer

Yeah. So early days, right, as I said before to one of the other questions, as long as a third-party cookie world exists, it's hard to generate enough urgency on the publisher side because it's a need that necessarily doesn't match what buyers want, but the minute third-party cities go away. Buyers are desperately going to need these targeting parameters. And so, that's where the publisher gets in.

So what we're doing is building for that future. We know it's coming. We know that it will happen. It will be multiple solutions, but we feel very good about the assets that we have and the work that we're doing right now on those assets.

We do a ton of data overlays in CTV right now. Some of it first party, a lot of it third-party. And so, I would say CTV's even more advanced than DVs processors relates to data-oriented packages and quite easier frankly, and probably more valued audiences, just given the logged in nature of the user, right? Many, many open web sites and apps don't have a looting component, and it makes profiling an audience a little bit more difficult than the login user approach of CTV. And so, yes, I think in CTV, you're going to find that that's going to quick move to the front and center of buyer needs because of the displacement of the cookie.

Nick Zangler -- Stephens Inc. -- Analyst

Great. Appreciate it guys. Thanks. Good luck.

Michael Barrett -- Chief Executive Officer

Thanks.

Operator

Our next question is from the line of Matt Thornton with Truist Securities. Please go ahead.

Matt Thornton -- Truist Securities -- Analyst

Hey, good afternoon, you. Maybe two, if I could. First, on Trade Desk moving away from Google open bidding, I know, it's still fairly early, but I'm curious what you're seeing in terms of impact. I think the thinking had been from you and some of your peers that it could be neutral to positive? I'm kind of curious what the early read is there.

And then, just secondly, any update on the merged platform, taking kind of the best of Telaria, the best of SpotX. I think you've talked about having that out fully in the market, I think it's by 1Q 2023. So I'm just curious, how that's progressing. And what might happen once that's fully launched? Is there any benefits from a share gain standpoint, from a cost efficiency standpoint? Just any color there would be helpful.

Thanks, guys.

Michael Barrett -- Chief Executive Officer

Yeah. Hey, Matt. So as far as there will be a concerned, Trade Desk definitely has moved away from it. We can see the flow of money from Trade Desk through OB has kind of gone down to a trickle.

The reality is Google – Trade Desk has moved away from open bidding incrementally over the last year and a half. They came to all the SSPs and they went to publishers and they basically said, hey, we're buying your inventory on multiple pads. We've taken a look at it and the most efficient path is prebid or the most efficient path is Amazon. And so, we're switching our dollars over to those pads.

And so, OB was not a huge contributor for Magnite through -- from a Trade Desk spend standpoint. It's kind of hard to track it as to whether or not it's flowing through prebid, and it's also too early to see if the hundreds of SSPs that were in the OB program if that shift of share to the validated SSPs in which Magnite is one of them for Trade Desk. That hasn't resulted in any huge wuss right now. But I do think, again, very early days, and we could be seeing it just in prebid and not recognizing the specific dollars.

And as far as the platform consolidation concern, it continues at pace. That timing is around -- as you know, it's all not just dependent upon us. It's when the publishers are going to be able to allocate the resources to move to the new platform. And so, we've always felt this out Q4 -- and Q2 be a cutoff for any migrations.

And so, we'll be migrating clients into 2023 Q1 for sure. And to point to direct revenue boost is kind of difficult. We'll probably be able to educate you and others more as the platform comes online. But I think if you build a next-gen platform that has all the bells and whistles and while the -- that everyone's asked for, it just leads to more revenue opportunities in terms of access to inventory.

So we feel pretty good about the path around there.

David Day -- Chief Financial Officer

And from a cost efficiency perspective, you'll see that primarily in a more efficient technology infrastructure cost base.

Matt Thornton -- Truist Securities -- Analyst

OK. Got you. That's helpful. And maybe one quick follow-up, and this has been -- I think touched on a couple of times, but I think that my question is, I think when you think about some of the opportunities or changes out there, so Disney launching an AVOD in the US by fourth calendar fourth quarter or the Warner Discovery merger now being done.

When you think about your full year commentary and guidance and we don't need to get into specifics, but I guess does that contemplate or take anything into account in terms of some of these incremental perhaps opportunities out there or would you landing one of these or an increased role with one of these be incremental to kind of what you've talked about. Thanks, guys.

Michael Barrett -- Chief Executive Officer

I think, Matt, whenever you look at new business opportunities, you kind of bake it into a general forecast. So a lot of our business growth every year, organic is same-store sales, but we always do lie upon kind of an unknown number out there that will come from new client relationships. And so, I think by and large, it's already baked into the forecast and these things tend to start off as walk before you run types of relationships. And so, I think that I wouldn't necessarily say that a one particular client out there might result in dramatically increased revenue for Magnite.

I don't know, David, if you have a different view on that.

David Day -- Chief Financial Officer

No, I think that's right. I mean it certainly would add to our ability to take market share. And -- but I think you've covered it.

Matt Thornton -- Truist Securities -- Analyst

OK. Awesome. Thanks for that.

Operator

Thank you. This concludes our question-and-answer session. I would now like to turn the conference back over to Michael Barrett, president and CEO, for any closing remarks.

Michael Barrett -- Chief Executive Officer

Thank you, Ryan. I'd like to thank every Magnite team member for their hard work and efforts. We have one of the best teams in the industry and their expertise and unmatched customer focus has yielded a very differentiated leading company with comprehensive customer solutions. We continue to see and invest in clear areas for growth in CTV, DV+ in audience and identity.

We've established ourselves as a critical long-term partner for many of our publishers and buyers, especially in CTV and believe much of our future success lies in both our execution and in winning new business. We've never been more excited about the opportunity we have ahead of us. As we look at the back half of the year, we feel strongly that our selection by Group N and CTV, Disney+ recently announcing an ad-supported alternative, return in verticals such as travel and political spend are tangible examples of growth drivers for the quarters ahead. Almost all CTV streaming services have either launched or announced AVOD offerings and even the largest subscription CTV streaming service has recently moved from a position of never to actively exploring it.

Thank you for joining us for our Q1 results call. We look forward to talking to many of you at virtual investor meetings hosted by SIG tomorrow, conferences by Needham on May 17 and Craig-Hallum on June 1. Have a great evening.

Operator

[Operator signoff]

Duration: 67 minutes

Call participants:

Nick Kormeluk -- Head of Investor Relations

Michael Barrett -- Chief Executive Officer

David Day -- Chief Financial Officer

Laura Martin -- Needham and Company -- Analyst

Jason Kreyer -- Craig-Hallum Capital Group -- Analyst

Shyam Patil -- Susquehanna International Group -- Analyst

Tim Nollen -- Macquarie -- Analyst

Matt Swanson -- RBC Capital Markets --- Analyst

Vasily Karasyov -- Cannonball Research -- Analyst

Nick Zangler -- Stephens Inc. -- Analyst

Matt Thornton -- Truist Securities -- Analyst

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