What happened
Shares of Magnite (MGNI 1.73%), the supply-side adtech platform, were taking a dive today after the company missed the mark on the bottom line in its fourth-quarter earnings report and offered underwhelming guidance for the first quarter of 2023.
As a result, the stock was down 18.1% as of 10:14 a.m. ET.
Image source: Getty Images.
So what
Overall revenue in the quarter rose 9% to $175.4 million, and revenue excluding traffic acquisition costs (ex-TAC) rose 10% to $156.6 million, which was ahead of the consensus at $153.7 million.
The company continued to see solid growth in connected TV, or ad-driven streaming, where revenue was up 20% ex-TAC to $64.6 million, making up roughly 40% of revenue ex-TAC and indicating that nearly all the growth in the quarter came from CTV. In its other channels, mobile revenue ex-TAC rose 18% to $61.1 million, while desktop revenue ex-TAC was down 15% to $30.9 million.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was down slightly, falling from $67.5 million to $64.2 million, giving the company a still-strong EBITDA margin of 41%. Adjusted earnings per share slipped from $0.32 to $0.24, missing estimates at $0.32.
CEO Michael Barrett said: "We delivered a strong fourth quarter, with total and CTV revenue at the high end of our guidance ranges. For the full year, we also exceeded revenue targets and continue to build on our leading independent market position by growing both the CTV and the DV+ (digital video+) business."
Now what
For the first quarter, Magnite sees revenue ex-TAC of $109 million to $113 million, which represents just a 4% increase at the midpoint and compares to analyst estimates at $111.9 million. It also sees adjusted EBITDA falling from $28.8 million to the $15 million-$21 million range.
For the full year, guidance called for revenue ex-TAC to grow and for adjusted EBITDA to be flat for the year, though it did expect a second-half improvement in adjusted EBITDA margins due to the recent launch of its unified streaming platform, Magnite Streaming.
While that forecast was generally in line with estimates, investors seem to be disappointed with the flat profit growth forecast for the year. However, Magnite's growth should reaccelerate once the economy and the ad market improve, though that may not come until 2024.
