Shares of Magnite (MGNI 13.07%), the sell-side ad tech company, were moving lower today after better-than-expected earnings results were overshadowed by disappointing guidance.
As a result, the stock was down 9.6% as of 2:20 p.m. ET.
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What's happening with Magnite
Magnite, which offers a supply side ad tech platform (SSP) that help publishers like Netflix better monetize their ad inventory, posted solid results in the second quarter with revenue up 11% to $179.5 million. Contribution revenue minus traffic acquisition costs and excluding political ads rose 16%, to
$166.8 million, topping guidance at $161 million-$165 million and analyst estimates at $164.2 million.
Connected TV (CTV) continued to be a strength for Magnite, increasing 18% to $75.8 million. On the bottom line, adjusted earnings per share increased from $0.17 to $0.20, edging out the consensus at $0.19.
CEO Michael Barrett said, "Our CTV success is being driven by our largest publisher partners, and strong agency and DSP momentum."
NASDAQ: MGNI
Key Data Points
What's next for Magnite
Despite the strong Q3 results, investors were disappointed by the fourth-quarter guidance, which called for a slowdown in growth, especially in the DV+ business. DV+ makes up more than half of Magnite's revenue, and it expects just 2%-5% growth in the fourth quarter. (DV+ stands for display, video, and other formats.)
It wasn't fully clear why Magnite sees the slowdown in growth, but it could be related to macro concerns as consumer spending seems impaired. Meanwhile, the ad tech industry is changing quickly as The Trade Desk, the leading independent DSP, has also faced challenges.
Investors may want to adopt a wait-and-see approach here. Magnite has a long history of volatility, and the guidance could turn out to be conservative.
