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CTV is Magnite's primary growth engine: Second-quarter CTV contribution ex-TAC rose 36% year over year and reached 51% of the company's mix, driven by increasing programmatic adoption and relationships with major platforms including Netflix, Disney, Roku and Warner.
Potential Google ad-tech remedies could benefit Magnite's DV+ business: The company believes changes to Google's dominant ad-serving and exchange practices could improve competition in desktop and mobile web advertising, though Magnite has not included any potential benefit in its forecasts.
Magnite is expanding margins and returning capital: Management raised its margin outlook to above 37%, cited strong second-quarter revenue and EBITDA performance, and committed to using at least 50% of free cash flow for buybacks under a $200 million authorization.
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Magnite (NASDAQ:MGNI) said growth in connected television advertising, expansion of its programmatic technology and potential changes to Google's advertising technology practices are central themes for its business outlook.
Speaking at an Age of AI technology conference, Senior Vice President of Investor Relations Nick Kormeluk discussed the company's view of the Google ad-tech antitrust case, Magnite's second-quarter connected TV performance, its SpringServe platform and its approach to capital allocation.
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Kormeluk said the Google ad-tech trial overseen by Judge Leonie Brinkema focused on Google's advantages in ad serving and advertising exchanges following its DoubleClick acquisition. He said Google's ad server has held a dominant position in non-connected-TV open-internet advertising and that Google's exchange benefited from preferred timing, auction information and bidding capabilities.
According to Kormeluk, Magnite estimates that Google has roughly 60% share of the relevant market, while Magnite has about 6% to 8% of the total market and approximately 15% of the non-Google SSP market. He said any impact from remedies would affect Magnite's DV+ business, which includes desktop and mobile web advertising, rather than its CTV operations.
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Kormeluk said Magnite has not incorporated potential benefits from antitrust remedies into its forecasts, guidance or discussions with analysts. He argued that behavioral remedies could be implemented more quickly than structural remedies, which could face appeals and potential stays.
He pointed to Prebid, an open-source software standard used by publishers, as a possible mechanism for providing advertising exchanges with simultaneous access to impressions and comparable auction data. Kormeluk said this approach could create a more level competitive environment.
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"We have not seen anything change from the behaviors or the patterns" of Google's conduct, Kormeluk said. He cited Magnite's observations of auction outcomes following Google's announced removal of "Last Look," a feature that he said had enabled Google to win certain impressions after other bids were submitted.
While acknowledging that traditional web page views in desktop and mobile are declining, Kormeluk said the open web remains a sizable advertising market. He also highlighted mobile apps and commerce media as healthier parts of Magnite's DV+ business.
Magnite reported that CTV contribution ex-TAC, or traffic acquisition costs, increased 36% year over year in the second quarter and represented 51% of the company's mix. Kormeluk said the company is benefiting from advertisers' growing adoption of programmatic CTV buying.
He said Magnite's relationships with companies including Netflix, Warner, Roku and Disney, along with ESPN inventory, have positioned the company to benefit as programmatic buying expands. Magnite is the sole programmatic partner for access to certain Roku, Disney and Netflix inventory, according to Kormeluk.
"Demand is finally coming in," Kormeluk said, adding that CTV advertising is beginning to move beyond upper-funnel branding uses toward mid-funnel and some performance-oriented campaigns.
He said the CTV demand base is broadening beyond a small group of major demand-side platforms, with Amazon, Google, Viant and other market participants bringing additional demand into the ecosystem. Magnite also powers marketplaces for agencies and publishers seeking to create direct, self-service buying channels.
Kormeluk said Magnite combined its SpringServe ad-serving technology with its CTV exchange platforms into a single product environment. He described the platform as increasingly integrated across customers and said its programmatic capabilities differentiate it from traditional CTV ad-serving systems.
He estimated that FreeWheel maintains a large position among major broadcasters, while Magnite has approximately 80% of the programmatic ad-serving market. Kormeluk also noted that Magnite recently won Samsung's home-screen ad-serving and primarily SSP-serving business.
Magnite's relationship with Walmart originated through Vizio, which Magnite served before Walmart acquired the television manufacturer, Kormeluk said. He said Walmart has expanded access to its data beyond a single DSP and has announced plans to acquire Vibe.co, a small- and medium-sized-business-focused CTV DSP. Kormeluk said Magnite is integrated with Vibe.co, though the acquisition had not closed and related growth had not yet begun to flow through results.
The company is also developing "agentic" workflows through Magnite Orchestration. Kormeluk said the technology is intended to connect agencies' campaign planning processes to real-time inventory, allowing campaign testing and refinement to occur more quickly. He said that converting traditional insertion-order spending into these workflows could create new addressable market opportunities for Magnite.
Kormeluk said Magnite's operating model generated about 80% flow-through from incremental revenue to EBITDA in the second quarter. He cited a $10 million top-line beat and an $8 million EBITDA beat during the period. The company's margin guide increased from below 35% at the start of the year to more than 37%, he said.
On capital allocation, Kormeluk said Magnite has committed to using at least 50% of free cash flow for share repurchases while continuing to evaluate smaller acquisitions that could add products or accelerate its roadmap. He said the company has a $200 million share repurchase authorization over two years and used its revolver in the second quarter to accelerate buybacks when shares were at lower levels.
Finally, Kormeluk said Magnite is making progress in its search for a successor to retiring CFO David Day. He said the company is evaluating internal and external candidates and expects Day to remain through the end of September.
Magnite, Inc (NASDAQ: MGNI) operates as an independent sell-side advertising platform that enables publishers and digital media owners to monetize their inventory through programmatic advertising. Formed in 2020 through the merger of Rubicon Project and Telaria, Magnite combines technologies for desktop, mobile, connected television (CTV) and digital out-of-home (DOOH) ad exchanges. The company provides an end-to-end solution designed to help media owners optimize yield across open marketplaces, private marketplaces and programmatic guaranteed deals.
At the core of Magnite's offering is its supply-side platform (SSP), which connects publishers' ad impressions to demand-side platforms (DSPs) through real-time bidding (RTB).
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The article "Magnite Sees CTV Surge and Google Antitrust Remedies as Growth Catalysts" was originally published by MarketBeat.
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