Magnite, Inc. Common Stock Bank of America 2026 Media,Communications & Entertainment Conference
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Okay. All right. This is Omar Dessouky. I am senior analyst at Bank of America, covering U.S. internet, focusing on advertising technology and video games and consumer subscriptions. Some of the stocks that I cover in the ad tech space are Magnite, whose CEO we have today, Michael Barrett, AppLovin, Unity, DoubleVerify, and a couple of others. Magnite, we have been following Magnite for a long time. Well, actually, sorry, since 2024. We turned bullish sort of late 2024, and we have been bullish ever since, and it seems like much of the thesis that we had expected has just simply played out. One thing, for example, is CTV. They have two businesses, the CTV business and the DV+ business, which is focused on open web. We have always been looking at CTV as your business, as a business that could outgrow the CTV market in general.
CTV advertising seems to be growing, I think, kind of like mid to high teens expected long term, yet you grew 36% year-on-year in the third quarter. Your top 10 advertisers grew 40% year-on-year?
Yes. Right. That is even faster than the rest of your business, probably because of upsells.
Your upsell process is working.
Yeah, no question. One of the benefits we do are most of our clients are global in nature, and so when they expand to different countries, we get to go along for the ride and help them monetize their inventory in those areas. You find that it is kind of a land and expand with the big media owners.
Got it. I think what I am most interested in is you talked about the potential for 25% annualized growth long term, and I was hoping to double-click into that. Are you saying that it is going to be sort of like a 25% CAGR or a minimum 25% year-on-year growth, what you would look for even with years where there are tough comps?
Yeah, no, I think it is very fair. Again, it is a longer-term goal, but I do think that most of the industry experts peg the growth rates of streaming, the ad-supported streamers, in the mid to high teens. We have every expectation, given the breadth of the relationships that we have in streaming, that we would outpace the industry growth. I think if you look at a 25% growth rate compared to our 36% versus low to mid-teens growth rate for the industry, we feel very comfortable pegging that as a, not just aspirational, but something that we feel is very likely to occur.
Okay, got it. This year, I think, there is potentially a big political cycle coming up.
Correct. To us, I think your guidance looks a little bit conservative.
I still want to get back to that question. Even in the context of a big year, which, for example, could be this year, depending on how political does and other factors where you are doing well, are we supposed to look at that 25% as sort of more of a floor or like a CAGR?
Yeah, I think a CAGR. You mentioned political. Political is very interesting for us. We are new at it. We are not scripts, right? We have two cycles to go off of, a national election 4 years ago and a midterm most recently. The challenge is that it was so new. Streaming was so new as a medium mix for political advertisers that it is a little unknown what to expect this year. To date, we have been pleasantly surprised with the amount of spend, but we know it is heavily back-loaded, and it really does come down to are they competitive races? Are the races in the right market, et cetera. I do absolutely think we will be talking in 2027 about ex-political from a comp standpoint. I think we feel very good about where we have pegged it right now.
How penetrated are your services in the CTV TAM at this point? The reason I ask that is because there is this push and this pull where your more seasoned publishers, you have upsold them, and that is one of the reasons why, for example, your top 10 accounts are growing faster than the rest. You have talked about positive kind of pricing mix shifts very recently. The 40% growth on your biggest publishers, that is higher than the overall 36% growth. I assume you are still penetrating the market, right? The newly onboarded publishers are going to start off with lower take rate type services, which eventually will go up. There is probably some latent pricing mix in your model, which I think analysts have to think about further off. Eventually, the take rate will improve, right? While the total ad spend may moderate.
How do we- Yeah, it will be closer.
To date, and again, our take rate is a contractual agreement with publishers. It is not as if we talk about scenarios by which there is lower take rates or higher take rates, sometimes people immediately go to, "Oh, they are under pressure. The market is forcing a collapse in take rates." What it is it is a product mix. Generally speaking, when someone that has a legacy advertising business gets into streaming and hires a Magnite, they are very much inclined to kind of go at it on a walking pace and say, "Hey, we have been selling advertising for 100 years. We are going to continue to sell the exact same way we sell linear. We are going to do the same with streaming. Because we want complete control, we have always had complete control, and we just want you, Magnite, to operate as our plumber.
We will go find the advertiser, we will negotiate the price, and then we will just execute it automated, so programmatically." That carries with it a lower take rate. It is a product that we offer. It is publisher-sold programmatic, and not surprisingly, every large media company starts off that way because they are a little concerned. Is the programmatic ads going to ruin the consumer experience? I do not know that advertiser. Is it going to be cheaper CPMs? It is just this journey that most folks have to go along till they get comfort. Of course, at the same time, the buyer is coming at the media owner saying, "Go programmatic or you are going to lose dollars.
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