Magnite, Inc. Common Stock 2026 Q2 Earnings Call

Good afternoon, everyone. Welcome to Magnite's second quarter 2026 earnings conference call. As a reminder, this conference call is being recorded. Joining me on the call today are Michael Barrett, CEO, and David Day, our CFO, for his final earnings call prior to retiring. 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 impacts of macroeconomic factors on our business.

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 other risks, uncertainties, and assumptions is set forth in the company's periodic reports filed with the SEC, including our quarterly reports on Form 10-Q and our 2025 annual report on Form 10-K. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including Contribution 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 our financial highlights deck that is posted on our investor relations website. At times, in response to your questions, we may offer additional 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 the webcast replay of today's call to learn more about Magnite. I will now turn the call over to Michael.

Please go ahead, Michael. Thank you, Nick, and thanks everyone for joining us today.

I am pleased to report an outstanding second quarter for Magnite. We significantly exceeded expectations across the business. Contribution ex-TAC came in well above consensus, driven by strength in both CTV and DV+. That translated into meaningful bottom-line outperformance. We expect this momentum to continue. Based on our first half results and the strength we are seeing across the business, we are raising both our full year Contribution ex-TAC outlook and our expectations for margin expansion. Total Contribution ex-TAC exceeded consensus by approximately $10 million. CTV contributed roughly $6 million of that outperformance and grew 36% year-over-year. DV+ contributed approximately $4 million of the beat and returned to growth, increasing 2%. Adjusted EBITDA exceeded consensus by $8 million, resulting in a margin of 37%, demonstrating the operating leverage in our business.

These results were broad-based. CTV represented 51% of total Contribution ex-TAC in the quarter, continuing the momentum that began in the second half of 2025. We believe the market has reached an important inflection point as programmatic becomes the desired way to transact on streaming television. We saw strong growth across many of the industry's largest media owners, including Disney and ESPN, Netflix, Roku, Vizio, Walmart, and Warner Bros. Discovery. Across our top 10 CTV accounts, growth accelerated to the mid to high 40% range year-over-year. While the secular shift of advertising dollars towards CTV continues, we are encouraged by the improving trajectory of DV+. In particular, mobile in-app grew 17% year-over-year. We continue to believe mobile in-app is an attractive long-term growth market, supported by deeper DSP integrations, new publisher onboarding, and our SDK strategy.

To be clear, this is both an industry and Magnite share growth story. Our results demonstrate that we are expanding our share with growth that is outpacing the broader market as customers increasingly choose our platform. Stepping back, there are three structural trends driving our business today. First, SpringServe has become the operating system for CTV monetization. Second, audience enablement and decisioning are moving from the buy side to the supply side, we believe Magnite is leading that transition. Third, as AI reshapes advertising, our newly announced Magnite Orchestration shows early signs of becoming a critical infrastructure layer for agentic advertising. Taken together, these three trends are improving our long-term competitive position and growth prospects. SpringServe remains our primary differentiator.

What began as a best-in-class ad server has evolved into the operating system for CTV monetization. It has become the intelligent control layer for premium streaming, combining ad serving, mediation, monetization, demand facilitation, and data enablement. These functions are increasingly being enhanced by agentic tools. Publishers want to work with a trusted partner capable of maximizing yield while preserving control over their inventory, data, pricing, business rules, and viewer experience. Buyers want direct, transparent, and scaled access to premium streaming supply. SpringServe uniquely sits directly between those objectives. The power of SpringServe is evidenced by a string of major new wins and partner expansions. On the publisher side, we announced Samsung selected SpringServe to power ad serving for its premium smart TV home screen inventory, reaching hundreds of millions of smart TVs globally, to open this inventory to programmatic buying for the first time through our DSP ecosystem.

We are excited to add Samsung as another key home screen customer, solidifying Magnite's leadership position among OEMs in this increasingly valuable environment. On the buy side, WPP has expanded ad formats in its media supply hub, enabled on SpringServe, to include pause ads and has validated Magnite's ability to seamlessly pair CTV ad formats with WPP's open audience segments via ClearLine through a custom real-time data integration. Moving to the second structural trend, the acceleration of supply-side audience enablement and decisioning. Historically, many of the most important optimization decisions in digital advertising were made on the buy side. Today, publishers and buyers have access to richer first-party data, commerce signals, AI, pricing intelligence, and much more workflow flexibility. As a result, more valuable decisions are moving toward the supply side and the breadth of our relationships and technology position us well to capture the shift.

One of the most compelling applications of supply-side audience enablement and decisioning is commerce media. Commerce media continues to scale with 21 partners now deployed and actively ramping across DV+ and CTV. Partners, including Fanatics, CVS Media Exchange, Best Buy, and PayPal Ads, are all using Magnite to activate valuable first-party data across owned and operated inventory and the broader open internet. With our partnership with Walmart Connect, we are helping combine Walmart's first-party commerce data with premium CTV inventory, including Vizio supply, while supporting off-site execution and closed-loop measurement. Now turning to AI. Earlier this year, much of the discussion focused on whether companies like Magnite could be disintermediated. Today, the conversation has largely changed. Our customers are increasingly leaning on us to develop and deploy AI capabilities within our platform, converting AI into a tailwind. buyer agents and seller agents will become increasingly common across digital advertising.

Agents do not eliminate infrastructure, they increase the need for it. As thousands of agents from publishers, marketers, data providers, and measurement companies interact simultaneously, someone must coordinate those interactions. Someone must discover inventory, interpret campaign objectives, package audiences, enforce publisher controls, protect privacy, optimize monetization, clear transactions, and provide the trust required for advertising to function at scale. We believe Magnite is uniquely positioned to play that role. Last quarter, we announced our seller and buyer agents. Our seller agent allows publishers to seamlessly create custom inventory and audience packages that are discoverable and purchasable by buyer agents. While our buyer agent enables buyers to create custom media plans from simple RFIs, generate ad creatives, and activate and discover audience opportunities. This quarter, we took the next major step by introducing Magnite Orchestration. Earlier, I described SpringServe as the operating system for CTV monetization.

As AI reshapes advertising, we believe Magnite Orchestration has the potential to become the critical infrastructure for agentic advertising. Rather than simply introducing another AI agent, we are building the orchestration layer that enables any agent to work together in a trusted environment across a scaled, independent marketplace. Disney Advertising, Spectrum Reach, Kepler, MiQ, Publicis Media Exchange, Dentsu, and DirecTV are already working with different components of our AI suite. These partnerships provide early but meaningful validation of agentic advertising operating across both the buy side and the sell side. As advertising evolves with advancements in AI and becomes more automated, more data-driven, and more interconnected, the value of intelligent decisioning and trusted orchestration only increases. We believe Magnite is uniquely positioned to lead in these areas.

If CTV has been the defining growth story for Magnite over the past several years, we believe supply-side audience enhancement, enablement and decisioning and AI orchestration together have the potential to define the next chapter of our growth. Before I conclude, I would like to recognize David. As previously announced, David plans to retire at the end of September after more than 13 years of outstanding leadership and service to Magnite. David has been an exceptional partner and a trusted advisor. His financial leadership helped guide Magnite through transformational acquisitions, significant industry change, and tremendous growth. Just as importantly, he has built a deep and talented finance organization that will provide an excellent foundation for his successor. Our search continues to progress well, and we are evaluating a strong group of internal and external candidates.