Magnite reports strong Q3 2024 results driven by CTV growth and Netflix partnership
Connected TV advertising leads growth with 23% YoY increase as Magnite expands partnerships with major streaming players.
Magnite reported strong financial results for the third quarter of 2024, with total revenue reaching $162 million, up 8% from Q3 2023. According to the company's earnings release, contribution ex-TAC (excluding traffic acquisition costs) grew 12% year-over-year to $149.4 million, driven primarily by connected television (CTV) growth.
The company achieved net income of $5.2 million in Q3 2024, compared to a net loss of $17.5 million in the prior year period. Adjusted EBITDA increased 26% year-over-year to $50.6 million, representing a margin of 34% compared to 30% in Q3 2023.
CTV revenue showed particularly strong performance, with contribution ex-TAC growing 23% year-over-year to $64.4 million, exceeding the company's guidance range. The display and video (DV+) segment delivered $85 million in contribution ex-TAC, up 5% compared to the prior year.
Strategic partnerships
During the quarter, Magnite achieved several significant partnership milestones. According to Michael Barrett, President and CEO, "Netflix's rollout of Magnite-powered programmatic solutions continues to ramp, and we anticipate the partnership to grow in revenue contribution through 2025."
The company also announced a two-year extension and expansion of its relationship with Disney, which now includes live sports like college football, the Latin American region, and podcasts for ESPN and ABC News. The expanded partnership will make Disney inventory available through ClearLine, Magnite's self-service direct buying platform.
Barrett highlighted that the company's ad serving business has been operating at nearly twice the ad impression volume compared to a year ago, with the software deeply embedded within partner workflows.
Industry trends
Management noted increasing adoption of programmatic advertising among major streaming players, including Roku, Netflix, Paramount, Warner Discovery, and Disney. The company is seeing growth in live sports streaming monetization, including college football, NFL from top MVPDs, and Olympics internationally.
Magnite has also made progress in commerce media opportunities, with its United Airlines partnership now powering ad serving on personal devices on hundreds of planes. The company expects to expand beyond personal device entertainment to include seatback screens in 2025.
As noted by Barrett during the earnings call, "Our market leadership position in CTV continues to get stronger, and we remain extremely focused on innovative features and services that will extend our lead into the future."
Forward guidance and outlook
For the fourth quarter of 2024, Magnite expects:
- Total contribution ex-TAC between $182-186 million
- CTV contribution ex-TAC between $75-77 million, representing approximately 20% year-over-year growth
- DV+ contribution ex-TAC between $107-109 million
The company raised its full-year 2024 guidance, now expecting:
- Contribution ex-TAC growth of 11-12%
- Adjusted EBITDA margin expansion of 150-200 basis points
- Free cash flow growth of approximately 20%
Earnings call highlights
During the earnings call, management emphasized several key themes:
- Programmatic Evolution: Barrett highlighted the industry's shift toward more biddable programmatic advertising, particularly in CTV, which could lead to improved economics for Magnite.
- First-Party Data Strategy: The company discussed the growing importance of first-party data in CTV advertising, with Barrett noting that CTV will be "predominantly a first-party world."
- Cost Efficiencies: Management reported a 30% reduction in cost per ad request compared to last year, driven by improved filtering and traffic shaping technologies.
- Political Advertising: Political advertising contributed approximately 3.5% of contribution ex-TAC during the quarter, with the company meeting its expectations of around $20 million for the year.
- Balance Sheet Strength: The company achieved a net leverage ratio of 0.9x, reaching its goal ahead of schedule, and successfully repriced its Term Loan B facility to reduce interest expenses by approximately $2.7 million annually.
Key Facts
- Revenue: $162 million (+8% YoY)
- CTV contribution ex-TAC: $64.4 million (+23% YoY)
- Net income: $5.2 million vs. -$17.5 million in Q3 2023
- Adjusted EBITDA: $50.6 million (+26% YoY)
- Net leverage ratio: 0.9x
- Cash balance: $387.2 million