Magnite, Inc.

Good afternoon and welcome to the Magnite second quarter 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Nick Kormeluk, head of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Magnite's second quarter 2021 earnings conference call. As a reminder, the comparisons you will see in the 10-Q, as reported, include the financial results of SpotX for May and June of 2021, But for the second quarter of 2020, the results do not include spot X given the acquisition date of April 30, 2021. During the course of this call, when we refer to results and associated year-over-year comparisons with the phrase as reported, we were referring to the basis as reported in our 10Q. When we make comments referring to pro forma comparisons, we are including spot X for the second quarter of 2020 and the month of April in 2021 in order to provide additional detailed insights that management also uses to evaluate our business performance. Please keep in mind as it relates to the SpotX acquisition, prior quarterly results are estimated and unaudited. As a reminder, this conference call is being recorded. Joining me on this call are Michael Barrett, CEO, and David Day, our CFO. I would like to point out that we have posted financial highlight slides to 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 impact of COVID-19 on our business, as well as statements concerning the acquisitions of SpotX and SpringServe and potential benefits and synergies we expect to realize therefrom. These statements are not guarantees of future performance. 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 and other risks, uncertainties, and assumptions is set forth in the company's periodic reports filed with the SEC, including our 2020 Annual Report on Form 10-K, and our 10 Qs for Q1 and Q2 2021. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including revenue extract 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 the financial highlights deck that is posted on our investor relations website. At times, in response to your questions, we may offer incremental 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'll now turn the call over to Michael. Please go ahead, Michael.

Thank you, Nick. It's been an exciting three months for us since our last call. The digital advertising market has continued its strong recovery from the impacts of COVID. The recovery is clearly visible in our Q2 revenue X-TAC across all formats and channels, which combined were up 79% on a pro forma basis. These results are very strong, even when considering easier comparisons from COVID and Q2 last year. I'll first cover some quick performance highlights. CTV Revenue XTAC grew 108% on a pro forma basis with both Legacy Magnite and SpotX platforms each delivering growth over 100%. OLV and Display also show very strong Revenue XTAC pro forma with growth of over 60% each, indicating broad strength in our business aided by a strengthening economic recovery. Adjusted EBITDA margins XTAC came in at 32% in Q2, and we generated $24 million in operating free cash flow in Q2, which we define as adjusted EBITDA less capex. This quarter was transformative for Magnet, specifically with the closing of two strategic M&A deals, Spotix and SpringServe, which expanded our addressable market added video ad serving to our product offering, significantly enhanced our product development and engineering capabilities, all of which contribute to greater CTV scale and revenue growth expansion. I want to provide some insights on what our combined scale, value proposition, and growth opportunities look like going forward. As viewers continue to consume media content via streaming services and platforms, many media and content owners are creating content and services for the CTV market. And we are in a great position to provide them with the only independent end-to-end monetization platform. To be clear, we define CTV as large-screen, immersive TV advertising and do not include streaming TV across other devices like mobile, tablet, and desktop. We have significantly widened and strengthened the customer segments we serve across device OEMs such as Roku and Samsung, virtual multi-channel video programming distributors or MVPDs such as Sling and Hulu, digital-first platforms such as Pluto and Tubi, and, of course, broadcasters such as Discovery and Fox. We have also meaningfully expanded our service offering to touch more inventory and transaction types, and our CTV revenue includes not only programmatic auction, but also fees for private and direct-sold deals, managed service revenue, ad-serving fees, and value-added service fees. With the traditional TV upfront season recently concluded, I'd like to clear up confusion regarding how we participate in these upfronts. Direct sold and upfront refers to who is doing the selling, but direct and upfront deals increasingly include programmatic media spend commitments because buyers and sellers want to realize the workflow efficiencies and targeting gains that programmatic provides. So how do we participate in upfronts and direct sold CTV? First, through private marketplaces where our platform serves as the pipes that connect buyers and sellers. As you may recall, a substantial majority of our CTV revenue comes from PMPs. In support of PMPs, our tech serves as a self-service productivity and workflow tool to efficiently execute CTV campaigns. We also participate in direct sold inventory through our managed service business, which provides demand facilitation and serves as a great onboarding source to get buyers into the programmatic ecosystem. And finally, with CTV ad serving, which comes by way of the SpringServe acquisition. We now have significant scale in CTV, even in these early days of its adoption. as we expect well over $40 million in quarterly CTV revenue ex-tax in Q3, which, if you step back, is greater than what our total company revenue was in Q3 2019. And we are now enabling every part of the buying process, direct, upfront, and programmatic, through our technology solutions and through our managed service offerings. We participate in all growth categories of CTV. On the identity front, we saw Google push out the elimination of third-party cookies in Chrome until the end of 2023. We continue to believe that first-party publisher segments collected in a privacy-compliant manner will be the future of identity solutions and that SSPs will be a driving force behind this transition. However, the Google decision provides the industry with more time to transition and focus on advancement and adoption of alternative audience solutions. We also saw further adoption of IDFA removal with iOS updates this quarter. We observed some shift from iOS to Android and spend lower but better than expected CPMs for iOS opt-outs and limited impact to overall ad spend. I'll now shift to highlight the strategic value and opportunity created by our addition of an ad server. This is a very strategic piece for us to better serve current and future customers. Ad serving in its most basic form is a key utility function for CTV publishers to manage, forecast, and execute their campaigns, whether programmatic or direct. This is a key technology piece that market leaders like Freewheel and Google have bundled with their SSP to create an efficiency advantage and better compete in the market versus other SSPs or ad server only competitors. We've talked before about how important it is to be a full-stack, independent partner to serve the open web and third-party CTV publishers, and this critical piece of tech allows us to offer a viable, independent, end-to-end solution. Ad serving adds significantly to our CTV value proposition. Specifically, ad serving is required by all CTV market participants, OEMs, broadcasters, and OTT-only platforms, and for all types of inventory, upfront, direct, or programmatic. Having a tightly integrated ad server allows for the dynamic allocation of programmatic and non-programmatic inventory to provide a holistic yield management solution for publishers. It addresses a specific set of customers that want an integrated ad server and SSP solution from one partner. especially new entrants with no legacy tech or desire to build it. It allows us to cross-sell ad serving to all of our SSP customers, and from a technical standpoint, it provides greater efficiency and performance versus third-party ad server integrations, which leads to better monetization for publishers. Switching gears, Our SpotX and SpringServe integration efforts have been progressing well. Specifically related to SpotX, our senior leadership structure has been finalized, our go-to-market teams have been put in place, the dev and product teams are combined, and we are ahead of plan for first year across synergies. We are also pleased with plans to consolidate our two CTV platforms appropriately under the leadership of Alan Dove, our Chief Technology Officer, and Adam Soroka, our Chief Product Officer. Lastly, we are excited to serve customers as a more comprehensive, scaled, independent, and powerful company to accelerate the growth of programmatic within the already attractive and rapidly growing CTV market. We look forward to our Investor Analyst Day which is planned to be virtual on September 15th. With that, I will hand things over to David, who will go into greater detail regarding financial performance and expectations.