Magnite, Inc.

Good afternoon and welcome to the Magnite Q3 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 from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Nick Kormelowski. head of investor relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Magnite's third quarter 2022 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. 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. 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 third quarter 2022 quarterly report on Form 10-Q and our 10-K. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including revenue 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 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 will now turn the call over to Michael. Please go ahead, Michael.

Thank you, Nick. We are very pleased with our Q3 performance that surpassed our guidance, as well as our continued ability to grow, even with a tougher macro and more challenging ad spend environment. Our growth in revenue XTAC exceeded our expectations across the entire business and in CTV specifically. An adjusted EBITDA margin also came in strong at 35%. These results were encouraging, and David will provide greater detail on Q3 results and Q4 outlook. Our CTV business continued to be a growth driver in the quarter, as revenue XTAC grew 29% year over year, a trend improvement from the first half of the year, driven by new and ramping Magnite partnerships. We grew and deepened our relationships with industry leaders in streaming. We want to highlight three key client wins in the quarter with Fox, Vizio, and Kroger, and give ongoing commentary to three partnerships that continue to grow with time and engagement, LG, Disney, and Group M. All of these partnerships serve as future drivers of our CTV business, and I want to touch on each individually. First, we recently announced a partnership with Fox, where we will serve as the SSP launch partner to power programmatic campaigns for one Fox video inventory across the company's leading entertainment, sports, streaming, and news portfolios. Together, Fox and Magnite will build custom technology solutions that further streamline the buying process and enable advertisers to create one simple and unified plan to deliver their private marketplace and programmatic guarantee campaigns across the entire Fox portfolio of video inventory. SpringServe, our CTV ad server, is becoming an increasingly important component of many of our wins and represents a true differentiator for Magnite. As we have highlighted on previous calls, the integration between our ad server and SSP is incredibly powerful. It reduces complexity, improves inventory management between multiple parties, enhances functionality, and most importantly, drives yield for customers that have both a direct sales force and programmatic sales channel. In fact, our win with Vizio was driven by the unique relationship between our CTV ad server and SSP. Vizio used the Spring Serve to manage their entire video ad serving business while also relying on our SSP to power their programmatic channel. In the quarter, we announced that Vizio would also be using our newly released CTV tiles product across its entire footprint. Tiles are our proprietary native ad unit that are presented on the home screen of connected TVs and represent an exciting area of growth for us as a new ad format. OEMs can use Tiles to highlight content recommendations, deliver personalized experiences, and simplify the search and discovery process for millions of users. As the retail media network space has gained momentum recently, we are very pleased to have been selected as one of the inaugural CTV platforms to support Kroger's retail media advertising business, Kroger Precision Marketing. This partnership will allow advertisers, regardless of what DSP they work with, to package Kroger's proprietary first-party data with Magnite's premium omnichannel inventory with an emphasis on CTV, but spanning all formats, including display and online video. Last quarter, we announced a multi-year partnership with LG Ads Solutions, which in addition to serving as the preferred SSP and ad server, provides us access to their automatic content recognition, or ACR, data for planning, activation, measurement, and advanced analytics. This data can be leveraged across our entire streaming publisher footprint to deliver more personalized ad campaigns at scale. We are very encouraged by the early progress with this initiative, with a number of brands and agencies already utilizing this data to help optimize spend. Our preferred partnership with GroupM is continuing to scale, gaining momentum as we move into 2023 and the new season of UpFriends. We are starting to see new advertiser demand across OTT as a result of the partnership and expect it to be one step in our supply path optimization or SPO strategy as we work with agencies and brands to consolidate spend on Magnite. And lastly, a quick update on Disney. We continue to be a strategic programmatic technology partner with Disney, positioned at the forefront of their advertising stack. We are excited to partner with Disney in their industry-leading efforts to shift more streaming inventory into a biddable programmatic environment. Our relationship is continually growing in scope as we work across ad formats on their properties globally. Our CTV platform integration is also moving forward very nicely, and we are on track to have our next-generation platform substantially complete by year-end and ready for client transition starting in Q1. We are excited about the industry-leading features and functionality and intend to share more details after the launch. On the DVplus side, we have begun implementing some key initiatives that have returned the business to growth this quarter, with growth acceleration expected in ensuing quarters. This quarter, DVplus grew 1% year-over-year, although we estimate this would have been closer to 5% when considering the effect of the strengthening dollar in the quarter. Stepping back, our broader perspective remains very positive heading into 2023, despite macro concerns. In challenging ad environments, publishers tend to have greater difficulty selling ads directly to agencies and marketers, and therefore rely more heavily upon partners like Magnite to monetize its inventory through programmatic channels. We have already seen a record number of ad impressions this quarter and expect this trend to continue into 2023. And specifically in CTV, we are seeing the launch of more AVOD services and consumers switching from higher price subscriptions to ad-supported tiers, which will result in additional ad inventory. As we look to 2023, we expect to grow our top line and generate very healthy free cash flow. as we judiciously manage expenses and balance investments in the business. With that, I'll turn the call over to David.