Magnite, Inc.

Good day and welcome to the Magnite fourth quarter 2022 conference call. All participants are 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 touch-tone phone. 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 Kormeluk, Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to Magnite's fourth 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 2022 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 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 will now turn the call over to Michael. Michael, please go ahead.

Thank you, Nick. We had a strong finish to the year with Q4 revenue coming in at the high end of our guidance ranges. total revenue XTAC was up 10% TTV up 20% and DV plus up 4% adjusted EBITDA margin also came in strong at 41% and for the full year I'm happy to report that we achieved revenue XTAC of $515 million in free cash flow of $106 million both exceeding our targets our outlook on 2023 is positive despite weakness in the overall ad spend environment that began in late Q4 and continued into Q1. We are currently seeing stability at these levels and are cautiously optimistic. David will provide greater detail on our financial results in our Q1 outlook. Our CTV business continued to drive our top line with revenue XTAC growth of 20% year over year, which we believe outpaced industry growth in Q4 based on customer feedback in recent industry trends. Just a couple weeks ago, we announced Magnite Streaming, our next generation CTV and OTT platform, merging the best features, functionality, and technology from Magnite and Spotix. Magnite Streaming empowers media owners to maximize advertising yield holistically and across live and VOD inventory, addressable linear, and CTV and OTT environments while providing insights to more effectively grow their businesses. It also provides advertisers with unparalleled access to CTV and OTT inventory, audience targeting capabilities, and real-time reporting. We are excited about our new and expanded CTV partnerships, in addition to further traction with those previously announced. Key new partners and expanded relationships I'd like to highlight since our last call are Brightcove, BuboTV, Horizon Media, Criteo, and last but definitely not least, Disney. First. I'd like to highlight the news in late January that we expanded and renewed our agreement as Disney's global programmatic SSP partner. As you may recall, our relationship with them started with Hulu. We have since grown the relationship to include the full portfolio of Disney properties. In January, ahead of their annual tech and data showcase, Disney's Rita Farrow had a lot to say in articles by Variety and Digiday about a full suite of targeting that will be available on Disney Plus in July. We are thrilled to be a partner with Disney in support of their audience and targeting capabilities, which leverage the Disney Select first party data platform with more than 100 million US household level IDs. Second, with Brightcove, a global leader in secure streaming technology solutions, Magnite will power advertising across the Brightcove customer footprint, helping them to improve fill rates and delivery to increase revenue for their publishing partners. Brightcove saw a significant opportunity to help customers better monetize their advertising businesses utilizing Magnite's platform and capabilities. Brightcove will also integrate the SpringServe ad server to provide publishers with greater control, insight, and transparency into available ad supply, providing a strategic opportunity for customers to better monetize their video content. We also had another client win on Spring Serve with Fubo choosing to implement our ad server for their entire video business. This expansion comes to illustrate just how strategic and important our ad server is to expand and deepen our relationships with our biggest partners. Live sports is one of the largest and most valuable yet complex opportunities in CTV. We continue to make this a priority. Our leading products such as Binge Watcher and Live Sports Acceleration, or LSA, provide significant opportunities to build on our success with a sports-first live TV streaming platform partner like FUBU. The opportunity for CTV and live sports is huge. The creation and need to fill ad slots in real time, coupled with massive spikes in viewership and tremendous engagement, while requiring adherence to complex rules, make our capabilities extremely attractive and needed by publishers. The ad dollars chasing sports in CTV are significant. and most sports leagues are looking to capitalize on this opportunity, having recently separated streaming rights from linear. We see a bright future for Magnite in the world of live sports streaming and will look to build on our success across all sports and leagues. Retail media networks are another very big opportunity for us. Increasingly, user identities are being protected by publishers and retailers, and they are looking for a trusted SSP partner to help securely activate audiences on the supply side. Recent initiatives with both Kroger and Criteo highlight our progress in this area. This quarter, we announced a preferred relationship that will enable Criteo's global retail partners to leverage CTV through Magnite. Through collaboration, retailers can drive growth by extending their off-site audiences into addressable CTV environments, in turn providing closed-loop measurement to their brand and agency partners. Criteo is an industry leader in the very attractive retail media space, and we are thrilled to help their 160 retail partners expand audience reach in CTV. In addition, We continue to make progress on Supply Path Optimization, or SPO, and announced a multi-year SPO deal with Horizon Media, one of the largest US media agencies. We also continue to see strong traction with previously announced partnerships with Fox, GroupM, Vizio, and LG. I'd like to specifically discuss the status of our relationships with GroupM and Fox which we believe will contribute nicely in 2023. Our preferred partnership with GroupM is continuing to scale, gaining momentum as we move into 2023 and a new season of upfronts. GroupM has successfully launched 20 plus premium CTV accounts with more to come. The next phase is launching OLV into the GroupM marketplace, which presents an additional expansion opportunity. We are also very pleased with the progress of our Fox relationship, where we serve as the SSP partner to power programmatic campaigns for one Fox video inventory across the company's leading entertainment, sports, streaming, and news portfolio. The launch is very successful, and it is also now a part of the Group M premium marketplace. On the DVplus side, we grew revenue X-TAC 4% year-over-year, This growth builds on Q3 progress in spite of a tough ad spend environment. Our success is attributable to our continued focus on customer-based improvements to assist buyers to find and win and publishers to monetize the massive volume of additional impressions we've added since last year. Some examples of recent customer wins include BuzzFeed, who is in the early stages of onboarding demand manager, The Arena Group, a tech-powered media company which includes premier pubs such as Sports Illustrated, The Street, Men's Journal, and Parade, has chosen Magnite as its preferred PMP partner. And Trusted Media Brands, which reaches more than 200 million consumers worldwide across every screen, selected Magnite's Demand Manager solution and has seen approximately an 8% CPM lift when using Demand Manager. In closing, I'd like to address the recent news regarding two SSPs exiting the space, EMX declaring bankruptcy and Yahoo shuttering their SSP business. Some industry pundits have concluded that this might be the beginning of the end for the SSP industry. We couldn't disagree more. What we're seeing now isn't the beginning of the end of the SSP. but the death of the undifferentiated SSP. For years, the market has borne the weight of a raft of SSPs with little innovative technology and little more to offer than recirculated DSP demand. Magnite, meanwhile, has been investing in a range of essential sell-side technologies, demand manager to get the most from the header, carbon and nth party to help publishers take back control of audience and addressability as third-party cookies are phased out, spring serve for CTV ad serving, and a demand facilitation team that delivers proprietary demand at global scale. Add all this to the best yield management tools for every media type, including CTV, OLV, display, audio, native, and digital out of homes. The Yahoo decision underlines what we have long known, that it's extremely hard for media owners of any size to build and maintain a sell-side technology stack that can keep up with the industry's endless stream of evolutions. Indeed, it's hard enough for dedicated technology companies to stay ahead of the curve, but no sell-side ad tech company is better positioned than we are to help publishers thrive today and in the future. As supply path or SPO accelerates, Magnite stands to gain in several ways. First, as a recipient of additional ad spend when competitive platforms go offline. Second, as sellers migrate to the partner that's most differentiated, indispensable, and likely to bolster their bottom lines. And third, as buyers consolidate spend on a select list of SSPs that meet all of their complex criteria. How does this end for the SST industry? Well, very similar to the winner take most consolidation that we've seen on the DSP side. We are in the late innings of SST consolidation, and Magnite is poised to be that winner take most victor. With that, I'll turn the call over to David.