Magnite, Inc.

David will provide greater detail on our financial results and future outlook in his prepared remarks. Our CTV results were propelled by strong performance in our spring serve ad server business and by our managed service business where we saw good traction with new and existing partners. We've had success this quarter with our lead partners in CTV that include LG, Vizio, GroupM, Disney, Fox, and Roku, who recently announced changes to their go-to-market strategy. Our momentum with these partners is very visible with our active participation in the Upfronts and Newfronts that have recently kicked off, where programmatic continues to play a bigger role, especially as it relates to direct deals. On the new CTV partner front, Rakuten TV, one of the leading video on-demand platforms in Europe, recently adopted the SpringServe tile solution. As a reminder, this proprietary ad unit provides publishers with the flexibility to showcase custom ad creative within the streaming interface in any size in a wide variety of formats. Rakuten joins Vizio and others who are now leveraging tiles to create incremental revenue opportunities and enhance the advertising experience and effectiveness within their platforms. Moving on to DV+. We continue to build momentum with our initiatives in this business. DV Plus Revenue XTAC grew 7% year over year, showing further improvement in share gains. We have seen broad-based improvement this quarter across many of the leading DSP partners we work with. As I have mentioned in the past, DVplus growth is a result of many incremental wins and improving the fill rates between our publishers and DSPs. And we look forward to continued strength as we drive further improvements in the quarters to come. We had a very busy quarter from a platform perspective. In February, we officially launched Magnite Streaming. Magnite Streaming is our next generation CTV and OTT platform that merges the best features, functionality, and technology from Magnite and Spotix. Customer feedback so far has been very positive. Migrations to date have gone very well, and we expect to have all migrations completed shortly after the end of Q2, as planned. On the product front, we also announced the launch of Clearline in early April. Clearline is a self-service solution that provides agencies direct access to buy premium video inventory across all Magnite publishers and is ad server agnostic. Clearline significantly increases spend going towards working media, makes it easier for sellers and agencies to securely share data, and helps magnate publishers generate more revenue and develop new sources of unique demand. This product captures CTV ad dollars that have traditionally been transacted outside the programmatic channel through direct deals and therefore represents an incremental opportunity to bring additional ad spend into the ecosystem. In addition to our agency launch partners, We've received positive feedback from publishers as well who see this as a potential alternative to drive additional revenue. Clearline has been portrayed by some of the press as an alternative to DSPs. This couldn't be further from the truth. DSPs will remain the primary method for agencies to access premium video inventory on our platforms. Clearline represents a programmatic market expansion for publishers, agencies, and DSPs. We are excited to share more details on Clearline's traction in the coming quarters. Also on the technology front, we announced that SpringServe will be joining the Amazon Publisher Services, or APS, ad server certification program for streaming TV. Working with APS through the certification program is a significant opportunity for our spring serve publishers as it will add Amazon DSP demand to their existing monetization solutions. We've been doing a lot of work behind the scenes in CTV audience creation and targeting, helping media owners extract greater value from their first party publisher data while carefully protecting the confidentiality of their user IDs. This is a big shift from the browser world to display and online video, where the buy side would typically perform this work through third party cookies. More to come on this in the quarters ahead. Before I turn it over to David to cover the financials, I'd like to mention the promotion of David Bonasera to the role of Magnite's new CTO. He's been pretty busy, as you can see from the platform and partner developments I just covered. David joined the company in 2021 when we acquired SpringServe, which he helped co-found and scale to a leader in video ad serving with an impressive global client list. Prior to his appointment as our CTO, David was serving as a member of our office of the CTO, as well as leading our SpringServe and CTV platform engineering efforts. He is a phenomenal leader and technologist, and we're thrilled to have someone with David's unique experience and capabilities lead our global technology organization. Welcome, David. With that, I'll turn the call over to David Day for more details on the financials. David?

Thanks, Michael. Key one finished with strong momentum. As Michael mentioned, Revenue X-TAC, Adjusted EBITDA, and adjusted EBITDA margin all exceeded our guidance for the quarter. Total revenue for Q1 was $130 million. Revenue XTAC was $116 million, up 8% from Q1 of 2022. CTV revenue XTAC was $46 million, up from $42 million, or 10% from last year. DV Plus revenue XTAC was $70 million, an increase of 7% compared to Q1 last year. Automotive, travel, and food and beverage were our top growth verticals for the quarter. Consumer categories such as technology, retail and health, and fitness made more modest improvements. Our revenue extract mix for Q1 was 40% CTV, 40% mobile, and 20% desktop. From a geographic perspective, we saw good international growth that was roughly double the growth rate of the U.S. Total operating expenses, which includes cost of revenue for the first quarter, increased to $231 million compared to $158 million in the same period a year ago, with the increase primarily driven by $53 million of non-cash accelerated amortization resulting from our platform consolidation. Adjusted EBITDA operating expense was $93 million and within our guidance range. This was an increase of less than 1% sequentially from Q4. We would typically see a bigger increase seasonally, but the impact was offset by our RIF actions. The increase from $78 million in Q1 of last year resulted from increased platform and personnel expenses, along with return to office, travel, and event-related costs. Net loss was $99 million for the quarter compared to net loss for the first quarter of 2000 22 of $45 million, which includes the previously mentioned $53 million of accelerated amortization expense. Adjusted EBITDA was $23 million versus $29 million for the same period last year, and adjusted EBITDA margin was 20%. Note that we calculate our adjusted EBITDA margin as a percentage of revenue XTAC. Gap loss for basic and diluted share was $0.73 for the first quarter of 2023 and compared to a loss of 34 cents for the first quarter in 2022. Non-GAAP earnings per share in the first quarter of 2023 was 4 cents, compared to 8 cents reported last year. The $53 million of accelerated amortization expense had a negative impact on GAAP loss per share of 39 cents and a negative impact on non-GAAP earnings per share of 9 cents in Q1. The reconciliations to non-GAAP income and non-GAAP earnings per share are included with our Q1 results press release. We expect to recognize additional accelerated amortization expense of 53 million in Q2 and 8 million in Q3 this year. There were 135 million weighted average basic and diluted shares outstanding for the first quarter of 2023. Fully diluted weighted average shares utilized for non-GAAP earnings per share were 144 million for the first quarter. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs, were $10 million for the quarter. Operating cash flow, which we define as adjusted EBITDA less capex, was $14 million for the quarter. Our net interest expense for the quarter was $8 million. During the first quarter, we purchased and retired approximately $50 million in face value of our convertible notes using approximately $41 million in cash, resulting in a discount of approximately 19%. We have $34 million remaining under our current program for the repurchase of common shares and or convertible debt. Cash balance at the end of Q1 was $237 million. The reduction from year-end is based on use of cash for the repurchase of our convertible notes, typical seasonality, and timing of receivable payments around quarter-end. Our net leverage ratio is approximately 2.5x at the end of Q1, down from 3.1x year over year. We expect the ratio to be meaningfully below 2x at year end. We are excited about our business and ability to generate strong cash flow while providing the flexibility to reduce debt and maintain a healthy cash position. We continue to expect to generate significant free cash in 2023, especially in our seasonally strong second half, and we will continue to evaluate the best use of our cash as it relates to debt reduction and share repurchases. I will now share our expectations for the second quarter and thoughts for the year. Our guidance is based on recent growth trends, although we have been somewhat measured due to the continued uncertainty in the macro environment. For the second quarter, we expect revenue XTAC to be in the range of $132 to $136 million. We expect revenue XTAC attributable to CTV to be in the range of $56 to $58 million. We expect adjusted EBITDA operating expenses to increase slightly from Q1 to between $94 and $96 million, which implies adjusted EBITDA margin of of approximately 29% for Q2 at the midpoints. For 2023, we expect our revenue extract growth rate for the full year to be in the high single digits, assuming current course and speed. We expect that adjusted EBITDA OpEx will be lower in the second half of the year compared to the first half as we complete our CPV platform migration and remain focused on managing costs across the business. We anticipate full-year adjusted EBITDA will be comparable or better than 2022, and that adjusted EBITDA margins will show meaningful improvement in the second half of 2023. Our full CapEx expectation is unchanged, and we expect $40 million or less in 2023. And lastly, we continue to expect full-year free cash flow to exceed $100 million. Q1 performance gives us a great start to 2023, and our differentiated market position as the leading independent sell-side advertising company puts us in a great place to accelerate growth and expand margins as the market improves. With that, let's open up the line for Q&A.

Yes, thank you. At this time, we will begin the question-and-answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star the two. At this time, we will pause momentarily to assemble the roster. And the first question comes from Laura Martin with Needham.