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spk12: Good day and welcome to the Magnite First Quarter 2024 Earnings 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 hand the call to Nick Kormeluk of Investor Relations. Please go ahead.
spk07: Thank you, operator, and good afternoon, everyone. Welcome to Magnite's First Quarter 2024 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 are 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 First Quarter 2024 quarterly report on Form 10Q and our 2023 annual report on Form 10K. We undertake no obligation to update forward-looking statements or relevant risks. Our comments here today will include non-GAAP financial measures, including Contribution X-TAC, or Less Traffic Acquisition Costs, Adjusted EBITDA, and Non-GAAP Income Per Share. Reconciliation between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and the financial highlights deck that is posted on the Investor Relations website. At times, in response to your questions, we may offer additional 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. Thank you, Nick.
spk06: I'm pleased to report that results for Q1 once again exceeded our top-line guidance for Contribution XTAC across all business lines, particularly CTV, which grew 18% in the quarter. Our DV Plus business also performed very well, delivering Contribution XTAC growth of 9%. We've had a great start to 2024 and an exceptionally strong march, and remain optimistic that positive trends will continue throughout the year. Our -in-class CTV platform benefited from a number of key accelerators. Last quarter, we emphasized the strength of our platform in handling live sports. In the quarter, this was demonstrated through strong performance in NCAA Basketball March Madness, proving how valuable Magnite is as a monetization partner for this highly sought-after inventory. Our ad-serving business, SpringServe, also delivered stellar results from new wins and ramping partners, and continues to be a strong differentiator for us and highly strategic. The combination of SpringServe and our Magnite streaming SSP makes us much more than just a conduit for demand. We offer a complete solution that includes ad-serving, yield monetization, audience capabilities, and a host of tools to protect the consumer viewing experience and honor complex rules around competitive separation and frequency capping. We are also deeply embedded within our clients' workflow, so from their perspective, this combined implementation of our ad server and SSP looks more like a typical enterprise software solution. This stickiness creates a meaningful moat and barrier to entry for others. And in our case, the barrier is not just workflow from ad operations, it is also in the form of superior monetization. For all of these reasons, we believe having the best streaming first ad server and the most technologically advanced SSP combined in one offering gives us a significant market advantage in retaining, expanding, and winning new business. We've been really excited to build on our U.S. leadership position by expanding SpringServe globally with new wins internationally and broadening existing partnerships. These wins and ramping customers include Titan for Phillips Operating System, Barca One, Barcelona Football Club's streaming app, Altis France, and YTV Japan, a leading Japanese broadcaster. Clearline, our self-service direct buying platform, is continuing to gain traction, and we have numerous agencies and multiple brands testing and transacting through Clearline. On a particular note, we are very excited to announce an expansion of our MediaOcean partnership to include an exclusive deal for CTV buying through Clearline. MediaOcean represents over $200 billion in total spend, and their products are deeply integrated into the linear TV media buying workflows of agencies and brands. Through this partnership, linear TV buyers will be able to use the MediaOcean planning tool to directly buy CTV inventory through Clearline, specifically targeting a large $60 billion plus U.S. linear TV total addressable market for us to be able to convert into CTV ad buys. In addition, through feedback from our various agency partners, we are hard at work on building and launching additional features and functionality in Q2 in preparation for live sports programming like the Summer Olympics, NFL, and college football, as well as the fall elections.
spk13: Now stepping
spk06: back to look a little bit more broadly at the CTV market, recently some attention has been given to the advent of DSPs connecting directly to sellers in the connected TV landscape. Some observers have been anxious about what this means for sell side platforms like Magnite. Our perspective, backed by both data and experience, leaves us more optimistic than anxious. It's important to remember that the concept direct connections isn't new. The trade desk introduced Open Path across the display and video just over two years ago, sparking similar concerns. Despite this, our TV plus business has continued to gain share and we have accelerated our growth rate year over year. This experience strengthens our confidence. While some large media owners are likely to test or adopt a dual pipeline approach to drive incremental programmatic demand, we believe differentiated SSPs like Magnite will continue to thrive for the following reasons. First, it's about values and incentive alignment. Demand side platforms are, by definition, incentivized to prioritize the needs of advertisers and agencies over anyone else. In contrast, SSPs like Magnite are built to help the sell side win full stop. Everything we do is through this lens, including the guidance we give on a daily basis and the tech we provide for complex operations such as billing, collections, reconciliation, fraud protection, and of course, yield management. Second reason relates to holistic yield management. SSPs are uniquely positioned to help media owners optimize yield decisions holistically, leveraging data and AI insights to maximize clients' revenue across all formats and channels. The larger, more global, and more technically comprehensive the SSP, the more effective it is. And Magnite is uniquely positioned on all these fronts. The third reason is a universal, more efficient, safer publisher deal environment. A universal deal library, such as what we provide for many of our seller clients, enhances deal value by ensuring broader and more equitable demand access. The alternative, under a direct connect scenario, is multiple deal libraries in each connected DSP, resulting in buyer inefficiency, potential data leakage, and poor user experience. Number four is all about the ability to capture demand from a growing number of diversified streaming advertisers. We are in the early stages of CTV advertising, and the focus, rightfully so, is capturing linear dollars spent by broadcast advertisers. Today, a handful of DSPs handle this business. But that isn't the future. The future is ,000-plus advertisers, not 500. These digital-first advertisers will demand precise targeting in a biddable environment and will partner with a host of DSPs and buying tools. It will be impossible for a streaming publisher to directly connect all of this demand without absorbing huge build-out costs for no economic value. These publishers will lean on a tech partner that can easily integrate this disparate demand and ensure the best yield. Magnite's combination of SSP and ad server uniquely positions us as the monetization partner of choice for CTV publishers. And the last reason is our unique demand. Magnite's strategic agency deals, managed service operations, clear line demand, and partnerships like our exclusive deal with MediaOcean, represents a vital part of publisher revenue streams, and this revenue only flows through our SSP pipes. It's also important to mention that almost any direct DSP implementation is integrated through SpringServe, either as the primary ad server or as the programmatic layer sitting on top of third-party ad servers. So while the disintermediation narrative makes for a nice headline, Magnite continues to participate in the economics. Our deep partnerships with the likes of Disney, Roku, Warner Brothers Discovery, Paramount Fox, Samsung, LG, and Vizio ensure we have a valuable long-term role in the growth of the CTV market. We are excited to enter the 2024 upfront season, during which a majority of these partners will continue to expand their programmatic advertising efforts as it relates to CTV ad sales. Now moving over to DV Plus. Q1 once again finished strong with revenue extract growth of 9%. Our results continue to be driven by extreme focus on buyers, improving monetization for sellers, improving performance with AI, and investing in formats such as native, audio, podcast, and digital out of home. As you are aware, Google recently announced yet another delay in its deprecation of third-party cookies. The announcement was not unexpected and notwithstanding the delay, we will continue to do testing and work with Google so that when we are prepared to fully support privacy sandbox when it eventually launches. In addition, we believe we have built the industry's best technology platform to help publishers better monetize their first-party data. Ultimately, we believe the elimination of third-party cookies will greatly strengthen our market position as other SSP competitors will struggle to support new third-party solutions and do not possess the scale or strategic proximity to publishers necessary to support first-party segment creation. Our DV Plus scale continues to grow as we add new publishers and see over 1.2 trillion ad requests daily, offering the broadest and most efficient customized supply of inventory for our DSPs and brands to find and target the users they are looking to reach. In closing, we are excited about the business we have built and off to a great start to 2024. The prospects for Magnite and our growth opportunities are very strong. With that, I'll turn the call over to David for more detail on the financials. David? Thanks, Michael.
spk08: We are pleased to have a strong start to 2024 with CTV and DV Plus Contribution Extact significantly beating the high end of our guide. We also reported an adjusted EBITDA margin of 19% for the quarter, which is above the high end of our guidance range. Total revenue for Q1 was $149 million, up 15% from Q1 2023. Contribution Extact was $131 million, up 12%. CTV Contribution Extact was $55 million, up 18% year over year, which significantly exceeded our guidance range. A strong contribution from live sports, including better than expected March Madness results, as well as continued growth in ad serving, were significant drivers of CTV. Our CTV outperformance was entirely driven by our programmatic offerings, with managed service down slightly year over year. DV Plus Contribution Extact was $76 million, an increase from 70 million, or up 9% compared to the first quarter last year. Our Contribution Extact mix for Q1 was 42% CTV, 41% mobile, and 17% desktop. From a vertical perspective, automotive, financial, and food and beverage were our strongest performing categories. Categories that did not perform as well were entertainment, home and garden, and technology. Total operating expenses, which includes cost of revenue for the first quarter, were $163 million, a decrease from $231 million in the same period last year. A primary driver of the decrease was the result of the SpotX acquired intangible assets that became fully amortized in the third quarter of last year. Adjusted EBITDA operating expense for the first quarter was $106 million at the low end of our guidance range. The increase from 93 million last year was driven by higher cloud computing expenses, planned event and travel related expenses, including our full company offsite in Q1, as well as personnel related costs driven by annual merit increases and payroll tax resets. Net loss was $18 million for the quarter compared to net loss for the first quarter of 2023 of $99 million. Adjusted EBITDA was $25 million, and Adjusted EBITDA margin was 19% for the first quarter, which compares to $23 million in a margin of 20% last year. As a reminder, we calculate Adjusted EBITDA margin as a percentage of contribution extra. Gap loss per basic and diluted share was $0.13 for the first quarter of 2024 compared to a loss of $0.73 for the first quarter of 2023. Non-Gap earnings per share in the first quarter of 2024 was $0.05 compared to $0.04 reported last year. The reconciliations to Non-Gap income and Non-Gap earnings per share are included with our Q1 results press release. Our cash balance at the end of Q1 was $253 million, a decrease from $326 million at the end of the fourth quarter. The decrease was due to typical seasonality in our business. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs, were $15 million for the quarter. Operating cash flow, which we define as Adjusted EBITDA less cap ex, was $10 million for the quarter. Our net interest expense for the quarter was $8 million. As we announced last quarter, we successfully refinanced our credit facilities in Q1, which stabilizes our capital structure for the foreseeable future. Our net leverage was 1.7x at the end of Q1 due to the same typical cash seasonality I mentioned earlier. We expect to see net leverage improvements in future quarters this year and expect a net leverage ratio of 1x or less by the end of the year. I will now share our expectations for the second quarter and full year. For the second quarter, we expect Contribution XTAC to be in the range of $142 to $146 million. Contribution XTAC attributable to CTV to be in the range of $59 to $61 million, comprised of double-digit programmatic CTV growth, partially offset by lower managed service contribution, which is going up against a strong comp in Q2 2023. Contribution XTAC attributable to DV Plus to be in the range of $83 to $85 million, and adjusted EBITDA operating expenses to be between $101 and $103 million, which implies adjusted EBITDA margin of approximately 30% for Q2 in the midpoints. For the full year, we are raising both top and bottom line guidance. We are raising Contribution XTAC to grow at least 10% with CTV to grow faster than DV Plus. We are increasing our expected adjusted EBITDA margin, now expected to expand 100 to 150 basis points over 2023, and we are increasing our expected adjusted EBITDA growth to the mid-teens, up from double digits previously, with even higher growth in pre-cash flow, and total capex to be in the -to-high $40 million range, including PP&E and capitalized software. We are off to a great start in 2024, and are very encouraged by the recovery in our CTV growth. We are excited about the opportunities ahead of us, and look forward to continued strong programmatic CTV performance. And with that, let's open the line for Q&A.
spk12: We will now begin the question and answer session. To ask a question, you may press star, then one, on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause
spk11: momentarily to assemble the roster. And our first question comes from Shyam Patil
spk12: of Susquehanna. Please go ahead.
spk09: Hey, guys. Congrats on a really strong result there. I had a couple of questions. Michael, you talked in your prepared remarks about CTV benefiting from strength in ad serving. I was wondering if you could talk a little bit more about that and just opportunities to kind of expand ad serving going forward. And then also, I guess, second question, on Clearline, you talked about the Mediosyn partnership and the Clearline integration. Can you just talk about, I guess, for that partnership and then just kind of Clearline overall, just how you think about the contribution from this over time? Thank you.
spk06: Yeah, sure, Shyam. So on the ad serving front, yeah, it's two stories, right? So ad serving itself has just so far exceeded the expectations. If you recall, when we acquired SpotX, we had the option to be able to buy spring serve at the time. And it came with a kind of expectation of performance and everything that we thought of on the top range of performance. It's so far exceeded. So it's growing incredibly fast through same store sales and also through new customer adoption. It really is the rare choice for digital first streaming companies. You know, obviously, the broadcasters have been at online video for a long time and Freewheel has a very good position in that market. But if you look at the OEMs, you look at fast services, you look at virtual MVPDs, all of these guys, spring serve is the server choice. So as a standalone, spring serve is killing it. But the secret sauce here is spring serve in combination with our SSP. So as the year goes on, you're going to see one unified login. You know, clients that don't use spring serve will have access to spring serve tools. Clients that are spring serve only clients will have access to the SSP. And we think that in addition to just being a stickier relationship with publishers, having the two together will drive superior monetization. So we couldn't be more excited with the prospects going forward and with the results to date with spring serve. As it relates to Clearline, you have very excited about the Mediocean relationship. As you know, their software sits at all the major agencies. Everyone uses it. They use it for planning, for linear. And increasingly they're using it to process insertion orders to send over to those very same broadcasts for their streaming service. And the need there is to automate that, to make that more programmatic. And so we think that there's a real opportunity here partnering with our partners at Mediocean to really shift the market and the way they think about the way that we're going to be able to move forward in terms of the transacting kind of publishers sold deals that used to be insertion or now can be processed programmatically with targeting, et cetera. So really excited about that, obviously very early days. But we really rushed this partnership and got it in place so that it's there for the up fronts. And I think that we're very excited about the timing there. As for the prospects at Clearline, I think we've been very realistic that it will be a modest revenue generator in the near future. But we think that providing this kind of buy side alternative for certain types of buyers, whether they're extremely fee sensitive or they're not needing to have the full suite of DSP services, we think it's going to be very attractive and continue to invest in it and put resources against it.
spk13: Great. Thanks, Michael.
spk11: The next question comes from Laura Martin of Needham.
spk12: Please go ahead.
spk10: I'll add my congratulations. Nice speed and raised quarter, you guys. Congratulations. Thanks, Laura. I have two, Michael. So one is, so Roku said that they were seeing CPM slothness because Netflix is coming into the market and I probably Amazon Prime Video 2, which is creating an oversupply. So that's sort of my first question is, do you see a cost per thousand pricing difference within the CTV market between the TV OEMs like Roku, LG, Samsung, and what you call the broadcasters? And if so, if there is a difference, are there trends that are different? Or is the whole CTV market moved together? That's my first one.
spk06: Yeah, we look at it holistically, Laura, but we also do look at it in cohorts, right? And so the broadcaster cohort versus the OEM and kind of made for the medium kind of guy. And there is a disparity in CPMs, no question about it. They obviously, not surprisingly, are higher for the broadcasters than Netflix of the world and lower for folks like the OEM. That Delta hasn't really widened over the last several quarters. We've seen some price decline. Obviously, Netflix went out at a very, very high price point. That probably wasn't sustainable. It was a launch. So that's come back down. But generally speaking, we've seen a little softness in CPMs. But when I say a little softness, we're talking very low single-digit decline. So it hasn't been what the market has kind of, some of the pundits have said, which a cratering of CPMs, that hasn't occurred.
spk10: Super interesting and helpful. Next week, we're walking into the upfront market where $9 billion, $19 billion is spent in the upfront market. If you, what is your gut feel when we're on the other side of the upfront market, when all the new deals are signed by August? How much will programmatic be this year compared to the past? Are we at a tipping point? Do you feel that we're a lot more programmatic deals are actually going to get signed in this year's upfront? What's your point of view on that?
spk06: I do, Laura. And I think that what we'll see, the majority of that will still be the publishers sold directly with the premium guys. They'll be more biddable, but not the majority of it by any stretch. And so, you know, our ad spend growth rate continues to be toward with these guys, and most of that's publishers sold deals. And I think you're going to just see more and more of that because that's what buyers want.
spk13: Okay, so that's a key driver for you
spk10: next year, if that prediction comes true then, right?
spk06: Well, I think it's reflected in any kind of guidance that's out there for 2024. Hard to have that go through 2025.
spk10: Okay, thank you very much.
spk06: Congratulations.
spk13: Thanks, Laura. Thank you.
spk12: The next question comes from Jason Cryer of Craig Hallam. Please go ahead.
spk04: Great, thank you, guys. Michael, I appreciate the time you spent on Direct Connections. Just curious, if we look at that, you know, looking forward over, like, the next three to five years, what does the dialogue look like on Direct Connections? Do those still exist? Do they maybe just exist for, you know, a few of the largest buyers and a few of the largest publishers? Or maybe what is your thought on the evolution there?
spk06: It's a great call. Well, I mean, I think, not trying to be too self-serving, that I think that CTV is quite different. And, you know, the point we tried to point out about in the Deal Library area is that it's really tough and inefficient for a publisher to create Deal Libraries in every DSP. That's the role of the SSP, right? You create the Deal Library in one location. Every buyer knows where to go to get it. So I think that there's that element, there's an element of risk for a publisher. If they haven't done it before, it can be costly. It requires engineering talent to do. So I think based upon those kind of broader challenges, I don't think this is for everyone. You know, I think that those that have the technical ability to do so will sample this because who wouldn't want incremental demand? But I do think the vast majority of dollars that will be flowing into CTV will flow through pipes like ours because of the reasons that we alluded to in the script today.
spk04: Thank you. I want to go back to the CTV conversation from kind of last summer, fall. Obviously, you've had a nice bounce back there in your business. And if we just kind of look over the last two, three quarters, are you just seeing generally better advertising trends that's driven those tailwinds? Are the buckets changing, which is creating a more favorable take rate? Or you did kind of give some detail on managed service, but I'm curious if you can give details on any of those other variables.
spk06: Yeah, Jason, I would say that – and David will correct me – but I would say the biggest driver is macro. It's an improved ad environment and there's more spend available. And I would say from the last time we talked about the buckets, you know, magnet-managed deals, publisher-managed deals, and managed service, maybe on the margins the actual publisher-sold deals have increased. So what you're seeing is obviously a lower take rate for that category, but more of them, many, many more of them. And so I still think right now when folks look at available inventory – and there's a lot of it. Amazon Prime obviously dumped a bucket of inventory onto the market this last quarter. I think there's still a real preference for the buyer to go super premium, brand name, broadcasters that they're comfortable with, shows that they're comfortable with. And so I don't think that that trend line will change dramatically anytime soon. I mean, on the margins, you know, our march over performance, some of that was driven by managed service, and particularly around the NCAA basketball. But I don't think there's going to be any dramatic change throughout 2024 in terms of the mix of buckets.
spk13: Perfect. Thank you. Thanks, Ben.
spk11: The
spk12: next question comes from Matt Swanson of RBC Capital Markets. Please go ahead.
spk05: Yeah, thank you. And I'll add my congratulations to the team. Maybe if we get David involved here, we haven't had to deal with an improving macro for quite some time. Could you just talk a little bit about what your approach to guidance is with some of the momentum we're seeing in the market?
spk08: Yeah. And I want to caveat a little bit. The macro is improving, but we wouldn't characterize it by any means as full steam ahead. So if we take a vertical view, for example, you know, there was some strength in automotive, a lot of electric cars sitting on lots that need to be sold, financial, food and beverage. You know, a lot of CPG folks, you know, need to maintain support for increased prices, which they've had to put in place as a result of inflation. But, you know, we're also seeing some weaknesses in technology in particular. I think WPP and a few others have called that out. Entertainment, we still haven't fully recovered, you know, from some of the strike issues last year. And so I think from a guidance perspective, I think we remain cautiously optimistic. So we're certainly, you know, we appreciate the improvements that we have in place. And, you know, for future potential there. But I think cautiously optimistic is the way to describe it. Also, you know, we've spoken in the past about managed service and how that business is a little more volatile than some of the other businesses. And so as we look forward to this year in that group in particular, it obviously continues to be a super important value add for the company. But it's, you know, we had kind of stronger comps early in 2023, first half of 2023. So that's a little depressing now from a growth perspective, not personally depressing. And, you know, those comps ease up the second half of the year. And so for managed service specifically, you know, perhaps a little extra bit of conservatism, given that volatility, but, you know, we'd also see some strengthening throughout the remainder of the year.
spk05: That's really helpful, Coli. And then Michael also super helpful, Coli, when we talked about the direct connections and you kind of outlining your value proposition with those key points. But could you maybe dive a little deeper into Disney specifically? You know, it's a really close relationship and just maybe talk about kind of the messaging that you've heard from them and just kind of how much it aligns with your view.
spk06: Yeah, so I mean, we talked a little bit about I guess it was our cycle of earnings calls. This is the first time in earnings. But the, you know, the relationship actually is kind of been portrayed as a contraction where it's actually more of an expansion. We're actually working with them now through our managed service team. We are working with them in political advertising and remain their sole SSP partner. They own their own ad server. So if they were using a commercial ad server, more than likely it would have been a connection through Spring Serve into their commercial ad server. But because they own their own ad server, I think they felt as though they had the technical capabilities to do a connection with the two largest DSPs. It's been kind of intimated that it begins and ends there. It's a lengthy process. You know, I commented earlier about the risk of implementation in the length and the expense of it. They're not going to even lift a finger on the trade disk integration until 2025. And so I think it's an experiment. I'd probably do it if I were them because it's been pitched as incremental demand. Why wouldn't you as a publisher? But I do think they're quite unique in the sense that they do own their ad server and they do have engineers to do these kinds of things. So, you know, I think our Disney relationship remains incredibly strong. We are talking about workflow for 2025. And, you know, I do think that they're an outlier as it relates to most of the top streaming services.
spk13: Thank
spk11: you. The next question comes from Zach Cummins of B. Riley
spk12: FBR. Please go ahead.
spk02: Hi. Good afternoon. Thanks for taking my questions and congrats on a strong start to the year. I was really hoping you could just further unpack some of the assumptions you're making for CTV business. It obviously seems like some tailwinds from live sports and some easier comps as we go into the second half of the year. But just curious of your approach to CTV specifically as your sudden guidance for the remainder of this year?
spk08: Yeah, I mean, I think our approach, you know, we continue to be bullish about the recovery in the programmatic component of CTV. Q1 was just an exceptionally strong quarter from a CTV perspective. And as we talked about, we continue the programmatic CTV component to, you know, continue to grow in double digits and, again, offset by declines in Q2 that will be a little bit, in managed service, will be a little bit greater than Q1. And so as we, you know, look forward, we would expect that continued CTV programmatic growth. And we'll get a little bit of a boost, particularly in the second half of the year, you know, from political, where, you know, we've talked about political spend levels in the past, 2022 and 2020, of roughly $10 million for the company. And if one were to assume that, say, that doubled in this next cycle, most of that hitting the second half of the year, you know, that's also factored into our guidance.
spk13: Understood. And just one follow-up question is around capital
spk02: allocation. And nice to see that you're targeting a net leverage ratio closer to one times at the end of this year. But as you continue to strengthen the balance sheet, how do you balance thinking of share repurchases versus continuing to pay down debt?
spk08: Yeah, that's a really good question. You know, I guess the first point is we're just, we're thrilled to be in that position. And, you know, with the refinancing of our debt, removal of a springing covenant related to our converts and the progress on this net leverage ratio, as you mentioned, you know, it opens up a lot of possibilities for us. So, yeah, we have a program in place for $125 million program that could be used for convert repurchase or for share buybacks. Given where the converts are trading, you know, it's not favorable for us to take them off the market at this time. And so, you know, it would lend ourselves to consider share repurchases more significantly. You know, so we'll where I would say it probably wasn't on the table in 2023, at least very significantly. I think, you know, that's a growing area of focus for us, although, you know, facts and circumstances as we move forward will determine, you know, if we take action or not.
spk13: Understood. Well, thanks for taking my questions and best of luck with the rest of the quarter. Thanks, Zach. Thanks,
spk12: Zach. The next question comes from Dan Kernos of the Benchmark Company. Please go ahead.
spk03: All right, thanks. I'll take a stab at this. I'm trying to listen to like four calls at once. Michael, it sounds like you guys did another deal, small, but with one of the linear players. We know you already have a relationship with Scripps in particular, but it feels like they're all trying to come online. And it's sort of a, you know, facilitation of the move to streaming, but also an untapped opportunity that a lot of your peers or others aren't going after. So just kind of curious about that particular opportunity. And David, you just kind of mentioned the political aspect that I wanted to get into. But it sounds like a lot of agencies are actually trying to transact political on almost a purely programmatic basis, particularly in the CTV universe. So I guess that could be a boon depending on how many dollars shift there. But just curious if that's what you're seeing and if you're sort of negotiating some of the deals on kind of that premise. Thanks.
spk06: Yeah. So, yeah, Dan, I think local as it relates to streaming is a story that's not well told. And that's on us as much as anyone. And look forward to talking much more about that because we do have a lot of momentum in that area. We think it's really promising. And I think you're right. It's kind of green space for us in terms of being able to secure a lot of that business and relationships. And as it relates to political, and I'll let David opine, but, you know, it's going to be a very back loaded spend. And so anything that we talk about political is kind of conjecture because it ain't flown yet. And so we think it's going to be big. We have built it into some of the forward looking guide. But how big when who's it going to come from? How much of its programmatic? It's all very encouraging, but it's still kind of on the come.
spk08: Yeah. And, you know, we've got a crack political facilitation team in place. So we're, you know, you know, we have very established relationships with those players and we have tried to take a fairly modest approach in our guidance. And so to your point, it could create an upside, certainly in the latter half of the year.
spk13: All right. Thanks, guys. Appreciate it. Thanks, Dan.
spk12: Our next question comes from Omar Asuki, Bank of America. Please go ahead.
spk01: Hey, guys, this is Arthur Omar. Thanks so much for taking the question and congrats on strong results. This is a quick follow up on the MediaOcean partnership. Michael, you talk about automating insertion orders to the clear line integration. How do we think about the economic implications of that? Like, should we think about higher take rate on these direct deals from your existing customer base? Or is this expected to be something that's also going to drive incremental market share growth because, you know, you're offering easier access for these new buyers to execute the deals programmatically?
spk06: Yeah, so I think the way to think about it is obviously there's the take rate that's involved in the transaction that is on the Magnate side. And I would envision that there'll be a buy side fee associated with using this tool from MediaOcean. So obviously, as a partnership, there's shared economics on the buy side piece of it and on the sell side piece of it. That's Magnate economics. So I think, you know, anything that would flow through it is found money and it would be a creative in terms of both a take rate and a buy side fee.
spk13: Got it. Thank you.
spk11: This concludes our question and answer session. I'd like to turn the call back over
spk12: to Michael for any closing remarks.
spk06: Thank you, Andrea. I'd also like to say thank you to the Magnate team for delivering a great quarter that exceeded expectations. The performance of our team around the world has established a very solid foundation to build on for the remainder of the year and beyond. We look forward to speaking with many of you at our upcoming investor events. Cannonball will host our post-Q1 virtual investor meetings tomorrow. We will be attending the Needham Conference in New York on May 14th and 15th, the B. Riley Conference in Beverly Hills on May 22nd and 23rd, and the Craig Hallam Conference in Minneapolis on the 29th. The Evercore Conference in New York also on May 29th and the B of A Conference in San Francisco on June the 5th. We'll also be participating in meetings with Benchmark in Milwaukee and Chicago on June 11th and 12th and we'll be in London on June 18th. Lastly, Benchmark will be hosting a live from Cannes webcast on Wednesday, June 19th. Have a great evening and thank you for listening.
spk12: The conference is now concluded. Thank you for attending today's presentation and you may now disconnect.
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