Magnite, Inc.

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 Komorlik of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Magnite's fourth quarter 2024 earnings conference call. As a reminder, this conference 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 and uncertainties and assumptions is set forth in the company's periodic reports filed with the SEC, including our 2024 annual report on Form 10-K. We undertake no obligation to update forward-looking statements. Our commentary will include non-GAAP financial measures, including contribution ex-tax 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 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 SAC 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. We once again exceeded top-line guidance growth in CTV for Q4, and although our Q4 results in DV Plus were disappointing, I'm very proud of the terrific year that our team produced. We generated contribution XTAC of $607 million and processed ad spend of over $6 billion. We generated adjusted EBITDA of $197 million and $118 million of free cash flow, all record highs for Magnite. These results demonstrate that we've made the right long-term investments, are focused on the right part of the market, and are making tremendous progress. We are very confident in our future. For Q4, CTV contribution XTAC increased 23% year over year, outpacing our guidance of 18 to 21%. And for full year 2024, CTV contribution XTAC grew 19%. In contrast, our DV plus business in Q4 came in later than we expected at 1% contribution XTAC growth as a result of some unusual spend patterns post-election. This caused total Q4 results to come in below our range. That said, we're happy to report that DVplus has rebounded nicely to start 2025, and David will walk through more details in his remarks. In contrast to DVplus, our CTV business continued to grow with significant momentum. Performance was driven by overall ad spend growth and a stabilizing year-over-year average take rate. illustrating a better product mix. Our most significant growth in Q4 came from Roku, LG, Vizio Walmart, Disney, Fox, Warner Discovery, and Paramount. Netflix continues to ramp, and we remain bullish about our Netflix opportunity as they significantly grow their global ad tier and corresponding ad revenue. They will be a key programmatic partner as they expand the rollout of their ad platform in 2025. Live sports had strong growth in the fourth quarter, and we expect that to continue. We are encouraged by Disney's focus on live sports and NCAA football specifically in Q4 and their pending acquisition of Fubo to become one of the market's largest live TV subscriber bases. We also continue to strengthen our international sports business with the addition of new partners, including FIFA and Sky New Zealand. Lastly, we announced a deal with DirecTV to expand our partnership in their streaming business on top of our efforts in satellite TV. Clearline, our self-service direct buying platform, posted very strong growth in Q4 and is showing great promise for 2025. The agencies and brands we work with continue to ramp their buying. And when buyers use Clearline, not only do we receive a fee for use of the product, but many of these buyers also leverage our data, leading to additional revenue opportunities. Clearline, along with SpringServe, also power our agency marketplaces. These marketplaces, which are leveraged by GroupM and Horizon, among others, provide agencies with their own end-to-end private label platform, and establish direct connections with sellers, allowing more spend to go to working media. We believe agency marketplaces are a differentiated product offering for Magnite and will contribute nicely to our growth throughout 2025. Now to DBplus. As I mentioned earlier, to start 2025, the business has resumed growing at healthy pace and then mid to high single digits. We've seen this rebound broadly across verticals, and we're also seeing some benefits from ramping new deals, leading us to believe that the business has normalized after the unusual Q4 trend we experienced. Audio, which is part of our DV Plus supply footprint, continues to be a solid growth driver, and we see our partners focusing more and more on programmatic ad revenues. We are excited about the growth opportunities of partners such as iHeart and Spotify this year and beyond as this channel grows. Now I'd like to turn to AI, where we have some really exciting new initiatives. We have a long history of using machine learning, neural networks, and sophisticated data science to optimize our data centers and efficiently process trillions of ad requests per day. These tools reduce our costs and the cost for buyers, allowing them to spend more across Magnite. In addition, these tools that power operational efficiencies for clients behind the scenes, in 2025, we will be releasing a number of new client-facing tools powered by generative AI. As an example, we recently launched in beta a generative AI feature for our Curator product, that allow buyers to quickly and easily identify the optimal audiences to meet their marketing goals while improving match rates. Other AI-powered tools include, in DBplus, a yield optimization engine for our demand manager header bidding solution, and in CTV, a tool for automating and standardizing content classification signals. We are optimistic that these tools will help drive significant value for our partners and look forward to additional AI-driven product releases throughout 2025. These advances will just further solidify us as the leading independent SSP. Before I turn the call over to David, I'd like to address head-on comments by the Trade Desk and their earnings call two weeks ago regarding their Open Path initiative in CTV. and the presumption that it will ultimately displace SSPs. Large parts of this argument are flat wrong, but before I get into our points of contention, first a point of agreement. I can't blame them for thinking most SSPs are headed for a rel viz, but it's not because the SSP model is inherently flawed or inefficient. It's because most SSPs' tech is undifferentiated and outdated. Most of our competitors in the streaming space have taken display advertising technology and hacked it into working with CTV. Because they have no CTV ad server, they're limited to acting as a reseller of non-unique inventory in an open market capacity. It's a low-value practice. Meanwhile, our CTV offerings are purpose-built for the space, including our streaming SSP platform and, critically, our SpringServe ad server. which is the industry's leading programmatic mediation layer. Magnate doesn't need to rely on reselling inventory because our tech has earned us direct relationships with every major streaming platform other than YouTube. We can now reach over 90% or 92 million U.S. households and over 90% or 75 million European households in EMEA's big five countries, which is amazing if you think about it. Trade Desk also argues that Open Path is more efficient for sellers and avoids the unnecessary fees of middlemen. Yet, the Trade Desk charges sellers a healthy fee to use Open Path in addition to their fees on the buy side. In reality, the economics are unchanged for publishers. How is that more efficient? Moreover, they claim that each seller using Open Path would be better served conducting its own yield management. This misses the very obvious fact that most sellers don't have this technology and would be incredibly expensive and inefficient to build in-house. Building their own tech wouldn't be just inefficient, but disadvantageous, as none have access to the reams of pricing data that inform Magnite's yield management systems. As a result, sellers would be far more likely to leave money on the table. This is why sellers connecting to OpenPath continue to find enormous value in using SpringServe. Further, the Trade Desk argument ignores the importance of diversity of demand. While they are obviously a huge player, no one DSP can represent all the world's demand for every geo and use case. In addition to established DSPs, we are seeing an explosion of DSPs focused on SMBs and performance advertisers. These essential demand sources aren't accessible through OpenPath, and it's impractical to think sellers will tap into all of them by integrating and managing dozens of direct connections. That is exactly what Magnite is built for. Simply put, OpenPath doesn't replace the need for yield management or remediation level. So even as OpenPath grows, Magnite's technology will still be used and valued by publishers in the vast majority of OpenPath CTV transactions. But a future dominated by OpenPath is not in the best interest of sellers. Trade Desk talks a lot about objectivity, but let's be clear. As a DSP, their allegiance lies with the buy side. Despite their marketing effort, OpenPath is not about providing long-term value to sellers. It's about extracting more fees from every transaction that runs through their platform. It's about accelerating the commoditization of sellers' inventory and data. We see what happens when one player becomes too dominant on both the buy and the sell side of this industry, and sellers always end up getting the short end of the stick. As a sell side company, Magnite's mission is to protect the interests of media owners. Like the Trade Desk, we believe in the open internet, but we also believe that for it to thrive, there must be a healthy and fair value exchange between buyers and sellers. That's the future that technology like SpringServe enables, and that's the future we'll always be working towards. In closing, we delivered strong Q4 CTV results, with overall quarterly results being negatively impacted by DVPlus's post-election spending pause. However, our recent trends give us comfort that DVPlus headwinds are not structural, as we've seen in normalization of trends in Q1. The strategic investments we've made to create the world's leading programmatic CTV platform are clearly paying off, and we are incredibly excited for the remainder of 2025. With that, I'll turn the call over to David for more detail on the financials. David?