Magnite (Nasdaq: MGNI), the world's largest independent sell-side
advertising company, today reported its results of operations for
the quarter ended March 31, 2023.
Q1 2023 Highlights:
- Revenue of $130.2 million, up 10%
year-over-year
- Revenue ex-TAC(1) of $116.0 million, up
8% year-over-year
- Revenue ex-TAC(1) attributable to CTV
of $46.4 million, up 10% year-over-year
- Net loss of $98.7 million, for a loss
per share of $0.73, compared to net loss of $44.6 million in Q1
2022, for a loss per share of $0.34
- Adjusted EBITDA(1) of $23.3 million,
representing a 20% Adjusted EBITDA margin(3), compared to Adjusted
EBITDA of $28.8 million in Q1 2022
- Non-GAAP earnings per share(1) of
$0.04, compared to non-GAAP earnings per share of $0.08 for Q1
2022
- Operating cash flow(4) of $13.7
million
- Repurchased $50.3 million of
convertible notes during the quarter
Expectations:
- Revenue ex-TAC(1) for Q2 2023 to be
between $132 million and $136 million
- Revenue ex-TAC(1) attributable to CTV
for Q2 2023 to be between $56 million and $58 million
- Adjusted EBITDA operating expenses(2)
to be between $94 million and $96 million for Q2 2023
- Expect revenue ex-TAC(1) growth for
full-year 2023 to be in the high single-digits
- Expect Adjusted EBITDA(1) for full-year
2023 will be comparable or better than 2022
- Continue to expect Adjusted EBITDA(3)
margin will improve meaningfully in the second half of 2023
- Continue to expect total capital
expenditures for 2023 will be $40 million or less
- Continue to expect free cash flow(5)
for the full-year 2023 to exceed $100 million
“We delivered strong results in Q1, with both total revenue
ex-TAC and CTV revenue ex-TAC exceeding the high end of our
guidance. Adjusted EBITDA also exceeded our expectations and
delivered a margin of 20% for the quarter. We see this improvement
carrying into Q2 and are cautiously optimistic for the year. We
feel very good about our market position as the leading independent
differentiated sell-side advertising company and leader in CTV. Our
ability to post positive results during challenging times
demonstrates the value we provide our partners. We continue to grow
and expand our deep partnerships and support the large industry
shift from linear to CTV advertising,” said Michael G. Barrett,
President and CEO of Magnite.
First
quarter 2023 Results
Summary |
|
|
|
|
(in millions,
except per share amounts and percentages) |
|
|
|
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
|
ChangeFavorable/
(Unfavorable) |
Revenue |
$ |
130.2 |
|
|
$ |
118.1 |
|
|
10 |
% |
Revenue ex-TAC(1) |
$ |
116.0 |
|
|
$ |
107.1 |
|
|
8 |
% |
Gross profit |
$ |
5.3 |
|
|
$ |
58.7 |
|
|
(91 |
)% |
Net loss |
($ |
98.7 |
) |
|
($ |
44.6 |
) |
|
(121 |
)% |
Adjusted EBITDA(1) |
$ |
23.3 |
|
|
$ |
28.8 |
|
|
(19 |
)% |
Adjusted EBITDA operating
expenses(2) |
$ |
92.7 |
|
|
$ |
78.2 |
|
|
(18 |
)% |
Adjusted EBITDA margin(3) |
|
20% |
|
|
|
27% |
|
|
(7 ppt |
) |
Basic and diluted loss per
share |
($ |
0.73 |
) |
|
($ |
0.34 |
) |
|
(115 |
)% |
Non-GAAP earnings per
share(1) |
$ |
0.04 |
|
|
$ |
0.08 |
|
|
(50 |
)% |
Footnotes: |
(1 |
) |
Revenue ex-TAC, Adjusted EBITDA, and non-GAAP earnings per share
are non-GAAP financial measures. Please see the discussion in the
section called "Non-GAAP Financial Measures" and the
reconciliations included at the end of this press release. |
(2 |
) |
Adjusted EBITDA operating
expenses is calculated as Revenue ex-TAC less Adjusted EBITDA. |
(3 |
) |
Adjusted EBITDA margin is
calculated as Adjusted EBITDA divided by Revenue ex-TAC. |
(4 |
) |
Operating cash flow is calculated
as Adjusted EBITDA less capital expenditures. |
(5 |
) |
Free cash flow is defined as
operating cash flow (Adjusted EBITDA less capital expenditures)
less net interest expense. |
First quarter 2023
Results Conference Call and Webcast:
The Company will host a conference call on May 10, 2023 at
1:30 PM (PT) / 4:30 PM (ET) to discuss the results for its first
quarter of 2023.
Live conference
call |
|
Toll free number: |
(844) 875-6911 (for domestic
callers) |
Direct dial number: |
(412) 902-6511 (for
international callers) |
Passcode: |
Ask to join the Magnite
conference call |
Simultaneous audio
webcast: |
http://investor.magnite.com
under "Events and Presentations" |
|
|
Conference call
replay |
|
Toll free number: |
(877) 344-7529 (for domestic
callers) |
Direct dial number: |
(412) 317-0088 (for
international callers) |
Passcode: |
4850867 |
Webcast link: |
http://investor.magnite.com
under "Events and Presentations" |
About MagniteWe’re Magnite (NASDAQ: MGNI), the
world’s largest independent sell-side advertising company.
Publishers use our technology to monetize their content across all
screens and formats including CTV, online video, display, and
audio. The world's leading agencies and brands trust our platform
to access brand-safe, high-quality ad inventory and execute
billions of advertising transactions each month. Anchored in
bustling New York City, sunny Los Angeles, mile high Denver,
historic London, colorful Singapore, and down under in Sydney,
Magnite has offices across North America, EMEA, LATAM, and
APAC.
Forward-Looking Statements:This press release
and management's prepared remarks during the conference call
referred to above include, and management's answers to questions
during the conference call may include, forward-looking statements,
including statements based upon or relating to our expectations,
assumptions, estimates, and projections. In some cases, you can
identify forward-looking statements by terms such as "may,"
"might," "will," "objective," "intend," "should," "could," "can,"
"would," "expect," "believe," "design," "anticipate," "estimate,"
"predict," "potential," "plan" or the negative of these terms, and
similar expressions. Forward-looking statements may include, but
are not limited to, statements concerning acquisitions by the
Company, including the acquisition of SpotX, Inc. ("SpotX," and
such acquisition the "SpotX Acquisition"), the acquisition of
SpringServe, LLC ("SpringServe," and such acquisition the
"SpringServe Acquisition"), and the merger with Telaria, Inc.
("Telaria," and such merger the "Telaria Merger"), or the
anticipated benefits thereof; statements concerning potential
synergies from the Company's acquisitions; statements concerning
macroeconomic conditions, including inflation, supply chain issues
or the occurrence of a recession, or concerns related thereto; our
anticipated financial performance; key strategic objectives;
industry growth rates for ad-supported connected television ("CTV")
and the shift in video consumption from linear TV to CTV;
anticipated benefits of new offerings, including the introduction
of our new Magnite Streaming platform and our ClearLine solution;
the impact of our traffic shaping technology on our business; the
success of the consolidation of our two CTV platforms; the effects
of our cost reduction initiatives; scope and duration of client
relationships; the fees we may charge in the future; business mix;
sales growth; benefits from supply path optimization; the
development of identity solutions; client utilization of our
offerings; our competitive differentiation; our market share and
leadership position in the industry; market conditions, trends, and
opportunities; certain statements regarding future operational
performance measures; and other statements that are not historical
facts. 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. Risks that our business faces include,
but are not limited to, the following: our ability to realize the
anticipated benefits of the SpotX Acquisition, SpringServe
Acquisition, and other acquisitions; the impact of macroeconomic
challenges on the overall demand for advertising and the
advertising marketplace, including as a result of global conflict,
global pandemics and the responses to such pandemics by
governments, inflation, supply chain issues, capital market
disruptions and instability of financial institutions, the
occurrence of a recession, or concerns relating to the foregoing;
CTV spend on our platform may grow more slowly than we expect if
industry growth rates for ad supported CTV are not accurate, if CTV
sellers fail to adopt programmatic advertising solutions or if we
are unable to maintain or increase access to CTV advertising
inventory; we may be unsuccessful in our supply path optimization
efforts with buyers; our ability to introduce new offerings and
bring them to market in a timely manner and potential responses or
reactions of clients, vendors, and competitors to the announcement
of new products and offerings; uncertainty of our estimates and
expectations associated with new offerings, including our
SpringServe ad server, ClearLine product, and our developing
identity solutions; potential negative impacts associated with the
integration of our CTV platforms and the introduction of Magnite
Streaming; we must increase the scale and efficiency of our
technology infrastructure to support our growth; the emergence of
header bidding has increased competition from other demand sources
and may cause infrastructure strain and added costs; our access to
mobile inventory may be limited by third-party technology or lack
of direct relationships with mobile sellers; we may experience
lower take rates, which may not be offset by increases in the
volume of ad requests, improvements in fill-rate, and/or increases
in the value of transactions through our platform; the impact of
requests for discounts, fee concessions, rebates, refunds or
favorable payment terms; our business may be subject to sales and
use tax, advertising and other taxes; failure by us or our clients
to meet advertising and inventory content standards; the freedom of
buyers and sellers to direct their spending and inventory to
competing sources of inventory and demand, and to establish direct
relationships and integrations without the use of our platform; our
reliance on large aggregators of advertising inventory, and the
concentration of CTV among a small number of large sellers that
enjoy significant negotiating leverage; our ability to provide
value to both buyers and sellers of advertising without being
perceived as favoring one over the other or being perceived as
competing with them through our service offerings; our reliance on
large sources of advertising demand, including demand side
platforms ("DSPs") that may have or develop high-risk credit
profiles or fail to pay invoices when due; our sales efforts may
require significant time and expense and may not yield the results
we seek; we may be exposed to claims from clients for breach of
contract; the effects of seasonal trends on our results of
operations; we operate in an intensely competitive market that
includes companies that have greater financial, technical and
marketing resources than we do; the effects of consolidation in the
ad tech industry or among our media clients; our ability to
differentiate our offerings and compete effectively to combat
commodification and disintermediation; potential limitations on our
ability to collect or use data as a result of consumer tools,
regulatory restrictions and technological limitations; the
development and use of new identity solutions as a replacement for
third-party cookies and other identifiers may disrupt the
programmatic ecosystem and cause the performance of our platform to
decline; the industry may not adopt or may be slow to adopt the use
of first-party publisher segments as an alternative to third-party
cookies; the impact of antitrust regulations or enforcement actions
targeting the digital advertising ecosystem; our ability to comply
with, and the effect on our business of, evolving legal standards
and regulations, particularly concerning data protection and
privacy; errors or failures in the operation of our solution,
interruptions in our access to network infrastructure or data, and
breaches of our computer systems; our ability to ensure a high
level of brand safety for our clients and to detect "bot" traffic
and other fraudulent or malicious activity; our ability to attract
and retain qualified employees and key personnel; costs associated
with enforcing our intellectual property rights or defending
intellectual property infringement; our ability to comply with the
terms of our financing arrangements; restrictions in our Credit
Agreement may limit our ability to make strategic investments,
respond to changing market conditions, or otherwise operate our
business; increases in our debt leverage may put us at greater risk
of defaulting on our debt obligations, subject us to additional
operating restrictions and make it more difficult to obtain future
financing on favorable terms; conversion of our Convertible Senior
Notes would dilute the ownership interest of existing stockholders;
the Capped Call Transactions subject us to counterparty risk and
may affect the value of the Convertible Senior Notes and our common
stock; the conditional conversion feature of the Convertible Senior
Notes, if triggered, may adversely affect our financial condition
and operating result; failure to successfully execute our
international growth plans; failure to maintain an effective system
of internal control over financial reporting, which could adversely
affect investor confidence; the use of our net operating losses and
tax credit carryforwards may be subject to certain limitations; our
ability to raise additional capital if needed and the elimination
of LIBOR; volatility in the price of our common stock; the impact
of our repurchase program on our stock price and cash reserves;
competition for investors and the impact of negative analyst or
investor research reports; and provisions of our charter documents
and Delaware law may inhibit a potential acquisition of the company
and limit the ability of stockholders to cause changes in company
management.
We discuss many of these risks and additional
factors that could cause actual results to differ materially from
those anticipated by our forward-looking statements under the
headings "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and elsewhere in
this press release and in other filings we have made and will make
from time to time with the Securities and Exchange Commission, or
SEC, including our Annual Report on Form 10-K for the year ended
December 31, 2022 and subsequent Quarterly Reports on Form 10-Q.
These forward-looking statements represent our estimates and
assumptions only as of the date of the report in which they are
included. Unless required by federal securities laws, we assume no
obligation to update any of these forward-looking statements, or to
update the reasons actual results could differ materially from
those anticipated, to reflect circumstances or events that occur
after the statements are made. Without limiting the foregoing, any
guidance we may provide will generally be given only in connection
with quarterly and annual earnings announcements, without interim
updates, and we may appear at industry conferences or make other
public statements without disclosing material nonpublic information
in our possession. Given these uncertainties, investors should not
place undue reliance on these forward-looking statements. Investors
should read this press release and the documents that we reference
in this press release and have filed or will file with the SEC
completely and with the understanding that our actual future
results may be materially different from what we expect. We qualify
all of our forward-looking statements by these cautionary
statements.
Non-GAAP Financial Measures and Operational
Measures:In addition to our GAAP results, we review
certain non-GAAP financial measures to help us evaluate our
business on a consistent basis, measure our performance, identify
trends affecting our business, establish budgets, measure the
effectiveness of investments in our technology and development and
sales and marketing, and assess our operational efficiencies. These
non-GAAP measures include Revenue ex-TAC, Adjusted EBITDA, Non-GAAP
Income (Loss), and Non-GAAP Earnings (Loss) per share, each of
which is discussed below.
These non-GAAP financial measures are not intended to be
considered in isolation from, as substitutes for, or as superior
to, the corresponding financial measures prepared in accordance
with GAAP. You are encouraged to evaluate these adjustments, and
review the reconciliation of these non-GAAP financial measures to
their most comparable GAAP measures, and the reasons we consider
them appropriate. It is important to note that the particular items
we exclude from, or include in, our non-GAAP financial measures may
differ from the items excluded from, or included in, similar
non-GAAP financial measures used by other companies. See
"Reconciliation of Revenue to Gross Profit to Revenue ex-TAC,"
"Reconciliation of net income (loss) to Adjusted EBITDA,"
"Reconciliation of net income (loss) to non-GAAP income (loss),"
and "Reconciliation of GAAP earnings (loss) per share to non-GAAP
earnings (loss) per share" included as part of this press
release.
We do not provide a reconciliation of our non-GAAP financial
expectations for Revenue ex-TAC, Adjusted EBITDA, Adjusted EBITDA
operating expenses or free cash flow, or a forecast of the most
comparable GAAP measures, because the amount and timing of many
future charges that impact these measures (such as amortization of
future acquired intangible assets, acquisition-related charges,
foreign exchange (gain) loss, net, stock-based compensation,
impairment charges, provision or benefit for income taxes, and our
future revenue mix), which could be material, are variable,
uncertain, or out of our control and therefore cannot be reasonably
predicted without unreasonable effort, if at all. In addition, we
believe such reconciliations or forecasts could imply a degree of
precision that might be confusing or misleading to investors.
Revenue ex-TAC:
Revenue ex-TAC is revenue excluding traffic acquisition cost
("TAC"). Traffic acquisition cost, a component of cost of revenue,
represents what we must pay sellers for the sale of advertising
inventory through our platform for revenue reported on a gross
basis. In calculating Revenue ex-TAC, we add back the cost of
revenue, excluding TAC, to gross profit, the most comparable GAAP
measurement. Revenue ex-TAC is a non-GAAP financial measure. We
believe Revenue ex-TAC is a useful measure in assessing the
performance of Magnite as a combined company following our
acquisition of SpotX and facilitates a consistent comparison
against our core business without considering the impact of traffic
acquisition costs related to revenue reported on a gross basis.
Adjusted EBITDA:
We define Adjusted EBITDA as net income (loss) adjusted to
exclude stock-based compensation expense, depreciation and
amortization, amortization of acquired intangible assets,
impairment charges, interest income or expense, and other cash and
non-cash based income or expenses that we do not consider
indicative of our core operating performance, including, but not
limited to foreign exchange gains and losses, acquisition and
related items, gains or losses on extinguishment of debt,
non-operational real estate and other expense (income), net, and
provision (benefit) for income taxes. We also track future expenses
on an Adjusted EBITDA basis, and describe them as Adjusted EBITDA
operating expenses, which includes total operating expenses. Total
operating expenses include cost of revenue. Adjusted EBITDA
operating expenses is calculated as Revenue ex-TAC less Adjusted
EBITDA. We adjust Adjusted EBITDA operating expenses for the same
expense items excluded in Adjusted EBITDA. We believe Adjusted
EBITDA is useful to investors in evaluating our performance for the
following reasons:
- Adjusted EBITDA is widely used by
investors and securities analysts to measure a company’s
performance without regard to items such as those we exclude in
calculating this measure, which can vary substantially from company
to company depending upon their financing, capital structures, and
the method by which assets were acquired.
- Our management uses Adjusted EBITDA in
conjunction with GAAP financial measures for planning purposes,
including the preparation of our annual operating budget, as a
measure of performance and the effectiveness of our business
strategies, and in communications with our board of directors
concerning our performance. Adjusted EBITDA may also be used as a
metric for determining payment of cash incentive compensation.
- Adjusted EBITDA provides a measure of
consistency and comparability with our past performance that many
investors find useful, facilitates period-to-period comparisons of
operations, and also facilitates comparisons with other peer
companies, many of which use similar non-GAAP financial measures to
supplement their GAAP results.
Although Adjusted EBITDA is frequently used by investors and
securities analysts in their evaluations of companies, Adjusted
EBITDA has limitations as an analytical tool, and should not be
considered in isolation or as a substitute for analysis of our
results of operations as reported under GAAP. These limitations
include:
- Stock-based compensation is a non-cash
charge and will remain an element of our long-term incentive
compensation package, although we exclude it as an expense when
evaluating our ongoing operating performance for a particular
period.
- Depreciation and amortization are
non-cash charges, and the assets being depreciated or amortized
will often have to be replaced in the future, but Adjusted EBITDA
does not reflect any cash requirements for these replacements.
- Impairment charges are non-cash charges
related to goodwill, intangible assets and/or long-lived
assets.
- Adjusted EBITDA does not reflect
non-cash charges related to acquisition and related items, such as
amortization of acquired intangible assets, merger, acquisition, or
restructuring related severance costs, and changes in the fair
value of contingent consideration.
- Adjusted EBITDA does not reflect cash
and non-cash charges and changes in, or cash requirements for,
acquisition and related items, such as certain transaction expenses
and expenses associated with earn-out amounts.
- Adjusted EBITDA does not reflect
changes in our working capital needs, capital expenditures,
non-operational real estate expenses or income, or contractual
commitments.
- Adjusted EBITDA does not reflect cash
requirements for income taxes and the cash impact of other income
or expense.
- Other companies may calculate Adjusted
EBITDA differently than we do, limiting its usefulness as a
comparative measure.
Our Adjusted EBITDA is influenced by fluctuations in our
revenue, cost of revenue, and the timing and amounts of the cost of
our operations. Adjusted EBITDA should not be considered as an
alternative to net income (loss), income (loss) from operations, or
any other measure of financial performance calculated and presented
in accordance with GAAP.
Non-GAAP Income (Loss) and Non-GAAP Earnings (Loss) per
Share:
We define non-GAAP earnings (loss) per share as non-GAAP income
(loss) divided by non-GAAP weighted-average shares outstanding.
Non-GAAP income (loss) is equal to net income (loss) excluding
stock-based compensation, cash and non-cash based acquisition and
related expenses, including amortization of acquired intangible
assets, merger related severance costs, transaction expenses, gains
or losses on extinguishment of debt, non-operational real estate
and other expenses or income, foreign currency gains and losses,
and interest expense associated with Convertible Senior Notes. In
periods in which we have non-GAAP income, non-GAAP weighted-average
shares outstanding used to calculate non-GAAP earnings per share
includes the impact of potentially dilutive shares. Potentially
dilutive shares consist of stock options, restricted stock awards,
restricted stock units, performance stock units, and potential
shares issued under the Employee Stock Purchase Plan, each computed
using the treasury stock method. In periods in which the Company
generates net income, non-GAAP weighted-average shares will also
include the impact of shares that would be issuable assuming
conversion of all of the Convertible Senior Notes, calculated under
the if-converted method. We believe non-GAAP earnings (loss) per
share is useful to investors in evaluating our ongoing operational
performance and our trends on a per share basis, and also
facilitates comparison of our financial results on a per share
basis with other companies, many of which present a similar
non-GAAP measure. However, a potential limitation of our use of
non-GAAP earnings (loss) per share is that other companies may
define non-GAAP earnings (loss) per share differently, which may
make comparison difficult. This measure may also exclude expenses
that may have a material impact on our reported financial results.
Non-GAAP earnings (loss) per share is a performance measure and
should not be used as a measure of liquidity. Because of these
limitations, we also consider the comparable GAAP measure of net
income (loss).
|
MAGNITE, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS(In
thousands)(unaudited) |
|
|
March 31, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
236,550 |
|
|
$ |
326,254 |
|
Accounts receivable, net |
|
875,307 |
|
|
|
976,506 |
|
Prepaid expenses and other current assets |
|
25,098 |
|
|
|
23,501 |
|
TOTAL CURRENT ASSETS |
|
1,136,955 |
|
|
|
1,326,261 |
|
Property and equipment,
net |
|
45,641 |
|
|
|
44,969 |
|
Right-of-use lease asset |
|
71,144 |
|
|
|
78,211 |
|
Internal
use software development costs, net |
|
23,256 |
|
|
|
23,671 |
|
Intangible assets, net |
|
167,072 |
|
|
|
253,501 |
|
Goodwill |
|
978,217 |
|
|
|
978,217 |
|
Other
assets, non-current |
|
7,590 |
|
|
|
7,383 |
|
TOTAL
ASSETS |
$ |
2,429,875 |
|
|
$ |
2,712,213 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
950,405 |
|
|
$ |
1,094,321 |
|
Lease liabilities, current |
|
20,878 |
|
|
|
21,172 |
|
Debt, current |
|
3,600 |
|
|
|
3,600 |
|
Other current liabilities |
|
7,467 |
|
|
|
5,939 |
|
TOTAL CURRENT LIABILITIES |
|
982,350 |
|
|
|
1,125,032 |
|
Debt,
non-current, net of debt issuance costs |
|
674,036 |
|
|
|
722,757 |
|
Lease
liabilities, non-current |
|
61,590 |
|
|
|
66,331 |
|
Deferred
tax liability, net |
|
4,708 |
|
|
|
5,072 |
|
Other
liabilities, non-current |
|
1,962 |
|
|
|
1,723 |
|
TOTAL
LIABILITIES |
|
1,724,646 |
|
|
|
1,920,915 |
|
STOCKHOLDERS' EQUITY |
|
|
|
Common
stock |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
1,331,517 |
|
|
|
1,319,221 |
|
Accumulated other comprehensive loss |
|
(2,784 |
) |
|
|
(3,151 |
) |
Accumulated deficit |
|
(623,506 |
) |
|
|
(524,774 |
) |
TOTAL
STOCKHOLDERS' EQUITY |
|
705,229 |
|
|
|
791,298 |
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
2,429,875 |
|
|
$ |
2,712,213 |
|
|
MAGNITE, INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per
share amounts)(unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
Revenue |
$ |
130,150 |
|
|
$ |
118,075 |
|
Expenses (1)(2): |
|
|
|
Cost of revenue |
|
124,828 |
|
|
|
59,396 |
|
Sales and marketing |
|
53,049 |
|
|
|
50,000 |
|
Technology and development |
|
24,215 |
|
|
|
23,043 |
|
General and administrative |
|
21,088 |
|
|
|
18,704 |
|
Merger, acquisition, and restructuring costs |
|
7,465 |
|
|
|
6,756 |
|
Total
expenses |
|
230,645 |
|
|
|
157,899 |
|
Loss from operations |
|
(100,495 |
) |
|
|
(39,824 |
) |
Other
(income) expense: |
|
|
|
Interest expense, net |
|
8,175 |
|
|
|
7,111 |
|
Other income |
|
(1,313 |
) |
|
|
(1,263 |
) |
Foreign exchange loss, net |
|
233 |
|
|
|
926 |
|
Gain on extinguishment of debt |
|
(8,549 |
) |
|
|
— |
|
Total
other (income) expense, net |
|
(1,454 |
) |
|
|
6,774 |
|
Loss
before income taxes |
|
(99,041 |
) |
|
|
(46,598 |
) |
Benefit for income taxes |
|
(309 |
) |
|
|
(2,005 |
) |
Net
loss |
$ |
(98,732 |
) |
|
$ |
(44,593 |
) |
Net loss
per share: |
|
|
|
Basic and diluted |
$ |
(0.73 |
) |
|
$ |
(0.34 |
) |
Weighted
average shares used to compute loss per share: |
|
|
|
Basic and diluted |
|
134,667 |
|
|
|
132,236 |
|
(1) Stock-based compensation
expense included in our expenses was as follows: |
|
Three Months Ended |
March 31, 2023 |
|
March 31, 2022 |
Cost of revenue |
$ |
468 |
|
$ |
350 |
Sales
and marketing |
|
7,405 |
|
|
5,341 |
Technology and development |
|
5,446 |
|
|
4,717 |
General
and administrative |
|
5,825 |
|
|
4,237 |
Merger,
acquisition, and restructuring costs |
|
143 |
|
|
1,944 |
Total stock-based compensation expense |
$ |
19,287 |
|
$ |
16,589 |
(2) Depreciation and amortization
expense included in our expenses was as follows: |
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
Cost of revenue |
$ |
80,391 |
|
$ |
26,322 |
Sales
and marketing |
|
15,044 |
|
|
19,152 |
Technology and development |
|
205 |
|
|
224 |
General
and administrative |
|
155 |
|
|
168 |
Total depreciation and amortization expense |
$ |
95,795 |
|
$ |
45,866 |
|
MAGNITE, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands)(unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
OPERATING ACTIVITIES: |
|
|
|
Net loss |
$ |
(98,732 |
) |
|
$ |
(44,593 |
) |
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
95,795 |
|
|
|
45,866 |
|
Stock-based compensation |
|
19,287 |
|
|
|
16,589 |
|
Impairment of intangible assets |
|
— |
|
|
|
3,320 |
|
Gain on extinguishment of debt |
|
(8,549 |
) |
|
|
— |
|
Gain on disposal of property and equipment |
|
(26 |
) |
|
|
(2 |
) |
Provision for doubtful accounts |
|
67 |
|
|
|
(571 |
) |
Amortization of debt discount and issuance costs |
|
1,669 |
|
|
|
1,700 |
|
Non-cash lease expense |
|
34 |
|
|
|
610 |
|
Deferred income taxes |
|
(404 |
) |
|
|
(1,891 |
) |
Unrealized foreign currency (gain) loss, net |
|
(1,463 |
) |
|
|
458 |
|
Other items, net |
|
2,696 |
|
|
|
— |
|
Changes in operating assets and liabilities, net of effect of
business acquisitions: |
|
|
|
Accounts receivable |
|
100,142 |
|
|
|
146,241 |
|
Prepaid expenses and other assets |
|
(2,063 |
) |
|
|
(2,279 |
) |
Accounts payable and accrued expenses |
|
(141,068 |
) |
|
|
(141,312 |
) |
Other liabilities |
|
1,722 |
|
|
|
(2,504 |
) |
Net cash (used in) provided by operating activities |
|
(30,893 |
) |
|
|
21,632 |
|
INVESTING ACTIVITIES: |
|
|
|
Purchases of property and equipment |
|
(4,404 |
) |
|
|
(7,184 |
) |
Capitalized internal use software development costs |
|
(3,063 |
) |
|
|
(3,382 |
) |
Mergers and acquisitions, net of cash acquired |
|
— |
|
|
|
(20,755 |
) |
Net cash used in investing activities |
|
(7,467 |
) |
|
|
(31,321 |
) |
FINANCING ACTIVITIES: |
|
|
|
Proceeds from exercise of stock options |
|
1,486 |
|
|
|
1,107 |
|
Repayment of debt |
|
(900 |
) |
|
|
(900 |
) |
Repurchase of Convertible Senior Notes |
|
(40,828 |
) |
|
|
— |
|
Repayment of financing lease |
|
(208 |
) |
|
|
(197 |
) |
Purchase of treasury stock |
|
— |
|
|
|
(12,138 |
) |
Taxes paid related to net share settlement |
|
(9,046 |
) |
|
|
(4,260 |
) |
Payment of indemnification claims holdback |
|
(2,313 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(51,809 |
) |
|
|
(16,388 |
) |
EFFECT OF EXCHANGE RATE
CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
265 |
|
|
|
268 |
|
CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
(89,904 |
) |
|
|
(25,809 |
) |
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH — Beginning of period |
|
326,502 |
|
|
|
230,693 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH — End of period |
$ |
236,598 |
|
|
$ |
204,884 |
|
|
|
|
|
RECONCILIATION OF CASH, CASH
EQUIVALENTS AND RESTRICTED CASH TO CONSOLIDATED BALANCE SHEETS |
|
|
|
Cash and cash equivalents |
$ |
236,550 |
|
|
$ |
204,589 |
|
Restricted cash included in
prepaid expenses and other current assets |
|
48 |
|
|
|
242 |
|
Restricted cash included in
other assets, non-current |
|
— |
|
|
|
53 |
|
Total cash, cash equivalents
and restricted cash |
$ |
236,598 |
|
|
$ |
204,884 |
|
|
|
|
MAGNITE, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS-(Continued)(In
thousands)(unaudited) |
|
|
Three Months Ended |
SUPPLEMENTAL DISCLOSURES OF
OTHER CASH FLOW INFORMATION: |
March 31, 2023 |
|
March 31, 2022 |
Cash paid for income taxes |
$ |
1,547 |
|
$ |
338 |
Cash paid for interest |
$ |
8,987 |
|
$ |
5,668 |
Capitalized assets financed by
accounts payable and accrued expenses |
$ |
3,320 |
|
$ |
372 |
Capitalized stock-based
compensation |
$ |
569 |
|
$ |
338 |
Operating lease right-of-use
assets obtained in exchange for operating lease liabilities |
$ |
271 |
|
$ |
— |
Purchase consideration -
indemnification claims holdback |
$ |
— |
|
$ |
2,300 |
|
MAGNITE, INC.RECONCILIATION OF REVENUE TO
GROSS PROFIT TO REVENUE EX-TAC(In
thousands)(unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
Revenue |
$ |
130,150 |
|
$ |
118,075 |
Less: Cost of revenue |
|
124,828 |
|
|
59,396 |
Gross Profit |
|
5,322 |
|
|
58,679 |
Add back: Cost of revenue, excluding TAC |
|
110,727 |
|
|
48,405 |
Revenue ex-TAC |
$ |
116,049 |
|
$ |
107,084 |
|
|
|
|
|
MAGNITE, INC.RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA(In
thousands)(unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
Net loss |
$ |
(98,732 |
) |
|
$ |
(44,593 |
) |
Add back (deduct): |
|
|
|
Depreciation and amortization expense, excluding amortization of
acquired intangible assets |
|
9,366 |
|
|
|
7,390 |
|
Amortization of acquired intangibles |
|
86,429 |
|
|
|
38,476 |
|
Stock-based compensation expense |
|
19,287 |
|
|
|
16,589 |
|
Merger, acquisition, and restructuring costs, excluding stock-based
compensation expense |
|
7,322 |
|
|
|
4,812 |
|
Non-operational real estate and other expense, net |
|
116 |
|
|
|
135 |
|
Interest expense, net |
|
8,175 |
|
|
|
7,111 |
|
Foreign exchange loss, net |
|
233 |
|
|
|
926 |
|
Gain on extinguishment of debt |
|
(8,549 |
) |
|
|
— |
|
Benefit for income taxes |
|
(309 |
) |
|
|
(2,005 |
) |
Adjusted EBITDA |
$ |
23,338 |
|
|
$ |
28,841 |
|
|
|
|
|
|
MAGNITE, INC.RECONCILIATION OF NET LOSS TO
NON-GAAP INCOME(In
thousands)(unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
Net loss |
$ |
(98,732 |
) |
|
$ |
(44,593 |
) |
Add back (deduct): |
|
|
|
Merger, acquisition, and restructuring costs, including
amortization of acquired intangibles and excluding stock-based
compensation expense |
|
93,751 |
|
|
|
43,288 |
|
Stock-based compensation expense |
|
19,287 |
|
|
|
16,589 |
|
Non-operational real estate and other expense, net |
|
116 |
|
|
|
135 |
|
Foreign exchange loss, net |
|
233 |
|
|
|
926 |
|
Interest expense, Convertible Senior Notes |
|
1,665 |
|
|
|
250 |
|
Gain on extinguishment of debt |
|
(8,549 |
) |
|
|
— |
|
Tax effect of Non-GAAP adjustments (1) |
|
(2,020 |
) |
|
|
(5,326 |
) |
Non-GAAP income |
$ |
5,751 |
|
|
$ |
11,269 |
|
(1 |
) |
Non-GAAP income includes the estimated tax impact from the
reconciling items between net loss and non-GAAP income. |
|
MAGNITE, INC.RECONCILIATION OF GAAP LOSS
PER SHARE TO NON-GAAP EARNINGS PER SHARE(In
thousands, except per share
amounts)(unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
GAAP loss per share (1): |
|
|
|
Basic and diluted |
$ |
(0.73 |
) |
|
$ |
(0.34 |
) |
|
|
|
|
Non-GAAP income (2) |
$ |
5,751 |
|
|
$ |
11,269 |
|
Non-GAAP earnings per
share |
$ |
0.04 |
|
|
$ |
0.08 |
|
|
|
|
|
Weighted-average shares used
to compute basic earnings (loss) per share |
|
134,667 |
|
|
|
132,236 |
|
Dilutive effect of weighted-average common stock options, RSUs, and
PSUs |
|
3,615 |
|
|
|
5,160 |
|
Dilutive effect of weighted-average ESPP shares |
|
17 |
|
|
|
— |
|
Dilutive effect of weighted-average Convertible Senior Notes |
|
6,026 |
|
|
|
6,262 |
|
Non-GAAP weighted-average
shares outstanding (3) |
|
144,325 |
|
|
|
143,658 |
|
(1) Calculated as net income
(loss) divided by basic and diluted weighted-average shares used to
compute earnings (loss) per share as included in the condensed
consolidated statement of operations. |
(2) Refer to reconciliation of
net loss to non-GAAP income. |
(3) Non-GAAP earnings per
share is computed using the same weighted-average number of shares
that are used to compute GAAP earnings (loss) per share in periods
where there is both a non-GAAP loss and a GAAP net loss. |
|
MAGNITE, INC.REVENUE EX-TAC BY
CHANNEL(In
thousands)(unaudited) |
|
|
Revenue ex-TAC |
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
|
|
Channel: |
|
|
|
|
|
|
|
CTV |
$ |
46,412 |
|
40 |
% |
|
$ |
42,303 |
|
40 |
% |
Mobile |
|
46,897 |
|
40 |
% |
|
|
38,297 |
|
35 |
% |
Desktop |
|
22,740 |
|
20 |
% |
|
|
26,484 |
|
25 |
% |
Total |
$ |
116,049 |
|
100 |
% |
|
$ |
107,084 |
|
100 |
% |
Investor Relations Contact
Nick Kormeluk
(949) 500-0003
nkormeluk@magnite.com
Media Contact
Charlstie Veith
(516) 300-3569
press@magnite.com
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