Magnite outlines at least 11% contribution ex-TAC growth for 2026 while expanding CTV partnerships

Earnings Call Insights: Magnite, Inc. (MGNI) Q3 2025

MANAGEMENT VIEW

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CEO Michael Barrett indicated that Q3 delivered strong results, with "CTV contribution ex-TAC growing 18% and 25%, excluding political," and adjusted EBITDA reaching $57 million with a 34% margin. Barrett highlighted growth from major publisher partners including LG, NBCU, Netflix, Roku, Vizio, Walmart, and Warner Bros. Discovery. "Regarding Netflix, we've supported the expansion of their ads business to all ad-supported markets. The pacing of the Netflix ramp has gone very well, and we remain excited about our continued growth opportunity with them in 2026." He also noted successful adoption of agency marketplaces and programmatic expansion in live sports, with specific mention of the new Warner Bros. Discovery NEO platform and ClearLine enhancements.

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Barrett announced integration of AI assistance and Agentic workflows into ClearLine, leveraging technology from the streamer.ai acquisition, aimed at simplifying CTV advertising for SMBs. "We're licensing Streamer to large media owners, commerce players, agencies, DSPs and other media buyers so they can help their SMB clients easily break into CTV advertising, and the response has been very positive. We've announced two client wins since the acquisition, ITV...and Wolt, which is part of DoorDash with many more to come."

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On the legal front, Barrett discussed the Google Ad tech trial and Magnite's own lawsuit against Google: "The suit, which seeks financial damages as well as other remedies, is a follow-on action to the DOJ litigation and builds on the allegations proved in that case."

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CFO David Day stated, "Total revenue for Q3 was $179 million, up 11% from Q3 of 2024. Contribution ex-TAC was $167 million, up 12%, exceeding the high end of our guidance range." Day explained the CTV contribution ex-TAC was $76 million and DV+ contribution ex-TAC was $91 million. He highlighted operating expense growth to $154 million and net income of $20 million for the quarter, compared to $5 million a year prior.

OUTLOOK

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Day provided guidance for Q4, forecasting "contribution ex-TAC to be in the range of $191 million to $196 million, which represents growth of 6% to 9% or 13% to 16%, excluding political." CTV contribution ex-TAC is expected to be "in the range of $87 million to $89 million, which represents growth of 12% to 14% or 23% to 25% when excluding political."

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For full year 2025, Day continued to expect "total contribution ex-TAC growth above 10% or mid-teens, excluding political, adjusted EBITDA to grow in the mid-teens." CapEx was raised to approximately $80 million.

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Looking ahead to 2026, Day stated, "We currently expect contribution ex-TAC growth for 2026 to be at least 11%. We also expect to get back into our target margin range, which is 35% at the low end."

FINANCIAL RESULTS

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Magnite reported Q3 total revenue of $179 million and contribution ex-TAC of $167 million. CTV contribution ex-TAC reached $76 million and DV+ contribution ex-TAC was $91 million. Adjusted EBITDA increased to $57 million with a margin of 34%. Net income for the quarter was $20 million and GAAP earnings per diluted share were $0.13. The cash balance at quarter-end was $482 million. Operating cash flow was $39 million, with capital expenditures of $18 million, and $10 million spent on the Streamer acquisition.

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CapEx investment increased by $20 million for new data center build-outs, and net leverage declined to 0.3x. During the first three quarters, over 3.3 million shares were repurchased for approximately $50 million.

Q&A

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Shyam Patil, Susquehanna: Asked about the impact of The Trade Desk’s OpenPath changes. Barrett responded that "in late Q3, Trade Desk made a software change to their operating system that prioritized OpenPath as a default path for supply...we do feel as though the bulk of the impact has already occurred that it's been limited to DV+."

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Daniel Kurnos, The Benchmark Company: Inquired about Amazon partnership and SMB marketplace integration. Barrett explained that "Amazon, in particular, is having a banner year, and we really enjoy that partnership both with Amazon as a buyer of inventory and Amazon as a publisher." On SMBs, "the idea is that we offer the streamer product to those folks that have direct relationships with SMBs."

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Jason Kreyer, Craig-Hallum: Sought clarification on Magnite’s evolving role in an AI-driven, agentic world. Barrett said, "the key really as you look at AdCP, you start to realize that the idea of inventory sitting way over here and dollars from buyers sitting way on the other side of an exchange, you start to see a world where they're comingled."

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Shweta Khajuria, Wolfe Research: Asked about expectations for Google AdTech case remedies and 2026 guidance. Barrett maintained a positive outlook, "our outlook has always been quite positive, and we think it's a generational opportunity for a company like Magnite." Day clarified that 2026 guidance includes "zero dollars baked into that for any Google remedy outcomes."

SENTIMENT ANALYSIS

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Analysts focused on competitive ecosystem changes, legal outcomes, and the pace of AI adoption, with a neutral to slightly positive tone, seeking clarification on strategic responses to industry shifts and guidance conservatism.

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Management maintained a confident tone in prepared remarks and Q&A, stating "we feel confident going forward that, that will mitigate any negative financial impact in out quarters" and expressing optimism about growth drivers and legal opportunities. The tone was consistent with the previous quarter, though management provided more detailed explanations of risk mitigation and partnership momentum.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for Q4 and full year 2025 remains consistent with prior outlook, but CapEx guidance increased from $60 million to $80 million for the full year. Revenue and contribution ex-TAC growth rates accelerated compared to Q2. Management emphasized continued momentum in CTV and highlighted new AI and SMB initiatives.

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Analysts’ questions this quarter concentrated on competitive dynamics, legal proceedings, and the impact of new technologies, whereas the previous quarter included more focus on partnership wins and margin sustainability. Management’s responses this quarter were more detailed about risk management regarding ecosystem changes.

RISKS AND CONCERNS

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Management cited a "slightly softening macro environment," particularly impacting automotive, technology, and Home and Garden verticals. There was also near-term pressure from a feature change by a top DSP partner affecting all SSPs. Day noted, "we're still experiencing -- or expecting growth in DV+ and expect contribution ex-TAC for DV+ to be in the range of $104 million to $107 million."

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The outcome and timing of remedies in the Google Ad tech trial remain uncertain, with management stating they have "zero dollars baked into" 2026 guidance for any potential benefits from the case.

FINAL TAKEAWAY

Magnite’s third quarter demonstrated strong growth in CTV, continued expansion of major partnerships, and the successful integration of AI-driven solutions. The company is investing in infrastructure and technology to scale its operations efficiently and expects at least 11% contribution ex-TAC growth for 2026, with additional upside possible pending legal outcomes. Management remains optimistic about continued momentum and is focused on mitigating risks from external industry changes and macroeconomic softness.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/mgni/earnings/transcripts]

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