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Magnite Reports Third Quarter 2021 Results

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  • MGNI

CTV Revenue Grows Over 50% in Q3 on a Pro Forma Basis and

Represents 38% of Revenue ex-TAC

NEW YORK, Nov. 03, 2021 (GLOBE NEWSWIRE) -- Magnite (Nasdaq: MGNI), the world's largest independent sell-side advertising platform, today reported its results of operations for the quarter ended September 30, 2021. Third quarter 2021 financial results of Magnite represent the combined performance of Magnite, SpotX, and SpringServe. Third quarter 2020 comparative numbers do not include results from SpotX and SpringServe, unless noted as pro-forma.

Recent Magnite Highlights

  • Revenue of $131.9 million for Q3 2021, up 116% from Q3 2020

  • Revenue ex-TAC(2) of $114.1 million for Q3 2021, up 89% from Q3 2020 and up 26% on a pro-forma basis(1)

  • Revenue ex-TAC(2) attributable to CTV of $43.1 million for Q3 2021, up 290% year over year, and up 51% on a pro forma basis(1)

  • Net loss of $24.3 million in Q3 2021, for a loss per share of $0.18, compared to net loss of $10.5 million, for a loss per share of $0.10 in Q3 of 2020

  • Adjusted EBITDA(2) of $40.0 million in Q3 2021 representing a margin of 35%(4), as compared to Adjusted EBITDA of $13.7 million in Q3 of 2020

  • Non-GAAP earnings per share(2) of $0.14 for Q3 2021, compared to non-GAAP earnings per share of $0.06 for Q3 of 2020

  • Operating free cash flow(5) in Q3 2021 was $34.0 million

  • SpringServe acquisition closed on July 1, 2021

Expectations:

  • Revenue ex-TAC(2) for Q4 2021 to be between $138 million and $142 million

  • Revenue ex-TAC(2) attributable to CTV for Q4 2021 to be between $52 million and $56 million

  • Adjusted EBITDA operating expenses(3) to be between $79 and $81 million for Q4 2021

  • Total capital expenditures for Q4 2021 to be approximately $8 million

“We are pleased with the Company's recent performance in our CTV and DV+ business in Q3, which drove top line growth. Our business continued to show substantial leverage as we exceeded expectations on the bottom line. We also added a very strategic technology this quarter with SpringServe’s ad server, to further enhance our strong CTV market position and better serve customers in this exciting market. We expect solid growth in Q4, even with some pockets of sector weakness in the broader economy, and continue to be excited about the long term growth outlook for the industry and our business ,” said Michael G. Barrett, President and CEO of Magnite.

Third Quarter 2021 Results Summary

(in millions, except per share amounts and percentages)

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

Change
Favorable/ (Unfavorable)

September 30, 2021

September 30, 2020

Change
Favorable/ (Unfavorable)

Revenue

$131.9

$61.0

116%

$307.1

$139.6

120%

Revenue ex-TAC(2)

$114.1

$60.3

89%

$274.4

$138.6

98%

Net income (loss)

($24.3)

($10.5)

(131)%

($0.4)

($59.3)

99%

Adjusted EBITDA(2)

$40.0

$13.7

191%

$81.1

$13.1

521%

Adjusted EBITDA operating expenses(3)

$74.1

$46.6

59%

$193.2

$125.6

54%

Adjusted EBITDA margin(4)

35%

23%

12 ppt

30%

9%

21 ppt

Basic earnings (loss) per share

($0.18)

($0.10)

(80)%

$—

($0.65)

100%

Diluted earnings (loss) per share

($0.18)

($0.10)

(80)%

$—

($0.65)

100%

Non-GAAP earnings (loss) per share(2)

$0.14

$0.06

133%

$0.29

($0.07)

514%


Footnotes:

(1

)

When Q3 year-over-year comparisons are referred to as pro-forma, they include SpotX and SpringServe results for Q3 2020.

(2

)

Revenue ex-TAC, Adjusted EBITDA, Adjusted EBITDA operating expenses, and non-GAAP earnings (loss) 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.

(3

)

Adjusted EBITDA operating expenses is calculated as Revenue ex-TAC less Adjusted EBITDA.

(4

)

Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue ex-TAC.

(5

)

Operating free cash flow is calculated as Adjusted EBITDA less capital expenditures.

Third Quarter 2021 Results Conference Call and Webcast:

The Company will host a conference call on November 3, 2021 at 1:30 PM (PT) / 4:30 PM (ET) to discuss the results for its third quarter of 2021.

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:

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:

10161248

Webcast link:

investor.magnite.com under "Events and Presentations"

About Magnite
We’re Magnite (NASDAQ: MGNI), the world’s largest independent sell-side advertising platform. 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. In April 2021 we acquired SpotX to further enhance our CTV business and better help our clients in this rapidly growing market. Anchored in bustling New York City, sunny Los Angeles, mile-high Denver, historic London, and down under in Sydney, Magnite has offices across North America, EMEA, LATAM, and APAC.

Note: Magnite and the Magnite logo are service marks of Magnite, Inc.

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 the acquisition of SpotX, Inc. ("SpotX," and such acquisition the "SpotX Acquisition") or SpringServe, LLC ("SpringServe," and such acquisition the "SpringServe Acquisition") or the anticipated benefits thereof; statements concerning potential synergies from the SpotX Acquisition or SpringServe Acquisition; statements concerning the potential impacts of the COVID-19 pandemic on our business operations, financial condition, and results of operations and on the world economy; our anticipated financial performance; anticipated benefits or effects related to our completed merger with Telaria, Inc. in April 2020 ("Telaria" and such merger the "Telaria Merger"); key strategic objectives, industry growth rates for ad-supported CTV and the shift in video consumption from linear TV to CTV; introduction of new offerings; the impact of transparency initiatives we may undertake; the impact of our traffic shaping technology on our business; 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; 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; benefits from supply path optimization; 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 Telaria Merger, SpotX Acquisition, and SpringServe Acquisition; 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, which may place us at a disadvantage compared to competitors; 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; sales of our common stock by the former owner of SpotX may have an adverse effect on the price of our common stock; conversion of our Convertible Senior Notes would dilute the ownership interest of existing stockholders; the severity, magnitude, and duration of the COVID-19 pandemic, including impacts of the pandemic and of responses to the pandemic by governments, business and individuals on our operations, personnel, buyers, sellers, and on the global economy and the advertising marketplace; our CTV spend 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; our ability to introduce new offerings and bring them to market in a timely manner, and otherwise adapt in response to client demands and industry trends; uncertainty of our estimates and expectations associated with new offerings, including the CTV ad server product that we recently acquired in the SpringServe Acquisition; lack of adoption and market acceptance of our Demand Manager solution; 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 increase 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 history of losses, and the fact that in the past our operating results have and may in the future fluctuate significantly, be difficult to predict, and fall below analysts' and investors' expectations; the effect on the advertising market and our business from difficult economic conditions or uncertainty; 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; the growing percentage of digital advertising spend captured by closed "walled gardens" (such as Google, Facebook, Comcast, and Amazon); 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; our ability to comply with, and the effect on our business of, evolving legal standards and regulations, particularly concerning data protection and privacy; failure by us or our clients to meet advertising and inventory content standards could harm our brand and reputation and those of our partners; the freedom of buyers and sellers to direct their spending and inventory to competing sources of inventory and demand; the ability of buyers and sellers 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; we may be exposed to claims from clients for breach of contracts; 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; the use of our net operating losses and tax credit carryforwards may be subject to certain limitations; the possibility of adjustments to the purchase price allocation and valuation relating to the SpotX Acquisition and the SpringServe Acquisition; our ability to raise additional capital if needed; volatility in the price of our common stock; the impact of negative analyst or investor research reports; our ability to attract and retain qualified employees and key personnel; costs associated with enforcing our intellectual property rights or defending intellectual property infringement; the Capped Call Transactions may affect the value of the Convertible Senior Notes and our common stock; we are subject to counterparty risk with respect to the Capped Call Transactions; 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; and our ability to identify future acquisitions of or investments in complementary companies or technologies and our ability to consummate the acquisitions and integrate such companies or technologies.

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, 2020 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, 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 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, and Adjusted EBITDA operating expenses 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 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, non-operational real estate 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. 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 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, non-operational real estate expenses or income, foreign currency gains and losses, and in periods in which the Company generates net income, non-GAAP net income also excludes 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).

Investor Relations Contact
Nick Kormeluk
(949) 500-0003
nkormeluk@magnite.com

Media Contact
Charlstie Veith
(516) 300-3569
press@magnite.com



MAGNITE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)

September 30, 2021

December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

188,182

$

117,676

Accounts receivable, net

765,076

471,666

Prepaid expenses and other current assets

20,992

17,729

TOTAL CURRENT ASSETS

974,250

607,071

Property and equipment, net

32,759

23,681

Right-of-use lease asset

64,591

39,599

Internal use software development costs, net

19,130

16,160

Intangible assets, net

463,571

89,884

Goodwill

972,747

158,125

Other assets, non-current

6,062

4,440

TOTAL ASSETS

$

2,533,110

$

938,960

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

828,501

$

509,315

Lease liabilities, current

15,033

9,813

Debt, current

3,600

Other current liabilities

11,773

3,070

TOTAL CURRENT LIABILITIES

858,907

522,198

Deferred tax liability

19,488

199

Debt, non-current, net of debt issuance costs

719,333

Lease liabilities, non-current

55,999

32,278

Other liabilities, non-current

2,618

2,672

TOTAL LIABILITIES

1,656,345

557,347

STOCKHOLDERS' EQUITY

Common stock

2

2

Additional paid-in capital

1,273,093

777,084

Accumulated other comprehensive loss

(1,426

)

(957

)

Accumulated deficit

(394,904

)

(394,516

)

TOTAL STOCKHOLDERS' EQUITY

876,765

381,613

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,533,110

$

938,960



MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Revenue

$

131,871

$

60,982

$

307,127

$

139,625

Expenses (1)(2):

Cost of revenue

63,541

21,031

134,823

56,579

Sales and marketing

52,260

21,761

118,122

53,059

Technology and development

21,059

13,562

53,436

37,318

General and administrative

16,535

13,314

47,673

38,221

Merger, acquisition, and restructuring costs

2,424

2,254

37,778

16,677

Total expenses

155,819

71,922

391,832

201,854

Loss from operations

(23,948

)

(10,940

)

(84,705

)

(62,229

)

Other (income) expense:

Interest income (expense), net

7,280

30

12,595

(112

)

Other income

(955

)

(1,194

)

(3,317

)

(2,487

)

Foreign exchange (gain) loss, net

(1,246

)

293

(1,358

)

(845

)

Total other (income) expense, net

5,079

(871

)

7,920

(3,444

)

Loss before income taxes

(29,027

)

(10,069

)

(92,625

)

(58,785

)

Provision (benefit) for income taxes

(4,708

)

446

(92,237

)

533

Net loss

$

(24,319

)

$

(10,515

)

$

(388

)

$

(59,318

)

Net loss per share:

Basic and Diluted

$

(0.18

)

$

(0.10

)

$

$

(0.65

)

Weighted average shares used to compute loss per share:

Basic and Diluted

131,501

110,416

124,325

91,371

(1) Stock-based compensation expense included in our expenses was as follows:



Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Cost of revenue

$

278

$

122

$

530

$

412

Sales and marketing

4,583

2,309

10,426

5,928

Technology and development

3,828

2,061

8,195

5,469

General and administrative

3,087

2,504

8,299

7,935

Merger, acquisition, and restructuring costs

48

354

1,071

1,554

Total stock-based compensation expense

$

11,824

$

7,350

$

28,521

$

21,298

(2) Depreciation and amortization expense included in our expenses was as follows:

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Cost of revenue

$

24,764

$

9,579

$

52,108

$

26,407

Sales and marketing

23,569

4,317

44,037

8,962

Technology and development

190

143

468

340

General and administrative

179

37

471

448

Total depreciation and amortization expense

$

48,702

$

14,076

$

97,084

$

36,157



MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

Nine Months Ended

September 30, 2021

September 30, 2020

OPERATING ACTIVITIES:

Net loss

$

(388

)

$

(59,318

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

97,084

36,157

Stock-based compensation

28,521

21,298

(Gain) loss on disposal of property and equipment

78

(17

)

Provision for doubtful accounts

217

31

Amortization of debt issuance costs

3,223

Non-cash lease expense

1,825

(601

)

Deferred income taxes

(91,540

)

837

Unrealized foreign currency gains, net

(2,578

)

(2,108

)

Changes in operating assets and liabilities:

Accounts receivable

(92,131

)

(46,145

)

Prepaid expenses and other assets

(297

)

(2,896

)

Accounts payable and accrued expenses

113,795

23,464

Other liabilities

191

5,260

Net cash provided by (used in) operating activities

58,000

(24,038

)

INVESTING ACTIVITIES:

Purchases of property and equipment

(13,985

)

(4,211

)

Capitalized internal use software development costs

(8,525

)

(6,894

)

Cash (used in), net of cash acquired, in merger and acquisition activities

(653,060

)

54,595

Net cash (used in) provided by investing activities

(675,570

)

43,490

FINANCING ACTIVITIES:

Proceeds from Convertible Senior Notes offering

400,000

Proceeds from issuance of debt, net of debt discount

349,200

Payment for capped call options

(38,960

)

Payment for debt issuance costs

(30,378

)

Proceeds from exercise of stock options

8,747

3,868

Proceeds from issuance of common stock under employee stock purchase plan

1,154

693

Repayment of debt

(900

)

Taxes paid related to net share settlement

(7,841

)

Net cash provided by (used in) financing activities

688,863

(3,280

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(591

)

41

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

70,702

16,213

CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period

117,731

88,888

CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period

$

188,433

$

105,101

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO CONSOLIDATED BALANCE SHEETS

Cash and cash equivalents

$

188,182

$

103,797

Restricted cash included in other asset, non-current, and prepaid expenses and other current assets

251

1,304

Total cash, cash equivalents and restricted cash

$

188,433

$

105,101


Nine Months Ended

SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:

September 30, 2021

September 30, 2020

Cash paid for income taxes

$

1,221

$

829

Cash paid for interest

$

7,671

$

49

Capitalized assets financed by accounts payable and accrued expenses

$

1,513

$

2,388

Capitalized stock-based compensation

$

956

$

616

Operating lease right-of-use assets obtained in exchange for new operating lease liabilities

$

22,651

$

2,036

Purchase consideration - indemnification claims holdback

$

1,409

$

Common stock and options issued for merger

$

495,591

$

287,418

Debt discount, non-cash

$

10,800

$



MAGNITE, INC.
RECONCILIATION OF REVENUE TO GROSS PROFIT TO REVENUE EX-TAC
(In thousands)
(unaudited)

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Revenue

$

131,871

$

60,982

$

307,127

$

139,625

Less: Cost of revenue

63,541

21,031

134,823

56,579

Gross Profit

68,330

39,951

172,304

83,046

Add back: Cost of revenue, excluding TAC

45,734

20,351

102,052

55,601

Revenue ex-TAC

$

114,064

$

60,302

$

274,356

$

138,647



MAGNITE, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands)
(unaudited)

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Net loss

$

(24,319

)

$

(10,515

)

$

(388

)

$

(59,318

)

Add back (deduct):

Depreciation and amortization expense, excluding amortization of acquired intangible assets

6,518

6,254

17,771

19,253

Amortization of acquired intangibles

42,184

7,822

79,313

16,904

Stock-based compensation expense

11,824

7,350

28,521

21,298

Merger, acquisition, and restructuring costs, excluding stock-based compensation expense

2,376

1,900

36,707

15,123

Non-operational real estate expense (income), net

57

163

197

203

Interest expense (income), net

7,280

30

12,595

(112

)

Foreign exchange (gain) loss, net

(1,246

)

293

(1,358

)

(845

)

Other non-operating (income) expense, net

6

15

Provision (benefit) for income taxes

(4,708

)

446

(92,237

)

533

Adjusted EBITDA

$

39,966

$

13,749

$

81,121

$

13,054



MAGNITE, INC.
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP INCOME (LOSS)
(In thousands)
(unaudited)

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Net loss

$

(24,319

)

$

(10,515

)

$

(388

)

$

(59,318

)

Add back (deduct):

Merger, acquisition, and restructuring costs, including amortization of acquired intangibles and excluding stock-based compensation expense

44,560

9,722

116,020

32,027

Stock-based compensation expense

11,824

7,350

28,521

21,298

Non-operational real estate expense (income), net

57

163

197

203

Foreign exchange (gain) loss, net

(1,246

)

293

(1,358

)

(845

)

Other non-operating (income) expense, net

6

15

Interest expense, Convertible Senior Notes

327

544

Tax effect of Non-GAAP adjustments (1)

(10,868

)

239

(103,287

)

(131

)

Non-GAAP income (loss)

$

20,335

$

7,258

$

40,249

$

(6,751

)


(1

)

Non-GAAP income (loss) includes the estimated tax impact from the expense items reconciling between net loss and non-GAAP income (loss).



MAGNITE, INC.
RECONCILIATION OF GAAP EARNINGS (LOSS) PER SHARE TO NON-GAAP EARNINGS (LOSS) PER SHARE
(In thousands, except per share amounts)
(unaudited)

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

GAAP loss per share (1):

Basic and Diluted

$

(0.18

)

$

(0.10

)

$

$

(0.65

)

Non-GAAP income (loss) (2)

$

20,335

$

7,258

$

40,249

$

(6,751

)

Non-GAAP earnings (loss) per share

$

0.14

$

0.06

$

0.29

$

(0.07

)

Weighted-average shares used to compute basic earnings (loss) per share

131,501

110,416

124,325

91,371

Dilutive effect of weighted-average common stock options, RSUs, and PSUs

8,564

5,702

10,784

Dilutive effect of weighted-average ESPP

11

30

49

Dilutive effect of weighted-average Convertible Senior Notes

6,262

4,499

Non-GAAP weighted-average shares outstanding (3)

146,338

116,148

139,657

91,371

(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 consolidated statement of operations.
(2) Refer to reconciliation of net income (loss) to non-GAAP income (loss).
(3) Non-GAAP earnings (loss) 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

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Channel:

CTV

$

43,142

38

%

$

11,059

18

%

$

89,382

33

%

$

18,978

14

%

Desktop

29,192

26

%

20,222

34

%

76,566

28

%

50,490

36

%

Mobile

41,730

36

%

29,021

48

%

108,408

39

%

69,179

50

%

Total

$

114,064

100

%

$

60,302

100

%

$

274,356

100

%

$

138,647

100

%