Magnite Q1 Earnings Call Highlights

Key Points

• Magnite beat expectations in Q1 with revenue of $164 million (+6% YoY) and Adjusted EBITDA of $43 million (+16% YoY), driven by earlier-than-expected cost efficiencies and margin expansion; net income was $4 million and non-GAAP EPS was $0.13.
• CTV now over half of contribution ex-TAC — CTV contribution rose 30% to $82 million and represented 51% of total contribution ex-TAC, with management saying CTV growth is sustainable and significantly outpacing the broader market.
• Capital allocation and guidance: the company paid off convertible debt (cash down to $185M), repurchased ~2.2M shares for $29M (with $186M remaining authorization), ended Q1 with 0.7x net leverage, and raised targets — at least 11% contribution ex-TAC growth, a ≥35.5% Adjusted EBITDA margin, and mid-30% free cash flow growth for 2026.

Magnite NASDAQ: MGNI reported first-quarter 2026 results that management said exceeded expectations on both revenue and profitability, driven by continued strength in connected TV (CTV) and earlier-than-expected operating efficiencies.

Quarterly performance driven by CTV growth and cost efficiencies

CEO Michael Barrett said Magnite delivered a “strong first quarter,” with revenue ahead of consensus expectations and Adjusted EBITDA exceeding consensus by $5 million. Barrett attributed the profitability outperformance to “earlier than expected cost efficiencies” and said the company is “encouraged by the margin expansion we are seeing.”

CFO David Day reported total revenue of $164 million, up 6% from the prior-year quarter. Contribution ex-TAC was $161 million, up 10% and at the top end of Magnite’s guidance range. Adjusted EBITDA rose 16% year-over-year to $43 million, representing a 27% margin on contribution ex-TAC, compared with 25% in the year-ago period. Day noted that the first quarter is seasonally Magnite’s “lowest margin quarter.”

On profitability, Day said net income was $4 million versus a net loss of $10 million in the first quarter of 2025. GAAP earnings per diluted share were $0.03, compared with a loss of $0.07 a year earlier, while non-GAAP earnings per share were $0.13, up from $0.12.

CTV surpasses half of contribution ex-TAC as streaming shift continues

Management emphasized the ongoing shift of advertising dollars toward streaming. Barrett said that in Q1, CTV contribution ex-TAC grew 30% and represented 51% of total contribution ex-TAC, a level he said maintained momentum from the second half of 2025.

Day reported CTV contribution ex-TAC of $82 million, up 30% year-over-year. Barrett described the CTV strength as broad-based, citing continued growth across publishers including LG Ads, Netflix, Paramount, Roku, Vizio, Walmart, and Warner Bros. Discovery. He also said Magnite’s top 10 accounts grew in the “mid-30% range” year-over-year, with the rest of the customer base growing in the “mid-20s.”

Barrett tied Magnite’s CTV positioning to SpringServe, which he said has evolved into an “operating system for CTV monetization,” combining ad serving, mediation, and monetization infrastructure. In live TV—particularly live sports—Barrett said Magnite’s differentiation is more pronounced, adding that revenue from March Madness grew more than 80% year-over-year.

Asked whether CTV growth rates could continue, Barrett said Magnite believes the performance is sustainable. He said the broader CTV market appears to be growing in the “low 10s” based on peer reports and analyst expectations, while Magnite is “significantly outperforming market growth.” He also highlighted international expansion, saying U.S.-based streamers going global “go with” Magnite and can disrupt local markets in ways that accelerate programmatic adoption.

DV+ trends: decline moderates as mobile and commerce media contribute

Magnite’s DV+ segment declined in the quarter but performed better than management expected. Day reported DV+ contribution ex-TAC of $79 million, down 5% year-over-year, while Barrett said the decline was “better than expected” and that trends improved exiting Q1 and into Q2.

Barrett characterized DV+ as a portfolio, noting the open web display portion remains pressured but other areas are growing, including mobile in-app, online video, audio, and commerce media. He said mobile in-app grew 8% year-over-year and remains “a durable growth segment,” supported by deeper integrations and publisher and DSP onboarding.

Commerce media was cited repeatedly as a contributor across both DV+ and CTV. Barrett said Magnite had 21 commerce media partners, with 13 “deployed and ramping.” He also described what he sees as a shift in commerce media strategy: instead of forcing buyers through a single DSP to access retail data, he said the strategy is “unwinding” toward keeping data close to the retail media partner and working with an SSP so multiple DSPs can access the data in a privacy-compliant way.

Expenses, cash flow, and capital allocation

Day said total operating expenses (including cost of revenue) were $157 million, flat year-over-year. Adjusted EBITDA operating expense was $118 million, $4 million better than company guidance, which Day attributed to “significant improvements in cloud spend and some early AI-related productivity gains.”

On cash and leverage, Day said the cash balance was $185 million at quarter end, down from $553 million at the end of Q4. He attributed the change primarily to a $205 million payoff of convertible debt, planned capital expenditures, share repurchases, and seasonal working capital dynamics. Operating cash flow, defined as Adjusted EBITDA less CapEx, was $23 million. CapEx totaled $20 million in the quarter.

Magnite ended Q1 with net leverage of 0.7x, consistent with its target of less than 1x. The company repurchased or withheld over 2.2 million shares for approximately $29 million during the quarter, and Day said $186 million remained under the current repurchase authorization through February 2028. Following the convertible debt repayment, Day said Magnite plans to be “more aggressive” with share repurchases and reiterated a goal of returning approximately 50% of free cash flow to shareholders via buybacks.

Guidance, AI initiatives, and leadership transition

For the second quarter, Day guided contribution ex-TAC to $177 million to $181 million (9% to 12% growth), including CTV contribution ex-TAC of $90 million to $92 million (26% to 29% growth) and DV+ contribution ex-TAC of $87 million to $89 million (a decline of 4% to 2%). He forecast Adjusted EBITDA operating expenses of $115 million to $117 million, implying an Adjusted EBITDA margin of 34% to 36%.

For full-year 2026, Magnite reaffirmed contribution ex-TAC growth of at least 11% and mid-teens Adjusted EBITDA growth. Day said the company raised its Adjusted EBITDA margin target to at least 35.5% (from greater than 35%) and raised its free cash flow growth outlook to the “mid-30% range” (from greater than 30%), while reaffirming approximately $60 million of CapEx. Day noted that Magnite’s estimates do not include any potential market share gains from remedies related to the Google ad tech trial.

AI was a recurring theme during Q&A. Barrett said 2026 would be “the story of AI with modest amounts of revenue flowing through,” with the largest near-term benefit coming from workflow and productivity improvements such as reducing the need to toggle between multiple dashboards. He said he expects 2027 to be the point when AI begins resulting in “real revenue.” Addressing concerns that agentic workflows could disintermediate parts of the ad tech stack, Barrett said Magnite expects AI to drive more volume through its infrastructure and that the company “will charge for that,” expecting improved margins rather than pressure.

Barrett also highlighted the company’s streamr.ai acquisition, describing it as a tool enabling small and mid-sized businesses to create and measure TV ads and buy through Magnite’s platform. He said the product is “really taking off” and that Magnite’s approach is to place the tools with aggregators and publishers that already have SMB relationships.

Separately, Barrett and Day addressed leadership changes, with Barrett noting that Day will retire after more than 13 years and will remain CFO through September 30 as Magnite evaluates internal and external candidates. Day said he intends to “energetically serve” through that date to support the transition.

About Magnite NASDAQ: MGNI

Magnite, Inc NASDAQ: MGNI operates as an independent sell-side advertising platform that enables publishers and digital media owners to monetize their inventory through programmatic advertising. Formed in 2020 through the merger of Rubicon Project and Telaria, Magnite combines technologies for desktop, mobile, connected television (CTV) and digital out-of-home (DOOH) ad exchanges. The company provides an end-to-end solution designed to help media owners optimize yield across open marketplaces, private marketplaces and programmatic guaranteed deals.

At the core of Magnite's offering is its supply-side platform (SSP), which connects publishers' ad impressions to demand-side platforms (DSPs) through real-time bidding (RTB).

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