Magnite Q3 Earnings Call Highlights

Key Points

• Magnite beat Q3 targets: revenue rose 14% to $204 million, while contribution ex-TAC increased 20% to $201 million. Adjusted EBITDA grew 46% to $83 million, and adjusted earnings rose to $0.33 per share.
• CTV was the standout growth driver, with contribution ex-TAC up 39% to $105 million; political advertising contributed about $12 million in contribution ex-TAC, mostly through CTV. Magnite now expects more than $40 million in political contribution ex-TAC for 2026, versus a prior $15 million forecast.
• Magnite raised its full-year outlook, lifting expected contribution ex-TAC growth to about 17% and adjusted EBITDA growth to about 30%; it also expects free cash flow growth above 60%. For 2027, the company projects top-line growth above 15% excluding political advertising.

Magnite NASDAQ: MGNI raised its full-year outlook after third-quarter growth in connected television and stronger-than-expected political advertising helped the advertising technology company exceed its financial targets.

Contribution excluding traffic acquisition costs, a non-GAAP measure known as contribution ex-TAC, rose 20% from a year earlier to $201 million, more than $10 million above the company’s expectations. Revenue increased 14% to $204 million.

Chief Executive Officer Michael Barrett said both connected TV, or CTV, and DV+ exceeded expectations. Political advertising contributed approximately $12 million in contribution ex-TAC, with more than three-quarters benefiting CTV.

Net income rose to $34 million, or $0.23 per diluted share, from $20 million, or $0.13 per share, a year earlier. Adjusted earnings were $0.33 per share, up from $0.20. Adjusted EBITDA increased 46% to $83 million, with the margin expanding to 42% from 34%.

Political spending lifts CTV growth

CTV contribution ex-TAC climbed 39% to $105 million, above Magnite’s guidance range of $98 million to $100 million. Political advertising accounted for approximately 9% of CTV contribution ex-TAC in the quarter.

Magnite now expects political contribution ex-TAC of more than $40 million for 2026, up from its previous projection of $15 million. Barrett said the company expects fourth-quarter political spending to be even larger than in the third quarter.

Barrett attributed the increase to a strong midterm cycle, the growing share of political budgets going to CTV, and Magnite’s expanded tools for political buyers. Approximately 20% of political ad spending on the platform flowed through ClearLine, its buying tool, he said.

Barrett said political advertising crowded out some other ads in certain states, but the company was watching how quickly that spending would return after the election. He described the market outside political advertising as strong.

The CEO reiterated an approximately 25% long-term annual growth expectation for CTV over three to five years, citing Magnite’s market position and existing client relationships. He said the company’s SpringServe ad-serving technology helps direct programmatic demand to publishers.

DV+ improves as mobile grows

DV+ contribution ex-TAC rose 5% to $95 million. Mobile in-app grew 17% and represented approximately 35% of the DV+ business, Barrett said. He also pointed to commerce media as a source of resilience against pressure on browser-based open-web advertising.

Chief Financial Officer Brian Gephart said Magnite views DV+ as a business capable of roughly flat to modest, low-single-digit growth, with mobile in-app, commerce media and audio among its opportunities.

Barrett highlighted a three-year extension and expansion with LG Ad Solutions and said Pinterest selected Magnite as its primary supply-side platform for a global launch of programmatic deals. He also confirmed that Magnite is working with OpenAI as a supply-side platform, bringing advertising demand to OpenAI inventory.

On agentic advertising tools, Barrett said there was considerable testing but not yet much spending flowing through them. He expects 2027 to remain a year of exploration for the industry.

Outlook raised for 2026

For the fourth quarter, Magnite forecast contribution ex-TAC of $227 million to $233 million, representing growth of 16% to 19%. That includes $124 million to $127 million from CTV and $103 million to $106 million from DV+. The company expects an adjusted EBITDA margin of 44% to 46%.

For the full year, Magnite raised its contribution ex-TAC growth forecast to approximately 17% from 13% to 14%. It also raised its adjusted EBITDA growth expectation to approximately 30% from more than 20%, and its adjusted EBITDA margin outlook to approximately 38.5% from at least 37%. Free cash flow growth is expected to exceed 60%, up from the high-40% range previously.

Looking ahead to 2027, Gephart said Magnite expects top-line growth of more than 15% excluding political advertising, or more than 10% on a reported basis, and an adjusted EBITDA margin of at least 38.5%.

The 2027 outlook does not include potential upside from remedies in the Google ad technology case. Barrett said the company was awaiting a final court order and that implementation timing remained uncertain.

Cash and capital spending

Magnite ended the quarter with $393 million in cash, up from $333 million at the end of the second quarter. Capital expenditures were $15 million, and the company reaffirmed its approximately $60 million capital spending forecast for the year.

Gephart said moving capacity on-premises helped keep cloud costs roughly flat year over year and reduced streaming cost per billion ad requests by more than 50%. Magnite also repurchased or withheld nearly 1.2 million shares for approximately $29 million during the quarter, with $145 million remaining under its repurchase authorization at quarter end.

About Magnite (NASDAQ:MGNI)

Magnite, Inc operates an independent omnichannel sell-side advertising platform that helps publishers and digital media owners monetize their content while enabling advertisers to reach audiences across multiple channels. Its platform supports the buying and selling of digital advertising inventory through automated auctions and direct transactions.

The company's solutions serve connected television and streaming video, online display and mobile advertising, audio, and digital out-of-home media.

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