Magnite, a leading independent supply-side ad platform (SSP), reported second-quarter financial performance for 2022 (Q3 2022). The firm achieved revenue ex-TAC (excluding acquisition costs) of USD 127.7 million (12% YoY growth) for Q2 2022, which was marginally above the upper bound of the company guidance and 2.9% above analyst estimates. Growth in demand for connected TV (CTV) continued to support topline performance, which grew by 29% YoY and accounted for an increasing share of ex-TAC revenue (Q3 2022: ~44%; Q2 2022: 42%; Q1 2022: 40%). 

The firm recorded an adjusted EBITDA of USD 44.4 million (11% YoY growth) during Q3 2022, which represents an adjusted EBITDA margin of 35% in line with the margin for Q3 2021. The improved EBITDA was attributed to lower-than-expected operating expenses due to a reduction in hiring and lower office and facility costs. The firm recorded a  net loss of USD 24.4 million in Q3 2022 (compared to a net loss of USD 24.3 million in Q3 2021) which corresponds to a diluted loss per share of USD 0.18, which was above analyst estimates of a loss per share of USD 0,15. 

For the fourth quarter of 2022 (Q4 2022E), the firm expects to achieve a revenue ex-TAC between USD 151 million and USD 157 million and for CTV revenue to be between USD 63 million and USD 65 million. The firm also expects to achieve an ex-TAC revenue above USD 510 million for the full year 2022E.

Analyst Quicktake: While the firm’s ex-TAC revenue has slowed compared to the previous quarter (7% QoQ dip), it is noteworthy that CTV revenue had risen over the same period (7% YoY growth). Hence the firm’s continued focus on the CTV space such as the recent partnership with rlaxx TV (an ad-based video-on-demand solution) is likely to continue to support its growth for the remainder of 2022E.