Magnite, Inc. Q2 FY2021 Earnings Call

Good afternoon, and welcome to Magnite’s Second Quarter 2021 Conference Call. All participants will be in a listen-only mode. Please note that this event is being recorded. I would now like to turn the conference over to Nick Kormeluk, Head of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Magnite’s second quarter 2021 earnings conference call. As a reminder, the comparisons you will see in the 10-Q as reported include the financial results of SpotX from May and June of 2021, but for the second quarter of 2020, the results do not include SpotX given the acquisition date of April 30, 2021. During the course of this call, when we refer to results and associated year-over-year comparisons with the phrase as reported, we are referring to the basis as reported in our 10-Q. When we make comments referring to pro forma comparisons, we are including SpotX for the second quarter of 2020 and the month of April in 2021 in order to provide additional detailed insights that management also uses to evaluate our business performance. Please keep in mind as it relates to the SpotX acquisition, prior quarterly results are estimated and unaudited. As a reminder, this conference call is being recorded. Joining me on this call are Michael Barrett, CEO; and David Day, our CFO. I would like to point out that we have posted financial highlight slides to our Investor Relations website to accompany today’s presentation. Before we get started, I’ll remind you that our prepared remarks and answers to questions will include information that might be considered to be forward-looking statements, including, but not limited to, statements concerning our anticipated financial performance and strategic objectives, including the potential impacts of COVID-19 on our business, as well as statements concerning the acquisitions of SpotX and SpringServe and potential benefits and synergies we expect to realize therefrom. 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. A discussion of these and other risks, uncertainties, and assumptions is set forth in the company’s periodic reports filed with the SEC, including our 2020 annual report on Form 10-K and our 10-Qs for Q1 and Q2 2021. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including revenue ex TAC for less traffic acquisition cost, adjusted EBITDA and non-GAAP income per share. Reconciliations between GAAP and non-GAAP metrics for all our reported results can be found in our earnings press release and in the financial highlights deck that has posted on our Investor Relations website. At times, in response to your questions, we may offer incremental metrics to provide greater insights into the dynamics of our business. Please be advised that this additional detail may be one-time in nature, and we may or may not provide an update in the future of these metrics. I encourage you to visit our Investor Relations website to access our press release, financial highlights deck, periodic SEC reports, and webcast replay of today’s call to learn more about Magnite. I will now turn the call over to Michael. Please go ahead, Michael.

Thank you, Nick. It’s been an exciting three months for us since our last call. The digital advertising market has continued its strong recovery from the impacts of COVID. The recovery is clearly visible in our Q2 revenue ex TAC across all formats and channels, which combined were up 79% on a pro forma basis. These results are very strong, even when considering easier comparisons from COVID in Q2 last year. I’ll first cover some quick performance highlights. CTV revenue ex TAC grew 108% on a pro forma basis, with both legacy Magnite and SpotX platforms each delivering growth over 100%. OLV and display also show very strong revenue ex TAC pro forma, with growth of over 60% each, indicating broad strength in our business aided by a strengthening economic recovery. Adjusted EBITDA margins ex TAC came in at 32% in Q2, and we generated $24 million in operating free cash flow in Q2, which we define as adjusted EBITDA less CapEx. This quarter was transformative for Magnite. Specifically with the closing of two strategic M&A deals, SpotX and SpringServe, which expanded our addressable market and added video ad serving to our product offering, significantly enhancing our product development and engineering capabilities, all of which contribute to greater CTV scale and revenue growth expansion. I want to provide some insights on what our combined scale, value proposition and growth opportunities look like going forward. As viewers continue to consume media content via streaming services and platforms, many media and content owners are creating content and services for the CTV market. And we are in a great position to provide them with the only independent end-to-end monetization platform. To be clear, we define CTV as large screen immersive TV advertising, and do not include streaming TV across other devices like mobile, tablet, and desktop. We have significantly widened and strengthened the customer segments we serve across device OEMs, such as Roku and Samsung, virtual multi-channel video programming distributors or MVPDs, such as Sling and Hulu, digital-first platforms such as Pluto and Tubi, and of course, broadcasters like Discovery and Fox. We have meaningfully expanded our service offering to touch more inventory and transaction types. Our CTV revenue includes not only programmatic auction but also fees for private and direct-sold deals, managed service revenue, ad serving fees, and value-added service fees. With the traditional TV upfront season recently concluded, I’d like to clarify how we participate in these upfronts. Direct-sold and upfront refers to who is doing the selling, but direct and upfront deals increasingly include programmatic media spend commitments because buyers and sellers want to realize the workflow efficiencies and targeting gains that programmatic provides. So, how do we participate in upfronts and direct-sold CTV? First through private marketplaces, where our platform serves as the pipes that connect buyers and sellers. As you may recall, a substantial majority of our CTV revenue comes from PMPs. In supporting PMPs, our texture serves as a self-service productivity and workflow tool to efficiently execute CTV campaigns. We also participate in direct-sold inventory through our managed service business, which provides demand facilitation and serves as a great onboarding source to get buyers into the programmatic ecosystem. Finally, with CTV ad serving, which comes by way of the SpringServe acquisition. We now have significant scale in CTV even in these early days of its adoption, as we expect well over $40 million in quarterly CTV revenue, ex TAC in Q3, which, if you step back, is greater than what our total company revenue was in Q3 2019. We are now enabling every part of the buying process: direct, upfront, and programmatic through our technology solutions into our managed service offering. We participate in all growth categories of CTV. On the identity front, we saw Google push out the elimination of third-party cookies in Chrome until the end of 2023. We continue to believe that first-party publisher segments collected in a privacy-compliant manner will be the future of identity solutions, and that SSPs will be a driving force behind this transition. However, the Google decision provides the industry with more time to transition and focus on advancement and adoption of alternative audience solutions. We also saw further adoption of IDFA removal with iOS updates this quarter. We observed some shift from iOS to Android in spend, lower but better than expected CPMs for iOS soft touch and limited impact overall ad spend. I’ll now shift to highlight the strategic value and opportunity created by our addition of an ad server. This is a very strategic piece for us to better serve current and future customers. Ad serving, in its most basic form, is a key utility function for CTV publishers to manage forecasts and execute their campaigns, whether programmatic or direct. This is a crucial technology piece that market leaders like FreeWheel and Google have bundled with their SSPs to create an efficiency advantage and better compete in the market versus other SSPs or ad server-only competitors. We’ve talked before about how important it is to be a full-stack independent partner to serve the open web and third-party CTV publishers. This critical piece of technology allows us to offer a viable independent end-to-end solution. Ad serving adds significantly to our CTV value proposition. Specifically, ad serving is required by all CTV market participants: OEMs, broadcasters, and OTT-only platforms, and for all types of inventory: upfront, direct, or programmatic. Having a tightly integrated ad server allows for the dynamic allocation of programmatic and non-programmatic inventory to provide a holistic yield management solution for publishers that addresses a specific set of customers wanting an integrated ad server and SSP solution from one partner, especially new entrants with no legacy tech or desire to build it. It allows us to cross-sell ad serving to all our SSP customers. And from a technical standpoint, it provides greater efficiency and performance versus third-party ad server integrations, which leads to better monetization for publishers. Switching gears, our SpotX and SpringServe integration efforts have been progressing well. Specifically related to SpotX, our senior leadership structure has been finalized. Our go-to-market teams have been put in place. The development and product teams are combined. We are ahead of plan for first-year cost synergies. We’re also pleased with plans to consolidate our two CTV platforms appropriately under the leadership of Allen Dove, our Chief Technology Officer, and Adam Soroca, our Chief Product Officer. Lastly, we are excited to serve customers as a more comprehensive scaled independent and powerful company to accelerate the growth of programmatic within the already attractive and rapidly growing CTV market. We look forward to our investor Analyst Day, which is planned to be virtual on September 15. With that, I will hand things over to David, who will go into greater detail regarding financial performance and expectations.

Thanks, Michael. We are pleased to announce our strong Q2 to provide some color on areas of strength in the business and to provide our outlook for continued growth in Q3. Total revenue for Q2 was $114 million. Revenue ex TAC was $100.4 million for Q2, up 139% from Q2 2020 on an as-reported basis and up 79% on a pro forma basis. CTV revenue ex TAC was $34.3 million and grew 108% on a pro forma basis, as Michael stated earlier. OLV and display were up over 60%, all on a pro forma basis. Looking at the CTV business more granularly, both legacy SpotX and Magnite grew pro forma revenue ex TAC over 100% in Q2. Since we’ve now integrated our customer sales, support, and engineering teams, we’re no longer running separate CTV businesses, and thus it no longer makes sense to split out CTV results based on legacy companies. As a result, we will speak to our combined CTV business going forward. Desktop pro forma revenue ex TAC grew 52%, and mobile pro forma ex TAC grew 75%. Our revenue mix for Q2 2020 on an ex TAC basis was 34% CTV, 39% mobile, and 27% desktop. Operating expenses, which in our case includes cost of revenue for the second quarter, were $161.5 million versus $82.9 million in the same period a year ago. Increases were primarily driven by the inclusion of SpotX cost of revenue, including traffic acquisition costs, operating expenses, and acquisition-related expenses. Adjusted EBITDA operating expenses, which represents the difference between revenue ex TAC and adjusted EBITDA, were $68.6 million for Q2 as compared to $45.5 million in Q2 2020, also driven primarily by the addition of the costs resulting from the SpotX merger. As Michael mentioned, we’ve made significant progress on our SpotX acquisition-related cost synergy goals. In June, we announced our leadership and team reorganization, and as part of that process reduced our workforce by roughly 6%. As a result of this and other actions, in our first four months, we’ve achieved over half of the $35 million in run rate synergies that we targeted, which is ahead of our plan. Net income was $36.8 million in the second quarter of 2021. That’s compared to a net loss of $39.1 million in the second quarter of 2020. The increase in net income was primarily attributable to an $87.7 million tax benefit recorded in Q2 as a result of the SpotX acquisition. Adjusted EBITDA was $31.8 million, resulting in a margin of 32% as compared to an adjusted EBITDA loss of $3.5 million in the second quarter of 2020 driven by continued revenue growth in our legacy business and by the addition of SpotX. Note that we calculate our adjusted EBITDA margin as a percentage of revenue ex TAC. GAAP diluted income per share was $0.26 for the second quarter of 2021 compared to GAAP loss per share of $0.36 in the same period in 2020. Non-GAAP diluted income per share in the second quarter of 2021 was $0.11 compared to non-GAAP loss per share of $0.10 reported for the same period in 2020. There were 126 million weighted average basic and 143 million weighted average diluted shares outstanding for the second quarter of 2021. We estimate diluted shares outstanding for the third quarter to be approximately 152 million. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs, were $8 million for the second quarter of 2021, in line with our expectations. Operating free cash flow was $24 million for the quarter, which we defined as adjusted EBITDA less CapEx. As a reminder, our acquisition of SpotX closed on April 30. Total consideration consisted of $640 million in cash and approximately 12.4 million shares of Magnite for a total value of $1.1 billion based on the value of our stock on the date of closing, excluding normal working capital adjustments. Our financing for the acquisition consisted of the issuance of $400 million in convertible senior notes during Q1 and the issuance of a $360 million seven-year senior secured term loan, concurrent with the close of the acquisition. The term loan bears interest at LIBOR with a floor of 75 basis points plus 500 basis points. The loan also requires 1% annual principal payments payable quarterly, which will be $900,000 per quarter. Our interest expense for Q2 2021 was $5.2 million. We estimate that full quarter interest expense will be approximately $7.1 million, of which $5.5 million will be the cash cost. At the end of Q2, we had $193 million in cash on the balance sheet. Note that just after the quarter closed, we used $31 million for the SpringServe acquisition. As a reminder, our cash balances can swing disproportionately both up and down compared to the run rate of our business that we collect and pay the gross amount of flow through to our sellers, while we recorded revenue primarily on a net basis, and even more so with higher revenues with SpotX going forward. We’re excited to add SpringServe to our business, which is currently generating approximately $3 million in quarterly revenue, the majority of which is CTV, and is roughly EBITDA breakeven. This is an area we plan to invest in. I will now share future expectations, which includes SpringServe. We expect revenue ex TAC for the third quarter to be in the range of $112 million to $116 million. We expect revenue ex TAC attributable to CTV for the third quarter to be in the range of $41 million to $45 million. This represents pro forma CTV growth of roughly 50% at the midpoint, year-over-year. We expect that adjusted EBITDA operating expenses in Q3 will be $77 million to $79 million. We expect that total CapEx for the second half of 2021 will be roughly $16 million. We continue to target long-term annual revenue ex TAC growth of 25% and adjusted EBITDA over revenue ex TAC margins of 30% to 35%. We are thrilled with the progress our teams are making, especially considering all that they’ve had to accomplish and integrate in a COVID-restricted world. Q2 also showed the powerful financial leverage we have in our business model with a strong adjusted EBITDA margin expansion that comes with revenue outperformance. With that, let’s open the line for Q&A.

The first question comes from Shyam Patil with SIG. Please go ahead.

Thanks. It’s Ryan on for Shyam. So first, you talked at length about SpringServe in the prepared remarks. But can you talk about how you think about SpringServe impacting CTV growth sort of in the long term? And does that accelerate your opportunity there? And then secondly, we saw you set up the new leadership team in Asia, of course, the acquisition. So how do you feel about your expansion prospects in Asia? Thanks.

Yes, Ryan, this is Michael Barrett. I can start it off and David can jump in. So, prior to the SpringServe acquisition, we were certainly the leading independent programmatic player in CTV, but we did lack the ad serving capabilities. And ad serving isn’t just essential to the whole monetization stack, whether it’s CTV or online video display. The top players have shown that if you combine an SSP with ad serving, there are benefits for the publisher from a monetization standpoint. So, there are the direct benefits we get from market expansion, which is ad serving. If the publisher were to sell an ad and not run it programmatically, it still has to be served. And there’s revenue to be generated from that. Then there’s also the increased opportunity from a programmatic standpoint. So, we’re quite excited. I think SpringServe has done a great job in the middle-market in terms of the customer base. I think that we see that segment growing. We had mentioned in the prepared remarks about interest from content owners and distributors to get into the CTV marketplace, and we think we’ll have a very exciting role there. Regarding the Asia announcement of our leadership team, that was done across the board, and I think the exciting aspect there is that we have go-to-market teams focused on CTV and DV+. We have product teams focused on CTV and DV+ and engineering teams focused on CTV and DV+, as well as DV+ display video, audio, anything that isn’t CTV. I think that allows us to better invest in the areas of the company because you saw the display growth numbers; they were quite strong for the quarter, indicating that display is up 60% marketplace every quarter. This simple fact is that it’s a growth business for us. It’s highly profitable, and we’re going to lean into that as well with appropriate resources. That team has done a fantastic job, and I think we have potential for growth, particularly in India in the Asian market. We’re making investments there. So yes, I would say I’m very pleased with the team structure, the leadership in place, and the prospects for growth in the future.

Great, thanks.

The next question is from Jason Kreyer with Craig-Hallum. Please go ahead.

Thank you, guys. And congrats on the execution. I wanted to go back to the SpringServe topic, just wondering where that product sits today, relative to where you think it needs to be to serve as a big catalyst as kind of another tool in your toolkit because we hear a lot in checks and in conversations that there’s a lot of demand for an alternative ad server relative to what’s out there. But I’m curious what kind of resources you need to put behind that to get it ready for a broader go-to-market?

Yes, it’s a great question, Jason, and thanks for the kind words on the quarter. I think we’ll be drilling down on this quite a bit more on our Analyst Day on September 15. But it’s a new acquisition for us, right, just recently closed on it. The good news is SpotX had been working very closely with the SpringServe team for the past year. It was almost a complete validation that if you couple ad serving knowledge with programmatic monetization, it’s going to yield greater outcomes for the publishers. There is definitely a tier of publishers that are ready for the SpringServe product and leaning into it. Admittedly, there’s a tier of publishers that bring with them legacy sales and linear sales, and that’s a far more complicated product. Probably not the effort that we’re going to attack as a rip and replace of a Google or a FreeWheel, but we see many opportunities in what is a pretty complex, multi-server environment, to be able to work very closely with those folks to gain more opportunities than we currently had prior to SpringServe. But yes, again, I’m super excited about it. As David mentioned, there are areas of investment, but the team has proven for the last year, working closely with SpringServe, that there is a real need for a coupling of our demand with the SpringServe product.

Thank you, Michael. In regards to integrating SpotX, we’ve spent some time before talking about the managed service offering. I’m curious if that’s part of the integration process to make that product available to the more legacy Magnite CTV customers? And if it is, is there a timeline when that becomes available? Because it seems like that could be a source of revenue synergies over time.

Yes, great call. That’s one of those things where you kind of just hit the ground running with it. If you had inventory, say a legacy Magnite or legacy Telaria, had inventory that SpotX didn’t have access to, that goes into the salesperson's bag. So that inventory can be used to bolster packages, create new packages. Yes, we see really promising opportunities in increasing demand facilitation.

Perfect. All right. Thank you.

Thanks.

The next question is from Nick Zangler with Stephens. Please go ahead.

Hey guys, great quarter. Curious how revenue trended throughout the quarter? What maybe you might attribute to COVID-19 impacted businesses driving a resurgence in ad demand, maybe specifically in CTV as well. I know you saw some oscillations late last quarter. Just thoughts on how things trended throughout the quarter?

Do you want to start, David?

Yes, I think across the business, we saw for the most part, normal seasonal patterns, except that we did see some acceleration coming into June. A couple of categories picked up; I think travel was one in particular that really strengthened over the course of the quarter. We also saw slight strengthening in CTV as well, but nothing extremely outsized I guess.

Great. And then, obviously, this was a very busy quarter for you guys. So, this might be going backwards, but maybe you could talk through some of the advantages of partnering with Iris TV for contextual advertising as well as TV scientific for access to incremental demand. Do you think you’re seeing performance marketers; performance advertisers enter this market for CTV? Can you just talk about the opportunity there? It seems it’s pretty vast; I think $134 billion is spent across search and social and they cover the measurement and attribution that search and social offer. Now that theoretically is coming to CTV. It’s available on CTV, so maybe you can just kind of size up that opportunity for incremental demand.

Yes, I mean, all good questions, Nick. One of the themes we’ve been pushing on as it relates to the programmatic opportunity or market size for CTV is the democratization of advertisers. If you look at linear TV, given the sophistication of the media buying, the expense of the media buying, and the quality of the advertising that has to be produced, it’s not surprising that the linear world from a national TV standpoint, is comprised of a couple of hundred advertisers, representing the bulk of it, where we firmly believe in programmatic CTV, you’re going to be talking 10,000 advertisers. We saw that throughout COVID, when many direct-to-consumer brands started testing CTV and had a very positive experience with it. Pricing on Instagram and Facebook had gotten very expensive for them. They already had the creatives from those video units and were able to repurpose it. So you’re at the very early stages. But I think it’s a big, big opportunity, this democratization of advertising. Regarding the two partnerships you mentioned, they are strong partnerships and one of many. SpotX has done an extraordinary job onboarding, measuring, attributing, creating audience segments, and packaging. They’ve done a nice job presenting inventory and the results of the advertising on inventory to marketers and publishers. We will continue in that vein with more partnerships and generally just trying to help the industry with this attribution and measurement conundrum that exists today.

Great, thank you so much and good luck going forward.

Thanks, Nick.

The next question is from Vasily Karasyov from Cannonball Research. Please go ahead.

Thank you very much. Good afternoon. So on the Q1 report, your connected TV revenues were a little light. One of the reasons you cited was that there was a shortfall in inventory due to linear ratings. That caused some constraints. So now that you have closed on SpotX and SpringServe, can you tell us how these transactions mitigate the risk of that happening again? Thank you very much.

Yes, Vasily, thanks for the question. In a high growth, nascent marketplace, I think it’s hard to bulletproof projections. Your baseline of performance quarter-to-quarter isn’t all that great in terms of years of practice. I think we’re going to have choppiness, but I think we still stick with our longer-term view of a marketplace that we’re going to outpace the growth. As it relates to safeguarding against inventory shortfalls, those kind of fall out of our control by and large due to publishers and their go-to-market efforts. However, I can say that what SpringServe and SpotX do is broaden the product sets that we can go to market with, creating a larger total addressable market (TAM) which also creates stability. Yes, there will always be blips here, there, especially in online video, and we’ve experienced that for 15 years. In programmatic, there are technical issues that arise and there are pushes and pulls. But in summary, I think that the larger our base becomes, the more stable the projections can be, and we now have a portfolio of products that help safeguard against that.

Thank you.

The next question is from Matt Thornton with Truist. Please go ahead.

Hey, good afternoon, guys. Maybe two, if I could. I guess, Michael, can you talk a little bit about the competitive landscape out there, maybe on the display side, as well as on the CTV side, just kind of anything incremental since we were on the call last time three months ago, supply path optimization, competition, pricing, just give us the lay of the land. And then just secondly, and I apologize that I missed this, but I think last quarter you talked about being comfortable with north of $500 million in revenue next year. Just want to see if you’re still comfortable ordering you update to that number. Thanks, guys.

Sure, Matt, I’ll take the first half and David will stick his neck out for the second half. Yes, listen, competition continues, right? I think what we’re seeing is it’s really getting consolidated among the top players, right? A Magnite, or maybe a PubMatic on the display side, folks that are in the private sector that see open access, going through a process right now trying to sell themselves. No index exchange, which was a tough competitor a couple of years back, has fallen a step behind, and you kind of hear that in the marketplace. The bigger players are getting bigger; marketers feel more comfortable with a handful of partners. The final steps of supply path optimization will look different in different sectors. In open auction, I think there will always be a need for eight to ten participants to do a unified auction in that open market header bidding. In CTV, I don’t see any momentum for people looking for more demand partners in the private marketplace world; I think they’re quite satisfied with the existing players. So I think we stand very well positioned in this marketplace that is consolidating. And David, on the 2020 forecast, 2022 forecasts?

Yes, we were excited this quarter to come in $6 million or so ahead of our midpoint of guidance and we remain bullish about 2022. So, certainly not reducing our targets, and we will continue to lean into it. I think we talked about well in excess of $500 million in revenue, and we remain super comfortable with that.

The next question comes from Shweta Khajuria with Evercore ISI. Please go ahead.

Okay, thank you. Well, I’m sorry if I missed this, but is there a structural difference in growth rates? So, you mentioned 100% year-over-year growth in CTV revenue for Magnite as well as SpotX. I guess the question is, for managed services versus direct deals, putting into programmatic, sort of two growth different paths. Are you seeing trends where one is going faster than the other?

David, is that something we’ve ever broken out?

We haven’t really broken our growth rates, but what I would say is that they’re both growing strongly; they will be an important part of our business. The managed service or demand facilitation part of our business represented about 18% of our total GAAP revenue. It will be an important part of our business, but it’s not the primary part of our CTV business. Programmatic will still be the biggest driver over the long term, I think.

Okay, so 18% of the combined pro forma for our products plus Magnite is managed service, is that right?

18% of the CTV number, correct?

Sorry, I was going say, it’s actually, it’s 18% of our total revenue. But let’s talk about revenue ex TAC, it’s 7% of our total revenue, and it’s still a minority of our CTV business.

Okay. Regarding the guidance you provided that indicates a 50% year-over-year growth in CTV revenue, can we expect that same 50% growth for both the indiscernible segment and SpotX?

We’ve combined our teams, so there really is no such thing going forward as one legacy business versus the other business. In the second quarter, we did have that differentiation, but both CTV businesses grew at basically the same rate. Now we’ve combined and we’re going forward. There’s no drag from any of the legacy clients we brought together, and we’ll be talking about that business on a combined basis going forward.

Okay. So when you report the third quarter, should we not expect you to give us a breakout like you did this time, that was 100% each?

That’s correct.

Okay, sounds good. Well, thank you very much.

Thanks, Shweta.

The next question is from Matt Swanson with RBC Capital Markets. Please go ahead.

Yes, thank you guys so much for taking my question. I’ll kind of follow up on the previous Matthew going down competition. With the acquisition of SpotX, and now with SpringServe, you’ve really kind of established your place in the CTV market. Thinking competitively, how do you build a defensible moat around the market share kind of acknowledging that this is still a nascent market? We’re looking five years from now with a much larger TAM. How are you thinking about kind of sticking to the areas that you’re excelling in right now?

Yes, great question, Matt, and thanks for the question. The funny thing is, you can certainly look at competitors coming up: general display exchanges like PubMatic crashing the party and wanting to get into CTV. God knows why – we know why they want to; given the exciting TAM and growth rates. We really do feel it’s going to play out quite differently. As you pointed out, we now have a collection of assets that are unrivaled. In order to really compete against us as a new entrant, you’re going to have to bring a lot of tech, experience, and talented engineers. We don’t see this as something where it erupts into open auction header bidding with ten exchanges competing for inventory. That may occur at a segment of the market but that would be kind of the longer tail. It wouldn’t necessarily look like the upper top of the pyramid, like broadcasters. The way we look at it, this isn’t a defensive move by us to maintain what we have; the vast majority of revenue dominating this space is by FreeWheel and Google, and that’s whom we’re targeting.

Yes, and that’s super helpful, Michael. And then if I could just kind of add on to that collection of assets idea, bringing in SpringServe. Can you talk about how you see the whole mess of your value proposition now? Are there any other clear adjacencies or capabilities, either M&A or internal development, either assets or even thinking about ways to build out some of those strategic managed services to kind of build – we’re not saying defensible; I want to say entrenched position with your customers, but kind of cement the value creation that you have for publishers?

Yes, I mean, listen, I think we have the big pieces in place. We are very satisfied if we never did another M&A deal; we’ve gotten the best that was out there, the best talent, and now we’re all set to run a unified company Magnite. That said, that’s probably not realistic. The flavor of the M&A going forward is likely to be SpringServe-sized, as opposed to SpotX-sized simply because that’s what exists in the market. With the ad server, it’s about executing and scaling the SpringServe product. What are adjacent areas? I don’t think we’d ever get into as a principal in the measurement business. A lot of marketers or publishers don’t like the grading your own homework, so there are great measurement companies to work with. Audience packaging and audience segmentation business has some interesting areas of opportunity for us. We’re already head down doing a great job on it in CTV and DV Plus, but there’s probably opportunities there, particularly as we get closer to the deprecation of cookies in Chrome. Generally speaking, the way you should think about it is that we’ve got the pieces in place. It’s about execution at this juncture.

Got it. Fantastic. Thank you for the time.

All right, thanks, Matt.

This concludes our question-and-answer session. I would like to turn the conference back over to Michael Barrett for any closing remarks. This concludes our question-and-answer.

I’m sorry, Debbie. I was on mute. One more time, we are excited about what the future holds for Magnite and how we’re positioned in the CTV, OLV, and display markets. Magnite is the industry’s leading independent omni-channel SSP. We could not have achieved that position without all the hard work from our close to 1,000 Magniters. Thank you all for your commitment and passion. We’ve accomplished a lot in a very short time from a strategic perspective. The investments we’ve made, the offerings and talent we now possess, give us the opportunity to play an ever more strategic role in serving open web and CTV publishers. We are very excited about the industry and Magnite’s future. Thank you for joining us for our Q2 results call. We look forward to talking to many of you at our Virtual Analyst Day on September 15, or through virtual investor meetings hosted by Craig Hallum and Cannonball Research this quarter. Have a great evening.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.