Magnite, Inc. Q3 FY2025 Earnings Call

Good day, and welcome to the Magnite Q3 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Nick in Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Magnite's Third Quarter '25 Earnings Conference Call. As a reminder, this conference is being recorded. Joining me on the call today are Michael Barrett, CEO; and David Day, our CFO. I would like to point out that we have posted financial highlight slides on our Investor Relations website to accompany today's presentation. Before we get started, I will remind you that our prepared remarks and answers to questions will include information that may be considered to be forward-looking statements, including, but not limited to, statements concerning our anticipated financial performance and strategic objectives, including the potential impact of macroeconomic factors on our business. 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 quarterly reports on Form 10-Q and our 2024 annual report on Form 10-K. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including contribution ex-TAC or less traffic acquisition costs, adjusted EBITDA and non-GAAP income per share. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and in the financial highlights deck that is posted on our Investor Relations website. At times, in response to your questions, we may offer additional metrics to provide greater insights into the dynamics of our business. Please be advised that this additional detail may be onetime in nature, and we may or may not provide an update on 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 the webcast replay of today's call to learn more about Magnite. I will now turn the call over to Michael. Michael, please go ahead.

Thank you, Nick. Q3 came in strong, and we once again exceeded total top line expectations with CTV contribution ex-TAC growing 18% and 25%, excluding political. DV+ continued to perform well, growing in line with expectations. Adjusted EBITDA was also strong at $57 million, beating expectations, resulting in a margin of 34%. Our performance in CTV was driven by growth of our largest publisher partners, significant traction with agency marketplaces, ClearLine adoption, positive SMB trends and programmatic expansion in live sports. Our most significant growth came from the industry's largest players, including LG, NBCU, Netflix, Roku, Vizio, Walmart and Warner Bros. Discovery. Regarding Netflix, we've supported the expansion of their ads business to all ad-supported markets. The pacing of the Netflix ramp has gone very well, and we remain excited about our continued growth opportunity with them in 2026. Roku continues to be a very fast-growing publisher with the Roku Exchange, where Magnite is the preferred programmatic partner. This quarter, in particular, demonstrated especially great momentum where our partnership saw meaningful traction in sports and in attracting SMBs to their platform. We continue to explore areas for further expansion of our relationship to drive more revenue for them. Warner Bros. Discovery has also made great progress with its NEO platform launching in September. NEO, a new ad platform, will provide buyers direct access to Warner Bros. entire premium video inventory through one simplified and intuitive user interface where Magnite is helping to power transactions. ClearLine continues to gain momentum with over 30 clients, and we recently rolled out a number of key enhancements to the product. Earlier this year, we announced that native home screen units are available through ClearLine. This update will enable buyers and curators to discover, package and activate inventory in one platform with the most comprehensive access to differentiated supply, unique first-party data and content signals. Finally, we also announced plans to integrate AI assistance and Agentic workflows into ClearLine, which will be powered in part by technology from our acquisition of streamer.ai, which we announced in September. As I've mentioned before, the CTV advertising opportunity for small and medium-sized businesses is enormous, but it's historically been bottlenecked by complexity and high cost. To address this, streamer.ai gives small businesses the tools to create production quality CTV commercials in minutes and in an extremely cost-efficient manner. We're licensing Streamer to large media owners, commerce players, agencies, DSPs and other media buyers so they can help their SMB clients easily break into CTV advertising, and the response has been very positive. We've announced two client wins since the acquisition, ITV, which is the U.K.'s largest commercial broadcaster, and Wolt, which is part of DoorDash with many more to come. We are seeing agencies becoming more active in their programmatic SPO efforts, and it's driving spend now. We have long supported agencies and have dedicated teams in place to support their growth efforts in this area. As evidence of this acceleration, ad spend from top holds grew nearly 20% in Q3 year-over-year. A significant driver of our growth with agencies is from Magnite's powered buyer marketplaces. These private label marketplaces allow agencies to connect directly with publishers to develop curated pools of inventory that are enriched by proprietary data, are DSP agnostic and maximize working media spend. Our combined CTV ad serving and SSP platform, SpringServe, continues to be a significant differentiator for us with publishers. As well as offering a leading ad server in CTV, SpringServe plays a crucial role as the mediation layer for publishers. In addition to supporting traditional DSP to SSP connections, our unique position enables us to provide a direct connection for buyers directly into the ad server. We just added Viant's Direct Access product to our list of direct integrations that include Amazon APS, Yahoo's Backstage and Trade Desk's OpenPath. SpringServe also allows publishers to maximize their yield by unifying demand from these direct ad server integrations directly amongst buyers that connect to our SSP. Live sports continues to drive growth in our business, and we see tremendous potential in the future as programmatic adoption continues to escalate. We have seen new contributions notably from Disney of NFL and college football as well as Major League Baseball in the WNBA. Our live stream accelerator product, which was specifically developed for live sports, is currently utilized by numerous partners globally. Leaders in this area are choosing Magnite because of our unique tech and continued commitment to invest in this area. On the DV+ side of the business, Q3 contribution ex-TAC was up 7% or 10% excluding the impact of political last year. Our DV+ business continues to benefit from ramping partners as well as new client wins. A notable update is that our partnership with Pinterest began to ramp in Q3. In particular, we've been really pleased with the progress of our Commerce Media offering as our roster of partners continues to grow. We've announced partnerships with Best Buy, RE/MAX, Western Union, PayPal and Connective Media by United Airlines. Commerce entities are attracted to the unique technology Magnite provides. They each have some form of O&O inventory and leverage Magnite DV+ or SpringServe tools for monetizing or ad serving. In addition, these entities possess valuable first-party data and are utilizing ClearLine to layer their first-party data on top of third-party supply for curation. The first-party data enriches the supply and allows commerce entities to package their media with data to extend their overall footprint. Our fastest-growing format in TV+ in the third quarter was audio. We are gaining traction in this area and see it as a significant opportunity in the future. Earlier this year, Spotify announced its new Spotify Ad Exchange or SAX, and selected Magnite as its global programmatic partner. SAX has integrated SpringServe to power its omnichannel advertising across audio, video and native display. Acast, a leading podcast monetization platform, announced a partnership with Magnite during the third quarter as well. This strategic collaboration will make Acast podcast inventory, which includes more than 140,000 podcasts and more than 1 billion listens quarterly, available to advertisers through Magnite's infrastructure. Turning to AI. We delivered another quarter of progress and have an increasingly clear view of how Agentic technologies will show up across the industry and in our products. In October, an industry association comprised of some of the industry's best regarded executives introduced the Ad context protocol or AdCP, a proposed standard for how buy and sell-side agents will transact. When you look into the structure, you see that the agents are designed to operate on top of the transactional infrastructure that exists today, much of which we've built. As always, these transactions must be vetted, negotiated, processed and cleared in a privacy-compliant manner, jobs we excel at. We envision the new world as one where sell-side assets, in particular, are going to be even more valuable and especially Magnite with our strong publisher relationships, SPO partnerships and leading technology. A key focus of our AI efforts involves the integration of the Model Context Protocol, or MCP, a generalized open standard that lets agents and LLMs connect to external systems and data. The AI business we recently acquired, Streamer, is built on MCP, and we've wired its foundation into ClearLine, enabling partners like the aforementioned ITV and Volt to generate CTV creative, receive campaign recommendations and place buys. ClearLine is the first of several Magnite products to integrate MCP. This work will enable agents to automate tedious tasks such as setup and adjustment to surface valuable insights and drive increased monetization while freeing partners' valuable time. Beyond agents, we continue to strengthen the machine learning that powers many of our products and operations, improving optimization, raising win rates and lowering unit costs. We're also applying AI across our internal operations, combining process redesigns with efficiency gains and investing in the platform services and training our teams need to serve our growing partner list without meaningfully increasing headcount. Next, I want to provide an update on the Google Ad tech trial. As you likely know, Judge Brinkema concluded a two-week trial on the remedies phase of the DOJ's case in early October. The post-trial briefing has recently been filed and closing arguments are scheduled for November 17. After that, it will likely take some time for Judge Brinkema to issue a final order outlining the remedies she'll put in place. At this stage, having found that Google had illegally engaged in a series of anticompetitive acts to establish monopolies in the ad exchange and ad server market, both structural and behavioral remedies remain on the table, structural referring to the forced divestiture of parts of their ad tech business and behavioral being a set of rules and practices designed to rectify and prohibit Google's illegal anticompetitive conduct. We think there are merits to both types of remedies and have confidence that the court will reach the right outcome. The remedy hearings in September did not change our positive outlook about remedies. Ultimately, our point of view is that any decision that helps restore competition and eliminates Google's self-preferencing behavior will be a big win for the open Internet as well as Magnite specifically. To that point, as we've said previously, every 1% of market share that shifts to Magnite as a result of these remedies could mean $50 million of additional contribution ex-TAC on an annualized basis and at a very high 90% plus flow-through margins. Needless to say, we're watching developments in this case very closely. On a related note, we recently announced that we had filed our own lawsuit against Google relating to its anticompetitive conduct. The suit seeks financial damages as well as other remedies and is a follow-on action to the DOJ litigation and builds on the allegations proved in that case. The complaint further details how Google's illegal conduct served to provide Magnite and other independent players the opportunity to compete fairly and grow their businesses while harming advertisers and publishers alike. We're at the early stages of the process, and we'll provide further updates on the litigation as it progresses. With that, I'll turn the call over to David for more detail on financials.

Thank you, Michael. As he mentioned, we had an excellent third quarter with exceptional performance in CTV, achieving an 18% growth in contribution excluding TAC or 25% if we exclude political contributions, surpassing our expectations. DV+ performed well and was consistent with our guidance. Adjusted EBITDA was strong, increasing 13% to $57 million and exceeding expectations, resulting in a 34% margin. We are pleased with these results, especially the acceleration in CTV growth, significantly outpacing market growth. Total revenue for Q3 stood at $179 million, up 11% compared to Q3 of 2024. Contribution excluding TAC reached $167 million, which is a 12% increase, surpassing the high end of our guidance range. CTV contribution excluding TAC was $76 million, growing 18% year-over-year or 25% excluding political contributions, also exceeding our guidance range. DV+ contribution excluding TAC was $91 million, up 7% or 10%, excluding political contributions from the same quarter last year, in line with our guidance. The contribution excluding TAC mix for the third quarter was 45% from CTV, 39% from mobile, and 16% from desktop. From a vertical perspective, health and fitness, shopping, and technology were the strongest categories, while automotive was among the weaker performers. Total operating expenses, which include cost of revenue, were $154 million, up from $147 million during the same period last year. Adjusted EBITDA operating expense for the third quarter was $110 million, aligning with our expectations and increasing from $99 million in the same period last year. This rise was primarily due to personnel costs and higher cloud and data center expenses to support our CTV business growth and investments in CTV-related features. Our net income was $20 million for the quarter, compared to net income of $5 million for the third quarter of 2024. As noted earlier, adjusted EBITDA grew 13% year-over-year to $57 million, reflecting a margin of 34%. For clarity, we calculate the adjusted EBITDA margin as a percentage of contribution excluding TAC. GAAP earnings per diluted share were $0.13 for the third quarter of 2025 compared to $0.04 for the third quarter of 2024. Non-GAAP earnings per share for the third quarter of 2025 was $0.20 compared to $0.17 last year. Reconciliations to non-GAAP income and non-GAAP earnings per share are included in our Q3 results press release. Our cash balance at the end of Q3 stood at $482 million, an increase from $426 million at the end of the second quarter. Operating cash flow, defined as adjusted EBITDA less CapEx, was $39 million. Capital expenditures, which include purchases of property and equipment along with capitalized software development costs, were $18 million. Additionally, as Michael noted, we acquired Streamer for $10 million. Our technology team has significantly improved operational efficiency and reduced per unit cloud costs, enabling us to manage substantial increases in ad request volumes while keeping total costs modest. To enhance efficiency and maximize the value of our hybrid infrastructure, we are evaluating the optimal allocation of on-prem and cloud resources. Consequently, we decided to raise our CapEx investment by $20 million this quarter, specifically for two new data center setups in Ashburn, Virginia, and Santa Clara, California, to ensure future data capacity needs are met. We now anticipate CapEx for Q4 and the full year to be approximately $23 million and $80 million, respectively. For 2026 and beyond, we expect this increased investment to yield additional efficiencies, with plans to reinvest part of the savings into critical growth areas. We forecast CapEx to be in the $60 million range in 2026. Net interest expense for the quarter was $5 million. Our net leverage for the quarter was well below our target of less than 1x, coming in at 0.3x at the end of Q3, down from 0.6x at the end of the second quarter. As a reminder, the $205 million principal balance of our convertible notes is a current liability on the balance sheet, as the notes are due this coming March. We plan to pay off these notes in cash at maturity and have the necessary liquidity to do so. In the first three quarters of the year, we repurchased or withheld over 3.3 million shares for around $50 million. We have $88 million remaining in our authorized share repurchase program, which we will continue to utilize opportunistically. I will now discuss our expectations for the fourth quarter and outlook for 2026. As we mentioned last quarter and due to the concentration of political spending in the fourth quarter last year, we will provide guidance both including and excluding political contributions to show the underlying business performance. For Q4, we expect contribution excluding TAC to be between $191 million and $196 million, which translates to growth of 6% to 9% or 13% to 16% excluding political contributions. Contribution excluding TAC from CTV is expected to be between $87 million and $89 million, which corresponds to growth of 12% to 14% or 23% to 25% when political contributions are excluded. In DV+, our guidance reflects slightly lower growth compared to year-to-date performance due to a couple of factors. First, we’ve observed a further dip in vertical spending in automotive and some additional weakness in technology and Home and Garden, indicating a somewhat softening macro environment. Additionally, we are seeing a shift of spending from online video to CTV, which makes sense given the more competitive CTV CPMs and increased access for SMBs to CTV inventory. Lastly, we have also encountered some near-term pressure from a recent feature change by a top DSP partner affecting all SSPs. Despite these challenges, we still expect growth in DV+: contribution excluding TAC for DV+ is anticipated to be between $104 million and $107 million, reflecting growth of 2% to 5% or 7% to 10%, excluding political contributions. We anticipate adjusted EBITDA operating expenses of between $112 million and $114 million and CapEx of approximately $23 million, which includes the previously mentioned incremental investment. For the full year 2025, as indicated in the Q4 guidance, we still expect total contribution excluding TAC growth to exceed 10% or be in the mid-teens excluding political contributions, with adjusted EBITDA growth in the mid-teens, which would represent a margin expansion of about 180 basis points at the midpoint. We are raising our CapEx to approximately $80 million. Now looking ahead to 2026, I want to highlight that our estimates do not account for any potential market share gains resulting from the remedies from the Google Ad tech trial. We expect contribution excluding TAC growth for 2026 to be at least 11%. We also anticipate returning to our target margin range, which starts at 35%, factoring in significant investments in personnel to support our growth initiatives, with CapEx expected to be around $60 million. The third quarter was very encouraging for us at Magnite as we see substantial traction from our partners and progress in our strategic initiatives. I am optimistic about our business's continued advancement and look forward to further momentum into 2026. Now, let's open the line for questions.

Our first question comes from Shyam Patil of Susquehanna.

Nice job on the quarter. Michael, I have a question for you. A fairly kind of recent question or even discussion has been around The Trade Desk, Kokai and OpenPath and the potential impact to Magnite, just given some of the impact that we've seen it have on others in the industry. Can you just talk about this and maybe just also talk about your value add to the ecosystem?

Yes. Thanks for the question, Shyam. Yes, so in late Q3, Trade Desk made a software change to their operating system that prioritized OpenPath as a default path for supply. And since that occurred, we've worked with all of our major buyers, which include agency holding companies to reconnect Magnite as a preferred supply path. And as we noted in the script, Magnite powers many of the Holdco buyer marketplaces, so connection to Magnite is essential for their business. So there was impact. We project impact for Q4 and that kind of softer DV+ guide that we put forth. But we do feel as though the bulk of the impact has already occurred that it's been limited to DV+. We've been able to work with our largest buyers, again, many of the agency holding companies to reconnect Magnite. And we feel confident going forward that, that will mitigate any negative financial impact in out quarters. I will say we definitely support Trade Desk's goal of cleaning up the ecosystem and cutting out supply players that provide very little value. And I assure you this move will do that. But I also think this shows Magnite's importance to the buying community, the profile of the media that we supply, the services that we provide building their businesses by our marketplaces on our rails and obviously, the importance that we bring to the supply side. So I think that certainly, Magnite's proven its efficacy in the industry. And I think that the strength of those relationships will help us mitigate any headwinds that come from these changes or other changes for other DSPs.

The next question comes from Dan Kurnos of The Benchmark Company.

Michael, just to obviously tack on to that. I don't want to read too much into the press release, but you said DV+ continues to perform well, growing in line with expectations, driven by exclusive partner expansion. I think we all believe Amazon is your fastest-growing DSP partner, and it seems like you're gaining share across kind of DV+ with them as they expand. So maybe your thoughts as they press their own DSP and your partnership there? And then secondarily, SMB is becoming a real thing now. I think people forget how deeply integrated SpringServe is with all of the DSPs, but just kind of your thoughts on where you're at from the SMB marketplace from an integration perspective, how you're attacking the market directly. And if you want to bring up some of the streamer AI stuff, again, that's fine, too.

Yes. Thanks for the question, Dan. Yes, listen, our spend from the leading DSPs remain very strong. We are closing that gap that we had highlighted multiple quarters ago, where the total ad spend was outpacing the contribution ex-TAC growth. And that's narrowed, but we still have a very healthy spend pattern. And with all DSPs, and Amazon, in particular, is having a banner year, and we really enjoy that partnership both with Amazon as a buyer of inventory and Amazon as a publisher where we can help them monetize the inventory there. And the SMB is a very exciting chapter. Obviously, partners like Mountain are doing a phenomenal job and buying a lot of supply from us. And the idea of Streamer is to help folks like that, not just Mountain, but other DSPs that may not have the tools to attract SMB dollars or merchants or agencies. And so the idea is that we offer the streamer product to those folks that have direct relationships with SMBs. The idea isn't for us to be chasing SMBs ourselves, but to make sure that, that spend winds up on our platform. And that's why we're super excited about the Streamer acquisition because it accomplishes that. In addition, as we pointed out, we get the side benefit of having this AI infusion, this AI-first way of thinking into our technology organization. And you see that already ClearLine is being built on MCP Rails. And so it's going to help accelerate our total kind of AI agentic focused business. So very, very happy with that acquisition.

Super helpful, Michael. And despite all the noise, really nice print and outlook. Next question comes from Jason Kreyer of Craig-Hallum.

So, Michael, I appreciate the comments on AI, and you had talked about AdCP. You had mentioned the sell-side's role becoming more important. And maybe can you just expand on how Magnite's role changes in a more agentic world?

Yes. Thanks, Jason. Obviously, early days and a lot of this exists on whiteboards, but I do think that the shift that we've seen in the non-agentic world, the idea of first-party data owned by the large media companies becoming extraordinarily important and their desire to keep that data as close as possible to the supply side. So we're playing a huge role in the audience creation business today. And we see that as accelerating. I think the key really as you look at AdCP, you start to realize that the idea of inventory sitting way over here and dollars from buyers sitting way on the other side of an exchange, you start to see a world where they're comingled. And as you start to look at the value, the idea of whoever has the access to that valuable supply as it gets comingled has a leg up. And so we feel very bullish about not just our prospects, but the prospects for the supply side in this new kind of agentic world.

Appreciate that. I wanted to follow up on live sports is kind of your perspective on supply and demand because it seems like there's a ton of demand for more dollars flowing into live sports. Curious the perspective you get from publishers moving inventory into programmatic or even moving inventory into biddable and how that progresses over time.

Yes, thank you, Jason. It's definitely accelerating and has a significant impact on our revenue. However, we should be cautious; I don’t see the Super Bowl becoming programmatic in the near future. We are observing a lot of inventory from college football and the NFL, so it's not limited to just second-tier leagues or sports. It's also very early, and programmatic is not being fully utilized yet. We're in the initial stages of this, and we're satisfied with our product leadership in this area. We mentioned LSA earlier, and Disney has been a crucial partner in expanding our footprint in sports inventory programmatically. Overall, we feel very positive about our position and the total addressable market associated with it.

The next question comes from Shweta Khajuria of Wolfe Research.

Okay, Michael, can you give us an update on the Google AdTech case? There seems to be a growing belief that a structural breakup might not occur, and expectations regarding behavioral aspects may have decreased slightly. Do you have any insights on this? How do you view the situation, and do you have any updates on the timeline from your perspective? Additionally, David, could you discuss the guidance for 2026? What is included in your guidance, and what factors might lead to growth beyond your base case?

Shweta, it's Michael. Yes, no, we were very encouraged by the remedies hearings. It pretty much stayed to the script. The DOJ was pressing for structural changes. Google was recommending behavioral. And we've always, I think, been very clear that we don't view structural as the only way to win in this scenario that a level fair playing field is exactly what we're looking for, what Judge Brinkema is very aware of. And I think we feel very good about the direction it's heading, structural or behavioral. So I think our outlook on it remains unchanged, and our outlook has always been quite positive, and we think it's a generational opportunity for a company like Magnite.

Great. Regarding the guidance for '26, there are several factors to consider. Generally, we've aimed to be somewhat conservative given the ongoing uncertainty in the macroeconomic environment. We have not factored in any potential outcomes related to Google remedies. We're approaching this cautiously, especially with the midterm elections coming up, and we need to evaluate the competitive races as they develop. Additionally, we have several positive influences from the deals we've signed, such as Commerce Media and our AI initiatives. However, it’s challenging to predict exactly when these might gain momentum, so we've set modest expectations in that area, which could also lead to potential upside.

The next question comes from Laura Martin of Needham.

Yes. Michael, you represent mainly premium CTV ad units. I'm curious about the excess supply in CTV, especially with FAST channels selling CTV ad units for $6 and $7. Are your CPMs and ad units unaffected by this, or are they competing with those lower-cost ad units, which could put downward pressure on your revenue share over time? David, I’d like to push a bit. You raised the CapEx to $20 million in Q4, and you mentioned adding full-time employees. Usually, when companies increase their CapEx estimates, they tend to cut FTEs and use capital to replace them. Why are you forecasting both higher CapEx growth and an increase in full-time equivalent employee growth? I’d like some clarity on that.

Yes. Thanks, Laura. Yes, as it relates to the CTV CPM trends, we've seen a bit of stability for the last several quarters. And there are definitely trade-in bands, right? Like so you have the super premium, you have premium and then you have a broader batch of inventory maybe in the FAST channels. And they've been pretty steady and consistent. You may have buckets of dollars flow in each of those channels. But generally speaking, I think people are aware of what the value of a Netflix ad is compared to perhaps an ad in an unspecified program in a free TV watch channel. Not that it doesn't have value, it just has a different value. You also keep in mind that these folks have great first-party data, which helps really differentiate themselves from free TV, where folks don't necessarily have to be registered or you have their personal information. And so that valuable first-party data helps separate it as well. So, yes, I don't see this as a race to the bottom or an existential threat to our revenues in the coming quarters.

Great question regarding CapEx. I'll break down the discussion into two key areas. First, we had two main goals for CapEx. The primary goal was to secure additional space on both the East and West Coasts for future growth. Given the limited availability of data center space, we wanted to ensure we locked in the expansion space we would need over the next few years. This involves some necessary overhead infrastructure and related components, all aimed at optimizing our hybrid infrastructure. As you know, in CTV, we operate a hybrid model with significant cloud activity, but we are shifting a larger portion of our operations to on-premises solutions, which are more cost-effective. Part of the CapEx funding will go toward acquiring additional machines for on-prem processing, thereby transferring workload from the cloud. The financial outcome of this shift is expected to result in increased margins in 2026, with these machines being installed at the end of this year or early next year. Separately, we recognize the immense potential in the CTV space, prompting us to accelerate certain investment activities. This includes hiring software engineers and product specialists to enhance our audience engagement, develop live sports features, improve ClearLine, and implement AI both in our products and for internal efficiencies. Some of these areas require upfront investment to realize future benefits. Thus, we are making two distinct decisions and directing some of the additional margin towards these critical investments. I hope that clarifies things.

The next question comes from Barton Crockett of Rosenblatt.

First, I wanted to ask about the outlook in '26 on CXT growing at least 11% as you put it. And that would be including the contribution from political. So maybe ex-political, it's at least like 9%, 10% or something like that. In 2025, your ex-political growth rates, you say is mid-teens. So ex-political, you're talking about a slowdown. And I'm just wondering what's behind that? Why the slowdown? Is that conservatism? Or is there something happening with autos or The Trade Desk tariffs? So that's the first question.

Yes. I think there's an element of conservatism in there. I would say also DV+ was particularly strong in 2025. And so there's sort of maybe a little reversion to the mean. We kind of target that at mid-single-digit growth. And so I think that's part of that equation as well.

Okay. All right. That's helpful. And then Michael, on the antitrust, I think one of the hopes is that there could be an impact in 2026, which was always predicated on the idea of behavioral that could be implemented quickly enough to actually matter in 2026. structural, of course, could be appealed and would take a long time. So it was never in the view that it could impact 2026. So I'm just curious, based on what's happened with some of the discussion around some of the technologies, prebid maybe as a middleware, other things, how do you feel now about the possibility of there being behavioral remedies that could impact 2026 P&L for you guys?

Yes, great question, Barton. It's not included in the guidance because there are too many unknowns. However, we've always believed that if the rulings continue along the expected timeline, a judgment could be rendered in the first half of 2026. We also believe that even if the judgment is structural, behavioral remedies will be implemented during the appeals process. Therefore, we remain optimistic about seeing an impact from this in 2026. However, we want to be clear that no one should anticipate this affecting the first half of the year; it should be considered for the second half.

Okay. But just to follow up on that, technologically, are the things that are being discussed, looked at that you see as likely things that could be done quickly?

Yes. The most common scenarios seem to be related to the sell side. The buy side may require a bit more effort, but unified pricing could be implemented relatively quickly. I was discussing this with our General Counsel, who is the expert on this issue and may provide a better answer than I can. However, unified pricing would be a significant advantage, and it is something that can be achieved quickly.

The next question comes from Zach Cummins of B. Riley.

David, I think you mentioned in the script that some of your CTV strength was actually partially driven by some of your budgets from like mobile video actually moving into that direction. Is this a dynamic that you think could continue moving forward or more kind of a one-time thing that we experienced here in recent months?

No, I believe this is a dynamic that will progress. I want to clarify that this is just one aspect among several factors. I wouldn’t characterize any of these as having earth-shattering volumes; it's more of a slight improvement on the margin. However, we do anticipate that, particularly in the short term, there will be a continued shift in budgets from small and medium-sized businesses into the connected TV space. This represents a new total addressable market for the company. Initially, I think these budgets may be somewhat overlapping with each other, drawing from resources outside our ecosystem. Overall, I believe this will prove to be a very positive development in the long run.

Understood. And my follow-up question is just around Netflix. It seems like that relationship is progressing along pretty nicely. I mean any insight into how you think about ramping that up, whether that's just executing now that you're live in all their ad-supported markets or additional features you plan on helping them roll out on the ad platform? Any incremental color there would be great.

Yes. We've always been clear that it's their story to share. They highlighted their success in Europe and international markets, which is the key factor in our relationship and will remain so. The relationship is very strong, and our expectations are right where we anticipated they would be at this point in the year.

The next question comes from Robert Coolbrith of Evercore ISI.

I wanted to go back to the Trade Desk change. Beyond the OpenPath issue, it seems like they and others are somewhat focused on dealing with the issue of reselling, particularly just given the changes to prebid transaction ID of late. Just wondering, given your direct publisher footprint, if you think there could ultimately be an opportunity to win some share in the market as the demand side looks at the issue of reselling, particularly given that there's reduced transparency around the transaction ID.

Yes, that's a great question, Robert. We are very excited about it. We are often seen as a competitor to Trade Desk, but I believe that 99% of what Jeff does is brilliant, and we fully support efforts to improve the system. If that refers to reselling, we do not consider Magnite to be a reseller. We operate as a principal, engaging directly with publishers and top-tier brands worldwide. Any initiative that helps eliminate confusion and redundancy, such as the duplicate traffic we encounter, is something we support, and we would definitely benefit from such actions.

Our next question comes from Tim Nolan of SSR.

Michael, I want to revisit the topic of ad agencies that you briefly mentioned in your prepared remarks. The agency landscape is undergoing significant changes; for instance, WPP and Dentsu are currently experiencing challenges, while Omnicom and IPG are nearing the completion of a major merger. Publicis seems to be thriving with its in-house ad tech. My question, without focusing too much on specific agencies, is whether the ongoing changes present an opportunity for you to enhance your supply path optimization relationships. How can you leverage this disruption in the market, including within their businesses? Are there ways you can assist them, and in return, how can they support you in optimizing the supply path?

Yes, Tim, great question. And I'll take a cut at it. We're also very fortunate to have our President of Revenue here, Sean Buckley. And so I'll let him jump in on it as well. But yes, I mean, these agencies obviously are going through some challenges. Their media businesses in the programmatic space, in particular, have lost some relevance. They seeded a lot of that control to the DSPs. And so we have seen over the last several years, a very lean in increased awareness of supply side, how they can regain those relationships with those publishers that trust them, how they can renegotiate proprietary data lay over their own data, get preferred pricing. And all of this has to be done in an efficient manner, a technological manner, and that makes us so important in that piece for them from a strategic standpoint. So yes, I think our value is only growing in importance for the holding companies, and we are very leaned in. And as we cited, we have a big team that works with them on a daily basis. I don't know, Sean, if you want to add any more color.

No, I totally agree. There's been a theme of the agencies really leaning in and working more with supply-side technology in a big way. I also think they've obviously either invested in or built out proprietary data products, and we've spent a lot of time integrating those products into our technology. And so we're very excited about the future we have with the agencies and holding companies.

The next question comes from L Niber of Lake Street Capital Markets.

Regarding Google, I'm wondering if you guys are seeing a shift in publisher RFP activity or deal flow towards Magnite?

Are you inquiring specifically about the ad tech DOJ trial?

Yes, correct.

Yes. No. So, to date, I mean, obviously, we have strong publisher relationships. But to date, there hasn't really been any movement because the structure remains the same, right? And so until that structure has either changed through divestiture or through behavior patterns, any of the share gains that we're seeing against our competitors aren't coming from Google. They're coming from the open web. And so all that is upside for us.

I would like to turn the conference back over to Michael Barrett, CEO, for any closing remarks.

Thank you, Cindy. I want to thank all of you for joining us today and for your continued support. Our business is performing well, particularly with our growth trends in CTV. We are encouraged by the momentum from our partners who include the world's leading streamers. Our team is constantly innovating and enhancing our industry-leading technology. I'm excited about the new functionality improvements that I discussed, which will further benefit our partners. We are very well positioned to build on our accomplishments and take advantage of the opportunities for growth and market share gains ahead. I'll turn it back over to Nick to cover our upcoming marketing events.

Yes, thanks, Michael. We look forward to engaging with many of you at our upcoming events. Tomorrow, Tim Nolan will host the SSR event virtually, which is a virtual NDR. On November 17th, we have the Seaport Virtual TMT Conference, followed by Craig-Hallum in New York on November 18th, and Wells Fargo in Rancho Palos Verdes Estates on the same day. The RBC Conference is scheduled in New York for November 19th, and we have Stephens virtually on the 21st. There's a West Coast roadshow planned for the week of December 8, and finally, Raymond James in New York on December 9. Thank you all, and have a great evening.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.