Hello, and welcome to the Magnite Fourth Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Nick Kormeluk of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Magnite's Fourth Quarter 2025 Earnings Conference Call. As a reminder, this conference call 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 might be considered forward-looking statements, including, but not limited to, statements concerning our anticipated financial performance and strategic objectives, including the potential impacts 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 2025 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 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. Please go ahead, Michael.

Thank you, Nick, and what an end to 2025. We surpassed expectations for both the quarter and the full year. In a mixed macro environment, our results demonstrate the strength of our model and the growing trend towards streaming. In Q4, the contribution from CTV, excluding political advertising, increased by 32%, which was significantly above our guidance. This growth began in Q3 and continued to strengthen as we ended the year. As we head into 2026, CTV has surpassed DV+, establishing streaming as the majority of our business. This is a pivotal moment for Magnite. The shift towards programmatic CTV is no longer just anticipated; it's happening on a large scale. Adoption is widespread among media owners, agencies, and DSPs. We witnessed substantial growth from major industry players, including LG Ads, Netflix, Paramount, Roku, VIZIO, Walmart, and Warner Bros. Discovery. TV OEMs are actively embracing programmatic through home screens, pause ads, data enablement, and marketplaces. The programmatic approach in live sports is also expanding with the largest global streamers. On the demand side, top global agencies are generating significant volume through buyer marketplaces and DSP-agnostic channels powered by Magnite. ClearLine activation is gaining traction as advertisers increasingly seek direct, transparent, and efficient access to premium streaming inventory. Looking at the broader industry trends, it's clear that consumer behavior is shifting towards streaming. Time spent watching has already transitioned. Advertisers are following suit, and funding is aligning as well. CTV brings the branding power of television along with the precision and measurability of digital. As inventory has expanded and pricing stabilized, CTV has become accessible to a wider array of advertisers, including large brands, performance marketers, and small businesses. For Magnite, this transition is structurally beneficial. In DV+, we face intense competition where we hold a modest market share. In contrast, our share in CTV is significantly higher. As funding flows into streaming, it moves into a sector where we have more comprehensive integrations, stronger publisher relationships, and unique infrastructure. Now regarding DV+, it grew by 4% excluding political advertising in Q4, which was slightly below expectations, and this pressure has continued into Q1. We have seen an accelerated shift in budgets from DV+ to CTV among agencies, DSPs, and brands, a trend that has intensified this quarter. This shift makes sense as CTV becomes more quantifiable and performance-oriented, leading to a natural consolidation of funds into streaming environments. There are positive developments within DV+. Our mobile in-app sector remains strong, and our Commerce Media partnerships are gaining traction, with over 15 collaborations announced, including 11 already operational and expanding, featuring companies like United Airlines, PayPal, Pinterest, and Best Buy. These partnerships merge owned inventory with first-party data through ClearLine curation. We don’t believe the decline in search referral traffic is affecting our DV+ sector. Our presence remains diverse across various platforms, including open web, mobile app, online video, audio, and digital out-of-home. In fact, our DV+ supply is continuing to grow, with ad requests increasing by over 30% year-over-year in Q4 and similar rates in Q1. Our DV+ business has never experienced supply constraints. Turning to AI, there has been speculation that generative AI and automated buying could disrupt infrastructure platforms. We believe the current developments actually highlight the significance of robust sell-side infrastructure. In Q4, we incorporated a seller agent based on an advertising context protocol into SpringServe and successfully executed what we consider the industry's inaugural agent-to-agent campaign. Scope3 acted as the buyer agent for MiQ, with media from LG and Warner Bros. Discovery. While still in the early stages, this is a significant milestone. It signifies the beginning of a future where buyer and seller agents can interpret campaign directives, intelligently align inventory with audiences, and eventually negotiate media transactions in a more automated and efficient manner. Magnite is uniquely positioned on the sell side and we believe we will emerge as long-term leaders in digital advertising due to our unique access to supply, substantial and interoperable data assets, and ability to use AI across the entire workflow. Integrating AI into this ecosystem modernizes the buying process, simplifying historically manual tasks, aligning briefs with audiences and inventory at scale, and improving traditional programmatic execution. Even in a landscape dominated by autonomous agents, infrastructure becomes increasingly vital, not less so. Agents may understand intent, but they still depend on expansive marketplaces to facilitate transactions, enforce auction processes, ensure compliance, prevent fraud, and manage payment settlements. As the ecosystem progresses towards potentially thousands of buyer and seller agents, both aggregation and interoperability become crucial. A market where each agent negotiates independently with every other agent is unsustainable. Scaled platforms based on established standards are essential to ensure the system operates smoothly. Magnite fulfills that role. In Q1, we are continuing to conduct test campaigns and refine the AdCP framework. While it's still early, we are optimistic about the advancements and view this as a critical step towards a more intelligent and efficient advertising marketplace. AI is not replacing our infrastructure; it is enhancing throughput within it. Finally, regarding DV+, we are still waiting for the court's definitive order on the Google AdTech remedies phase. We anticipate that these remedies could provide significant market share reallocation opportunities. As we've mentioned, every 1% gain in market share could potentially yield around $50 million in additional contributions annually at high margins. We are prepared for that. In conclusion, we are just beginning a multi-year replatforming of television and video advertising. Streaming has become the leading form of video consumption. CTV makes up the majority of digital video viewing time, yet ad spending still has not caught up with engagement levels. Industry projections foresee consistent double-digit growth in CTV advertising for years, with billions expected to flow from traditional television and fragmented digital channels into streaming services. Magnite is at the epicenter of this transition. CTV now constitutes the majority of our business. We have deep integrations with some of the largest streaming publishers and OEMs globally. We operate in premium, largely logged-in environments that are inherently more defensible and measurable. As investment consolidates into CTV, it moves into a sector where our market share is significantly greater and our infrastructure is deeply embedded. Simultaneously, automation and AI are enhancing efficiencies across the ecosystem, increasing working media, and driving higher volumes through our scaled platforms. With persistent growth in CTV, a broader total addressable market, increased automation, and a strong share position, these factors are robust. We believe Magnite is essential to the future of advertising transactions, and we have never felt more confident in our strategic position. I will now hand the call over to David for more details on the financials. David?

Thanks, Michael. As Michael mentioned, we had a strong Q4 and finish to the year with a great performance in CTV, achieving 20% contribution ex-TAC growth or 32% excluding political, significantly exceeding our expectations. CTV reached 48% of our total contribution ex-TAC for Q4. DV+ came in below expectations, declining 1% and up 4%, excluding political. Adjusted EBITDA grew 9% to $84 million, resulting in a 43% margin. We're pleased with the results, particularly the continued acceleration in CTV growth we saw in Q4. For the full year, contribution ex-TAC totaled $670 million, a year-over-year increase of 10% or 14%, excluding the impact of political. For CTV in 2025, we achieved contribution ex-TAC of $304 million, an increase of 17% or 22% excluding political. And for DV+, we reported $365 million for the year, growth of 5% or 8% ex-political. We processed total ad spend approaching $7 billion. Adjusted EBITDA for the full year 2025 was $232 million, an increase of 18% from 2024, resulting in an adjusted EBITDA margin for the year of 34.7%. Total revenue for Q4 was $205 million, up 6% from Q4 2024. Contribution ex-TAC was $195 million, up 8%, within our guidance range and up 16%, excluding political. CTV contribution ex-TAC was $94 million, up 20% year-over-year or 32% excluding political, significantly exceeding the top end of our guidance range. DV+ contribution ex-TAC was $101 million, a decrease of 1% or an increase of 4%, excluding political from the fourth quarter last year. This result was below our guidance range. As Michael noted, we saw a growing spend shift from DV+ to CTV. Our contribution ex-TAC mix for Q4 was 48% CTV, 37% mobile, and 15% desktop. From a vertical perspective, retail, health and fitness, and financial were the strongest performing categories, while automotive was again one of our weakest performing categories. In DV+, we saw additional weakness in technology and food and beverage. Total operating expenses, which includes cost of revenue, were $153 million, a slight decrease from $154 million for the same period last year. Adjusted EBITDA operating expense for the fourth quarter was $111 million, $1 million better than the low end of our guidance range and an increase from $104 million in the same period last year. The increase was primarily driven by higher cloud and data center costs and higher personnel-related expenses supporting the growth of our CTV business and investment in CTV-related features and functionality and was better than expected due to lower personnel expenses, including slower-than-anticipated hiring. Our net income was $123 million for the quarter compared to net income of $36 million for the fourth quarter of 2024. This was driven by a $90 million one-time tax benefit resulting from the release of the valuation allowance on our deferred tax assets. As background to the release, we met the specific accounting criteria of 12 quarters of cumulative positive pretax income and the necessary expectations for future profitability. Adjusted EBITDA grew 9% year-over-year to $84 million, reflecting a margin of 43%. As a reminder, we calculate adjusted EBITDA margin as a percentage of contribution ex-TAC. GAAP earnings per diluted share were $0.80 for the fourth quarter of 2025 compared to $0.24 for the fourth quarter of 2024. Non-GAAP earnings per share for the fourth quarter of 2025 was $0.34 compared to $0.34 last year. Reconciliations to non-GAAP income and non-GAAP earnings per share are included with our Q4 results press release. Our cash balance at the end of Q4 was $553 million, an increase from $482 million at the end of the third quarter. Operating cash flow, which we define as adjusted EBITDA less CapEx, was $61 million. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs, were $23 million, consistent with the expectations we discussed last quarter. Debt interest expense for the quarter was $4 million. Net leverage for the quarter was 0, down from 0.3x at the end of Q3. As a reminder, the remaining $205 million principal balance of our convertible notes is a current liability on the balance sheet as the notes mature this quarter. We plan to pay off the converts at maturity with cash on hand next month. As you know, $400 million in converts was part of our original financing for the SpotX acquisition and when all is said and done, provided capital at an extremely favorable rate. During 2025, we repurchased or withheld over 5.2 million shares for approximately $79 million. We're also announcing a new 2-year share repurchase plan today, which authorizes the repurchase of common stock with a value up to $200 million. Following the repayment of our convert, we plan to be more aggressive with share repurchases given our future expected significant and consistent free cash flow generation. Our capital allocation strategy will target approximately 50% of free cash flow generation to be returned to shareholders via share repurchases over time, provided our share price provides a reasonable return compared to our estimated intrinsic value. Note also that M&A opportunities may arise in the future that might change our perspective. I will now share our expectations for the first quarter of 2026 and our current thoughts for the full year. For the first quarter, we expect contribution ex-TAC to be in the range of $157 million to $161 million, which represents growth of 8% to 10%. Contribution ex-TAC attributable to CTV to be in the range of $81 million to $83 million, which represents growth of 28% to 31%, surpassing 50% of total contribution ex-TAC for the first time. DV+ contribution ex-TAC to be in the range of $76 million to $78 million, which represents a decline of 6% to 8%. We anticipate adjusted EBITDA operating expenses to be approximately $122 million, which implies adjusted EBITDA margin of over 23%. As a reminder, the first quarter is always seasonally our lowest margin quarter. For the full year 2026, we anticipate total contribution ex-TAC growth to be at least 11%, adjusted EBITDA percentage growth in the mid-teens, adjusted EBITDA margin greater than 35%, free cash flow growth greater than 30%, and CapEx of approximately $60 million, a reduction from the prior year. I want to point out that our estimates do not include any potential market share gains as a result of remedies from the Google AdTech trial. And finally, regarding our tax position, we would not expect to have any significant increases in cash taxes for the next few years. We are proud of our team's execution and our resulting fourth quarter and full-year results. We believe we are very well positioned to continue winning and thriving with the changes that are taking place in the programmatic ecosystem. We continue testing and implementing the right AI capabilities to build on Magnite's industry-leading platform and making strategic investments to improve our efficiencies. With that, let's open the line for Q&A.

Our first question comes from Laura Martin of Needham.

Congratulations, good numbers. I wanted to talk about the breadth of CTV and how much of that is sustainable. So ex-political, CTV up 32% in growth. Can you break down how much of that is SMBs? How much is by vertical? You named a lot of really big studio companies that are growing. I'm really interested in what's growing and whether you see that continuing? That's my first question.

Yes. Laura, great question. I'll handle it first and maybe David will dive in with some specifics. We really haven't gotten into breaking it out. Lord knows we have hard enough time figuring out TV and CTV buckets, let alone getting a little bit more specific on the CTV. I will say, and you did see the announcement from MNTN recently about their direct connection into us as their first platform to do so. So that's a very encouraging sign of a high-growth area of performance-oriented SMBs. But we are seeing just across the board. You don't grow at 32% and not have everything firing on all cylinders. So big branded advertisers that used to advertise on TV, we had cited a big shift from performance advertisers that were digital online video, digital display shifting into CTV throughout all of our channel checks, the same note was sung by every major agency brand, marketer; the appeal of CTV, the pricing, the performance metrics of it, it's really just increasing in velocity of appeal. So we're just seeing it across the board, Laura.

Okay, Great. And then my second question is about risk. It feels like, Michael, you're moving more towards an infrastructure. You have a lot of really specific deep infrastructure integrations into some of these large CTV performers. Do you get the sense that elongating your client relationship time, increasing your lifetime value and lowering the risk of investing in Magnite as a stock?

Well, no question. You hit the nail on the head, and I think we tried to harp on that in the call in the script. We look so different in CTV than we do perhaps even in DV+ and display. We are highly differentiated. We have a leading programmatic ad server that's coupled with the leading SSP platform. We're building more and more tools. We have a buying tool, ClearLine, that's integrated across the board. So we look quite different and unique and with an enjoyable moat that we built in CTV, which is, as you know, the fastest-growing segment in the digital advertising sector.

Our next question comes from Dan Kurnos of Benchmark StoneX.

Michael, let me just stick with the CTV question for a second. Is there any way to kind of parse out the mix shift to CTV versus your organic partner growth like what you had before? Because there's a clear acceleration, I think, on both fronts. And how much of that is coming from live events?

Live is becoming a bigger contributor each quarter, which is a positive sign for us. David, could you explain the dollar shift we observed from DV+ into CTV to provide some insight into the baseline growth level compared to the accelerated growth?

Yes. If you look at the expectations compared to consensus for Q1, DV+ is about $8 million or $9 million lower while CTV is higher by that same amount. However, I'm not sure we can distinguish between spend shifts and organic growth because the spend shift is affecting our organic numbers and is occurring with all the same partners. It is a significant change. Go ahead.

Yes. If we consider a situation where the expected performance is 20% and it actually turns out to be 32%, it's quite straightforward to identify the reason for the increase as a shift in spending from one platform to another.

Yes, that's helpful information. I just want to emphasize that the underlying growth is still occurring despite the shift.

Very much so. Yes, very much so. Just think a little bit about the larger perspective here. The marketers making up a number, say someone spends $100 less, are simply allocating it differently. The good news for us is that they're allocating into the faster-growing platform, which over the next 3 to 5 years from a CAGR standpoint is going to be super impressive. So, number one, the allocation is happening on our platform. We're catching dollar for dollar, and we're still experiencing organic growth on the CTV side that far exceeds the marketplace. Both are very positive for us.

Yes. And just to layer on I say layer on to Laura's point, it's derisking. So $1 of CTV revenue and growth is more protectable and sustainable in some ways than DV+, which just can be a little bit more volatile. And so we love where this is heading ultimately.

And not to add, David, I mean, I guess the next question I'd ask is like, I mean, margins are still improving, but there's always been a question around take rate and economics and you're still driving margins higher. So some of that's been your cost to take out, cost to serve initiatives, but just maybe any comments you guys have on that would be great.

Yes. In fact, we discussed this a bit last quarter or two. Due to the opportunity in CTV, we have made additional internal investments in this area, particularly in engineering and in accelerating features and functionality in our CTV business. As a result, our margin expansion could have been even greater in 2026. However, we will still see margin expansion. This opportunity in CTV represents a unique investment in headcount and ongoing improvements to our tech stack infrastructure, which will help us achieve more rapid margin growth in future years.

Our next question comes from Shyam Patil of Susquehanna.

I have a couple of questions that follow up on the previous ones. How do you view the growth of CTV and DV+ moving forward? I know you provided an outlook for the first quarter and a high-level view for the year overall, but how should we think about the growth rates for these two businesses on a sustainable basis? Michael, you mentioned that CTV is experiencing double-digit growth, and we’ve seen strong growth in that area. Additionally, could you provide some insight on OpenPath? What impact have you observed there? It seems like that situation might be resolved now. Can you discuss whether you believe that issue is behind us or if there are any potential concerns we should be aware of?

Yes, great questions, and I’ll let David elaborate on some of them. Looking at connected TV (CTV), the market estimates have often lagged behind actual growth rates. Recent numbers suggest growth in the mid to low teens, but at 32%, we are far exceeding those market growth expectations. Given our market position, we anticipate maintaining a growth rate in the high teens or 20s, which seems sustainable due to the ongoing secular shift. Regarding DV+, it's important to remember its diverse portfolio, which includes desktop and mobile web that are currently under pressure. We've noticed significant budget shifts towards CTV, largely coming from that segment. On the other hand, emerging categories such as audio, digital out-of-home, and mobile apps present opportunities. For a long time, mobile app growth was challenging for us because of the competition with app install advertising; however, it has now reached a more even playing field. We see this as a significant growth area, as we are deploying our SDK and partnering with major players like AppLovin and Unity. It's difficult to predict specific growth rates for DV+, but any observed weakness seems to be reflected in the CTV area. Essentially, if the total budget remains the same, we are still capturing it; it is just being allocated differently by marketers. For a clearer picture, there will be growth areas like mobile apps in the teens, while desktop and mobile web might be flat to slightly declining. As for OpenPath, it has been in operation for years, and its focus last quarter stemmed from the Kokai deployment and its status as a default. We've discussed our efforts to improve this with our largest buyers, and by most accounts, we’ve seen success. The smaller advertisers and agencies, which we anticipated would be a tougher market, have matched our expectations. OpenPath has had a modest impact on DV+ performance but no effect on CTV performance. We’ve executed all the commitments we made regarding OpenPath; it has been a consistent part of our business and will remain so in the future. We have established ourselves as invaluable partners to our largest buyers in driving their programmatic businesses.

Our next question comes from Jason Kreyer of Craig-Hallum.

So Michael, you talked about running volumes through AdCP. Just curious what you think the evolution is on that front? And what is the client interest in running volumes through AI agents?

Yes. So interest is very high. Reality, very little and budgets are being allocated to it. I think to frame it correctly is think of this as a massive remodeling of your house, but we're not knocking it down and building a brand-new house. So I think that it's all going to sit on top of the existing infrastructure in the industry. Hundreds of millions of dollars have been invested by Magnite alone to make programmatic work. And what AI agents are going to do is make it work better. It's going to alleviate menial tasks from the traders, the planners, the ops people, and it's going to put more working dollars to play, which is awesome. And we feel it's all going to flow through our pipes. And so I think we're doing the exact appropriate amount of investment in it and we are ready to catch the dollars when they come scaled, but that is not going to happen any coming quarter. So interest high, execution actually putting your money where your mouth is, is not high, but we believe we're in a great position technically and from a market position to take advantage of this next wave of innovation.

Is that more likely to occur on the DV+ side or on the CTV side?

Well, I think across the board, I mean, the world I described, there's a lot of heavy lifting that goes on in terms of planning campaigns, introducing opportunities for publishers, publishers, introducing opportunities for buyers, making sure it works. Line item broken here, this deal doesn't work here, why doesn't it work? 20 hours of troubleshooting to figure out, and then half the budget is already not been spent and you're wasting time. And so I think there's all sorts of efficiencies that are in play across both platforms with an agentic approach at the UI level and then the plumbing and the infrastructure powered the way it used to be, the way Magnite does it.

A quick follow-up for David. The EBITDA OpEx is a pretty big jump from Q4 to Q1. Just curious if you can maybe talk about what investments are embedded in there?

Yes. And if you recall, we kind of have that jump literally every year. You have personnel raises effective January 1 that kick into place. You also have employer taxes that kick into place and some of those are attached to some annual grant vesting in that Q1. We have an off-site that occurs in the first quarter of the year. Certain years, it's full company and certain years, it's the commercial team. And so you just got a number of those things. And then the other component there would be some of the investment that I mentioned earlier, which is engineering and product talent for supporting the pace of development and velocity in our CTV business. And so those kind of make up that increase.

Our next question comes from Shweta Khajuria of Wolfe Research.

Okay. Let me try 2, please. I have a follow-up on the prior one. So Michael, if you could please explain the context protocol, like how it works, what the real value proposition is and what your differentiated advantage is there? And as it relates to CloudX, is that a competitive product? Is that even related? How should we think about how all this evolves in an agentic world? And what the impact will eventually be? Is it that you're going to get greater share of ad dollars? Is it that the TAM will expand? Like how should we think about the impact and how it works? And then the second question I have is just on the AdTech case, you touched on it in your prepared remarks. What is the base case expectation at this point? What should investors be expecting in terms of a realistic outcome? And if you have any sense on the timeline, that would be great, too.

Yes, absolutely, Shweta. AdCP is essentially a protocol that enables agents to communicate with each other, which isn't anything particularly new. It's about ensuring that our program can support this agentic functionality. Our platform can facilitate interactions among agents. Given the scale of our platform and the attractiveness of our publisher base, Scope3 approached us first to implement this. This reflects our readiness to transition from the API model to the MCP, AdCP environment where agents communicate directly, moving away from the traditional API model where users connect to machines. We are confident in this shift. Our competitive edge will not only stem from our preparedness but also from the extensive data we have accumulated over the years. This data enables us to assist our publishers and buyers in discovering inventory, determining prices, and maximizing publisher yields through mediation, which is where significant value is created. While anyone can create an agent, the critical factor is the quality of data that informs these agents. We possess a rich repository of data across tens of thousands of publishers, encompassing many years of information to guide decision-making. Additionally, we've organized the taxonomy of all the publishers on our platform, allowing for easy targeting whether someone is seeking sports or auto enthusiasts, ensuring a consistent protocol across all publishers. This facilitates scaling niche purchases through agents, which is promising. Regarding CloudX, while it primarily relates to mobile, we are currently integrated with CloudX, a new mediation platform for mobile applications, which we are excited about. We have good relationships with their team, and this represents another opportunity to tap into the rapidly growing segment of our DV+ business focused on apps. We're collaborating closely with them, which is beneficial for us. Lastly, concerning the AdTech case, pinpointing timing is tricky. We expect developments any week now, though there may be some delays regarding the predicted outcomes. Given the recent discussions in the final prejudgment hearing between Google and the DOJ, it appeared from Judge Brinkema's inquiries that a structural remedy was probably unlikely, while behavioral remedies seemed more plausible. Some might misinterpret this as negative for Magnite or similar companies, but we strongly disagree. We have always anticipated a behavioral resolution, and whether the outcome is behavioral or structural, our focus remains on achieving a more level playing field, which we believe will greatly benefit us, and we maintain that belief today.

Our next question comes from Matt Swanson of RBC Capital Markets.

This is Simran on for Matt Swanson. Congrats on the quarter. It seems like you guys have hit this tipping point in CTV, which has been great to see. What would you think from an ecosystem standpoint has changed? And how much would you attribute to the secular market shift versus your growing company-specific moat?

Yes, thank you for the question. I believe David addressed this and provided the details about the $9 million from the DV+ platform. That amount, which we anticipated would be utilized for DV+, is now being directed towards CTV. This is in addition to an already rapidly growing base of organic spending in that area. Therefore, even if you adjust for the $9 million, returning it to DV+, we are still experiencing growth exceeding 20 percent, which is significantly higher than the market average. You're correct about the tipping point being reached, and this shift in spending from one platform to another is just accelerating the process. CTV is fundamentally a much faster-growing platform to start with, and as we've mentioned several times, it has a much larger competitive advantage for us. We are well differentiated in this space with deep integrations with leading streamers and ad server capabilities that are quite distinct from the DV+ market.

Got it. That makes sense. And then on the progress with these partnerships and integrations, could you double-click on the ramp of some of these and maybe touch on Netflix specifically or any other partners that have progressed particularly well?

Yes. In the streaming area, we discussed our most significant clients for the quarter, which include LG Ads, Netflix, Paramount, Roku, VIZIO, Walmart, and Warner Bros. Discovery. We're seeing positive trends across the board. Regarding our commerce partner in the DV+ segment, United Airlines, which took some time to ramp up, is now performing well. PayPal, Pinterest, and Best Buy also took a while to develop, but each of these has different ramp-up timelines. If a company is already in the advertising business, adding programmatic options usually impacts revenue more quickly compared to a company like United Airlines, which is new to advertising and has a longer ramp-up period. Each partner has its unique development pace. We occasionally highlight those that are currently active and making contributions, and that was the list we provided.

Our next question comes from Barton Crockett of Rosenblatt.

I wanted to ask about your kind of view of the future with AI, given that that's what's really driving all the stocks. And I know there's been some questions on it, but I want to see if you can give us your view of how this evolves in this way, which is, do you see AI as a force for compression of take rates throughout the kind of ad tech sector generally? Do you see this evolving to a circumstance where perhaps LLMs are a front end for ad plans and then SSPs are kind of a processing agent, so maybe DSPs get squeezed? Or do you think that DSPs and SSPs are main kind of players and maybe the smaller competitors in both sectors get squeezed or any other kind of circumstance? How do you see this evolving in terms of players and take rates?

Yes, that's a great question. If you consider an agentic world and where value is generated, there is still significant value being produced by Magnite, not just in the infrastructure aspect, but also in educating these seller agents with our data to make informed pricing decisions when dealing with buyer agents. Generally, what you observe is more of a renovation than a decline in value, leading to a more efficient environment where individuals can focus on more sophisticated tasks rather than getting bogged down in campaign management and fixing issues. Therefore, you can expect to see more media effectively utilized. Some intermediaries between agents may lose value, but when you examine the leading demand-side platforms and the foundations they operate on, along with top supply-side platforms like Magnite, the value creation remains comparable, if not higher. Consequently, I do not anticipate any impact on take rates in the future for Magnite in this agentic landscape.

Okay. Now, regarding antitrust, there has been a shift towards behavioral remedies in Europe, with Google starting to adopt some of the key changes potentially coming here. Would you say that's an accurate description? If so, have you noticed any changes in market share in Europe as a result of what Google is doing there?

Yes, that's a good question. It's a perceptive observation, but I'm not entirely convinced it's the specific behavioral remedies that are being pursued in the United States. Let's just say it's part of the overall strategy, the easiest aspect to address, and it also demands significant effort from publishers. We've noticed that publishers who adjust the rankings of the exchanges and revise the price floors see improvements, but it's a gradual process. This became evident in the fourth quarter. Typically, people refrain from making changes during that time because of its significance. We'll have to see how that unfolds. However, I believe it only scratches the surface of what the Department of Justice is seeking and what Judge Brinkema has hinted at. Therefore, I think it's not entirely fair to compare the situation in Europe with that in the United States.

Our next question comes from Robert Coolbrith of Evercore ISI.

Just to go back to the CTV strength. Any key unlocks, whether it's around demand partners, supply partners or maybe things that maybe had happened earlier in the year where the momentum just sort of built up in Q4 and surpassed your expectations. Just wondering if we could maybe take another crack at that. And then secondly, on the agentic piece, is there anything that can come into the market incrementally in terms of volumes that remain sort of offline negotiated, inserted via IO, whether that's through some sort of electronic data interchange or fax or whatever, things that can come into the market incrementally, the net new to programmatic from the sort of agentic shifts in the market?

Certainly, I think there is hope in that area. A significant amount of money is still tied up in traditional methods, which are highly sensitive to rates. It's more about automation rather than a manual process. However, if we can create tools that enable efficient pricing for programmatic transactions, that’s something we've been working on for a couple of years. Making the process easier and adding a manual touch could facilitate direct communication with the ad server and streamline the insertion into it. This is appealing because it goes beyond just being biddable or simply automating insertion orders. We are optimistic about this development and believe it will greatly benefit the Magnite platform. I'm sorry, could you repeat the first question?

I want to revisit the question about the inflection point in CTV. Was there any change with demand partners or supply partners that impacted the quarter's results compared to your expectations? Is there anything from previous quarters that, in hindsight, you see as having started to improve in Q2 but really took off in Q4 beyond what you anticipated? I'm looking for insights on any unlock or factors that were significant.

I would say broad-based across the board. Obviously, certain DSPs have become stronger. You look at the strength of an Amazon in the space, that's been impressive. Certainly, MNTN, we've talked about them in the partnership that they've delivered. But I think across the board, you've seen strength in DSPs. I think one of the things that could be the unlock, Robert, is the upfront negotiations. So they went stronger than anticipated. But the big question mark was how much was streaming going to be a part of it because all these guys, the big ones still run linear businesses. And I think what we're finding out is streaming played a huge role in the upfront and you're starting to see that come to fruition because those dollars don't get spent until the second half of the year into the first quarter of the year. So I think that, combined with some of the strengths of particular partners has really led to outside growth in addition to the platform switch from the DV+ spending in the open web and now spending in CTV. You add those all together and you get turbocharged growth rates.

Our next question comes from Eric Martinuzzi of Lake Street.

Regarding the performance in CTV, I remember you mentioned strengths in retail, health and fitness, and financial sectors. You also noted weaknesses in auto and tech, but I can't recall the third one. I'm curious if there have been any changes in the guidance regarding those sectors. Is it still the same, or do you expect some recovery in the weaker areas?

Yes. I think yes, I think status quo is sort of what we've been seeing. So I would say the trends that we saw in the latter half of November and December are kind of continuing across the board into this first quarter. So no significant changes on those trends.

Our next question comes from Omar Dessouky of Bank of America.

So Netflix, I think, recently said that they expect their ad business to double in size in 2026. So I wanted to ask you how you're thinking about your contribution from Netflix as you progress through 2026 and how that might affect the overall take rate of your business? And then I have a follow-up.

Sure. I think that Netflix has been an excellent partner. We expected them to be one of our top partners this year on a run rate basis, and that has certainly happened. We are looking forward to a stronger year for them this year given their ambitions in the industry. Regarding concentration, the take rate varies depending on the services we offer. In some markets, we perform better than in others. Therefore, I believe that the blended take rate will not significantly influence the overall performance.

Okay. On Netflix in particular, so how do we think about CTV growth as we kind of progress through 2026, right? It looks like you had a nice acceleration for the last couple of quarters. Should we kind of think of an acceleration for the next few quarters as well as you try to upsell your products, as Netflix gets bigger? Is that kind of the outlook for how you expect the year to pan out?

I believe our take rates in CTV have stabilized and are becoming fairly consistent. However, there's still a notable influx of premium inventory at our lower take rate tiers. I expect this trend to continue, and our growth rates excluding TAC are holding steady even at those lower levels. From a mix perspective, we have opportunities to increase those take rates over time. While I don't anticipate a significant increase in the average take rate in CTV in the short term, we are laying the groundwork to offer additional services on the demand side that could lead to slightly higher take rates in the future.

Our next question comes from Zach Cummins of B. Riley Securities.

I'll keep to one question just given the extent of the call. But David or maybe Michael could address on this. Just curious of the strength you've been seeing with agencies, particularly in agency marketplaces. Can you talk about the opportunity that you have there, specifically as maybe more ClearLine adoption with some of these key agency partners?

Yes, Zach, we're very enthused by the adoption and the volume. These things take a while to get going. There's a bit of a sell-in process from agency to their clients. And so it's kind of a crawl walk run. And the ones that have been up the longest are at run right now and the others are in various stages. So I think that super encouraged by the model, super encouraged by the contribution for the company and I think the stickiness is what really matters that when they build their business with Magnite as the backbone of their programmatic marketplaces, we become more than just a vendor or a partner that can be put in competition every quarter. We become much more of a partner that's a much more strategic longer-term partner, which isn't the easiest thing to do, particularly in the DV+ world. So they've been essential to our growth and the success of ClearLine.

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

Thank you, operator. Before we close, I want to thank our investors and our team. To our shareholders, thank you for your continued confidence and long-term partnership. We remain focused on disciplined execution and building durable value. To our employees around the world, thank you. CTV becoming the majority of our business, the acceleration across streaming, and our early leadership in AI-driven transactions are direct results of your innovation and commitment. The shift towards streaming and automation is structural and still in its early innings as ad dollars move into CTV, they move into an environment where Magnite has scale, deep integrations, and meaningful market share. We believe we are building foundational infrastructure for the next era of advertising, and we are confident our best days are ahead. Thank you for joining us. We look forward to updating you next quarter. I'll turn it back over to Nick to cover our upcoming marketing events.

Thank you, Michael. Yes. Sorry. So upcoming schedules, we've got Susquehanna Conference now virtually tomorrow. We've got meetings in San Francisco with Needham on March 5, a Sydney roadshow on March 11, meetings in Boston with Bank of America on March 17, an investor lunch with Susquehanna on March 19, Kansas City with RBC on March 24, Dallas and Houston with Stephens on the 25th and 26th of March, and then San Diego and L.A. with Wolfe on the 30th and 31st. Thanks again all for joining.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.