Magnite, Inc 10-Q for FY2022 Q1

Magnite, Inc. (MGNI)

10-Q 2022-05-04 For: 2022-03-31

Added on April 09, 2026

About this 10-Q

Magnite, Inc filed this 10-Q on May 4, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $118.08M; up 94.5% from $60.72M a year earlier
Net loss: $44.59M; compared with a net loss of $12.88M a year earlier
Diluted EPS: -$0.34; compared with -$0.11 a year earlier

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Delaware									20-8881738
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

1250 Broadway, 15th Floor
New York, New York 10001
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code:
(212) 243-2769


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.00001 per share	MGNI	Nasdaq Global Select Market


Class						Outstanding as of April 27, 2022
Common Stock, $0.00001 par value						131,910,148


		Page No.
Part I.	FINANCIAL INFORMATION	3
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of March 3 1 , 202 2 and December 31, 202 1	4
	Condensed Consolidated Statements of Operations for the Three Months Ended March 3 1 , 202 2 and March 3 1 , 202 1	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 3 1 , 202 2 and March 3 1 , 202 1	6
	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 3 1 , 202 2 and March 3 1 , 202 1	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 3 1 , 202 2 and March 3 1 , 202 1	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	52
Part II.	OTHER INFORMATION	53
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 6.	Exhibits	55
Signatures		56


	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	204,589	$	230,401

Accounts receivable, net	782,956		927,781
Prepaid expenses and other current assets	22,219		19,934
TOTAL CURRENT ASSETS	1,009,764		1,178,116
Property and equipment, net	34,986		34,067
Right-of-use lease asset	72,363		76,986
Internal use software development costs, net	20,837		20,093
Intangible assets, net	399,419		426,615
Goodwill	978,216		969,873
Other assets, non-current	6,877		6,862
TOTAL ASSETS	$	2,522,462	$	2,712,612
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	859,178	$	1,000,956
Lease liabilities, current	18,638		19,142
Debt, current	3,600		3,600
Other current liabilities	5,903		5,697
TOTAL CURRENT LIABILITIES	887,319		1,029,395
Debt, non-current, net of debt issuance costs	720,710		720,023
Deferred tax liability, net	11,509		13,303
Lease liabilities, non-current	62,777		66,487
Other liabilities, non-current	2,237		2,647
TOTAL LIABILITIES	1,684,552		1,831,855
Commitments and contingencies (Note 12)
STOCKHOLDERS' EQUITY
Preferred stock, $0.00001 par value, 10,000 shares authorized at March 31, 2022 and December 31, 2021; 0 shares issued and outstanding at March 31, 2022 and December 31, 2021	—		—
Common stock, $0.00001 par value; 500,000 shares authorized at March 31, 2022 and December 31, 2021; 132,052 and 132,553 shares issued at March 31, 2022 and December 31, 2021, respectively, and 132,052 and 132,204 shares outstanding at March 31, 2022 and December 31, 2021, respectively	2		2
Additional paid-in capital	1,278,218		1,282,589
Accumulated other comprehensive loss	(1,266)		(1,376)
Treasury stock at cost, 0 and 349 shares outstanding at March 31, 2022 and December 31, 2021, respectively	—		(6,007)
Accumulated deficit	(439,044)		(394,451)
TOTAL STOCKHOLDERS' EQUITY	837,910		880,757
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,522,462	$	2,712,612


	Three Months Ended
	March 31, 2022		March 31, 2021
Revenue	$	118,075	$	60,715
Expenses:
Cost of revenue	59,396		20,756
Sales and marketing	50,000		22,589
Technology and development	23,043		14,266
General and administrative	18,704		14,158
Merger, acquisition, and restructuring costs	6,756		2,722

Total expenses	157,899		74,491
Loss from operations	(39,824)		(13,776)
Other (income) expense:
Interest expense, net	7,111		143
Other income	(1,263)		(1,223)
Foreign exchange loss, net	926		15
Total other (income) expense, net	6,774		(1,065)
Loss before income taxes	(46,598)		(12,711)
Provision (benefit) for income taxes	(2,005)		166
Net loss	$	(44,593)	$	(12,877)
Net loss per share:
Basic and Diluted	$	(0.34)	$	(0.11)

Weighted average shares used to compute net loss per share:
Basic and Diluted	132,236		115,296


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2020	114,029	$	2	$	777,084	$	(957)	$	(394,516)				$	381,613
Exercise of common stock options	733	—		5,785		—		—		—	—		5,785


Issuance of common stock related to RSU vesting	1,351	—		—		—		—		—	—		—

Stock-based compensation	—	—		7,108		—		—		—	—		7,108
Capped call options	—	—		(38,960)		—		—		—	—		(38,960)
Other comprehensive loss	—	—		—		(313)		—		—	—		(313)
Net loss	—	—		—		—		(12,877)		—	—		(12,877)
Balance at March 31, 2021	116,113	$	2	$	751,017	$	(1,270)	$	(407,393)	—	$	—	$	342,356


	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Cash equivalents	$	7,870	$	7,870	$	—	$	—


Fiscal Year	Amount
	(in thousands)
Remaining 2022	$	111,428
2023	104,924
2024	87,294
2025	70,647
2026	24,695
Thereafter	431
Total	$	399,419


Cash Consideration	$	640,000
Stock Consideration (Fair Value of Shares of Magnite common stock)	495,591
Working capital adjustment	65,152
Total purchase consideration	$	1,200,743


Cash	$	81,967
Restricted cash	199
Accounts receivable	199,649
Prepaid and other assets, current	12,308
Fixed assets	6,823
Intangible assets	429,600
Right-of-use lease asset	10,055
Goodwill	782,719

Total assets to be acquired	1,523,320
Accounts payable and accrued expenses	205,822

Other current liabilities	1,091
Lease liabilities	12,625
Deferred tax liability, net	103,039
Total liabilities to be assumed	322,577
Total purchase price	$	1,200,743


			Estimated Useful Life
Technology	$	280,400	5 years
Customer relationships	130,300		2 to 4 years
Backlog	11,100		<1 year
In-process research and development	5,800		3 years*
Non-compete agreements	1,500		1 year
Trademarks	500		<1 year
Total intangible assets acquired	$	429,600
* In-process research and development consists of six projects with a weighted-average useful life of 3 years. Amortization begins once associated projects are completed and it is determined the projects have alternative future use.


Cash Consideration	$	31,136
SpotX initial cash investment in SpringServe	2,075
Fair value appreciation of SpotX purchase right	7,450
Indemnification claims - holdback	1,409
Total purchase consideration	$	42,070


Cash	$	1,062
Accounts receivable	3,234
Prepaid and other assets, current	157
Fixed assets	25
Intangible assets	23,400
Right-of-use lease asset	1,879
Goodwill	24,156

Total assets to be acquired	53,913
Accounts payable and accrued expenses	2,475
Other current liabilities	35
Lease liabilities	3,179
Deferred tax liability, net	6,154
Total liabilities to be assumed	11,843
Total preliminary purchase price	$	42,070


			Estimated Useful Life
Technology	$	15,500	5 years
Customer relationships	5,700		2 years
Trademarks and Trade Names	900		3 years
In-process research and development	800		3 years*
Non-compete agreements	500		2 years
Total intangible assets acquired	$	23,400
* In-process research and development consists of two projects with a weighted-average useful life of 3 years. Amortization begins once associated projects are completed and it is determined the projects have alternative future use.


	Three Months Ended
	March 31, 2022		March 31, 2021
OPERATING ACTIVITIES:
Net loss	$	(44,593)	$	(12,877)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	45,866		12,485
Stock-based compensation	16,589		6,993
Impairment of intangible assets	3,320		—
(Gain) loss on disposal of property and equipment	(2)		50
Provision for doubtful accounts	(571)		(159)
Amortization of debt discount and issuance costs	1,700		99
Non-cash lease expense	610		(652)
Deferred income taxes	(1,891)		62
Unrealized foreign currency (gains) losses, net	458		(375)

Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable	146,241		70,252
Prepaid expenses and other assets	(2,279)		1,578
Accounts payable and accrued expenses	(141,312)		(80,074)
Other liabilities	(2,504)		1,392
Net cash provided by (used in) operating activities	21,632		(1,226)
INVESTING ACTIVITIES:
Purchases of property and equipment	(7,184)		(1,317)
Capitalized internal use software development costs	(3,382)		(1,955)
Mergers and acquisitions, net of cash acquired	(20,755)		—



Net cash used in investing activities	(31,321)		(3,272)
FINANCING ACTIVITIES:
Proceeds from Convertible Senior Notes offering	—		389,000

Payment for capped call options	—		(38,960)
Payment for debt issuance costs	—		(198)
Proceeds from exercise of stock options	1,107		5,785

Repayment of debt	(900)		—
Repayment of financing lease	(197)		—
Purchase of treasury stock	(12,138)		—


	Three Months Ended
	March 31, 2022				March 31, 2021
	(in thousands, except percentages)
Channel:
CTV	$	51,440	44	%	$	11,976	20	%
Desktop	27,606		23		20,851		34
Mobile	39,029		33		27,888		46
Total	$	118,075	100	%	$	60,715	100	%


	Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Allowance for doubtful accounts, beginning balance December 31	$	3,475	$	2,360

Write-offs	—		(4)
Increase (decrease) in provision for expected credit losses	(1,466)		(877)
Recoveries of previous write-offs	87		20
Allowance for doubtful accounts, ending balance March 31	$	2,096	$	1,499


	March 31, 2022		December 31, 2021
	(in thousands)
Accounts payable—seller	$	821,848	$	971,220
Accounts payable—trade	16,857		11,904
Accrued employee-related payables	16,575		16,230
Accrued holdback - indemnification claims	3,898		1,602
Total	$	859,178	$	1,000,956


	(in thousands)
Accrued restructuring costs at December 31, 2021	$	2,742
Restructuring costs, personnel related and non-cash stock-based compensation	2,661
Restructuring costs, impairments	3,320

Cash paid for restructuring costs	(658)

Non-cash impairments	(3,320)
Non-cash stock-based compensation	(1,944)
Accrued restructuring costs at March 31, 2022	$	2,801


	Shares Under Option	Weighted- Average Exercise Price		Weighted- Average Contractual Life	Aggregate Intrinsic Value
	(in thousands)				(in thousands)
Outstanding at December 31, 2021	5,129	$	7.25
Granted	699	$	13.90
Exercised	(311)	$	3.56
Expired	(21)	$	15.24

Outstanding at March 31, 2022	5,496	$	8.27	5.9 years	$	35,278
Exercisable at March 31, 2022	3,763	$	5.76	4.6 years	$	29,168


	Number of Shares		Weighted-Average Grant Date Fair Value
	(in thousands)
Restricted stock units outstanding at December 31, 2021	6,634		$	18.39
Granted	6,556		$	13.87
Canceled	(284)		$	17.95
Vested and released	(783)		$	9.27
Restricted stock units outstanding at March 31, 2022	12,123		$	16.54
Restricted stock units outstanding and unvested*	12,086	*	$	16.57
*At March 31, 2022, outstanding restricted stock units included 37,318 units that were vested but deferred.


Fiscal Year
Remaining 2022	$	16,397
2023	19,406
2024	16,593
2025	8,783
2026	7,761
Thereafter	27,302
Total lease payments (undiscounted)	96,242
Less: imputed interest	(14,827)
Lease liabilities—total (discounted)	$	81,415


Fiscal Year
Remaining 2022	$	2,700
2023	3,600
2024	3,600
2025	3,600
2026	403,600
Thereafter	340,200
Total	$	757,300


Fiscal Year	Debt Issuance Costs
Remaining 2022	$	1,716
2023	2,288
2024	2,288
2025	2,288
2026	491
Total	$	9,071


Fiscal Year	Debt Discount		Debt Issuance Costs
Remaining 2022	1,184		1,847
2023	1,564		2,441
2024	1,548		2,416
2025	1,532		2,391
2026	1,516		2,366
Thereafter	1,998		3,116
Total	$	9,342	$	14,577


	Three Months Ended				Change %
	March 31, 2022		March 31, 2021
	(in thousands)
Revenue	$	118,075	$	60,715	94	%
Expenses (1)(2):
Cost of revenue	59,396		20,756		186	%
Sales and marketing	50,000		22,589		121	%
Technology and development	23,043		14,266		62	%
General and administrative	18,704		14,158		32	%
Merger, acquisition, and restructuring costs	6,756		2,722		148	%
Total expenses	157,899		74,491		112	%
Loss from operations	(39,824)		(13,776)		(189)	%
Other (income) expense, net	6,774		(1,065)		(736)	%
Loss before income taxes	(46,598)		(12,711)		(267)	%
Provision (benefit) for income taxes	(2,005)		166		1,308	%
Net loss	$	(44,593)	$	(12,877)	(246)	%


(1) Stock-based compensation expense included in our expenses was as follows:
	Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Cost of revenue	$	350	$	85
Sales and marketing	5,341		2,461
Technology and development	4,717		1,826
General and administrative	4,237		2,244
Merger, acquisition, and restructuring costs	1,944		377
Total stock-based compensation expense	$	16,589	$	6,993


(2) Depreciation and amortization expense included in our expenses was as follows:
	Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Cost of revenue	$	26,322	$	8,240
Sales and marketing	19,152		3,984
Technology and development	224		113
General and administrative	168		148
Total depreciation and amortization expense	$	45,866	$	12,485


	Revenue ex-TAC
	Three Months Ended
	March 31, 2022		March 31, 2021		Change %
	(in thousands)
Channel:
CTV	$	42,303	$	11,976	253	%
Desktop	26,484		19,997		32	%
Mobile	38,297		27,887		37	%
Total	$	107,084	$	59,860	79	%


Period	Total Number of Shares Purchased	Average Price per Share		Total number of shares purchased as part of a Publicly Announced Program	Maximum Approximate Dollar Value that May Yet be Purchased Under the Program
January 1 - January 31, 2022
Equity withholding(1)	58	$	15.39	—	$	—
Repurchase program(2)	377	$	14.94	377	$	38,362
February 1 - February 28, 2022
Equity withholding(1)	205	$	13.59	—	$	—
Repurchase program(2)	—	$	—	—	$	38,362
March 1 - March 31, 2022
Equity withholding(1)	52	$	11.10	—	$	—
Repurchase program(2)	554	$	11.76	554	$	31,855
	1,246			931


Number						Description

3.1						Fifth Amended and Restated Bylaws of Magnite, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022).
31.1*						Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*(1)						Certification of the Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.ins *						Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.sch *						XBRL Taxonomy Schema Linkbase Document
101.cal *						XBRL Taxonomy Calculation Linkbase Document
101.def *						XBRL Taxonomy Definition Linkbase Document
101.lab *						XBRL Taxonomy Label Linkbase Document
101.pre *						XBRL Taxonomy Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


			MAGNITE, INC. (Registrant)
			/s/ David Day
			David Day
			Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)
Date May 4, 2022


	Signature:	/s/ Michael Barrett
Date May 4, 2022		Michael Barrett President and Chief Executive Officer (Principal Executive Officer)


			/s/ David Day
			David Day Chief Financial Officer (Principal Financial Officer)