MAGNITE, INC. Total Revenue up 7% & Contribution ex-TAC(1) up 6% in Fourth Quarter
Adjusted EBITDA Margin(2) of 43% in Fourth Quarter
Full-Year 2023 CTV Ad Spend(3) Growth Over 20%
Recent Highlights:
- Revenue of
$186.9 million for Q4 2023, up 7% from Q4 2022 - Contribution ex-TAC(1) of
$165.3 million for Q4 2023, exceeded guidance of$158 to$162 million , and was up 6% from Q4 2022 - Contribution ex-TAC(1) attributable to CTV for Q4 2023 was
$63.5 million , exceeded guidance of$61 to$63 million , and was down 2% year-over-year - Contribution ex-TAC(1) attributable to DV+ for Q4 2023 was
$101.8 million , exceeded guidance of$97 to$99 million , and was up 11% year-over-year - Net income for Q4 2023 of
$30.9 million , or$0.16 per diluted share, compared to a net loss of$36.4 million , or$0.27 per share for Q4 2022 - Adjusted EBITDA(1) of
$70.4 million in Q4 2023 representing a 43% Adjusted EBITDA margin(2), compared to Adjusted EBITDA(1) of$64.2 million , a margin of 41% for Q4 2022 - Non-GAAP diluted earnings per share(1) of
$0.29 for Q4 2023, compared to$0.24 non-GAAP diluted earnings per share(1) for Q4 2022 - Operating cash flow(4) in Q4 2023 was
$58.6 million
Expectations:
- Total Contribution ex-TAC(1) for Q1 2024 to be between
$122 and$126 million - Contribution ex-TAC(1) attributable to CTV for Q1 2024 to be between
$49 and$51 million - Contribution ex-TAC(1) attributable to DV+ for Q1 2024 to be between
$73 and$75 million - Adjusted EBITDA operating expenses(5) for Q1 2024 to be between
$106 and$108 million - Adjusted EBITDA operating expenses(5) for Q2 2024 to be between
$101 and$103 million - Total Contribution ex-TAC(1) growth of approximately 10% for the full-year 2024, with CTV growing faster than DV+
- Adjusted EBITDA margin(2) expansion of 100 basis points for 2024
- Double digit percentage growth of Adjusted EBITDA(1) for 2024, and even higher growth in free cash flow(6)
“We delivered a strong fourth quarter with CTV and DV+ revenue both exceeding the high end of our guidance ranges. We are even more encouraged to see improving top line trends to start 2024, particularly in CTV” said
| Magnite Fourth Quarter 2023 Results Summary | |||||||||||
| (in millions, except per share amounts and percentages) | |||||||||||
| Three Months Ended | Year Ended | ||||||||||
| Change Favorable/ (Unfavorable) | Change Favorable/ (Unfavorable) | ||||||||||
| Revenue | 7% | 7% | |||||||||
| Gross profit | 82% | (22)% | |||||||||
| Contribution ex-TAC(1) | 6% | 7% | |||||||||
| Net income (loss) | ( | 185% | ( | ( | (22)% | ||||||
| Adjusted EBITDA(1) | 10% | (4)% | |||||||||
| Adjusted EBITDA margin(2) | 43% | 41% | 2 ppt | 31% | 35% | (4) ppt | |||||
| Basic earnings (loss) per share | ( | 181% | ( | ( | (19)% | ||||||
| Diluted earnings (loss) per share | ( | 159% | ( | ( | (19)% | ||||||
| Non-GAAP earnings per share(1) | 21% | (16%) | |||||||||
| Notes: | ||
| (1 | ) | Contribution ex-TAC, Adjusted EBITDA, and non-GAAP earnings (loss) per share are non-GAAP financial measures. Please see the discussion in the section called "Non-GAAP Financial Measures" and the reconciliations included at the end of this press release. |
| (2 | ) | Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Contribution ex-TAC. |
| (3 | ) | Advertising spend, or ad spend, is defined as the total volume of spending between buyers and sellers transacted on our platform. |
| (4 | ) | Operating cash flow is calculated as Adjusted EBITDA less capital expenditures. |
| (5 | ) | Adjusted EBITDA operating expenses is calculated as Contribution ex-TAC less Adjusted EBITDA. |
| (6 | ) | Free cash flow is defined as operating cash flow (Adjusted EBITDA less capital expenditures) less net interest expense. |
Fourth Quarter 2023 Results Conference Call and Webcast:
The Company will host a conference call on
| Live conference call | |
| Toll free number: | (844) 875-6911 (for domestic callers) |
| Direct dial number: | (412) 902-6511 (for international callers) |
| Passcode: | Ask to join the |
| Simultaneous audio webcast: | http://investor.magnite.com, under "Events and Presentations" |
| Conference call replay | |
| Toll free number: | (877) 344-7529 (for domestic callers) |
| Direct dial number: | (412) 317-0088 (for international callers) |
| Passcode: | 5127377 |
| Webcast link: | http://investor.magnite.com, under "Events and Presentations" |
About
We’re
Forward-Looking Statements:
This press release and management's prepared remarks during the conference call referred to above include, and management's answers to questions during the conference call may include, forward-looking statements, including statements based upon or relating to our expectations, assumptions, estimates, and projections. In some cases, you can identify forward-looking statements by terms such as "may," "might," "will," "objective," "intend," "should," "could," "can," "would," "expect," "believe," "design," "anticipate," "estimate," "predict," "potential," "plan" or the negative of these terms, and similar expressions. Forward-looking statements may include, but are not limited to, statements concerning acquisitions by the Company, including the acquisition of
We discuss many of these risks and additional factors that could cause actual results to differ materially from those anticipated by our forward-looking statements under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in filings we have made and will make from time to time with the
Non-GAAP Financial Measures and Operational Measures:
In addition to our GAAP results, we review certain non-GAAP financial measures to help us evaluate our business on a consistent basis, measure our performance, identify trends affecting our business, establish budgets, measure the effectiveness of investments in our technology and development and sales and marketing, and assess our operational efficiencies. These non-GAAP measures include Contribution ex-TAC, Adjusted EBITDA, Non-GAAP Income (Loss), and Non-GAAP Earnings (Loss) per share, each of which is discussed below.
These non-GAAP financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding financial measures prepared in accordance with GAAP. You are encouraged to evaluate these adjustments, and review the reconciliation of these non-GAAP financial measures to their most comparable GAAP measures, and the reasons we consider them appropriate. It is important to note that the particular items we exclude from, or include in, our non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies. See "Reconciliation of Revenue to Gross Profit to Contribution ex-TAC," "Reconciliation of net income (loss) to Adjusted EBITDA," "Reconciliation of net income (loss) to non-GAAP income (loss)," and "Reconciliation of GAAP earnings (loss) per share to non-GAAP earnings (loss) per share" included as part of this press release.
We do not provide a reconciliation of our non-GAAP financial expectations for Contribution ex-TAC and Adjusted EBITDA, or a forecast of the most comparable GAAP measures, because the amount and timing of many future charges that impact these measures (such as amortization of future acquired intangible assets, acquisition-related charges, foreign exchange (gain) loss, net, stock-based compensation, impairment charges, provision or benefit for income taxes, and our future revenue mix), which could be material, are variable, uncertain, or out of our control and therefore cannot be reasonably predicted without unreasonable effort, if at all. In addition, we believe such reconciliations or forecasts could imply a degree of precision that might be confusing or misleading to investors.
Contribution ex-TAC:
Contribution ex-TAC is calculated as gross profit plus cost of revenue, excluding traffic acquisition cost ("TAC"). Traffic acquisition cost, a component of cost of revenue, represents what we must pay sellers for the sale of advertising inventory through our platform for revenue reported on a gross basis. Contribution ex-TAC is a non-GAAP financial measure that is most comparable to gross profit. We believe Contribution ex-TAC is a useful measure in assessing the performance of
Adjusted EBITDA:
We define Adjusted EBITDA as net income (loss) adjusted to exclude stock-based compensation expense, depreciation and amortization, amortization of acquired intangible assets, impairment charges, interest income or expense, and other cash and non-cash based income or expenses that we do not consider indicative of our core operating performance, including, but not limited to foreign exchange gains and losses, acquisition and related items, gains or losses on extinguishment of debt, non-operational real estate and other expense (income), net, and provision (benefit) for income taxes. We also track future expenses on an Adjusted EBITDA basis, and describe them as Adjusted EBITDA operating expenses, which includes total operating expenses. Total operating expenses include cost of revenue. Adjusted EBITDA operating expenses is calculated as Contribution ex-TAC less Adjusted EBITDA. We adjust Adjusted EBITDA operating expenses for the same expense items excluded in Adjusted EBITDA. We believe Adjusted EBITDA is useful to investors in evaluating our performance for the following reasons:
- Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s performance without regard to items such as those we exclude in calculating this measure, which can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired.
- Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of performance and the effectiveness of our business strategies, and in communications with our board of directors concerning our performance. Adjusted EBITDA is also used as a metric for determining payment of cash incentive compensation.
- Adjusted EBITDA provides a measure of consistency and comparability with our past performance that many investors find useful, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results of operations as reported under GAAP. These limitations include:
- Stock-based compensation is a non-cash charge and will remain an element of our long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period.
- Depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future, but Adjusted EBITDA does not reflect any cash requirements for these replacements.
- Impairment charges are non-cash charges related to goodwill, intangible assets and/or long-lived assets.
- Adjusted EBITDA does not reflect certain cash and non-cash charges related to acquisition and related items, such as amortization of acquired intangible assets, merger, acquisition, or restructuring related severance costs, and changes in the fair value of contingent consideration.
- Adjusted EBITDA does not reflect cash and non-cash charges and changes in, or cash requirements for, acquisition and related items, such as certain transaction expenses and expenses associated with earn-out amounts.
- Adjusted EBITDA does not reflect changes in our working capital needs, capital expenditures, non-operational real estate expenses or income, or contractual commitments.
- Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense.
- Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Our Adjusted EBITDA is influenced by fluctuations in our revenue, cost of revenue, and the timing and amounts of the cost of our operations. Adjusted EBITDA should not be considered as an alternative to net income (loss), income (loss) from operations, or any other measure of financial performance calculated and presented in accordance with GAAP.
Non-GAAP Income (Loss) and Non-GAAP Earnings (Loss) per Share:
We define non-GAAP earnings (loss) per share as non-GAAP income (loss) divided by non-GAAP weighted-average shares outstanding. Non-GAAP income (loss) is equal to net income (loss) excluding stock-based compensation, cash and non-cash based merger, acquisition, and restructuring costs, which consist primarily of professional service fees associated with merger and acquisition activities, cash-based employee termination costs, and other restructuring activities, including facility closures, relocation costs, contract termination costs, and impairment costs of abandoned technology associated with restructuring activities, amortization of acquired intangible assets, gains or losses on extinguishment of debt, non-operational real estate and other expenses or income, foreign currency gains and losses, interest expense associated with Convertible Senior Notes, and the tax impact of these items. In periods in which we have non-GAAP income, non-GAAP weighted-average shares outstanding used to calculate non-GAAP earnings per share includes the impact of potentially dilutive shares. Potentially dilutive shares consist of stock options, restricted stock units, performance stock units, and potential shares issued under the Employee Stock Purchase Plan, each computed using the treasury stock method, and the impact of shares that would be issuable assuming conversion of all of the Convertible Senior Notes, calculated under the if-converted method. We believe non-GAAP earnings (loss) per share is useful to investors in evaluating our ongoing operational performance and our trends on a per share basis, and also facilitates comparison of our financial results on a per share basis with other companies, many of which present a similar non-GAAP measure. However, a potential limitation of our use of non-GAAP earnings (loss) per share is that other companies may define non-GAAP earnings (loss) per share differently, which may make comparison difficult. This measure may also exclude expenses that may have a material impact on our reported financial results. Non-GAAP earnings (loss) per share is a performance measure and should not be used as a measure of liquidity. Because of these limitations, we also consider the comparable GAAP measure of net income (loss).
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 326,219 | $ | 326,254 | |||
| Accounts receivable, net | 1,176,276 | 976,506 | |||||
| Prepaid expenses and other current assets | 20,508 | 23,501 | |||||
| TOTAL CURRENT ASSETS | 1,523,003 | 1,326,261 | |||||
| Property and equipment, net | 47,371 | 44,969 | |||||
| Right-of-use lease asset | 60,549 | 78,211 | |||||
| Internal use software development costs, net | 21,926 | 23,671 | |||||
| Intangible assets, net | 51,011 | 253,501 | |||||
| 978,217 | 978,217 | ||||||
| Other assets, non-current | 6,729 | 7,383 | |||||
| TOTAL ASSETS | $ | 2,688,806 | $ | 2,712,213 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 1,372,176 | $ | 1,094,321 | |||
| Lease liabilities - current portion | 20,402 | 21,172 | |||||
| Debt, current | 3,600 | 3,600 | |||||
| Other current liabilities | 5,957 | 5,939 | |||||
| TOTAL CURRENT LIABILITIES | 1,402,135 | 1,125,032 | |||||
| Debt, non-current, net of debt issuance costs | 532,986 | 722,757 | |||||
| Lease liabilities, non-current | 49,665 | 66,331 | |||||
| Deferred tax liabilities, net | 680 | 5,072 | |||||
| Other liabilities, non-current | 1,657 | 1,723 | |||||
| TOTAL LIABILITIES | 1,987,123 | 1,920,915 | |||||
| STOCKHOLDERS' EQUITY | |||||||
| Common stock | 2 | 2 | |||||
| Additional paid-in capital | 1,387,715 | 1,319,221 | |||||
| Accumulated other comprehensive loss | (2,076 | ) | (3,151 | ) | |||
| Accumulated deficit | (683,958 | ) | (524,774 | ) | |||
| TOTAL STOCKHOLDERS' EQUITY | 701,683 | 791,298 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 2,688,806 | $ | 2,712,213 | |||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (unaudited) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| Revenue | $ | 186,932 | $ | 175,399 | $ | 619,710 | $ | 577,069 | |||||||
| Expenses(1)(2): | |||||||||||||||
| Cost of revenue | 70,025 | 111,015 | 409,906 | 307,165 | |||||||||||
| Sales and marketing | 37,575 | 48,406 | 173,982 | 200,081 | |||||||||||
| Technology and development | 23,183 | 22,543 | 94,318 | 93,757 | |||||||||||
| General and administrative | 21,025 | 21,977 | 89,048 | 81,382 | |||||||||||
| Merger, acquisition, and restructuring costs | — | — | 7,465 | 7,468 | |||||||||||
| Total expenses | 151,808 | 203,941 | 774,719 | 689,853 | |||||||||||
| Income (loss) from operations | 35,124 | (28,542 | ) | (155,009 | ) | (112,784 | ) | ||||||||
| Other expense: | |||||||||||||||
| Interest expense, net | 8,100 | 7,987 | 32,369 | 29,260 | |||||||||||
| Foreign exchange (gain) loss, net | 3,495 | 3,913 | 1,953 | (1,129 | ) | ||||||||||
| Gain on extinguishment of debt | (8,348 | ) | — | (26,480 | ) | — | |||||||||
| Other income | (1,287 | ) | (1,327 | ) | (5,304 | ) | (5,318 | ) | |||||||
| Total other expense, net | 1,960 | 10,573 | 2,538 | 22,813 | |||||||||||
| Income (loss) before income taxes | 33,164 | (39,115 | ) | (157,547 | ) | (135,597 | ) | ||||||||
| Provision (benefit) for income taxes | 2,250 | (2,730 | ) | 1,637 | (5,274 | ) | |||||||||
| Net income (loss) | $ | 30,914 | $ | (36,385 | ) | $ | (159,184 | ) | $ | (130,323 | ) | ||||
| Net earnings (loss) per share: | |||||||||||||||
| Basic | $ | 0.22 | $ | (0.27 | ) | $ | (1.17 | ) | $ | (0.98 | ) | ||||
| Diluted | $ | 0.16 | $ | (0.27 | ) | $ | (1.17 | ) | $ | (0.98 | ) | ||||
| Weighted average shares used to compute net earnings (loss) per share: | |||||||||||||||
| Basic | 138,212 | 133,706 | 136,620 | 132,887 | |||||||||||
| Diluted | 143,793 | 133,706 | 136,620 | 132,887 | |||||||||||
| (1) Stock-based compensation expense included in our expenses was as follows: |
| | Three Months Ended | Year Ended | |||||||||
| Cost of revenue | $ | 436 | $ | 475 | $ | 1,809 | $ | 1,666 | |||
| Sales and marketing | 6,394 | 5,301 | 27,263 | 21,558 | |||||||
| Technology and development | 4,624 | 3,316 | 20,542 | 19,961 | |||||||
| General and administrative | 5,701 | 4,833 | 22,860 | 18,929 | |||||||
| Merger, acquisition, and restructuring costs | — | — | 143 | 2,004 | |||||||
| Total stock-based compensation expense | $ | 17,155 | $ | 13,925 | $ | 72,617 | $ | 64,118 | |||
| (2) Depreciation and amortization expense included in our expenses was as follows: |
| Three Months Ended | Year Ended | ||||||||||
| Cost of revenue | $ | 13,901 | $ | 61,977 | $ | 211,956 | $ | 142,616 | |||
| Sales and marketing | 2,628 | 15,072 | 27,584 | 71,887 | |||||||
| Technology and development | 188 | 216 | 779 | 913 | |||||||
| General and administrative | 103 | 146 | 501 | 636 | |||||||
| Total depreciation and amortization expense | $ | 16,820 | $ | 77,411 | $ | 240,820 | $ | 216,052 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) | |||||||
| Year Ended | |||||||
| OPERATING ACTIVITIES: | |||||||
| Net loss | $ | (159,184 | ) | $ | (130,323 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 240,820 | 216,052 | |||||
| Stock-based compensation | 72,617 | 64,118 | |||||
| Impairment of intangible assets | — | 3,320 | |||||
| Gain on extinguishment of debt | (26,480 | ) | — | ||||
| (Gain) loss on disposal of property and equipment | 311 | (86 | ) | ||||
| Provision for (recovery of) doubtful accounts | 4,666 | (163 | ) | ||||
| Amortization of debt discount and issuance costs | 6,279 | 6,785 | |||||
| Non-cash lease expense | (1,712 | ) | 1,485 | ||||
| Deferred income taxes | (2,379 | ) | (8,802 | ) | |||
| Unrealized foreign currency (gain) loss, net | 1,266 | (271 | ) | ||||
| Other items, net | 2,696 | — | |||||
| Changes in operating assets and liabilities, net of effect of business acquisitions: | |||||||
| Accounts receivable | (220,102 | ) | (46,325 | ) | |||
| Prepaid expenses and other assets | 1,004 | (4,228 | ) | ||||
| Accounts payable and accrued expenses | 294,677 | 91,377 | |||||
| Other liabilities | (112 | ) | (389 | ) | |||
| Net cash provided by operating activities | 214,367 | 192,550 | |||||
| INVESTING ACTIVITIES: | |||||||
| Purchases of property and equipment | (26,764 | ) | (30,815 | ) | |||
| Capitalized internal use software development costs | (10,619 | ) | (13,582 | ) | |||
| Mergers and acquisitions, net of cash acquired and indemnification claims holdback | — | (20,755 | ) | ||||
| Net cash used in investing activities | (37,383 | ) | (65,152 | ) | |||
| FINANCING ACTIVITIES: | |||||||
| Proceeds from exercise of stock options | 2,166 | 2,234 | |||||
| Proceeds from issuance of common stock under employee stock purchase plan | 3,513 | 3,744 | |||||
| Repayment of debt | (3,600 | ) | (3,600 | ) | |||
| Repurchase of Convertible Senior Notes | (165,518 | ) | — | ||||
| Repayment of financing lease | (276 | ) | (807 | ) | |||
| Purchase of treasury stock | — | (15,663 | ) | ||||
| Taxes paid related to net share settlement | (11,814 | ) | (14,498 | ) | |||
| Payment of indemnification claims holdback | (2,313 | ) | (1,582 | ) | |||
| Net cash used in financing activities | (177,842 | ) | (30,172 | ) | |||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 575 | (1,417 | ) | ||||
| CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (283 | ) | 95,809 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period | 326,502 | 230,693 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period | $ | 326,219 | $ | 326,502 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-(Continued) (In thousands) (unaudited) | |||||
| Year Ended | |||||
| RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO CONSOLIDATED BALANCE SHEETS: | |||||
| Cash and cash equivalents | $ | 326,219 | $ | 326,254 | |
| Restricted cash included in prepaid expenses and other current assets | — | 248 | |||
| Total cash, cash equivalents and restricted cash | $ | 326,219 | $ | 326,502 | |
| SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||
| Cash paid for income taxes | $ | 5,357 | $ | 4,932 | |
| Cash paid for interest | $ | 37,028 | $ | 26,320 | |
| Capitalized assets financed by accounts payable and accrued expenses and other liabilities | $ | 1,690 | $ | 1,295 | |
| Capitalized stock-based compensation | $ | 2,012 | $ | 2,704 | |
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 4,017 | $ | 20,131 | |
| Purchase consideration - indemnification claims holdback | $ | — | $ | 2,293 | |
CALCULATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (In thousands, except per share data) (unaudited) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| Basic and Diluted Earnings (Loss) Per Share: | |||||||||||||||
| Net income (loss) | $ | 30,914 | $ | (36,385 | ) | $ | (159,184 | ) | $ | (130,323 | ) | ||||
| Weighted-average common shares outstanding used to compute basic earnings (loss) per share | 138,212 | 133,706 | 136,620 | 132,887 | |||||||||||
| Basic earnings (loss) per share | $ | 0.22 | $ | (0.27 | ) | $ | (1.17 | ) | $ | (0.98 | ) | ||||
| Diluted Earnings (Loss) Per Share: | |||||||||||||||
| Net income (loss) | $ | 30,914 | $ | (36,385 | ) | $ | (159,184 | ) | $ | (130,323 | ) | ||||
| Adjustments: | |||||||||||||||
| Interest expense, Convertible Senior Notes, net of tax | 508 | — | — | — | |||||||||||
| Gain on extinguishment of debt, net of tax | (8,151 | ) | — | — | — | ||||||||||
| Net income (loss) for calculation of diluted income (loss) | $ | 23,271 | $ | (36,385 | ) | $ | (159,184 | ) | $ | (130,323 | ) | ||||
| Weighted-average common shares used in basic earnings (loss) per share | 138,212 | 133,706 | 136,620 | 132,887 | |||||||||||
| Dilutive effect of weighted-average restricted stock units | 545 | — | — | — | |||||||||||
| Dilutive effect of weighted-average common stock options | 1,156 | — | — | — | |||||||||||
| Dilutive effect of weighted-average performance stock units | — | — | — | — | |||||||||||
| Dilutive effect of weighted-average ESPP shares | 15 | — | — | — | |||||||||||
| Dilutive effect of weighted-average convertible notes | 3,865 | — | — | — | |||||||||||
| Weighted-average shares used to compute diluted net earnings (loss) per share | 143,793 | 133,706 | 136,620 | 132,887 | |||||||||||
| Diluted net earnings (loss) per share | $ | 0.16 | $ | (0.27 | ) | $ | (1.17 | ) | $ | (0.98 | ) | ||||
RECONCILIATION OF REVENUE TO GROSS PROFIT TO CONTRIBUTION EX-TAC (In thousands) (unaudited) | |||||||||||
| Three Months Ended | Year Ended | ||||||||||
| Revenue | $ | 186,932 | $ | 175,399 | $ | 619,710 | $ | 577,069 | |||
| Less: Cost of revenue | 70,025 | 111,015 | 409,906 | 307,165 | |||||||
| Gross Profit | 116,907 | 64,384 | 209,804 | 269,904 | |||||||
| Add back: Cost of revenue, excluding TAC | 48,373 | 92,233 | 339,343 | 244,711 | |||||||
| Contribution ex-TAC | $ | 165,280 | $ | 156,617 | $ | 549,147 | $ | 514,615 | |||
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (In thousands) (unaudited) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| Net income (loss) | $ | 30,914 | $ | (36,385 | ) | $ | (159,184 | ) | $ | (130,323 | ) | ||||
| Add back (deduct): | |||||||||||||||
| Depreciation and amortization expense, excluding amortization of acquired intangible assets | 9,198 | 8,365 | 38,330 | 31,658 | |||||||||||
| Amortization of acquired intangibles | 7,622 | 69,046 | 202,490 | 184,394 | |||||||||||
| Stock-based compensation expense | 17,155 | 13,925 | 72,617 | 64,118 | |||||||||||
| Merger, acquisition, and restructuring costs, excluding stock-based compensation expense | — | — | 7,322 | 5,464 | |||||||||||
| Non-operational real estate and other expense, net | 20 | 107 | 310 | 622 | |||||||||||
| Interest expense, net | 8,100 | 7,987 | 32,369 | 29,260 | |||||||||||
| Foreign exchange (gain) loss, net | 3,495 | 3,913 | 1,953 | (1,129 | ) | ||||||||||
| Gain on extinguishment of debt | (8,348 | ) | — | (26,480 | ) | — | |||||||||
| Provision (benefit) for income taxes | 2,250 | (2,730 | ) | 1,637 | (5,274 | ) | |||||||||
| Adjusted EBITDA | $ | 70,406 | $ | 64,228 | $ | 171,364 | $ | 178,790 | |||||||
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP INCOME (LOSS) (In thousands) (unaudited) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| Net income (loss) | $ | 30,914 | $ | (36,385 | ) | $ | (159,184 | ) | $ | (130,323 | ) | ||||
| Add back (deduct): | |||||||||||||||
| Merger, acquisition, and restructuring costs, including amortization of acquired intangibles and excluding stock-based compensation expense | 7,622 | 69,046 | 209,812 | 189,858 | |||||||||||
| Stock-based compensation expense | 17,155 | 13,925 | 72,617 | 64,118 | |||||||||||
| Non-operational real estate and other expense, net | 20 | 107 | 310 | 622 | |||||||||||
| Foreign exchange (gain) loss, net | 3,495 | 3,913 | 1,953 | (1,129 | ) | ||||||||||
| Interest expense, Convertible Senior Notes | 508 | 250 | 2,620 | 1,000 | |||||||||||
| Gain on extinguishment of debt | (8,348 | ) | — | (26,480 | ) | — | |||||||||
| Tax effect of Non-GAAP adjustments(1) | (10,218 | ) | (16,197 | ) | (23,740 | ) | (32,487 | ) | |||||||
| Non-GAAP income | $ | 41,148 | $ | 34,659 | $ | 77,908 | $ | 91,659 | |||||||
| (1 | ) | Non-GAAP income (loss) includes the estimated tax impact from the reconciling items reconciling between net income (loss) and non-GAAP income (loss). |
RECONCILIATION OF GAAP EARNINGS (LOSS) PER SHARE TO NON-GAAP EARNINGS PER SHARE (In thousands, except per share amounts) (unaudited) | ||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||
| GAAP net earnings (loss) per share (1): | ||||||||||||||
| Basic | $ | 0.22 | $ | (0.27 | ) | $ | (1.17 | ) | $ | (0.98 | ) | |||
| Diluted | $ | 0.16 | $ | (0.27 | ) | $ | (1.17 | ) | $ | (0.98 | ) | |||
| Non-GAAP income (2) | $ | 41,148 | $ | 34,659 | $ | 77,908 | $ | 91,659 | ||||||
| Non-GAAP earnings per share | $ | 0.29 | $ | 0.24 | $ | 0.54 | $ | 0.64 | ||||||
| Weighted-average shares used to compute basic net earnings (loss) per share | 138,212 | 133,706 | 136,620 | 132,887 | ||||||||||
| Dilutive effect of weighted-average common stock options, RSAs, RSUs, and PSUs | 1,701 | 2,883 | 3,258 | 3,494 | ||||||||||
| Dilutive effect of weighted-average ESPP shares | 15 | 2 | 31 | 18 | ||||||||||
| Dilutive effect of weighted-average Convertible Senior Notes | 3,865 | 6,262 | 4,981 | 6,262 | ||||||||||
| Non-GAAP weighted-average shares outstanding (3) | 143,793 | 142,853 | 144,890 | 142,661 | ||||||||||
| (1) Calculated as net income (loss) divided by basic and diluted weighted-average shares used to compute net income (loss) per share as included in the consolidated statement of operations. |
| (2) Refer to reconciliation of net income (loss) to non-GAAP income (loss). |
| (3) Non-GAAP earnings per share is computed using the same weighted-average number of shares that are used to compute GAAP net income (loss) per share in periods where there is both a non-GAAP loss and a GAAP net loss. |
CONTRIBUTION EX-TAC BY CHANNEL (In thousands, except percentages) (unaudited) | |||||||||||
| Contribution ex-TAC | |||||||||||
| Three Months Ended | |||||||||||
| Channel: | |||||||||||
| CTV | $ | 63,530 | 38 | % | $ | 64,623 | 41 | % | |||
| Mobile | 71,566 | 44 | 61,117 | 39 | |||||||
| Desktop | 30,184 | 18 | 30,877 | 20 | |||||||
| Total | $ | 165,280 | 100 | % | $ | 156,617 | 100 | % | |||
| Contribution ex-TAC | |||||||||||
| Year Ended | |||||||||||
| Channel: | |||||||||||
| CTV | $ | 218,494 | 40 | % | $ | 214,803 | 42 | % | |||
| Mobile | 226,826 | 41 | 188,116 | 36 | |||||||
| Desktop | 103,827 | 19 | 111,696 | 22 | |||||||
| Total | $ | 549,147 | 100 | % | $ | 514,615 | 100 | % | |||
Investor Relations ContactSource:Nick Kormeluk (949) 500-0003 nkormeluk@magnite.com Media ContactCharlstie Veith (516) 300-3569 press@magnite.com
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