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Magnite (NASDAQ:MGNI) shares tanked as much as 40% on Thursday after the ad tech company reported its second quarter results.
The company on Wednesday after the bell posted Q2 Non-GAAP EPS of $0.09, beating estimates by 6 cents. Revenue of $152.5 million was up 23.7% from last year and ahead of expectations by $18.2 million.
Key Metrics: Q2 contribution ex-TAC $134.7 million (+9% Y/Y); CTV contribution ex-TAC $56.1 million (+8% Y/Y); DV+ contribution ex-TAC $78.6 million (+10% Y/Y); adjusted EBITDA $37.3 million; adjusted EBITDA margin 28%.
The company pointed out during its earnings call that its EBITDA and margin in the quarter were negatively impacted by the MediaMath bankruptcy.
For its CTV segment, the company said it has seen softness in the managed service business hurt by macro challenges since the beginning of June.
"The premium broadcasters, plus services, and OEMs are taking share from smaller CTV publishers, which while creating significant long-term opportunity, is negatively impacting revenue in the short term," CFO David Day said during the call with analysts.
Commenting further on CTV, the company highlighted that several large managed service campaigns were paused based on ad budget pressure, particularly in the auto and media, and entertainment verticals.
Q3 outlook: contribution ex-TAC $128-$132 million; CTV contribution ex-TAC $50-$52 million; DV+ ex-TAC $78-$80 million; adjusted EBITDA opex $92-$94 million; adjusted EBITDA margin ~28% at the midpoint.
SA contributor Michael Wiggins De Oliveira wrote in his latest analysis on Magnite that the growth trajectory of its CTV segment has not matched the expectations set by the company and there are too many uncertainties and hurdles to justify a strong buy recommendation for the MGNI stock at its current point. He cut the rating on the stock to "Hold".
"Magnite's negative guidance for Q3 raises concerns about its ability to balance growth and manage its overleveraged balance sheet," De Oliveira added.
MGNI stock is down 17% YTD and 9.5% over the last 12 months.