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Magnite (MGNI) Q4 Earnings Beat Estimates, Revenues Up Y/Y

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Magnite (MGNI - Free Report) reported fourth-quarter 2020 adjusted earnings of 19 cents per share, beating the Zacks Consensus Estimate by 11.8%. The bottom-line figure also jumped 11.8% year over year.

Revenues of $82 million came in line with the consensus mark. Moreover, the figure surged 69.1% year over year and 20% on a pro-forma basis (includes contributions from Telaria merger which was closed on April 1, 2020). The upswing was primarily driven by stellar performance across the Connected Television (CTV) and Online Video (OLV) formats.

United States revenues (73.7% of revenues) were $60.4 million, up 74.1% year over year. International revenues (26.3% of revenues) were $21.6 million in the reported quarter, up 56.5%.

Top Line Details

Channel wise, CTV revenues (18.7% of the total revenues) jumped 53% year over year to $15.3 million, on a pro-forma basis. The solid uptick in the CTV business resulted from higher cord cutting and growing traction of ad-supported programmatic CTV owing to the ongoing transition from direct sales to programmatic ad-spending.
 

Magnite, Inc. Price, Consensus and EPS Surprise

Magnite, Inc. Price, Consensus and EPS Surprise

Magnite, Inc. price-consensus-eps-surprise-chart | Magnite, Inc. Quote

Desktop revenues (33.5% of the total revenues) climbed 33.7% year on year to $27.5 million. Desktop revenues grew 3% year over year on a pro-forma basis.

Mobile revenues (47.8% of the total revenues) came in at $39.2 million, up 40.3% year over year, on stellar growth across OLV. Mobile revenues grew 24% year over year on a pro-forma basis.

 

Operating Details

Sales and marketing expenses soared 101.3% year on year to $23 million. General and administrative expenses flared up 43.1% year over year to $14.8 million. Technology and development expenses rose 36.8% year over year to $14.2 million.

Magnite reported an operating income of $8 million, significantly higher than the $1 million reported in the year-ago quarter. Operating margin expanded 772 basis points (bps) year over year to 9.8%.

Adjusted EBITDA was $30 million, up a whopping 96% year on year. Moreover, adjusted EBITDA margin expanded 502 bps year over year to 36.6%. Adjusted EBITDA operating expenses came in at $52 million compared with the $33.2 recorded in the year ago quarter.

Balance Sheet and Cash Flow

As of Dec 31, 2020, Magnite had cash & cash equivalents worth $117.7 million compared with $103.8 million as of Sep 30, 2020.

The company witnessed free cash flow of $20.7 million in the reported quarter compared with the year-ago quarter’s $8.9 million.

Key Announcement

Magnite announced that its contract with Disney (DIS - Free Report) and Hulu has been renewed for additional18 months. Further, the company will facilitate programmatic transactions across additional Disney properties such as ESPN, ABC and others.

Guidance

For first-quarter 2021, management projects revenues between $58 million and $62 million. Further, adjusted EBITDA operating expenses are expected to in the $51-$53 million band.

Magnite’s expanding product portfolio with new unified decisioning products and expanding Demand Manager offering as well as growing traction of targeted advertising is likely to boost the company’s growth prospects.

Additionally, strong momentum across all of the company’s formats and device types, which include CTV, non-CTV video, mobile and display, along with the contributions from the SpotX acquisition, which will likely close in the second quarter, is anticipated to fuel top-line growth over the long haul.

Zacks Rank & Other Key Picks

Magnite currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector include Zoom (ZM - Free Report) and Marvell Technology (MRVL - Free Report) . Both stocks carry a Zacks Rank of #2, currently. You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.

Zoom and Marvell are scheduled to report their quarterly numbers on Mar 1 and 3, respectively.

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