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Magnite (MGNI) to Report Q1 Earnings: What's in the Cards?

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Magnite (MGNI - Free Report) is set to release first-quarter 2021 results on May 10.

For the quarter, the company expects revenues between $80 million and $84 million. The consensus mark for revenues is pegged at $58 million, suggesting a 61.1% surge from the year-ago quarter’s reported figure.

For the quarter, the Zacks Consensus Estimate for earnings has remained steady at 2 cents per share over the past 30 days, indicating growth of 133.3% from the year-ago quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in the other, the average surprise being 75.7%.

Let’s see how things have shaped up prior to this announcement.

Magnite, Inc. Price and EPS Surprise

Magnite, Inc. Price and EPS Surprise

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

Factors to Consider

Magnite’s expanding product portfolio with new Unified Decisioning products and expanding Demand Manager offering as well as growing traction in targeted advertising is likely to have aided first-quarter performance.

Additionally, continued strength across all its formats and device types, which include Connected Television (CTV), non-CTV video, mobile and display, is expected to have aided the company’s top line.

Markedly, Magnite expects strong CTV growth in first-quarter 2021. According to the company’s CTV: The Future Forward report, released in the first quarter, 82% of EU5 (the UK, France, Germany, Spain and Italy) respondents tune into CTV weekly. The UK leads in this metric, with nearly nine in 10 (89%) of UK respondents reporting that they used a streaming service at least once a week and 61% watched daily. Additionally, 71% of EU5 viewers said they preferred streaming over broadcast TV.

The company is likely to have gained from increased cord cutting and growing traction of ad-supported programmatic CTV led by a shift from direct sales to programmatic ad-spending.

Moreover, expanded live sports access on ad-supported CTV, along with robust adoption of ad-supported free and lower-cost content and growing streaming TV content line-up are expected to have been major growth drivers for this Zacks Rank #3 (Hold) company’s CTV business. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Markedly, in the fourth quarter of 2020, Magnite’s CTV revenues jumped 53% year over year to $15.3 million, primarily on elevated CTV spending by advertisers in the technology, direct to consumer, and consumer packaged goods verticals. This strong momentum is likely to have continued to fuel top-line growth in the first quarter as well.

Further, solid demand for the company’s CTV addressability capabilities, which provide data-driven audience targeting features to advertisers is expected to have aided top-line growth in the to-be-reported quarter.

Furthermore, growing adoption of Demand Manager among publishers is a major positive. In addition, expansion of the company’s publisher-focused prebid offering with Demand Manager Mobile is likely to have aided contract wins in the to-be-reported quarter.

During the first quarter, Magnite launched the open beta of Unified Decisioning, a solution that empowers CTV and OTT publishers to maximize yield by removing the need to manage direct sold and programmatic demand channels independently and allowing them to compete side by side. This is expected to have boosted client growth and retention in the first quarter.

Furthermore, contributions from a broad partner base, including Disney (DIS - Free Report) , Sling, Pluto, DISH (DISH - Free Report) and Tubi, along with device manufacturing companies, such as Samsung, Sony, LG and Vizio, and broadcasting cable companies, such as Discovery (DISCA - Free Report) , FOX and NBC, are anticipated to have been conducive to Magnite’s top-line growth in the quarter under review.

Key Developments in Q1

On Mar 18, Magnite announced that it has closed its offering of $400 million aggregate principal amount of 0.25% convertible senior notes due 2026, including the full exercise of the option to purchase $50 million of additional notes granted by Magnite to the initial purchasers.

Markedly, the company expanded its international footprint by opening data center facility in Singapore in the first quarter, which is expected to strengthen Magnite's leadership in CTV and omnichannel digital advertising globally. Digital ad spending in APAC is expected to grow 13% to reach $114 billion according to Magna Global.

Moreover, Magnite entered into a definitive agreement to acquire SpotX from RTL Group for $1.17 billion in cash and stock. SpotX is one of the leading platforms shaping CTV and video advertising globally.

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