Shares of Magnite (NASDAQ: MGNI) were heading lower today after the supply-side ad-tech platform (SSP) came up short on the bottom line in its second-quarter earnings report, and its revenue growth slowed.
As a result, the stock was down 6.8% as of 10:12 a.m. EDT.
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Magnite hits the brakes
Magnite's revenue grew by 7% in the quarter, reaching $162.9 million. Revenue excluding traffic-acquisition costs (TAC) rose 9% to $146.8 million, which was slightly ahead of estimates. Magnite, best known for its Connected TV (CTV) technology, said that revenue from CTV rose 12% to $63 million, ahead of its guidance of $59 million to $61 million.
The company began partnering with Netflix, a potentially huge opportunity, in May. It also signed a new deal with United Airlines and is gaining traction in live sports.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $44.7 million were up from $37.3 million, and the company reported adjusted earnings per share (EPS) of $0.14, up from $0.09 but short of estimates at $0.15.
CEO Michael Barrett said, "Ad spend trends from the first half continue to be positive and we remain optimistic this momentum will carry forward as Magnite growth accelerates in the back half of 2024."
What's next for Magnite
Looking ahead, Magnite sees revenue ex-TAC of $146 million to $150 million in Q3, essentially flat from Q2, though up more than 10% from a year ago.
It also called for revenue ex-TAC from CTV to increase 18% to 22%. Magnite continues to see adjusted EBITDA up in the mid-teens and positive EPS on a generally accepted accounting principles (GAAP) basis for the year.
While there were no red flags in the report, investors seemed to have higher expectations given the acceleration in the broader digital-advertising industry and the new deal with Netflix.
For now, investors will have to be patient with the stock.
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Jeremy Bowman has positions in Magnite and Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool recommends Magnite. The Motley Fool has a disclosure policy.
