Magnite, Inc. (MGNI) Bundle
Understanding Magnite, Inc. (MGNI) Revenue Streams
Understanding Magnite, Inc.’s Revenue Streams
Magnite, Inc. reported a revenue of $162.0 million for the three months ended September 30, 2024, marking an increase of 8% compared to $150.1 million in the same period in 2023. For the nine months ended September 30, 2024, revenue rose to $474.2 million, reflecting a 10% increase from $432.8 million in 2023.
Breakdown of Primary Revenue Sources
The revenue streams primarily comprise:
- CTV (Connected TV): $76.2 million (47% of total revenue) for Q3 2024, up from $67.8 million in Q3 2023.
- Mobile: $59.8 million (37% of total revenue) for Q3 2024, compared to $56.3 million in Q3 2023.
- Desktop: $25.9 million (16% of total revenue) for Q3 2024, slightly down from $26.0 million in Q3 2023.
Year-over-Year Revenue Growth Rate
The year-over-year growth rates are as follows:
- Q3 2024 vs Q3 2023: 8% increase.
- Nine months ended September 30, 2024 vs 2023: 10% increase.
Contribution of Different Business Segments to Overall Revenue
The contribution of various segments to overall revenue is detailed below:
| Segment | Q3 2024 Revenue ($ millions) | Q3 2023 Revenue ($ millions) | Growth Rate (%) |
|---|---|---|---|
| CTV | 76.2 | 67.8 | 6.7% |
| Mobile | 59.8 | 56.3 | 6.2% |
| Desktop | 25.9 | 26.0 | -0.4% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- CTV revenue increased by $8.5 million, or 12%, driven by political advertising.
- Mobile revenue grew by $3.5 million, or 6%.
- Desktop revenue remained relatively flat with a minor decrease.
Overall, the revenue growth was primarily attributed to the increasing demand for CTV and mobile advertising, reflecting a shift in consumer viewing habits and advertising spend towards digital platforms.
Revenue by Geographic Location
The revenue breakdown by geographic location is as follows:
| Region | Q3 2024 Revenue ($ millions) | Q3 2023 Revenue ($ millions) | Percentage of Total Revenue |
|---|---|---|---|
| United States | 120.2 | 111.3 | 74% |
| International | 41.8 | 38.8 | 26% |
This data indicates that the U.S. market remains the dominant revenue source, accounting for 74% of total revenue in Q3 2024.
A Deep Dive into Magnite, Inc. (MGNI) Profitability
Profitability Metrics
Gross Profit: For the three months ended September 30, 2024, the gross profit was $99,459,000, compared to $65,207,000 for the same period in 2023, marking a 53% increase. For the nine months ended September 30, 2024, gross profit reached $283,150,000, up from $92,897,000 in 2023, representing a 205% increase.
Operating Profit: The income from operations for the three months ended September 30, 2024, was $15,123,000, compared to ($17,843,000) for the same period in 2023. For the nine months ended September 30, 2024, the income from operations was $10,869,000, compared to ($190,133,000) in 2023.
Net Profit: The net income for the three months ended September 30, 2024, was $5,214,000, a significant recovery from ($17,477,000) in 2023. For the nine months ended September 30, 2024, the net loss was ($13,621,000), compared to ($190,098,000) in 2023, showing a 93% improvement.
Profitability Margins
| Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change (%) | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Gross Profit Margin | 61.4% | 43.4% | 18.0% | 59.7% | 21.5% | 38.2% |
| Operating Margin | 9.3% | (11.9%) | 21.2% | 2.3% | (44.0%) | 46.3% |
| Net Profit Margin | 3.2% | (11.6%) | 14.8% | (2.9%) | (43.9%) | 41.0% |
Trends in Profitability Over Time
Revenue for the three months ended September 30, 2024, was $162,003,000, an 8% increase from $150,085,000 in 2023. For the nine months ended September 30, 2024, revenue reached $474,202,000, up 10% from $432,778,000 in 2023. The overall trend indicates a consistent improvement in revenue generation and profitability metrics over the year.
Comparison of Profitability Ratios with Industry Averages
The industry average gross profit margin for similar companies is approximately 50%. The reported gross profit margin of 61.4% for the three months ended September 30, 2024, indicates that this company is performing above average in terms of gross profitability. The operating margin of 9.3% also surpasses the industry average, which is typically around 5%.
Analysis of Operational Efficiency
Cost of revenue for the three months ended September 30, 2024, was $62,544,000, down 26% from $84,878,000 in 2023. This decrease is primarily driven by reductions in depreciation and traffic acquisition costs, enhancing operational efficiency. The reduction in cost of revenue for the nine months ended September 30, 2024, was 44%, indicating significant improvements in cost management practices.
Overall, the gross margin continues to trend positively, reflecting effective cost control measures and operational efficiencies that have been implemented within the organization.
Debt vs. Equity: How Magnite, Inc. (MGNI) Finances Its Growth
Debt vs. Equity: How Magnite, Inc. Finances Its Growth
As of September 30, 2024, Magnite, Inc. has a total debt of $553.8 million, comprised of long-term and short-term obligations. The breakdown of this debt is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Convertible Senior Notes | $205,067 |
| Term Loan B Facility | $364,088 |
| Debt Issuance Costs | ($13,628) |
| Total Debt Net of Discounts | $550,168 |
The company’s debt-to-equity ratio stands at 0.76, calculated by dividing total debt by total equity of approximately $725.9 million as of the same date. This ratio is below the industry average of 1.0, indicating a relatively conservative leverage position.
Recent debt activity includes the refinancing of the 2021 Term Loan B Facility into a new 2024 Term Loan B Facility in February 2024, which provided $413.5 million in proceeds. This refinancing was aimed at reducing interest expenses, and the new facility has an interest rate of 8.60%. Furthermore, the company has a 2024 Revolving Credit Facility of $175 million, which remains undrawn as of September 30, 2024.
In terms of credit ratings, Magnite, Inc. does not hold an investment-grade rating, which is typical for companies in the digital advertising space, where market volatility can impact financial performance.
The balance between debt financing and equity funding is evident in the company’s strategy. Magnite has issued common stock and utilized stock options to raise capital, contributing to its overall financial health. For instance, in the nine months ending September 30, 2024, the company generated $1.98 million from employee stock purchase plans and other equity-related activities.
Additionally, the company has shown a commitment to managing its debt load effectively, evidenced by the recent refinancing efforts and a focus on maintaining liquidity with cash and equivalents totaling $387.2 million as of September 30, 2024.
The following table summarizes the company’s principal contractual obligations associated with its debt as of September 30, 2024:
| Obligation Type | Amount (in thousands) | Due Date |
|---|---|---|
| Lease Liabilities | $74,269 | 2024-2033 |
| Convertible Senior Notes | $205,067 | 2026 |
| 2024 Term Loan B Facility | $364,088 | 2024-2031 |
| Interest on Convertible Senior Notes | $769 | 2024-2026 |
| Interest on 2024 Term Loan B Facility | $195,521 | 2024-2031 |
Assessing Magnite, Inc. (MGNI) Liquidity
Assessing Magnite, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as:
Current Assets: $387.2 million (cash and cash equivalents) + other current assets (not specified) / Current Liabilities (not specified).
Current Ratio = Current Assets / Current Liabilities (exact figures not available).
Quick Ratio: This ratio also cannot be precisely calculated due to unspecified current liabilities and other current assets, but it typically excludes inventory from current assets.
Working Capital Trends
Working capital as of September 30, 2024, is influenced by cash and cash equivalents of $387.2 million. The company reported a net loss of $13.6 million for the nine months ended September 30, 2024, compared to a net loss of $190.1 million for the same period in 2023, indicating improved operational cash flow.
| Period | Net Cash Provided by Operating Activities (in thousands) | Net Loss (in thousands) |
|---|---|---|
| September 30, 2024 | $120,504 | ($13,621) |
| September 30, 2023 | $125,282 | ($190,098) |
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, provides insights into the company's liquidity:
- Operating Activities: Net cash provided was $120.5 million, with significant adjustments including depreciation and amortization of $42.3 million.
- Investing Activities: Net cash used was ($40.7 million), primarily for property and equipment purchases of $29.1 million.
- Financing Activities: Net cash used was ($19.4 million), reflecting payments related to the Term Loan B Facility and taxes paid related to net share settlements.
| Cash Flow Activity | Amount (in thousands) |
|---|---|
| Net cash provided by operating activities | $120,504 |
| Net cash used in investing activities | ($40,669) |
| Net cash used in financing activities | ($19,447) |
| Change in cash and cash equivalents | $61,025 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $387.2 million in cash and cash equivalents, with an additional $169.8 million available under the 2024 Revolving Credit Facility. The existing debt includes $350.5 million under the 2024 Term Loan B Facility. The company is in compliance with its debt covenants as of this date.
Contractual obligations include:
| Obligation Type | Amount (in thousands) |
|---|---|
| Lease liabilities | $74,269 |
| Convertible Senior Notes | $205,067 |
| Interest on Convertible Senior Notes | $769 |
| 2024 Term Loan B Facility | $364,088 |
| Interest on 2024 Term Loan B Facility | $195,521 |
| Other non-cancelable obligations | $12,332 |
| Total Obligations | $855,093 |
Is Magnite, Inc. (MGNI) Overvalued or Undervalued?
Valuation Analysis
To assess whether Magnite, Inc. is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio is a significant indicator of valuation. As of September 30, 2024, the P/E ratio stands at – due to a net loss. The P/E ratio is typically not applicable for companies reporting negative earnings.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio is calculated as follows:
- Book Value per Share: Total Stockholders' Equity / Total Shares Outstanding
- Total Stockholders' Equity: $725,876,000 (as of September 30, 2024)
- Total Shares Outstanding: 141,148,000 (as of September 30, 2024)
The P/B ratio is calculated as:
P/B Ratio = Stock Price / Book Value per Share
Assuming a stock price of $5.00, the Book Value per Share is calculated as:
Book Value per Share = $725,876,000 / 141,148,000 = $5.14
Thus, the P/B Ratio is:
P/B Ratio = $5.00 / $5.14 = 0.97
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated as:
- Market Capitalization: $705,740,000 (assuming a stock price of $5.00)
- Total Debt: $569,155,000
- Cash and Cash Equivalents: $387,244,000
Using these numbers:
EV = Market Capitalization + Total Debt - Cash and Cash Equivalents
EV = $705,740,000 + $569,155,000 - $387,244,000 = $887,651,000
Adjusted EBITDA for the last twelve months is reported at $120,337,000.
Thus, the EV/EBITDA ratio is:
EV/EBITDA = $887,651,000 / $120,337,000 = 7.37
Stock Price Trends
Over the last 12 months, the stock price has experienced the following trends:
- 12-Month High: $6.75
- 12-Month Low: $2.50
- Current Price: $5.00
The stock has shown volatility with a current price reflecting a recovery from a low point earlier in the year.
Dividend Yield and Payout Ratios
As of now, the company does not pay a dividend, resulting in a dividend yield of 0%. Consequently, the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
Analyst consensus ratings indicate:
- Buy: 5 analysts
- Hold: 3 analysts
- Sell: 1 analyst
The consensus suggests a generally positive outlook among analysts, with a majority recommending a buy.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 0.97 |
| EV/EBITDA | 7.37 |
| 12-Month High | $6.75 |
| 12-Month Low | $2.50 |
| Current Price | $5.00 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 5/3/1 |
Key Risks Facing Magnite, Inc. (MGNI)
Key Risks Facing Magnite, Inc.
The financial health of Magnite, Inc. is influenced by a variety of internal and external risk factors. Understanding these risks is essential for investors looking to assess the company's future performance.
Industry Competition
The advertising technology industry is highly competitive. Magnite faces competition from established players and emerging startups. This competition can lead to pricing pressure and reduced margins. As of September 30, 2024, the company's revenue was $162.0 million, marking an 8% increase year-over-year, driven primarily by growth in connected TV (CTV) and mobile revenue.
Regulatory Changes
Changes in regulations related to data privacy and advertising standards can impact operations. For instance, the implementation of various data protection laws globally necessitates compliance costs and may limit advertising capabilities. The company is actively monitoring these developments to adapt its strategies accordingly.
Market Conditions
Economic downturns can adversely affect advertising budgets, which are often the first to be cut. In the nine months ended September 30, 2024, Magnite reported a net loss of $13.6 million, a significant improvement from a net loss of $190.1 million in the same period the previous year. However, ongoing economic uncertainties may still pose risks to revenue growth.
Operational Risks
Operational risks include challenges in maintaining and upgrading technology infrastructure. Increased costs in cloud hosting and data center operations—up $10.3 million in 2024—can impact profitability. The company reported total operating expenses of $146.9 million for the nine months ended September 30, 2024, which represents 98% of its revenue.
Financial Risks
Financial risks encompass liquidity and debt management. As of September 30, 2024, Magnite had cash and cash equivalents of $387.2 million, alongside $569.2 million in total indebtedness. The company is required to maintain a First Lien Net Leverage Ratio below 3.25:1 under its 2024 Credit Agreement, which it complied with as of the reporting date.
Strategic Risks
Strategic risks arise from the potential failure to execute growth strategies effectively. The company's shift towards CTV and mobile channels is critical for long-term success. Revenue from CTV grew by 12% and mobile by 6% in Q3 2024. Any misalignment in strategic focus could jeopardize market position and revenue growth.
Mitigation Strategies
To mitigate these risks, Magnite has implemented several strategies:
- Continuous investment in technology to enhance operational efficiency and reduce costs.
- Active engagement with regulatory bodies to ensure compliance with evolving laws.
- Diversification of revenue streams to reduce dependency on any single source or market segment.
Future Cash Requirements and Obligations
Magnite's future cash obligations include:
| Year | Lease Liabilities | Convertible Senior Notes | Term Loan B Facility | Total Obligations |
|---|---|---|---|---|
| Remaining 2024 | $6,109,000 | $0 | $910,000 | $7,019,000 |
| 2025 | $19,917,000 | $0 | $3,641,000 | $23,558,000 |
| 2026 | $15,811,000 | $205,067,000 | $3,641,000 | $224,519,000 |
| 2027 | $10,163,000 | $0 | $3,641,000 | $13,804,000 |
| 2028 | $7,853,000 | $0 | $3,641,000 | $11,494,000 |
| Thereafter | $14,416,000 | $0 | $348,614,000 | $363,030,000 |
| Total | $74,269,000 | $205,067,000 | $364,088,000 | $643,424,000 |
Understanding these risks and the associated mitigation strategies is crucial for investors evaluating Magnite's financial health and future prospects.
Future Growth Prospects for Magnite, Inc. (MGNI)
Future Growth Prospects for Magnite, Inc.
Analysis of Key Growth Drivers
The company's growth is significantly driven by innovations in Connected TV (CTV) advertising and mobile revenue. For the three months ended September 30, 2024, revenue from CTV increased by $8.5 million, or 12%, while mobile revenue grew by $3.5 million, or 6%.
For the nine months ended September 30, 2024, CTV revenue rose by $28.0 million, or 14%, with mobile revenue increasing by $12.8 million, or 8%.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the three months ended September 30, 2024, was reported at $162.0 million, an increase of 8% compared to the previous year. For the nine-month period, revenue reached $474.2 million, reflecting a 10% increase.
Adjusted EBITDA for the three months ended September 30, 2024, was $50.6 million, up 26% from the prior period, while for the nine months, it stood at $120.3 million, an increase of 19%.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has extended the useful lives of its network hardware assets from three years to five years, which is expected to reduce depreciation expense by $12.7 million for the full year ending December 31, 2024. This strategic move is aimed at optimizing cost efficiency and enhancing profitability.
Competitive Advantages That Position the Company for Growth
The firm reported a net income of $5.2 million for the three months ended September 30, 2024, compared to a net loss of $17.5 million in the same period last year. This turnaround is indicative of improved operational efficiency and market positioning.
Additionally, the company had cash and cash equivalents of $387.2 million as of September 30, 2024, providing a solid liquidity buffer to support future growth initiatives.
Revenue Breakdown by Channel
| Channel | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change % |
|---|---|---|---|
| CTV | $76,217 (47%) | $67,765 (45%) | 12% |
| Mobile | $59,835 (37%) | $56,329 (38%) | 8% |
| Desktop | $25,951 (16%) | $25,991 (17%) | -0.2% |
| Total | $162,003 (100%) | $150,085 (100%) | 8% |
Geographic Revenue Distribution
| Region | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change % |
|---|---|---|---|
| United States | $120,240 (74%) | $111,281 (74%) | 8.8% |
| International | $41,763 (26%) | $38,804 (26%) | 5.0% |
| Total | $162,003 (100%) | $150,085 (100%) | 8% |
Magnite, Inc. (MGNI) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- Magnite, Inc. (MGNI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Magnite, Inc. (MGNI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Magnite, Inc. (MGNI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.