Good evening, and welcome to the Magnite first quarter 2022 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star one on your telephone keypad. To withdraw your question, please press star two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Nick Kormeluk, Head of Investor Relations. Please go ahead, sir. Thank you, operator, and good afternoon, everyone. Welcome to Magnite's first quarter 2022 earnings conference call. As a reminder, the comparisons you will see in the 10-Q as reported include the financial results of SpotX and SpringServe for Q1 2022, but for periods prior to the acquisition dates, the results do not include SpotX or SpringServe, which were acquired on April 30, 2021 and July 1, 2021, respectively. Through the course of this call, when we refer to results and associated year-over-year comparisons with the phrase as reported, we are referring to the basis as reported in our 10-Q. When we make comments referring to pro forma comparisons, we are including SpotX and SpringServe for the relevant pre-acquisition period in order to provide a like-to-like comparison. Please keep in mind as it relates to SpotX and SpringServe acquisitions, prior quarterly results are estimated and unaudited. As a reminder, this conference call is being recorded. Joining me on the call today are Michael Barrett, CEO, and David Day, our CFO. I would like to point out that we have posted financial highlight slides on our investor relations website to accompany today's presentation. Before we get started, I will remind you that our prepared remarks and answers to questions will include information that might be considered to be forwardlooking statements including but not limited to statements concerning our anticipated financial performance and strategic objectives, including the potential impacts of macroeconomic factors on our business. These statements are not guarantees of future performance. They reflect our current views with respect to future events and are based on assumptions and estimates and subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements. A discussion of these and other risks, uncertainties and assumptions is set forth in the company's periodic reports filed with the SEC, including our first quarter 2022 quarterly report on Form 10-Q and our 10-K. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including revenue ex-TAC or less traffic acquisition costs, Adjusted EBITDA and non-GAAP income per share. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and in the financial highlights deck that is posted on our investor relations website. At times, in response to your questions, we may offer incremental metrics to provide greater insights into the dynamics of our business. Please be advised that this additional detail may be one time in nature, and we may or may not provide an update on the future of these metrics. I encourage you to visit our investor relations website to access our press release, financial highlights deck, periodic SEC reports and webcast replay of today's call to learn more about Magnite. I will now turn the call over to Michael. Michael, please go ahead. Thank you, Nick. We delivered strong Q1 results on total revenue, CTV revenue, Adjusted EBITDA and free cash flow, and we're providing a positive outlook for Q2. David will provide greater detail on Q1 results and Q2 outlook. I'd like to use my remarks today to focus on our broader strategic view of the industry. Recently, questions have been raised about the relevance of the sell-side platform and where it might sit in a world where sellers can connect directly to buyers. We've said before that we don't see these connections as a threat, and today I'm going to go further and say that we see them as an indication that the SSP is becoming more valuable than ever, and Magnite's independent omni-channel approach positions us to lead the group long term. To understand our perspective, I think it's helpful to explore the evolution of Magnite and SSPs more generally. First, I'll focus on the role of the SSP in DV+, and then I'll transition to CTV. Let's start in the early 2000s when programmatic wasn't yet a thing and display publishers made most of their money selling ad inventory directly, which they book in their primary ad server, usually Google's DFP. They'd sell everything they could direct and throw the remaining impressions, known as remnant, into the bargain bin, where dozens of ad networks jockey to get first look. It was difficult and inefficient for publishers to predict which of these networks would make them the most money. In 2007, ad network optimizers such as the Rubicon Project emerged to help publishers maximize their remnant yield. In the 2010s, as programmatic buying ramped up and DSPs gradually replaced ad networks, the ad network optimizer retained the SSP, managing yield across all indirect sources and offering an array of additional services, such as tools for private deals, ad quality, billing and reconciliation, real-time reporting, and controls. In this era, most publishers partnered with one SSP, relying on them to navigate a rapidly changing space and maximize what was quickly becoming a significant portion of their revenue. In 2015, programmatic truly kicked into high gear when publishers began calling direct and programmatic demand simultaneously, known as header bidding. The practice was difficult and manual, but it finally put programmatic on a level playing field, and publishers were leaving far less money on the table. In time, publishers learned that the more SSPs they called in their headers, the more money they made. Which was once a valued one-on-one relationship became one of many, and the SSP was pushed away from its core yield management role and towards something closer to an ad exchange. At this time, we saw an opportunity to embrace the disruption by helping to make header bidding more transparent and flexible. We co-founded Prebid.org, an open source header bidding framework, and launched Demand Manager, a suite of software that makes it easy for publishers to configure and optimize their Prebid headers. As header bidding expanded, and even as buyers dramatically limited their connections to only the most credible SSPs, it became increasingly clear to buyers that the header model was inefficient and expensive as it required them to bid against themselves for the same impression across multiple exchanges. The Trade Desk's recent announcement of OpenPath is in many ways a response to these inefficiencies by attempting to acquire supply directly from the very largest publishers. Though some publishers will add OpenPath as a demand source, we expect it will be supplementary to other sources and paths, not a replacement for them. After all, it's not just The Trade Desk or even just DSPs looking for more direct access to publishers, it's also agencies. As a result, large publishers will need to manage and optimize a growing list of newly minted direct connections with buyers, something they can't do by adding another SSP into the header. Instead, they'll need to partner with one scaled, unconflicted SSP to unify the auction, optimize yields, and deliver a full suite of seller-focused tools, including the ability to embrace and activate the shift towards seller-centric audience and identity. In many ways, this is a return to the one-on-one publisher SSP relationship that preceded header bidding. For several reasons, no platform is better positioned to lead in this role than Magnite. First, our deep expertise in Prebid, now the preeminent header bidding standard, and our work enhancing it, expanding it with Demand Manager, puts us in the unique position to be the clear leader for yield management across every type of demand, including display, audio, and video. We've only just begun to scratch the surface on maximizing the value of each impression through machine learning and AI. Second, as the industry moves away from the third-party cookie and other buy-side identifiers towards solutions that are seller-centric, our robust audience technologies, bolstered by our recent acquisitions of Nth Party and Carbon, and our deal management tools, which are among the best in the business, will enable publishers to activate and monetize their audiences across every media type with an eye towards privacy and security. Third, our relationships with brands and agencies are strong and continuously growing, which benefits our seller clients by bringing them new and unique pools of demand. Our recently announced preferred partnership with Group M is a great example of this. Lastly, Magnite's omni-channel footprint enables us to meet our clients' needs across a wider range of channels and formats, including CTV, which other SSPs talk about doing, but no independent SSP can match our full stack of capabilities in this area. That's a good transition to CTV, which is fundamentally different from DV+ and how it operates. Because CTV is a world in which there's a finite amount of available inventory and viewer experience takes precedent over CPMs, there isn't the same need for header bidding. Direct selling plays a dominant role in CTV and probably always will. Even if the means of executing these direct sales is increasingly programmatic, in many cases, there's no auction at all. For this reason, our clients prefer to work primarily with Magnite, and they look to us to provide far more than the highest bid. We have a track record of building custom software and unique features for a broad range of CTV industry players. These range from device manufacturers and OEMs, such as LG, Vizio, Samsung, and Roku, to virtual MVPDs, such as Fubo, Hulu, Sling, and DirecTV, to digital first and free ad-supported streaming TV services like Pluto, Tubi, and Crackle, and broadcasters and programmers such as Disney, Discovery, Fox, and A&E. For many of these companies, we're not just helping them sell or serve the ads, but more importantly, to manage a highly complex series of decisions that balance revenue, targeting, and enforcement of business rules while fiercely guarding viewer experience and publisher data. Moreover, by integrating our proprietary ad service, SpringServe, we offer CTV sellers a holistic yield management solution that drives value across their entire ad business by dynamically allocating between programmatic and non-programmatic inventory. We are constantly innovating to solve the evolving needs of CTV sellers. For example, through SpringServe's newly announced BingeWatcher product, a tool set to rapidly review creatives and improve the user experience. We see our ability to address the nuanced needs of CTV clients through advanced software solutions as a formidable barrier to entry for our competitors. In the final analysis at Magnite, we believe strongly in two key principles. One, all media display CTV, audio, you name it, will be bought, sold, or executed programmatically. Two, sellers will always need a scaled and unconflicted agent to help them make the most of every programmatic opportunity. A bet on Magnite is a bet on these principles. With that, I will hand the call over to David, who will provide additional detail regarding our financial performance and expectations. David? Thanks, Michael. Despite macro headwinds, we are pleased that Q1 revenue came in consistent with our guide. Adjusted EBITDA came in above our implied guidance, which resulted in strong cash flow and non-GAAP earnings per share. We also see this translating into solid guidance for Q2 that I'll cover after I discuss the first quarter results. Total revenue for Q1 was $118.1 million. Revenue ex-TAC was $107.1 million, up 79% from Q1 2021 on an as-reported basis, and up 15% on a pro forma basis. CTV revenue ex-TAC was $42.3 million in Q1 2022, up from $12 million, or 253% from last year on an as-reported basis and up 27% on a pro forma basis. Mobile revenue ex-TAC grew 12%, and desktop revenue ex-TAC grew 3% year-over-year, both on a pro forma basis. Our revenue ex-TAC mix for Q1 2022 was 40% CTV, 35% mobile, and 25% desktop. Operating expenses, which in our case includes cost of revenue for the first quarter, were $157.9 million versus $74.5 million in the same period a year ago. Increases were primarily driven by the acquisition of SpotX, including the amortization of acquired intangibles and by increase in personnel-related expenses. Adjusted EBITDA operating expenses, which represents the difference between revenue ex-TAC and adjusted EBITDA, was $78.2 million for Q1, an increase of $3.7 million sequentially, and up from $50 million in Q1 2021, also driven primarily by the acquisition of SpotX in a year-over-year comparison. Costs for the first quarter were lower than expected, primarily driven by slower hiring, consistent with the overall labor market, lower technology and cloud costs, and lower office and travel expenses in the quarter. Net loss was $44.6 million in the first quarter of 2022, as compared to a net loss of $12.9 million in the first quarter of 2021. The increase in net loss was primarily attributable to an increase in amortization of acquired intangibles related to the SpotX acquisition, which had no cash impact. Q1 2022 adjusted EBITDA was $28.8 million, an increase of 208% versus prior year, resulting in a margin of 27% as compared to adjusted EBITDA of $9.4 million, or margin of 16% in the first quarter of 2021. This was driven by continued organic revenue growth and by the acquisition of SpotX. Note that we calculate our adjusted EBITDA margin as a percentage of revenue ex-TAC. GAAP loss per share was $0.34 for the first quarter of 2022 compared to GAAP loss per share of $0.11 in the same period in 2021. non-GAAP earnings per share in the first quarter of 2022 was $0.08, which was up compared to non-GAAP earnings per share of $0.03 reported for the same period in 2021. There were 132.2 million weighted average basic and diluted shares outstanding for the first quarter of 2022. Fully diluted shares utilized for non-GAAP earnings per share were 143.7 million for the first quarter of 2022. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs, were $8.7 million for the first quarter of 2022, in line with our expectations. Operating cash flow was $20.1 million in the quarter, which we define as Adjusted EBITDA plus CapEx. Our interest expense for Q1 2022 was $7.1 million, of which roughly $5.7 million was cash. At the end of Q1, we had $204.6 million in cash on the balance sheet. For Q1, our cash outflows included $21 million for our acquisition of Carbon. Our priorities for the deployment of capital remain balanced and have not changed. Regarding M&A opportunities, we believe that we have the core assets that we need at this point in time, although we will always consider tuck-ins or acqui-hires that would expand our talent pool or accelerate our product features and functionality, such as our recent acquisitions of Nth Party and Carbon. Regarding debt, we continue to reduce our net leverage ratio, which was approximately 3.1x at the end of Q1 as compared to 6.2x at the time we closed SpotX at the end of April last year. This represents further progress towards our ultimate goal of 2x or less. As it relates to our $50 million share buyback program announced in December, we repurchased 931,000 shares for $12 million in Q1, leaving $31.9 million in the program at the end of the quarter. In addition, for our regular RSU vesting during the quarter, we utilized the withhold-to-cover method to cover employee taxes, withholding 315,000 shares for $4 million. As a result, share dilution was reduced by about 1.2 million shares during the quarter. We expect to continue a balanced approach to reducing leverage and share repurchases throughout the remainder of 2022. I will now share our future expectations. We'd like to reiterate that we expect revenue ex-TAC for the full year 2022 to be well above $500 million. We expect revenue ex-TAC for the second quarter to be in the range of $123 million-$127 million. We expect revenue ex-TAC attributable to CTV for the second quarter to be in the range of $51 million-$53 million. We expect adjusted EBITDA operating expenses in Q2 to be $83 million-$85 million, implying an adjusted EBITDA margin of 33% at the midpoint. The sequential increase in Adjusted EBITDA operating expenses is primarily driven by an increase in technology infrastructure costs, hiring a full quarter impact of our return to office, and the return of T&E and marketing events. For the second half of 2022, we expect quarterly Adjusted EBITDA operating expenses to increase roughly $3 million-$4 million each quarter. These increases are primarily the result of return to office costs and increased headcount and other technology operating costs to support our growing business. We continue to expect that CapEx for 2022 will be between $40 million-$45 million. For 2022, we continue to expect that we will generate over $100 million in free cash flow. We define free cash flow as operating cash flow less cash interest payments. We continue to target long-term annual revenue ex-TAC growth of 25% and Adjusted EBITDA margins of 35%-40%. We're very pleased with our results for the first quarter of 2022 and are optimistic about our growth trajectory, especially in the back half of the year. We have a very attractive financial model and expect increasing flow through over time, from revenue growth to Adjusted EBITDA margin expansion to free cash flow. With that, let's open the line for Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press star one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star two. At this time, we will pause momentarily to assemble our roster. The first question comes from the line of Laura Martin with Needham. Please go ahead. Hi there. Let's start with CTV. Do you feel that Netflix adding an ad tier and Disney earlier than that adding an ad tier is good for the ecosystem's cost per thousand or bad? Like, and I'm looking sort of short-term, long-term. Could you speak to these big streamers adding ad tiers in the next 12 months? Yeah. Hey, Laura, it's Michael. Hi. I'll jump on that, and David can pile on if you'd like. I see it as nothing but good. You know how the dollars are just starting to shift from linear into CTV, and it just will be an inexorable march as more and more consumers decide to consume their entertainment, news, sports in that manner. I think that you know, they're going to be measured in the ad load. Even though there's scarcity in the market today, it's not exactly inflating prices. I think what lists the CPMs now is you know, the advanced targeting that you're able to do versus what linear always had. I think, over time, even though it's more inventory, I don't see it having a dramatic impact on CPMs, because of adding in a more supply into the marketplace. David, anything from you? Nope. Got it covered. Nope. Okay. Excellent. That's super helpful. Secondly, you said in your prepared comments, Michael, that you thought everything was gonna be programmatic, and the second thing you said was sellers will always need an independent sell-side platform. I just wanted to push on that a little bit because we have NBC having a captive SSP in FreeWheel, and now we have Xandr being bought by Microsoft. I do get questions from investors about why doesn't Disney just buy an SSP and do it itself. When you said the second thing you see is that these sellers will have to have an independent platform, is that really being borne out by the largest sellers, do you think? Well, I think that the meaning there, Laura, was that, you know, the vast majority of publishers don't have the means and/or ability to land a major tech player to bring in-house. There are obviously always examples of folks that do it. Of course, you know, the pendulum swings both ways. Microsoft picked up Xandr from AT&T, who tried to do it in-house, and that didn't work out so great. You know, Fox had Unruly, and they've shed that, and Altice has been rumored to be looking to move Teads. I think these things are somewhat cyclical. Our meaning is that, you know, I think folks have learned when they put all their eggs in one basket in the DV+ world, as it relates to Google, little by little over the course of 15 years, they learned that it wasn't the most efficient way, and they broke the system by doing Prebid and bringing header bidding into the world. I think that it's not lost on folks that, if your partner's independent, isn't in conflict with you, doesn't own inventory, doesn't sell ads against other inventory, then that's inherently transparent and above board. I think that our meaning of that is that the vast majority of publishers need that type of a profile of a company. Super helpful. Thanks very much. Thanks, Laura. Thank you. Our next question is from the line of Jason Kreyer with Craig-Hallum. Please go ahead. All right. Thanks for taking questions, guys. Kind of an inline Q1 from the top-line perspective, but when we look at the Q2 guide, that looks a lot more robust, particularly on the CTV side. Just curious if maybe you can parse out the puts and takes on what you saw last quarter versus how things are progressing kind of a month into Q2 here. Yeah. I'll take it at first and then David can help as well. Yeah. Jason, I think that you know, look, we saw the same impact that others did in the face of the you know, crisis in the Ukraine. You know, our CPMs across the board particularly in EMEA you know, they plunged dramatically. A lot of big CPG multinational corporations kind of had suspended spend. You know, it definitely had headwind impacts on the Q1 results and we see it continuing to Q2. But what changes about Q2? Well, you know, obviously you know, we think that there's gonna be some adding of political that's gonna kick in for midterms. We also think that we've seen some strengthening in some verticals that hadn't been back to normal since the pandemic. We also see some, you know, strength in our managed service business on the CTV side with the return of some of the important ad verticals. I wouldn't say 100% return by any stretch, but strengthening. We feel good about, you know, Q2 uptick over Q1. I don't know, David, if you have any more specificity to add. Yeah. No, I think that's right. I think, you know, I would still say cautiously optimistic in Q2 just because there's so much going on. Certainly, as Michael mentioned, as we especially get into the latter half of the year with the political with our GroupM SPO deal, you know, we're continuing to, you know, in the upfront process, agencies are really going to be pushing for greater amounts to run through programmatic. The feedback that we're getting from agencies is some optimism in the second half with spending and some committed budgets. David, wondering if maybe you can just quantify that impact that, you know, Russia or EMEA might have had in Q1 or your Q2 guide? Yeah. A couple of factors that we're observing. One is, you know, we had a small number of Russian publishers who we no longer have on the exchange. That had a smaller impact. We've also seen some softening of CPMs, particularly in our DV+ business in EMEA, and we think that comes from, I suppose, some general skittishness around the Ukraine situation. A lot of advertisers don't like to be advertising around these kinds of events. Even though there's a ton more inventory, there isn't as much advertising demand. A strong dollar. We've had we normally don't see significant impacts from the normal FX volatility, but there's been a very significant strengthening in the dollar. We've seen, and so that impacts those CPMs as well. Perfect. Just a follow-up from me. Any updates on the relationship with Disney? Kinda looking at this two ways. Just first, any indications in your potential involvement with an ad-supported Disney+? Then second, you know, I know we're starting to approach the term on that 18-month agreement from a year ago. Just curious if you have any thoughts on where that engagement goes from here. Yeah, Jason, the relationship remains incredibly strong. The, you know, renewal is coming up as you pointed out, but we don't perceive any material change there. As for Disney+, I think it's, you know, it validates the model, right, the idea of having an ad-supported tier. Although it's obviously Disney's decision on how they go to market with Disney+ and the other streaming assets, our understanding is it's all gonna be available through DV+, and obviously we power a nice chunk of that. Therefore, we see it as nothing but a positive opportunity. Perfect. Thank you. Thank you. Our next question comes from the line of Shyam Patil with Susquehanna Financial Group. Please go ahead. Hey, guys. Nice quarter and outlook. I had a couple of questions. Michael, when you were talking about the ecosystem in your prepared remarks, you talked about, you know, independent SSPs becoming more valuable. I know you talked about that a little bit in the first question. Can you just talk a little bit more about, you know, what kind of conversations you're having now with your larger publisher partners, you know, given OpenPath? And what do you foresee in terms of economics and market share for Magnite going forward, kind of, you know, related to OpenPath? Second question, in terms of CTV, how are you guys thinking about the pro forma growth there, you know, throughout the year? I know you're cautiously optimistic, lot of moving parts. How are you guys just thinking about the pro forma growth for CTV throughout the year? You know, generally speaking at a high level, you know, what do you think is the right kind of baseline as we kind of think about this business over the next few years? I know you said, you know, at least market growth rates, but, you know, is it? You know, are you still thinking like 30% plus, you know, 40, 50%? Just how are you thinking about this growth opportunity? Thank you. Yeah. Thanks, Shyam. I'll let David take the pro forma growth for CTV. You know, as it relates to OpenPath, you know, I think it's in its nascent formation. We haven't heard much from publishers other than the folks that were listed that were gonna take part in the beta. You know, I think that, as we pointed in our remarks, you know, others will seek direct paths, particularly agencies. I think agencies feel that part of their value to their advertising clients is their relationship with publishers. The challenge is a lot of them don't have the technology to work directly with publishers, and that's why I think you see deals like the GroupM deal that we announced and the OMD deal we talked about in IPG and Havas, working with a technology partner to try to work their way out of like a header bidding open auction and more of a structured, you know, relationship with the publisher is a trend that's only gonna continue. It adds a degree of complexity for our publishers, and that's why we think that our thesis is that an SSP will never be more valuable because they are the ones that can help manage this complexity and manage the yield of the complexity. The other thing that we're seeing in terms of conversations with publishers is a growing appetite for, you know, publisher-centered first-party data. You know, to be, you know, completely candid, as long as the third-party cookie exists, it's going to be hard to make that like revolutionary. It might be evolutionary. Once the cookie is deprecated, I think you're going to see a big rush to first-party data being readily used by buyers, that's provided by the sell side. The tools that we've acquired are gonna play an integral role in that. Quite excited about those developments. David, maybe you wanna talk about the pro forma growth CTV expectations. Yeah. We grew pro forma CTV in Q1 at 27%. As we mentioned, especially in the second half of this year, we have some really significant tailwinds. You know, we see you know upside certainly to those growth rates. We've always talked about the CTV business being you know very volatile. It's nascent. That will continue. We do believe that over time you know our growth rates should definitely you know exceed those of market, which I think you know folks handicap in the low 30% range right now. You know, we should take our share and then some as the market continues. Thank you, guys. Thank you. Our next question comes from the line of Tim Nollen with Macquarie. Please go ahead. Thanks very much. I'd like to pick up on the Q2 guidance again, please. You know, the last couple of quarters you've talked about a few supply chain issues in the auto business. It sounds like that seems to have moved past you now, and in fact seems to be something positive. If there's anything you could give us a bit more in terms of that or any other sectors that are affecting your Q2 number, because on a very difficult comparison actually in Q2, I think it's very nice to see a 25% growth forecast for the top line. Relatedly, you know, the NewFronts and the Upfronts are upon us now. I just wonder if there's any particular role you could point to that you're playing in that process, and if there's any news flow to look forward to as this upfront season is upon us, or not? Thanks. Yeah, I'll start with the Q. Yeah. Oh, go ahead. No, you- Okay. Yeah, I think on Q2, you know, we're still seeing. I don't know that we're really past, you know, the issues that we talked about. I think supply chain, and particularly auto, you know, remains a challenge. Not sure that that gets resolved, you know, fully this year. You know, we see continued headwinds there. You know, the Ukraine situation I think still has that little bit of a dampening effect, particularly in our EMEA business. You know, we've factored that into our guide. I think where we've seen improvement, I think travel in particular has had some rebound, still not fully back to, you know, pre-COVID levels by any margin. You know, we've seen significant improvement there and have expectations for growth there. Yeah. Tim, I'll comment on the new upfront. Yeah, so they've all just kicked into gear. I would say that the biggest difference this year from in previous years is the, you know, kind of direct involvement of players like Magnite in the conversation as it relates to chunks of the upfronts being allocated programmatically. I think if you look at the GroupM premium marketplace and their partnership with us there, I think we certainly hope that will have an impact in terms of moving dollars over. Whereas before, you know, the upfronts you would conclude pretty much as historically they have. Then, you know, programmatic would probably play much more in the spot world. You know, there's many, many more conversations regarding having programmatic front and center in the actual upfronts itself, the guaranteed world. It's a nice development, you know, early stage, and not sure that there'll be a milestone announcement or event, but hopefully it would play through in our back half numbers as David kind of alluded to in his prepared remarks. If I could have a quick follow-up on that, please, Michael. Does that mean more direct deals now being done with a programmatic component, which is just naturally good for your business? Would there be as opposed to, I guess, it kind of falling to remnant spot inventory kind of over time is kind of what you were saying? Just to make sure I understand that. Yeah. That's correct. The buyers have always wanted this, right? It was a change for, you know, sellers, who, you know, had, you know, their linear strategies with broadcaster programmers. What you're seeing now is that, much more of a kind of a mutual agreement at the table, at the bargaining table during the upfront about a chunk of the dollars being allocated programmatically as part of the guarantee. You know, if you're an agency and you're guaranteeing one of the broadcasters $50 million, you in the past wanted some of that to go programmatically, it was never part of the deal. You're seeing more and more of the agreement that we agree that blank is going to be served programmatically. That's the maturation that we thought was going to happen in the business. It's just that I think, like, again, with deals like the GroupM deal, that shows you how vested they are in wanting to transact business-wise this way. Right. That would presumably be good news. Any news that we do get, you know, in the next few weeks or whatever, would presumably be good across the next several quarters then, because this would be deals being struck across the upcoming TV seasons, right? Over the next, you know, three, four quarters. That's exactly right. Yep. Yep. Okay. Thanks. Thank you. Our next question comes from the line of Matthew Swanson with RBC Capital Markets. Please go ahead. All right. Thank you so much for taking my question. Michael, if I could ask my quarterly DV+ question. I know last quarter you didn't really want to get into the specifics of the investments, but could you maybe just comment for us how you feel about, you know, the progress you're making on those investments that you've done or maybe what sort of returns you're starting to see so far? Yeah, Matt, great question. You know, I think that, you know, as we've talked about this in the past, you know, DV+ in a world where you're transacting, you know, hundreds of millions of auctions a day, every little bit tweak here, tweak there, results in improvement. You know, if you look at the laundry list, it's, you know, it numbers into the hundreds of things that you can constantly be doing. Some of it is fixing things, other is innovating on things. You know, speed of auction, you know, your hardware settings, all the way to making sure that the plumbing is clean and the connections are good with buyers and the sellers. You know, it's an ongoing effort. You know, I wish there was a seminal product or project that we could point to that once it's completed, it unlocks the floodgates, but it's a constant area of maintenance for us, innovation for us, and admittedly an area that was under-maintained or under-innovated over the years as we, you know, acquire the CTV assets. We have some catch-up to do. I'm pleased with the focus on it. I think our results can get better and improve over time. I think that, you know, we've analyzed where we can gain improvement, where our highest return for investment will be and, you know, are well down the path in those areas. That's super helpful. This is probably a little bit David, a little bit Michael. When we're thinking about the full year guide, you mentioned Q2 starting to see some political. Obviously, the CTV environment's changed so much since the last midterm cycle, and it feels to me like midterms might, you know, be a little bit better position than general election for you because the emphasis on targeting, right? Because they're all, you know, regionalized elections. Can you just talk a little bit maybe about how you're thinking about the, political spend this year and whether or not you do think there could be, you know, a bigger shift towards CTV? Yeah. I think we feel as though if and when we see the impact of political spend for the midterms, it will be predominantly through CTV. I think there'll be some online video bought as well, but I think CTV will be, you know, a primary focus. You're right, it'll be highly directed in those battleground states. You probably saw our release with that. The folks from Scripps who are, you know, bundling inventory from other non-Scripps stations to create a bigger pool of available inventory in those markets, and they're working exclusively with us on that. You know, of course, we have our direct team in the middle markets in those states, working with, you know, the top agencies that are specialized in spend. You know, our best guess is that this midterm probably will behave more like a general election like two years ago than it will like a traditional midterm, especially as it relates to CTV. Yeah, we're cautiously optimistic that we're gonna see some flow-through in Q2 and certainly in the back half of the year. I don't know, Dave, if you have any other thoughts or specifics. I think you covered it. I think, you know, there'll be some flow-through in Q2. I don't. You know, it won't be super significant. I think the vast majority will be Q3 and Q4. Yeah, as far as the volume of spend, as Michael mentioned, you know, maybe similar to presidential and with this recently leaked news on Roe v. Wade, that may have supercharged that spend as well. Time will tell. All right, guys. That's super helpful. Thanks for the time. Thank you. Our next question comes from the line of Vasily Karasyov with Cannonball Research. Please go ahead. Thank you. Good afternoon. I wanted to ask you a question about political. My question is this: if you look at broadcasting companies, they in years when they have strong political spending, the non-political advertising revenue growth is usually depressed from what they call displacement, right? Because political campaigns payers are not price sensitive, they just outbid non-political advertisers. Given that you as an SSP are probably more on the supply constraint side, are you seeing anything like that? Is this a scenario that you're thinking about that it may not be 100% additive when all the expected political comes in? I know we are in uncharted waters there, but would appreciate your thoughts here. Yeah, Vasily. It's a very keen observation, and there's far less supply constraint in online video. I think what you see in online video is that there's just, you know, there's always a lot of inventory, and therefore there's a lot less displacement. In CTV, I think you do see some displacement, but I think that any displacement is more than made up for, as you pointed out. There's not a lot of price elasticity as it relates to CPMs, and you're seeing higher CPMs. Although, you know, even though inventory, generally speaking, is very tight in the CTV world, it's not always all sold. There's different day parts and things like that where political may be less sensitive about running it. I think that, all in all, we have seen historically that even if there's displacement, it's a net positive because of the rates, as it relates to, you know, Magnite. If just a follow-up. If we look at the previous political cycle, did you see any displacement at all? I'm just curious. Yeah. I mean, I think that generally speaking, especially if you get into Q4, you know, so right at the tail end of the election cycle, those are pretty tight windows anyway. There were certainly some displacement there. But as I said before, it was still a good guide because of the rates that displaced these buyers were, you know, significantly higher than market. Right. Well, thank you very much. Thanks. Thank you. Our next question comes from the line of Nicholas Zangler with Stephens. Please go ahead. Yep. Hey, guys. You know, thinking about these new AVOD services, you touched on Disney+, but you know, with regard to Netflix, maybe Apple TV+, just in general, if you could comment on how do you think about your ability to win new business? For these large streaming services, how long do you suspect it would take to go from having absolutely nothing to something with regard to building an ad business? Yeah. Hey, Nick, I'll jump on that one. Yeah, it's a very fair question. Then, of course, you start to ask, are you launching in the US, are you launching in foreign countries, you know, if you've never had an ad business before? It's hard to predict how long it would take, especially if you're starting from scratch. One would say it's, you know, it's obviously a multi-quarter journey, given the fact that you haven't even, you know, pitched, you know, your customer base on this tier, tried to figure out what the cannibalization might be, et cetera. I think that there's a lot more that goes into it, obviously, than just ad technology. As it does relate to ad technology, I think we are extraordinarily well-positioned, as we talk about all the assets that we have, and not just doing the traditional work of bringing demand like an SSP to fill these ad slots, but, you know, having the server to actually serve them. There's one thing everyone needs, and it doesn't matter if you're a legacy broadcaster or, you know, a new programmer or platform, you need an ad server, right? You need something that can serve ads if you're gonna get into the ad business. At the very minimum, we have, you know, the leading CTV ad server, and especially if you don't have a legacy business, there's not really a need for a server that was built in the online video world that, you know, meets the conditions and rules that broadcasters needed to, you know, thread the needle between linear and streamed. I think we feel really good about the company that we've built. Obviously, every day, we're helping these new services get off the ground and sell ads, and some of them have a direct sales team where the rules of engagement are quite structured, and others don't have any direct sellers, and they rely upon us for the vast majority of their demand. I just think it's a validation for the company we've built. It's a validation for the consumer in terms of a choice, right? I think, you know, we really enjoy the position we have in the marketplace right now. I agree. It's good to hear. Then just one more for me. You know, you briefly touched on it, but any update just, you know, with regard to the construction of these seller-defined audiences, maybe specifically within CTV, you know, utilizing that first-party data from publishers? You know, I know you guys keep making acquisitions here, for sure. Are you monetizing audience segmentation and creation at all yet? Maybe you could just comment, you know, on the overall roadmap within seller-defined audiences. Thanks. Early days, right? As I said before, to one of the other questions, as long as the third-party cookie world exists, it's hard to generate enough urgency on the publisher side, because there's a need that necessarily doesn't match what buyers want. The minute third-party cookies go away, buyers are desperately gonna need these targeting parameters. That's where the publisher gets in. What we're doing is building for that future. We know it's coming. We know that it will happen. It will be multiple solutions, but we feel very good about the assets that we have and the work that we're doing right now on those assets. We do a ton of data overlays in CTV right now, some of it first party, a lot of it third party. I would say CTV is even more advanced than DV+ as it relates to data-oriented packages. You know, quite easier, frankly, and probably more valued audiences just given the logged in nature of the user, right? Many open web sites and apps don't have a logged in component, and it makes you know, profiling an audience a little bit more difficult than the logged in user approach with CTV. Yeah, I think in CTV, you're gonna find that that's gonna quickly move to the front and center of buyer needs because of the you know, displacement of the cookie. Great. Appreciate it, guys. Thanks. Good luck. Thanks. Thank you. Our next question is from the line of Matthew Thornton with Truist Securities. Please go ahead. Hey, good afternoon, guys. Maybe two if I could. First on, excuse me, The Trade Desk moving away from Google Open bidding. I know it's still fairly early, but I'm curious what you are seeing in terms of impact. I think the thinking had been from you and some of your peers that it could be neutral to positive. I'm kinda curious what the early read is there. Then just secondly, any update on the merged platform taking kind of the best of Telaria, the best of SpotX. I think you've talked about having that out fully in market. I think by Q1 2023. I'm just curious how that's progressing and what might happen once that's fully launched. Is there any benefits from a share gain standpoint, from a cost efficiency standpoint? Just any color there would be helpful. Thanks, guys. Yeah. Hey, Matt. So as far as OB is concerned, you know, The Trade Desk definitely has moved away from it. We can see the, you know, flow of money from The Trade Desk through OB has, you know, kinda gone down to a trickle. The reality is, Google, The Trade Desk had moved away from open bidding incrementally over the last year and a half. You know, they came to all the SSPs and they went to publishers, and they basically said, "Hey, you know, we're buying your inventories through multiple paths. We've taken a look at it, and the most efficient path is Prebid, or the most efficient path is Amazon." OB was not a huge contributor for Magnite from a Trade Desk spend standpoint. It's kinda hard to track it as to whether or not it's flown through Prebid. It's also too early to see if the you know hundreds of SSPs that were in the OB program if that shift of share to the you know validated SSPs of which Magnite's one of them for The Trade Desk that hasn't resulted in any huge whoosh right now. I do think again very early days and you know we could be seeing it just in Prebid and not recognizing the specific dollars. As far as the platform consolidation is concerned it continues at pace. That timing is around right. As you know, it's all not just dependent upon us, it's when the publishers are gonna be able to allocate the resources to move to the new platform. We've always felt as though Q4, any Q3 will be a cutoff for any migrations. We'll be migrating clients into 2023 Q1 for sure. I you know to point to direct revenue boost kind of difficult. We'll probably be able to educate you and others more as the platform comes online. But I think if you build a next-gen platform that has all the bells and whistles of all that everyone's asked for, it just leads to more revenue opportunities in terms of access to inventory. We feel pretty good about the path around there. Yeah. From a cost efficiency perspective, you'll see that primarily in a more efficient, you know, technology infrastructure cost base. Okay. Gotcha. That's helpful. Maybe one quick follow-up, this has been, I think, touched on a couple times, but I think that my question is, I think when you think about some of the opportunities or changes out there, so, you know, Disney launching an AVOD in the U.S. by calendar fourth quarter or the Warner Bros. Discovery merger now being done. When you think about your full year commentary and guidance, and we don't need to get into specifics, but I guess, does that contemplate or take anything into account in terms of some of these incremental perhaps opportunities out there? Or would you landing on one of these or an increased role with one of these be incremental to kinda what you've talked about? Thanks, guys. You know, I think, Matt, you know, whenever you look at new business opportunities, you kinda bake it into a general forecast. You know, a lot of our business growth every year, organic is same-store sales, but we always rely upon, you know, kind of an unknown number out there that will come from new client relationships. So I think by and large, it's already baked into the forecast and that, and these things tend to start off as, you know, walk before you run types of relationships. You know, I think that I wouldn't necessarily say that, you know, a one particular client out there might, you know, result in, you know, dramatically increased revenue for Magnite. I don't know, David, if you have a different view on that. No, I think that's right. I mean, it certainly would add to our ability to take, you know, market share, but I think you've covered it. Okay. Awesome. Thanks, Matt. Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Michael Barrett, President and CEO, for any closing remarks. Thank you, Ryan. I'd like to thank every Magnite team member for their hard work and efforts. We have one of the best teams in the industry, and their expertise and unmatched customer focus has yielded a very differentiated leading company with comprehensive customer solutions. We continue to see and invest in clear areas for growth in CTV, TV plus, and audience and identity. We've established ourselves as a critical long-term partner for many of our publishers and buyers, especially in CTV, and believe much of our future success lies in both our execution and in winning new business. We've never been more excited about the opportunity we have ahead of us. As we look at the back half of the year, we feel strongly that our selection by GroupM in CTV, Disney+ recently announcing an ad-supported alternative, return of verticals such as travel and political spend, are tangible examples of growth drivers for the quarters ahead. Almost all CTV streaming services have either launched or announced AVOD offerings, and even the largest subscription CTV streaming service has recently moved from a position of never to actively exploring it. Thank you for joining us for our Q1 results call. We look forward to talking to many of you at virtual investor meetings hosted by SIG tomorrow, conferences by Needham & Company on May seventeenth, and Craig-Hallum on June first. Have a great evening. Thank you. Everyone else has left the call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.