By Karsten Weide, Chief Analyst
Executive Summary
Magnite reported their second quarter 2025 earnings on Tuesday, August 6. After a few quarters marked by integration headwinds and uneven income, one of the world’s largest independent sell-side advertising platforms returned to GAAP profitability and delivered steady gains across its core product segments. The results point to a company that is executing on its long-term bet on connected TV (CTV), disciplined in its operations, and increasingly differentiated from peers like PubMatic – though challenges remain in scaling internationally and sustaining growth in a competitive SSP landscape.
The headline for Q2 was Magnite’s ongoing push toward sustained profitability. Until late 2023, the company had rarely posted a profit. Since then, the numbers suggest leadership has made profitability a clear priority. Results have been mixed – some quarters delivered strong gains, others only modest profits, and a few still slipped into the red. But in the most recent quarter, Magnite returned to solidly positive territory.
Gross revenue rose 6% year-over-year to $173 million, while contribution ex-TAC – the company’s preferred measure excluding traffic acquisition costs – was up 10% to $162 million. Adjusted EBITDA climbed 22% to $54.4 million, pushing margins to 34%. Both product segments – CTV and DV+ (desktop and mobile display and video outside of CTV) – grew in tandem, showing that Magnite’s portfolio is now more balanced than in prior quarters where performance was uneven.
Management credited this strength to continued momentum with streaming partners like Netflix, Disney, and Warner Bros. Discovery, as well as adoption of its SpringServe ad server and direct buying platform ClearLine. Efficiency gains from unified auctions and a leaner cost structure amplified the revenue impact, turning top-line growth into stronger margins.
Revenue: Modest Growth
At first glance, 6% revenue growth may not seem remarkable in an industry that once took double-digit expansion for granted. But in the context of a slowing SSP market, it’s meaningful. PubMatic, for example, averaged about 4% quarterly growth between Q1 2024 and Q1 2025, and many smaller SSPs have struggled to grow. Magnite’s contribution ex-TAC gains also outpaced its own gross revenue growth, indicating more efficient traffic acquisition and healthier underlying business mechanics.
This was the third consecutive quarter of revenue acceleration and improved profitability – a trend that suggests integration pains from acquisitions like SpotX are in the rearview mirror. The steady trajectory contrasts with the lumpiness seen in earlier years and helps support a more predictable narrative for investors.
Revenue by Product Segment:
CTV Gains, DV+ Holds Strong
Magnite divides its business into CTV and DV+. In Q2 2025, CTV generated $71.5 million in contribution ex-TAC, or 44% of the total, up 14% year-over-year. DV+ brought in $90.4 million, or 56% of the total, continuing its 20-quarter streak of growth with a 7% increase.
This balance is important. In the earlier stages of Magnite’s pivot to CTV, gains in that segment often came at the expense of DV+, which lagged behind. Now, both are growing in tandem. CTV remains the strategic centerpiece – Magnite’s partnerships and direct integrations with major streaming publishers position it well as ad-supported streaming continues to take share from linear TV.
There is, however, a fly in the ointment: CTV growth has slowed sharply, dropping from an average of 23% per quarter in 2024 to 15% in Q1 2025 and just 14% in Q2. Like The Trade Desk, Magnite is clearly feeling pressure from Amazon’s aggressive push into the space. Fortunately, the mobile business – and even desktop to a degree – have helped offset the slowdown, supporting overall sustained growth.
Revenue by Geography: Still U.S.-Heavy
Magnite’s revenue remains concentrated in the U.S., which delivered $132 million in Q2 (76% of gross revenue). International markets contributed $41 million (24%). This split has been consistent for several quarters.
While the U.S. provides stability and strong CTV adoption, it also limits exposure to higher-growth international markets. PubMatic, by comparison, derives roughly 40% of revenue abroad, giving it more diversification, insulating it against economic shocks in any one region. Magnite has made inroads internationally – its work with Warner Bros. Discovery and Amazon Fire TV in EMEA is notable – but scaling those partnerships without adding significant operational complexity will be a key test.
Operating Income:
Turning Profitability Into a Pattern
Magnite’s $22 million in income from operations represents a net margin of about 14%, a dramatic improvement from the prior year’s 7%. Adjusted EBITDA of $54 million (34% margin) and operating cash flow of $34 million underscore how revenue gains are translating into bottom-line strength.
Compared to a year ago, this quarter shows the payoff from disciplined cost management and platform efficiency improvements – particularly in CTV, where cost per ad request has come down sharply over the past year.
Performance Versus Guidance and Expectations
Magnite’s Q2 revenue and profitability exceeded its own guidance and Wall Street’s expectations. Analysts had forecast lower top-line and margin numbers, but stronger-than-expected CTV contribution and healthy DV+ growth lifted results above consensus. The company’s ability to beat expectations for multiple consecutive quarters helps counter lingering skepticism about its growth durability post-acquisitions.
Stock Price Reaction
The market’s reaction was mixed. Magnite’s stock fell about 4% in trading the day after the earnings release but regained momentum to end up exactly where it was the day before the earnings report: at $22.40. This reflects a broader investor pattern with Magnite: ongoing concerns about scale relative to larger platforms and about the competitive intensity in CTV monetization, tempered by enthusiasm on beats.
Cash Reserves: Room to Invest
Magnite ended the quarter with $497 million in cash and equivalents, slightly up from $483 million in Q4 2024. This strong liquidity position gives it flexibility to invest in product development – especially in AI-driven tools for curation and optimization – pursue strategic acquisitions, and expand internationally without straining the balance sheet.
Looking Ahead: Opportunities and Risks
Among the key forward-looking announcements was continued expansion of the ClearLine platform for direct buying and deeper integration of SpringServe into publisher workflows. Management reaffirmed its focus on premium CTV supply, live sports, and international expansion as growth levers.
Strengths: Magnite’s leadership in programmatic CTV, its balanced growth across CTV and DV+, and its operational efficiency are strong competitive assets. Partnerships with marquee streaming publishers give it credibility and scale in premium inventory.
Weaknesses: Heavy reliance on the U.S. market limits geographic diversification. Magnite is still smaller in scale than, for instance, The Trade Desk, which affects bargaining power.
Opportunities: Rising ad-supported streaming adoption, the shift of linear TV budgets to CTV, and the potential to capture SSP market share create room to grow. AI-powered curation and targeting can improve yield for publishers and margins for Magnite.
Threats: Intense competition from both independent SSPs and vertically integrated walled gardens, potential pricing pressure in CTV as supply grows, and the need to expand internationally without margin dilution.
The broader digital advertising industry is still in a growth cycle, with programmatic CTV as one of its fastest-expanding segments. This macro tailwind supports Magnite’s positioning, but execution – particularly in scaling profitably and differentiating in a crowded space – will determine how much of that upside it captures.
Conclusion
Magnite’s second quarter of 2025 delivered on the priorities it has set for investors: growth in CTV, resilience in DV+, and a push for profitability. While the stock market’s reaction was lukewarm, the operational results suggest a business on firmer footing than in prior years. Sustaining this performance will require maintaining momentum in CTV while building a more diversified geographic footprint and keeping competitors at bay.
About Magnite
Magnite is one of the world’s largest independent sell-side advertising platforms, helping publishers monetize across CTV, video, display, and audio through advanced technology. Learn more at www.magnite.com.
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