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What changed in MAGNITE, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MAGNITE, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+403 added−415 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in MAGNITE, INC.'s 2024 10-K

403 paragraphs added · 415 removed · 295 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

68 edited+23 added−25 removed72 unchanged
Biggest changeIn addition to the GDPR and UK GDPR, state lawmakers in the United States continue to actively focus on consumer privacy regulations. These laws have caused, and will likely continue to cause, us to incur additional compliance costs and impose additional restrictions on us and on our industry partners.
Biggest changeThese laws have caused, and will likely continue to cause, us to incur additional compliance costs and impose additional restrictions on us and on our industry partners. Additionally, our compliance with our privacy policies and our general consumer privacy practices are also subject to review by the Federal Trade Commission and certain State Attorneys General.
As digital content consumption continues to proliferate, we believe the percentage of advertising dollars spent through digital channels will continue to grow. Automation of Buying and Selling Due to the size and complexity of the advertising ecosystem and purchasing process, manual processes cannot effectively manage digital advertising inventory at scale.
As digital content consumption continues to proliferate, we believe the percentage of advertising dollars spent through digital channels will continue to grow. Automation of Buying and Selling Due to the size and complexity of the digital advertising ecosystem and purchasing process, manual processes cannot effectively manage digital advertising inventory at scale.
In addition to the United States, we have personnel and operations in Australia, Brazil, Canada, France, Germany, India, Italy, Japan, New Zealand, Singapore, Sweden, and the United Kingdom, in order to service buyers and sellers on a global scale. Culture We strive to build a culture that is high-performing and results-oriented while emphasizing growth, collaboration and innovation.
In addition to the United States, we have personnel and operations in Australia, Brazil, Canada, France, Germany, India, Italy, Japan, New Zealand, Singapore, Sweden, and the United Kingdom, in order to service buyers and sellers on a global scale. Culture We strive to build a culture that is high-performing and results-oriented while emphasizing growth, collaboration, diversity, and innovation.
For these managed service campaigns, our team of specialists manages the delivery and execution of the campaign according to an agreed set of objectives with the advertiser or agency, at a negotiated fixed price. For ClearLine, advertisers and agencies use a self-service programmatic solution to directly access premium inventory on our platform.
For managed service campaigns, our team of specialists manages the delivery and execution of the campaign according to an agreed set of objectives with the advertiser or agency, at a negotiated fixed price. For ClearLine, advertisers and agencies use a self-service programmatic solution to directly access premium inventory on our platform.
Reserve Auctions A significant portion of premium inventory, in particular with respect to CTV, is purchased and sold through reserve auctions where the seller establishes a direct deal with a buyer or group of buyers.
Reserve Auctions and Deal Management A significant portion of premium inventory, in particular with respect to CTV, is purchased and sold through reserve auctions where the seller establishes a direct deal with a buyer or group of buyers.
Our streaming SSP platform and ad server offers CTV sellers a holistic solution for workflow, yield management and monetization, across both programmatic and direct-sold video inventory.
Our streaming SSP and ad server offers CTV sellers a holistic solution for workflow, yield management and monetization, across both programmatic and direct-sold video inventory.
Custom auction packages and audience tools give buyers a versatile and cost-effective way to curate and target open market inventory, using categories such as audience, context, and viewability, while our deal discovery platform allows buyers to connect directly with sellers to arrange direct reserve auctions.
Custom auction packages and audience tools give buyers a versatile and cost-effective way to curate and target inventory, using categories such as audience, context, and viewability, while our deal discovery platform allows buyers to connect directly with sellers to arrange direct reserve auctions.
Technology and Development To support a majority of our non-CTV transactions, we have developed a globally distributed infrastructure hosted at on-prem data centers in the U.S., Europe, and Asia that run our proprietary software. Our CTV transactions run primarily on the cloud.
Our Technology To support a majority of our non-CTV transactions, we have developed a globally distributed infrastructure hosted at on-prem data centers in the U.S., Europe, and Asia that run our proprietary software. Currently, our CTV transactions run primarily on the cloud.
Following these transactions, we believe that we are the world's largest independent omni-channel sell-side advertising platform ("SSP"), offering a single partner for transacting globally across all channels, formats and auction types, and the largest independent programmatic CTV marketplace, making it easier for buyers to reach CTV audiences at scale from industry-leading streaming content providers, broadcasters, platforms and device manufacturers.
We believe that we are the world's largest independent omni-channel sell-side advertising platform ("SSP"), offering a single partner for transacting globally across all channels, formats and auction types, and the largest independent programmatic CTV marketplace, making it easier for buyers to reach CTV audiences at scale from industry-leading streaming content providers, broadcasters, platforms and device manufacturers.
Geographic Scope of Our Operations The growth of programmatic advertising is expanding into geographic markets outside of the United States, and in some markets, the adoption rate of programmatic digital advertising is greater than in the United States. We face staffing challenges, including difficulty in recruiting, retaining, and managing a diverse and distributed workforce across time zones, cultures, and languages.
Geographic Scope of Our Operations The growth of programmatic advertising has expanded into geographic markets outside of the United States, and in some markets, the adoption rate of programmatic digital advertising is greater than in the United States. We face staffing challenges, including difficulty in recruiting, retaining, and managing a diverse and distributed workforce across time zones, cultures, and languages.
Termination or diminution of our relationships with these third parties could result in a material reduction of the amount of mobile inventory 13 Table of Contents available through our platform. We encourage application developers to use our own SDK when appropriate, but it is difficult to displace existing SDKs.
Termination or diminution of our relationships with these third parties could result in a material reduction of the amount of mobile inventory available through our platform. We encourage application developers to use our own SDK when appropriate, but it is difficult to displace existing SDKs.
For detailed information regarding our revenue and property and equipment, net by geographical region, see Note 4 and Note 6 of the "Notes to Consolidated Financial Statements." Regulation Our business is highly susceptible to existing and emerging privacy regulations and oversight concerning the collection, use and sharing of data.
For detailed information regarding our revenue, property and equipment, net, and right-of-use assets by geographical region, see Note 4, Note 6, and Note 15 of the "Notes to Consolidated Financial Statements." Regulation Our business is highly susceptible to existing and emerging privacy regulations and oversight concerning the collection, use and sharing of data.
These companies are formidable competitors due to their huge resources and direct user relationships, and could become even more dominant as third-party cookie use decreases.
These companies are formidable competitors due to their large resources and direct user relationships, and could become even more dominant as third-party cookie use decreases.
However, this type of information is considered "personal" across various jurisdictions and is governed by an increasing number of consumer privacy laws and regulations. Data collection, use, and disclosure by companies that do not have direct relationships with the consumers whose personal data they process will now be subject to state data broker laws, including in California and Texas.
However, this type of information is considered "personal" across various jurisdictions and is governed by an increasing number of consumer privacy laws and regulations. Data collection, use, and disclosure by companies that do not have direct relationships with the consumers whose personal data they process are now subject to state data broker laws, including in California, Oregon, and Texas.
Increasing Seller Inventory In order to increase transaction volume we are continuously looking to add new high quality sellers to our platform and to expand our existing relationships with sellers to increase our share of their inventory, in particular in the CTV and OTT space where inventory is controlled by fewer sellers.
Increasing Seller Inventory In order to increase transaction volume we are continuously looking to add new high quality sellers to our platform and to expand our existing relationships with sellers to increase our share of their inventory, in particular in CTV where inventory is controlled by fewer sellers.
Programmatic advertising allows buyers and sellers to transact on an impression-by-impression basis through the use of real-time bidding technology, and allows for the use of advanced data and identity solutions 6 Table of Contents to better target ad campaigns.
Programmatic advertising allows buyers and sellers to transact on an impression-by-impression basis through the use of real-time bidding technology, and allows for the use of advanced data and identity solutions to better target ad campaigns.
We expect our revenue, cash flow, operating results and other key operating and financial measures to fluctuate based on seasonal factors from period to period and expect these measures to be higher in the fourth quarter than in other quarters.
We expect our revenue, cash flow, operating results and other key operating and financial measures to fluctuate based on seasonal factors from period to period and expect these measures to be higher in the fourth quarter than in other quarters. Refer to "Item 7.
Desktop transactions are those transactions delivered to the end user whose device runs on a traditional PC, laptops, as well as those delivered on mobile devices or tablets that are not running on mobile based operating systems. Magnite: Growth Strategies.
Desktop transactions are those transactions delivered to the end user whose device runs on a traditional PC, laptops, as well as those delivered on mobile devices or tablets that are not running on mobile based operating systems.
Human Capital: Our Team and Culture Our team draws from a broad spectrum of experience, including data science, machine-learning algorithms, infrastructure, software development, and from experienced leadership on the seller and buyer sides, including streaming, mobile and video.
Human Capital: Our Team and Culture Our team draws from a broad spectrum of experience, including data science, infrastructure, software development, and from experienced leadership on the seller and buyer sides, including streaming, mobile and video.
We plan to continue to expand our international presence and make additional investments in sales, marketing and infrastructure to support our long-term growth and to position ourselves for expected increases in the penetration of programmatic advertising globally.
We plan to continue to expand our international presence and make additional investments in sales, marketing and infrastructure to support our long-term growth and to position ourselves for expected increases in programmatic advertising globally.
We have addressed this, in part, through our 7 Table of Contents SpringServe ad server, which offers sellers a unified programmatic demand solution for CTV that leverages our existing programmatic SSP capabilities as well as connects with third party programmatic demand sources. Magnite: Competitive Strengths of Our Platform.
We have addressed this, in part, through our ad server, which offers sellers a unified programmatic demand solution for CTV that leverages our existing programmatic SSP capabilities as well as connects with third party programmatic demand sources. Magnite: Competitive Strengths of Our Platform.
Buyer Tools We provide a suite of buyer tools designed to help buyers curate inventory, append data and improve ROI in order to meet their campaign strategies. Our curation tools enable agency holding companies and major brands to create their own private label marketplaces and establish direct connections with sellers.
Buyer Tools We provide a suite of buyer tools designed to help buyers discover and curate inventory, append data and improve ROI in order to meet their campaign strategies. For instance, our agency marketplace tools enable agency holding companies and major brands to create their own private label marketplaces and establish direct connections with sellers.
For additional information regarding regulatory risks to our business, see "Item 1A. Risk Factors." Seasonality Our advertising spend, revenue, cash flow from operations, Adjusted EBITDA, operating results, and other key operating and financial measures may vary from quarter to quarter due to the seasonal nature of buyer spending.
For additional information regarding regulatory risks to our business, see "Item 1A. Risk Factors." Seasonality Our revenue, Contribution ex-TAC, cash flow from operations, Adjusted EBITDA, operating results, and other key operating and financial measures may vary from quarter to quarter due to the seasonal nature of buyer spending.
Scaled Omni-Channel Platform We offer a scaled omni-channel platform that brings value to both buyers and sellers of ad inventory. For buyers, we offer a single omni-channel partner to reach target audiences globally across all channels, including CTV, mobile, desktop, and digital out-of-home, and formats, including video, display, and audio.
Scaled Omni-Channel Platform We offer a scaled omni-channel platform that brings value to both buyers and sellers of ad inventory. For buyers, we offer a single omni-channel partner to reach target audiences globally acr oss all channels, including CTV, mobile, and desktop, and formats, including video, display, and audio.
Unlike some large industry participants, we do not have our own media properties that compete for advertising spending with our sellers. Therefore, we are agnostic and have no 9 Table of Contents preference towards delivering demand to any specific pub lisher.
Independence We are fully aligned with the interests of our publisher clients. Unlike some large industry participants, we do not have our own media properties that compete for advertising spending with our sellers. Therefore, we are agnostic and have no 9 Table of Contents preference towards delivering demand to any specific pub lisher.
In CTV, this identity model already largely exists with publishers more tightly controlling access to identifiers and user data, while offering proprietary first party data segments for reaching desired audiences.
In CTV, where third-party cookies do not exist, this identity model already largely exists with publishers more tightly controlling access to identifiers and user data, while offering proprietary first party data segments for reaching desired audiences.
We have invested significant resources in identifying and cultivating these relationships and our sales executives and account managers often serve a consultative role within a client’s sales organization to help establish best practices and evangelize the benefits of programmatic advertising.
We have invested significant resources in identifying and cultivating these relationships and our sales executives and account managers often serve a consultative role within a client’s sales organization to help establish best practices.
We believe we are well positioned to benefit from SPO in the long run as a result of our transparency, our broad and unique inventory supply across all channels and formats, including CTV, buyer tools, such as traffic shaping and ClearLine that reduce the cost of working with us, and our brand safety measures.
We believe we are well positioned to benefit from SPO in the long run as a result of our transparency, broad and unique inventory supply across all channels and formats, buyer tools, such as our ClearLine product offering, traffic filtering technology that reduces the cost of working with us, and brand safety measures.
Notably, California 14 Table of Contents recently passed the Delete Act, dramatically increasing obligations and potential penalties relative to the state’s preexisting data broker statute. There are also a number of specific laws and regulations governing the collection and use of certain types of consumer data relevant to our business.
Notably, California's Delete Act, dramatically increases obligations and potential penalties relative to the state’s preexisting data broker statute. There are also a number of specific laws and regulations governing the collection and use of certain types of consumer data relevant to our business.
In addition, during 2023 we announced SpringServe Tiles, an innovative product that allows publishers to showcase custom creative and highlight content recommendations within streaming programming guides in any size and a wide variety of formats.
In addition, our SpringServe Tiles product is an innovative new feature that allows publishers to showcase custom creative and highlight content recommendations within streaming programming guides in any size and a wide variety of formats.
The key elements to our long-term growth strategy include: Focus on CTV We expect CTV to be the biggest driver of our growth. As streaming video continues to become mainstream and ad-supported models become more prevalent, we believe brand advertisers will continue to shift their budgets from linear television to CTV.
The key elements to our long-term growth strategy include: Focus on CTV As streaming video continues to become mainstream and ad-supported models become more prevalent, we believe advertisers will continue to shift budgets to CTV.
We have relationships with all of the major DSPs, and because ad spend is highly concentrated among relatively few DSPs, each of these relationships is important to us and represents a source of demand that could be difficult for us to replace. We maintain close relationships with DSPs to maximize the amount of spend being transacted through our platform.
We have relationships with all of 13 Table of Contents the major DSPs, and because ad spend is highly concentrated among relatively few DSPs, each of our relationships with these DSPs is important to us and represents a source of demand that could be difficult for us to replace.
There are many ways for buyers and sellers of digital advertising inventory to connect and transact, including directly and through many other exchanges, and buyers are increasingly demanding more transparency and lower transaction costs and establishing relationships directly with sellers of advertising inventory, which puts significant pressure on us.
There are many ways for buyers and sellers of digital advertising inventory to connect and transact, including directly and through many other exchanges, and buyers, including DSPs that transact on our platform, are increasingly establishing relationships directly with sellers of advertising inventory, which puts significant pressure on us.
We believe these two approaches optimize the type of traffic we handle - hosted data centers for high-frequency, low-latency transactions and cloud-supported for lower frequency transactions subject to more volatile viewing patterns, for example CTV prime-time viewing spikes. Our approach supports the volume, diversity, and complexity of buyers’ bidding patterns, which increases market liquidity.
We believe these two approaches optimize the type of traffic we handle - hosted data centers for high-frequency, low-latency transactions and cloud-supported for lower frequency transactions subject to more volatile viewing patterns, for example CTV prime-time viewing spikes.
We often present at industry conferences, create custom events, and invest in public relations. In addition, our marketing team advertises online, in print, and in other forms of media, creates case studies, sponsors research, writes whitepapers, publishes marketing collateral, generates blog posts, and undertakes client research studies. Competition Our industry is highly competitive.
In addition, our marketing team advertises online, in print, and in other forms of media, creates case studies, sponsors research, writes whitepapers, publishes marketing collateral, generates blog posts, and undertakes client research studies. Competition Our industry is highly competitive.
This infrastructure is supported by real-time data pipelines, a system that quickly moves volumes of data generated by our business into reporting and machine-learning systems that allow usage both internally and by buyers and sellers.
This infrastructure is supported by real-time data pipelines, a system that quickly moves volumes of data generated by our business into reporting and machine-learning systems for both internal and client use cases.
As of December 31, 2023, we had 911 full-time employees. Our Intellectual Property Our proprietary technologies are important and we rely upon trade secret, trademark, copyright, and patent laws in the United States and abroad to establish and protect our intellectual property and protect our proprietary technologies.
Our Intellectual Property Our proprietary technologies are important and we rely upon trade secret, trademark, copyright, and patent laws in the United States and abroad to establish and protect our intellectual property and protect our proprietary technologies.
We believe the acquisition of SpringServe is highly strategic as it allows us to offer publishers an independent full-stack solution to the walled gardens, which can be leveraged across their entire video advertising business.
We believe the combination of our Magnite Streaming platform with our ad server is highly strategic as it allows us to offer publishers an independent full-stack solution to the walled gardens, which can be leveraged for yield-management across their entire video advertising business.
Identity Solutions We believe that the elimination of third-party cookies has the potential to shift the programmatic ecosystem from an identity model powered by buyers that are able to aggregate and target audiences through cookies to one enabled by sellers that have direct relationships with consumers and are therefore better positioned to obtain user data and consent for implementing first party identifiers.
In the long term, we believe that a decreased reliance on third-party cookies and other non-transparent tracking methods are a positive for the industry, and offer the potential to shift the programmatic ecosystem from an identity model powered by buyers that are able to aggregate and target audiences through cookies to one enabled by sellers that have direct relationships with consumers and are therefore better positioned to obtain user data and consent for implementing first party identifiers.
In addition, header bidding has led to a significant increase in the number of ad impressions to be processed and analyzed through our platform as well as by DSPs, which can lead to increased costs if not properly addressed. We have invested in technology solutions, such as Demand Manager, to help desktop and mobile publishers manage their header-bidding inventory.
In addition, header bidding has led to a significant increase in the number of ad impressions to be processed and analyzed through our platform as well as by DSPs, which can lead to increased costs if not properly addressed.
In turn, we believe brand advertisers looking to engage with streaming viewers will continue to shift their budgets from linear to CTV.
With the proliferation of CTV advertising inventory, we believe that brand advertisers looking to engage with streaming viewers will continue to shift their budgets from linear to CTV.
We believe that continued investment in our platform, including its technologies and functionalities, is critical to our success and long-term growth. Sales and Marketing We market our solution to buyers and sellers through global sales teams that operate from various locations around the world.
We believe that continued investment in technology and development is critical to our success and long-term growth. Sales and Marketing We market our solution to buyers and sellers through global sales teams that operate from various locations around the world. These teams leverage market knowledge and expertise to demonstrate the benefits of our solution to buyers and sellers.
The price that buyers pay for each thousand paid impressions purchased is measured in units referred to as CPM, or cost per thousand, and the total volume of spending between buyers and sellers on our platform is referred to as advertising spend. We generate revenue from the use of our platform for the purchase and sale of digital advertising inventory.
Winning bids can create advertising, or paid impressions, for the seller to present to the consumer. The price that buyers pay for each thousand paid impressions purchased is measured in units referred to as CPM, or cost per thousand, and the total volume of spending between buyers and sellers on our platform is referred to as advertising spend.
We believe that our traffic optimization coupled with bid filtering improves return on investment for buyers and increases revenue for sellers, which in turn attracts more buyers and sellers to our platform creating a dual network effect that 8 Table of Contents makes our platform stickier.
We believe that our traffic optimization coupled with bid filtering improves return on investment for buyers and increases revenue for sellers, which in turn attracts more buyers and sellers to our platform creating a dual network effect that makes our platform stickier. These capabilities also help us manage the costs associated with the high volumes of ad requests we receive.
In addition, because we do not offer a dedicated demand side platform, we are able to avoid inherent conflicts of interest that exist when serving both the buy- and sell-side. How We Generate Revenue Digital advertising inventory is created when consumers access sellers' content.
In addition, because we do not offer a dedicated demand side platform, we are able to avoid inherent conflicts of interest that exist when serving both the buy- and sell-side. Magnite: Growth Strategies.
Big Data Analytics and Machine-Learning Algorithms; Bid Filtering A core aspect of our value proposition is our big data and machine-learning platform, a subcategory of artificial intelligence, which is able to discover unique insights from our massive data repositories.
Our deal management and curation tools support sales functions rather than replacing them, which eliminates friction in the sales process. Big Data Analytics and Machine-Learning Algorithms; Bid Filtering A core aspect of our value proposition is our big data and machine-learning platform, a subcategory of artificial intelligence, which is able to discover unique insights from our massive data repositories.
Bid efficiency algorithms provide bid prediction (i.e., which buyers are most likely to bid on a given impression) and throttling (i.e., the volume of bid requests a given buyer can process), to improve infrastructure load and execute transactions efficiently by only sending bid requests to those buyers of advertising inventory who can handle the volume and are likely to respond.
Our algorithms improve infrastructure load and execute transactions efficiently by only sending bid requests to those buyers of advertising inventory who can handle the volume and are likely to respond.
We are continuing to invest in traffic optimization and bid filtering technology to allow us to monetize a higher proportion of the ad requests on our platform, which reduces costs for us as well as the process costs for buyers. We believe these cost savings make our platform more attractive to buyers, which in turn improves revenue opportunities for sellers.
Our solution is constantly self-improving as we process more volume and accumulate more data and we are continuing to invest in traffic optimization and bid filtering technology to allow us to monetize a higher proportion of the ad requests on our platform, which reduces costs for us as well as the process costs for buyers.
Programmatic transactions include open auctions, where multiple buyers bid against each other in a real-time auction for the right to purchase a publisher's inventory, as well as reserve auctions, where publishers establish direct deals or private marketplaces with select buyers. These reserve auctions may be “guaranteed,” where a buyer has negotiated a pre-established price and volume with a seller.
Programmatic transactions include biddable auctions, where multiple buyers bid against each other in a real-time auction for the right to purchase a publisher's inventory, as well as reserve auctions, where publishers 6 Table of Contents establish direct deals or private marketplaces with select buyers.
For instance, our ad-pod feature provides publishers with a tool analogous to commercial breaks in traditional linear television so that they can request and manage several ads at once from different demand sources. Using this tool, publishers can establish business rules such as competitive separation of advertisers so that competing brand ads do not appear during the same commercial break.
For instance, our ad-pod feature provides publishers with a tool analogous to commercial breaks in traditional linear television so that they can request and manage several ads at once from different demand sources.
Additionally, our compliance with our privacy policies and our general consumer privacy practices are also subject to review by the Federal Trade Commission and certain State Attorneys General. Outside of the United States, our privacy and data practices are subject to regulation by data protection authorities and other regulators in the countries in which we do business.
Outside of the United States, our 14 Table of Contents privacy and data practices are subject to regulation by data protection authorities and other regulators in the countries in which we do business.
Sellers provide digital advertising inventory to our platform in the form of advertising requests, or ad requests. When we receive ad requests from sellers, we send bid requests to buyers, which enable buyers to bid on sellers’ digital advertising inventory. Winning bids can create advertising, or paid impressions, for the seller to present to the consumer.
How We Generate Revenue Digital advertising inventory is created when consumers access sellers' content. Sellers provide digital advertising inventory to our platform in the form of advertising requests, or ad requests. When we receive ad requests from sellers, we send bid requests to buyers, which enable buyers to bid on sellers’ digital advertising inventory.
Talent Retention We believe empowerment starts with investing in our employees, both inside and outside the office. We reward team and individual excellence and are committed to creating an exceptional workplace environment in which we seek feedback from our employees in regular engagement surveys. We believe in continual feedback on performance.
We reward team and individual excellence and are committed to creating an exceptional workplace environment in which we seek feedback from our employees in regular engagement surveys. We believe in continual feedback on performance. Our employees set goals at a regular cadence throughout the year and managers provide achievement ratings at year-end.
Item 1. Business Overview Magnite, Inc., ("we," or "us"), provides technology solutions to automate the purchase and sale of digital advertising inventory. On April 30, 2021, we completed the acquisition of SpotX, Inc. ("SpotX" and such acquisition the "SpotX Acquisition"), a leading platform shaping connected television ("CTV") and video advertising globally.
Item 1. Business Overview Magnite, Inc., ("we," or "us"), provides technology solutions to automate the purchase and sale of digital advertising inventory.
As the largest independent supply side platform, we believe we are well positioned to take a leadership role in advancing the shift to a first party identity model and creating additional value opportunities for our clients. Accordingly, we have invested and intend to further invest in the development and enhancement of industry leading identity and audience solutions.
Identity Solutions As the largest independent supply side platform, we believe we are well positioned to take a leadership role in advancing the shift away from third-party cookies and other identifiers to a model that is powered by sellers that have access to valuable first-party data, creating additional opportunities for our clients.
Our tools enable sellers to create audience segments based on first-party data, which makes their advertising inventory more valuable to buyers looking to achieve specific campaign goals.
Identity Solutions We offer identity solutions that help buyers and sellers create better matches and increase advertising return on investment ("ROI") and the value of the underlying impression. Our tools enable sellers to create audience segments based on 8 Table of Contents first-party data, which makes their advertising inventory more valuable to buyers looking to achieve specific campaign goals.
Finally, our ClearLine product is a self-service solution that provides buyers with direct access to premium CTV and video inventory on our platforms in a more cost effective manner. Independence We are fully aligned with the interests of our publisher clients.
Finally, our ClearLine product is a self-service solution that provides buyers with direct access to premium CTV and video inventory.
Key competitive strengths of our platform include: Leadership in CTV Our Magnite Streaming platform has been strategically built to meet the unique requirements of CTV sellers. Many of these sellers have their roots in linear television and it is important that established business practices in television advertising can be translated to programmatic advertising.
Many CTV sellers have their roots in linear television and it is important that established business practices in television advertising can be translated to programmatic advertising.
Our buyer team, which is separately managed, focuses on collaborating with and increasing spend from DSPs, agencies, and brands, and our client services teams work closely with clients to support and execute campaigns. Our marketing initiatives are focused on managing our brand, increasing market awareness, and driving advertising spend to our platform.
We deploy a professional services team with each seller integration to assist sellers in getting the most value from our platform. Our buyer team, which is separately managed, focuses on collaborating with and increasing spend from DSPs, agencies, and brands, and our client services teams work closely with clients to support and execute campaigns.
Conduct We are committed to promoting high standards of honest and ethical business conduct and compliance in alignment with our cultural values. We do not tolerate harassment or discrimination. Our employees are required to take annual harassment and discrimination training as well as acknowledge our Code of Business and Ethics Policy.
We do not tolerate harassment or discrimination. Our employees are required to take annual harassment and discrimination training as well as acknowledge our Code of Business and Ethics Policy. As of December 31, 2024, we had 905 full-time employees.
In addition, we may receive certain fixed monthly fees for the use of our platform or products. We track the performance and revenue of our platform by channel. Our channels include CTV, mobile, and desktop.
In addition, we may receive certain fixed monthly fees for the use of our platform or products. Channels Sellers use our technology to monetize their content across all digital channels, including CTV, mobile, and desktop. We refer to our mobile and desktop channels as DV+.
For example, the Children’s Online Privacy Protection Act ("COPPA"), imposes restrictions on the collection and use of data about users of child-directed websites.
For example, the Children’s Online Privacy Protection Act ("COPPA"), imposes restrictions on the collection and use of data about users of child-directed websites. Other regulators and lawmakers continue to focus on activities involving data perceived as particularly sensitive such as data based on race, ethnicity or health information.
Portions of Magnite Access are already available to our clients, while others are in testing and are expected to reach wider availability this year. Increase Efficiencies on our Exchange We aim to increase the operational efficiency of our platform, so as to enable buyers and sellers to achieve their campaign and monetization objectives in a cost-effective manner.
Accordingly, we have invested and intend to further invest in the development and enhancement of industry leading identity and audience solutions. Increase Efficiencies on our Exchange We aim to increase the operational efficiency of our platform, so as to enable buyers and sellers to achieve their campaign and monetization objectives in a cost-effective manner.
Continue to Innovate and Enhance our Platform We are working on a number of platform innovations and enhancements designed to improve the value to our clients, such as our recently announced Magnite Streaming platform.
Continue to Innovate and Enhance our Platform We are working on a number of platform innovations and enhancements designed to improve the value of our services to our clients, including new features and ad formats on our streaming ad server, tools that facilitate the creation of audience 10 Table of Contents segments, such as our recently launched Magnite Curator Marketplace, as well as developing a product suite specifically to address the challenges of live streaming.
Our recruitment team seeks individuals that are committed to seeing the big picture and being catalysts of change.
Our recruitment team seeks qualified individuals that are committed to seeing the big picture and being catalysts of change. We aim to recruit and develop talent from diverse backgrounds, to provide equal employment opportunity, and to champion a wide array of voices throughout the Company.
While header-bidding technologies have not been largely adopted by CTV sellers, such solutions or similar solutions geared towards increasing demand competition have become more prevalent.
We 7 Table of Contents continuously work to increase the operational efficiency of our platform, so as to enable buyers and sellers to achieve their campaign and monetization objectives in a cost-effective manner. While header-bidding technologies have not been largely adopted by CTV sellers, such solutions or similar solutions geared towards increasing demand competition have become more prevalent.
We have invested significant time and resources in cultivating relationships with CTV sellers and have built a specialized team of CTV experts across our engineering and sales functions to support our clients and evangelize the benefits of CTV advertising.
Key competitive strengths of our platform include: Leadership in CTV Our Magnite Streaming platform has been strategically built to meet the unique requirements of CTV sellers and we have invested significant time and resources in cultivating relationships with these sellers through our specialized team of CTV experts.
Our employees set goals at a regular cadence throughout the year and managers provide achievement ratings at year-end. We continually invest in learning and leadership development programs and routinely analyze voluntary employee turnover to understand and address trends. We give equity to our employees to promote alignment and ownership.
We continually invest in 12 Table of Contents learning and leadership development programs and routinely analyze voluntary employee turnover to understand and address trends. We give equity to our employees to promote alignment and ownership. Conduct We are committed to promoting high standards of honest and ethical business conduct and compliance in alignment with our cultural values.
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On July 1, 2021, we acquired SpringServe, LLC ("SpringServe"), a leading ad serving platform for video and CTV.
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These reserve auctions may be “guaranteed,” where a buyer has negotiated a pre-established price and volume with a seller, otherwise referred to as "programmatic guaranteed." Convergence of TV and Digital CTV viewership is growing rapidly and the pace of adoption is accelerating the transition of linear television to CTV programming.
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Convergence of TV and Digital CTV viewership is growing rapidly and the pace of adoption is accelerating the transition of linear television to CTV programming. As the number of CTV channels continues to proliferate, we believe that ad-supported models or hybrid models that rely on a combination of subscription fees and advertising revenue will continue to gain traction.
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Initially, many streaming services were subscription based, but as the market has matured, the largest streaming publishers have adopted ad-supported models or hybrid models that rely on a combination of subscription fees and advertising.
Removed
Furthermore, as the CTV market continues to mature, we believe that a greater percentage of CTV advertising inventory will be sold programmatically, and through biddable environments rather than programmatic guaranteed, similar to trends that occurred in desktop and mobile. As such, we expect CTV to be a significant driver of our revenue growth for the foreseeable future.
Added
Moreover, we believe that as the amount of CTV inventory continues to scale, CTV sellers will make a greater percentage of inventory available through biddable auction environments with multiple buyers rather than programmatic guaranteed, in order to attract a broader set of advertisers that have not historically advertised on linear TV.
Removed
Identity Solutions A number of participants in the advertising technology ecosystem have taken or are expected to take action to eliminate or restrict the use of third-party cookies and other primary identifiers that have historically been used to deliver targeted advertisements. For instance, Google has announced plans to fully deprecate third-party cookies by the end of 2024.
Added
We have made and plan to continue to make significant investments in technology, sales and support related to our CTV growth initiatives, and believe CTV will be a significant driver of our revenue growth for the foreseeable future.
Removed
While we generally support third-party cookie deprecation in favor of more transparent identity solutions, these efforts could lead to significant uncertainty and instability in the short term as the industry adjusts to a new targeting paradigm, as well as a decrease in CPMs and a shift of advertising spend to large walled gardens that have access to large amounts of first party data.
Added
Identity Solutions One of the advantages of programmatic advertising is that it enables more precise audience targeting, which is generally more effective and valuable for buyers than other types of advertising, resulting in better performance for buyers and more revenue for sellers.
Removed
Moreover, alternative solutions proposed by Google, such as Privacy Sandbox, are unreleased and unproven, will require substantial development and commercial changes for us to support and may ultimately be self preferential.
Added
Historically, in desktop and mobile, one of the primary methods for delivering targeted advertisements was through the use of third-party cookies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe have experienced significant variations in revenue and operating results from period to period, and operating results may continue to fluctuate and be difficult to predict due to a number of factors, including: • seasonality in demand for digital advertising, as many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing, and advertising inventory in the fourth quarter may be more expensive due to increased demand for advertising inventory; • changes in pricing of advertising inventory or pricing for our solution and our competitors' offerings, including potential further reductions in our pricing and overall take rate as a result of competitive pressure, changes in supply, improvements in technology and extension of automation to higher-value inventory, uncertainty regarding rate of adoption, changes in the allocation of demand spend by buyers, changes in revenue mix, auction dynamics, pricing discussions or negotiations with clients and potential clients, header bidding and other factors; • diversification of our revenue mix to include new services, some of which may have lower pricing or may cannibalize existing business; • the addition or loss of buyers or sellers; • general economic conditions and the economic health of our current and prospective sellers and buyers; • changes in the advertising strategies or budgets or financial condition of advertisers; • the performance of our technology and the cost, timeliness, and results of our technology innovation efforts; • advertising technology and digital media industry conditions and the overall demand for advertising, or changes and uncertainty in the regulatory environment for us or buyers or sellers, including with respect to privacy regulation; • the introduction of new technologies or service offerings by our competitors and market acceptance of such technologies or services; • the phasing out of third-party cookies throughout the industry; • our level of expenses, including investment required to support our technology development, scale our technology infrastructure and business expansion efforts, including acquisitions, hiring and capital expenditures, or expenses related to litigation; • the impact of changes in our stock price on valuation of stock-based compensation or other instruments that are marked to market; • the effectiveness of our financial and information technology infrastructure and controls; • geopolitical and social factors, such as concerns regarding negative, unstable or changing economic conditions in the countries and regions where we operate, global and regional recessions, political instability, and trade disputes; • foreign exchange rate fluctuations; and • changes in accounting policies and principles and the significant judgments and estimates made by management in the application of these policies and principles.
Biggest changeWe have experienced significant variations in revenue and operating results from period to period, and operating results may continue to fluctuate and be difficult to predict due to a number of factors, including: • seasonality in demand for digital advertising, as many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year; • changes in pricing of advertising inventory or pricing for our solution and our competitors' offerings, including potential further reductions in our pricing and overall take rate as a result of competitive pressure, changes in supply, improvements in technology and extension of automation to higher-value inventory, uncertainty regarding rate of adoption, changes in the allocation of demand spend by buyers, changes in revenue mix, auction dynamics, pricing discussions or negotiations with clients and potential clients, header bidding and other factors; • the variability and unpredictability of our managed service business, which depends on seasonal advertising trends and discretionary advertising budgets, and are typically tied to one-off or seasonal campaigns rather than recurring revenue models; • diversification of our revenue mix to include new services, some of which may have lower pricing or may cannibalize existing business; • the effect of political advertising, which has an intermittent impact on our business depending on election cycles, and may be highly unpredictable and variable based on circumstances outside of our control; • the addition or loss of buyers or sellers; • general economic conditions and the economic health of our current and prospective sellers and buyers; • changes in the advertising strategies or budgets or financial condition of advertisers; • the performance of our technology and the cost, timeliness, and results of our technology innovation efforts; • advertising technology and digital media industry conditions and the overall demand for advertising, or changes and uncertainty in the regulatory environment for us or buyers or sellers, including with respect to privacy regulation; • the introduction of new technologies or service offerings by our competitors and market acceptance of such technologies or services; • the phasing out of third-party cookies throughout the industry; • our level of expenses, including investment required to support our technology development, scale our technology infrastructure and business expansion efforts, including acquisitions, hiring and capital expenditures, or expenses related to litigation; • the impact of changes in our stock price on valuation of stock-based compensation or other instruments that are marked to market; • the effectiveness of our financial and information technology infrastructure and controls; • geopolitical and social factors, such as concerns regarding negative, unstable or changing economic conditions in the countries and regions where we operate, global and regional recessions, political instability, and trade disputes; • foreign exchange rate fluctuations; and • changes in accounting policies and principles and the significant judgments and estimates made by management in the application of these policies and principles.
Factors that could cause fluctuations in the trading price of our common stock include the following: 35 Table of Contents • announcements of new offerings, products, services or technologies, commercial relationships, acquisitions, or other events by us or our competitors; • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular; • fluctuations in the trading volume of our shares or the size of our public float; • actual or anticipated changes or fluctuations in our results of operations; • actual or anticipated changes in the expectations of investors or securities analysts, and whether our results of operations meet these expectations; • issuance of research reports by analysts or investors; • litigation involving us, our industry, or both; • regulatory developments in the United States, foreign countries, or both; • general economic conditions and trends; • major catastrophic events; • political uncertainty; • breaches or system outages; • departures of officers or other key employees; or • an adverse impact on the company resulting from other causes, including any of the other risks described in this report.
Factors that could cause fluctuations in the trading price of our common stock include the following: • announcements of new offerings, products, services or technologies, commercial relationships, acquisitions, or other events by us or our competitors; • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular; • fluctuations in the trading volume of our shares or the size of our public float; • actual or anticipated changes or fluctuations in our results of operations; • actual or anticipated changes in the expectations of investors or securities analysts, and whether our results of operations meet these expectations; • issuance of research reports by analysts or investors; • litigation involving us, our industry, or both; • regulatory developments in the United States, foreign countries, or both; 35 Table of Contents • general economic conditions and trends; • major catastrophic events; • political uncertainty; • breaches or system outages; • departures of officers or other key employees; or • an adverse impact on the company resulting from other causes, including any of the other risks described in this report.
Borrowing to fund any cash purchase price would result in increased fixed obligations and could also include covenants or other restrictions that would impair our ability to manage our operations; • acquisitions expose us to the risk of assumed known and unknown liabilities including contract, tax, regulatory or other legal, and other obligations incurred by the acquired business or fines or penalties, for which indemnity obligations, escrow arrangements or insurance may not be available or may not be sufficient to provide coverage; • new business acquisitions can generate significant intangible assets that result in substantial related amortization charges and possible impairments; • the operations of acquired businesses, or our adaptation of those operations, may require that we apply revenue recognition or other accounting methodologies, assumptions, and estimates that are different from those we use in our current business, which could complicate our financial statements, expose us to additional accounting and audit costs, and increase the risk of accounting errors; • acquired businesses may have insufficient internal controls that we must remediate, and the integration of acquired businesses may require us to modify or enhance our own internal controls, in each case resulting in increased 16 Table of Contents administrative expense and risk that we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); • acquisition of businesses based outside the United States would require us to operate in foreign languages and manage non-U.S. currency, billing, and contracting needs, comply with laws and regulations, including labor laws and privacy laws that in some cases may be more restrictive on our operations than laws applicable to our business in the United States; and • acquisitions can sometimes lead to disputes with the former owners of the acquired company, which can result in increased legal expenses, management distraction and the risk that we may suffer an adverse judgment if we are not the prevailing party in the dispute.
Borrowing to fund any cash purchase price would result in increased fixed obligations and could also include covenants or other restrictions that would impair our ability to manage our operations; • acquisitions expose us to the risk of assumed known and unknown liabilities including contract, tax, regulatory or other legal, and other obligations incurred by the acquired business or fines or penalties, for which indemnity obligations, escrow arrangements or insurance may not be available or may not be sufficient to provide coverage; • new business acquisitions can generate significant intangible assets that result in substantial related amortization charges and possible impairments; • the operations of acquired businesses, or our adaptation of those operations, may require that we apply revenue recognition or other accounting methodologies, assumptions, and estimates that are different from those we use in our current business, which could complicate our financial statements, expose us to additional accounting and audit costs, and increase the risk of accounting errors; • acquired businesses may have insufficient internal controls that we must remediate, and the integration of acquired businesses may require us to modify or enhance our own internal controls, in each case resulting in increased administrative expense and risk that we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); • acquisition of businesses based outside the United States would require us to operate in foreign languages and manage non-U.S. currency, billing, and contracting needs, comply with laws and regulations, including labor laws and privacy laws that in some cases may be more restrictive on our operations than laws applicable to our business in the United States; and • acquisitions can sometimes lead to disputes with the former owners of the acquired company, which can result in increased legal expenses, management distraction and the risk that we may suffer an adverse judgment if we are not the prevailing party in the dispute.
We believe that because our business has many fixed costs, increases in advertising spend volume generally create opportunities to disproportionately improve our bottom line results, even with increased discounts, rebates or other buyer incentives. However, our revenue could be negatively impacted by discounts, rebates and other buyer incentives, notwithstanding an increase in ad spend.
We believe that because our business has many fixed costs, increases in advertising spend volume generally create opportunities to disproportionately improve our bottom line results, even with increased discounts, rebates or other buyer incentives. However, our results could be negatively impacted by discounts, rebates and other buyer incentives, notwithstanding an increase in ad spend.
We may be unsuccessful in our Supply Path Optimization efforts. SPO refers to efforts by buyers to consolidate the number of vendors with which they work to find the most effective and cost-efficient paths to procure media. There are a number of criteria that buyers use to evaluate supply partners.
We may be unsuccessful in our Supply Path Optimization efforts. Supply path optimization refers to efforts by buyers to consolidate the number of vendors with which they work to find the most effective and cost-efficient paths to procure media. There are a number of criteria that buyers use to evaluate supply partners.
In addition, as further described in the risk factors below, current and potential future privacy laws and regulations in the U.S. and abroad already restrict, and could further restrict, the ability to collect and process certain types of user data.
As further described in the risk factors below, current and potential future privacy laws and regulations in the U.S. and abroad already restrict, and could further restrict, the ability to collect and process certain types of user data.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions, as described below, that could delay or prevent a change in control of the company, and make it difficult for stockholders to elect directors who are not nominated by the current members of our board of directors or take other actions to change company management. • Our certificate of incorporation gives our board of directors the authority to issue shares of preferred stock in one or more series, and to establish the number of shares in each series and to fix the price, designations, powers, preferences 36 Table of Contents and relative, participating, optional or other rights, if any, and the qualifications, limitations, or restrictions of each series of the preferred stock without any further vote or action by stockholders.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions, as described below, that could delay or prevent a change in control of the company, and make it difficult for stockholders to elect directors who are not nominated by the current members of our board of directors or take other actions to change company management. • Our certificate of incorporation gives our board of directors the authority to issue shares of preferred stock in one or more series, and to establish the number of shares in each series and to fix the price, designations, powers, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations, or restrictions of each series of the preferred stock without any further vote or action by stockholders.
These provisions could delay the ability of stockholders to change the membership of a majority of our board of directors. • Under our bylaws, only the board of directors or a majority of remaining directors, even if less than a quorum, may fill vacancies resulting from an increase in the authorized number of directors or the resignation, death or removal of a director. • Our certificate of incorporation prohibits stockholder action by written consent, so any action by stockholders may only be taken at an annual or special meeting. • Our certificate of incorporation provides that a special meeting of stockholders may be called only by the board of directors.
These provisions could delay the ability of stockholders to change the membership of a majority of our board of directors. 36 Table of Contents • Under our bylaws, only the board of directors or a majority of remaining directors, even if less than a quorum, may fill vacancies resulting from an increase in the authorized number of directors or the resignation, death or removal of a director. • Our certificate of incorporation prohibits stockholder action by written consent, so any action by stockholders may only be taken at an annual or special meeting. • Our certificate of incorporation provides that a special meeting of stockholders may be called only by the board of directors.
However, some buyers and sellers may require direct billing and collection arrangements between themselves, and some providers of header bidding wrappers or other downstream decisioning mechanisms in which we participate (such as Google EB) may control billing and collection for transactions we win through their platforms.
However, some buyers and sellers may require direct billing and collection arrangements between themselves, and some providers of header bidding wrappers or other downstream decisioning mechanisms in which we participate (such as Google OB) may control billing and collection for transactions we win through their platforms.
Our ability to collect, use, and share data about advertising purchase and sale transactions and user behavior and interaction with content is critical to the value of our services, and any limitation on our data practices could impair our ability to deliver effective solutions to our clients.
Our ability to collect, use, and disclose data about advertising purchase and sale transactions and user behavior and interaction with content is critical to the value of our services, and any limitation on our data practices could impair our ability to deliver effective solutions to our clients.
We expect mobile applications to be the largest driver of our mobile business. Many mobile apps utilize software development kits, or SDKs, and other proprietary technology of third parties, such as aggregators, and it is those third parties, 19 Table of Contents not the application providers themselves, that contract with us to provide exchange services to help monetize the inventory.
We expect mobile applications to be the largest driver of our mobile business. Many mobile apps utilize software development kits, or SDKs, and other proprietary technology of third parties, such as aggregators, and it is those third parties, not the application providers themselves, that contract with us to provide exchange services to help monetize the inventory.
However, there is no assurance that we will identify suitable acquisition candidates or complete any acquisitions on favorable terms, or at all. Further, any acquisitions we do complete would involve a number of risks, which may include the following: • the identification, acquisition, and integration of acquired businesses require substantial attention from management.
However, there is no assurance that we will identify 21 Table of Contents suitable acquisition candidates or complete any acquisitions on favorable terms, or at all. Further, any acquisitions we do complete would involve a number of risks, which may include the following: • the identification, acquisition, and integration of acquired businesses require substantial attention from management.
Our inability to obtain financing may negatively impact our ability to operate and continue our business as a going concern. 31 Table of Contents Conversion of our Convertible Senior Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their Convertible Senior Notes, or may otherwise depress the price of our common stock.
Our inability to obtain financing may negatively impact our ability to operate and continue our business as a going concern. Conversion of our Convertible Senior Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their Convertible Senior Notes, or may otherwise depress the price of our common stock.
In the mobile and desktop channels, the vast majority of sellers have embraced header bidding technology, a solution by which impressions that would have previously been exposed to different potential sources of demand in a sequence dictated by ad server priorities are instead available for concurrent competitive bidding by demand sources.
In the mobile and desktop channels, the vast majority of sellers have embraced header bidding technology, a solution by which impressions that would have previously been exposed to different potential sources of demand in a sequence dictated 18 Table of Contents by ad server priorities are instead available for concurrent competitive bidding by demand sources.
Due to this consolidation, if our relationships with these third parties decline or are terminated, it may result in a larger than usual loss of access to mobile inventory. Any rapid and/or significant decline in the availability of mobile inventory can adversely affect our mobile advertising spend and growth prospects.
Due 19 Table of Contents to this consolidation, if our relationships with these third parties decline or are terminated, it may result in a larger than usual loss of access to mobile inventory. Any rapid and/or significant decline in the availability of mobile inventory can adversely affect our mobile advertising spend and growth prospects.
Further, because our Los Angeles office and San Francisco offices and our California data center sites are in seismically active areas, earthquakes present a particularly serious risk of business disruption. These vulnerabilities may increase with the complexity and scope of our systems and their interactions with buyer and seller systems.
Further, because our Los Angeles office and San Francisco offices 28 Table of Contents and our California data center sites are in seismically active areas, earthquakes present a particularly serious risk of business disruption. These vulnerabilities may increase with the complexity and scope of our systems and their interactions with buyer and seller systems.
Generally, our buyers and sellers are not obligated to provide us with any minimum volumes of business, may do business with our competitors as well as with us, may reduce or cancel their business with us or terminate our contracts without penalty, and may bypass us and transact directly with each other or through other intermediaries that compete with us.
Generally, our buyers and sellers are not obligated to provide us with any minimum volumes of business, may do business with our competitors as well as with us, may reduce or cancel their business with us or terminate our contracts without 16 Table of Contents penalty, and may bypass us and transact directly with each other or through other intermediaries that compete with us.
In addition, if a "make-whole fundamental change" (as defined in the Indenture) occurs prior the maturity date, we will in some 32 Table of Contents cases be required to increase the conversion rate of the Convertible Senior Notes for a holder that elects to convert its Convertible Senior Notes in connection with such make-whole fundamental change.
In addition, if a "make-whole fundamental change" (as defined in the Indenture) occurs prior the maturity date, we will in some cases be required to increase the conversion rate of the Convertible Senior Notes for a holder that elects to convert its Convertible Senior Notes in connection with such make-whole fundamental change.
However, this report cannot anticipate and fully address all 15 Table of Contents possible risks of investing in our common stock, the risks of investing in our common stock may change over time, and additional risks and uncertainties that we are not aware of, or that we do not consider to be material, may emerge.
However, this report cannot anticipate and fully address all possible risks of investing in our common stock, the risks of investing in our common stock may change over time, and additional risks and uncertainties that we are not aware of, or that we do not consider to be material, may emerge.
Proliferation of consumer tools, regulatory restrictions and technological limitations all threaten our ability to use and disclose data. 24 Table of Contents The more informed advertising is about its audience, the more valuable it is. Programmatic advertising enables more precise audience targeting based on the interests and actions of the user.
Proliferation of consumer tools, regulatory restrictions and technological limitations all threaten our ability to use and disclose data. The more informed advertising is about its audience, the more valuable it is. Programmatic advertising enables more precise audience targeting based on the interests and actions of the user.
Reserve auctions generally involve lower fees than we can charge for open marketplace transactions and we may experience additional fee pressure as more competitors, including new entrants as well as sellers themselves, build their own technology and infrastructure to enable reserve auctions.
Reserve auctions generally involve lower fees than we can charge for auction transactions and we may experience additional fee pressure as more competitors, including new entrants as well as sellers themselves, build their own technology and infrastructure to enable reserve auctions.
Regardless of whether claims that we are infringing patents or infringing or misappropriating other intellectual property rights have any merit, these claims are time- 30 Table of Contents consuming and costly to evaluate and defend, and can impose a significant burden on management and employees.
Regardless of whether claims that we are infringing patents or infringing or misappropriating other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend, and can impose a significant burden on management and employees.
Risks Related to Our Internal Controls and Finances If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations.
Risks Related to Our Internal Controls and Finances 33 Table of Contents If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations.
In addition, the existence of the Convertible Senior Notes may encourage short selling by market participants because the conversion of the Convertible Senior Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Senior Notes into shares of our common stock could depress the price of our common stock.
In addition, the existence of the Convertible Senior Notes may 31 Table of Contents encourage short selling by market participants because the conversion of the Convertible Senior Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Senior Notes into shares of our common stock could depress the price of our common stock.
We serve many buyers and sellers, but certain large buyers and sellers have accounted for and will continue to account for a disproportionate share of business transacted through our solution. In 2023, there were two buyers of advertising inventory that indirectly contributed to approximately 37% of revenue through their buying activity from sellers on our platform.
We serve many buyers and sellers, but certain large buyers and sellers have accounted for and will continue to account for a disproportionate share of business transacted through our solution. In 2024, there were two buyers of advertising inventory that indirectly contributed to approximately 39% of revenue through their buying activity from sellers on our platform.
Attracting new buyers and sellers and increasing our business with existing buyers and sellers involves substantial time, expense, and personnel investments, and we may not be successful in our efforts. This is particularly true with respect to our managed service business, which relies on direct relationships with advertisers, and is therefore more resource intensive.
Attracting new buyers and sellers and increasing our business with existing buyers and sellers involves substantial time, expense, and personnel investments, and we may not be successful in our efforts. This is particularly true with respect to 23 Table of Contents our managed service business, which relies on direct relationships with advertisers, and is therefore more resource intensive.
Risks Related to Financing Arrangements Our financing of the SpotX Acquisition and subsequent refinancing significantly increased our leverage, which may put us at greater risk of defaulting on our debt obligations and limit our ability to conduct necessary operating activities, make strategic investments, respond to changing market conditions, or obtain future financing on favorable terms.
("SpotX") acquisition and subsequent refinancing significantly increased our leverage, which may put us at greater risk of defaulting on our debt obligations and limit our ability to conduct necessary operating activities, make strategic investments, respond to changing market conditions, or obtain future financing on favorable terms.
Accordingly, our business and operations have been, and could in the future be, adversely affected by events beyond our control, such as health epidemics or pandemics, geopolitical events, including the conflicts in Ukraine and the Middle East, and economic and macroeconomic factors like labor strikes, labor shortages, supply chain disruptions, capital market disruptions and instability of financial institutions, inflation and recessionary concerns impacting the markets and communities in which our clients operate.
Accordingly, our business and operations have been, and could in the future be, adversely affected by events beyond our control, such as health epidemics or pandemics, geopolitical events, and economic and macroeconomic factors like labor strikes, labor shortages, supply chain disruptions, capital market disruptions and instability of financial institutions, inflation and recessionary concerns impacting the markets and communities in which our clients operate.
We use 29 Table of Contents various measures, including proprietary technology, in an effort to store, manage and process rules set by buyers and sellers and to ensure the quality and integrity of the results delivered to sellers and buyers through our solution.
We use various measures, including proprietary technology, in an effort to store, manage and process rules set by buyers and sellers and to ensure the quality and integrity of the results delivered to sellers and buyers through our solution.
U.S. federal NOLs generated for tax years beginning before December 31, 2018 can offset 100% of taxable income, however, these NOLs can only be carried forward for 20 years. U.S. federal NOLs generated for tax years beginning after December 31, 2018 can offset 80% of taxable income, however, these NOLs can be carried forward indefinitely.
U.S. federal NOLs generated for tax years beginning before 34 Table of Contents December 31, 2018 can offset 100% of taxable income, however, these NOLs can only be carried forward for 20 years. U.S. federal NOLs generated for tax years beginning after December 31, 2018 can offset 80% of taxable income, however, these NOLs can be carried forward indefinitely.
We believe that the elimination of third-party cookies has the potential to shift the programmatic ecosystem from an identity model powered by buyers that are able to aggregate and target audiences through cookies and other tracking technologies to one enabled by sellers that have direct relationships with consumers and are therefore better positioned to obtain user data and consent for implementing first party identifiers.
We believe that this trend has the potential to shift the programmatic ecosystem from an identity model powered by buyers that are able to aggregate and target audiences through cookies and other tracking technologies to one enabled by sellers that have direct relationships with consumers and are therefore better positioned to obtain user data and consent for implementing first party identifiers.
We are subject to regulation with respect to political advertising activities, which are governed by various federal and state laws in the U.S., and national and provincial laws worldwide. Online political advertising laws are rapidly evolving and in 27 Table of Contents certain jurisdictions we have compliance requirements with respect to political ads delivered on our platform.
We are subject to regulation with respect to political advertising activities, which are governed by various federal and state laws in the U.S., and national and provincial laws worldwide. Online political advertising laws are rapidly evolving and in certain jurisdictions we have compliance requirements with respect to political ads delivered on our platform.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters that could expose us to numerous risks. Increasingly, regulators, customers, investors, employees and other stakeholders are focusing on environmental, social and governance ("ESG") matters and related disclosures.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters that could expose us to numerous risks. 27 Table of Contents Regulators, customers, investors, employees and other stakeholders are increasingly focusing on environmental, social and governance ("ESG") matters and related disclosures.
All of these facilities and systems are vulnerable to 28 Table of Contents interruption and/or damage from a number of sources, many of which are beyond our control, including, without limitation: (i) loss of adequate power or cooling and telecommunications failures; (ii) fire, flood, earthquake, hurricane, and other natural disasters; (iii) software and hardware errors, failures, or crashes; (iv) financial insolvency; and (v) computer viruses, malware, hacking, terrorism, and similar disruptive problems.
All of these facilities and systems are vulnerable to interruption and/or damage from a number of sources, many of which are beyond our control, including, without limitation: (i) loss of adequate power or cooling and telecommunications failures; (ii) fire, flood, earthquake, hurricane, and other natural disasters or severe weather events; (iii) software and hardware errors, failures, or crashes; (iv) financial insolvency; and (v) computer viruses, malware, hacking, terrorism, and similar disruptive problems.
For instance, our take rate tends to be lower for reserve auctions compared to open auctions, and tends to be lower on CTV transactions compared to other channels. Additionally, take rates tend to be higher for our managed service business where we are responsible for delivering a campaign at a fixed price.
For instance, our take rate tends to be lower for reserve auctions compared to auctions with multiple bidders, and tends to be lower on CTV transactions compared to other channels. Additionally, take rates tend to be higher for our managed service business where we are responsible for delivering a campaign at a fixed price.
Further, much of the data we collect and use belongs to our buyers or sellers, and we receive their permission to use it. Although our sellers and buyers generally permit us to aggregate and use data from advertising placements, subject to certain restrictions, sellers or buyers might decide to restrict our collection or use of their data.
In addition, much of the data we collect and process belongs to our buyers or sellers, and we receive their permission to use it. Although our sellers and buyers generally permit us to aggregate and use data from advertising placements, subject to certain restrictions, sellers or buyers might decide to restrict our collection or use of their data.
Moreover, not material federal and state NOLs and federal research and development tax credits were generated during the pre-acquisition period by corporations that we acquired, and thus those NOLs already are subject to limitation under Section 382 and 383 of the Code and comparable state income tax laws.
Moreover, not material federal and state NOLs and federal research and development tax credits were generated during the pre-acquisition period by corporations that we acquired, and thus those NOLs already are subject to limitation under Section 382 and 383 of the Code and comparable state income tax laws. Also, prior to the merger, Telaria Inc.
Risks Related to Our International Business Strategy. Our international operations require increased expenditures and impose additional risks and compliance imperatives, and failure to successfully execute our international plans will adversely affect our growth and operating results.
Risks Related to Our International Business Strategy. 32 Table of Contents Our international operations require increased expenditures and impose additional risks and compliance imperatives, and failure to successfully execute our international plans will adversely affect our growth and operating results.
Growth in the CTV advertising market is dependent on a number of factors, including the pace of cord-cutting (the replacement of tradition linear TV for CTV streaming), the continued proliferation of digital content and CTV providers, the adoption of ad-supported models by CTV sellers in lieu of, or in addition to, subscription models, and an acceleration in the shift of ad dollars from traditional linear TV to CTV to keep pace with changing viewership habits.
Growth in the CTV advertising market is dependent on a number of factors, including the pace of user adoption, the continued proliferation of digital content and CTV providers, the adoption of ad-supported models by CTV sellers in lieu of, or in addition to, subscription models, and an acceleration in the shift of ad dollars from traditional linear TV to CTV to keep pace with changing viewership habits.
If we do not handle viewability well, or if we are not positioned to transact the higher viewability inventory competitively, our revenue and profitability could be adversely affected and we could be competitively disadvantaged.
If 29 Table of Contents we do not handle viewability well, or if we are not positioned to transact the higher viewability inventory competitively, our revenue and profitability could be adversely affected and we could be competitively disadvantaged.
Legal standards and regulatory guidance will continue to evolve. National regulators in the UK and EU are evolving their guidance on the use of advertising technologies and compliance with the GDPR and ePrivacy Directive. This guidance may be burdensome or inconsistent across countries, and present challenges to the way we operate.
National regulators in the UK and EU are evolving their guidance on the use of advertising technologies and compliance with the GDPR and ePrivacy Directive. This guidance may be burdensome or inconsistent across countries, and present challenges to the way we operate.
We must continue to increase the capacity of our platform to support our high-volume strategy, to cope with increased data volumes and parties resulting from header bidding and an increasing variety of advertising formats and platforms, and to maintain a stable service infrastructure and reliable service delivery.
It must perform these transactions end-to-end within milliseconds. We must continue to increase the capacity of our platform to support our high-volume strategy, to cope with increased data volumes and parties resulting from header bidding and an increasing variety of advertising formats and platforms. Additionally, we must maintain a stable service infrastructure and reliable service delivery.
In addition, these laws require all businesses that engage in certain advertising uses of consumer personal information to offer and honor an opt-out of such activities, including, in some states, through browser or device-based preference signals.
These state laws require all businesses that engage in certain advertising uses of consumer personal data to offer and honor an opt-out of such activities, including, in some states, through universal browser or device-based preference signals such as GPC.
For example, our Magnite Streaming platform is relatively new, and unknown errors or bugs in our software, faulty algorithms, technical or infrastructure problems, or updates to our systems could lead to an inability to effect transactions or process data to place advertisements or price inventory effectively, cause the inadvertent disclosure of proprietary data, or cause advertisements to display improperly or be placed in proximity to inappropriate content.
Any unknown errors or bugs in our software, faulty algorithms, technical or infrastructure problems, or updates to our systems could lead to an inability to effect transactions or process data to place advertisements or price inventory effectively, cause the inadvertent disclosure of proprietary data, or cause advertisements to display improperly or be placed in proximity to inappropriate content.
Acquisitions have been an important element of our business strategy, and we may pursue future acquisitions in an effort to increase revenue, expand our market position, add to our service offering and technological capabilities, respond to dynamic market conditions, or for other strategic or financial purposes.
Moreover, we may pursue future acquisitions in an effort to increase revenue, expand our market position, add to our service offering and technological capabilities, respond to dynamic market conditions, or for other strategic or financial purposes.
Additionally, for each individual advertising impression created when a user visits a website or uses an application where our auctions technology is integrated, our technology must send bid requests to appropriate buyers, receive and process their responses, select a winner, and, increasingly, integrate with downstream decisioning systems. It must perform these transactions end-to-end within milliseconds.
Our technology must scale to process the increased ad requests on our platform. Additionally, for each individual advertising impression created when a user visits a website or uses an application where our auctions technology is integrated, our technology must send bid requests to appropriate buyers, receive and process their responses, select a winner, and, increasingly, integrate with downstream decisioning systems.
Sellers may seek to change the terms on which they offer inventory on our platform, including with respect to pricing, or may elect to make advertising inventory available to our competitors who offer more favorable economic terms.
Sellers may seek to change the terms on which they offer inventory on our platform, including with respect to pricing, may elect to make advertising inventory available to our competitors who offer more favorable economic terms, may create their own ad-tech solutions, or may connect with buyers directly.
Because our software is complex, undetected errors and failures may occur, especially when new versions or updates are made to our software or network infrastructure, changes are made to sellers' or buyers' software interfacing with our solution, or as we further integrate acquired technologies.
We must operate our technology infrastructure without interruption to support the needs of sellers and buyers. Because our software is complex, undetected errors and failures may occur, especially when new versions or updates are made to our software or network infrastructure, changes are made to sellers' or buyers' software interfacing with our solution, or as we further integrate acquired technologies.
Any such failure or delay in adoption could negatively impact our finance results and growth prospects. We may not be able to maintain or increase access to the CTV advertising inventory monetized through our platform on terms acceptable to us. Our success requires us to maintain and expand our access to premium and unique advertising inventory.
Any such failure or delay in adoption could negatively impact our finance results and growth prospects. We may not be able to maintain or increase access to the CTV advertising inventory monetized through our platform on terms acceptable to us, and our efforts to maintain such access may subject us to an increased risk of losses.
We may also have no way of remediating intellectual property violations, and failure to do so could cause our business, results of operations or financial condition to be materially and adversely affected.
We may also have no way of remediating intellectual property violations, and failure to do so could cause our business, results of operations or financial condition to be materially and adversely affected. Risks Related to Financing Arrangements 30 Table of Contents Our financing of the SpotX, Inc.
Such investment may negatively affect our profitability and results of operations. To the extent our access to mobile inventory is limited by third-party technology or lack of direct relationships with mobile sellers, our ability to grow our business will be impaired.
To the extent our access to mobile inventory is limited by third-party technology or lack of direct relationships with mobile sellers, our ability to grow our business will be impaired.
We reported net loss of $159.2 million, net loss of $130.3 million, and net income of $0.1 million during the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, we had an accumulated deficit of $684.0 million.
We reported net income of $22.8 million during the year ended December 31, 2024 and net loss of $159.2 million and $130.3 million during the years ended December 31, 2023, and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $661.2 million.
Any limitation imposed on our collection, use or disclosure of this data could significantly diminish the value of our solution and cause us to lose sellers, buyers, and revenue.
Risks Related to Our Collection, Use and Disclosure of Data Our business depends on our ability to collect, use, and disclose data to deliver advertisements. Any limitation imposed on our collection, use or disclosure of this data could significantly diminish the value of our solution and cause us to lose sellers, buyers, and revenue.
Separate from these comprehensive state consumer privacy laws, lawmakers continue to focus their efforts on data collection, processing, and disclosures by companies that do not have direct relationships with the consumers whose personal data they process. Several states, including California and Texas, have recently enacted or updated laws restricting the activities of data brokers.
Separate from these comprehensive state consumer privacy laws, lawmakers continue to focus their efforts on data collection, processing, and disclosures by companies that do not have direct relationships with the consumers whose personal data they process.
Furthermore, we may receive public pressure to discontinue working with certain sellers or buyers on our platform and our determination whether to continue or cease working with a given client may subject us to reputational risk.
Furthermore, we may receive public pressure to discontinue working with certain sellers or buyers on our platform and our determination whether to continue or cease working with a given client may subject us to reputational risk. Our sales efforts with buyers and sellers may require significant time and expense and may not yield the results we seek.
We have addressed the market need for such requirements in part, through our ad server, SpringServe, which offers a unified programmatic demand solution for CTV, which leverages our existing programmatic SSP capabilities and connects with third party programmatic demand sources.
We have addressed the market need for such requirements in part, through our ad server, SpringServe, which offers a unified programmatic demand solution for CTV, which leverages our existing programmatic SSP capabilities and connects with third party programmatic demand sources. However, this offering may not be adopted by clients, or such clients may adopt competing solutions.
In addition, sellers sometimes place significant restrictions on the sale of their advertising inventory, such as strict security requirements, limitations on data sharing, prohibitions on advertisements from specific advertisers or specific industries, and restrictions on the use of specified creative content or format. Finally, with the proliferation of header bidding, sellers' inventory is available for purchase through multiple exchanges simultaneously.
In addition, sellers sometimes place significant restrictions on the sale of their advertising inventory, such as strict security requirements, limitations on data sharing, prohibitions on advertisements from specific advertisers or specific industries, and restrictions on the use of specified creative content or format.
Our revenue and operating results are highly dependent on the overall demand for advertising and any macroeconomic challenges may adversely affect our business, financial position, results of operations and/or cash flows. Our business depends on the overall demand for advertising and on the economic health of our current and prospective sellers and buyers.
Risks Related to Our Business, Growth Prospects and Operating Results Our revenue and operating results are highly dependent on the overall demand for advertising and any macroeconomic challenges may adversely affect our business, financial position, results of operations and/or cash flows.
This solution helps agencies maximize the spend going towards working media, makes it easier for sellers and agencies to securely share data, improves workflow for campaigns traditionally transacted manually, and helps publishers generate more revenue and develop new sources of unique 22 Table of Contents demand.
For instance, ClearLine, a self-service buying tool that provides agencies direct access to premium advertising on our platform helps agencies maximize the spend going towards working media, makes it easier for sellers and agencies to securely share data, improves workflow for campaigns traditionally transacted 22 Table of Contents manually, and helps publishers generate more revenue and develop new sources of unique demand.
We do not own or control the ad inventory upon which our business depends and do not own or create content. Sellers are generally not required to offer a specified level of inventory on our platform, and we cannot be assured that any publisher will continue to make their ad inventory available on our platform.
Sellers are generally not required to offer a specified level of inventory on our platform, and we cannot be assured that any publisher will continue to 17 Table of Contents make their ad inventory available on our platform.
Beginning in 2028, data brokers must undergo audits verifying their compliance with the Delete Act. These obligations may reduce the data available to Magnite, require us to develop complex and expensive compliance tools and procedures, and may result in reductions in revenue.
These obligations may reduce the data available to Magnite, require us to develop complex and expensive compliance tools and procedures, and may result in reductions in revenue.
To the extent we are unable, for cost or other reasons, to effectively increase the capacity of our platform, continue to process transactions at fast enough speeds, and support emerging advertising formats or services preferred by buyers, our revenue will suffer. We expect to continue to invest in our platform to meet increasing demand.
To the extent we are unable, for cost or other reasons, to effectively increase the capacity of our platform, continue to process transactions at fast enough speeds, and support emerging advertising formats or services preferred by buyers, our revenue will suffer. Furthermore, failure to optimize and manage infrastructure costs efficiently could result in margin compression and increased financial strain.
Further, Google has announced that it will deprecate the mobile advertising identifier used on Android devices. These shifts have had, and will likely continue to have, a substantial impact on the mobile advertising ecosystem and could harm growth in this channel.
For example, Apple requires user opt-in before permitting access to Apple’s unique identifier, or IDFA. Further, it is likely that Google will eventually deprecate the mobile advertising identifier used on Android devices. These shifts have had, and will likely continue to have, a substantial impact on the mobile advertising ecosystem and could harm growth in this channel.
Notably, California recently passed the Delete Act, dramatically increasing obligations and potential penalties relative to the state’s preexisting data broker statute. Beyond additional transparency requirements, beginning in August 2026, companies registered as data brokers in California (including Magnite), must honor universal deletion requests consumers make of all data brokers via a deletion mechanism the state will create.
Beyond additional transparency requirements, beginning in August 2026, companies registered as data brokers in California (including Magnite), must honor universal deletion requests consumers make of all data brokers via a deletion mechanism the state will create.
User privacy features of other channels of programmatic advertising are growing, such as use of browser-based opt out signals like Global Privacy Control (“GPC”) on web browsers, and privacy features on CTV or over-the-top video. Technical or policy changes, including regulation or industry self-regulation, could also harm our growth in those channels.
Use of GPC and similar user privacy features provided on other channels of programmatic advertising, such as CTV, are growing. Technical or policy changes, including regulation or industry self-regulation, could also harm our growth in those channels.
We may also communicate certain initiatives and goals regarding environmental matters, diversity, responsible advertising, social investments and other ESG matters in our SEC filings or in other public disclosures. We could face scrutiny from certain stakeholders for the scope or nature of such initiatives or goals, or for any revisions to these goals.
We may also communicate certain initiatives and goals regarding environmental matters, diversity, responsible advertising, social investments and other ESG matters in our SEC filings or in other public disclosures.
In addition, as our own capabilities evolve, we may be perceived by clients, particularly buyers, as competing with them, which could result in a loss of their business or otherwise negatively impact our relationships. For instance, we recently introduced ClearLine, a self-service buying tool that provides agencies direct access to premium advertising on our platform.
In addition, as our own capabilities evolve, we may be perceived by clients, particularly buyers, as competing with them, which could result in a loss of their business or otherwise negatively impact our relationships.
In addition, the Company and Telaria both underwent ownership changes for tax purposes (i.e. a more than 50% change in stock ownership in aggregated 5% shareholders) on April 1, 2020 due to the Merger.
("Telaria") acquired corporations with pre-acquisition NOLs that are subject to limitation under Section 382 of the Code and comparable state income tax laws. In addition, the Company and Telaria both underwent ownership changes for tax purposes (i.e. a more than 50% change in stock ownership in aggregated 5% shareholders) on April 1, 2020 due to the Merger.
At December 31, 2023, we had U.S. federal net operating loss carryforwards, or NOLs, of approximately $324.1 million, state NOLs of approximately $227.9 million, foreign NOLs of approximately $23.3 million, federal research and development tax credit carryforwards of approximately $4.4 million, and state research and development tax credit carryforwards of approximately $10.5 million.
At December 31, 2024, we had U.S. federal net operating loss carryforwards, or NOLs, of approximately $263.9 million, state NOLs of approximately $204.8 million, foreign NOLs of approximately $17.7 million, federal research and development tax credit carryforwards of approximately $6.2 million, and state research and development tax credit carryforwards of approximately $10.2 million.
If buyers or sellers fail to abide by relevant laws, rules and regulations, or contract requirements, we could potentially face liability for such misuse. 21 Table of Contents In addition, both advertisers and inventory suppliers are concerned about being associated with content they consider inappropriate, competitive or inconsistent with their brands, or illegal, and they are hesitant to spend money or make inventory available, respectively, without some guarantee of brand security.
In addition, both advertisers and inventory suppliers are concerned about being associated with content they consider inappropriate, competitive or inconsistent with their brands, or illegal, and they are hesitant to spend money or make inventory available, respectively, without some guarantee of brand security.
Buyers and sellers may also resist 18 Table of Contents adopting our new solutions for various reasons, including reluctance to disrupt existing relationships and business practices or to invest in necessary technological integration.
Buyers and sellers may also resist adopting our new solutions for various reasons, including reluctance to disrupt existing relationships and business practices or to invest in necessary technological integration. Clients, vendors, and competitors may also react negatively to the announcement of new products and offerings, which may have a harmful effect on our relationships and our business.
Despite the opportunities created by programmatic advertising, CTV sellers have been slower to adopt programmatic solutions compared to desktop and mobile video sellers. Many CTV sellers have backgrounds in cable or broadcast television and have limited experience with digital advertising, and in particular programmatic advertising.
Although programmatic represents a substantial majority of CTV advertising, CTV sellers have generally been more cautious to adopt programmatic solutions compared to desktop and mobile video sellers, and in particular, with respect to biddable auctions. Many CTV sellers have backgrounds in cable or broadcast television and have limited experience with digital advertising, and in particular programmatic advertising.
The GDPR and UK GDPR impose strict requirements for transferring personal data from the European Economic Area and United Kingdom to the United States and other countries, and regulatory guidance and case law on international transfers is continually evolving; this increases uncertainty and may require us to change our EEA and UK data practices and/or change our technology solution or business model, which may in turn adversely affect demand for our solution.
Any failure to protect, and comply with applicable laws and regulations or industry standards applicable to, personal data or other data relating to consumers could result in enforcement action against us, including fines, imprisonment of our officers, and public censure, claims for damages by consumers and other affected individuals, damage to our reputation, and loss of goodwill. 26 Table of Contents The GDPR and UK GDPR impose strict requirements for transferring personal data from the European Economic Area and United Kingdom to the United States and other countries, and regulatory guidance and case law on international transfers is continually evolving; this increases uncertainty and may require us to change our EEA and UK data practices and/or change our technology solution or business model, which may in turn adversely affect demand for our solution.
Any such action against us could be costly and time consuming, require us to change our business practices, divert management's attention and our resources, and be damaging to our reputation and our business. In addition, we could be adversely affected by new or altered self-regulatory guidelines that are inconsistent with our practices.
Any such action against us could be costly and time consuming, require us to change our business practices, divert management's attention and our resources, and be damaging to our reputation and our business.
Buyers, in turn, are free to direct their spend to us or one or more of our competitors, and increasingly are seeking price concessions, rebates, or other consideration to direct more spend towards us.
Finally, with the proliferation of header bidding in desktop and mobile, sellers' inventory is available for purchase through multiple exchanges simultaneously. Buyers, in turn, are free to direct their spend to us or one or more of our competitors, and increasingly are seeking price concessions, rebates, or other consideration to direct more spend towards us.
We may also negotiate lower take rates with large sellers to win additional business or share of inventory.
We may also negotiate lower take rates with large sellers to win additional business or share of inventory, and these sellers may account for a disproportionately higher percentage of advertising spend on our platform.
Advertising services are considered a service and are generally not subject to sales and use tax, except in certain states. Additionally, Maryland adopted a tax on gross revenues from digital advertising. While the law is being challenged in the courts, the law took effect and we are technically subject to the tax, which increases our cost of doing business.
Advertising services are 20 Table of Contents considered a service and are generally not subject to sales and use tax, except in certain states. Additionally, Maryland adopted a tax on gross revenues from digital advertising.
If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public.
If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar solutions with lower development effort and time and ultimately put us at a competitive disadvantage.
Sellers may also require us to take increased risks in some of our commercial agreements in the form of offering revenue guarantees or minimum spend commitments. Furthermore, sellers may enter into exclusive relationships with our competitors, which preclude us from offering their inventory. These risks are particularly pronounced with CTV sellers.
Furthermore, sellers may enter into exclusive relationships with our competitors or with DSPs directly, which may preclude us from offering their inventory. These risks are particularly pronounced with CTV sellers.
Other states are looking to follow suit and tax either 20 Table of Contents digital advertising or other goods or services. In addition, the continual evolution of our services and the expansion of our business offerings may further complicate the determination of the sales taxability of our services in certain jurisdictions.
In addition, the continual evolution of our services and the expansion of our business offerings may further complicate the determination of the sales taxability of our services in certain jurisdictions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWhile we are not aware of having experienced any material cybersecurity threats or incidents, there can be no guarantee that we will not be the subject of future successful attacks, threats or incidents. To mitigate against such risks, the company carries information security risk insurance that provides protection against potential losses arising from a cybersecurity incident. Refer to Item 1A.
Biggest changeWhile we are not aware of any risks from cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition, there can be no guarantee that we will not be the subject of future successful attacks, threats or incidents.
The IRP sets out a coordinated approach to investigating, containing, documenting and mitigating incidents, and provides triage workflows for individuals to follow. Our incident response process is generally based on the NIST framework and focuses on four phases: preparation; detection and analysis; containment, eradication and recovery; and post-incident remediation.
The IRP sets out a coordinated approach to investigating, containing, documenting and mitigating incidents, and provides triage workflows for individuals to follow. Our incident response process is generally based on the NIST Cybersecurity Framework and focuses on four phases: preparation; detection and analysis; containment, eradication and recovery; and post-incident remediation.
Our chief information security officer (“CISO”) reports to the board quarterly on cybersecurity matters. These reports and presentations are prepared with input from members of our senior management team responsible for overseeing the company’s cybersecurity risk management, including the Chief Technology Officer, Chief Financial Officer, Chief Legal Officer and Chief People Officer.
Our Chief Information Security Officer (“CISO”) reports to the board quarterly on cybersecurity matters. These reports and presentations are prepared with input from members of our senior management team responsible for overseeing the company’s cybersecurity risk management, including the Chief Technology Officer, Chief Financial Officer, Chief Legal Officer, Chief People Officer, and SVP, Engineering.
All phases of the review process are led by the CISO or another member of the security team, as appropriate. We perform regular vulnerability scanning of our systems in order to ensure appropriate security controls are in place and function in accordance with established policies.
All phases of the review process are led by the CISO or another member of the security team, as appropriate. We perform regular vulnerability scanning of our systems in order to confirm appropriate security controls are in place and function in accordance with established policies.
In addition to our internal audit team, we have a dedicated compliance manager within the engineering department who helps ensure compliance with our control framework.
In addition to our internal audit team, we have a dedicated compliance manager within the engineering department who helps promote compliance with our control framework.
The CISO receives reports on cybersecurity threats from other internal information security personnel on an ongoing basis and in conjunction with management, regularly reviews risk management measures implemented by the Company to identify and mitigate cybersecurity risks. The CISO also attends meetings of the board of directors to report on any material developments.
She holds a bachelors degree, with a certificate in architecture and systems engineering, and a professional education certificate in AI and machine learning. The CISO receives reports on cybersecurity threats from other internal information security personnel on an ongoing basis and in conjunction with management, regularly reviews risk management measures implemented by the Company to identify and mitigate cybersecurity risks.
Despite ongoing efforts to continue improvement of our and our vendors’ ability to protect against cyber-attacks, we may not be able to protect all information systems.
Despite ongoing efforts to continue improvement of our and our vendors’ ability to protect against 38 Table of Contents cyber-attacks, we may not be able to protect all information systems. Any incidents may lead to reputational harm, revenue and client loss, legal actions, statutory penalties, among other consequences.
"Risk Factors" for additional information related to cybersecurity risks and the impact they may have on our operations. 39 Table of Contents
To mitigate against such risks, the company carries information security risk insurance that provides protection against potential losses arising from a cybersecurity incident. Refer to Item 1A. "Risk Factors" for additional information related to cybersecurity risks and the impact they may have on our operations. 39 Table of Contents
We have protocols by which certain cybersecurity incidents are reported promptly to management and the legal team. The Company maintains a general security policy, which outlines the relationship between employees and information technologies and systems within the Company, and sets guidelines on how such technologies and systems should and should not be used.
The Company maintains a general security policy, which outlines the relationship between employees and information technologies and systems within the Company, and sets guidelines on how such technologies and systems should and should not be used. This policy is revised regularly by the CISO and reviewed and acknowledged by all Company employees in conjunction with annual cybersecurity training.
Our CISO, who has extensive cybersecurity knowledge and skills gained from extensive information technology and engineering experience, heads the team responsible for implementing, monitoring and maintaining cybersecurity and data protection practices across our business.
Our CISO heads the team responsible for implementing, monitoring and maintaining cybersecurity and data protection practices across our business. Our CISO has extensive background, knowledge and skill in cybersecurity, with over 12 years of experience in establishing and maturing cybersecurity programs in the advertising technology space, from small startups to Fortune 500 companies.
Any incidents may lead to reputational harm, revenue and client loss, legal actions, statutory penalties, among other consequences. 38 Table of Contents Although we maintain a robust cybersecurity program, due to evolving cybersecurity threats, it has and will continue to be difficult to prevent, detect, mitigate, and remediate cybersecurity incidents.
Although we maintain a robust cybersecurity program, due to the evolving cybersecurity threat landscape, it has and will continue to be difficult to prevent, detect, mitigate, and remediate cybersecurity incidents.
Removed
This policy is revised regularly by the CISO and reviewed and acknowledged by all Company employees in conjunction with annual cybersecurity training.
Added
The CISO also attends meetings of the board of directors to report on any material developments. We have protocols by which certain cybersecurity incidents are reported promptly to management and the legal team.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also have an office in Los Angeles under a lease that expires in 2031 that is approximately 38,754 square feet and lease additional offices and maintain data centers in other locations in North America, South America, Europe, Australia, and Asia.
Biggest changeWe also have an office in Los Angeles under a lease that expires in 2032 that is approximately 38,754 square feet and lease additional offices and maintain data centers in other locations in North America, South America, Europe, Australia, and Asia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, based on our knowledge as of December 31, 2023, we believe that the final resolution of such matters pending at the time of this report, individually and in the aggregate, will not have a material adverse effect upon our consolidated financial position, results of operations or cash flows.
Biggest changeHowever, based on our knowledge as of December 31, 2024, we believe that the final resolution of such matters pending at the time of this report, individually and in the aggregate, will not have a material adverse effect upon our consolidated financial position, results of operations or cash flows.
Consequently, we are unable to ascertain the ultimate aggregate amount of monetary liability, amounts which may be covered by insurance or recoverable from third parties, or the financial impact with respect to such matters as of December 31, 2023.
Consequently, we are unable to ascertain the ultimate aggregate amount of monetary liability, amounts which may be covered by insurance or recoverable from third parties, or the financial impact with respect to such matters as of December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Common stock repurchases during the quarter ended December 31, 2023 were as follows (in thousands, except per share amounts): Period Total Number of Shares Purchased Average Price per Share October 1 - October 31, 2023 Equity withholding (1) — $ — November 1 - November 30, 2023 Equity withholding (1) 258 $ 7.89 December 1 - December 31, 2023 Equity withholding (1) 11 $ 9.56 269 (1) Upon vesting of most restricted stock units or stock awards, we are required to deposit minimum statutory employee withholding taxes on behalf of the holders of the vested awards.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Common stock repurchases during the quarter ended December 31, 2024 were as follows (in thousands, except per share amounts): Period Total Number of Shares Purchased Average Price per Share Total number of shares purchased as part of a Publicly Announced Program Maximum Approximate Dollar Value that May Yet be Purchased Under the Program October 1 - October 31, 2024 Equity withholding (1) 4 $ 12.24 — $ — Repurchase program (2) 462 $ 12.03 462 $ 110,427 November 1 - November 30, 2024 Equity withholding (1) 301 $ 15.85 — $ — Repurchase program (2) — $ — — $ 110,427 December 1 - December 31, 2024 Equity withholding (1) — $ — — $ — Repurchase program (2) — $ — — $ 110,427 767 462 (1) Upon vesting of most restricted stock units or stock awards, we are required to deposit minimum statutory employee withholding taxes on behalf of the holders of the vested awards.
The returns shown are based on historical results and are not necessarily indicative of, nor intended to forecast, future stock price performance. 41 Table of Contents COMPARISON OF CUMULATIVE TOTAL RETURN Item 6. Reserved 42 Table of Contents
The returns shown are based on historical results and are not necessarily indicative of, nor intended to forecast, future stock price performance. COMPARISON OF CUMULATIVE TOTAL RETURN Item 6. Reserved 42 Table of Contents
Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of ours under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by 41 Table of Contents reference into any filing of ours under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
The following graph compares the cumulative total stockholder return on an initial investment of $100 in our common stock between December 31, 2018 and December 31, 2023, with the comparative cumulative total returns of the S&P 500 Index, Nasdaq Composite, Nasdaq Internet Index, S&P Internet Select Industry Index, and Russell 2000 Index over the same period.
The following graph compares the cumulative total stockholder return on an initial investment of $100 in our common stock between December 31, 2019 and December 31, 2024, with the comparative cumulative total returns of the S&P 500 Index, Nasdaq Composite, Nasdaq Internet Index, S&P Internet Select Industry Index, and Russell 2000 Index over the same period.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq Global Select Market of the Nasdaq Stock Market LLC ("Nasdaq") under the symbol "MGNI." Holders of Record As of February 20, 2024, there were approximately 53 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq Global Select Market of the Nasdaq Stock Market LLC ("Nasdaq") under the symbol "MGNI." Holders of Record As of February 19, 2025, there were approximately 45 holders of record of our common stock.
Added
(2) On February 1, 2024, our Board of Directors approved a share repurchase program (the "February 2024 Repurchase Plan") under which the Company is authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $125.0 million, through February 1, 2026.
Added
Shares repurchased under the February 2024 Repurchase Plan in the quarter ended December 31, 2024 have been subsequently retired, which was recorded as a reduction in additional paid in capital. The average price per share purchased under the February 2024 Repurchase Plan includes broker commission costs.
Added
As of December 31, 2024, $110.4 million remains available under the February 2024 Repurchase Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related income tax benefits, the applicability of special tax regimes, changes in foreign currency exchange rates, changes in our stock price, changes in our deferred tax assets ("DTAs") and liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions. 45 Table of Contents Results of Operations The following table sets forth our consolidated results of operations: Year Ended Change % December 31, 2023 December 31, 2022 December 31, 2021 2023 vs 2022 2022 vs 2021 (in thousands) Revenue $ 619,710 $ 577,069 $ 468,413 7 % 23 % Expenses (1)(2) : Cost of revenue 409,906 307,165 201,662 33 % 52 % Sales and marketing 173,982 200,081 170,406 (13) % 17 % Technology and development 94,318 93,757 74,449 1 % 26 % General and administrative 89,048 81,382 64,789 9 % 26 % Merger, acquisition, and restructuring costs 7,465 7,468 38,177 — % (80) % Total expenses 774,719 689,853 549,483 12 % 26 % Loss from operations (155,009) (112,784) (81,070) 37 % 39 % Other expense, net 2,538 22,813 13,918 (89) % 64 % Loss before income taxes (157,547) (135,597) (94,988) 16 % 43 % Provision (benefit) for income taxes 1,637 (5,274) (95,053) (131) % (94) % Net income (loss) $ (159,184) $ (130,323) $ 65 22 % NM NM means Not Meaningful (1) Stock-based compensation expense included in our expenses was as follows: Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Cost of revenue $ 1,809 $ 1,666 $ 792 Sales and marketing 27,263 21,558 15,718 Technology and development 20,542 19,961 11,857 General and administrative 22,860 18,929 11,297 Merger, acquisition, and restructuring costs 143 2,004 1,071 Total stock-based compensation expense $ 72,617 $ 64,118 $ 40,735 (2) Depreciation and amortization expense included in our expenses was as follows: Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Cost of revenue $ 211,956 $ 142,616 $ 78,115 Sales and marketing 27,584 71,887 67,463 Technology and development 779 913 674 General and administrative 501 636 634 Total depreciation and amortization expense $ 240,820 $ 216,052 $ 146,886 46 Table of Contents The following table sets forth our consolidated results of operations for the specified periods as a percentage of our revenue for those periods presented: Year Ended December 31, 2023 December 31, 2022 December 31, 2021 Revenue 100 % 100 % 100 % Cost of revenue 66 53 43 Sales and marketing 28 35 36 Technology and development 15 16 16 General and administrative 14 14 14 Merger, acquisition, and restructuring costs 1 1 8 Total expenses 125 120 117 Loss from operations (25) (20) (17) Other expense, net — 4 3 Loss before income taxes (25) (23) (20) Provision (benefit) for income taxes — (1) (20) Net income (loss) (26) % (23) % — % Note: Percentages may not sum due to rounding Comparison of the Years Ended December 31, 2023, 2022, and 2021 Revenue Revenue increased $42.6 million, or 7%, for the year ended December 31, 2023 compared to the prior year.
Biggest changeOur effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related income tax benefits, the applicability of special tax regimes, changes in foreign currency exchange rates, changes in our stock price, changes in our deferred tax assets ("DTAs") and liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions. 46 Table of Contents Results of Operations The following table sets forth our consolidated results of operations: Year Ended Change % December 31, 2024 December 31, 2023 December 31, 2022 2024 vs 2023 2023 vs 2022 (in thousands) Revenue $ 668,170 $ 619,710 $ 577,069 8 % 7 % Expenses: Cost of revenue 258,838 409,906 307,165 (37) % 33 % Sales and marketing 166,142 173,982 200,081 (5) % (13) % Technology and development 95,243 94,318 93,757 1 % 1 % General and administrative 96,860 89,048 81,382 9 % 9 % Merger, acquisition, and restructuring costs — 7,465 7,468 (100) % — % Total expenses 617,083 774,719 689,853 (20) % 12 % Income (loss) from operations 51,087 (155,009) (112,784) NM 37 % Other expense, net 24,603 2,538 22,813 869 % (89) % Income (loss) before income taxes 26,484 (157,547) (135,597) NM 16 % Provision (benefit) for income taxes 3,698 1,637 (5,274) 126 % NM Net income (loss) $ 22,786 $ (159,184) $ (130,323) NM 22 % NM - Not meaningful The following table sets forth our consolidated results of operations for the specified periods as a percentage of our revenue for those periods presented: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Revenue 100 % 100 % 100 % Cost of revenue 39 66 53 Sales and marketing 25 28 35 Technology and development 14 15 16 General and administrative 14 14 14 Merger, acquisition, and restructuring costs — 1 1 Total expenses 92 125 120 Income (loss) from operations 8 (25) (20) Other expense, net 4 — 4 Income (loss) before income taxes 4 (25) (23) Provision (benefit) for income taxes 1 — (1) Net income (loss) 3 % (26) % (23) % Note: Percentages may not sum due to rounding Comparison of the Years Ended December 31, 2024, 2023, and 2022 Revenue Revenue increased $48.5 million, or 8%, for the year ended December 31, 2024 compared to the prior year.
Other income consists primarily of rental income from commercial office space we hold under lease and have sublet to other tenants. Provision (Benefit) for Income Taxes We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions.
Other income primarily consists of rental income from commercial office space we hold under lease and have sublet to other tenants. Provision (Benefit) for Income Taxes We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions.
Generally, our revenue is based on a percentage of the ad spend that runs through our platform, although for certain clients, services, or transaction types we may receive a fixed CPM for each impression sold, and for advertising campaigns that are transacted through insertion orders we earn revenue based on the full amount of ad spend that runs through our platform.
Generally, our revenue is based on a percentage of the ad spend that runs through our platform, although for certain clients, services, or transaction types we may receive a fixed CPM for each impression sold, and for advertising campaigns that are transacted through insertion orders, we earn revenue based on the full amount of ad spend that runs through our platform.
Adjusted EBITDA We define Adjusted EBITDA as net income (loss) adjusted to exclude stock-based compensation expense, depreciation and amortization, amortization of acquired intangible assets, impairment charges, interest income or expense, and other cash and non-cash based income or expenses that we do not consider indicative of our core operating performance, including, but not limited to foreign exchange gains and losses, acquisition and related items, gains or losses on extinguishment of debt, non-operational real estate and other expense (income), net, and provision (benefit) for income taxes.
Adjusted EBITDA We define Adjusted EBITDA as net income (loss) adjusted to exclude stock-based compensation expense, depreciation and amortization, amortization of acquired intangible assets, impairment charges, interest income or expense, and other cash and non-cash based income or expenses that we do not consider indicative of our core operating performance, including, but not limited to foreign exchange gains and losses, acquisition and related items, gains or losses on extinguishment of debt, other debt refinancing expenses, non-operational real estate and other expenses (income), net, and provision (benefit) for income taxes.
Our sales and support organization focuses on increasing the adoption of our solution by existing and new buyers and sellers and supports ongoing client relationships. We amortize acquired intangibles associated with client relationships and backlog from our business acquisitions over their estimated useful lives. Technology and Development .
Our sales and support organization focuses on increasing the adoption of our solution by existing and new buyers and sellers and supports ongoing client relationships. We amortize acquired intangibles associated with client relationships from our business acquisitions over their estimated useful lives. Technology and Development .
Foreign currency exchange (gain) loss, net consists primarily of gains and losses on foreign currency transactions and remeasurement of monetary assets and liabilities on our balance sheet denominated in foreign currencies. Foreign currency monetary assets and liabilities consist primarily of cash and cash equivalents, accounts receivable, accounts payable, and various intercompany balances held between our subsidiaries.
Foreign currency exchange (gain) loss, net consists of gains and losses on foreign currency transactions and remeasurement of monetary assets and liabilities on our balance sheet denominated in foreign currencies. Foreign currency monetary assets and liabilities primarily consists of cash and cash equivalents, accounts receivable, accounts payable, and various intercompany balances held between our subsidiaries.
Our primary foreign currency exposures are currencies other than the U.S. Dollar, principally the Australian Dollar, British Pound, Canadian Dollar, Euro, Japanese Yen, and New Zealand Dollar. Gain on Extinguishment of Debt .
Our primary foreign currency exposures are currencies other than the U.S. Dollar, principally the Australian Dollar, British Pound, Canadian Dollar, Euro, Japanese Yen, and New Zealand Dollar. (Gain) Loss on Extinguishment of Debt .
The net deferred tax liabilities recorded in connection with the prior year’s acquisitions and current taxable income for the year provided sources of taxable income to support the realization of pre-existing deferred tax assets.
The net deferred tax liabilities recorded in connection with prior acquisitions and current taxable income for the year provided sources of taxable income to support the realization of pre-existing deferred tax assets.
Our general and administrative expenses consist primarily of personnel costs, including salaries, bonuses, and stock-based compensation, associated with our executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees, facilities-related costs, depreciation expense, bad debt expense, and other corporate-related expenses. Merger, Acquisition, and Restructuring Costs.
Our general and administrative expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, associated with our executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees, facilities-related costs, depreciation expense, bad debt expense, and other corporate-related expenses. Merger, Acquisition, and Restructuring Costs.
Cash outflows from financing activities for the year ended December 31, 2022 included $15.7 million for payments related to share repurchases, $14.5 million for taxes paid related to net share settlement of stock-based awards, and $3.6 million for repayment of our Prior Term Loan B Facility.
Cash outflows from financing activities for the year ended December 31, 2022 included $15.7 million for payments related to share repurchases, $14.5 million for taxes paid related to net share settlement of stock-based awards, and $3.6 million for repayment of our 2021 Term Loan B Facility.
Contractual Obligations and Known Future Cash Requirements Our principal commitments as of December 31, 2023 consist of obligations under our Convertible Senior Notes, Prior Term Loan B Facility, Prior Revolving Credit Facility, leases for our various office facilities, including our corporate headquarters in New York, New York and offices in Los Angeles, California, and operating lease agreements, including data centers and cloud hosting services that expire at various times through 2033.
Contractual Obligations and Known Future Cash Requirements Our principal commitments as of December 31, 2024 consist of obligations under our Convertible Senior Notes, 2024 Term Loan B Facility, 2024 Revolving Credit Facility, leases for our various office facilities, including our corporate headquarters in New York, New York and offices in Los Angeles, California, and operating lease agreements, including data centers and cloud hosting services that expire at various times through 2033.
Our merger, acquisition, and restructuring costs consist primarily of professional service fees associated with merger and acquisition activities, cash-based employee termination costs, related stock-based compensation charges, and other restructuring activities, including facility closures, relocation costs, contract termination costs, and impairment costs of abandoned technology associated with restructuring activities. Other (Income) Expense Interest (Income) Expense, Net.
Our merger, acquisition, and restructuring costs primarily consists of professional service fees associated with merger and acquisition activities, cash-based employee termination costs, related stock-based compensation charges, and other restructuring activities, including facility closures, relocation costs, contract termination costs, and impairment costs of abandoned technology associated with restructuring activities. Other (Income) Expense Interest (Income) Expense, Net.
There have been no significant changes in our accounting policies or estimates from those disclosed in our audited consolidated financial statements and notes thereto for the years ended December 31, 2023, 2022 and 2021.
There have been no significant changes in our accounting policies or estimates from those disclosed in our audited consolidated financial statements and notes thereto for the years ended December 31, 2024, 2023 and 2022.
In 2022, these costs were primarily due to restructuring activities related to the integration of our recent acquisitions, which included $3.3 million of impairment costs associated with abandoned technology, $2.0 million non-cash stock-based compensation expense associated with the acceleration of unvested equity awards, and $1.2 million of one-time cash-based employee termination costs.
In 2022, these costs primarily included $3.3 million of impairment costs associated with abandoned technology, $2.0 million non-cash stock-based compensation expense associated with the acceleration of unvested equity awards, and $1.2 million of one-time cash-based employee termination costs due to restructuring activities related to the integration of our acquisitions.
Our sales and marketing expenses consist primarily of personnel costs, including salaries, bonuses, and stock-based compensation, as well as marketing expenses such as brand marketing, travel expenses, trade shows and marketing materials, amortization expense associated with client relationships, backlog, and non-compete agreements from our business acquisitions, professional services, facilities-related costs, and depreciation expense.
Our sales and marketing expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, as well as marketing expenses such as brand marketing, travel expenses, trade shows and marketing materials, amortization expense associated with client relationships, and non-compete agreements from our business acquisitions, professional services, facilities-related costs, and depreciation expense.
Software development costs that do not meet the qualification for capitalization, as further discussed below, are expensed as incurred and recorded in technology and development expenses in the results of operations. 57 Table of Contents Software development activities generally consist of three stages, (i) the planning stage, (ii) the application and infrastructure development stage, and (iii) the post implementation stage.
Software development costs that do not meet the qualification for capitalization, as further discussed below, are expensed as incurred and recorded in technology and development expenses in the results of operations. Software development activities generally consist of three stages, (i) the planning stage, (ii) the application and infrastructure development stage, and (iii) the post implementation stage.
On February 6, 2024, we entered into a credit agreement (the “New Credit Agreement”) with Morgan Stanley Senior Funding, Inc. as term loan administrative agent and Citibank, N.A. as revolving facility administrative agent and collateral agent, and other lender parties thereto.
On February 6, 2024, we entered into a credit agreement (the “2024 Credit Agreement”) with Morgan Stanley Senior Funding, Inc. as our term loan administrative agent and Citibank, N.A. as our revolving facility administrative agent and collateral agent, and other lender parties thereto.
Our collection and payment cycle can vary from period to period depending upon various circumstances, including seasonality, and may be negatively impacted by certain macroeconomic challenges, such as capital market disruptions and instability of financial institutions.
Our collection and payment cycle can vary from period to period depending upon various circumstances, 53 Table of Contents including seasonality, and may be negatively impacted by certain macroeconomic challenges, such as capital market disruptions and instability of financial institutions.
Our cost of revenue consists primarily of cloud hosting, data center, and bandwidth costs, ad protection costs, depreciation and maintenance expense of hardware supporting our revenue-producing platform, amortization of software costs for the development of our revenue-producing platform, amortization expense associated with acquired developed technologies, and personnel costs.
Our cost of revenue primarily consists of cloud hosting, data center, and bandwidth costs, ad verification costs, depreciation and maintenance expense of hardware supporting our revenue-producing platform, amortization of internally-developed software costs for the development of our revenue-producing platform, amortization expense associated with acquired developed technologies, personnel costs, and software costs.
Capitalization ends once a project is substantially complete and the software and technologies are ready for their intended purpose. There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project.
Capitalization ends once a project is substantially complete and the software and technologies are ready for their intended purpose. There is judgment involved in estimating the stage of 57 Table of Contents development as well as estimating time allocated to a particular project.
We amortize internal use software development costs that relate 44 Table of Contents to our revenue-producing activities on our platform to cost of revenue and amortize other internal use software development costs to technology and development costs or general and administrative expenses, depending on the nature of the related project.
We amortize internal use software development costs that relate to our revenue-producing activities on our platform to cost of revenue and amortize other internal use software development costs to technology and development costs or general and administrative expenses, depending on the nature of the related project.
Technology and Development Technology and development expenses increased $0.6 million, or 1%, for the year ended December 31, 2023 compared to the prior year.
Technology and Development Technology and development expenses increased $0.9 million, or 1%, for the year ended December 31, 2024 compared to the prior year. Technology and development expenses increased $0.6 million, or 1%, for the year ended December 31, 2023 compared to the prior year.
Cash outflows from financing activities for the year ended December 31, 2023 primarily included $165.5 million of payments related to repurchasing our Convertible Senior Notes, $11.8 million for taxes paid related to net share settlement of stock-based awards, $3.6 million for repayment of our Prior Term Loan B Facility, and $2.3 million for payment of our indemnification claims holdback related to historical acquisitions.
Cash outflows from financing activities for the year ended December 31, 2023 primarily included $165.5 million of payments related to repurchasing our Convertible Senior Notes, $11.8 million for taxes paid related to net share settlement of stock-based awards, $3.6 million for repayment of our 2021 Term Loan B Facility, and $2.3 million for payment of our indemnification claims holdback related to a historical acquisition.
Subsequently, on February 1, 2024, the Board of Directors approved a new repurchase plan (the "February 2024 Repurchase Plan"), which fully replaced the August 2023 Repurchase Plan, pursuant to which we are authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $125.0 million, through February 1, 2026.
On February 1, 2024, the Board of Directors approved a new repurchase plan (the "February 2024 Repurchase Plan"), which fully replaced the prior repurchase plan, pursuant to which we are authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $125.0 million, through February 1, 2026.
Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.
Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without 45 Table of Contents notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.
No demands for indemnification have been made as of December 31, 2023. 56 Table of Contents Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures.
No demands for indemnification have been made as of December 31, 2024. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures.
Interest expense consists of interest expense associated with our Prior Term Loan B Facility (defined below) and Convertible Senior Notes (defined below), and their related amortization of debt issuance costs and debt discount. Interest income consists of interest earned on our cash equivalents. Foreign Currency Exchange (Gain) Loss, Net .
Interest expense primarily consists of interest expense associated with our 2024 Term Loan B Facility (defined below), 2021 Term Loan B Facility (defined below) and Convertible Senior Notes (defined below), and their related amortization of debt issuance costs and debt discount. Interest income primarily consists of interest earned on our cash equivalents. Foreign Currency Exchange (Gain) Loss, Net .
Merger, Acquisition, and Restructuring Costs We incurred merger, acquisition, and restructuring costs of $7.5 million, $7.5 million, and $38.2 million during the years ended December 31, 2023, 2022, and 2021, respectively, primarily related to the SpotX and SpringServe Acquisitions, which were completed on April 30, 2021 and July 1, 2021, respectively.
We incurred merger, acquisition, and restructuring costs of $7.5 million and $7.5 million during the years ended December 31, 2023 and 2022, respectively, primarily related to the acquisitions of SpotX, Inc. and SpringServe, LLC, which were completed on April 30, 2021 and July 1, 2021, respectively.
Our future cash flows will be diminished if we cannot increase our revenue levels and manage costs appropriately. During the year ended December 31, 2023, net cash provided by operating activities was $214.4 million, compared to net cash provided by operating activities of $192.6 million and $126.6 million during the years ended December 31, 2022 and 2021, respectively.
Our future cash flows will be diminished if we cannot increase our revenue levels and manage costs appropriately. During the year ended December 31, 2024, net cash provided by operating activities was $235.2 million, compared to net cash provided by operating activities of $214.4 million and $192.6 million during the years ended December 31, 2023 and 2022, respectively.
Our revenue growth was driven primarily by growth in mobile and CTV, which was partially offset by a decrease in desktop. Revenue from mobile and CTV increased by $39.7 million, or 21%, and $13.6 million, or 5%, respectively, while desktop decreased by $10.6 million, or 9%.
Our revenue growth was driven primarily by growth in mobile and CTV, which was partially offset by a decrease in desktop. Revenue from mobile and CTV increased by $39.7 million, or 21%, and $13.6 million, or 5%, respectively, while desktop decreased by $10.6 47 Table of Contents million, or 9%.
This increase was primarily driven by incremental amortization due to the acceleration of the remaining lives of certain acquired intangible assets and capitalized software from the integration of our legacy Magnite CTV and SpotX CTV platforms, which started in the fourth quarter of 2022 and was completed in the third quarter of 2023.
These increases were primarily driven by incremental amortization due to the acceleration of the remaining lives of certain acquired intangible assets and capitalized software from the integration of our legacy Magnite CTV and SpotX CTV platforms, which started in the fourth quarter of 2022 and was completed in the third quarter of 2023.
Provision (Benefit) for Income Taxes We recorded an income tax expense of $1.6 million for the year ended December 31, 2023 compared to an income tax benefit of $5.3 million and $95.1 million for the years ended December 31, 2022 and 2021, respectively.
Provision (Benefit) for Income Taxes We recorded an income tax expense of $3.7 million for the year ended December 31, 2024 compared to an income tax expense of $1.6 million and an income tax benefit $5.3 million for the years ended December 31, 2023 and 2022, respectively.
We believe our existing cash and cash equivalents, cash generated from operating activities, and amounts available to borrow under our New Revolving Credit Facility will be sufficient to meet our working capital requirements for at least the next twelve months from the issuance of our financial statements.
We believe our existing cash and cash equivalents, cash generated from operating activities, and amounts available to borrow under our 2024 Revolving Credit Facility will be sufficient to meet our liquidity requirements for at least the next twelve months from the issuance of our financial statements.
Our principal cash requirements for the twelve-month period following this report primarily consist of personnel costs, contractual payment obligations, including office leases, data center costs and cloud hosting costs, capital expenditures, payment of 52 Table of Contents interest and required principal payments on our Convertible Senior Notes, New Term Loan B Facility, cash outlays for income taxes, and cash requirements to fund working capital.
Our principal cash requirements for the twelve-month period following this report primarily consists of personnel costs, contractual payment obligations, including office leases, data center costs and cloud hosting costs, capital expenditures, payment of interest and required principal payments on our Convertible Senior Notes and our 2024 Term Loan B Facility, cash outlays for income taxes, and cash requirements to fund working capital.
Merger, acquisition, and restructuring costs incurred during 2023 included $3.4 million of severance related expenses, $2.2 million of facilities related loss contracts, and $1.4 million of exit costs, all due to restructuring activities as a result of consolidating our legacy CTV and SpotX CTV platforms following the SpotX Acquisition.
In 2023, these costs primarily included $3.4 million of severance related expenses, $2.2 million of facilities related loss contracts, and $1.4 million of exit costs, all due to restructuring activities as a result of consolidating our legacy CTV and SpotX CTV platforms following the SpotX acquisition.
For the years ended December 31, 2023, 2022, and 2021, our revenue reported on a gross basis was 18%, 18%, and 17% of total revenue for the respective periods.
For the years ended December 31, 2024, 2023, and 2022, our revenue reported on a gross basis was 14%, 18%, and 18% of total revenue for the respective periods.
Net changes in our working capital resulted in increases of $75.5 million, $40.4 million, and $31.9 million in cash provided by operating activities in 2023, 2022, and 2021 respectively. The net changes in working capital for all periods presented are primarily due to the timing of cash receipts from buyers and the timing of payments to sellers.
Net changes in our working capital also resulted in increases of $76.6 million, $75.5 million, and $40.4 million in cash provided by operating activities in 2024, 2023, and 2022 respectively. The net changes in working capital for all periods presented are primarily due to the timing of cash receipts from buyers and the timing of payments to sellers.
Our management believes Contribution ex-TAC is a useful measure in assessing the performance of Magnite and facilitates a consistent comparison against our core business without considering the impact of traffic acquisition costs related to revenue reported on a gross basis.
Our management believes Contribution ex-TAC is a useful measure in facilitating a consistent comparison against our core business without considering the impact of traffic acquisition costs related to revenue reported on a gross basis.
The New Credit Agreement provides for a $365.0 million seven-year senior secured term loan facility (the "New Term Loan B Facility") and a $175.0 million five-year senior secured revolving credit facility (the "New Revolving Credit Facility").
The 2024 Credit Agreement provided for a $365.0 million seven-year senior secured term loan facility (the "2024 Term Loan B Facility") and a $175.0 million five-year senior secured revolving credit facility (the "2024 Revolving Credit Facility").
Sales and Marketing Sales and marketing expenses decreased $26.1 million, or 13%, for the year ended December 31, 2023 compared to the prior year primarily due to a decrease of $44.3 million in depreciation and amortization related to certain acquired intangible assets becoming fully amortized in 2022 and 2023.
Sales and marketing expenses decreased $26.1 million, or 13%, for the year ended December 31, 2023 compared to the prior year, primarily due to decreases of $44.3 million in depreciation and amortization, which were primarily driven by certain acquired intangible assets becoming fully amortized in 2022 and 2023.
We believe that the following assumptions and estimates have the greatest potential impact on our consolidated financial statements: (i) the determination of revenue recognition as net versus gross in our revenue arrangements and (ii) the determination of amounts to capitalize and the estimated useful lives of internal-use software development costs.
Our actual results could differ from these estimates. 56 Table of Contents We believe that the following assumptions and estimates have the greatest potential impact on our consolidated financial statements: (i) the determination of revenue recognition as net versus gross in our revenue arrangements and (ii) the determination of amounts to capitalize and the estimated useful lives of internal-use software development costs.
During the year ended December 31, 2023, net cash used in investing activities was $37.4 million, compared to net cash used in investing activities of $65.2 million and $691.0 million during the years ended December 31, 2022 and 2021, respectively.
During the year ended December 31, 2024, net cash used in investing activities was $47.5 million, compared to net cash used in investing activities of $37.4 million and $65.2 million during the years ended December 31, 2023 and 2022, respectively.
General and Administrative General and administrative expenses increased $7.7 million, or 9%, for the year ended December 31, 2023 compared to the prior year, primarily due to increases of $4.8 million in bad debt expense.
General and administrative expenses increased by $7.7 million, or 9%, for the year ended December 31, 2023 compared to the prior year, primarily due to increases of $4.8 million in bad debt expense, as described above, and $4.2 million in personnel costs.
Foreign exchange loss, net increased $3.1 million during the year ended December 31, 2023 compared to the prior year, due to movements in foreign currency exchange rates and the amount of foreign currency-denominated cash, receivables, and payables, which were impacted by our billings to buyers, payments to sellers, and intercompany balances.
Foreign exchange (gain) loss, net changed by $7.0 million during the year ended December 31, 2024 compared to the prior year, due to movements in foreign currency exchange rates and the amount of foreign currency-denominated cash, receivables, and payables, which were impacted by our billings to buyers, payments to sellers, and intercompany balances.
We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in "Item 1A. Risk Factors" and the "Special Note About Forward-Looking Statements." Overview and Trends See "Item 1. Business" for an overview of our business, the industry in which we operate, and important industry trends.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in "Item 1A. Risk Factors" and the "Special Note About Forward-Looking Statements; Summary of Risk Factors." Overview and Trends See "Item 1.
Any worsening of macroeconomic conditions in future periods would likely have a negative effect on our financial results, the magnitude of which is difficult to predict. In addition, continued inflation could result in an increase in our cost base relative to our revenue. Refer to Item 1A.
Any worsening of macroeconomic conditions in future periods would likely have a negative effect on our financial results, the magnitude of which is difficult to predict. In addition, continued inflation could result in an increase in our cost base relative to our revenue. Refer to Item 1A. "Risk Factors" for additional information related to risks associated with macroeconomic challenges.
These limitations include: • Stock-based compensation is a non-cash charge and will remain an element of our long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period. • Depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future, but Adjusted EBITDA does not reflect any cash requirements for these replacements. 51 Table of Contents • Impairment charges are non-cash charges related to goodwill, intangible assets and/or long-lived assets. • Adjusted EBITDA does not reflect certain cash and non-cash charges related to acquisition and related items, such as amortization of acquired intangible assets, merger, acquisition, or restructuring related severance costs, and changes in the fair value of contingent consideration. • Adjusted EBITDA does not reflect cash and non-cash charges and changes in, or cash requirements for, acquisition and related items, such as certain transaction expenses and expenses associated with earn-out amounts. • Adjusted EBITDA does not reflect changes in our working capital needs, capital expenditures, non-operational real estate expenses or income, or contractual commitments. • Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense. • Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
These limitations include: • Stock-based compensation is a non-cash charge and will remain an element of our long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period. • Depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future, but Adjusted EBITDA does not reflect any cash requirements for these replacements. • Impairment charges are non-cash charges related to goodwill, intangible assets and/or long-lived assets. • Adjusted EBITDA does not reflect certain cash and non-cash charges related to acquisition and related items, such as amortization of acquired intangible assets, merger, acquisition, or restructuring related severance costs, and changes in the fair value of contingent consideration. • Adjusted EBITDA does not reflect cash and non-cash charges and changes in, or cash requirements for, acquisition and related items, such as certain transaction expenses. • Adjusted EBITDA does not reflect cash and non-cash charges related to certain financing transactions such as gains or losses on extinguishment of debt or other debt refinancing expenses. • Adjusted EBITDA does not reflect certain non-operational real estate and other (income) and expense, net, which consists of transactions or expenses that are typically by nature non-operating, one-time items, or unrelated to our core operations. • Adjusted EBITDA does not reflect changes in our working capital needs, capital expenditures, or contractual commitments. • Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense. • Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. 51 Table of Contents Our Adjusted EBITDA is influenced by fluctuations in our revenue, cost of revenue, and the timing and amounts of the cost of our operations.
During the year ended December 31, 2023, 2022, and 2021, we used cash for purchases of property and equipment of $26.8 million, $30.8 million, and $17.7 million, respectively, and used cash for investments in our internally developed software of $10.6 million, $13.6 million, and $11.4 million, respectively.
During the year ended December 31, 2024, 2023, and 2022, we used cash for purchases of property and equipment of $32.8 million, $26.8 million, and $30.8 million, respectively, and used cash for investments in our internally developed software of $14.3 million, $10.6 million, and $13.6 million, respectively.
Performance obligations for all transactions are satisfied, and the corresponding revenue is recognized, at a distinct point in time. We have no arrangements with multiple performance obligations.
Performance obligations for all transactions are satisfied, and the corresponding revenue is recognized, at a distinct point in time.
The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue. Contribution ex-TAC increased $98.2 million, or 24%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue. Contribution ex-TAC increased $34.5 million, or 7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.
Our Adjusted EBITDA is influenced by fluctuations in our revenue, cost of revenue, and the timing and amounts of the cost of our operations. Adjusted EBITDA should not be considered as an alternative to net income (loss), income (loss) from operations, or any other measure of financial performance calculated and presented in accordance with GAAP.
Adjusted EBITDA should not be considered as an alternative to net income (loss), income (loss) from operations, or any other measure of financial performance calculated and presented in accordance with GAAP.
Our working capital needs and cash conversion cycle, which is influenced by seasonality and by the mix of terms among our buyers and sellers and which may be negatively impacted as a result of pandemics, inflationary, recessionary and other macroeconomic challenges, can have large fluctuations due to the timing of receipts from buyers and timing of disbursements to sellers.
As of December 31, 2024, $110.4 million remains available under the February 2024 Repurchase Plan. 52 Table of Contents Our working capital needs and cash conversion cycle, which is influenced by seasonality and by the mix of terms among our buyers and sellers and which may be negatively impacted as a result of pandemics, inflationary, recessionary and other macroeconomic challenges, can have large fluctuations due to the timing of receipts from buyers and timing of disbursements to sellers.
Because pricing and take rate vary across publisher, channel, and transaction type, our revenue is subject to changes in publisher-specific take rates, and shifts in the mix of advertising spend on our platform among publishers and transaction types. For instance, managed services tend to have higher take rates while reserve auctions tend to have lower take rates.
Because pricing and take rate vary across publisher, channel, and transaction type, our revenue is subject to changes in publisher-specific take rates, and shifts in the mix of advertising spend on our platform among publishers and transaction types.
The income tax expense for the year ended December 31, 2023 was primarily the result of the domestic valuation allowance and the federal, state, and foreign income tax liabilities. We continue to maintain a valuation allowance for our domestic deferred tax assets.
The income tax expense for the year ended December 31, 2023 was primarily the result of the domestic valuation allowance and the federal, state, and foreign income tax liabilities.
For 2024, we expect Contribution ex-TAC will increase compared to the prior year period, and although Contribution ex-TAC from mobile was the primary driver in Contribution ex-TAC growth in 2023, we expect CTV will be our biggest growth driver in 2024.
For 2025, we expect Contribution ex-TAC will increase compared to the prior year period, and we expect CTV will be our biggest growth driver in 2025.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Cash flows provided by operating activities $ 214,367 $ 192,550 $ 126,589 Cash flows used in investing activities (37,383) (65,152) (690,997) Cash flows provided by (used in) financing activities (177,842) (30,172) 678,053 Effects of exchange rate changes on cash, cash equivalents and restricted cash 575 (1,417) (683) Change in cash, cash equivalents and restricted cash $ (283) $ 95,809 $ 112,962 Operating Activities Our cash flows from operating activities are primarily driven by revenue from transactions of advertising on our platform, offset by the cash costs of operations, and are significantly influenced by the timing of and fluctuations in receipts from buyers and 54 Table of Contents related payments to sellers.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 (in thousands) Cash flows provided by operating activities $ 235,201 $ 214,367 $ 192,550 Cash flows used in investing activities (47,502) (37,383) (65,152) Cash flows used in financing activities (28,904) (177,842) (30,172) Effects of exchange rate changes on cash, cash equivalents and restricted cash (1,794) 575 (1,417) Change in cash, cash equivalents and restricted cash $ 157,001 $ (283) $ 95,809 Operating Activities Our cash flows from operating activities are primarily driven by revenue generated by our business, offset by the cash costs of operations, and are significantly influenced by the timing of and fluctuations in receipts from buyers and related payments to sellers.
During the year ended December 31, 2023, net cash used in financing activities was $177.8 million, compared to net cash used in financing activities of $30.2 million for the year ended December 31, 2022 and net cash provided by financing activities of $678.1 million during the year ended December 31, 2021.
During the year ended December 31, 2024, net cash used in financing activities was $28.9 million, compared to net cash used in financing activities of $177.8 million and $30.2 million for the years ended December 31, 2023 and 2022, respectively.
Sales and marketing expenses may fluctuate quarter to quarter and period to period, on an absolute dollar basis and as a percentage of revenue, based on revenue levels, the timing of our investments and seasonality in our industry and business.
These decreases were partially offset by increases of $15.3 million of personnel costs. Sales and marketing expenses may fluctuate quarter to quarter and period to period, on an absolute dollar basis and as a percentage of revenue, based on revenue levels, the timing of our investments and seasonality in our industry and business.
During 2023, our growth rate in CTV was negatively impacted, in part, by a mix shift towards large CTV sellers that transacted primarily through reserve auctions, which carry a lower overall take rate compared to other transaction types. Revenue increased $108.7 million, or 23%, for the year ended December 31, 2022 compared to the prior year.
During 2023, our growth rate in CTV was negatively impacted, in part, by a mix shift towards large CTV sellers that transacted primarily through reserve auctions, which carry a lower overall take rate compared to other transaction types.
Gain on extinguishment of debt consists of gains or losses associated with the repurchases of Convertible Senior Notes at a discount or premium, respectively, including unamortized issuance costs, accrued interest expense, and commissions associated with the extinguished debt. Other Income.
Gain or loss on extinguishment of debt consists of gains or losses associated with the repurchases of Convertible Senior Notes at a discount or premium and gains or losses associated with the refinancing of our debt facilities, including the extinguishment of unamortized debt discount, debt issuance costs, and deferred financing costs. Other Income.
Our technology and development expenses consist primarily of personnel costs, including salaries, bonuses, and stock-based compensation, as well as professional services associated with the ongoing development and maintenance of our solution, third-party software license costs, facilities-related costs, and depreciation and amortization expense.
Our technology and development expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, as well as professional services associated with the ongoing development and maintenance of our solution, software costs, facilities-related costs, and depreciation and amortization expense. These expenses include costs incurred in the development, implementation, and maintenance of internal use software, including platform and related infrastructure.
Our operating activities included net loss of $159.2 million, net loss of $130.3 million, and net income of $0.1 million for the years ended December 31, 2023 and 2022, and 2021, respectively, which were offset by non-cash adjustments of $298.1 million, $282.4 million, and $94.6 million, respectively.
Our operating activities included net income of $22.8 million, net loss of $159.2 million, and net loss of $130.3 million for the years ended December 31, 2024, 2023, and 2022, respectively. Non-cash adjustments of $135.8 million, $298.1 million, and $282.4 million increased cash provided by operating activities in 2024, 2023, and 2022 respectively.
We track the breakdown of Contribution ex-TAC across channels to better understand how our clients are transacting on our platform, which informs decisions as to business strategy and the allocation of resources and capital.
We track the breakdown of Contribution ex-TAC across channels to better understand how our clients are transacting on our platform.
The following table presents the calculation of gross profit and reconciliation of gross profit to Contribution ex-TAC for the years ended December 31, 2023, 2022, and 2021, respectively: Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Revenue $ 619,710 $ 577,069 $ 468,413 Less: Cost of revenue 409,906 307,165 201,662 Gross profit 209,804 269,904 266,751 Add back: Cost of revenue, excluding TAC 339,343 244,711 149,704 Contribution ex-TAC $ 549,147 $ 514,615 $ 416,455 50 Table of Contents Sellers use our technology to monetize their content across all digital channels, including CTV, mobile and desktop.
The following table presents the calculation of gross profit and reconciliation of gross profit to Contribution ex-TAC for the years ended December 31, 2024, 2023, and 2022, respectively: Year Ended Change % December 31, 2024 December 31, 2023 December 31, 2022 2024 vs 2023 2023 vs 2022 (in thousands) Revenue $ 668,170 $ 619,710 $ 577,069 8 % 7 % Less: Cost of revenue 258,838 409,906 307,165 (37) % 33 % Gross profit 409,332 209,804 269,904 95 % (22) % Add back: Cost of revenue, excluding TAC 197,610 339,343 244,711 (42) % 39 % Contribution ex-TAC $ 606,942 $ 549,147 $ 514,615 11 % 7 % Sellers use our technology to monetize their content across all digital channels, including CTV, mobile, and desktop.
We also evaluate internal use software for abandonment and use that as a significant indicator for impairment on a quarterly basis. Recently Issued Accounting Pronouncements The information set forth under Note 2 to our "Notes to Consolidated Financial Statements" under the caption "Organization and Summary of Significant Accounting Policies" is incorporated herein by reference.
Recently Issued Accounting Pronouncements The information set forth under Note 2 to our "Notes to Consolidated Financial Statements" under the caption "Organization and Summary of Significant Accounting Policies" is incorporated herein by reference.
In addition, we were party to a $65.0 million Prior Revolving Credit Facility (as defined below), of which approximately $5.3 million was assigned to outstanding but undrawn letters of credit.
In addition, we were party to a $175.0 million 2024 Revolving Credit Facility (as defined below), of which approximately $5.2 million was assigned to outstanding but undrawn letters of credit. See "Capital Resources" below for further information about our outstanding debt.
At December 31, 2023, the balance of the Convertible Senior Notes was $202.5 million, net of unamortized debt issuance costs of $2.6 million. Accrued interest for the Convertible Senior Notes at December 31, 2023 was $0.1 million.
At December 31, 2024, the balance of the Convertible Senior Notes was $203.6 million, net of unamortized debt issuance costs of $1.4 million.
Other (Income) Expense, Net Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Interest expense, net $ 32,369 $ 29,260 $ 19,848 Foreign exchange (gain) loss, net 1,953 (1,129) (1,480) Gain on debt extinguishment (26,480) — — Other income (5,304) (5,318) (4,450) Total other expense, net $ 2,538 $ 22,813 $ 13,918 Interest expense, net increased by $3.1 million during the year ended December 31, 2023 compared to the prior year, mainly due to increased interest expense of $11.3 million as a result of increased interest rates on our Prior Term Loan B Facility (defined below), partially offset by an increase in interest income of $8.2 million.
Interest expense, net increased by $3.1 million during the year ended December 31, 2023 compared to the prior year, mainly due to increased interest expense of $11.3 million as a result of increased interest rates on our 2021 Term Loan B Facility (defined below), partially offset by an increase in interest income of $8.2 million.
The combination of our SSP and ad server provides publishers a holistic yield management solution that works across their entire video advertising business to drive value. We believe the acquisition of SpringServe is highly strategic as it allows us to offer publishers an independent full-stack solution to the walled gardens, which can be leveraged across their entire video advertising business.
We believe these transactions are highly strategic, as the combination of our SSP and ad server allows us to offer publishers an independent full-stack solution that works across their entire video advertising business, for both programmatic and directly sold inventory, to manage yield and drive value.
Refer to Item 1A. "Risk Factors" for additional information related to these risks and the impact they may have on our business. Cost of Revenue Cost of revenue increased $102.7 million, or 33%, for the year ended December 31, 2023 compared to the prior year primarily due to an increase of $69.3 million in depreciation and amortization.
Cost of revenue increased $102.7 million , or 33%, for the year ended December 31, 2023 compared to the prior year, primarily due to increases of $69.3 million in depreciation and amortization.
The following table presents Contribution ex-TAC by channel: Contribution ex-TAC Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Channel: CTV $ 218,494 $ 214,803 $ 143,407 Mobile 226,826 188,116 160,067 Desktop 103,827 111,696 112,981 Total $ 549,147 $ 514,615 $ 416,455 Contribution ex-TAC increased $34.5 million, or 7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The following table presents Contribution ex-TAC by channel for the years ended December 31, 2024, 2023, and 2022: 50 Table of Contents Contribution ex-TAC Year Ended Change % December 31, 2024 December 31, 2023 December 31, 2022 2024 vs 2023 2023 vs 2022 (in thousands) Channel: CTV $ 260,159 $ 218,494 $ 214,803 19 % 2 % Mobile 242,018 226,826 188,116 7 % 21 % Desktop 104,765 103,827 111,696 1 % (7) % Total $ 606,942 $ 549,147 $ 514,615 11 % 7 % Contribution ex-TAC increased $57.8 million, or 11%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Note that in February 2024, the Company entered into a New Credit Agreement, which replaced the Prior Credit Agreement. (2) Interest payments are based on an assumed rate of 10.56%, which was the rate as of December 31, 2023 for the associated Prior Term Loan B Facility.
(2) Interest payments are based on an assumed rate of 8.11%, which was the rate as of December 31, 2024 for the associated 2024 Term Loan B Facility.
Our consolidated operating results are regularly reviewed by our chief operating decision maker, principally to make decisions about how we allocate our resources and to measure our consolidated operating performance. Revenue We generate revenue from the use of our platform for the purchase and sale of digital advertising inventory.
Components of Our Results of Operations We report our financial results as one operating segment. Our consolidated operating results are regularly reviewed by our chief operating decision maker, principally to make decisions about how we allocate our resources and to measure our consolidated operating performance.
In addition, as newer entrants to programmatic advertising, the largest publishers and broadcasters have tended to transact almost exclusively through reserve auctions and have lower overall take rates. These publishers have continued to increase their focus and investment in programmatic CTV, and in recent periods have grown as a percentage of our CTV business.
These publishers have continued to increase their focus and investment in programmatic CTV, and in recent periods have grown as a percentage of our CTV business.
Costs of revenue also included increases of $26.2 million in cloud hosting, data center, and bandwidth expenses and $8.1 million in traffic acquisition costs, both primarily due to revenue growth. 47 Table of Contents Cost of revenue increased $105.5 million , or 52%, for the year ended December 31, 2022 compared to the prior year primarily due to an increase of $64.5 million in depreciation and amortization.
The year over year increase in amortization due to the acceleration was $64.0 million. Cost of revenue also included increases of $26.2 million in cloud hosting, data center, and bandwidth expenses and $8.1 million in traffic acquisition costs, both primarily due to revenue growth and an associated increase in the volume of transactions processed on our platform.
We expect technology and development expenses to increase in 2024 compared to 2023 in absolute dollars due to increases in personnel related expenses. The timing and amount of our capitalized development and enhancement projects may affect the amount of development costs expensed in any given period.
The timing and amount of our capitalized development and enhancement projects may affect the amount of development costs expensed in any given period.
The net proceeds from the New Term Loan B Facility were used, among other things, to terminate and to repay in full the outstanding facilities under the Prior Credit Agreement. The New Revolving Credit Facility will be available for 53 Table of Contents general corporate purposes.
The proceeds from the 2024 Term Loan B Facility were used, among other things, to terminate and to repay in full the outstanding facilities under the prior credit agreement entered into in April 2021 (the "2021 Credit Agreement"), which included a term loan facility (the "2021 Term Loan B Facility") and a revolving facility (the "2021 Revolving Credit Facility").
The following table presents a reconciliation of net income (loss), the most comparable GAAP measure, to Adjusted EBITDA for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Net income (loss) $ (159,184) $ (130,323) $ 65 Add back (deduct): Depreciation and amortization expense, excluding amortization of acquired intangible assets 38,330 31,658 25,017 Amortization of acquired intangibles 202,490 184,394 121,869 Stock-based compensation expense 72,617 64,118 40,735 Merger, acquisition, and restructuring costs, excluding stock-based compensation expense 7,322 5,464 37,106 Non-operational real estate and other expense, net 310 622 552 Interest expense, net 32,369 29,260 19,848 Foreign exchange (gain) loss, net 1,953 (1,129) (1,480) Gain on extinguishment of debt (26,480) — — Provision (benefit) for income taxes 1,637 (5,274) (95,053) Adjusted EBITDA $ 171,364 $ 178,790 $ 148,659 Adjusted EBITDA decreased by $7.4 million during the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increases in cloud hosting, data center, and bandwidth costs, traffic and acquisitions costs, personnel expenses, and bad debt expense, which exceeded increases in revenue year-over-year, which are discussed in section "Comparison of the Years Ended December 31, 2023, 2022, and 2021." Adjusted EBITDA increased by $30.1 million during the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to incremental revenue growth from the SpotX Acquisition and organic growth, which are discussed in section "Comparison of the Years Ended December 31, 2023, 2022, and 2021." Liquidity and Capital Resources Liquidity At December 31, 2023, we had cash and cash equivalents of $326.2 million, of which $52.6 million was held in foreign currency denominated cash accounts, and an aggregate gross principal amount of $556.1 million of indebtedness outstanding under our Prior Term Loan B Facility (as defined below) and our Convertible Senior Notes (as defined below).
The following table presents a reconciliation of net income (loss), the most comparable GAAP measure, to Adjusted EBITDA for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 (in thousands) Net income (loss) $ 22,786 $ (159,184) $ (130,323) Add back (deduct): Depreciation and amortization expense, excluding amortization of acquired intangible assets 28,376 38,330 31,658 Amortization of acquired intangibles 30,134 202,490 184,394 Stock-based compensation expense 76,519 72,617 64,118 Merger, acquisition, and restructuring costs, excluding stock-based compensation expense — 7,322 5,464 Non-operational real estate and other expense, net 1,579 310 622 Interest expense, net 27,032 32,369 29,260 Foreign exchange (gain) loss, net (5,083) 1,953 (1,129) (Gain) loss on extinguishment of debt 7,706 (26,480) — Other debt refinancing expense 4,103 — — Provision (benefit) for income taxes 3,698 1,637 (5,274) Adjusted EBITDA $ 196,850 $ 171,364 $ 178,790 Adjusted EBITDA increased by $25.5 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to increases in revenue, described above, which were partially offset by increases in expenses to support this revenue growth.
Foreign exchange gain, net decreased $0.4 million during the year ended December 31, 2022 compared to the prior year, for the same reasons above. Gain on debt extinguishment increased by $26.5 million during the year ended December 31, 2023 compared to the prior year due to our Convertible Senior Notes (defined below) repurchases.
The gain on extinguishment of debt of $26.5 million for the year ended December 31, 2023 was due to the repurchase of portions of our Convertible Senior Notes (defined below).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe risks below may be further exacerbated by the effects of certain global macroeconomic challenges and market conditions. Interest Rate Fluctuation Risk Our cash and cash equivalents consist of cash and money market funds, but may from time to time also include commercial paper, with original maturities of three months or less.
Biggest changeInterest Rate Fluctuation Risk Our cash and cash equivalents consist of cash and money market funds, but may from time to time also include other money market instruments such as commercial paper or U.S. treasury bills, with original maturities of three months or less. Our investments may consist of repurchase agreements, U.S. government agency debt, and U.S. treasury debt.
The effect of an immediate 10% adverse change in foreign exchange rates on foreign currency-denominated monetary assets and liabilities at December 31, 2023 and December 31, 2022, including intercompany balances, would result in a foreign currency loss of approximately $9.5 million and $10.5 million, respectively.
The effect of an immediate 10% adverse change in foreign exchange rates on foreign currency-denominated monetary assets and liabilities at December 31, 2024 and December 31, 2023, including intercompany balances, would result in a foreign currency loss of approximately $10.8 million and $9.5 million, respectively.
Dollar, principally the Australian Dollar, British Pound, Canadian Dollar, Euro, Japanese Yen, and New Zealand Dollar. Foreign exchange rate volatility is influenced by many factors that we cannot forecast with reliable accuracy. In the event our non-U.S.
Dollar, principally the Australian Dollar, British Pound, Canadian Dollar, 58 Table of Contents Euro, Japanese Yen, and New Zealand Dollar. Foreign exchange rate volatility is influenced by many factors that we cannot forecast with reliable accuracy. In the event our non-U.S.
We do not believe that an increase or decrease in interest rates of 100 basis points on the New Term Loan B Facility will have a material effect on our operating results or financial condition as compared to the annualized impact on our Prior Term Loan B Facility, which is discussed above.
We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial condition. The annualized impact to interest expense for each 100 basis points increase above the SOFR Floor on our 2024 Term Loan B Facility is approximately $3.6 million.
With regard to all debt currently outstanding as of December 31, 2023 and to debt outstanding under the New Credit Agreement, the Company is potentially exposed to refinancing risk in the future, should the Company seek to refinance its debt or raise new debt.
In future periods, we will continue to evaluate our investment opportunities and policy relative to our overall objectives. With regard to all debt currently outstanding, the Company is potentially exposed to refinancing risk in the future, should the Company seek to refinance its debt or raise new debt.
Because our cash, cash equivalents, and investments have a short maturity, our portfolio’s fair value is relatively insensitive to interest rate changes, however, interest income earned will vary as interest rates change. We do not have economic interest rate expense exposure on our Convertible Senior Notes due to their fixed interest rate nature.
The primary objective of our investment activities is to preserve the value of our cash without significantly increasing risk. Because our cash, cash equivalents, and investments have a short maturity, our portfolio’s fair value is relatively insensitive to interest rate changes, however, interest income earned will vary as interest rates change.
As of December 31, 2023, we were party to our Prior Term Loan B Facility, which bore interest rate at a floating interest rate that reset periodically, subject to a 0.75% floor (the "SOFR Floor").
Our 2024 Term Loan B Facility bears a floating rate of interest that resets periodically, subject to a 0% floor on that floating rate, according to the terms of the agreement (the "SOFR Floor").
Interest expense has been impacted by floating interest rates as a result of underlying interest rates on our Prior Term Loan B Facility moving above this floor since the second quarter of 2022. As of December 31, 2023, the Company had no outstanding borrowings under the Prior Revolving Credit Facility.
The fair value of the 2024 Term Loan B Facility may fluctuate when the underlying base interest rate fluctuates below the floor or when the rate of return demanded by our loan investors changes relative to when the loans were issued. As of December 31, 2024, the Company had no outstanding borrowings under the 2024 Revolving Credit Facility.
Removed
Our investments may consist of repurchase agreements, U.S. government agency debt, and U.S. treasury debt. The primary objective of our investment activities is to preserve the value of our cash without significantly increasing risk.
Added
The risks below may be further exacerbated by the effects of certain global macroeconomic challenges and market conditions.
Removed
We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial condition.
Added
We do not have economic interest rate expense exposure on our Convertible Senior Notes due to their fixed interest rate nature.
Removed
As of the end of December 31, 2023, the annualized impact to interest expense for each 100 basis points increase above the SOFR Floor on our Prior Term Loan B Facility is approximately $3.5 million.
Added
Our financial results have been exposed to changes in the underlying base interest rate on that debt because the underlying base interest rate resets above the floor on such underlying interest rate.
Removed
In future periods, we will continue to evaluate our investment opportunities and policy relative to our overall objectives. 58 Table of Contents On February 6, 2024, we refinanced the Prior Term Loan B Facility with a $365.0 million New Term Loan B Facility.
Added
Should the company borrow under the 2024 Revolving Credit Facility at any point in the future, any associated borrowings would have a floating underlying base rate of interest that would expose the Company to interest rate risk.

Other MGNI 10-K year-over-year comparisons