Magnite, Inc. · NASDAQ:MGNI
Magnite — Rubicon Project — Q1 2018 Earnings Presentation
27 slides from Magnite's earnings presentation, May 30, 2018
Slide 1: The Global Exchange For Advertising
The Global Exchange For Advertising May 30, 2018 1 | COPYRIGHT RUBICON PROJECT 2018
Slide 2: Safe Harbor Forward-Looking Statements
SAFE HARBOR FORWARD-LOOKING STATEMENTS This presentation and management's prepared remarks during the conference call referred to above include, and management's answers to questions during the conference call may include, forward-looking statements, including statements based upon or relating to ou
Slide 3: Who We Are
Who We Are 3 | COPYRIGHT RUBICON PROJECT 2018
Slide 4: Rubicon Project
Rubicon Project (NYSE: RUBI) • The independent global exchange for advertising • Headquartered in Los Angeles • 400+ employees • Operating in 30+ markets globally 4 | COPYRIGHT RUBICON PROJECT 2018
Slide 5: What We Do
What We Do 5 | COPYRIGHT RUBICON PROJECT 2018
Slide 6: Our Business: Matching Buyers & Sellers
Our Business: Matching Buyers & Sellers PUBLISHERS & APP DEVELOPERS WANT ADVERTISERS WANT To drive revenue for all impressions by leveraging To safely reach high quality audiences at scale, turnkey access to billions of dollars of demand, and provide across devices no matter where they engage a qual
Slide 7: Large & Growing TAM
Large & Growing TAM 7 | COPYRIGHT RUBICON PROJECT 2018
Slide 8: Growing Ad Market
Growing Ad Market 8 | COPYRIGHT RUBICON PROJECT 2018
Slide 9: Opportunity: $19B Addressable Market
Opportunity: $19B Addressable Market 9 | COPYRIGHT RUBICON PROJECT 2018
Slide 10: Well Positioned In Highest Growth Segments
Well Positioned In Highest Growth Segments MOBILE, VIDEO & ORDERS DRIVING 4-Year CAGR $20 PROGRAMMATIC GROWTH $18 22% $16 $14 37% $12 $10 44% $8 $Billions $6 62% $4 1% $2 $0 2015 2016 2017 2018 2019 TOTAL DESKTOP MOBILE VIDEO PMPs Source: 2017 eMarketer US RTB Digital Ad Spending by segment report 1
Slide 11: What Happened?
What Happened? 11 | COPYRIGHT RUBICON PROJECT 2018
Slide 12: What Happened with Header Bidding
What Happened with Header Bidding $MM Sequential Net Revenue 90 Impact from 80 HEADER BIDDING 70 60 50 40 30 20 10 HeaderBidding HeaderBidding HeaderBidding 0 HeaderBidding Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016
Slide 13: Before Header Bidding (Waterfall)
Before Header Bidding (Waterfall) Buyer Buyer AD SERVER Buyer Buyer 1. Google AdX Buyer Buyer 2. RUBI Buyer Buyer 3. Exchange Buyer Buyer 4. Exchange Buyer Buyer 5-100 Exchange 13 | COPYRIGHT RUBICON PROJECT 2018
Slide 14: Header Bidding
Header Bidding AD SERVER Header Client-Side or Server-Side Google AdX RUBI AppNexus Index OpenX Pubmatic 7-100 Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer 14 | COPYRIGHT RUBICON PROJECT 2018
Slide 15: What Header Bidding Taught Us
What Header Bidding Taught Us • Fundamental shift and we were slow • Pricing & cost structure needed to be addressed • Greater focus on buyers and their needs 15 | COPYRIGHT RUBICON PROJECT 2018
Slide 16: What We Have Done
What We Have Done • Leaned in and have grown implementations to 780+ • Fees reduced from 24%+ to 11.8% (from eliminating buyer fees) • Changed auction mechanics – 1st price & EMR • Acquired traffic shaping tech - nToggle 16 | COPYRIGHT RUBICON PROJECT 2018
Slide 17: What Are Results
What Are Results • 2.5x increase in ad requests year-over-year • Ad spend increased 10% in Q1 2018 year-over-year • Ad spend expected to increase 1H 2018 year-over-year • Amounts Paid to Sellers (APS) up 28% year-over-year in Q1 • Projected return to adjusted EBITDA profitability in Q4 2018 17 | COP
Slide 18: Financials
Financials 18 | COPYRIGHT RUBICON PROJECT 2018
Slide 19: Q1 2018 Summary
Q1 2018 SUMMARY Financial Measures ($MM except per share data) Three Months Ended Change 3/31/2018 3/31/2017 Favorable / (Unfavorable) Revenue Mobile revenue $10.6 $17.7 (40%) Desktop revenue $14.3 $28.3 (49%) Revenue $24.9 $46.0 (46%) Advertising spend(1) $211.0 $191.5 10% Mobile advertising spend
Slide 20: Cash Flow and Balance Sheet Highlights
CASH FLOW AND BALANCE SHEET HIGHLIGHTS Cash Flow Highlights Balance Sheet Highlights ($MM) ($MM) March 31, December 31, Q1 2018 Q1 2017 2018 2017 Financial measure: Financial measure: Net cash provided (used) by ($9.8) $2.9 operating activities Cash & equivalents $67.5 $76.6 Less capital expenditure
Slide 21: What Are Results
What Are Results • 2.5x increase in ad requests year-over-year • Ad spend increased 10% in Q1 2018 year-over-year • Ad spend expected to increase 1H 2018 year-over-year • Amounts Paid to Sellers (APS) up 28% year-over-year in Q1 • Projected return to adjusted EBITDA profitability in Q4 2018 21 | COP
Slide 22: GDPR Update (as of 5/29/18)
GDPR Update (as of 5/29/18) § GDPR imposes new requirements for user consent and data processing - effective 5/25 § Law is lengthy and complex, with some unclear provisions - clarification will take time through regulatory/judicial interpretation § Clarification is complicated due to jurisdiction by
Slide 23: Conclusion
Conclusion + Offer the broadest inventory Strategy + High volume, higher win, transparent exchange + LOWEST TOTAL COST OF SUPPLY – TRAFFIC SHAPING, BETTER WIN RATES, NO BUYER FEES + Experienced management team Leadership Cut $44 million or 23% from annual cost structure commencing Q1 2018 & Cost Cut
Slide 24: Thank You
Thank You 24 | COPYRIGHT RUBICON PROJECT 2018
Slide 25: Reconciliations of Net Loss to Adjusted EBITDA & Revenue to Advertising Spend
RECONCILIATIONS OF NET LOSS TO ADJUSTED EBITDA & REVENUE TO ADVERTISING SPEND Reconciliation of Net Loss to Adjusted EBITDA ($MM) Q1 2018 Q1 2017 Financial Measure: ($MM) Net loss ($27.8) ($15.8) Add back (deduct): Depreciation and amortization, excluding amortization of acquired intangible assets 7
Slide 26: Reconciliations of GAAP Revenue to Non-GAAP Net Revenue & Net Loss
RECONCILIATIONS OF GAAP REVENUE TO NON-GAAP NET REVENUE & NET LOSS TO NON-GAAP NET LOSS Reconciliation of GAAP Revenue to Non-GAAP Net Revenue ($MM) Q1 2018 Q1 2017 Financial Measure: GAAP revenue $24.9 $46.0 Less amounts paid to sellers reflected in cost of revenue(1) - $0.6 Non-GAAP net revenue $2
Slide 27: Additional Reconciliations of Non-GAAP Financial Measures to GAAP
ADDITIONAL RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO GAAP Revenue & Advertising Spend Split by Channel Q1 2018 Q1 2017 Financial Measure: ($MM) Mobile Desktop Total Mobile Desktop Total GAAP Revenue $10.6 $14.3 $24.9 $17.7 $28.3 $46.0 Plus amounts paid to sellers(1) 80.4 105.7 186.1 50.2 95.