Cloud Stocks: Analysis Of Magnite’s Spot X Acquisition


According to a recent report, the US digital advertising market grew 12.2% in 2020. The early days of the pandemic saw pullback in ad budgets, but by the latter half of 2020, ad spending had returned again. According to the report, a surge in connected television, e-commerce shopping, and at-home deliveries helped drive the growth despite the pandemic conditions.

Photo Credit: Michael Gaida / Pixabay

Magnite’s Offerings

Los Angeles-based Magnite (Nasdaq: MGNI) was founded in 2007 by Craig Roah, Duc Chau, Frank Addante, and Julie Mattern. It is a sell-side advertising platform that allows publishers to monetize content. Magnite was initially set up as Rubicon Project in 2007. In 2019, Rubicon announced a merger with Telaria, and rebranded itself as Magnite the following year.

Today, Magnite is the world’s largest independent sell-side ad platform. It was formed by leveraging the programmatic ad capabilities of Rubicon Project with the Connected TV (CTV) experts at Telaria. It allows thousands of publishers to sell advertising across every channel and format—including CTV, desktop, mobile, and audio. It helps agencies and brands reach end consumers efficiently, safely, and while respecting their privacy.

Recently Magnite announced its first quarter results. Revenues for the quarter grew 67% to $60.7 million, ahead of the market’s estimates of $58 million. Net loss was $12.9 million, or $0.11 per share, compared to a net loss of $9.7 million, or $0.18 per share reported a year ago. Non GAAP net income was $0.03 per share compared with $0.06 per share reported a year ago. The market was looking for an EPS of $0.02 for the quarter.

For the current quarter, Magnite forecast revenues of $92-$96 million.

Magnite’s SpotX Acquisition

Magnite recently announced the acquisition of Colorado-based SpotX for an estimated $1.17 billion. Founded in 2007 by Michael Shehan and Steven B. Swoboda, SpotX provides premium digital media owners with a holistic solution, giving its customers the ability to monetize content with the help of video advertising across desktop, mobile, and connected devices. The platform connects premium media owners with brands, agencies, trading desks, and DSPs, facilitating the sale of video advertising. It allows customers to gain insights into buyer behavior and audience consumption, allowing them to better manage video ad inventory and maximize yield. The acquisition will provide comprehensive advertising technology stack for publishers and TV programmers. Prior to the acquisition, SpotX raised $12 million in 2 rounds of funding with the help of H.I.G. Capital.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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