What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-28 · 183 added, 225 removed, 283 unchanged (59% of the section changed)

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Risk Factors" and the "Special Note About Forward-Looking Statements;

Summary of Risk Factors."

Overview and Trends

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Recent Developments

SpotX and SpringServe Acquisitions

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.

On July 1, 2021, we acquired SpringServe, LLC ("SpringServe"), a leading ad serving platform for CTV.

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.

As CTV viewership is growing rapidly and the pace of adoption is accelerating the shift of advertising budgets from linear television to CTV, these transactions have strategically positioned us to take advantage of this trend, and we believe that CTV will be our biggest growth driver for 2024.

The SpotX Acquisition resulted in a significant increase in our revenue and Contribution ex-TAC (as defined in section "Key Operating and Financial Performance Metrics"), in particular in CTV and online video.

Following the transaction, the percentage of our revenue attributable to CTV increased significantly, and because CTV is largely transacted through reserve auctions, these types of auctions have become a more significant portion of the transactions on our platform.

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.

Financial Highlights

The following represents our consolidated financial highlights for the years ended December 31, 2024, 2023, and 2022:

Year Ended Change %

December 31, 2024 December 31, 2023 December 31, 2022 2024 vs 2023

(in thousands)

Financial Measures and non-GAAP Financial Measures:

Revenue $ 668,170 $ 619,710 $ 577,069 8 % 7 %

Gross profit 409,332 209,804 269,904 95 % (22) %

Contribution ex-TAC*

606,942 549,147 514,615 11 % 7 %

Net income (loss) 22,786 (159,184) (130,323) NM 22 %

Adjusted EBITDA*

196,850 171,364 178,790 15 % (4) %

NM - Not meaningful

* Contribution ex-TAC and Adjusted EBITDA are Non-GAAP measures.

Refer to discussion in section "Key Operating and Financial Performance Metrics" for a definition of Contribution ex-TAC and Adjusted EBITDA, as well as reconciliations of gross profit to Contribution ex-TAC and Net income (loss) to Adjusted EBITDA, for the years ended December 31, 2024, 2023, and 2022, respectively.

Over the past several years, we have made a number of investments to build what we believe is the leading independent programmatic CTV platform, including our 2021 acquisitions of SpotX, a leading CTV supply side platform, and SpringServe, a leading ad server for CTV.

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.

As a result of our investments, CTV has become the biggest growth driver of our business, with revenue growing 13% and Contribution ex-TAC growing 19% year over year from 2023 to 2024.

We believe that we are well positioned to take advantage of a number of favorable market trends in CTV.

In particular, as the pace of consumer adoption has accelerated and the streaming market has proliferated, the largest streaming publishers have adopted ad-supported models leading to a significant increase in the amount of CTV inventory available for advertisers.

Despite the proliferation of CTV advertising inventory, CTV sellers have been slower to embrace biddable environments with multiple buyers compared to desktop and mobile sellers.

Currently, the vast majority of CTV advertising is transacted through reserve auctions that are established by a sellers direct sales team with a single buyer.

This is particularly true of larger publishers and broadcasters that are newer to programmatic advertising and have large direct sales forces, as reserve auctions allow the seller to maintain tighter control over their advertising allocation.

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.

Accordingly, the increase in share among these publishers on our platform has driven a decrease in our aggregate CTV take rates.

The acquisition also resulted in an increase in related operating expenses, primarily associated with costs for personnel, data center and hosting costs, facilities, payments to sellers for revenue reported on a gross basis, and other ancillary costs to support the business.

We have been able to offset some of these increases through cost saving activities and the achievement of acquisition synergies.

As part of our integration efforts, we introduced our unified CTV platform, Magnite Steaming, which merges leading technology from the legacy Magnite CTV and SpotX CTV platforms.

We completed the migration to our unified platform early in the third quarter of 2023.

The SpringServe Acquisition expanded our video and CTV offering to include ad server functionality in addition to our programmatic SSP capabilities.

The SpringServe ad server manages multiple aspects of video advertising for both programmatic transactions and inventory sold directly by the publisher, including forecasting, routing, customized ad experiences and ad formats, and advanced podding logic.

This is of particular importance for CTV publishers.

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.

As the industry matures, we anticipate that market dynamics will lead CTV sellers to make a greater percentage of inventory available through biddable auction environments in order to attract a broader set of advertisers that have not historically advertised on linear TV.

We believe that this shift, if it were to occur, would likely be beneficial to our CTV growth as biddable transactions tend to require a higher level of service and therefore carry a higher take-rate compared to reserve auctions.

At the same time, we expect CTV advertisers that have historically transacted on our platform through managed service insertion orders to continue to shift budgets towards more automated solutions, which tend to carry a lower take rate;

and as a result, we expect transactions through managed service insertion orders to become a smaller component of our overall business.

In addition to CTV, we track mobile and desktop channels.

We expect our revenue and Contribution ex-TAC from each of these channels to grow at a slower rate compared to CTV, with mobile expected to grow at a higher rate than desktop.

As such, we expect our desktop business to continue to decline as an overall percentage of our revenue in future periods;

however, we expect that it will continue to represent a significant percentage of our revenue in the near term.

Therefore, the mix of our desktop business will continue to have a negative effect on our overall growth rate.

Our mobile channel consists of mobile web and mobile applications, with mobile applications expected to be a larger driver of our growth in future periods.

A significant portion of the mobile application inventory on our platform is made available through third-party mobile technology platforms or aggregators, rather than application developers themselves.

Accordingly, we are focused on expanding our relationships with these third parties in order to increase our access to inventory.

Other important growth initiatives for our mobile and desktop channels include:

bringing additional advertising demand to sellers through SPO and other buyer initiatives;

increasing the operational efficiency of our platform to reduce costs for us as well as the process costs for buyers;

developing alternative identity solutions to increase the value of seller inventory, as the industry shifts away from third-party cookies;

and leveraging our machine learning and big data set to improve traffic shaping and generate higher-quality matching between buyers and sellers.

Our results for the year-ended December 31, 2024, were negatively impacted by challenges in the fourth quarter in our desktop and mobile channels, where we experienced a significant drop in advertising demand following the election and through year-end.

We believe this drop was temporary in nature and was likely due to fears of macro and political uncertainty due to the election.

We anticipate that our operating expenses will continue to increase in the foreseeable future as we invest in technology and development to enhance our product features, in particular CTV, as well as sales and marketing to acquire new clients and reinforce our relationships with existing clients.

At the same time, we are making additional investments in on-prem data centers to support a higher percentage of CTV transactions, with the goal of increasing the operational efficiency of our platform in order to realize long-term cost savings.

Macroeconomic Developments

Our business has been negatively impacted as a result of macroeconomic challenges, such as the global COVID-19 pandemic, inflation, global conflict, capital market disruptions and instability of financial institutions, the risk of a recession, labor strikes, and other macroeconomic factors, which have generally negatively impacted ad budgets, and in turn have led to slower ad spend growth through our platform.

Macroeconomic challenges, such as inflation, the interest rate environment, global conflicts, the risk of a recession, and labor strikes, generally have a negative impact on ad budgets, which in turn may lead to slower ad spend growth through our platform.

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.

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Our revenue recognition policies are discussed in more detail in Note 2 of the "Notes to the Consolidated Financial Statements."

We track the performance and revenue of our platform by channel.

Our channels include CTV, mobile, and desktop.

Consistent with the IAB’s definition of CTV, CTV represents advertising transactions on our platform that are delivered to the end consumer via a television set that is connected to the Internet.

Our CTV transactions do not include advertisements viewed on a mobile or desktop device.

Mobile and desktop represent advertising transactions on our platform that are delivered to the end consumer via their respective devices’ operating system, that is, a mobile operating system or a traditional desktop operating system, respectively.

Mobile devices generally refer to a handset, tablet, or other communication device that runs on a mobile operating system used to access the Internet wirelessly, usually through a mobile carrier or Wi-Fi network.

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.

We classify our expenses into the following categories:

Cost of Revenue .

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.

In addition, for revenue booked on a gross basis, cost of revenue includes traffic acquisition costs.

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Sales and Marketing .

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.

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.

We amortize acquired intangibles associated with client relationships from our business acquisitions over their estimated useful lives.

Technology and Development .

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.

Technology and development costs are expensed as incurred, except to the extent that such costs are associated with internal use software development that qualifies for capitalization, which are then recorded as internal use software development costs, net, on our consolidated balance sheets.

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.

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.

We amortize acquired intangibles associated with technology and development functions from our business acquisitions over their estimated useful lives.

General and Administrative .

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.

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.

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.

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.

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.

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 .

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 .

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.

(Gain) Loss on Extinguishment of Debt .

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.

Other income consists primarily of rental income from commercial office space we hold under lease and have sublet to other tenants.

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

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(federal and state) and numerous foreign jurisdictions.

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

notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.

There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain.

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Revenue $ 668,170 $ 619,710 $ 577,069 8 % 7 %

Expenses (1)(2) :

Cost of revenue 258,838 409,906 307,165 (37) % 33 %

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Total expenses 617,083 774,719 689,853 (20) % 12 %

Loss from operations (155,009) (112,784) (81,070) 37 % 39 %

Income (loss) from operations

51,087 (155,009) (112,784) NM 37 %

Other expense, net

24,603 2,538 22,813 869 % (89) %

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) %

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 means Not Meaningful

(1) Stock-based compensation expense included in our expenses was as follows:

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:

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

General and administrative

Total depreciation and amortization expense

$ 240,820 $ 216,052 $ 146,886

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:

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Total expenses 92 125 120

Loss from operations (25) (20) (17)

Income (loss) from operations

Other expense, net

Loss before income taxes (25) (23) (20)

Income (loss) before income taxes

Provision (benefit) for income taxes

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Revenue increased $48.5 million, or 8%, for the year ended December 31, 2024 compared to the prior year.

Our revenue growth was driven primarily by growth in CTV and mobile.

Revenue from CTV, mobile, and desktop increased by $35.3 million, or 13%, $12.1 million, or 5%, and $1.0 million, or 1%, respectively.

Revenue increased $42.6 million, or 7%, for the year ended December 31, 2023 compared to the prior year.

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%.

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%.

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.

Our revenue growth was driven primarily by growth in CTV and mobile as well as incremental revenue from full-year results from the SpotX Acquisition, which was completed on April 30, 2021, and the SpringServe Acquisition, which was completed on July 1, 2021.

Revenue from CTV and mobile increased by $83.3 million, or 45%, and $27.8 million, or 17%, respectively.

On a pro forma basis, including results from SpotX and SpringServe during the relevant pre-acquisition period, revenue increased 7% for the year ended December 31, 2022 compared to the prior period.

Our revenue is largely a function of the number of advertising transactions and the price, or CPM, at which the inventory is sold, which results in total advertising spend on our platform, and, with respect to our revenue reported on a net basis, the take rate we charge for our services.

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.

For 2024, we believe our revenue will increase compared to the prior year period, and although revenue from mobile was the primary driver in revenue growth in 2023, we expect CTV will be our biggest growth driver in 2024.

Our business is dependent in part on the overall health of the advertising market.

Our revenue growth has been tempered, and may be negatively impacted in the future, by reductions in revenue resulting from the impact of macroeconomic challenges.

If economic conditions were to deteriorate further, we would likely experience a negative impact on our future revenue trends, and the magnitude of these impacts is difficult to predict depending on their scope and duration.

Refer to Item 1A.

"Risk Factors" for additional information related to these risks and the impact they may have on our business.

For 2025, we believe our revenue will increase compared to the prior year period and we expect CTV will continue to be our biggest growth driver.

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.

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.

Cost of revenue decreased $151.1 million, or 37%, for the year ended December 31, 2024 compared to the prior year, primarily due to decreases of $164.4 million in depreciation and amortization, which was primarily driven by certain acquired intangible assets becoming fully amortized in the third quarter of 2023.

These decreases were partially offset by increases of $11.8 million in cloud hosting, data center, and bandwidth expenses, primarily due to revenue growth and an associated increase in the volume of transactions processed on our platform.

On January 1, 2024, we extended the estimated useful lives of our network hardware assets from three years to five years, which was due to actual and expected longer refresh cycles for these assets.

Based on the related asset balance as of December 31, 2023 and those placed in service during the year ended December 31, 2024, the effect of this change reduced depreciation expense by $12.6 million for the full year ending December 31, 2024 when compared to what depreciation expense would have been based on the original expected useful lives of three years.

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.

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.

The year over year increase in amortization due to the acceleration was $64.0 million.

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.

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.

This increase was 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, as well as from a full year of amortization expense from the SpotX Acquisition.

The incremental amortization due to the acceleration was $35.4 million.

Costs of revenue also included increases of $26.9 million in cloud hosting, data center, and bandwidth expenses and $10.5 million in traffic acquisition costs, both primarily due to revenue growth.

We expect cost of revenue to decrease in 2024 compared to 2023 in absolute dollars primarily due to the completion of the accelerated amortization expense as discussed above.

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.

Cost of revenue may fluctuate from quarter to quarter and period to period, on an absolute dollar basis and as a percentage of revenue, depending on revenue levels and the volume of transactions we process supporting those revenues, and the timing and amounts of depreciation and amortization of equipment and software.

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.

This decrease was partially offset by an increase of $15.3 million of personnel related expenses.

Sales and marketing expenses increased $29.7 million, or 17%, for the year ended December 31, 2022 compared to the prior year primarily due to the impact of the SpotX Acquisition, which resulted in substantial increases in headcount in mid-2021, as well as expenses related to the amortization of acquired intangibles.

Compared to the prior year, sales and marketing included an increase of $17.5 million of personnel related expenses and $4.2 million in amortization of acquired intangibles relating to the SpotX Acquisition.

In addition, the increase in sales and marketing expenses included $3.3 million related to travel and industry events due to the lifting of travel restrictions during the year.

We expect sales and marketing expenses to decrease in 2024 compared to 2023 in absolute dollars primarily due to decreases in amortization of acquired intangible assets.

We expect these decreases to be partially offset by increases in personnel related expenses and increases in travel and entertainment expenses.

Sales and marketing expenses decreased $7.8 million, or 5%, for the year ended December 31, 2024 compared to the prior year, primarily due to decreases of $17.4 million in depreciation and amortization, which were primarily driven by certain acquired intangible assets becoming fully amortized in 2023.

These decreases were partially offset by increases of $9.5 million in personnel costs.

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.

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.

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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 $19.3 million, or 26%, for the year ended December 31, 2022 compared to the prior year, primarily due to an increase of $15.8 million in personnel costs as a result of the increased headcount associated with the SpotX Acquisition.

We expect technology and development expenses to increase in 2024 compared to 2023 in absolute dollars due to increases in personnel related expenses.

Technology and development expenses increased $0.6 million, or 1%, for the year ended December 31, 2023 compared to the prior year.

The timing and amount of our capitalized development and enhancement projects may affect the amount of development costs expensed in any given period.

As a percentage of revenue, technology and development expense may fluctuate from quarter to quarter and period to period based on revenue levels, the timing and amounts of technology and development efforts, the timing and the rate of the amortization of capitalized projects and the timing and amounts of future capitalized internal use software development costs.

As a percentage of revenue, technology and development expense may fluctuate from quarter to quarter and period to period based on revenue levels, the timing and amounts of technology and development efforts, the timing and the rate of the amortization of internally-developed capitalized projects and the timing and amounts of future capitalized internally-developed software costs.

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.

Bad debt expense was primarily a result of a buyer defaulting on payment obligations and subsequently filing for bankruptcy during the second quarter of 2023, resulting in bad debt expense of $4.2 million.

General and administrative expenses also included an increase of $4.2 million in personnel expenses.

General and administrative expenses increased by $16.6 million, or 26%, for the year ended December 31, 2022 compared to the prior year, primarily due to increases of $10.2 million in personnel expenses mainly due to increases in stock-based compensation year-over-year, $2.0 million in facilities related expenses due to a return to office work environment, $1.8 million in business insurance and taxes, and $1.1 million related to travel and industry events due to the lifting of travel restrictions during the year.

We expect general and administrative expenses to increase in 2024 compared to 2023 in absolute dollars primarily due to increases in personnel and travel-related expenses.

General and administrative expenses increased $7.8 million, or 9%, for the year ended December 31, 2024 compared to the prior year, primarily due to increases of $5.9 million in personnel costs, $4.1 million in expenses associated with refinancing our 2021 Credit Agreement (defined below) in February 2024 and repricing our 2024 Term Loan B Facility (defined below) in September 2024, and $3.7 million in insurance and business taxes.

These increases were partially offset by decreases of $4.1 million in bad debt expense and $2.7 million in facilities-related costs.

The higher bad debt expense in 2023 as compared to 2024 was primarily due to a buyer defaulting on payment obligations and filing for bankruptcy, resulting in bad debt expense of $4.2 million.

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.

General and administrative expenses may fluctuate from quarter to quarter and period to period based on the timing and amounts of expenditures in our general and administrative functions as they vary in scope and scale over periods.

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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.

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 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.

Costs incurred in 2021 included professional fees related to investment banking advisory, legal, and other professional service fees of $28.4 million, one-time cash-based employee termination benefit costs of $6.2 million, facility closure costs of $2.5 million, and non-cash stock-based compensation expense associated with double-trigger accelerations and severance benefits of $1.1 million.

We did not incur any merger, acquisition, and restructuring costs for the year ended December 31, 2024.

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.

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.

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.

Other (Income) Expense, Net

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Foreign exchange (gain) loss, net (5,083) 1,953 (1,129)

Gain on debt extinguishment

(Gain) loss on extinguishment of debt

7,706 (26,480) —

Other income (5,052) (5,304) (5,318)

Total other expense, net $ 24,603 $ 2,538 $ 22,813

$ 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 $9.4 million during the year ended December 31, 2022 compared to the prior year, mainly due to a full year of interest expense associated with the Prior Term Loan B Facility, which the Company entered into during April 2021, as well as increasing interest rates since our Prior Term Loan B Facility carries a variable rate.

The increase in interest expense was partially offset by increases in interest income of $2.9 million.

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, 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.

Interest expense, net decreased by $5.3 million during the year ended December 31, 2024 compared to the prior year.

The net decrease is primarily due to an increase in interest income and a decrease in interest expense as a result of lower Convertible Senior Notes (defined below) outstanding throughout 2024 as compared to the prior year period and the lower interest incurred under the 2024 Term Loan B Facility (defined below) compared to the 2021 Term Loan B Facility (defined below).

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.

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.

Foreign exchange (gain) loss, net changed by $3.1 million during the year ended December 31, 2023 compared to the prior year, for the same reasons above.

The loss on extinguishment of debt of $7.7 million for the year ended December 31, 2024 was due to the refinancing of our 2021 Credit Agreement (defined below) in February 2024 and the repricing of our 2024 Term Loan B Facility (defined below) in September 2024, which are further discussed below.

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).

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.

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 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.

income tax expense for the year ended December 31, 2024 was primarily the result of our ability to recognize DTAs subject to the domestic valuation allowance and the state and foreign income tax provisions.

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.

The income tax benefit for the year ended December 31, 2022 was primarily the result of recognizing the benefit of deferred tax assets previously subject to the domestic valuation allowance and the foreign income tax liability.

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 income tax benefit for the year ended December 31,

2021 was primarily the result of realizing the benefit of deferred tax assets previously subject to the domestic valuation allowance as a result of the deferred tax liabilities associated with acquisitions that occurred during the year and the tax liability associated with foreign subsidiaries.

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.

Key Operating and Financial Performance Metrics

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Revenue and net income (loss) are discussed above under the headings "Components of Our Results of Operations" and "Results of Operations."

December 31, 2023 December 31, 2022 December 31, 2021

(in thousands)

Financial Measures and non-GAAP Financial Measures:

Revenue $ 619,710 $ 577,069 $ 468,413

209,804 269,904 266,751

Contribution ex-TAC

549,147 514,615 416,455

Net income (loss) (159,184) (130,323) 65

Adjusted EBITDA 171,364 178,790 148,659

Contribution ex-TAC

Contribution ex-TAC is calculated as gross profit plus cost of revenue excluding traffic acquisition cost ("TAC").

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Contribution ex-TAC is a non-GAAP financial measure that is most comparable to gross profit.

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.

Our use of Contribution ex-TAC has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP.

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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:

December 31, 2023 December 31, 2022 December 31, 2021

Year Ended Change %

December 31, 2024 December 31, 2023 December 31, 2022 2024 vs 2023

(in thousands)

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Sellers use our technology to monetize their content across all digital channels, including CTV, mobile, and desktop.

Each of these digital channels has its own industry growth rate, with CTV and mobile projected to continue to grow steadily, while desktop growth flattens.

MAGNA's October 2023 Programmatic Market forecast has estimated compound annual growth rates from 2023 to 2027 for mobile and desktop at 15% and 3%, respectively, and over the same period, eMarketer projected CTV to grow at a 15% compound annual growth rate.

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.

The following table presents Contribution ex-TAC by channel:

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 Contribution ex-TAC by channel for the years ended December 31, 2024, 2023, and 2022:

Contribution ex-TAC

December 31, 2023 December 31, 2022 December 31, 2021

Year Ended Change %

December 31, 2024 December 31, 2023 December 31, 2022 2024 vs 2023

(in thousands)

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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 incremental revenue from the SpotX Acquisition, which was completed on April 30, 2021, and the SpringServe Acquisition, which was completed on July 1, 2021, as well as organic growth across CTV and mobile.

We saw substantial growth in our CTV channel, which benefited from a full year of results from the SpotX and Spring Serve Acquisitions, as well as modest growth in mobile, which was partially offset by a decline in our Contribution ex-TAC from desktop.

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.

The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.

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.

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.

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.

We believe Adjusted EBITDA is useful to investors in evaluating our performance for the following reasons:

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• 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 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.

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Interest expense, net 27,032 32,369 29,260

32,369 29,260 19,848

Foreign exchange (gain) loss, net (5,083) 1,953 (1,129)

Gain on extinguishment of debt

(Gain) loss on extinguishment of debt

7,706 (26,480) —

Other debt refinancing expense

Provision (benefit) for income taxes 3,698 1,637 (5,274)

Adjusted EBITDA $ 196,850 $ 171,364 $ 178,790

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."

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.

Refer to discussion in section "Comparison of the Years Ended December 31, 2024, 2023, and 2022."

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 expenses being greater than increases in revenue.

Refer to discussion in section "Comparison of the Years Ended December 31, 2024, 2023, and 2022."

Liquidity and Capital Resources

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).

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.

The Prior Term Loan B Facility and Prior Revolving Credit Facility were fully terminated and replaced with the New Term Loan B Facility and New Revolving Credit Facility (both defined below).

At December 31, 2024, we had cash and cash equivalents of $483.2 million, of which $54.4 million was held in foreign currency denominated cash accounts, and an aggregate gross principal amount of $568.2 million of indebtedness outstanding under our 2024 Term Loan B Facility (as defined below) and our Convertible Senior Notes (as defined below).

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.

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

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.

In the longer term, we would expect to have similar cash requirements, with increases in absolute dollars associated with the continued growth of our business and expansion of operations.

See "Contractual Obligations and Known Future Cash Requirements" for a further discussion of our known material contractual obligations.

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.

During the year ended December 31, 2024, we repurchased 1,160,496 shares of the Company's common stock for an aggregate amount of $14.6 million.

As of December 31, 2024, $110.4 million remains available under the February 2024 Repurchase Plan.

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.

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Our ability to meet our cash requirements depends on, among other things, our operating performance, competitive developments, and financial market conditions, all of which are significantly affected by business, financial, economic, political, global health-related and other factors, many of which we may not be able to control or influence.

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.

However, there are multiple factors that could impact our cash balances in the future, including the factors described above with respect to working capital and cash conversion cycles, as well as the duration and severity of events beyond our control, macroeconomic factors and other factors set forth in Part I, Item 1A:

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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.

Accrued interest for the Convertible Senior Notes at December 31, 2023 was $0.1 million.

In conjunction with the issuance of the Convertible Senior Notes, we entered into capped call transactions to reduce the Company's exposure to additional cash payments above principal balances in the event of a cash conversion of the Convertible Senior Notes.

The Company may owe additional cash or shares to the holders of the Convertible Senior Notes upon early conversion if our stock price exceeds $91.260 per share, which is subject to certain adjustments.

On April 30, 2021, and in conjunction with the SpotX Acquisition, we entered into a credit agreement (the "Prior Credit Agreement") with Goldman Sachs Bank USA as administrative and collateral agent, and other lending parties thereto for a $360.0 million seven-year senior secured term loan facility ("Prior Term Loan B Facility") and a $52.5 million senior secured revolving credit facility (the "Prior Revolving Credit Facility"), which was subsequently increased to $65.0 million in June 2021.

The Prior Credit Agreement was fully refinanced and replaced by the New Credit Agreement (defined below).

Amounts outstanding under the Prior Credit Agreement accrued interest at a rate equal to either, (1) for the Prior Term Loan B Facility, at the Company’s election, the Eurodollar Rate (as defined in the Prior Credit Agreement) plus a margin of 5.00% per annum, or ABR (as defined in the Prior Credit Agreement) plus a margin of 4.00%, and (2) for the Prior Revolving Credit Facility, at the Company’s election, the Eurodollar Rate plus a margin of 4.25% to 4.75%, or ABR plus a margin of 3.25% to 3.75%, in each case, depending on the Company’s first lien net leverage ratio.

As part of the Prior Term Loan B Facility, the Company received $325 million in proceeds, net of discounts and fees, which were used to finance the SpotX Acquisition and related transactions and for general corporate purposes.

In June 2023, the Company amended its Prior Credit Agreement to transition away from a variable interest rate based on the Eurodollar Rate towards a similar variable interest rate based on Adjusted Term SOFR, as defined in the amendment to the Credit Agreement, which is based on the Secured Overnight Financing Rate ("SOFR").

At December 31, 2023, amounts available under the Prior Revolving Credit Facility were $59.7 million, net of letters of credit outstanding in the amount of $5.3 million.

Accrued interest for the Prior Term Loan B Facility at December 31, 2023 was $1.0 million.

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.

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 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

general corporate purposes.

The obligations under the New Credit Agreement are secured by substantially all of the assets of the Company pursuant to a collateral agreement entered into with the collateral agent.

Amounts outstanding under the New Credit Agreement accrue interest at a rate equal to, (1) for the term loans, at the Company’s election, Term SOFR (as defined in the New Credit Agreement) plus a margin of 4.50% per annum, or ABR (as defined in the New Credit Agreement) plus a margin of 3.50%, and (2) for the revolving loans, at the Company’s election, Term SOFR plus a margin of 3.50% to 4.00%, or ABR plus a margin of 2.50% to 3.00%, in each case, depending on the Company’s first lien net leverage ratio.

The covenants of the New Credit Agreement include customary negative covenants that, among other things, restrict the Company’s ability to incur additional indebtedness, grant liens and make certain acquisitions, investments, asset dispositions and restricted payments.

In addition, the New Credit Agreement contains a financial covenant, tested on the last day of any fiscal quarter if utilization of the revolving credit facility exceeds 35% of the total revolving commitments, that requires the Company to maintain a first lien net leverage ratio not greater than 3.25 to 1.00.

The New Credit Agreement includes customary events of default, and customary rights and remedies upon the occurrence of any event of default thereunder, including rights to accelerate the loans, terminate the commitments thereunder and realize upon the collateral securing the obligations under the New Credit Agreement.

In December 2021, the Board of Directors approved a repurchase program (the "2021 Repurchase Plan"), under which we were authorized to purchase up to $50.0 million of our common stock over the twelve month period commencing December 10, 2021.

In November 2022, the Board of Directors approved an extension of the 2021 Repurchase Plan through December 15, 2023.

In February 2023, the Board of Directors approved a repurchase plan (the “February 2023 Repurchase Plan”), pursuant to which we were authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $75.0 million, through February 16, 2025, which was completed during the second quarter of 2023.

On August 4, 2023, the Board of Directors approved a new repurchase plan (the "August 2023 Repurchase Plan"), pursuant to which we were authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $100.0 million, through August 4, 2025.

As of December 31, 2023, $9.5 million remained available under the August 2023 Repurchase Plan.

As a result of repurchases under the February 2023 Repurchase Plan and August 2023 Repurchase Plan, as of December 31, 2023, the Company had reduced the principal balance of its Convertible Senior Notes to $205.1 million.

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 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.

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").

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").

On September 18, 2024, we entered into Amendment No.

1 to the 2024 Credit Agreement ("Amendment No.

1"), which reduced the interest rate of the 2024 Term Loan B Facility by 75 basis points to Term SOFR plus a margin of 3.75% from the previous rate of Term SOFR plus a margin of 4.50%.

The remaining terms of the 2024 Term Loan B Facility and the 2024 Revolving Credit Facility were substantially unchanged.

At December 31, 2024, the balance of the 2024 Term Loan B Facility was $350.1 million, net of unamortized debt discount and debt issuance costs of $13.1 million, and amounts available under the 2024 Revolving Credit Facility were $169.8 million, net of letters of credit outstanding in the amount of $5.2 million.

In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt financing arrangements.

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The timing of cash receipts from buyers and payments to sellers can significantly impact our cash flows from operating activities and our liquidity for, and within, any period presented.

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,

including seasonality, and may be negatively impacted by certain macroeconomic challenges, such as capital market disruptions and instability of financial institutions.

The following table summarizes our cash flows for the periods presented:

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Cash flows provided by operating activities $ 235,201 $ 214,367 $ 192,550

$ 214,367 $ 192,550 $ 126,589

Cash flows used in investing activities (47,502) (37,383) (65,152)

Cash flows used in financing activities

(28,904) (177,842) (30,172)

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 (1,794) 575 (1,417)

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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

related payments to sellers.

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.

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 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.

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.

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.

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.

We believe that cash flows from operations will continue to fluctuate, but in general will increase over time as our business continues to grow.

Investing Activities

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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.

During the year ended December 31, 2022, we used net cash of $20.8 million to acquire Carbon and during the year ended December 31, 2021, we used net cash of $661.9 million to acquire SpotX, SpringServe, and Nth Party.

We anticipate cash flows used in our investing activities will generally increase in 2024 compared to 2023 in order to support our overall growth, in particular with respect to investments in property and equipment and internally developed software.

During the year ended December 31, 2022, we used net cash of $20.8 million to acquire Carbon.

Financing Activities

Our financing activities consisted of our Convertible Senior Notes transactions, repayment of amounts borrowed under our Prior Term Loan B Facility, transactions related to our equity plans, and stock purchases under the repurchase plans.

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.

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.

Our financing activities consisted of our debt refinancing and repricing activities, Convertible Senior Notes transactions, repayment of amounts borrowed under our 2024 Term Loan B Facility and our 2021 Term Loan B Facility, and transactions related to our share repurchases and equity plans.

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.

Cash outflows from financing activities for the year ended December 31, 2024 primarily included $403.1 million of payments related to paying off our 2021 Term Loan B Facility in February 2024 and repricing our 2024 Term Loan B Facility in September 2024, $22.5 million for taxes paid related to net share settlement of stock-based awards, $14.6 million of payments related to share repurchases, and $4.5 million of payments related to debt issuance costs related to the issuance of our 2024 Term Loan B Facility and 2024 Revolver Facility in February 2024.

The outflows were partially offset by cash proceeds primarily consisting of $413.5 million from the issuance of our 2024 Term Loan B Facility, net of debt discount, and the repricing of our 2024 Term Loan B Facility in September 2024, and cash proceeds from the employee stock purchase plan of $3.6 million.

In connection with the September 2024 repricing, most lenders decided to roll their loan balances over from the original 2024 Term Loan B Facility to the amended 2024 Term Loan B Facility, while some decided to cash out and reassign their loan balances.

On September 18, 2024, $312.0 million of the 2024 Term Loan B Facility principal balance was rolled over as part of non-cash financing activities while the remaining lenders who were repaid and then had their loans reissued were included in the $403.1 million cash outflows and the $413.5 million cash proceeds mentioned above.

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.

These outflows for the year ended December 31, 2023 were partially offset by cash proceeds from issuance of common stock under our employee stock purchase plan of $3.5 million and from stock options exercised of $2.2 million.

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.

These outflows for the year ended December 31, 2022 were partially offset by cash proceeds from issuance of common stock under our employee stock purchase plan of $3.7 million and from stock options exercised of $2.2 million.

Cash inflows from financing activities for the year ended December 31, 2021 included $400.0 million in proceeds from our Convertible Senior Notes offering, $349.2 million in net proceeds from our Prior Term Loan B Facility, cash proceeds from stock options exercised of $9.4 million and $3.7 million cash proceeds from issuance of common stock under our employee stock purchase plan.

These inflows for the year ended December 31, 2021 were partially offset by a $39.0 million payment for capped call transactions entered into in connection with the Convertible Senior Notes offering, debt issuance cost payments of $30.4 million, repurchases of $6.0 million of treasury stock in conjunction with our stock repurchase plan, $6.5 million for income tax deposits paid in respect of vesting of stock-based compensation awards that were reimbursed by the award recipients through surrender of shares, $1.8 million repayment of Prior Term Loan B Facility, and repayment of $0.6 million financing lease obligations.

Off-Balance Sheet Arrangements

We do not have any relationships with other entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other

contractually narrow or limited purposes.

We did not have any other off-balance sheet arrangements at December 31, 2023 other than the short-term operating leases described below and commitments mentioned in Note 16 - Commitments and Contingencies.

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.

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.

In certain cases, the terms of the lease agreements provide for rental payments on a graduated basis.

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$ 18,722 $ 14,650 $ 9,024 $ 6,648 $ 6,434 $ 7,331 $ 62,809

Obligations for leases not included in lease liabilities as of December 31, 2024

3,926 4,817 4,888 5,526 5,748 964 25,869

Convertible Senior Notes — 205,067 — — — — 205,067

Interest, Convertible Senior Notes 513 256 — — — — 769

Prior Term Loan B (1)

2024 Term Loan B Facility (1)

3,641 3,641 3,641 3,641 3,641 344,972 363,177

Interest, Prior Term Loan B (2)

Interest, 2024 Term Loan B Facility (2)

29,738 29,440 29,140 28,920 28,542 31,087 176,867

Contractual fees related to the 2024 Term Loan B Facility and the 2024 Revolving Credit Facility (3)

687 687 687 687 102 38 2,888

Other non-cancelable obligations 6,585 5,198 4,315 241 — — 16,339

Total $ 63,812 $ 263,756 $ 51,695 $ 45,663 $ 44,467 $ 384,392 $ 853,785

(1) Includes only scheduled amortization of payments and excludes currently unknown prepayment amounts that may be required, per terms of the Prior Credit Agreement, after the end of each fiscal year.

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.

Note that in February 2024, the Company entered into a New Credit Agreement, which replaced the Prior Credit Agreement.

Payments associated with our Convertible Senior Notes and Prior Term Loan B are based on contractual terms and intended timing of repayments of long-term debt and associated interest, in each case, as of December 31, 2023.

As described above (see "Capital Resources"), in February 2024, we entered into a New Credit Agreement, the proceeds of which were used in part to refinance and terminate the Prior Term Loan B with the New Term Loan B Facility.

The New Term Loan B Facility includes a $365.0 million senior secured term loan facility that matures in February 2031.

Quarterly principal installment payments of 0.25% of the aggregate initial principal balance, or $0.9 million, will be due at the end of each fiscal quarter, with the first principal installment due June 30, 2024, and the amount equal to the then unpaid principal amount of the initial balance on February 6, 2031.

Amounts outstanding under the New Term Loan B Facility will accrue interest and will be due at least quarterly.

Other non-cancelable obligations include agreements in the normal course of business and purchase consideration that extend beyond a year as of December 31, 2023.

The amounts above include commitments under a cloud-managed services agreement, under which the Company has a non-cancelable minimum spend commitment from July 2023 to June 2025 based on actual spend, as defined in the agreement, with the third-party provider from July 2022 to June 2023 of $57.6 million for each twelve-month period (i.e.

July 2023 to June 2024 and July 2024 to June 2025).

The minimum spend commitment reflected above approximates the manner in which we expect to fulfill the obligation.

(1) Includes only customary scheduled loan amortization payments and excludes currently unknown prepayment amounts that may be required, per terms of the 2024 Credit Agreement after the end of each fiscal year.

(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.

(3) Includes estimated fees based on current available amounts under our 2024 Revolving Credit Facility and using the current commitment rate as of December 31, 2024, fees based on outstanding but undrawn letters of credit as of December 31, 2024, and fees owed to our administrative agents for both facilities under the 2024 Credit Agreement.

Obligations for leases not included in the lease liabilities as of December 31, 2024 include commitments under agreements for office space and data centers that have not commenced as of December 31, 2024.

Payments associated with our Convertible Senior Notes, 2024 Term Loan B, and 2024 Revolving Credit Facility are based on contractual terms and intended timing of repayments of long-term debt and associated interest and required fees.

Other non-cancelable obligations above consist of agreements in the normal course of business that are in excess of one year as of December 31, 2024.

In addition, the amounts above exclude commitments due within a year for a cloud-managed services agreement, under which the Company has a remaining non-cancelable minimum spend commitment from January 2025 to June 2025 of $15.9 million.

In the ordinary course of business, we enter into agreements with sellers, buyers, and other third parties pursuant to which we agree to indemnify buyers, sellers, vendors, lessors, business partners, lenders, stockholders, and other parties with respect to certain matters, including, but not limited to, losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, or other liabilities.

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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.

We consider the following when determining if a contract exists (i) contract approval by all parties, (ii) identification of each party’s rights regarding the goods or services to be transferred, (iii) specified payment terms, (iv) commercial substance of the contract, and (v) collectability of substantially all of the consideration is probable.

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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.

There is judgment involved in estimating the stage of

development as well as estimating time allocated to a particular project.

A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods.

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If the remaining useful life of a capitalized project is revised, it is accounted for as a change in estimate and the remaining unamortized cost of the underlying asset is amortized prospectively over the updated remaining useful life.

During the fourth quarter of 2022, we accelerated the remaining useful lives of certain capitalized internal use software projects due to the integration of our legacy CTV platforms, which resulted in approximately $1.9 million and $0.7 million of incremental amortization expense during the years ended December 31, 2023 and 2022.

We also evaluate internal use software for abandonment and use that as a significant indicator for impairment on a quarterly basis.

We also evaluate internal use software for abandonment and consider that along with other quantitative and qualitative factors as indicators for potential impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Recently Issued Accounting Pronouncements

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis