10-Q 1 mgni-20220331.htm 10-Q mgni-20220331
0001595974false2022Q1December 310.015653903450.015653900015959742022-01-012022-03-3100015959742022-04-27xbrli:shares00015959742022-03-31iso4217:USD00015959742021-12-31iso4217:USDxbrli:shares00015959742021-01-012021-03-310001595974us-gaap:CommonStockMember2020-12-310001595974us-gaap:AdditionalPaidInCapitalMember2020-12-310001595974us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001595974us-gaap:RetainedEarningsMember2020-12-310001595974us-gaap:TreasuryStockMember2020-12-3100015959742020-12-310001595974us-gaap:CommonStockMember2021-01-012021-03-310001595974us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001595974us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001595974us-gaap:RetainedEarningsMember2021-01-012021-03-310001595974us-gaap:CommonStockMember2021-03-310001595974us-gaap:AdditionalPaidInCapitalMember2021-03-310001595974us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001595974us-gaap:RetainedEarningsMember2021-03-310001595974us-gaap:TreasuryStockMember2021-03-3100015959742021-03-310001595974us-gaap:CommonStockMember2021-12-310001595974us-gaap:AdditionalPaidInCapitalMember2021-12-310001595974us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001595974us-gaap:RetainedEarningsMember2021-12-310001595974us-gaap:TreasuryStockMember2021-12-310001595974us-gaap:CommonStockMember2022-01-012022-03-310001595974us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001595974us-gaap:TreasuryStockMember2022-01-012022-03-310001595974us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001595974us-gaap:RetainedEarningsMember2022-01-012022-03-310001595974us-gaap:CommonStockMember2022-03-310001595974us-gaap:AdditionalPaidInCapitalMember2022-03-310001595974us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001595974us-gaap:RetainedEarningsMember2022-03-310001595974us-gaap:TreasuryStockMember2022-03-310001595974us-gaap:StockOptionMember2022-01-012022-03-310001595974us-gaap:StockOptionMember2021-01-012021-03-310001595974us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001595974us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001595974us-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:PerformanceSharesMember2021-01-012021-03-310001595974us-gaap:EmployeeStockMember2022-01-012022-03-310001595974us-gaap:EmployeeStockMember2021-01-012021-03-310001595974us-gaap:ConvertibleDebtSecuritiesMember2022-01-012022-03-310001595974us-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-03-310001595974mgni:PerformanceSharesGrantedApril2020Member2022-01-012022-03-31xbrli:pure0001595974mgni:PerformanceSharesGrantedApril2021Member2022-01-012022-03-310001595974mgni:PerformanceSharesGrantedAugust2021Member2022-01-012022-03-310001595974mgni:PerformanceSharesGrantedFebruary2022Member2022-01-012022-03-310001595974mgni:PerformanceSharesGrantedApril2020Member2021-01-012021-03-31mgni:share0001595974us-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2022-01-012022-03-310001595974mgni:NetRevenueMember2022-01-012022-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConcentrationOfBasisOfRevenueRecognitionMembermgni:NetRevenueMember2022-01-012022-03-310001595974mgni:NetRevenueMember2021-01-012021-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConcentrationOfBasisOfRevenueRecognitionMembermgni:NetRevenueMember2021-01-012021-03-310001595974mgni:GrossRevenueMember2022-01-012022-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConcentrationOfBasisOfRevenueRecognitionMembermgni:GrossRevenueMember2022-01-012022-03-310001595974mgni:GrossRevenueMember2021-01-012021-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConcentrationOfBasisOfRevenueRecognitionMembermgni:GrossRevenueMember2021-01-012021-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConcentrationOfBasisOfRevenueRecognitionMember2022-01-012022-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConcentrationOfBasisOfRevenueRecognitionMember2021-01-012021-03-310001595974mgni:ConnectedTelevisionMember2022-01-012022-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConnectedTelevisionMemberus-gaap:ProductConcentrationRiskMember2022-01-012022-03-310001595974mgni:ConnectedTelevisionMember2021-01-012021-03-310001595974us-gaap:SalesRevenueNetMembermgni:ConnectedTelevisionMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-03-310001595974mgni:DesktopMember2022-01-012022-03-310001595974us-gaap:SalesRevenueNetMembermgni:DesktopMemberus-gaap:ProductConcentrationRiskMember2022-01-012022-03-310001595974mgni:DesktopMember2021-01-012021-03-310001595974us-gaap:SalesRevenueNetMembermgni:DesktopMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-03-310001595974mgni:MobileMember2022-01-012022-03-310001595974us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMembermgni:MobileMember2022-01-012022-03-310001595974mgni:MobileMember2021-01-012021-03-310001595974us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMembermgni:MobileMember2021-01-012021-03-310001595974us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2022-01-012022-03-310001595974us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-03-310001595974country:US2022-01-012022-03-310001595974country:US2021-01-012021-03-310001595974us-gaap:NonUsMember2022-01-012022-03-310001595974us-gaap:NonUsMember2021-01-012021-03-310001595974us-gaap:FairValueMeasurementsRecurringMember2022-03-310001595974us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-03-310001595974us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-03-310001595974us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-03-310001595974us-gaap:FairValueMeasurementsRecurringMember2021-12-310001595974us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310001595974us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-12-310001595974us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-12-310001595974us-gaap:DevelopedTechnologyRightsMember2022-03-310001595974us-gaap:DevelopedTechnologyRightsMember2021-12-310001595974us-gaap:CustomerRelationshipsMember2022-03-310001595974us-gaap:CustomerRelationshipsMember2021-12-310001595974us-gaap:InProcessResearchAndDevelopmentMember2022-03-310001595974us-gaap:InProcessResearchAndDevelopmentMember2021-12-310001595974us-gaap:NoncompeteAgreementsMember2022-03-310001595974us-gaap:NoncompeteAgreementsMember2021-12-310001595974us-gaap:TrademarksMember2022-03-310001595974us-gaap:TrademarksMember2021-12-310001595974us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-03-310001595974us-gaap:OtherNoncurrentAssetsMember2022-03-310001595974us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-12-310001595974us-gaap:OtherNoncurrentAssetsMember2021-12-310001595974us-gaap:ComputerSoftwareIntangibleAssetMember2021-01-012021-03-310001595974us-gaap:ComputerSoftwareIntangibleAssetMember2022-01-012022-03-310001595974mgni:SpotXIncMember2021-02-042021-02-040001595974mgni:SpotXIncMember2021-04-302021-04-3000015959742021-04-2900015959742021-04-300001595974mgni:SpotXIncMember2021-04-300001595974mgni:SpotXIncMemberus-gaap:TechnologyBasedIntangibleAssetsMember2021-04-302021-04-300001595974mgni:SpotXIncMemberus-gaap:CustomerRelationshipsMember2021-04-302021-04-300001595974mgni:SpotXIncMemberus-gaap:CustomerRelationshipsMembersrt:MinimumMember2021-04-302021-04-300001595974mgni:SpotXIncMemberus-gaap:CustomerRelationshipsMembersrt:MaximumMember2021-04-302021-04-300001595974mgni:SpotXIncMemberus-gaap:OrderOrProductionBacklogMember2021-04-302021-04-300001595974mgni:SpotXIncMemberus-gaap:InProcessResearchAndDevelopmentMember2021-04-302021-04-300001595974mgni:SpotXIncMemberus-gaap:NoncompeteAgreementsMember2021-04-302021-04-300001595974us-gaap:TrademarksMembermgni:SpotXIncMember2021-04-302021-04-300001595974mgni:SpotXIncMemberus-gaap:InProcessResearchAndDevelopmentMember2021-04-30mgni:project0001595974mgni:SpotXIncMember2022-01-012022-03-310001595974mgni:ServeMotionIncMember2021-07-012021-07-010001595974mgni:ServeMotionIncMembermgni:SpotXIncMember2020-01-012020-12-310001595974mgni:ServeMotionIncMembermgni:SpotXIncMember2021-04-300001595974mgni:ServeMotionIncMembermgni:SpotXIncMember2021-07-010001595974mgni:ServeMotionIncMember2021-07-010001595974us-gaap:TechnologyBasedIntangibleAssetsMembermgni:ServeMotionIncMember2021-07-012021-07-010001595974us-gaap:CustomerRelationshipsMembermgni:ServeMotionIncMember2021-07-012021-07-010001595974mgni:ServeMotionIncMemberus-gaap:TrademarksAndTradeNamesMember2021-07-012021-07-010001595974us-gaap:InProcessResearchAndDevelopmentMembermgni:ServeMotionIncMember2021-07-012021-07-010001595974us-gaap:NoncompeteAgreementsMembermgni:ServeMotionIncMember2021-07-012021-07-010001595974us-gaap:InProcessResearchAndDevelopmentMembermgni:ServeMotionIncMember2021-07-010001595974mgni:NthPartyLtdMember2021-12-012021-12-310001595974us-gaap:TechnologyBasedIntangibleAssetsMembermgni:NthPartyLtdMember2021-12-012021-12-310001595974us-gaap:NoncompeteAgreementsMembermgni:NthPartyLtdMember2021-12-012021-12-310001595974mgni:NthPartyLtdMember2021-12-310001595974mgni:SpotXIncAndServeMotionIncMember2021-01-012021-03-310001595974mgni:CarbonAILimitedAndModeTechnologiesIncMember2022-02-012022-02-280001595974mgni:CarbonAILimitedAndModeTechnologiesIncMember2022-02-280001595974us-gaap:TechnologyBasedIntangibleAssetsMembermgni:CarbonAILimitedAndModeTechnologiesIncMember2022-02-012022-02-280001595974us-gaap:NoncompeteAgreementsMembermgni:CarbonAILimitedAndModeTechnologiesIncMember2022-02-012022-02-280001595974us-gaap:CustomerRelationshipsMembermgni:CarbonAILimitedAndModeTechnologiesIncMember2022-02-012022-02-280001595974mgni:ServeMotionIncMember2022-01-012022-03-310001595974mgni:EmployeeSeveranceAndOneTimeTerminationBenefitsMember2022-01-012022-03-310001595974mgni:EmployeeSeveranceAndOneTimeTerminationBenefitsMember2021-01-012021-03-310001595974mgni:SpotXAcquisitionSpringServeAcquisitionAndTelariaMergerMember2022-03-310001595974mgni:SpotXAcquisitionSpringServeAcquisitionAndTelariaMergerMember2021-12-310001595974mgni:SpotXAndTelariaMember2021-12-310001595974mgni:SpotXAndTelariaMember2022-01-012022-03-310001595974mgni:SpotXAndTelariaMember2022-03-310001595974us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:EmployeeStockOptionMember2022-01-012022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheOneMembermgni:RestrictedStockUnitsAndRestrictedStockAwardsMember2022-01-012022-03-310001595974us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-01-012022-03-310001595974us-gaap:EmployeeStockOptionMember2022-03-310001595974us-gaap:RestrictedStockUnitsRSUMember2021-12-310001595974us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001595974us-gaap:RestrictedStockUnitsRSUMember2022-03-310001595974srt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2020-04-012020-04-300001595974srt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-04-012021-04-300001595974srt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-02-012022-02-280001595974mgni:PerformanceSharesGrantedApril2020Membersrt:ChiefExecutiveOfficerMember2022-03-310001595974mgni:PerformanceSharesGrantedApril2021Membersrt:ChiefExecutiveOfficerMember2022-03-310001595974mgni:PerformanceSharesGrantedFebruary2022Membersrt:ChiefExecutiveOfficerMember2022-03-310001595974mgni:PerformanceSharesGrantedApril2020Membersrt:ChiefExecutiveOfficerMember2022-01-012022-03-310001595974mgni:PerformanceSharesGrantedApril2021Membersrt:ChiefExecutiveOfficerMember2022-01-012022-03-310001595974mgni:PerformanceSharesGrantedFebruary2022Membersrt:ChiefExecutiveOfficerMember2022-01-012022-03-310001595974mgni:SharebasedPaymentArrangementTrancheFourMembersrt:MinimumMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974mgni:SharebasedPaymentArrangementTrancheFourMembersrt:MaximumMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974srt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-08-012021-08-310001595974us-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-08-012021-08-310001595974us-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-08-012021-08-310001595974us-gaap:ShareBasedCompensationAwardTrancheThreeMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-08-012021-08-31mgni:day0001595974us-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheThreeMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheThreeMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974srt:MinimumMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974srt:MinimumMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974srt:MinimumMemberus-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:MaximumMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheThreeMembersrt:MaximumMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:MaximumMembersrt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:PerformanceSharesMember2022-01-012022-03-310001595974us-gaap:PerformanceSharesMember2021-01-012021-03-310001595974us-gaap:EmployeeStockMembermgni:A2014EmployeeStockPurchasePlanMember2013-11-300001595974us-gaap:EmployeeStockMembermgni:A2014EmployeeStockPurchasePlanMember2013-11-012013-11-300001595974us-gaap:EmployeeStockMembermgni:A2014EmployeeStockPurchasePlanMember2022-03-310001595974us-gaap:CostOfSalesMember2022-01-012022-03-310001595974us-gaap:CostOfSalesMember2021-01-012021-03-310001595974us-gaap:SellingAndMarketingExpenseMember2022-01-012022-03-310001595974us-gaap:SellingAndMarketingExpenseMember2021-01-012021-03-310001595974us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001595974us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001595974us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001595974us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001595974mgni:MergerAcquisitionAndRestructuringChargesMember2022-01-012022-03-310001595974mgni:MergerAcquisitionAndRestructuringChargesMember2021-01-012021-03-310001595974mgni:DataCentersForCloudBasedServicesMember2022-01-012022-03-310001595974mgni:DataCentersForCloudBasedServicesMember2021-01-012021-03-310001595974srt:MinimumMember2022-03-310001595974srt:MaximumMember2022-03-310001595974mgni:CompanyOfficeSanFranciscoCAMember2022-03-310001595974mgni:CompanyOfficeTorontoCAMember2022-03-310001595974us-gaap:FinancialStandbyLetterOfCreditMember2022-03-310001595974us-gaap:FinancialStandbyLetterOfCreditMember2021-12-310001595974us-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2022-03-310001595974us-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2021-12-310001595974mgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMember2022-03-310001595974mgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMember2021-12-310001595974us-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2021-03-310001595974us-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2021-03-012021-03-3100015959742021-03-012021-03-310001595974us-gaap:ConvertibleDebtMembermgni:ConversionTermIMembermgni:ConvertibleSeniorNoteMember2021-03-012021-03-310001595974mgni:ConversionTermIiMemberus-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2021-03-012021-03-310001595974mgni:ConversionTermIvMemberus-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2021-03-012021-03-310001595974us-gaap:ConvertibleDebtMembersrt:MaximumMembermgni:ConvertibleSeniorNoteMember2021-03-012021-03-310001595974us-gaap:ConvertibleDebtMembersrt:MinimumMembermgni:ConvertibleSeniorNoteMember2021-03-012021-03-310001595974mgni:ConvertibleSeniorNoteMember2021-03-310001595974srt:MinimumMembermgni:ConvertibleSeniorNoteMember2021-03-310001595974srt:MaximumMembermgni:ConvertibleSeniorNoteMember2021-03-310001595974mgni:ConvertibleSeniorNoteMember2021-03-012021-03-310001595974us-gaap:ConvertibleDebtMembermgni:ConvertibleSeniorNoteMember2021-01-012021-03-310001595974mgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMember2021-04-300001595974us-gaap:RevolvingCreditFacilityMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-04-300001595974mgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMember2021-04-302021-04-300001595974us-gaap:EurodollarMembermgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMember2021-04-302021-04-300001595974mgni:AlternateBaseRateMembermgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMember2021-04-302021-04-300001595974us-gaap:EurodollarMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-04-302021-04-300001595974us-gaap:EurodollarMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-04-302021-04-300001595974mgni:AlternateBaseRateMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-04-302021-04-300001595974mgni:AlternateBaseRateMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-04-302021-04-300001595974us-gaap:RevolvingCreditFacilityMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-04-300001595974us-gaap:RevolvingCreditFacilityMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-04-302021-04-300001595974mgni:IncrementalRevolverMemberus-gaap:RevolvingCreditFacilityMember2021-06-280001595974us-gaap:LetterOfCreditMembermgni:IncrementalRevolverMember2021-06-280001595974us-gaap:RevolvingCreditFacilityMembermgni:SeniorSecuredRevolvingCreditFacilityMember2021-06-280001595974us-gaap:RevolvingCreditFacilityMembermgni:SeniorSecuredRevolvingCreditFacilityMember2022-03-310001595974us-gaap:LetterOfCreditMembermgni:SeniorSecuredRevolvingCreditFacilityMember2022-03-310001595974mgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMembermgni:DebtDiscountMember2021-04-300001595974mgni:SeniorSecuredTermLoanFacilityMembermgni:DeferredFinancingCostsMemberus-gaap:SecuredDebtMember2021-04-300001595974mgni:SeniorSecuredTermLoanFacilityMemberus-gaap:SecuredDebtMember2022-01-012022-03-310001595974us-gaap:SubsequentEventMember2022-04-012022-04-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
__________________
  (Mark One)

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
 
Commission File Number: 001-36384
__________________
MAGNITE, INC.
(Exact name of registrant as specified in its charter)
 __________________
Delaware20-8881738
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1250 Broadway, 15th Floor
New York, New York 10001
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code:
(212) 243-2769
______________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.00001 per shareMGNINasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes    No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes  No
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
ClassOutstanding as of April 27, 2022
Common Stock, $0.00001 par value131,910,148


MAGNITE, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page No.
Part I.
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 6.
2

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
3

MAGNITE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par values)
(unaudited)
March 31, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$204,589$230,401
Accounts receivable, net
782,956927,781
Prepaid expenses and other current assets
22,21919,934
TOTAL CURRENT ASSETS
1,009,7641,178,116
Property and equipment, net
34,98634,067
Right-of-use lease asset
72,36376,986
Internal use software development costs, net
20,83720,093
Intangible assets, net
399,419426,615
Goodwill
978,216969,873
Other assets, non-current
6,8776,862
TOTAL ASSETS
$2,522,462$2,712,612
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$859,178$1,000,956
Lease liabilities, current
18,63819,142
Debt, current
3,6003,600
Other current liabilities
5,9035,697
TOTAL CURRENT LIABILITIES
887,3191,029,395
Debt, non-current, net of debt issuance costs720,710 720,023
Deferred tax liability, net
11,50913,303
Lease liabilities, non-current
62,77766,487
Other liabilities, non-current
2,2372,647
TOTAL LIABILITIES
1,684,5521,831,855
Commitments and contingencies (Note 12)


STOCKHOLDERS' EQUITY
Preferred stock, $0.00001 par value, 10,000 shares authorized at March 31, 2022 and December 31, 2021; 0 shares issued and outstanding at March 31, 2022 and December 31, 2021
Common stock, $0.00001 par value; 500,000 shares authorized at March 31, 2022 and December 31, 2021; 132,052 and 132,553 shares issued at March 31, 2022 and December 31, 2021, respectively, and 132,052 and 132,204 shares outstanding at March 31, 2022 and December 31, 2021, respectively
2 2
Additional paid-in capital
1,278,218 1,282,589
Accumulated other comprehensive loss(1,266)(1,376)
Treasury stock at cost, 0 and 349 shares outstanding at March 31, 2022 and December 31, 2021, respectively
 (6,007)
Accumulated deficit
(439,044)(394,451)
TOTAL STOCKHOLDERS' EQUITY
837,910880,757
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$2,522,462$2,712,612

The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.
4

MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
 Three Months Ended
March 31, 2022March 31, 2021
Revenue$118,075 $60,715 
Expenses:
Cost of revenue59,396 20,756 
Sales and marketing50,000 22,589 
Technology and development23,043 14,266 
General and administrative18,704 14,158 
Merger, acquisition, and restructuring costs6,756 2,722 
Total expenses157,899 74,491 
Loss from operations(39,824)(13,776)
Other (income) expense:
Interest expense, net7,111 143 
Other income(1,263)(1,223)
Foreign exchange loss, net926 15 
Total other (income) expense, net6,774 (1,065)
Loss before income taxes(46,598)(12,711)
Provision (benefit) for income taxes(2,005)166 
Net loss$(44,593)$(12,877)
Net loss per share:
Basic and Diluted$(0.34)$(0.11)
Weighted average shares used to compute net loss per share:
Basic and Diluted132,236 115,296 

The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.


 
5

MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(unaudited)
Three Months Ended
March 31, 2022March 31, 2021
Net loss$(44,593)$(12,877)
Other comprehensive income (loss):
Foreign currency translation adjustments110 (313)
Other comprehensive income (loss)110 (313)
Comprehensive loss$(44,483)$(13,190)

The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.



6

 

MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(unaudited)
Common Stock Additional
Paid-In
Capital
Accumulated  Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Treasury StockTotal
Stockholders’
Equity
Shares
Amount
SharesAmount
Balance at December 31, 2020114,029 $2 $777,084 $(957)$(394,516)$381,613 
Exercise of common stock options733 — 5,785 — — — — 5,785 
Issuance of common stock related to RSU vesting1,351 — — — — — — — 
Stock-based compensation— — 7,108 — — — — 7,108 
Capped call options— — (38,960)— — — — (38,960)
Other comprehensive loss— — — (313)— — — (313)
Net loss— — — — (12,877)— — (12,877)
Balance at March 31, 2021116,113

$2 

$751,017 

$(1,270)

$(407,393)

$ $342,356 
Common Stock Additional
Paid-In
Capital
Accumulated  Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balance at December 31, 2021132,553 $2 $1,282,589 $(1,376)$(394,451)(349)$(6,007)$880,757 
Exercise of common stock options311 — 1,107 — — — — 1,107 
Issuance of common stock related to RSU vesting783 — — — — — — — 
Shares withheld related to net share settlement(315)— (4,260)— — — — (4,260)
Purchase of treasury stock— — — — — (931)(12,138)(12,138)
Retirement of common stock(1,280)— (18,145)— — 1,280 18,145 — 
Stock-based compensation— — 16,927 — — — — 16,927 
Other comprehensive income— — — 110 — — — 110 
Net loss— — — — (44,593)— — (44,593)
Balance at March 31, 2022132,052 $2 $1,278,218 $(1,266)$(439,044) $ $837,910 


The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.
7


MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended
March 31, 2022March 31, 2021
OPERATING ACTIVITIES:
Net loss$(44,593)$(12,877)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization45,866 12,485 
Stock-based compensation16,589 6,993 
Impairment of intangible assets3,320  
(Gain) loss on disposal of property and equipment(2)50 
Provision for doubtful accounts(571)(159)
Amortization of debt discount and issuance costs1,700 99 
Non-cash lease expense610 (652)
Deferred income taxes(1,891)62 
Unrealized foreign currency (gains) losses, net458 (375)
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable146,241 70,252 
Prepaid expenses and other assets(2,279)1,578 
Accounts payable and accrued expenses(141,312)(80,074)
Other liabilities(2,504)1,392 
Net cash provided by (used in) operating activities21,632 (1,226)
INVESTING ACTIVITIES:
Purchases of property and equipment(7,184)(1,317)
Capitalized internal use software development costs(3,382)(1,955)
Mergers and acquisitions, net of cash acquired(20,755) 
Net cash used in investing activities(31,321)(3,272)
FINANCING ACTIVITIES:
Proceeds from Convertible Senior Notes offering 389,000 
Payment for capped call options (38,960)
Payment for debt issuance costs (198)
Proceeds from exercise of stock options1,107 5,785 
Repayment of debt(900) 
Repayment of financing lease(197) 
Purchase of treasury stock(12,138) 
Taxes paid related to net share settlement(4,260) 
Net cash (used in) provided by financing activities(16,388)355,627 
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH268 (256)
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(25,809)350,873 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period230,693 117,731 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period$204,884 $468,604 
The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.

8

MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

Three Months Ended
March 31, 2022March 31, 2021
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents$204,589 $468,550 
Restricted cash included in prepaid expenses and other current assets242  
Restricted cash included in other assets, non-current53 54 
Total cash, cash equivalents and restricted cash$204,884 $468,604 
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:
Cash paid for income taxes$338 $226 
Cash paid for interest$5,668 $51 
Capitalized assets financed by accounts payable and accrued expenses$372 $6,050 
Capitalized stock-based compensation$338 $115 
Purchase consideration - indemnification claims holdback$2,300 $ 
Debt issuance costs included in accrued expenses and other liabilities$ $1,349 
Debt discount, non-cash$ $11,000 

The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.
9

MAGNITE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1—Organization and Summary of Significant Accounting Policies
Company Overview
Magnite, Inc. ("Magnite" or the "Company"), formerly known as The Rubicon Project, Inc., was formed in Delaware and began operations on April 20, 2007. On April 1, 2020, Magnite completed a stock-for-stock merger with Telaria, Inc. ("Telaria" and such merger the "Telaria Merger"), a leading sell-side advertising platform and provider of connected television ("CTV") technology. On April 30, 2021, the Company completed its acquisition of SpotX, Inc. ("SpotX" and such acquisition the "SpotX Acquisition"), a leading CTV and video advertising platform. On July 1, 2021, the Company completed its acquisition of SpringServe, LLC ("SpringServe" and such acquisition the "SpringServe Acquisition"), a leading ad serving platform for CTV. The Company operates a sell-side advertising platform that offers buyers and sellers of digital advertising a single partner for transacting globally across all channels, formats, and auction types. Magnite has its principal offices in New York City, Los Angeles, London, and Sydney, and additional offices in Europe, Asia, North America, and South America.
The Company provides a technology solution to automate the purchase and sale of digital advertising inventory for buyers and sellers. The Company’s platform features applications and services for sellers of digital advertising inventory, or publishers, that own or operate websites, applications, CTV channels, and other digital media properties, to manage and monetize their inventory; applications and services for buyers, including advertisers, agencies, agency trading desks, and demand side platforms, to buy digital advertising inventory; and a transparent, independent marketplace that brings buyers and sellers together and facilitates intelligent decision making and automated transaction execution at scale. The Company's clients include many of the world's leading sellers and buyers of digital advertising inventory.
Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim period presented have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any future interim period, the year ending December 31, 2022, or for any future year.
The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in its 2021 Annual Report on Form 10-K.
There have been no significant changes in the Company's accounting policies from those disclosed in its audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in its Annual Report on Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed financial statements and accompanying footnotes. Due to the economic uncertainty as a result of the COVID-19 pandemic, geopolitical events, including the conflict in Ukraine, and economic and macro-economic factors like labor shortages, supply chain disruptions, and inflation impacting the markets and communities in which our clients operate, it has become more difficult to apply certain assumptions and judgments into these estimates. The extent of the impact of these factors on the Company's operational and financial performance will depend on future developments, which are highly uncertain and cannot be predicted, including but not limited to the duration and how quickly and to what extent normal economic and operating conditions can resume. During the three months ended March 31, 2022, this uncertainty continued to result in a higher level of judgment related to its estimates and assumptions. As of the date of issuance of the condensed consolidated financial statements for the three months ended March 31, 2022, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments, or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ materially from these estimates.
Recently Adopted Accounting Standards
In July 2021, the FASB issued Update No. 2021-05, Leases (Topic 842)—Lessors – Certain Leases with Variable Lease Payments ("ASU 2021-05"). ASU 2021-05 requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate as an operating lease if specified criteria are met. The Company adopted ASU 2021-05 on January 1, 2022 on a
10

prospective basis, which did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
Recent Accounting Pronouncements Not Yet Adopted
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. Considerations to determine the amount of contract assets and contract liabilities to record at the acquisition date include the terms of the acquired contract, such as timing of payment, identification of each performance obligation in the contract and allocation of the contract transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception. ASU 2021-08 is effective for the Company beginning in the first quarter of 2023. ASU 2021-08 should be applied prospectively for acquisitions occurring on or after the effective date of the amendments. Early adoption of the proposed amendments would be permitted, including adoption in an interim period. The Company is currently assessing the impact this standard will have on the Company’s consolidated financial statements.
The Company does not believe there are any other recently issued and effective or not yet effective pronouncements that would have or are expected to have any significant effect on the Company’s financial position, cash flows or results of operations.
Note 2—Net Loss Per Share
The following table presents the basic and diluted net loss per share:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands, except per share data)
Basic and Diluted Income (Loss) Per Share:
Net loss$(44,593)$(12,877)
Weighted-average common shares outstanding132,236 115,296 
Weighted-average common shares outstanding used to compute net loss per share132,236 115,296 
Basic and diluted net loss per share$(0.34)$(0.11)
The following weighted-average shares have been excluded from the calculation of diluted net loss per share attributable to common stockholders for each period presented because they are anti-dilutive:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Options to purchase common stock2,593 5,400 
Unvested restricted stock units2,415 7,496 
Unvested performance stock units152 197 
ESPP shares 90 
Convertible Senior Notes6,262  
Total shares excluded from net loss per share11,422 13,183 

For the three months ended March 31, 2022, outstanding performance stock units granted during April 2020, April 2021, August 2021, and February 2022 based on a current achievement level of 121%, 0%, 0%, and 51%, respectively, were excluded from the calculation of diluted net loss per share because they were anti-dilutive. For the three months ended March 31, 2021, outstanding performance stock units granted during April 2020, based on a current achievement level of 150%, were excluded from the calculation of diluted net loss per share because they were anti-dilutive. Refer to Note 9—"Stock-Based Compensation" for additional information related to performance stock units.
For the three months ended March 31, 2022 and 2021, shares that would be issuable assuming conversion of all of the Convertible Senior Notes (as defined in Note 13) were excluded from the calculation of diluted net loss per share because they were anti-dilutive. Diluted earnings per share for the Convertible Senior Notes is calculated under the if-converted method in accordance with ASC 260, Earnings Per Share. The Convertible Senior Notes have an initial conversion rate of 15.6539 shares of common stock per $1,000 principal amount of the Convertible Senior Notes, which will be subject to anti-dilution adjustments in certain circumstances. As of March 31, 2022 and 2021, the number of shares that would be issuable assuming conversion of all of
11

the Convertible Senior Notes is approximately 6,261,560. Refer to Note 13—"Debt" for additional information related to accounting for Convertible Senior Notes issued and associated Capped Call Transactions.
Note 3—Revenue
For the majority of transactions on the Company's platforms, the Company reports revenue on a net basis as it does not act as the principal in the purchase and sale of digital advertising inventory because it does not have control of the digital advertising inventory and does not set prices agreed upon within the auction marketplace. For certain advertising campaigns that are transacted through insertion orders, the Company reports revenue on a gross basis, based primarily on its determination that the Company acts as the primary obligor in the delivery of advertising campaigns for buyers with respect to such transactions.
For periods prior to the SpotX Acquisition, revenue reported on a gross basis was generally less than 3% of the Company's total revenue. As a result of the SpotX Acquisition, an increased percentage of the Company's revenue is reported on a gross basis. The following table presents our revenue recognized on a net basis and on a gross basis for the three months ended March 31, 2022 and March 31, 2021, respectively.
Three Months Ended
March 31, 2022March 31, 2021
(in thousands, except percentages)
Revenue:
Net basis$100,076 85 %$58,996 97 %
Gross basis17,999 15 1,719 3 
Total$118,075 100 %$60,715 100 %
The following table presents our revenue by channel for the three months ended March 31, 2022 and 2021:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands, except percentages)
Channel:
CTV$51,440 44 %$11,976 20 %
Desktop27,606 23 20,851 34 
Mobile39,029 33 27,888 46 
Total$118,075 100 %$60,715 100 %
    The following table presents the Company's revenue disaggregated by geographic location, based on the location of the Company's sellers:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
United States$90,408 $42,611 
International27,667 18,104 
Total$118,075 $60,715 

Payment terms are specified in agreements between the Company and the buyers and sellers on its platform. The Company generally bills buyers at the end of each month for the full purchase price of impressions filled in that month. The Company recognizes volume discounts as a reduction of revenue as they are incurred. Specific payment terms may vary by agreement, but are generally seventy-five days or less. The Company's accounts receivable are recorded at the amount of gross billings to buyers, net of allowances for the amounts the Company is responsible to collect. The Company's accounts payable related to amounts due to sellers are recorded at the net amount payable to sellers (see Note 5). Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.
Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest. The allowance for doubtful accounts is reviewed quarterly, requires judgment, and is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The Company reviews the status of the then-outstanding accounts receivable on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection experience, current information
12

regarding the client, subsequent collection history, and other relevant data, in establishing the allowance for doubtful accounts. Accounts receivable is presented net of an allowance for doubtful accounts of $2.1 million at March 31, 2022, and $3.5 million at December 31, 2021. Accounts receivable are written off against the allowance for doubtful accounts when the Company determines amounts are no longer collectible.
The Company reviews the associated payable to sellers for recovery of buyer receivable allowance and write-offs; in some cases, the Company can reduce the payable to sellers. The reduction of seller payables related to recovery of uncollected buyer receivables is netted against allowance expense. The contra seller payables related to recoveries were $1.2 million and $2.1 million as of March 31, 2022 and December 31, 2021, respectively.
The following is a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2022 and 2021:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Allowance for doubtful accounts, beginning balance December 31$3,475 $2,360 
Write-offs (4)
Increase (decrease) in provision for expected credit losses(1,466)(877)
Recoveries of previous write-offs87 20 
Allowance for doubtful accounts, ending balance March 31$2,096 $1,499 
During the three months ended March 31, 2022, the provision for expected credit losses associated with accounts receivable decreased by $1.5 million, offset by decreases of contra seller payables related to recoveries of uncollected buyer receivables of $0.9 million, which resulted in $0.6 million of bad debt expense. During the three months ended March 31, 2021, the provision for expected credit losses associated with accounts receivable decreased by $0.9 million and was offset by decreases of contra seller payables related to recoveries of uncollected buyer receivables of $0.7 million, which resulted in $0.2 million of bad debt expense during the period.
Note 4—Fair Value Measurements
Recurring Fair Value Measurements    
Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are based on market data obtained from independent sources. The fair value hierarchy is based on the following three levels of inputs, of which the first two are considered observable and the last one is considered unobservable:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 – Unobservable inputs.
13

The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at March 31, 2022:
TotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs 
(Level 3)
(in thousands)
Cash equivalents
$7,870 $7,870 $ $ 
The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2021:
TotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs 
(Level 3)
(in thousands)
Cash equivalents
$7,869 $7,869 $ $ 
At March 31, 2022 and December 31, 2021, cash equivalents of $7.9 million and $7.9 million, respectively, consisted of money market funds and commercial paper, with original maturities of three months or less. The carrying amounts of cash equivalents are classified as Level 1 or Level 2 depending on whether or not their fair values are based on quoted market prices for identical securities that are traded in an active market.
At March 31, 2022 and December 31, 2021, the Company had Convertible Senior Notes and Term Loan B Facility (as defined in Note 13) included in its balance sheets. The estimated fair value of the Company's Convertible Senior Notes was $292.5 million and $315.5 million as of March 31, 2022 and December 31, 2021, respectively. The estimated fair value of Convertible Senior Notes is based on market rates and the closing trading price of the Convertible Senior Notes as of March 31, 2022 and is classified as Level 2 in the fair value hierarchy. At March 31, 2022 and December 31, 2021, the estimated fair value of the Company's Term Loan B Facility approximates the carrying value based on borrowing rates currently available to the Company for financing with similar terms and is classified as Level 2 in the fair value hierarchy.
There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended March 31, 2022 and 2021.
Note 5—Other Balance Sheet Amounts
Accounts payable and accrued expenses included the following:
March 31, 2022December 31, 2021
(in thousands)
Accounts payable—seller$821,848 $971,220 
Accounts payable—trade16,857 11,904 
Accrued employee-related payables16,575 16,230 
Accrued holdback - indemnification claims3,898 1,602 
Total$859,178 $1,000,956 

Restricted cash was $0.3 million at March 31, 2022 and December 31, 2021, which was included within prepaid expenses and other current assets and other assets, non-current.
Note 6—Goodwill, Intangible Assets, and Capitalized Costs Incurred in Cloud Computing Arrangements
The Company's goodwill balance as of March 31, 2022 and December 31, 2021 was $978.2 million and $969.9 million, respectively. The increase during the three months ended March 31, 2022 was a result of the Carbon Acquisition (see Note 7).

14

The Company’s intangible assets as of March 31, 2022 and December 31, 2021 included the following:
March 31, 2022December 31, 2021
(in thousands)
Amortizable intangible assets:
Developed technology$390,378 $378,958 
Customer relationships172,500 173,950 
In-process research and development12,730 14,630 
Non-compete agreements2,400 2,270 
Trademarks900 1,400 
Total identifiable intangible assets, gross578,908 571,208 
Accumulated amortization—intangible assets:
Developed technology(93,579)(75,850)
Customer relationships(82,390)(65,702)
In-process research and development(1,695)(1,250)
Non-compete agreements(1,600)(1,197)
Trademarks(225)(594)
Total accumulated amortization—intangible assets(179,489)(144,593)
Total identifiable intangible assets, net$399,419 $426,615 
Amortization of intangible assets for the three months ended March 31, 2022 and 2021 was $38.5 million and $7.6 million, respectively. During the three months ended March 31, 2022, the Company abandoned certain in-process research and development projects and technology intangible assets. The abandonment resulted in $3.3 million of impairment costs, which was included within merger, acquisition, and restructuring costs in the condensed consolidated statement of operations.
The estimated remaining amortization expense associated with the Company's intangible assets was as follows as of March 31, 2022:
Fiscal YearAmount
(in thousands)
Remaining 2022$111,428 
2023104,924 
202487,294 
202570,647 
202624,695 
Thereafter431 
Total$399,419 
The Company capitalizes costs related to arrangements for infrastructure as a service, platform as a service, and software as a service. Capitalized costs associated with these arrangements as of March 31, 2022 and December 31, 2021 were included within prepaid expenses and other current assets and other assets, non-current within the condensed consolidated balance sheet in the amounts of $0.6 million and $0.8 million, and $0.5 million and $0.7 million, respectively. The amortization of these agreements was immaterial for the three months ended March 31, 2022 and 2021.

15


Note 7—Business Combinations

2021 Acquisition—SpotX
On April 30, 2021, the Company completed the SpotX Acquisition, pursuant to a Stock Purchase Agreement, dated as of February 4, 2021 (the "Purchase Agreement"), by and between the Company and RTL US Holdings, Inc. ("RTL"). The initial purchase price for the SpotX Acquisition was $560 million in cash ("Cash Consideration") and 14,000,000 shares of the Company's common stock. Per the terms of the Purchase Agreement, at the completion of the Company’s offering of its Convertible Senior Notes, RTL elected to increase the Cash Consideration by an amount equal to 20% of the gross proceeds of the Convertible Senior Notes (which amount was equal to $80 million) and to reduce the number of shares of common stock it would otherwise receive by a number of shares of common stock equal to 20% of the gross proceeds of the proposed offering of notes ($80 million) divided by the closing price of a share of our common stock on the trading day immediately prior to the date of pricing of the proposed offering of notes ($49.21). As a result of this election, the adjusted purchase price was $1.1 billion, prior to customary working capital adjustments and other adjustments, consisting of $640.0 million in cash plus 12,374,315 shares of common stock (based on the fair value of the Company's common stock on April 30, 2021). The Cash Consideration was subject to customary working capital and other adjustments. The working capital was approximately $65.2 million, including cash balances acquired and other working capital adjustments, resulting in a total purchase price of $1.2 billion. The Company financed the Cash Consideration through borrowings under the Term Loan B Facility and the Convertible Senior Notes (Note 13).
In accordance with ASC 805, the Company recorded the acquisition based on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the value of consideration transferred over the aggregate fair value of those net assets was recorded as goodwill. Any identified definite lived intangible assets will be amortized over their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill will be tested for impairment when certain indicators are present. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies.
Management's purchase price allocation is preliminary and subject to change pending finalization of the valuation, including finalization of tax attributes and tax related liabilities. Under the acquisition method of accounting for business combinations, if the Company identifies changes to acquired deferred tax asset ("DTA") valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment, and the Company will record the offset to goodwill. The Company records all other changes to DTA valuation allowances and liabilities related to uncertain tax positions in current- period income tax expense.
For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed, the Company has applied the guidance in ASC 820, Fair Value Measurement, which establishes a framework for measuring fair value. In accordance with ASC 820, fair value is an exit price and is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.
The following table summarizes the total purchase consideration (in thousands):
Cash Consideration$640,000 
Stock Consideration (Fair Value of Shares of Magnite common stock)495,591 
Working capital adjustment65,152 
Total purchase consideration$1,200,743 
The purchase consideration for the SpotX Acquisition included 12,374,315 shares of the Company's common stock with a fair value of approximately $495.6 million, based on the close price of the Company's common stock at closing on April 30, 2021, which was $40.05 per share, and working capital adjustment of $65.2 million, mainly consisting of cash balances acquired on the date of the SpotX Acquisition and other opening balance sheet adjustments.
During the three months ended March 31, 2022, the Company adjusted the preliminary purchase price allocation for SpotX based on updated fair values associated with the acquired assets and liabilities. Adjustments impacted acquisition related accounts payable and tax accruals.
16

The fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the SpotX Acquisition as set forth below (in thousands):
Cash$81,967 
Restricted cash199 
Accounts receivable199,649 
Prepaid and other assets, current12,308 
Fixed assets6,823 
Intangible assets429,600 
Right-of-use lease asset10,055 
Goodwill782,719 
Total assets to be acquired1,523,320 
Accounts payable and accrued expenses205,822 
Other current liabilities1,091 
Lease liabilities12,625 
Deferred tax liability, net103,039 
Total liabilities to be assumed322,577 
Total purchase price$1,200,743 
The Company believes the amount of goodwill resulting from the purchase price allocation is primarily attributable to expected synergies from the assembled workforce, an increase in development capabilities, increased offerings to customers, and enhanced opportunities for growth and innovation. Goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if certain indicators of impairment are present. In the event that goodwill has become impaired, the Company will record an expense for the amount impaired during the quarter in which the determination is made. The acquired intangibles and goodwill resulting from the SpotX Acquisition are not amortizable for tax purposes.
The following table summarizes the components of the intangible assets and estimated useful lives as of the date of the SpotX Acquisition (dollars in thousands):
Estimated Useful Life
Technology$280,400 5 years
Customer relationships130,300 
2 to 4 years
Backlog11,100 
<1 year
In-process research and development5,800 
3 years*
Non-compete agreements1,500 1 year
Trademarks500 
<1 year
Total intangible assets acquired$429,600 
* In-process research and development consists of six projects with a weighted-average useful life of 3 years. Amortization begins once associated projects are completed and it is determined the projects have alternative future use.
The fair value of the acquired technology and in-process research and development was valued using the Excess Earnings Method. This methodology included allocating future revenue projections to the existing technologies and applying decay rates and appropriate discount rates that reflect the respective intangible asset's relative risk profile when compared to other intangible assets as well as the discount rate for the overall business.
The Company used the Loss‐of‐Revenue and Income Method in its valuation of the existing customer relationships and non-compete agreements. To the extent that future cash flows of the business would be negatively affected in the absence of these relationships and non-compete agreements, they would be deemed to have economic value. This method attempts to quantify the scenario whereby the owner loses the right to the intangible asset and the resulting losses of revenue and income. Under this analysis, the value of the cash flows with the intangible asset is compared to the value of the cash flows without the intangible asset and the difference represents the value of the intangible asset. This methodology included applying a discount rate and the expected timing it would take to further enhance customer relationships.
The fair value of the backlog was based on the Excess Earnings Method, taking into consideration the existing contracts as of the date of the SpotX Acquisition and the respective cost to complete the servicing of the existing agreements. The resulting stream of after tax earnings were discounted to present value by applying an appropriate discount rate for the
17

asset. The discount rate was selected based on the intangible asset’s relative risk profile when compared to the other intangible assets as well as the discount rate for the overall business.
The fair value of the trademarks was based on the Income Approach, specifically the Relief‐from‐Royalty Method. Under this method, data is obtained regarding actual royalty payments made for similar intangible assets. After the appropriate royalty rate is determined, the reasonable royalty savings is then discounted to its present value over the remaining technological, economic, or legal life of the intangible asset.
Intangible assets are generally amortized on a straight-line basis, which approximates the pattern in which the economic benefits are consumed, over their estimated useful lives. Amortization of developed technology is included in cost of revenues and the amortization of customer relationships, backlog, non-compete agreements, and trademarks is included in sales and marketing expenses in the condensed consolidated statements of operations. Once the projects associated with acquired in-process research and development are completed, amortization will be included in cost of revenues in the condensed consolidated statements of operations. The acquired intangible assets and goodwill resulting from the SpotX Acquisition are not tax deductible.
As part of the SpotX Acquisition, deferred tax liabilities were established. As a result of the deferred tax liability balance created by the acquisition, the Company reduced its deferred tax asset valuation allowance by $56.2 million for the year ended December 31, 2021. Such reduction was recognized as an income tax benefit in the post-acquisition consolidated statements of operations for the year ended December 31, 2021.
2021 Acquisition—SpringServe
On July 1, 2021, the Company, through its wholly-owned subsidiary, SpotX, completed the SpringServe Acquisition. As a result of the SpringServe Acquisition, SpringServe became a wholly-owned subsidiary of SpotX, and a wholly-owned indirect subsidiary of the Company.
The following table summarizes the total estimated purchase consideration (in thousands):
Cash Consideration$31,136 
SpotX initial cash investment in SpringServe 2,075 
Fair value appreciation of SpotX purchase right 7,450 
Indemnification claims - holdback1,409 
Total purchase consideration$42,070 
In 2020, SpotX made a minority investment of $2.1 million in SpringServe in conjunction with a strategic partnership agreement between the two companies, which included an option agreement to purchase SpringServe. At the time of Magnite's acquisition of SpotX, the fair value of SpotX's minority investment and purchase right were valued at a combined $7.5 million for a total minority investment and purchase right of $9.5 million. In connection with the SpringServe Acquisition, approximately $1.4 million of the purchase price was held back to cover possible indemnification claims, which is expected to be paid in cash one year after the acquisition.
In accordance with ASC 805, the Company recorded the acquisition based on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the value of consideration transferred over the aggregate fair value of those net assets was recorded as goodwill. Any identified definite lived intangible assets will be amortized over their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill will be tested for impairment when certain indicators are present. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies.
Management's purchase price allocation is preliminary and subject to change pending finalization of the valuation, including finalization of tax attributes and tax related liabilities. Under the acquisition method of accounting for business combinations, if the Company identifies changes to acquired DTA valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment, and the Company will record the offset to goodwill. The Company records all other changes to DTA valuation allowances and liabilities related to uncertain tax positions in current- period income tax expense.
For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed, the Company has applied the guidance in ASC 820, Fair Value Measurement, which establishes a framework for measuring fair value.
18

In accordance with ASC 820, fair value is an exit price and is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.
The fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the SpringServe Acquisition as set forth below (in thousands):
Cash$1,062 
Accounts receivable3,234 
Prepaid and other assets, current157 
Fixed assets25 
Intangible assets23,400 
Right-of-use lease asset1,879 
Goodwill24,156 
Total assets to be acquired53,913 
Accounts payable and accrued expenses2,475 
Other current liabilities35 
Lease liabilities3,179 
Deferred tax liability, net6,154 
Total liabilities to be assumed11,843 
Total preliminary purchase price$42,070 
The Company believes the amount of goodwill resulting from the purchase price allocation is primarily attributable to expected synergies from the assembled workforce, an increase in development capabilities, increased offerings to customers, and enhanced opportunities for growth and innovation. Goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if certain indicators of impairment are present. In the event that goodwill has become impaired, the Company will record an expense for the amount impaired during the quarter in which the determination is made.
The following table summarizes the components of the intangible assets and estimated useful lives as of the date of the SpringServe Acquisition (dollars in thousands):
Estimated Useful Life
Technology$15,500 5 years
Customer relationships5,700 2 years
Trademarks and Trade Names900 3 years
In-process research and development800 
3 years*
Non-compete agreements500 2 years
Total intangible assets acquired$23,400 
* In-process research and development consists of two projects with a weighted-average useful life of 3 years. Amortization begins once associated projects are completed and it is determined the projects have alternative future use.
The fair value of the acquired technology and in-process research and development was valued using the Excess Earnings Method. This methodology included allocating future revenue projections to the existing technologies and applying decay rates and appropriate discount rates that reflect the respective intangible asset's relative risk profile when compared to other intangible assets as well as considering the risk associated with the overall business.
At the acquisition date, SpringServe had existing customer relationships. To the extent that future cash flows of the business would be negatively affected in the absence of these relationships, they would be deemed to have economic value. In addition, certain employees of SpringServe signed two year non-compete agreements. The Company used the Loss‐of‐Revenue and Income Method in its valuation of the existing customer relationships and non-compete agreements. This method attempts to quantify the scenario whereby the owner loses the right to the intangible asset and the resulting losses of revenue and income. Under this analysis, the value of the cash flows with the intangible asset is compared to the value of the cash flows without the intangible asset and the difference represents the value of the intangible asset. This methodology included applying a discount rate and the expected timing it would take to further enhance customer relationships.
The fair value of the trademarks and trade names were based on the Income Approach, specifically the Relief‐from‐Royalty Method. Under this method, data is obtained regarding actual royalty payments made for similar intangible assets. After the
19

appropriate royalty rate is determined, the reasonable royalty savings is then discounted to its present value over the remaining technological, economic, or legal life of the intangible asset.
Intangible assets are generally amortized on a straight-line basis, which approximates the pattern in which the economic benefits are consumed, over their estimated useful lives. Amortization of developed technology is included in cost of revenues and the amortization of customer relationships, non-compete agreements, and trademarks is included in sales and marketing expenses in the condensed consolidated statements of operations. Once the projects associated with acquired in-process research and development are completed, amortization will be included in cost of revenues in the condensed consolidated statements of operations. The acquired intangibles and goodwill resulting from the SpringServe Acquisition are not tax deductible.
As part of the SpringServe Acquisition, deferred tax liabilities were established. As a result of this and the SpotX deferred tax liability balance, the Company recognized an income tax benefit in the post-acquisition consolidated statements of operations for the year ended December 31, 2021.
2021 Acquisition—Nth Party
The Company completed the acquisition of Nth Party, Ltd. ("Nth Party"), a developer of cryptographic software for secure audience data sharing and analysis, in December 2021 for a total purchase price of $9.0 million in cash. The Company acquired Nth Party as part of its strategy to further invest in the development and enhancement of industry leading identity and audience solutions. The allocation of purchase consideration resulted in approximately $5.4 million of developed technology intangible assets with an estimated useful life of 5 years, approximately $0.2 million non-compete intangible assets with an estimated useful life of 2 years, approximately $1.3 million of deferred tax liability, and goodwill of approximately $4.8 million, which is attributable to the workforce of Nth Party and revenue growth from the acquisition. Acquired intangibles and goodwill resulting from the Nth Party acquisition are not deductible for income tax purposes.
Acquisition related costs associated with the 2021 acquisitions included in the "Merger, acquisition, and restructuring costs" in the Company's condensed consolidated statements of operations during the three months ended March 31, 2022 were immaterial.
Unaudited Pro Forma Information
The following table provides unaudited pro forma information as if the SpotX and SpringServe Acquisitions had been acquired by the Company as of January 1, 2020. The unaudited pro forma information reflects adjustments for additional amortization resulting from the fair value adjustments to assets acquired and liabilities assumed, adjustments for alignment of accounting policies, and transaction expenses as if the SpotX and SpringServe Acquisitions occurred on January 1, 2020. The pro forma results do not include any anticipated cost synergies or other effects of the combined companies. Accordingly, pro forma amounts are not necessarily indicative of the results that actually would have occurred had the SpotX and SpringServe Acquisitions been completed on the dates indicated, nor is it indicative of the future operating results of the combined company.

Three Months Ended
March 31, 2021
(in thousands)
Pro Forma Revenue$111,277 
Pro Forma Net Income (Loss) $(36,876)
2022 Acquisition—Carbon
The Company completed the acquisition of the business of Carbon (AI) Limited ("Carbon" and such acquisition the "Carbon Acquisition"), a platform that enables publishers to measure, manage, and monetize audience segments, in February 2022 for a total purchase price of $23.1 million in cash. Approximately $2.3 million of the purchase price was held back to cover possible indemnification claims, which is expected to be paid in cash one year after the acquisition. The Company acquired Carbon as part of its strategy to further invest in the development and enhancement of industry leading identity and audience solutions. The allocation of purchase consideration resulted in an estimated $14.2 million of developed technology intangible assets with an estimated useful life of 5 years, $0.2 million non-compete intangible assets with an estimated useful life of 2 years, $0.2 million of customer relationships with an estimated useful life of 0.5 years, and goodwill of $8.5 million, which is attributable to the workforce of Carbon and revenue growth from the acquisition. For tax purposes, the Carbon Acquisition was treated as an asset acquisition. The acquisition of identified intangibles results in tax deductible amortization pursuant to IRC Section 197.
Acquisition related costs associated with the Carbon Acquisition included in the "Merger, acquisition, and restructuring costs" in the Company's condensed consolidated statements of operations during the three months ended March 31, 2022 were immaterial.

20

Note 8—Merger, Acquisition, and Restructuring Costs
Merger, acquisition, and restructuring costs consist primarily of professional services fees and employee termination costs, including stock-based compensation charges, associated with the Telaria Merger, the SpotX Acquisition, and restructuring activities.
The following table summarizes merger, acquisition, and restructuring cost activity (in thousands):
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Professional services (investment banking advisory, legal and other professional services)$775 $2,226 
Personnel related (severance and one-time termination benefit costs)717 119 
Non-cash stock-based compensation (double-trigger acceleration and severance)1,944 377 
Impairment costs of abandoned technology
3,320  
Total merger, acquisition, and restructuring costs$6,756 $2,722