Digital advertising platform Magnite (NASDAQ:MGNI) missed Wall Street’s revenue expectations in Q2 CY2025, but sales rose 6.4% year on year to $173.3 million. Its non-GAAP profit of $0.20 per share was 20.3% above analysts’ consensus estimates.
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Magnite (MGNI) Q2 CY2025 Highlights:
- Revenue: $173.3 million vs analyst estimates of $177.3 million (6.4% year-on-year growth, 2.2% miss)
- Adjusted EPS: $0.20 vs analyst estimates of $0.17 (20.3% beat)
- Adjusted EBITDA: $54.39 million vs analyst estimates of $46.59 million (31.4% margin, 16.7% beat)
- Operating Margin: 12.7%, up from 5.9% in the same quarter last year
- Free Cash Flow Margin: 3.5%, down from 49.4% in the same quarter last year
- Market Capitalization: $3.16 billion
“We delivered total top-line results and Adjusted EBITDA that exceeded our guidance for the second quarter, with significant upside from DV+. We see acceleration in second-half 2025 growth in both CTV and DV+, despite some continued uncertainty related to the macro environment. In CTV, our growth was fueled by new and expanded partnerships, entry of SMB advertisers, our critical role in buyer marketplaces and success in live sports. The growth profile of DV+ is also improving as a result of progress on the partner and product side, even prior to benefits from any remedies resulting from the antitrust ruling against Google,” said Michael G. Barrett, CEO of Magnite.
Company Overview
Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ:MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $685.1 million in revenue over the past 12 months, Magnite is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.
As you can see below, Magnite grew its sales at an incredible 33% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows Magnite’s demand was higher than many business services companies.
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Magnite’s annualized revenue growth of 6.5% over the last two years is below its five-year trend, but we still think the results were respectable. 
This quarter, Magnite’s revenue grew by 6.4% year on year to $173.3 million, missing Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 12.7% over the next 12 months, an improvement versus the last two years. This projection is commendable and suggests its newer products and services will fuel better top-line performance.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Although Magnite was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 10% over the last five years. Unprofitable business services companies require extra attention because they could get caught swimming naked when the tide goes out.
On the plus side, Magnite’s operating margin rose by 31.1 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to show consistent profitability.
This quarter, Magnite generated an operating margin profit margin of 12.7%, up 6.8 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Magnite’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
Magnite’s EPS grew at an astounding 22.8% compounded annual growth rate over the last two years, higher than its 6.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Magnite’s earnings quality to better understand the drivers of its performance. Magnite’s operating margin has expanded by 59.7 percentage points over the last two years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q2, Magnite reported adjusted EPS at $0.20, up from $0.14 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Magnite’s full-year EPS of $0.83 to grow 10.7%.
Key Takeaways from Magnite’s Q2 Results
Revenue missed, and this seems to be the market's focus. The stock traded down 7.3% to $20.81 immediately following the results.
So do we think Magnite is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.