Needham repeats analyst Laura Martin Magnite Inc MGNI with a Buy and a price target of $15. Needham’s clients shared five things they found most interesting (ie key insights) about MGNI after discussing with the broker.

Roku, Inc ROKU recently stated that it would open up its CTV ad inventory to all DSPs. MGNI is the primary beneficiary of this pivot as MGNI is Roku’s SSP.

Therefore, all Open Internet DSPs will connect to MGNI for access to Roku’s unsold CTV ad inventory. MGNI will get a 7% take rate, Martin estimates.

Martin believes spring serve adds to MGNI’s existing customer acceptance rates. Martin estimates that MGNI’s CTV ad server, Spring Service, has an adoption rate of about 1% of total ad spend. However, for MGNI, that 1% of ad spend adds up to the standard 7% of ad spend for CTV ads, so they have very high incremental margins.

CTV is shifting power away from traditional walled gardens alphabet inc Google GoogleAnd Metaplatforms Inc META and towards the public open internet companies, Martin covers.

The analyst sees a “value leak” into open internet ad tech companies through a middle ground called “private marketplaces” as CTV moves power away from traditional walled gardens.

CTV ad inventory may be biddable on private marketplaces such as mobile or desktop. The CTV segment favors the largest open internet software providers due to CTV’s complex tech stack requirements.

MGNI has committed to shutting down SpotX’s legacy CTV platform by mid-2023.

In January 2023, MGNI laid off 6% of its workforce or 55 FTEs out of a total of 950 employees. MGNI anticipates further cost savings after the legacy CTV platform shutdown in mid-2023, driving margin and FCF higher in 2H23.

MGNI announced that CTV revenue was $214 million, 42% of total net revenue of $514 million for FY22A. The analyst estimates that CTV CPMs are about 10 times higher than the average mobile and desktop CPMs, but MGNI’s adoption rate…