Magnite Announces Cloud Gaming Partnership with PHȲND, Extending CTV Footprint Amidst Ongoing Challenges

What happened

Magnite has partnered with PHȲND as the ad tech monetization launch partner for cloud gaming on Smart TVs, aiming to tap into the growing ad-supported gaming market. This aligns with Magnite's strategic focus on connected TV (CTV), where it is the largest independent supply-side platform, as highlighted in the DeepValue report. However, the partnership is a small, non-material initiative that does not immediately address core financial pressures, such as the rising interest burden from $348.6M in net debt and subdued 1H25 operating cash flow of $21.1M. Critical risks from the report, including buyer-side supply path optimization consolidation and CTV CPM compression, remain unmitigated by this announcement. Ultimately, while this expansion could enhance publisher relationships, success depends on execution against significant industry headwinds like privacy shifts and demand variability.

Implication

For investors, the partnership with PHȲND represents an effort to diversify Magnite's CTV ad inventory into cloud gaming, potentially supporting long-term growth in streaming budgets. However, it does not directly counter the DeepValue report's concerns over SPO consolidation, which could pressure take rates and revenue stability. Magnite's leverage issues, with $348.6M in non-current net debt and rising interest costs, are unchanged and may constrain financial flexibility. The move could help maintain publisher footprint and CTV adoption, but investors should watch for tangible impacts on quarterly revenue and Adjusted EBITDA, as per the report's watch items. Until clearer evidence emerges, this partnership alone is insufficient to shift the neutral investment stance, emphasizing the need for disciplined execution amid industry pressures.

Thesis delta

The partnership does not alter the HOLD/NEUTRAL thesis from the DeepValue report, as it is a non-material expansion that fails to address core risks like SPO consolidation and cash flow momentum. It supports the CTV growth narrative but requires successful execution and measurable financial improvements to justify a more bullish view. A shift to BUY would depend on sustained revenue acceleration and deleveraging, which this announcement does not guarantee.