It’s a lengthy process. I had commented earlier about the risk of implementation and the length and the expense of it. They’re not going to even lift a finger on the Trade Desk integration until 2025. And so I think it’s an experiment. I’d probably do it if I were them because it’s been pitched as incremental demand. Why wouldn’t you, as a publisher, but I do think they’re quite unique in the sense that they do own their ad server and they do have engineers to do these kinds of things. So, I think our Disney relationship remains incredibly strong. We are talking about workflow for 2025. And I do think that they’re an outlier as it relates to most of the top streaming services.
Matt Swanson: Thank you.
Operator: The next question comes from Zach Cummins of B. Riley FBR. Please go ahead.
Zach Cummins: Yes, hi, good afternoon. Thanks for taking my questions and congrats on a strong start to the year. I was really hoping you could just further unpack some of the assumptions you’re making for CTV business. It obviously seems like some tailwinds from live sports and some easier comps as we go into the second half of the year. But just curious of your approach to CTV specifically as your sudden guidance for the remainder of this year?
David Day: Yes, I mean I think our approach, we continue to be bullish about the recovery in the programmatic component of CTV. Q1 was just — it was an exceptionally strong quarter from a CTV perspective. And as we talked about, we continue the programmatic CTV component to continue to grow in double digits and again, offset by declines in Q2 that will be a little bit in managed service, will be a little bit greater than Q1. And so as we look forward, we would expect that continued CTV programmatic growth and we’ll get a little bit of a boost in — particularly in the second half of the year from political, where we — we’ve talked about political spend levels in the past 2022 and 2020 of roughly $10 million for the company. And if one were to assume that, say, that doubled in this next cycle, most of that hitting the second half of the year, that’s also factored into our guidance.
Zach Cummins: Understood. And just my one follow-up question is around capital allocation. It’s nice to see that you’re targeting a net leverage ratio closer to one times at the end of this year. But as you continue to strengthens the balance sheet. How do you balance thinking of share repurchases versus continuing to pay down debt?
David Day: Yes, that’s a really good question. I guess the first point is we’re just — we’re thrilled to be in that position. And with the refinancing of our debt, removal of a springing covenant related to our converts and the progress on this net leverage ratio as you mentioned, it opens up a lot of possibilities for us. So, yes, we have a program in place for $125 million program that could be used for convert repurchase or for share buybacks. Given where the converts are trading, it’s not favorable for us to take them off the market at this time. And so it would lend ourselves to consider share repurchases more significantly. So, we’ll — where I would say probably wasn’t on the table in 2023, at least very significantly. I think that’s a growing area of focus for us, although facts and circumstances as we move forward will determine if we take action or not.
Zach Cummins: Understood. Well, thanks for taking my questions and best of luck for the rest of quarter.
Michael Barrett: Thanks Zach.
David Day: Thanks Zach.
Operator: The next question comes from Dan Kurnos of The Benchmark Company. Please go ahead.
Dan Kurnos: All right. Thanks. I’ll take a stab at this, trying to listen like four calls at once. Michael, it sounds like you guys did another deal, it’s small, but with one of the linear players. We know you already have a relationship with Scripps in particular, but it feels like they’re all trying to come online, and it’s sort of a facilitation of the move to streaming, but also untapped opportunities, a lot of your peers or others aren’t going after. So, just kind of curious about that particular opportunity. And David, you just kind of mentioned the political aspect that I wanted to get into, but it sounds like a lot of agencies are actually trying to transact political on almost a purely programmatic basis, particularly in the CTV universe. So, I guess that could be a boom depending on how many dollars shift there, but just curious if that’s what you’re seeing and if you’re sort of negotiating some of the deals on kind of that premise?
Michael Barrett: Yes. So yes, — Dan, I think local as it relates to streaming, is a story that’s not well told, and that’s on us as much as anyone and look forward to talking much more about that because we do have a lot of momentum in that area. We think it’s really promising. And I think you’re right, it’s kind of green space for us in terms of being able to secure a lot of that business and relationships. And as it relates to political, and I’ll let David opine, but it’s going to be a very backloaded spend. And so anything that we talk about political is kind of conjecture because it hadn’t flown yet and so we think it’s going to be big. We have built it into some of the forward-looking guide. But how big when, who is it going to come from, how much of its programmatic it’s all very encouraging, but it’s still kind of on the comp.
David Day: Yes, and we’ve got a crack political facilitation team in place. So, we’re — we have very established relationships with those players. And we have tried to take, I think, a fairly modest approach in our guidance. And so to your point, it could create an upside certainly in the latter half of the year.
Dan Kurnos: All right. Thanks guys. Appreciate it.
David Day: Thanks Dan.
Operator: Our next question comes from Omar Dessouky of Bank of America. Please go ahead.
Unidentified Analyst: Hey guys, this is Arthur on for Omar. Thanks so much for taking the question and congrats on strong results. Maybe just a quick follow-up on the Mediaocean partnership. Michael, you talked about automating insertion orders through the ClearLine integration. How should we think about the economic implications of that? Like should we think about higher take rate on these direct deals from your existing customer base? Or is this expected to be something that’s also going to drive incremental market share growth because you’re offering easier access for these new buyers to execute the deals programmatically?
Michael Barrett: Yes. So, I think the way to think about it is, obviously, there’s the take rate that’s involved in the transaction that is on the Magnite side. And I would envision that there’ll be a buy-side fee associated with using this tool from Mediaocean. So, obviously, is a partnership, there’s shared economics on the buy side piece of it. And then the sell-side piece of it, that’s Magnite economics. So, I think anything that would flow through it is found money, and it would be accretive in terms of both a take rate and a buy-side fee.
Unidentified Analyst: Got it. Thank you.
Operator: This concludes our question-and-answer session. I’d like to turn the call back over to Michael for any closing remarks.
Michael Barrett: Thank you, Andreas. I’d also like to say thank you to the Magnite team for delivering a great quarter that exceeded expectations. The performance of our team around the world has established a very solid foundation to build on for the remainder of the year and beyond. We look forward to speaking with many of you at our upcoming investor events. Cannibal will host our post-Q1 virtual investor meetings tomorrow. We will be attending the Needham Conference in New York on May 14th and 15th, the B. Riley Conference in Beverly Hills on May 22nd and 23rd, and the Craig-Hallum Conference in Minneapolis on the 29th. The Evercore conference in New York, also on May 29 and the BofA Conference in San Francisco on June 5th.
We will also be participating in meetings with Benchmark in Milwaukee and Chicago on June 11th and 12th, and will be in London on June 18th. Lastly, Benchmark will be hosting a live from [Indiscernible] webcast on Wednesday, June 19th. Have a great evening, and thank you for listening.
Operator: The conference has now concluded. Thank you for attending today’s presentation and you may now disconnect.
