Magnite delivered its third consecutive beat-and-raise quarter, and this was the cleanest of the three. Non-GAAP earnings of $0.33 per share topped the $0.26 consensus by 13.8% and cleared the $0.29 Earnings Whisper number. Earnings grew 37.5% year over year. Revenue of $204.2 million beat the $190.0 million consensus by 7.5% and rose 13.8%. The more important number is contribution ex-TAC, the company's preferred top-line measure. It rose 20% to $200.6 million, more than $8 million above the high end of guidance. That is the central story: growth is accelerating, from 10% in the first quarter to 17% in the second and 20% now, while margins are expanding even faster. The central tension is how much of that acceleration came from record political spending, a tailwind that disappears in 2027.
The quality of the quarter holds up better than a political-boosted beat might suggest. CTV contribution ex-TAC rose 39% to $105.4 million, up from 36% growth in Q2 and 30% in Q1, and now makes up 53% of the mix versus 45% a year ago. Management said the top 10 CTV accounts grew in the mid-40s percent range, up from the mid-30s in Q1. That points to broad strength rather than a single-channel spike. Even DV+ improved, growing 5% after 2% in Q2 and a 5% decline in Q1, helped by mobile in-app growth of 17%. The operating leverage was striking. Adjusted EBITDA jumped 46% to $83.4 million, and the margin reached 42%, compared with 34% a year ago, 37% in Q2 and 27% in Q1. Operating expenses were roughly flat year over year, as streaming cost per billion ad requests fell more than 50%. On a GAAP basis, operating income doubled to $50.5 million. Net income rose 70% to $34.0 million, or $0.23 per diluted share, despite a much heavier tax provision.
The guidance trajectory captures how much the outlook has shifted this year. Management raised full-year contribution ex-TAC growth to about 17%, up from 13% to 14% last quarter and at least 11% at the start of the year. It lifted the adjusted EBITDA margin target to about 38.5%, up from at least 37%, and raised free cash flow growth to above 60%. The fourth-quarter guide of $227 million to $233 million implies 16% to 19% growth. It calls for CTV growth of 33% to 36% and an EBITDA margin of 44% to 46%. Political contribution ex-TAC is now expected to exceed $40 million versus roughly $15 million previously, about four times the last midterm cycle. On the call, management's tone moved from the cautious macro conservatism of Q2 to describing this as one of the best quarters in company history.
That political windfall is also where bears have legitimate ammunition. The initial 2027 outlook calls for ex-political growth above 15%, accelerating over 2026, but reported growth of only about 10% because of the tough comparison. That is a visible step down from this year's roughly 17%. Management also flagged two near-term questions: political ads crowding out other advertisers, and how quickly that displaced spending returns after the election. DV+ remains the weak link. Q4 guidance calls for just 2% to 4% growth, and the new CFO, on his first call, framed DV+ long-term growth as flat to low-single-digit. Management also acknowledged that AI answer engines are eroding open-web and search referral traffic, along with international DV+ softness.
The catalyst list, however, lengthened meaningfully. Pinterest launched global programmatic with Magnite as its primary SSP. A new OpenAI partnership positions Magnite to route demand into OpenAI ad inventory. LG extended and expanded its relationship for three years, including exclusive SpringServe ad serving, and HP TV Plus selected Magnite as its primary video ad server. September's Google ad-tech remedies opinion adopted the DOJ's behavioral remedies. That upside is excluded from the 2027 outlook, and Google estimates 12 to 18 months for the technical work. The balance sheet also improved. Magnite retired $205 million of convertible notes, repurchased $55.6 million of stock, and repriced its term loan. Net leverage now stands at -0.2x, meaning the company holds slightly more cash than debt.
The market setup is more complicated than the surprise implies. Shares hit a 52-week high of $26.84 in mid-September, then slid to an inter-earnings low of $20.88 on October 30. They entered the report at $22.34, 16.8% below that peak and 2.9% below the opening price after the August report. The stock remains 26.5% above its 200-day moving average, so the longer-term trend is intact even after a sharp autumn pullback. Investor sentiment stayed negative but improved, rising from -0.13 to -0.06. The Earnings Whispers trend readings are mixed, with momentum positive while AVWAP remains negative.
The bottom line is that Magnite answered the core question about CTV with accelerating growth, broad customer strength and record margins, and it raised every major full-year target again. The open debate is no longer whether the business is improving. It is whether CTV and new partnerships like Pinterest and OpenAI can carry growth once the political tailwind fades, with reported 2027 growth guided to about 10% and DV+ offering little help. After the pre-report pullback, investors who doubted the quality of the beat now have to weigh a stronger, cash-rich company against a visibly tougher comparison ahead.