PubMatic Q2 2025 Earnings Release [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) PubMatic's Q2 2025 revenue and adjusted EBITDA surpassed guidance, with revenue growing 6% to $71.1 million, despite a shift to GAAP net loss and a decline in adjusted EBITDA, supported by a strong cash position Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $71.1M | $67.3M | +6% | | GAAP Net Income (Loss) | $(5.2)M | $2.0M | N/A | | GAAP Diluted EPS | $(0.11) | $0.04 | N/A | | Adjusted EBITDA | $14.2M | $21.1M | -33% | | Adjusted EBITDA Margin | 20% | 31% | -11 pts | | Non-GAAP Net Income | $2.5M | $9.7M | -74% | | Non-GAAP Diluted EPS | $0.05 | $0.17 | -71% | - Net dollar-based retention was **102%** for the trailing twelve months ending June 30, 2025, compared to **108%** in the prior year period, indicating slightly lower growth from existing publishers[5](index=5&type=chunk) - The company repurchased **3.5 million shares** in Q2 2025, and since the program's inception, PubMatic has used **$178.2 million** to repurchase **12.2 million shares**, representing **24%** of fully diluted shares[1](index=1&type=chunk)[7](index=7&type=chunk) - As of June 30, 2025, the company held **$117.6 million** in total cash, cash equivalents, and marketable securities with no debt[7](index=7&type=chunk) [Business Highlights](index=3&type=section&id=Business%20Highlights) PubMatic achieved strong growth in omnichannel video, with CTV revenue up over 50%, increased SPO activity to over 55%, diversified its DSP mix, and launched new AI-powered platform capabilities - Significant growth in video and CTV: CTV revenue grew **over 50%** year-over-year, and omnichannel video revenue (including CTV) grew **34%** year-over-year, representing **41%** of total revenue[1](index=1&type=chunk)[11](index=11&type=chunk) - Supply Path Optimization (SPO) represented **over 55%** of total platform activity, up from **51%** a year ago, driven by products like Activate and CTV Marketplaces[1](index=1&type=chunk)[11](index=11&type=chunk) - Customer adoption and diversification highlights: Buying activity on Activate **more than doubled** sequentially, and ad spend from performance marketers and mid-tier DSPs grew **over 20%** year-over-year, diversifying the DSP mix[11](index=11&type=chunk) - Launched new AI-powered capabilities, including an enhanced PubMatic Assistant for analytics, predictive diagnostics for yield anomalies, and a dynamic floor yield module to optimize pricing[9](index=9&type=chunk)[11](index=11&type=chunk) - Infrastructure optimization led to processing nearly **78 trillion impressions** in Q2 2025, a **28%** YoY increase, while the cost of revenue per million impressions decreased by **20%** on a trailing twelve-month basis[11](index=11&type=chunk) [Financial Outlook](index=4&type=section&id=Financial%20Outlook) PubMatic forecasts Q3 2025 revenue between $61 million and $66 million, with adjusted EBITDA of $7 million to $10 million, reflecting a 13% margin at midpoint and an impact from reduced ad spend by a top DSP partner Q3 2025 Financial Outlook | Metric | Guidance Range | | :--- | :--- | | Revenue | $61 million - $66 million | | Adjusted EBITDA | $7 million - $10 million | | Adjusted EBITDA Margin (at midpoint) | ~13% | - The outlook incorporates an expected reduction in ad spend from one of the company's top DSP partners[12](index=12&type=chunk)[16](index=16&type=chunk) - Guidance for GAAP net income was not provided, as reconciling it from adjusted EBITDA is impractical due to the unpredictability of items like stock-based compensation[13](index=13&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) This section presents PubMatic's unaudited condensed consolidated financial statements as of June 30, 2025, encompassing Balance Sheets, Statements of Operations, and Cash Flows [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, PubMatic reported total assets of $675.2 million, a decrease from year-end 2024, with total liabilities at $431.9 million and stockholders' equity at $243.3 million Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $90,476 | $100,452 | | Total current assets | $512,962 | $575,546 | | **TOTAL ASSETS** | **$675,220** | **$739,519** | | Accounts payable | $361,369 | $386,602 | | Total current liabilities | $388,743 | $418,810 | | **TOTAL LIABILITIES** | **$431,936** | **$462,256** | | **TOTAL STOCKHOLDERS' EQUITY** | **$243,284** | **$277,263** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, PubMatic reported $71.1 million in revenue, a 6% increase, but higher operating expenses led to an operating loss of $(5.5) million and a net loss of $(5.2) million, reversing Q2 2024's net income Statement of Operations Summary (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $71,095 | $67,267 | | Gross profit | $44,483 | $42,107 | | Total operating expenses | $49,944 | $46,092 | | Operating loss | $(5,461) | $(3,985) | | **Net income (loss)** | **$(5,208)** | **$1,971** | [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash from operating activities was $30.5 million, with $41.2 million used in financing, largely for share repurchases, ending with $90.5 million in cash and cash equivalents Cash Flow Summary (in thousands) | Account | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,526 | $36,238 | | Net cash used in investing activities | $(128) | $(5,870) | | Net cash used in financing activities | $(41,188) | $(35,356) | | **NET DECREASE IN CASH** | **$(10,790)** | **$(4,988)** | | **CASH - End of period** | **$90,476** | **$73,521** | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) This section details adjustments from GAAP to non-GAAP financial measures, including Adjusted EBITDA, Non-GAAP Net Income, and Free Cash Flow, primarily by removing non-cash expenses [Reconciliation of Net income (loss) to Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20income%20(loss)%20to%20Adjusted%20EBITDA) PubMatic's Q2 2025 GAAP net loss of $(5.2) million reconciled to an Adjusted EBITDA of $14.2 million, down from $21.1 million in Q2 2024, with the margin decreasing to 20% from 31% Adjusted EBITDA Reconciliation (in thousands) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) | $(5,208) | $1,971 | | Stock-based compensation | $9,801 | $9,699 | | Depreciation and amortization | $11,861 | $11,336 | | Interest income | $(1,379) | $(2,340) | | Provision for (benefit from) income taxes | $(862) | $412 | | **Adjusted EBITDA** | **$14,213** | **$21,078** | [Reconciliation of Net income (loss) per share](index=10&type=section&id=Reconciliation%20of%20Net%20income%20(loss)%20per%20share) Q2 2025 GAAP net loss of $(5.2) million adjusted to a Non-GAAP net income of $2.5 million, or $0.05 per diluted share, a notable decrease from $9.7 million, or $0.17 per diluted share, in Q2 2024 Non-GAAP Net Income Reconciliation (in thousands) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) | $(5,208) | $1,971 | | Stock-based compensation | $9,801 | $9,699 | | Adjustment for income taxes | $(2,068) | $(1,999) | | **Non-GAAP net income** | **$2,525** | **$9,671** | [Computation of Free Cash Flow](index=11&type=section&id=COMPUTATION%20OF%20FREE%20CASH%20FLOW) For Q2 2025, PubMatic generated $9.3 million in free cash flow, derived from $14.9 million in operating cash flow, after accounting for capital expenditures and capitalized software development costs Free Cash Flow Computation (in thousands) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,905 | $11,944 | | Less: Purchases of property and equipment | $(1,340) | $(736) | | Less: Capitalized software development costs | $(4,300) | $(4,295) | | **Free cash flow** | **$9,265** | **$6,913** |

Core Insights - Company reported strong second quarter results with revenue and adjusted EBITDA exceeding expectations [3][4] - Revenue from omnichannel video, including CTV, grew 34% year-over-year, representing 41% of total revenue [8][6] - CTV revenue specifically grew over 50% year-over-year [6][8] - Supply Path Optimization accounted for over 55% of total activity on the platform, up from 51% a year ago [12] - Company repurchased 3.5 million shares in Q2 2025, representing 7% of fully diluted shares [1][7] Financial Performance - Revenue for Q2 2025 was $71.1 million, a 6% increase from $67.3 million in Q2 2024 [7] - Adjusted EBITDA was $14.2 million, with a margin of 20%, compared to $21.1 million and a 31% margin in the same period of 2024 [7][31] - GAAP net loss was $(5.2) million, or $(0.11) per diluted share, compared to a net income of $2.0 million, or $0.04 per diluted share in Q2 2024 [7][31] - Non-GAAP net income was $2.5 million, or $0.05 per diluted share, down from $9.7 million, or $0.17 per diluted share in Q2 2024 [7][31] - Net cash provided by operating activities was $14.9 million, an increase from $11.9 million in Q2 2024 [7] Business Highlights - Company added a major top 5 U.S. streamer, increasing market penetration to 26 of the top 30 global streamers, or 87% [6] - Buying activity on Activate more than doubled sequentially in Q2 2025 compared to Q1 2025, with over 90% of campaigns meeting or exceeding client KPIs [12] - Diversified DSP mix showed over 20% year-over-year growth in ad spend from performance marketers and mid-tier DSPs [12] - Enhanced AI-powered capabilities launched to improve publisher monetization and campaign performance [10][12] Market Outlook - Company expects revenue for Q3 2025 to be between $61 million to $66 million, factoring in a reduction in ad spend from a top DSP buyer [17] - Adjusted EBITDA for Q3 2025 is projected to be in the range of $7 million to $10 million, representing approximately a 13% margin at the midpoint [17] - Continued focus on diversifying DSP mix and investing in high-growth areas, particularly CTV and AI integration [11][12]

Core Insights - PubMatic has launched an AI-powered Live Sports Marketplace that allows advertisers to target specific game moments in real-time across streaming platforms, enhancing the digital advertising supply chain for live sports [1][4][6] Group 1: Marketplace Launch and Partnerships - The Live Sports Marketplace has partnered with FanServ, providing access to premium inventory from major sports leagues including NBA, WNBA, MLB, NHL, and National Women's Soccer League, which is a significant step in expanding access to live sports inventory [2][4] - The partnership aims to redefine programmatic sports advertising by combining FanServ's sports expertise with PubMatic's event-level curation, enabling brands to engage fans at critical moments [3][4] Group 2: Market Demand and Performance - PubMatic's live sports activity has more than tripled in the first half of 2025 compared to the same period in 2024, indicating strong market demand for targeted live sports solutions [4] - The company has already surpassed its entire 2024 live sports activity within the first six months of 2025, positioning it to potentially double last year's performance [4] Group 3: Technological Innovations - The Live Sports Marketplace addresses issues in traditional programmatic sports buying, such as wasted impressions during low-engagement moments and the challenges of managing unpredictable viewership spikes [5][8] - The proprietary AI technology allows for event- and channel-level precision, enabling advertisers to target specific games and high-impact moments effectively [8] - The platform is designed for scalability and automation, providing flexibility for immediate manual adjustments and future automated processes [8] Group 4: Industry Trends - eMarketer projects that 114.1 million people will watch live sports digitally in 2025, compared to 82.0 million via traditional TV, highlighting the shift towards streaming and the need for precise ad delivery [7]

Core Insights - PubMatic, Inc. will release its financial results for Q2 2025 on August 11, 2025, after market close [1] - A webcast to discuss the financial results will be held at 1:30 p.m. Pacific Time [1][3] Company Overview - PubMatic is an independent technology company focused on enhancing customer value in the digital advertising supply chain [2] - The company provides a sell-side platform that empowers digital content creators to manage their inventory and increase monetization [2] - Since its inception in 2006, PubMatic has utilized an infrastructure-driven approach for real-time data processing and utilization [2]

Partnership Overview - Sojern and PubMatic have formed a partnership to enhance digital advertising in the hospitality sector by combining Sojern's travel data insights with PubMatic's premium inventory [1][3] - This collaboration aims to provide agencies and advertisers with tools to target travelers more accurately while ensuring privacy compliance [1][4] Advertising Strategy - The partnership focuses on creating personalized, targeted campaigns through a curation approach that allows for real-time optimization and measurement [2][3] - Advertisers can utilize a multi-ID approach to combine first-party data, Sojern's travel segments, and premium inventory for more effective targeting [2][3] Benefits of the Partnership - The integration of Sojern's travel data with PubMatic's curation and data solution, Connect, enables advertisers to activate real-time traveler insights for precise targeting [3] - This relationship enhances audience curation as a powerful tool for programmatic advertising, improving performance and transparency for marketers [3][4] Company Profiles - Sojern is a leading marketing platform for the hospitality industry, providing insights and services to over 10,000 travel marketers annually [6] - PubMatic is an independent technology company focused on maximizing customer value in digital advertising, offering a sell-side platform that enhances monetization for digital content creators [7]

Group 1 - Shares of PubMatic, Inc. have rebounded approximately 70% from their all-time low of $7.46 set on April 7, 2025, which marked a 90% decline from their all-time high [1] - The digital advertising landscape is evolving, potentially favoring supply-side platforms like PubMatic [1] - The Busted IPO Forum, led by Bret Jensen, focuses on stocks that have been public for 18 months to 6 years and are significantly under their offering price [1]

Core Insights - The Trade Desk (TTD) and PubMatic (PUBM) are key players in the programmatic advertising ecosystem, with TTD as a demand-side platform (DSP) and PUBM as a sell-side platform (SSP) [1][2] The Case for TTD - TTD is optimistic about its market growth due to strong execution in connected TV (CTV), retail media, international expansion, and the integration of Sincera's data insights [3][4] - The Kokai platform has achieved 66% client adoption ahead of schedule, delivering significant cost efficiencies with a 24% lower cost per conversion and 20% lower cost per acquisition [4] - TTD reported first-quarter revenues of $616 million, a 25% year-over-year increase, with adjusted EBITDA of $208 million (34% margin) [5] - CTV accounted for 40% of digital spend, while customer retention exceeded 95% [5] - However, TTD faces challenges from macroeconomic uncertainties and competition from major players like Alphabet and Amazon, which could impact revenue growth [6][7] The Case for PUBM - PUBM's underlying business grew 21% year-over-year in Q1 2025, driven by growth in CTV and Supply Path Optimization (SPO) [8][10] - CTV revenues surged 50% year-over-year, although total sales fell 4% due to a shift from a large DSP client [8][11] - PUBM is investing in technologies like Activate for SPO and Convert for commerce media, and is expanding its international presence, particularly in India, Europe, Australia, and Japan [12] - Despite strong growth in CTV, PUBM's revenues declined 4% year-over-year, raising concerns about its competitive position [13] Share Performance and Valuation - Year-to-date, PUBM and TTD have lost 24.7% and 41.6% respectively, amid macroeconomic uncertainties [14] - TTD is considered overvalued with a forward P/E ratio of 10.87X, while PUBM has a lower ratio of 1.74X, indicating a more favorable valuation [16][17] Analyst Estimates - Analysts have made significant downward revisions for PUBM's earnings estimates, while TTD has seen relatively lower revisions [18][19] - Both companies currently hold a Zacks Rank 3 (Hold) [20] Conclusion - TTD is positioned as a stronger investment case due to its leading DSP role and innovation, while PUBM's potential is tempered by revenue declines and estimate revisions [21][23]

Financial Data and Key Metrics Changes - The company reported its 30th consecutive quarter of profitability at adjusted EBITDA, indicating strong financial health and consistent performance [18] - The company has significant free cash flow generation, which supports share repurchases and overall financial stability [18][92] Business Line Data and Key Metrics Changes - The company has diversified its revenue streams, now delivering a unified AI-powered end-to-end platform that serves various customer segments, including streamers, publishers, media buyers, commerce media networks, and data partners [7][8] - Supply Path Optimization (SPO) has become a significant part of the business, accounting for over half of the revenue, up approximately 20 percentage points from two years ago [30][34] Market Data and Key Metrics Changes - The company has over 80% penetration among the top 30 streaming companies globally, including major players like Roku and Amazon Fire TV [8][76] - The mix of business includes over 20% from Connected TV (CTV) and about 20% from mobile apps, with omnichannel video making up around 40% of the business [47][49] Company Strategy and Development Direction - The company focuses on being well-positioned in the fastest-growing ad formats, including CTV, commerce media, and data curation [49][50] - The company aims to consolidate its market share by leveraging its independent and objective platform, especially in light of ongoing antitrust issues facing larger competitors like Google [15][62] Management's Comments on Operating Environment and Future Outlook - Management noted that the ad market has shown resilience despite macroeconomic uncertainties, with strong performance observed in early 2023 [83][84] - The company is planning for various economic scenarios while focusing on AI as a significant growth driver and efficiency enhancer [86][88] Other Important Information - The company has increased its share repurchase authorization by an additional $100 million, reflecting confidence in its financial position and future growth prospects [92] - The company estimates that every percentage point of market share gained from Google could translate to $50 to $75 million in revenue, with a high flow-through to the bottom line due to existing publisher overlaps [62][63] Q&A Session Summary Question: What is the company's outlook on the ad market amidst macroeconomic uncertainties? - Management indicated that the ad market has been more stable than expected, with strong performance trends continuing into the second quarter [83][84] Question: How does the company differentiate itself from competitors in the SSP space? - The company highlighted its independent platform and extensive publisher relationships, which allow it to offer unique value propositions that competitors may not provide [15][76] Question: What is the significance of Supply Path Optimization (SPO) for the company's growth? - SPO has become a key growth driver, accounting for over half of the business, and is expected to continue growing as advertisers seek efficiency and effectiveness [30][34] Question: How does the company view the impact of Google's antitrust issues on its market position? - Management believes that the antitrust case presents a significant opportunity for the company to gain market share, estimating potential revenue increases from share shifts [62][66]

Core Viewpoint - The current volatile stock market presents a prime opportunity for long-term investors to capitalize on significant price declines in major stock indexes [1][2]. Group 1: Investment Opportunities - Pfizer has been added to the portfolio with a cost basis of $23.47 per share, despite a significant drop in sales from COVID-19 products, indicating a buying opportunity due to investor shortsightedness [5][6][8]. - PubMatic has seen a doubling of investment with a cost basis of $9.29, benefiting from the shift of advertising dollars to digital platforms and strong cash flow generation [9][10][12]. - Sirius XM Holdings was purchased at $19.28 per share, leveraging its subscription-based revenue model which provides stability during economic downturns [13][15][16]. - Intel was added at $18.56, with expectations of a turnaround in its business despite being late to the AI market, supported by strong cash flow from CPU sales [18][20][21]. - BioMarin Pharmaceutical was acquired at $56.01, focusing on ultrarare diseases with high pricing power and projected sales growth from its drug Voxzogo [22][25]. - Fastly was added at $5.08, with a focus on the growing demand for cloud services and a strong revenue retention rate, indicating potential for future profitability [27][29][30].

Core Viewpoint - PubMatic, Inc. (NASDAQ: PUBM) is identified as a leading global programmatic supply-side platform (SSP) that facilitates publishers in monetizing their ad inventory through real-time auctions, with a belief that the market is currently mispricing the company's growth potential [1] Company Overview - PubMatic operates as a programmatic SSP, allowing publishers to optimize their advertising revenue through automated auctions [1] Investment Thesis - The investment analysis suggests that there is a significant growth runway for PubMatic, indicating that it may be undervalued in the current market [1]