Financial Data and Key Metrics Changes - Revenue growth for 2024 was 9% over 2023, more than doubling the previous year's growth rate [10][45] - Adjusted EBITDA margins expanded to 32%, marking a return to the "Rule of 40" benchmark [11][46] - Q4 revenue, excluding a specific DSP impact and political advertising, increased by 16% year-over-year [12][39] - Full-year net income was $12.5 million, or $0.23 per diluted share [56] Business Line Data and Key Metrics Changes - Connected TV (CTV) revenue more than doubled in 2024, reaching 20% of total revenue in Q4 [45][50] - Mobile app business grew 16% year-over-year, also representing 20% of total revenue [45] - Emerging revenue streams doubled in 2024, with Connect, the curation and data business, growing 140% year-over-year [53][95] Market Data and Key Metrics Changes - Omni-channel video revenue reached over 40% in Q4, with CTV accounting for half of that [20] - The company now works with 80% of the top 30 global streamers, up from 70% a quarter ago [21][103] - Supply Path Optimization (SPO) represented 53% of all platform activity, up from a third two years ago [25][46] Company Strategy and Development Direction - The company is focusing on high consumer engagement channels such as CTV, mobile app, and commerce media to drive growth [14][40] - Investments in product innovation and generative AI are expected to enhance operational efficiency and customer-facing products [18][36] - The company aims to diversify revenue streams and increase exposure to secular growth areas, targeting 15%+ year-over-year growth in 2025 [40][64] Management's Comments on Operating Environment and Future Outlook - Management noted a significant headwind from a single DSP partner affecting desktop display revenue, but overall growth in other areas remained strong [11][50] - The company anticipates a transition through lower year-over-year spend levels from the DSP buyer until mid-2025, with a focus on high-growth areas [61][72] - Management expressed confidence in the company's ability to execute its growth strategy despite near-term challenges [72] Other Important Information - The company ended the year with $141 million in cash and marketable securities and no debt [48][60] - A share repurchase program resulted in an 8% reduction in fully diluted shares outstanding [48][60] - The company has generated over $330 million in net cash from operating activities since going public [58] Q&A Session Summary Question: Can you talk about month-on-month trends and overall CPM trends? - Management noted that the softness in Q4 was primarily due to one DSP's bidding changes, while CPMs were positive throughout the year [76][78] Question: Why is the impact limited to display, and is there a need to address the relationship with the DSP? - The impact is due to a structural change in the DSP's bidding approach, which has stabilized, and the relationship remains strong [84][86] Question: What are the secular shifts in the industry driving the data opportunity? - The industry is shifting towards sell-side targeting due to the decline of cookies and the strength of first-party data on the sell side [90][92] Question: Can you discuss the success and growth of Activate? - Activate has seen 6x growth year-over-year, simplifying the digital advertising supply chain and driving performance [112][114] Question: What is the outlook for the CTV ecosystem? - The CTV ecosystem is transitioning towards programmatic buying, with opportunities for auction packages and managing demand effectively [134][136]

Financial Data and Key Metrics Changes - Revenue growth for 2024 was 9% over 2023, more than doubling the previous year's growth rate [10][45] - Adjusted EBITDA margins expanded to 32%, marking a return to the "Rule of 40" benchmark [11][46] - Q4 revenue, excluding a specific DSP impact and political advertising, increased by 16% year-over-year [12][39] - Full-year net income was $12.5 million, or $0.23 per diluted share [56] Business Line Data and Key Metrics Changes - CTV revenue more than doubled in 2024, representing 20% of total revenue in Q4 [45][52] - Mobile app business grew 16% year-over-year, also accounting for 20% of total revenue [45] - Emerging revenue streams doubled in 2024, with Connect, the curation and data business, growing 140% year-over-year [53][96] Market Data and Key Metrics Changes - Omni-channel video revenue reached over 40% in Q4, with half coming from CTV [20] - The company now works with 80% of the top 30 global streamers, up from 70% a quarter ago [21][103] - Political advertising contributed approximately 6% of total revenue in 2024 [68] Company Strategy and Development Direction - The company is focusing on high consumer engagement channels such as CTV, mobile app, and commerce media to drive growth [14][40] - Investments in product innovation and generative AI are expected to enhance operational efficiency and customer engagement [17][36] - The strategy includes diversifying revenue streams and increasing the value of ad impressions through data curation [34][95] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging first half of 2025 due to a DSP headwind but expects underlying business growth of 15%+ year-over-year [61][72] - The company is confident in its ability to execute its growth strategy and deliver healthy margins [72] - The shift towards sell-side targeting is seen as a significant opportunity, driven by the decline of third-party cookies [90][92] Other Important Information - The company ended 2024 with $141 million in cash and marketable securities and no debt [48][60] - A share repurchase program has resulted in an 8% reduction in fully diluted shares outstanding [48][60] - The company is targeting a full-year adjusted EBITDA margin in the high 20% range for 2025 [70] Q&A Session Summary Question: Can you talk about month-on-month trends and overall CPM trends? - Management noted that the softness in Q4 was primarily due to one DSP's bidding changes, while CPMs were positive throughout the year [76][78] Question: Why is the impact limited to display, and is there a need to address the relationship with the DSP? - The impact is due to a structural change in the DSP's bidding approach, which has historically affected display formats [84][86] Question: What are the secular shifts in the industry driving the data opportunity? - The industry is shifting towards sell-side targeting due to the decline of cookies and the strength of first-party data [90][92] Question: Can you discuss the success and growth of Activate? - Activate has seen 6x growth year-over-year, simplifying the digital advertising supply chain and driving performance [112][114] Question: What is the outlook for CTV and its evolution? - CTV is transitioning towards programmatic buying, with significant opportunities in auction packages and managing yield for publishers [134][136]

Q4 and FY 2024 Earnings Presentation February 27, 2025 S A F E H A R B O R This presentation contains forward-looking statements regarding our future business expectations, including but not limited to our guidance relating to our revenue, adjusted EBITDA, and adjusted EBITDA margin for the first quarter of 2025, our expectations regarding our adjusted EBITDA for the full year 2025, free cash flow, capital expenditures, future hiring, future revenue growth, future market growth, target revenue, our long-ter ...

Earnings Performance - PubMatic, Inc. reported quarterly earnings of $0.41 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and up from $0.34 per share a year ago, representing an earnings surprise of 10.81% [1] - Over the last four quarters, the company has surpassed consensus EPS estimates four times [2] - The company posted revenues of $85.5 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 3.42%, compared to year-ago revenues of $84.6 million [2] Stock Performance and Outlook - PubMatic shares have declined about 2% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The future performance of the stock will depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement based on the recently released numbers [3][4] Earnings Estimates and Industry Context - The current consensus EPS estimate for the upcoming quarter is -$0.03 on revenues of $66.43 million, and $0.70 on revenues of $317.69 million for the current fiscal year [7] - The Zacks Industry Rank for Internet - Software is currently in the top 33% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Core Insights - PubMatic exceeded earnings expectations with a Non-GAAP EPS of $0.41, surpassing analyst estimates of $0.23, but reported revenue of $85.5 million, which fell short of both analyst estimates of $88 million and management's guidance of $86 million to $90 million [2][6] Financial Performance - Non-GAAP EPS for Q4 2024 was $0.41, down 8.9% year-over-year from $0.45 in Q4 2023 [3][6] - Revenue increased by 1.1% year-over-year, reaching $85.5 million compared to $84.6 million in Q4 2023 [3][6] - Adjusted EBITDA margin was 44%, a decrease of 2 percentage points from the previous year [3][7] - Net cash provided by operating activities was $18.0 million, down 37.1% from $28.7 million in Q4 2023 [3] Business Overview - PubMatic operates a cloud infrastructure platform that facilitates digital advertising transactions, providing cost savings and adaptability compared to competitors using public cloud systems [4] - The company is focusing on expanding its presence in connected television (CTV) and mobile app channels, with key success factors including technological efficiency and strategic partnerships [4][5] Recent Developments - Partnerships with major brands like Roku and Disney+ Hotstar have been established, and the company is innovating with AI-driven products to enhance ad placement [5] - The Supply Path Optimization (SPO) initiative has expanded, with 53% of total activities connected to SPO, up from 45% the previous year [8] Challenges and Outlook - Revenue from CTV more than doubled, accounting for 20% of total revenue, but overall revenue was impacted by reduced spending from a major DSP buyer [6][7] - Management has issued a conservative outlook for Q1 2025, expecting revenue between $61 million and $63 million and adjusted EBITDA between $5 million and $7 million [9] - The company anticipates growth in areas unaffected by DSP dynamics to exceed 15% [9] Future Focus - Investors should monitor developments in strategic partnerships and technological advancements, particularly in AI-driven advertising solutions [10] - Management is committed to addressing ongoing DSP issues and ensuring compliance with privacy regulations to improve financial performance in the latter half of 2025 [11]

Financial Performance - For the year ended December 31, 2024, the company's revenue was $291.3 million, representing an increase from $267.0 million in 2023, which is a growth of approximately 9.0%[357]. - The company's net income for 2024 was $12.5 million, compared to $8.9 million in 2023, reflecting a year-over-year increase of approximately 40.0%[364]. - Operating income for 2024 was $3.9 million, up from $2.0 million in 2023, indicating a significant improvement in operational efficiency[364]. - The company reported a gross profit of $190.2 million for 2024, up from $167.8 million in 2023, representing an increase of approximately 13.4%[364]. - The company's operating expenses totaled $186.3 million in 2024, compared to $165.7 million in 2023, reflecting an increase of about 12.4%[364]. - Total current assets increased to $575.5 million in 2024 from $562.0 million in 2023, marking a growth of about 2.7%[362]. - Total liabilities increased to $462.3 million in 2024 from $399.0 million in 2023, which is an increase of about 15.9%[362]. - The company reported total financial assets of $115.250 million as of December 31, 2024, compared to $151.489 million as of December 31, 2023, indicating a decrease of approximately 23.9%[429]. Cash and Liquidity - As of December 31, 2024, the company reported cash and cash equivalents of $100.5 million and marketable securities of $40.1 million[27]. - The company had no amounts outstanding under its credit facility as of December 31, 2024, indicating a strong liquidity position[27]. - Cash provided by operating activities for 2024 was $73,425,000, compared to $81,121,000 in 2023 and $87,212,000 in 2022[372]. - The company's cash and cash equivalents rose to $100.5 million in 2024, compared to $78.5 million in 2023, an increase of approximately 28.0%[362]. - The company repurchased treasury stock at a cost of $75,693,000 in 2024, compared to $59,617,000 in 2023[372]. Stock and Compensation - Stock-based compensation increased to $40,752,000 in 2024 from $31,324,000 in 2023 and $22,121,000 in 2022[372]. - Total stock-based compensation expense recognized for the year ended December 31, 2024, was $37.676 million, compared to $28.862 million in 2023[474]. - The intrinsic value of options exercised was $9.9 million, $7.5 million, and $6.4 million for the years ended December 31, 2024, 2023, and 2022, respectively[462]. - Unrecognized stock-based compensation related to unvested stock options as of December 31, 2024, amounted to $17.1 million, to be recognized over a weighted average period of 2.49 years[463]. - As of December 31, 2024, unrecognized stock-based compensation related to unvested RSUs was $57.0 million, to be recognized over a weighted average period of 2.50 years[469]. Acquisitions and Investments - Future acquisitions or strategic investments may be challenging to identify and integrate, potentially disrupting business operations[26]. - The Company acquired ConsultMates, Inc. for $30.8 million, with $23.3 million attributed to goodwill[447]. - Goodwill remained stable at $29.6 million as of December 31, 2024, with no accumulated impairment losses[448]. Market and Competition - The company operates in a highly competitive digital advertising industry, which could impact its revenue and financial condition[24]. - The company is focused on maintaining a consistent supply of quality advertising inventory to support growth and profitability[17]. - The company’s success depends on its ability to attract and retain publishers and expand the utilization of its buyers[17]. Legal and Regulatory - The company is subject to evolving legal and industry standards regarding data protection and consumer privacy, which could impact operations[17]. - The company has not entered into any hedging arrangements for foreign currency risk, which may expose it to fluctuations in exchange rates[344]. Taxation - The Company had a total provision for income taxes of $5.270 million for the year ended December 31, 2024, with an effective tax rate of 29.64%[478]. - The Company reported total deferred tax assets of $47,860 thousand as of December 31, 2024, an increase from $32,537 thousand in 2023[479]. - The net deferred income tax asset increased to $24,864 thousand in 2024 from $13,880 thousand in 2023[479]. - The Company recognized gross unrecognized income tax benefits of $4,695 thousand at the end of 2024, up from $4,381 thousand in 2023[483]. Assets and Liabilities - The Company’s property, equipment, and software, net totaled $58.522 million in 2024, a decrease from $60.729 million in 2023, reflecting a decline of approximately 3.6%[432]. - The total accounts payable increased to $386.602 million in 2024 from $347.673 million in 2023, representing an increase of approximately 11.2%[435]. - The Company’s accrued liabilities increased to $26.365 million in 2024 from $25.684 million in 2023, marking an increase of approximately 2.7%[436]. - The Company’s depreciation and amortization expense related to property, equipment, and software was $24.8 million in 2024, down from $28.5 million in 2023, indicating a decrease of approximately 13.0%[432]. Lease Obligations - Operating lease costs increased to $8,536,000 in 2024 from $7,468,000 in 2023, representing a 14.3% increase[443]. - Total lease costs rose to $8,722,000 in 2024 compared to $7,657,000 in 2023, marking an increase of 13.9%[443]. - Operating lease right-of-use assets increased to $44,402,000 in 2024 from $21,102,000 in 2023, a growth of 110%[445]. - Total operating lease liabilities rose to $45,381,000 in 2024, up from $21,843,000 in 2023, indicating a 107% increase[445]. Foreign Currency and Exchange Rates - A hypothetical 10% change in the U.S. Dollar to Indian Rupee exchange rate could result in a change of $2.2 million in operating income for the year ended December 31, 2024[344]. - The company recognized a net foreign currency loss of $1.5 million for the year ended December 31, 2023, compared to a gain of $1.1 million in 2024 and a gain of $0.7 million in 2022[417].

Revenue and Growth - Fiscal Year 2024 revenue was $291.3 million, a 9% increase from $267.0 million in 2023[5] - Revenue from CTV in Q4 2024 more than doubled year-over-year, accounting for 20% of total revenue[2] - Revenue from omnichannel video grew 37% year-over-year in 2024[11] - Total revenue for Q4 2024 was $85,502, a slight increase from $84,600 in Q4 2023, while total revenue for the year reached $291,256, up from $267,014 in 2023, representing a year-over-year growth of 9%[30] - The company expects underlying business growth of over 15% in 2025, excluding revenue from a specific DSP buyer[8] Profitability and Income - Adjusted EBITDA for FY 2024 was $92.3 million, representing a 32% margin, up from $75.3 million and 28% margin in 2023[5] - GAAP net income for FY 2024 was $12.5 million, or $0.23 per diluted share, compared to $8.9 million, or $0.16 per diluted share in 2023[5] - Net income for Q4 2024 was $13,899, down from $18,702 in Q4 2023, with annual net income increasing to $12,504 from $8,881, reflecting a growth of 41% year-over-year[30] - Adjusted EBITDA for Q4 2024 was $37,646, compared to $38,906 in Q4 2023, with an adjusted EBITDA margin of 44% for Q4 2024, down from 46% in Q4 2023[35] - Non-GAAP net income for Q4 2024 was $21,443, down from $24,449 in Q4 2023, with non-GAAP diluted EPS at $0.41 compared to $0.45 in the prior year[35] Cash Flow and Liquidity - Free cash flow in 2024 was $34.9 million, a decrease of 34% compared to 2023[10] - Cash and cash equivalents increased to $100,452 as of December 31, 2024, from $78,509 at the end of 2023, indicating a significant improvement in liquidity[28] - Total cash flow from operating activities for the year ended December 31, 2024, was $73.425 million, compared to $81.121 million in 2023[37] - The company reported a decrease in free cash flow for the year, totaling $34.897 million compared to $52.833 million in 2023[37] Assets and Liabilities - Total cash, cash equivalents, and marketable securities at the end of 2024 were $140.6 million, down 20% from 2023[10] - Total assets rose to $739,519 in 2024 from $695,243 in 2023, while total liabilities increased to $462,256 from $399,044, resulting in a decrease in stockholders' equity from $296,199 to $277,263[28] Operational Efficiency - Supply Path Optimization represented 53% of total activity in 2024, an increase from 45% in 2023[16] - The company recorded a bad debt expense of $5.7 million due to a Chapter 11 bankruptcy filing by a Demand Side Platform buyer, impacting both GAAP net income and adjusted EBITDA results for the year[32] - Stock-based compensation expense for the year was $37,676, up from $28,862 in 2023, reflecting increased compensation costs associated with employee stock options[32] - The overall financial performance indicates a strategic shift towards optimizing operational costs and improving cash flow management[37] - The company is focusing on enhancing its integration capabilities with major platforms to drive future growth[37] Capital Expenditures - Purchases of property and equipment in Q4 2024 were $4.324 million, compared to $5.177 million in Q4 2023[37] - Capitalized software development costs for the year ended December 31, 2024, were $20.936 million, up from $17.687 million in 2023[37]

Core Insights - PubMatic reported FY 2024 revenue of $291.3 million, a 9% increase from $267.0 million in FY 2023, with a net income of $12.5 million, representing a 4% margin [1][5] - The company achieved an adjusted EBITDA of $92.3 million, reflecting a 23% increase over the previous year, with a margin of 32% [1][5] - In Q4 2024, revenue from Connected TV (CTV) more than doubled year-over-year, accounting for 20% of total revenue [1][2] Financial Performance - FY 2024 gross profit was $190.2 million, yielding a 65% margin, an improvement of 250 basis points from FY 2023 [5] - Q4 2024 revenue was $85.5 million, a slight increase of 1% from $84.6 million in Q4 2023 [5] - GAAP net income for Q4 2024 was $13.9 million, with a margin of 16%, compared to $18.7 million and a margin of 22% in Q4 2023 [5][11] Business Highlights - The revenue mix is evolving, with CTV revenue growing significantly, indicating a shift towards high consumer engagement channels [2][12] - Supply Path Optimization (SPO) accounted for 53% of total activity in 2024, up from 45% in 2023 [1][12] - The company expanded its partnerships with major streaming brands, now collaborating with 80% of the top 30 streaming publishers [12] Strategic Initiatives - PubMatic launched several new products, including CTV Marketplaces and Creative Category Manager, aimed at enhancing ad buying efficiency and targeting [12][13] - The company increased its global headcount by 11% in 2024 to support long-term growth initiatives [18] - Generative AI adoption improved engineering productivity by over 15%, facilitating faster software development and release processes [18] Market Outlook - The company anticipates continued growth in 2025, with expectations of a 15%+ increase in underlying business revenue, excluding certain buyers [7][15] - The total addressable market has been expanded to over $120 billion, targeting key stakeholders in the digital advertising ecosystem [12]

Group 1 - PubMatic (NASDAQ: PUBM) has experienced significant volatility in its stock price over the past year, with a strong rally in the first half of 2024 followed by a decline in the last six months [1] - The current trading price of PubMatic is near its lows, indicating a potential opportunity for investors who are looking for undervalued stocks [1] Group 2 - The article highlights the expertise of the financial journalist Muslim Farooque, who has over five years of experience in covering stock and cryptocurrency markets [1] - Farooque's insights are aimed at empowering investors to make informed financial decisions, showcasing the importance of data-driven analysis in investment strategies [1]

Core Insights - PubMatic, Inc. is an independent technology company focused on enhancing the digital advertising supply chain [3] - The company will participate in two upcoming financial conferences, showcasing its commitment to investor engagement [4] Company Overview - PubMatic maximizes customer value by delivering a future-oriented digital advertising supply chain [3] - The company's sell-side platform empowers digital content creators to control inventory access and enhance monetization [3] - Since its inception in 2006, PubMatic has utilized an infrastructure-driven approach for real-time data processing and utilization [3] Upcoming Events - Management will participate in the Citizens JMP Technology Conference on March 3, 2025, with a webcasted fire-side chat scheduled for 1:30 p.m. PT / 4:30 p.m. ET [4] - The KeyBanc Capital Markets Emerging Technology Summit will feature management on March 4, 2025, at 10:00 a.m. PT / 1:00 p.m. ET [4]