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Core Viewpoint - PubMatic, Inc. reported quarterly earnings of $0.03 per share, exceeding the Zacks Consensus Estimate of a loss of $0.01 per share, but down from $0.12 per share a year ago, indicating a significant earnings surprise of +400.00% [1] Financial Performance - The company achieved revenues of $67.96 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 7.04%, although this represents a decline from $71.79 million in the same quarter last year [2] - Over the last four quarters, PubMatic has exceeded consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - PubMatic shares have declined approximately 49.6% year-to-date, contrasting with the S&P 500's gain of 14.4% [3] - The current Zacks Rank for PubMatic is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $74.54 million, and for the current fiscal year, it is also $0.16 on revenues of $272.98 million [7] - The outlook for the Internet - Software industry, where PubMatic operates, is currently in the top 28% of over 250 Zacks industries, suggesting a favorable environment for performance [8]

Financial Data and Key Metrics Changes - The company delivered stronger-than-expected results with revenue and adjusted EBITDA ahead of guidance, demonstrating strong cash flow and operational efficiency [6][25][37] - Total omnichannel video revenues grew 21% year-over-year, with CTV revenue increasing over 50% year-over-year, contributing approximately 38% of total revenue in Q3 2025 [27][19] - Adjusted EBITDA for Q3 was $11.2 million, representing a 16% margin, while the US GAAP net loss was $6.5 million, or $0.14 per diluted share [32][37] Business Line Data and Key Metrics Changes - Emerging revenue streams grew over 80% year-over-year, now accounting for 10% of total revenue, with Activate revenue growing over 100% [27][14] - CTV significantly outpaced market growth, driven by increased premium supply and the scaling of agency marketplaces [7][19] - Display revenue was down 5% year-over-year, primarily affected by a large DSP's spending decline, but excluding this DSP, display grew in low single digits [28][29] Market Data and Key Metrics Changes - Ad spend from mid-tier DSP partners grew over 25% year-over-year, while APAC and EMEA revenues grew 12% and 7% respectively, offsetting a 14% decline in the Americas [29][30] - The company is seeing a shift in the advertising landscape, with a growing number of advertisers in CTV, moving from traditional TV's limited advertiser base to a much larger pool [54] Company Strategy and Development Direction - The company is focused on an AI-driven strategy across three layers: infrastructure, application, and transaction, which is expected to enhance competitive advantage and drive future growth [8][12][15] - Partnerships with DSPs and the introduction of programmatic guarantee deals are part of the strategy to diversify revenue and enhance operational efficiency [16][18] - The company is also investing in emerging revenue streams, including commerce media and sell-side curation, to expand its market reach [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to the evolving digital advertising landscape, anticipating that any remedies from the Google AdTech antitrust trial will benefit the open internet [38] - The company expects Q4 revenue to be in the range of $73 million to $77 million, with strong growth anticipated in CTV and emerging revenues [36][37] - Management highlighted the importance of operational efficiency and cost management, with a focus on maintaining profitability while investing in growth [30][32] Other Important Information - The company has generated over $390 million in net cash from operations since the beginning of 2021, ending Q3 with $136.5 million in cash and zero debt [33][34] - The repurchase program has seen the buyback of 12.4 million Class A common shares for $180.6 million, reflecting a commitment to long-term shareholder value [34] Q&A Session Summary Question: Can you expand on the topic of SPO and recent moves by companies like The Trade Desk? - The company clarified that it focuses on direct inventory monetization rather than reselling, emphasizing its value in yield optimization and direct connections with publishers [44][46] Question: Can you elaborate on the ability to drive unit cost leverage in COGS? - Management indicated a consistent focus on owning and operating infrastructure to drive down unit costs, with expectations for increased gross margin as revenue reaccelerates [49][50] Question: What trends are observed in the CTV environment and how is the company investing for growth? - The company noted significant growth in CTV, driven by partnerships with premium publishers and a growing advertiser mix, with continued investment in AI to unlock incremental budgets [54][55]

Financial Data and Key Metrics Changes - The company delivered stronger-than-expected results with revenue and adjusted EBITDA ahead of guidance, demonstrating strong cash flow and the power of its platform [5][23] - Adjusted EBITDA for Q3 was $11.2 million, representing a 16% margin, while the US GAAP net loss was $6.5 million, or $0.14 per diluted share [31][32] - Free cash flow for the quarter was $22.8 million, with net operating cash flows of $32.4 million [32] Business Line Data and Key Metrics Changes - CTV revenue grew over 50% year-over-year, driven by increased premium supply and growth in agency marketplaces [5][25] - Emerging revenues increased over 80% year-over-year, contributing to 10% of total revenue in Q3 [25][21] - Omnichannel video revenues grew 21% year-over-year, with CTV contributing approximately 38% of total revenue [25][24] Market Data and Key Metrics Changes - Ad spend from mid-tier DSP partners grew over 25% year-over-year in Q3, while ad spend from the top 10 verticals grew in the single-digit percentages [27][26] - APAC and EMEA revenues grew by 12% and 7% respectively, while the Americas saw a decline of 14% due to reduced spending from a large DSP [28][27] Company Strategy and Development Direction - The company is focusing on AI-driven innovations across three layers: infrastructure, application, and transaction, to enhance its competitive advantage [6][11] - Partnerships with mid-market DSPs and the introduction of programmatic guarantee deals are part of the strategy to diversify and expand the demand-side ecosystem [15][16] - The company aims to lead the next era of Agentic AI advertising while continuing to invest in emerging revenue streams and operational efficiencies [13][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to a rapidly changing digital advertising landscape, emphasizing the importance of AI in driving future growth [23][36] - The company anticipates strong growth in CTV and emerging revenues, projecting Q4 revenue between $73 million and $77 million [34][35] - Management noted that the competitive landscape is likely to shift due to the Google AdTech antitrust trial, which could benefit the open internet and the company [36] Other Important Information - The company has generated over $390 million in net cash from operations since the beginning of 2021, ending the quarter with $136.5 million in cash and zero debt [32][33] - The repurchase program has seen the buyback of 12.4 million Class A common shares for $180.6 million, with $94.4 million remaining authorized for repurchase [33] Q&A Session Summary Question: Can you expand on the topic of SPO and recent moves by companies like The Trade Desk? - The company clarified that it focuses on direct inventory monetization rather than reselling, emphasizing its value in yield optimization [40][42] Question: Can you elaborate on the ability to drive unit cost leverage? - The company has consistently driven down unit costs through owning its infrastructure and leveraging AI, expecting to continue this trend [45][46] Question: What evolution has been seen in the CTV environment over the past year? - The company noted significant growth in CTV, driven by partnerships with premium publishers and an expanding advertiser mix [48][50] Question: Are there any trends suggesting The Trade Desk is increasingly going direct? - The company reported that it is working directly with premium publishers and has taken steps to stabilize spending from The Trade Desk [59][61] Question: What impact is AI having on publisher traffic? - The company indicated limited impact from AI on publisher traffic, with opportunities emerging from new AI search experiences [64][66]

In addition to financial information presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, Free Cash Flow, non-GAAP net dollar-based retention, non-GAAP net income, non-GAAP net income margin, non-GAAP diluted EPS, and litigation related expenses. We believe that this information can assist investors in evaluating our operational trends, financial performance, and ...

Financial Performance - Revenue for Q3 2025 was $67.96 million, a decrease of 5.0% compared to $71.79 million in Q3 2024[93] - Operating loss for Q3 2025 was $8.42 million, compared to an operating loss of $1.37 million in Q3 2024[93] - Net loss for Q3 2025 was $6.45 million, compared to a net loss of $0.91 million in Q3 2024[93] - Adjusted EBITDA for Q3 2025 was $11.15 million, down 40.0% from $18.55 million in Q3 2024[93] - Gross profit for the three months ended September 30, 2025 was $42.56 million, down from $46.28 million in 2024, reflecting an 8% decrease[118] - The gross margin for the three months ended September 30, 2025 was 63%, a decrease from 64% in the same period of 2024[123] - Adjusted EBITDA for the three months ended September 30, 2025 was $11,152 thousand, compared to $18,546 thousand in 2024[137] Cash Flow and Investments - Net cash provided by operating activities for Q3 2025 was $32.37 million, an increase of 69.0% from $19.14 million in Q3 2024[93] - Net cash provided by operating activities for the nine months ended September 30, 2025 was $62,900 thousand, an increase from $55,377 thousand in 2024[144] - Net cash provided by investing activities for the nine months ended September 30, 2025 was $17,379 thousand, compared to $9,645 thousand in 2024[144] - Net cash used in financing activities for the nine months ended September 30, 2025 was $(44,903) thousand, a decrease from $(64,617) thousand in 2024[144] - As of September 30, 2025, the company had cash, cash equivalents, and marketable securities totaling $136.5 million[140] - As of September 30, 2025, the company had cash and cash equivalents totaling $136.5 million, primarily consisting of bank deposits, money market accounts, and time deposits[158] - The company repurchased 4,036,242 shares of Class A common stock for an aggregate purchase price of $46.0 million during the nine months ended September 30, 2025[141] Expenses - Technology and development expenses for the three months ended September 30, 2025 increased by 9% to $9.62 million, compared to $8.81 million in 2024[125] - Sales and marketing expenses for the three months ended September 30, 2025 rose by 9% to $25.73 million, driven by increased personnel costs[127] - General and administrative expenses for the three months ended September 30, 2025 increased by 3% to $15.63 million, compared to $15.13 million in 2024[129] - Interest income for the three months ended September 30, 2025 decreased by 39% to $1.20 million, down from $1.97 million in 2024[131] Market and Operational Insights - Net dollar-based retention rate was 98% for the trailing twelve months ended September 30, 2025, down from 112% for the same period in 2024[98] - Supply Path Optimization (SPO) accounted for over 55% of total activity for Q3 2025[99] - The platform processed approximately 980 billion ad impressions daily in September 2025[102] - The company launched new products, Activate and Convert, in 2023 to enhance buyer capabilities[103] - The digital advertising ecosystem is experiencing rapid changes, including increased demand for transparency and control from both buyers and publishers[90] - The company expects revenues to be negatively impacted in the near term by recent platform changes implemented by a large DSP buyer[120] Tax and Other Income - Other income (expense), net for the three months ended September 30, 2025 was $(937) thousand, reflecting a 1% increase compared to $(930) thousand in the same period of 2024[132] - For the nine months ended September 30, 2025, other income (expense), net was $(3,939) thousand, a decrease of 217% from $3,356 thousand in 2024, primarily due to foreign exchange losses[132] - The provision for (benefit from) income taxes for the three months ended September 30, 2025 was $(1,706) thousand, a decrease of 391% from $586 thousand in 2024[133] - For the nine months ended September 30, 2025, the provision for (benefit from) income taxes was $(4,406) thousand, a decrease of 688% from $749 thousand in 2024[134] Economic Factors - The company does not expect a 100 basis points change in interest rates to materially affect its operating results or financial condition[158] - A hypothetical 10% change in the U.S. Dollar to Indian Rupee exchange rate could result in a $1.7 million change in operating loss for the nine months ended September 30, 2025[159] - A hypothetical 10% change in the U.S. Dollar to British Pound exchange rate could also result in a $1.7 million change in operating loss for the nine months ended September 30, 2025[159] - The company does not believe inflation has had a material effect on its business or financial condition[160] - Significant inflationary pressures in regions like India could adversely affect the company's ability to offset higher costs through price increases[160]

Revenue Performance - Revenue for Q3 2025 was $68.0 million, down from $71.8 million in Q3 2024, which included $5.0 million from political advertising[6] - Revenue for Q3 2025 was $67,960,000, a decrease of 5.1% compared to $71,786,000 in Q3 2024[31] - The company estimates Q4 2025 revenue to be between $73 million to $77 million[17] Profitability Metrics - Adjusted EBITDA was $11.2 million, representing a 16% margin, down from $18.5 million and a 26% margin in the same period of 2024[6] - Adjusted EBITDA for Q3 2025 was $11,152,000, with an adjusted EBITDA margin of 16%[37] - Adjusted EBITDA for Q4 2025 is expected to be in the range of $19 million to $21 million, representing approximately a 27% margin at the midpoint[19] - Operating loss for Q3 2025 was $8,419,000, compared to a loss of $1,365,000 in Q3 2024[31] - Net loss for Q3 2025 was $6,452,000, compared to a net loss of $912,000 in Q3 2024[31] Cash and Liquidity - Total cash and cash equivalents were $136.5 million as of September 30, 2025, with no debt[8] - Cash and cash equivalents increased to $136,548,000 as of September 30, 2025, from $100,452,000 at the beginning of the period[35] - Net cash provided by operating activities for Q3 2025 was $32,374,000, compared to $19,139,000 in Q3 2024, representing a year-over-year increase of 69.5%[39] - Free cash flow for the nine months ended September 30, 2025, was $39,351,000, up from $26,041,000 in the same period of 2024, reflecting a growth of 51.1%[39] - The total cash flow from operating activities for the nine months ended September 30, 2025, was $62,900,000, compared to $55,377,000 in 2024, marking an increase of 13.7%[39] Asset and Liability Management - Total assets decreased to $676,188,000 as of September 30, 2025, down from $739,519,000 at the end of 2024[29] - Total liabilities decreased to $431,128,000 as of September 30, 2025, compared to $462,256,000 at the end of 2024[29] Operational Efficiency - AI-powered platform reduced campaign setup time by 87% and sped up issue resolution by 70%[3] - Supply Path Optimization represented over 55% of total activity on the platform in Q3 2025, up from 50% a year ago[18] - CTV revenue grew over 50% year-over-year excluding political ad spend, while omnichannel video revenue grew 21% year-over-year[12] - Emerging revenues grew 80% year-over-year, including curation, commerce media, and other non-SSP revenues[18] Stock and Compensation - Stock-based compensation expense for Q3 2025 was $9,511,000, slightly up from $9,457,000 in Q3 2024[33] - The company reported a basic and diluted net loss per share of $0.14 for Q3 2025, compared to a loss of $0.02 in Q3 2024[37] Capital Expenditures - Purchases of property and equipment decreased from $11,731,000 in Q3 2024 to $4,674,000 in Q3 2025, indicating a reduction of 60.1%[39] - Capitalized software development costs remained relatively stable, with $4,914,000 in Q3 2025 compared to $4,542,000 in Q3 2024, showing an increase of 8.2%[39]

Core Insights - PubMatic is set to announce its earnings results, with analysts expecting a significant year-on-year revenue decline of 10.8% to $64.02 million, contrasting with a 12.7% increase in the same quarter last year [2] - The company previously reported revenues of $71.1 million, which was a 5.7% increase year-on-year, but missed revenue guidance for the next quarter [1][3] - Analysts have generally maintained their estimates for PubMatic, indicating expectations for stability despite the company having missed Wall Street's revenue estimates twice in the past two years [3] Revenue and Earnings Expectations - Analysts anticipate an adjusted loss of -$0.01 per share for the upcoming quarter [2] - The revenue guidance for the next quarter has significantly missed analysts' expectations, indicating potential challenges ahead [1] Peer Performance - In the advertising software segment, peers like AppLovin and Integral Ad Science reported strong year-on-year revenue growth of 17.3% and 15.6%, respectively, both exceeding analysts' expectations [4] - Despite the positive performance of peers, PubMatic's stock has declined by 5.6% over the past month, while the average analyst price target for PubMatic stands at $11.28 compared to its current share price of $7.54 [5]

Core Insights - The Trade Desk (TTD) and PubMatic (PUBM) are key players in the programmatic advertising ecosystem, with TTD focusing on demand-side platform (DSP) services and PUBM on sell-side platform services [1][8] - Both companies are significantly exposed to the growing Connected TV (CTV) and retail media trends, making them interesting for investors in the expanding digital ad market [2] Group 1: The Trade Desk (TTD) - TTD is cautious about the impact of macroeconomic conditions on large global brands, which may pressure revenue growth due to reduced programmatic demand [3] - The competitive landscape is intensifying, with major players like Google and Amazon dominating the DSP space, posing challenges for TTD [4] - Despite challenges, TTD's expanding CTV presence is a strong advantage, as CTV is the fastest-growing segment in digital advertising [5] - TTD has established partnerships with major companies like Disney, NBCU, and Roku, focusing on live sports streaming as a key part of its CTV strategy [6] - The AI-powered Kokai platform is enhancing TTD's competitive edge, with over 70% client adoption expected to be completed this year [7] Group 2: PubMatic (PUBM) - PubMatic is diversifying its DSP mix and investing in CTV and emerging revenue streams, with CTV revenues accounting for nearly 20% of total revenues [8][9] - The company has expanded partnerships with 26 of the top 30 global streamers, indicating its ability to secure premium inventory [9] - PubMatic's revenues from emerging streams have more than doubled year over year, representing 8% of total second-quarter revenues [10] - The Activate platform is becoming a significant growth driver, with buying activity more than doubling as advertisers seek better control and transparency [11] - PubMatic expects third-quarter revenues of $61-$66 million, down from $71.8 million year-over-year, due to a revised bidding approach from a major client [12] Group 3: Share Performance and Valuation - Year-to-date, PUBM and TTD have experienced losses of 43.3% and 55.3%, respectively, amid macroeconomic uncertainties [13] - Valuation metrics indicate TTD is overvalued with a price/book ratio of 9.52X, while PUBM has a more favorable ratio of 1.56X [15] - PUBM currently holds a Zacks Rank 3 (Hold), while TTD has a Zacks Rank 4 (Sell), suggesting PUBM may be a better investment choice at this time [18]

Core Insights - PubMatic has announced a multi-year integration of Nvidia technology to enhance its infrastructure, enabling AI processing to be five times faster than traditional systems [1] - Following this announcement, PubMatic's stock rose 7.5% intraday on October 8 [1] Company Overview - PubMatic is a technology company based in Redwood City, California, founded in 2006, that provides a cloud-based platform for digital publishers and advertisers [1][2] - The company processes billions of ad impressions daily and supports various digital channels, including desktop, mobile, video, and connected TV [2] - PubMatic's market capitalization is currently $363.5 million [2] Financial Performance - In Q2 of fiscal 2025, PubMatic reported a revenue increase of 6% year-over-year to $71.1 million [5] - The company's CTV revenue grew more than 50% year-over-year, while omnichannel video revenue, including CTV, grew 34% year-over-year, accounting for 41% of total revenue [5] - PubMatic's net dollar-based retention rate was 102% for the trailing 12 months ended June 30 [5] Stock Performance - PUBM stock has faced challenges, declining 45% over the past 52 weeks and 43% year-to-date [3] - The stock reached a 52-week low of $7.01 in August but has since increased by 19% from that level [3] - Over the past five days, PUBM stock is up 1.5% [3] Valuation Metrics - As of the latest data, PubMatic has a price-to-sales ratio of 1.25 times, which is slightly lower than the industry average [4]