PubMatic(PUBM) - 2024 Q3 - Quarterly Report

Revenue and Profitability - Revenue for the three months ended September 30, 2024, was $71.786 million, an increase of 12.5% from$ 63.677 million for the same period in 2023[65] - Adjusted EBITDA for the nine months ended September 30, 2024, was $54.679 million, compared to$ 36.403 million for the same period in 2023, reflecting a growth of 50%[65] - Revenue for the three months ended September 30, 2024, increased by $8.1 million, or 13%, compared to the same period in 2023, driven by increased impressions processed and new revenue streams[84] - Gross profit margin for the three months ended September 30, 2024, was 64%, up from 59% in the same period of 2023[85] - Net income for the three months ended September 30, 2024, was$ 1,774 thousand, compared to a net loss of $(9,821) thousand in the same period of 2023[79] - Adjusted EBITDA for the nine months ended September 30, 2024, was$ 54.7 million, compared to $36.4 million for the same period in 2023, reflecting an increase of$ 18.3 million[97] Operating Performance - The net dollar-based retention rate improved to 112% for the trailing twelve months ended September 30, 2024, up from 97% for the trailing twelve months ended September 30, 2023[68] - The platform processed approximately 781 billion ad impressions daily in September 2024, indicating significant operational capacity[71] - Supply Path Optimization (SPO) accounted for over 50% of total activity for the three months ended September 30, 2024, highlighting its importance in the company's growth strategy[68] - The company generated net cash provided by operating activities of $19.139 million for the three months ended September 30, 2024, compared to$ 23.845 million for the same period in 2023[65] - Operating loss for the nine months ended September 30, 2024, was $(10,875) thousand, an improvement from$ (18,377) thousand in the same period in 2023[79] Expenses and Investments - Technology and development expenses for the three months ended September 30, 2024, increased by $2.2 million, or 33%, compared to the same period in 2023[86] - Sales and marketing expenses for the three months ended September 30, 2024, rose by$ 4.2 million, or 21%, compared to the same period in 2023[88] - General and administrative expenses for the three months ended September 30, 2024, increased by $3.1 million, or 26%, compared to the same period in 2023, primarily due to a$ 1.9 million increase in personnel costs[89] - The company expects technology and development expenses to continue to increase in 2024 compared to 2023 due to additional headcount and investment in innovation[86] - The company expects general and administrative expenses to increase in 2024 compared to 2023 primarily due to additional headcount[89] Cash Flow and Financial Position - As of September 30, 2024, the company had cash, cash equivalents, and marketable securities totaling $140.4 million, with net working capital of$ 137.0 million[99] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $55.4 million, compared to$ 52.4 million for the same period in 2023[100] - The company repurchased 3,572,563 shares of Class A common stock for an aggregate purchase price of $64.8 million during the nine months ended September 30, 2024[99] - Cash used in investing activities for the nine months ended September 30, 2024, was$ 9.6 million, compared to $7.7 million in the same period of 2023[103] - The company incurred$ 64.6 million in net cash used in financing activities for the nine months ended September 30, 2024, primarily due to treasury stock purchases of $65.4 million[104] Economic and Market Conditions - The company continues to monitor macroeconomic conditions, including inflation and interest rates, which may impact future performance[64] - The company anticipates that macroeconomic conditions will affect revenues for the remainder of 2024[84] - A hypothetical 10% change in the U.S. Dollar to Indian Rupee exchange rate could result in a change of$ 1.6 million in operating loss for the nine months ended September 30, 2024[110] - The company has not entered into any hedging arrangements for foreign currency risk, which may affect operating income if foreign sales and expenses increase[110] Tax and Other Financial Matters - Provision for income taxes for the three months ended September 30, 2024, increased by $475,000, or 428%, compared to the same period in 2023[94] - The effective income tax rate for the nine months ended September 30, 2024, was (116)%, influenced by tax benefits from foreign-derived intangible income and research tax credits[95] - Other income (expense), net for the three months ended September 30, 2024, decreased by$ 1.14 million, or 543%, compared to the prior year period, primarily due to foreign exchange rate fluctuations[93] - Interest income for the three months ended September 30, 2024, decreased by $277,000, or 12%, compared to the prior year period, due to a decrease in the Company's interest-bearing securities balance[91] Company Growth and Product Development - The company launched new products, including Activate and Convert, aimed at enhancing buyer engagement and monetization capabilities[72] - The digital advertising ecosystem is experiencing growth, with increasing demand for transparency and control from both buyers and publishers[64] - The company expects capital expenditures and investment activity to continue to increase as the business grows[103] - There were no material changes to the company's contractual obligations as disclosed in the Annual Report for the fiscal year ended December 31, 2023[105] - The company had$ 5.4 million of long-term income tax liabilities related to uncertain tax positions as of September 30, 2024[106]