PubMatic(US:PUBM)2025-05-08 20:15PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) This section presents PubMatic, Inc.'s unaudited interim financial statements for Q1 2025, highlighting a decrease in total assets, an increased net loss of $9.5 million, and reduced operating cash flow Condensed Consolidated Balance Sheets (Unaudited) | | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $505,267 | $575,546 | | Total Assets | $668,602 | $739,519 | | Total Current Liabilities | $350,161 | $418,810 | | Total Liabilities | $393,001 | $462,256 | | Total Stockholders' Equity | $275,601 | $277,263 | Condensed Consolidated Statements of Operations (Unaudited) | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $63,825 | $66,701 | | Gross Profit | $38,237 | $41,277 | | Operating Loss | $(11,903) | $(5,525) | | Net Loss | $(9,486) | $(2,454) | | Diluted Net Loss Per Share | $(0.20) | $(0.05) | Condensed Consolidated Statements of Cash Flows (Unaudited) | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $15,621 | $24,294 | | Net cash used in investing activities | $(10,069) | $(3,868) | | Net cash used in financing activities | $(4,472) | $(18,741) | - As of March 31, 2025, two buyers accounted for 46% and 12% of accounts receivable, respectively, indicating a concentration of credit risk28 - The company operates as a single reporting segment, as determined by its Chief Executive Officer, who is the chief operating decision maker (CODM)7374 - On May 7, 2025, the Board of Directors authorized an additional $100 million for the share repurchase program, bringing the total available for repurchases to $130.8 million as of May 5, 2025. The program was extended to December 31, 202681 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 results, reporting a 4% revenue decrease to $63.8 million and increased losses, while highlighting strategic progress in SPO and a 102% net dollar-based retention rate Key Financial Metrics | Financial Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $63,825 | $66,701 | (4)% | | Gross Profit | $38,237 | $41,277 | (7)% | | Operating Loss | $(11,903) | $(5,525) | 115% | | Adjusted EBITDA | $8,457 | $15,056 | (44)% | - The net dollar-based retention rate was 102% for the trailing twelve months ended March 31, 2025, compared to 106% for the same period in 2024, indicating continued publisher satisfaction and platform usage98 - Supply Path Optimization (SPO) continues to be a major growth driver, representing over 55% of total activity for the three months ended March 31, 202599 - The company's platform processed approximately 842 billion ad impressions daily in March 2025102 - Revenue decline was primarily attributed to bidding methodology changes implemented by one of the company's buyers in 2024117 Quantitative and Qualitative Disclosures About Market Risk The company identifies interest rate, currency exchange, and inflation as primary market risks, with low interest rate sensitivity and potential operating loss impacts from currency fluctuations in India and the UK - The company's portfolio of cash, cash equivalents, and marketable securities ($144.1 million as of March 31, 2025) has a relatively short maturity, making its fair value insensitive to interest rate changes135152 - A hypothetical 10% change in the U.S. Dollar to Indian Rupee exchange rate could change the operating loss by $0.6 million for Q1 2025153 - A hypothetical 10% change in the U.S. Dollar to British Pound exchange rate could change the operating loss by $0.5 million for Q1 2025153 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting identified during the quarter - As of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level155 - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal controls156 PART II - OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business, financial condition, or cash flows - The company is not presently a party to any legal proceedings that management believes would have a material adverse effect on its business, operating results, financial condition, or cash flows159 Risk Factors This section updates key business risks, including high dependency on advertising demand, evolving data privacy laws, and potential impacts from the share repurchase program - The business is highly dependent on overall advertising demand, which can be adversely affected by macroeconomic factors like economic volatility, recession fears, inflation, and volatile interest rates161 - The company's share repurchase program, extended to $275.0 million through December 2026, is not guaranteed to be fully consummated and could increase stock price volatility and diminish cash reserves164 - The company faces significant risks from constantly evolving data privacy laws globally, such as the CCPA in California, GDPR in Europe, and new state-level laws, which could increase compliance costs and legal exposure165171176 - A growing number of lawsuits based on the California Invasion of Privacy Act (CIPA) target ad-tech intermediaries, creating legal uncertainty and risk of significant statutory damages174 - New health data privacy laws, like Washington's My Health My Data Act (MHMD), create heightened compliance risks due to broad definitions of "consumer health data" and private rights of action182 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity for Q1 2025, including the repurchase of 339,000 shares for $3.6 million, with $36.8 million remaining available Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | Value of Shares that May Yet Be Purchased (End of Period) (in thousands) | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $— | $40,400,785 | | Feb 2025 | — | $— | $40,400,785 | | Mar 2025 | 339,000 | $10.66 | $36,787,667 | | Total Q1 2025 | 339,000 | $10.66 | $36,787,667 | Other Information This section discloses that CEO Rajeev Goel and President of Engineering Mukul Kumar adopted Rule 10b5-1 trading plans in Q1 2025 for future stock sales - In Q1 2025, CEO Rajeev Goel adopted a Rule 10b5-1 trading plan to sell up to 1,100,000 shares, expiring June 12, 2026189 - In Q1 2025, President of Engineering Mukul Kumar adopted a Rule 10b5-1 trading plan to sell up to 104,000 shares, expiring July 17, 2026189 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files for financial reporting - The exhibits filed with this report include certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act of 2002193 - The filing includes Inline XBRL documents, which embed financial data tags directly within the report for automated processing and analysis193