PubMatic(PUBM) - 2025 Q2 - Quarterly Results

PubMatic Q2 2025 Earnings Release Second Quarter 2025 Financial Highlights 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] - 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][7] - As of June 30, 2025, the company held $117.6 million in total cash, cash equivalents, and marketable securities with no debt[7] Business Highlights 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][11] - 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][11] - 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] - 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][11] - 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] Financial Outlook 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][16] - 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] Consolidated Financial Statements 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 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 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 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 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 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 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 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 |