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PubMatic Announces Second Quarter 2023 Financial Results

Delivered revenue of $63.3 million, ahead of guidance;
Revenue from CTV grew over 30% year over year;
Supply Path Optimization accelerated to 40%+ of total activity;
Generated $15.8 million in cash from operating activities and $10.8 million of free cash flow

NO-HEADQUARTERS/REDWOOD CITY, Calif., Aug. 08, 2023 (GLOBE NEWSWIRE) -- PubMatic, Inc. (Nasdaq: PUBM), an independent technology company delivering digital advertising’s supply chain of the future, today reported financial results for the second quarter ending June 30, 2023.

“Our deep customer relationships, alongside the strength and value of the PubMatic platform, drove revenue out-performance in the second quarter. As the market consolidates, we are in a strong position despite macro headwinds,” said Rajeev Goel, co-founder and CEO at PubMatic. “I am confident in our growing list of long-term revenue drivers and ability to gain market share. We have a strong and sustainable financial profile, and our deep technology innovation is widening our competitive moat. New products like Activate and Convert expand our total addressable market by over $75 billion. What’s more, we benefit from industry-wide shifts and consolidation, which only strengthen our market leading position.”

Second Quarter 2023 Financial Highlights

  • Revenue in the second quarter of 2023 was $63.3 million, compared to $63.0 million in the same period of 2022;
  • Revenue from CTV in the second quarter of 2023 grew over 30% compared to the same period last year which had grown over 140%;
  • Net dollar-based retention1 was 100% for the trailing twelve-months ended June 30, 2023, compared to 130% in the comparable trailing twelve-month period a year ago;
  • Included in GAAP and Non-GAAP results for the second quarter 2023 is incremental bad debt expense of approximately $5.7 million related to the bankruptcy of one of our top ten demand side platform buyers;
  • GAAP net loss was $5.7 million, or $(0.11) per diluted share in the second quarter, compared to GAAP net income of $7.8 million, or $0.14 per diluted share in the same period of 2022;
  • Adjusted EBITDA was $12.0 million, or 19% margin, compared to adjusted EBITDA of $23.0 million, or a 37% margin, in the same period of 2022;
  • Non-GAAP net income was $1.3 million, or $0.02 per diluted share in the second quarter, compared to Non-GAAP net income of $13.0 million, or $0.23 per diluted share in the same period of 2022;
  • Net cash provided by operating activities was $15.8 million, compared to $20.5 million in the same period of 2022;
  • Total cash, cash equivalents, and marketable securities of $170.9 million as of June 30, 2023 with no debt;
  • Through July 31, 2023, used $27.5 million in cash to repurchase 1.8 million shares of Class A common stock. We have $47.5 million remaining in the repurchase program.

The section titled “Non-GAAP Financial Measures” below describes our usage of non-GAAP financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data.
Business Highlights

  • Supply path optimization accelerated to over 40% of total activity on our platform in Q2 2023, up from approximately 30% a year ago.
  • In Q2 2023, we processed nearly 48.8 trillion impressions, an increase of 35% over Q2 2022, and an increase of 52% on a trailing twelve month period, as compared to the same trailing twelve month period.
  • Grew active publishers on the PubMatic platform 13% over Q2 2022, monetizing inventory from over 1,750 global publishers and app developers.
  • Revenue from omnichannel video, which includes desktop, mobile and Connected TV (CTV) devices, increased to 31% of total revenue in the second quarter.
  • Revenue from CTV grew by more than 30% over the second quarter of 2022. Added more premium CTV inventory to our platform and announced new and expanded partnerships with premium streaming brands including AMC Networks, FOX, iQIYI, and TiVo.
  • Well diversified across more than 20 verticals. The top 10 ad verticals, in aggregate, grew 8% year over year.
  • Infrastructure optimization initiatives continue ahead of schedule, bringing total capex for 2023 down approximately 70% compared to 2022.
  • Cost of revenue per million impressions processed decreased 12% on a trailing twelve month period, as compared to the prior same period.
  • Launched Convert, a unified solution for commerce media that leverages our global infrastructure, ad monetization expertise, and customer relationships. Convert centralizes commerce media capabilities in a single, self-service platform that offers onsite and offsite monetization across existing omnichannel solutions like CTV, video and display and our newly available sponsored listings ad format. We believe Convert significantly expands our total addressable market, particularly in performance marketing, allowing us to further diversify beyond brand ad spend.

“Our Q2 financial results again underscored our robust business model, driven by strength in high-growth areas like CTV and SPO and improved display revenues. Adjusting for an unexpected bad debt expense of $5.7 million related to the bankruptcy of a buyer, adjusted EBITDA would have exceeded our guidance,” said Steve Pantelick, CFO at PubMatic. “While macro factors are weighing on eCPMs, we continue to increase monetized impressions amongst a challenging environment for brand advertising. We are focused on the drivers of long-term market share gains: deeper relationships with publishers and ad buyers, TAM expansion through innovative new products like Activate and Convert, and increased revenue mix from higher growth drivers like CTV and SPO. With our focus on operational excellence and efficiency, we expect to deliver strong profitability and cash flow this year.”

Financial Outlook

Macroeconomic conditions continue to be challenging and advertisers remain cautious, particularly with respect to brand advertising. Our outlook is based on the latest data that reflect positive volume trends, industry-wide pricing headwinds and the short term impact from the redistribution of ad spend caused by a recent DSP bankruptcy.

For the third quarter of 2023, the company expects the following:

  • Revenue to be between $58 million to $61 million.
  • Adjusted EBITDA to be in the range of $13 million to $15 million, representing approximately a 23% margin at the midpoint.
  • For full year 2023, the company expects CapEx to be in the range of $10M – $13M, a decrease of approximately 70% over 2022.

Although we provide guidance for adjusted EBITDA, we are not able to provide guidance for net income, the most directly comparable GAAP measure. Certain elements of the composition of GAAP net income, including, income taxes and stock-based compensation expenses, are not predictable, making it impractical for us to provide guidance on net income or to reconcile our adjusted EBITDA guidance to net income without unreasonable efforts. For the same reason, we are unable to address the probable significance of the unavailable information.

Conference Call and Webcast details

PubMatic will host a conference call to discuss its financial results on Tuesday, August 8, 2023 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). A live webcast of the call can be accessed from PubMatic’s Investor Relations website at An archived version of the webcast will be available from the same website after the call.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), including, in particular operating income, net cash provided by operating activities, and net income (loss), we believe that adjusted EBITDA, non-GAAP net income, and free cash flow, each a non-GAAP measure, are useful in evaluating our operating performance. We define adjusted EBITDA as net income (loss) adjusted for stock-based compensation expense, depreciation and amortization, unrealized gain, loss or impairment of equity investment, interest income, acquisition-related and other expenses, and provision (benefit) for income taxes. Adjusted EBITDA margin represents adjusted EBITDA calculated as a percentage of revenue. We define non-GAAP net income as net income (loss) adjusted for unrealized (gain) loss on equity investments, stock-based compensation expense, acquisition-related and other expenses, and adjustments for income taxes. We define non-GAAP free cash flow as net cash provided by operating activities reduced by purchases of property and equipment and capitalized software development costs.

In addition to operating income and net income, we use adjusted EBITDA, non-GAAP net income, and free cash flow as measures of operational efficiency. We believe that these non-GAAP financial measures are useful to investors for period to period comparisons of our business and in understanding and evaluating our operating results for the following reasons:

  • Adjusted EBITDA, non-GAAP net income and free cash flow are widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as stock-based compensation expense, depreciation and amortization, interest expense, and provision (benefit) for income taxes that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired; and,
  • Our management uses adjusted EBITDA, non-GAAP net income, and free cash flow in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of operating performance and the effectiveness of our business strategies and in communications with our board of directors concerning our financial performance; and adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Our use of non-GAAP financial measures has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:

  • Adjusted EBITDA does not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) the potentially dilutive impact of stock-based compensation; or (c) tax payments that may represent a reduction in cash available to us;
  • Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; and
  • Non-GAAP net income does not include: (a) unrealized gains/losses resulting from our equity investment; (b) the potentially dilutive impact of stock-based compensation; (c) income tax effects for stock-based compensation and unrealized gains/losses from our equity investment; or (d) acquisition-related and other expenses.

Because of these and other limitations, you should consider adjusted EBITDA, non-GAAP net income, and free cash flows along with other GAAP-based financial performance measures, including net income (loss) and our GAAP financial results.

Forward Looking Statements

This press release contains “forward-looking statements” regarding our future business expectations, including our guidance relating to our revenue and adjusted EBITDA for Q3 2023 and full year 2023, our expectations regarding future hiring, our total addressable market, future market growth, and our ability to gain market share. These forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions and may differ materially from actual results due to a variety of factors including: our dependency on the overall demand for advertising and the channels we rely on; our existing customers not expanding their usage of our platform, or our failure to attract new publishers and buyers; our ability to maintain and expand access to spend from buyers and valuable ad impressions from publishers; the rejection of the use of digital advertising by consumers through opt-in, opt-out or ad-blocking technologies or other means; our failure to innovate and develop new solutions that are adopted by publishers; the war between Ukraine and Russia and the related measures taken in response by the global community; the impacts of inflation as well as fiscal tightening and rising interest rates; lingering effects of the COVID-19 pandemic, including the resulting global economic uncertainty; limitations imposed on our collection, use or disclosure of data about advertisements; the lack of similar or better alternatives to the use of third-party cookies, mobile device IDs or other tracking technologies if such uses are restricted; any failure to scale our platform infrastructure to support anticipated growth and transaction volume; any ability of our DSP buyers to make payments to us, including due to financial difficulties they may experience; liabilities or fines due to publishers, buyers, and data providers not obtaining consents from consumers for us to process their personal data; any failure to comply with laws and regulations related to data privacy, data protection, information security, and consumer protection; and our ability to manage our growth. Moreover, we operate in a competitive and rapidly changing market, and new risks may emerge from time to time. For more information about risks and uncertainties associated with our business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2022, which is on file with the SEC and is available on our investor relations website at and on the SEC website at Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023. All information in this press release is as of August 8, 2023. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

About PubMatic

PubMatic is an independent technology company maximizing customer value by delivering digital advertising’s supply chain of the future. PubMatic’s sell-side platform empowers the world’s leading digital content creators across the open internet to control access to their inventory and increase monetization by enabling marketers to drive return on investment and reach addressable audiences across ad formats and devices. Since 2006, PubMatic’s infrastructure-driven approach has allowed for the efficient processing and utilization of data in real time. By delivering scalable and flexible programmatic innovation, PubMatic improves outcomes for its customers while championing a vibrant and transparent digital advertising supply chain.

(In thousands)
  June 30,
  December 31,
Current assets     
Cash and cash equivalents$         105,537 $           92,382
Marketable securities              65,367               82,013
Accounts receivable, net            258,009             314,299
Prepaid expenses and other current assets              14,325               14,784
Total current assets            443,238             503,478
Property, equipment and software, net              65,663               71,156
Operating lease right-of-use assets              23,306               26,206
Acquisition-related intangible assets, net                6,654                 8,299
Goodwill              29,577               29,577
Deferred tax assets              13,264                 1,047
Other assets, non-current                1,964                 2,412
TOTAL ASSETS$         583,666 $         642,175
Current liabilities     
Accounts payable$         240,069 $         277,414
Accrued liabilities              22,871               18,936
Operating lease liabilities, current                5,840                 5,676
Total current liabilities            268,780             302,026
Operating lease liabilities, non-current              18,178               20,915
Other liabilities, non-current                2,180                 7,046
TOTAL LIABILITIES            289,138             329,987
Stockholders' equity     
Common stock                      6                       6
Treasury stock            (34,966)             (11,486)
Additional paid-in capital            213,115             195,677
Accumulated other comprehensive loss                   (32)                      (9)
Retained earnings            116,405             128,000
TOTAL STOCKHOLDERS’ EQUITY            294,528             312,188
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$         583,666 $         642,175


(In thousands, except per share data)
 Three Months Ended June 30, Six Months Ended June 30,
  2023  2022  2023  2022
Revenue$           63,330 $           63,032 $         118,737 $         117,584
Cost of revenue(1)              25,067               18,974               48,930               36,966
Gross profit              38,263               44,058               69,807               80,618
Operating expenses:(1)           
Technology and development                6,730                 5,075               13,247                 9,847
Sales and marketing              19,810               18,212               42,937               34,667
General and administrative(2)              18,857               10,977               31,429               21,727
Total operating expenses              45,397               34,264               87,613               66,241
Operating income (loss)              (7,134)                 9,794             (17,806)               14,377
Interest income                2,176                   325                 4,067                   448
Other income (expense), net                 (221)                  (373)                  (686)                 1,103
Income (loss) before income taxes              (5,179)                 9,746             (14,425)               15,928
Provision (benefit) for income taxes                  545                 1,927               (2,830)                 3,330
Net income (loss)$           (5,724) $             7,819 $         (11,595) $           12,598
Basic net income (loss) per share of Class A and Class B stock$             (0.11) $               0.15 $             (0.22) $               0.24
Diluted net income (loss) per share of Class A and Class B stock$             (0.11) $               0.14 $             (0.22) $               0.22
Weighted-average shares used to compute net income per share attributable to common stockholders:           
Basic              52,029               52,155               52,383               52,033
Diluted              52,029               56,847               52,383               56,868

(1)Stock-based compensation expense includes the following:

(In thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2023  2022  2023  2022
Cost of revenue$        387 $        327 $        702 $        605
Technology and development         1,089          907          2,097          1,784
Sales and marketing         2,614          2,098          5,323          4,005
General and administrative         3,176          2,059          6,203          4,133
Total stock-based compensation expense$        7,266 $        5,391 $        14,325 $        10,527

On June 30, 2023, a Demand Side Platform buyer of our platform filed for Chapter 11 bankruptcy. As a result, of this bankruptcy we recorded incremental bad debt expense of $5.7 million which is reflected in our GAAP net loss and adjusted EBITDA results for the period.

(In thousands)
 Six Months Ended June 30,
  2023  2022
Net Income (Loss)$         (11,595) $           12,598
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization              22,330               14,505
Unrealized gain on equity investment                     —                  (458)
Stock-based compensation              14,325               10,527
Provision for doubtful accounts                5,675                      —
Deferred income taxes            (13,555)               (2,396)
Accretion of discount on marketable securities              (2,042)                    (15)
Non-cash operating lease expense                3,067                 2,998
Other                      4                     99
Changes in operating assets and liabilities:     
Accounts receivable              41,743               22,942
Prepaid expenses and other assets                  907                   547
Accounts payable            (30,078)             (13,698)
Accrued liabilities                1,875               (5,565)
Operating lease liabilities              (2,740)               (2,385)
Other liabilities, non-current              (1,314)                     83
Net cash provided by operating activities              28,602               39,782
Purchases of property and equipment              (2,552)             (12,384)
Capitalized software development costs              (9,919)               (6,777)
Purchases of marketable securities            (46,715)             (82,616)
Proceeds from sales of marketable securities              18,873                      —
Proceeds from maturities of marketable securities              46,500               28,200
Net cash provided by (used in) investing activities                6,187             (73,577)
Proceeds from issuance of common stock for employee stock purchase plan                  971                 2,402
Proceeds from exercise of stock options                  937                   838
Principal payments on finance lease obligations                   (62)                    (56)
Payments to acquire treasury stock            (23,480)                      —
Net cash provided by (used in) financing activities            (21,634)                 3,184
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS              13,155             (30,611)
CASH AND CASH EQUIVALENTS - Beginning of period              92,382               82,505
CASH AND CASH EQUIVALENTS - End of period$         105,537 $           51,894


(In thousands, except per share amounts)

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Reconciliation of net income (loss):       
Net income (loss)$        (5,724) $        7,819  $        (11,595) $        12,598 
Add back (deduct):       
Stock-based compensation         7,266           5,391           14,325           10,527 
Depreciation and amortization         10,898           7,321           22,330           14,505 
Unrealized (gain) loss on equity investment         —           915           —           (458)
Interest income         (2,176)          (325)          (4,067)          (448)
Acquisition-related and other expenses         1,182           —           2,216           — 
Provision (benefit) for income taxes         545           1,927           (2,830)          3,330 
Adjusted EBITDA$        11,991  $        23,048  $        20,379  $        40,054 

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Reconciliation of net income (loss) per share:       
Net income (loss)$        (5,724) $        7,819  $        (11,595) $        12,598 
Add back (deduct):       
Unrealized (gain) loss on equity investment         —           915           —           (458)
Stock-based compensation         7,266           5,391           14,325           10,527 
Acquisition-related and other expenses         1,182           —           2,216           — 
Adjustment for income taxes         (1,390)          (1,093)          (2,708)          (1,566)
Non-GAAP Net Income$        1,334  $        13,032  $        2,238  $        21,101 
GAAP diluted EPS$        (0.11) $        0.14  $        (0.22) $        0.22 
Non-GAAP diluted EPS$        0.02  $        0.23  $        0.06  $        0.37 
Non-GAAP weighted average shares outstanding—diluted 56,259   56,847   56,605   56,868 

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Reconciliation of cash provided by operating activities:       
Net cash provided by operating activities$        15,848  $        20,468  $        28,602  $        39,782 
Less: Purchases of property and equipment         (1,135)          (12,236)          (2,552)          (12,384)
Less: Capitalized software development costs         (3,918)          (2,542)          (9,919)          (6,777)
Free cash flow$        10,795  $        5,690  $        16,131  $        20,621 


Net dollar-based retention is calculated by starting with the revenue from publishers in the trailing twelve months ended June 30, 2022 (Prior Period Revenue). We then calculate the revenue from these same publishers in the trailing twelve months ended June 30, 2023 (Current Period Revenue). Current Period Revenue includes any upsells and is net of contraction or attrition, but excludes revenue from new publishers. Our net dollar-based retention rate equals the Current Period Revenue divided by Prior Period Revenue. Net dollar-based retention rate is an important indicator of publisher satisfaction and usage of our platform, as well as potential revenue for future periods


The Blueshirt Group for PubMatic

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Broadsheet Communications for PubMatic

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