PubMatic, Inc. Q3 FY2025 earnings call

• CTV significantly outpaced the market rate of growth, growing over 50% year over year excluding political, driven by increased premium supply, continued scaling of agency marketplaces, traction in live sports marketplace, and growth of small and mid-market advertisers.
• Emerging revenues grew over 80% year over year as sell-side targeting and newly AI solutions quickly ramped.
• Strengthened end-to-end platform with cutting-edge AI innovations across infrastructure, application, and transaction layers. For infrastructure, own and operate full technology stack, collaborating with NVIDIA for next-generation AI models. For application, deploying AI-powered buyer and publisher platforms. For transaction, co-founding AdContext Protocol for agent-to-agent communication.
• Broadening demand-side ecosystem and accelerating pipeline, including expanding DSP partnerships and launching new partnerships with omnichannel DSPs.
• Accelerating investment on the buy side, expanding focus from top agencies and advertisers, with SPO representing over 55% of activity on platform, and onboarding more buyers onto Activate.
• Deepening integration with DSPs to create value beyond real-time bidding transactions, first SSP to integrate Trade Desk's price discovery and provisioning API.
• Momentum in Activate fueling growth in CTV, with CTV revenue excluding political growing over 50% year over year, expanding CTV publisher footprint and ad formats.
• Making significant progress in scaling emerging revenue streams, with commerce media and sell-side curation growing, including partnerships with leading retailers and data providers.

CTV excluding political grew over 50% year over year, contributing to revenue. Emerging revenues grew over 80% year over year, scaling to 10% of total revenue in Q3 2025. Omnichannel video contributed approximately 38% of total revenue in Q3 2025. Display revenue was down minus 5% year over year, but excluding a large DSP, it grew in low single-digit percentages. Ad spend from mid-tier DSP partners grew over 25% year over year in Q3. Regionally, APAC and EMEA revenues grew plus 12% and plus 7% respectively, offsetting a minus 14% decline in The Americas due to spend declines from a large DSP buyer.

• Q4 revenue expected to be in the range of $73 million to $77 million.
• Q4 adjusted EBITDA projected to be in the range of $19 million to $21 million, factoring in continued weakness of the US dollar.
• Full-year revenue expected to be in the range of $276 million to $280 million and adjusted EBITDA in the range of $53 million to $55 million, inclusive of more than $5 million of estimated negative FX impact.
• Maintaining full-year CapEx projection at $15 million, a year-over-year reduction made possible by AI-driven optimization efforts.

• The impending Google AdTech remedies verdict will very likely shift market share.
• Forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult to predict, including those related to the economy, industry changes, etc.

Q: Andrew Boone asked about SPO and the moves by companies like The Trade Desk, and then about COGS unit cost leverage.

A: Rajeev K. Goel addressed SPO by stating PubMatic is a platform for direct inventory monetization, not reselling, and emphasized value in yield optimization. Steven Pantelick discussed COGS unit cost leverage, stating they've been focused on owning and operating infrastructure, leveraging AI to drive optimizations, and expecting gross margin expansion as revenue reaccelerates Q: Matthew John Swanson asked about CTV environment evolution and generative AI right to win A: Rajeev K. Goel talked about CTV growth drivers like working with more premium publishers, growth in advertiser mix, and AI application. Regarding generative AI right to win, he mentioned owning infrastructure, having transactions and data flow, demonstrated innovation track record Q: Shweta R. Khajuria asked about impact of Trade Desk's moves on PubMatic's business A: Rajeev K. Goel said Trade Desk's new platform had spend from them stabilize in August and September after revisions to machine learning algorithms and working with SPO partners Q: Matthew Dorrian Condon asked about impact on publisher traffic and traffic on PubMatic's platform A: Rajeev K. Goel said impact on revenue is limited to a single-digit percentage, with 60% of impressions from CTV and mobile app unaffected by AI search, and working with top publishers limiting impact of search referral traffic Q: Robert Coolbrith asked about unpacking 5x faster bid response and SSP evolution with agentic AI A: Rajeev K. Goel talked about 5x faster bid response through NVIDIA partnership and vertical integration opportunities. Regarding SSP evolution, he said SSP role needs to expand to workflow automation, audience and inventory discovery, etc.

Q: Jacob Armstrong asked about SSP evolution with agentic AI and key investments A: Rajeev K. Goel said SSP role will expand to transaction automation, audience and inventory discovery, etc., and focus on those areas for future investments