PUBM Q1 2025: Guides 15%+ Growth as Antitrust Fuels Share Gains
- Google antitrust ruling tailwinds: The verdict is helping shift the balance of power in digital advertising, positioning PubMatic to capture additional market share—as each 1% share gain could add $50–75 million in net revenue—with Google’s dominance being challenged.
- Substantial SPO growth potential: PubMatic’s SPO activity has already reached 55% and could expand to 75% over the long term, indicating a large runway for share growth among direct advertisers and agency relationships.
- Expanding mid-market DSP opportunities: There is significant potential in tapping into the growing mid-market of advertisers, with shifts in the DSP market, especially as performance buying and CTV adoption increase, supporting robust revenue diversification.
- Dependence on a major DSP buyer and political headwinds: Changes in bidding behavior by a large DSP buyer have already impacted display revenue, and the expected lapping of this impact—coupled with a projected 6% to 7% headwind from political spend—raises concerns about revenue volatility.
- Macroeconomic environment risks: Despite steady Q1 performance, ongoing macro uncertainty could prompt advertisers to pull back on ad spend, potentially affecting the anticipated 15%+ underlying growth.
- Uncertainty around the antitrust outcome: The unresolved details and potential variability in remedies from the Google antitrust case create regulatory uncertainty that may delay or diminish the expected market share gains.
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Guidance Roadmap
Q: Explain roadmap and GAAP normalization?
A: Management explained that near-term challenges from a one-time DSP buyer impact of about $15–20 million and a last year’s political headwind near 6–7% will be lapped midyear. This positions the underlying business to grow at 15%+ with a normalized, double-digit growth outlook over time. -
Macro Trends
Q: How is current ad spend evolving?
A: Management sees stable overall spending despite macro uncertainty, noting a robust shift from linear TV to streaming and performance formats, underlined by 80% penetration of top streamers, which supports resilience in the business. -
SPO Traction
Q: What is the long-term SPO target?
A: Management expects SPO to eventually reach 75% of the business, up from the current 55%, by expanding both existing agency relationships and new buyer channels. -
Antitrust Impact
Q: Any DOJ interaction on Google antitrust?
A: Management noted that the DOJ is actively engaging with witnesses post-verdict, which underscores a shift away from Google’s dominance and could allow PubMatic to capture additional market share. -
DSP Volumes
Q: How did DSP partner volumes perform?
A: Management reported that performance with key DSP partners has been stable and slightly above expectations, with the impact from recent changes expected to normalize by midyear. -
Mid-Market DSP
Q: How are mid-market DSP relationships evolving?
A: Management highlighted robust growth in mid-market DSP activity as agencies gain more independence from major holding companies, indicating expanding global opportunities. -
Video Margins
Q: Will higher CPMs preserve margins?
A: Management stressed that reinvesting in omnichannel video—despite higher CPMs—strengthens long-term performance via cost efficiencies and increased scale, ensuring a balanced approach between margins and growth.
Research analysts covering PubMatic Inc.