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PubMatic, Inc. (PUBM)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue of $71.1M grew 6% YoY and beat Wall Street consensus by ~$3.6M; non-GAAP diluted EPS of $0.05 beat consensus (-$0.16) materially; adjusted EBITDA of $14.2M (20% margin) exceeded guidance .
  • Strength in omnichannel video (41% of revenue, +34% YoY) and CTV (+50% YoY; ~20% of revenue) offset display softness; Activate buying activity more than doubled sequentially .
  • Management guided Q3 2025 revenue to $61–$66M and adjusted EBITDA to $7–$10M as a top DSP platform change reduced spend beginning in July; mitigating actions underway; FY25 capex maintained at $15M .
  • Shares fell ~21% on Aug 12, 2025 following the guide and DSP disclosure, a key near-term sentiment headwind despite secular tailwinds in CTV and sell-side activation .

What Went Well and What Went Wrong

What Went Well

  • Omnichannel video revenue grew 34% YoY to 41% of revenue; CTV revenue grew over 50% YoY and reached ~20% of total, demonstrating share gains in high-value formats .
  • Activate momentum: buying activity more than doubled sequentially, with >90% of campaigns hitting/exceeding KPIs; partnerships with PayPal and Omnicom highlight buyer traction .
  • Quote: “We delivered a strong second quarter, with revenue and adjusted EBITDA exceeding expectations… Our key priority is to diversify our DSP mix, advance our leadership in CTV, and invest in the highest growth areas.” — CEO Rajeev Goel .

What Went Wrong

  • DSP headwind: a top DSP shifted clients to a new platform in July, changing inventory valuation and reducing spend; stabilization noted in August but optimization will take months .
  • Profitability compressed: adjusted EBITDA margin fell to 20% from 31% YoY; non-GAAP diluted EPS dropped to $0.05 from $0.17 YoY amid higher OpEx mix and FX headwinds .
  • Q3 outlook reset: revenue $61–$66M and adjusted EBITDA $7–$10M, reflecting DSP impact and some sequential softness in consumer discretionary verticals .

Financial Results

Headline P&L vs Prior Periods and YoY

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$85.5 $63.8 $71.1
GAAP Diluted EPS ($)$0.26 $(0.20) $(0.11)
Non-GAAP Diluted EPS ($)$0.41 $(0.04) $0.05
Adjusted EBITDA ($USD Millions)$37.6 $8.5 $14.2
Adjusted EBITDA Margin (%)44% 13% 20%
GAAP Net Income (Loss) Margin (%)16% (15)% (7)%

Q2 2025 Actuals vs Wall Street Consensus (S&P Global)

MetricConsensusActualSurprise
Revenue ($USD)$67.85M*$71.10M +$3.25M / +4.8% (Beat)
Primary EPS ($)$(0.16)*$0.05 +$0.21 (Beat)
EBITDA ($USD)$10.94M*$14.21M +$3.27M (Beat)
# Revenue Estimates11*——
# EPS Estimates10*——
Target Price (Cons.)$11.94*$11.94*—

Values with asterisk (*) retrieved from S&P Global.

KPI and Mix Highlights (Q2 2025)

KPIQ2 2025
Omnichannel video revenue mix41% of total; +34% YoY
CTV revenue growth>50% YoY; ~20% of total revenue
Emerging revenue streams>100% YoY; 8% of revenue
Net dollar-based retention (TTM)102%
SPO share of activity55%+ (vs 51% a year ago)
Impressions processed~78 trillion (+28% YoY)
Free Cash Flow$9.27M
Cash, equivalents & marketable securities$117.6M; no debt
Share repurchases3.5M shares in Q2 (7% of FD shares); 12.2M cumulative ($178.2M)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025N/A$61M–$66M New
Adjusted EBITDAQ3 2025N/A$7M–$10M; ~13% margin at midpoint; FX headwind New
CapExFY 2025~$15M (prior commentary) ~$15M maintained Maintained

Note: Q2 2025 prior guidance from Q1 2025 was $66M–$70M revenue and $9M–$12M adjusted EBITDA; actual Q2 results exceeded both ranges .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
CTV expansionQ4: CTV 20% of revenue; +2x YoY ; Q1: CTV +50% YoY; partnerships expanded +50% YoY; ~20% revenue; added top 5 US streamer; live sports marketplace launched Accelerating share gains
Sell-side activation (Activate)Q4: Activate customers up ~6x YoY ; Q1: SPO 55%+ record; Activate highlighted Buying activity more than doubled sequentially; >90% campaigns met/exceeded KPIs; commerce media integrations (PayPal) Strong momentum
DSP concentration & mitigationQ4: prior DSP headwind lapped in H2’25; conservative approach ; Q1: guidance inclusive of mid-2024 DSP auction changes New top DSP platform shift in July reduced spend; stabilization in Aug; diversification to mid-tier/performance DSPs (+20–30% growth) Near-term headwind; mitigation in progress
AI productizationQ4: gen AI tools (Assistant, Creative Category Manager) launched Enhanced Assistant; predictive diagnostics; dynamic floor yield (beta); “AI-powered platform” strategy Expanding capabilities
SPOQ4: 53% of activity ; Q1: 55%+ record 55%+ maintained; deeper buyer solutions; note possible mix volatility with mid-market buyers Stable-high; mix shift possible
Regional/macroQ4: solid operations, conservative near-term buyer approach ; Q1: underlying business +21% YoY; momentum into April EMEA/APAC up; Americas -1%; sequential softness in consumer discretionary verticals; FX headwind Mixed; FX/macro modest drag

Management Commentary

  • “The lines between SSPs and DSPs are blurring, and AI is fundamentally changing how advertising is created, transacted, and optimized… Our key priority is to diversify our DSP mix, advance our leadership in CTV, and invest in the highest growth areas.” — Rajeev Goel, CEO .
  • “Supply Path Optimization represented 55%+ of total activity… Buying activity on Activate more than doubled… more than 90% of campaigns achieving or exceeding client KPIs.” — Company highlights .
  • “We exceeded both revenue and adjusted EBITDA guidance as our business mix shifts toward high-margin revenue… while our outlook includes a reduction in ad spend from one of our top DSP partners, the underlying health of the business remains strong.” — Steve Pantelick, CFO .
  • “Ad spend from newer DSPs is growing at 20%+ rates… Mountain and TV Scientific… China-based performance DSPs… bring better demand diversity, buyer resilience, and platform stickiness.” — CEO .
  • On DSP change: “A top DSP buyer shifted a significant number of clients to a new platform that evaluates inventory differently… we need to… prioritize… which subset of… impressions we send to this DSP.” — CEO .

Q&A Highlights

  • DSP platform change mechanics and timeline: impact concentrated in display; stabilization in August; optimization and SPO reconfiguration will take several months; top two DSPs ~half of spend, with CTV spend still growing double digits .
  • SPO evolution and direct sales: advertisers seek deeper solutions (cookies→identity, performance, curation); expanding buyer-facing sales teams by >20%; mid-market buyer growth dilutes SPO mix but grows total dollars .
  • AI/search exposure: ~60% of impressions are CTV/mobile app (unaffected by AI search); remaining web traffic is primarily direct navigation at premium publishers; exposure to AI search viewed as single-digit percentage of revenue with offsetting AI monetization opportunities .
  • Demand/macro: top-10 verticals grew mid-single digits YoY; July saw sequential softness in discretionary categories; FX a ~$2M Q2 headwind and >$1M incremental headwind assumed in Q3 guidance .

Estimates Context

  • Q2 2025 delivered broad beats vs S&P Global consensus: revenue $71.10M vs $67.85M*, non-GAAP EPS $0.05 vs $(0.16), adjusted EBITDA $14.21M vs $10.94M .
  • Q3 2025 consensus ahead of print implied revenue ~$64.0M* and EPS $(0.22)*; company guided $61–$66M and $7–$10M adjusted EBITDA, embedding DSP spend reduction and FX .
  • Target price consensus stood at ~$$11.94* with nine contributing estimates*.
    Values with asterisk (*) retrieved from S&P Global.

Financial Results Detail

Q2 2025 Income Statement Highlights (YoY)

MetricQ2 2024Q2 2025
Revenue ($USD Thousands)$67,267 $71,095
Gross Profit ($USD Thousands)$42,107 $44,483
Operating Expenses ($USD Thousands)$46,092 $49,944
GAAP Net Income (Loss) ($USD Thousands)$1,971 $(5,208)
Adjusted EBITDA ($USD Thousands)$21,078 $14,213
Non-GAAP Net Income ($USD Thousands)$9,671 $2,525
Non-GAAP Diluted EPS ($)$0.17 $0.05

Guidance Changes – Additional Notes

  • Q3 revenue guidance explicitly includes impact from the top DSP platform shift; adjusted EBITDA guidance embeds a negative FX impact predominantly from Euro and Pound Sterling expenses .
  • FY2025 capex remains ~$15M, made possible by infrastructure optimizations and cost savings .

Earnings Call Themes & Trends – Additional Proof Points

  • Live Sports Marketplace launched with FanServ, MLB, FuboTV, DirecTV, Spectrum Reach, Roku; buyer activity up ~3x YoY in H1 2025 .
  • AI upgrades: predictive diagnostics, dynamic floor yield (beta), enhanced Assistant; infrastructure scaled to process ~78T impressions in Q2 .
  • Regional mix: EMEA and APAC revenues grew; Americas down ~1% .

Stock Reaction and Legal Overhang

  • Following Q2 results and disclosure of DSP headwinds, PUBM fell ~$2.23 (21.1%) to $8.34 on Aug 12, 2025; multiple law firms subsequently announced class action investigations/filings referencing the DSP disclosure .

Key Takeaways for Investors

  • Near-term: Expect elevated volatility tied to DSP mix shift; the Q3 guide-down de-risks the second half while optimization progresses; revenue/EPS beats in Q2 could temper estimate cuts focused on Q3 .
  • Medium-term: Secular growth in CTV and sell-side activation (Activate, Connect) supports mix shift to higher-margin revenues; SPO remains a core differentiator .
  • Diversification: Rising spend from mid-tier/performance DSPs and commerce media partners reduces concentration risk over time; management is expanding buyer-facing resources .
  • AI leverage: Expanded AI modules (Assistant, predictive diagnostics, dynamic floor yield) improve monetization and efficiency, buttressing margins and growth .
  • Capital allocation: Strong liquidity ($117.6M cash, no debt) and ongoing buybacks (3.5M shares in Q2; $178.2M cumulative) provide downside support .
  • Watch items: FX headwinds, display weakness, and any further DSP platform changes; monitor Q3 pacing and progress on SPO re-implementation and traffic shaping .
  • Valuation/sentiment: Post-print price dislocation driven by guide and DSP risk may create tactical opportunities if CTV/Activate momentum persists; legal headlines could overhang near term until visibility improves .