PUBM Q3 2024: 15% Revenue Growth on 70% CTV Penetration
- Robust CTV Growth and Market Penetration: Management highlighted that PubMatic has achieved critical mass in CTV by organically growing relationships with 70% of the top 30 streaming publishers and significantly increasing CTV monetized impressions, which supports sustained revenue growth.
- Advanced Technology and Curation Capabilities: The discussion emphasized innovations such as AI-powered inventory curation via the Connect platform, which enables targeted packaging of inventory (e.g., political and commerce media data) and positions PubMatic to capture incremental advertising dollars.
- Stabilizing DSP Impact and Diversified Revenue Streams: Despite a headwind from DSP changes, the core business—driven by substantial gains in mobile app and display segments—has maintained robust growth, with management expressing confidence in resolving DSP adjustments while other significant revenue drivers continue to perform strongly.
- DSP Buyer Adjustment Headwind: The ongoing need for algorithm optimization and adjustment of spending from a key DSP buyer poses short-term revenue risks, with challenges potentially persisting into mid-2025.
- Dependence on Political Advertising: A significant portion of revenue growth has been driven by political ad spend via CTV; however, this reliance makes performance vulnerable to volatility due to election cycles and changes in political spending trends.
- Macro Environment Pressures: Concerns related to the DSP change, including the previously mentioned $7 million headwind, highlight exposure to broader macroeconomic factors that could adversely affect future revenue and margin growth.
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Revenue Growth
Q: U.S. revenue surge: political, emerging products, DSP headwind?
A: Q3 performance was driven by CTV and mobile strength, with political ad spend and emerging products lifting growth to over 15% year-over-year, while the DSP headwind has stabilized after midyear adjustments. -
Demand & Outlook
Q: How are Q3 demand trends and 2025 headcount managed?
A: Demand remains robust with double-digit video and mobile growth, and for 2025, the focus is on targeted hiring to enhance productivity rather than broad headcount increases. -
DSP Stability
Q: What is the update on DSP change impact?
A: The spend from the DSP buyer has now stabilized, with management working through the adjustment period into early 2025 while core growth remains strong. -
CTV Penetration
Q: What drives your critical mass in CTV?
A: Our organic innovation and strategic partnerships have helped us reach 70% penetration among the top streaming publishers, underpinning our leadership in CTV. -
Infrastructure Needs
Q: What are your 2024–2025 infrastructure investment plans?
A: We are well-prepared for 2024 with existing CapEx, planning only incremental investments in 2025 driven by efficiency and the high value of CTV impressions. -
Go-to-Market Strategy
Q: How are you driving emerging product revenue?
A: A focused sales structure pairs relationship teams with product specialists to promote emerging solutions like Connect and Activate, strengthening revenue growth. -
CTV Curation
Q: How is your CTV curation executed?
A: Our Connect platform packages tailored inventory using first-party data, enabling buyers to access precisely targeted ad opportunities. -
Inventory & Curation
Q: Does rising CTV supply boost curation demand?
A: Yes, increased CTV inventory prompts sellers to adopt curation strategies to optimize premium CPMs and efficiently fill remaining inventory. -
Video Monetization
Q: What is video demand’s impact on margins?
A: Shifting budgets toward video have lowered unit costs and enhanced margins, thanks to our cost-effective processing across formats.
Research analysts covering PubMatic Inc.