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PubMatic, Inc. (PUBM)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue $68.0M and adjusted EBITDA $11.2M came in ahead of guidance; CTV revenue grew over 50% YoY excluding political, and Activate revenue grew over 100% YoY, driving strong free cash flow ($22.8M) .
  • Versus Wall Street, revenue beat S&P Global consensus ($63.95M*) and EPS Normalized beat (-$0.0117* est vs $0.03* actual); results also exceeded the company’s Q3 guidance ranges issued in August ($61–$66M revenue; $7–$10M adj. EBITDA) .
  • Q4 2025 guidance: revenue $73–$77M and adjusted EBITDA $19–$21M (~27% margin midpoint), with continued double-digit CTV (ex-political) and 30%+ emerging revenues growth expected; FY25 revenue guided to $276–$280M and adjusted EBITDA to $53–$55M .
  • Strategic catalysts: AI-led infrastructure and applications (NVIDIA collaboration, AI publisher suite) improving performance and efficiency; DSP mix diversification and SPO momentum (55%+ of platform activity) appear to be mitigating legacy DSP headwinds; spend from the large DSP stabilized in Aug–Sep .

What Went Well and What Went Wrong

What Went Well

  • CTV momentum: “CTV growth over 50% year-over-year excluding political advertising” with over 90% of the top 30 global streamers monetized; omnichannel video grew 21% YoY excluding political .
  • AI-enabled execution and differentiation: “AI-powered platform cuts campaign setup time by 87%, speeds issue resolution by 70%,” 5x faster bid responses and 85% fewer auction timeouts; publishers see ~10% revenue uplift from AI yield optimization; quote: “We delivered revenue and adjusted EBITDA ahead of guidance… These results demonstrate the power of our platform… and our accelerated pace of innovation.” – CEO Rajeev Goel .
  • Strong cash generation and operational leverage: Free cash flow $22.8M; cost per million impressions down 19% TTM; 87 trillion impressions processed (+24% YoY), with owned & operated infrastructure consolidating five racks into one for margin leverage .

What Went Wrong

  • GAAP profitability under pressure: GAAP net loss widened to $(6.5)M (margin -9%) and GAAP diluted EPS of $(0.14), down vs prior year; adjusted EBITDA margin compressed to 16% from 26% YoY .
  • Display weakness and DSP headwind: Display revenue declined ~5% YoY, most impacted by the large DSP platform changes; DSP spend stabilized late in Q3 but remained lower; regions: APAC +12% and EMEA +7% offset -14% Americas (primarily due to DSP spend declines) .
  • Non-GAAP earnings lower YoY: Non-GAAP diluted EPS $0.03 vs $0.12 last year; adjusted EBITDA $11.2M vs $18.5M last year, reflecting margin compression despite efficiency gains .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$63.825 $71.095 $67.960
GAAP Diluted EPS ($USD)$(0.20) $(0.11) $(0.14)
Non-GAAP Diluted EPS ($USD)$(0.04) $0.05 $0.03
Adjusted EBITDA ($USD Millions)$8.457 $14.213 $11.152
Adjusted EBITDA Margin (%)13% 20% 16%
Gross Profit ($USD Millions)$38.237 $44.483 $42.557
Net Cash from Operating Activities ($USD Millions)$15.621 $14.905 $32.374
Free Cash Flow ($USD Millions)$7.300 $9.265 $22.786

Segment and Mix

MetricQ1 2025Q2 2025Q3 2025
Omnichannel Video Mix of Revenue (%)40% 41% ~38%
Omnichannel Video Revenue Growth YoY (ex-political)20% 34% 21%
CTV Revenue Growth YoY (ex-political)>50% >50% >50%
Emerging Revenues Growth YoYMore than doubled More than doubled 80%
SPO Share of Activity (%)55%+ 55%+ 55%+
Impressions Processed (Trillions)~75 ~78 ~87

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Revenue ($USD Millions)Q3 2025$61–$66 $67.96 Raised/Beat
Adjusted EBITDA ($USD Millions)Q3 2025$7–$10 $11.15 Raised/Beat
Revenue ($USD Millions)Q4 2025—$73–$77 New
Adjusted EBITDA ($USD Millions)Q4 2025—$19–$21 (~27% margin midpoint) New
Revenue ($USD Millions)FY 2025—$276–$280 New
Adjusted EBITDA ($USD Millions)FY 2025—$53–$55 (incl. >$5M negative FX) New
CapEx ($USD Millions)FY 2025$15 $15 (maintained) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI infrastructure (NVIDIA, latency)Owned & operated infra; early GenAI launches; efficiency via AI; target end-to-end platform 5x faster bid responses; 85% fewer timeouts; 3x ad requests per server; rack consolidation; NVIDIA Triton for traffic shaping; Spark accelerator Accelerating
Agentic AI & Ad Context ProtocolIntroduced unified AI buyer platform; SPO award; curation/commerce momentum Co-founding AdCP; first spec for agent-to-agent communication; AI agents across platform (17 publisher-side agents) Accelerating
CTV expansion (publishers/formats)80–87% top-30 streamers; Live Sports Marketplace launch; >50% CTV growth Over 90% top-30 streamers; 150% sequential growth in live sports buying; new formats (Pause Ads) with Dentsu Strengthening
DSP mix diversification & SPO55%+ platform activity; mid-market DSP spend +20–30% YoY; Activate adoption doubling Mid-market DSP ad spend +25% YoY; Activate customers +35% over 9 months; active campaigns 4x vs prior year; SPO 55%+ Strengthening
Macro/tariffs/search trafficMixed vertical trends; cautious outlook; April/July sequential softness in some consumer categories Limited impact from AI search on publishers; muted holiday seasonal uptick in Oct; prudent Q4 guidance Stable/cautious
Litigation/regulatoryGoogle antitrust verdict tailwinds; potential share shift opportunity Remedies likely to benefit open internet; “even a modest share shift” unlocks high-margin revenue Supportive

Management Commentary

  • CEO: “We delivered revenue and adjusted EBITDA ahead of guidance and strong cash flow… As an early adopter of AI, our leadership extends across the infrastructure, application and transaction layers… In collaboration with NVIDIA, our infrastructure is, we believe, years ahead of peers.” – Rajeev Goel .
  • CFO: “Q3 adjusted EBITDA was $11.2 million, or 16% margin… We generated $32.4 million in net operating cash flows and free cash flow of $22.8 million… We ended the quarter with $136.5 million in cash and zero debt.” – Steve Pantelick .
  • On DSP dynamics: “We revised our machine learning algorithms… worked with our SPO partners… spend stabilized in August and September.” – Rajeev Goel .
  • On AI value: “AI solution… automates pricing and improves auction efficiency, driving an average of 10% revenue growth for publishers.” .

Q&A Highlights

  • SPO/Trade Desk context: Management clarified PubMatic is a platform for direct inventory monetization, not a reseller; collaboration with The Trade Desk on price discovery and APIs continues, enhancing PMP/PG deal performance .
  • Unit cost leverage: Decade-long owned infrastructure strategy enables continued double-digit unit cost reductions, now amplified by AI; as revenue reaccelerates, gross margin expected to improve .
  • CTV evolution: Expansion into FAST channels (Tubi, Future Today, Local Now), live sports marketplace scaling, programmatic guarantees; long runway with $155B still in linear TV .
  • AI infrastructure differentiation: NVIDIA-powered latency reductions and traffic shaping improve auction outcomes and reporting speeds, supporting 2026 growth .
  • Search traffic concern: Management sees limited exposure; majority of impressions from CTV/mobile app; browser traffic less dependent on search than long-tail; potential new ad canvases in AI search experiences .

Estimates Context

Results vs S&P Global Wall Street Consensus (Q3 2025):

MetricConsensusActual# of Estimates
Revenue ($USD)$63.95M*$67.96M*12*
EPS Normalized ($USD)$(0.0117)*$0.03*10*
  • Bold beats: Revenue beat by ~$4.0M; EPS Normalized beat by ~$0.04. Values retrieved from S&P Global.*
  • Note: Company reported GAAP diluted EPS $(0.14); Non-GAAP diluted EPS $0.03 .

Key Takeaways for Investors

  • CTV and AI are the core growth engines: sustained >50% CTV growth (ex-political) and AI-driven platform advantages should support mix shift to higher-value channels and margin leverage over time .
  • Activate/SPO momentum reduces dependence on legacy DSPs: >55% activity via SPO and 4x growth in Activate campaigns broaden demand sources and enhance platform stickiness .
  • Cash generation and buybacks provide downside support: $136.5M cash, zero debt, $22.8M FCF in Q3; $94.4M repurchase authorization remaining through 2026 .
  • Near-term headwinds manageable: Display softness tied to a large DSP’s platform changes appears stabilized; cautious Q4 guide reflects muted seasonal trends, FX; secular areas expected to grow double digits .
  • Potential 2026 tailwinds: Regulatory remedies in AdTech and agentic AI adoption could catalyze share gains and operating leverage; management targets margin expansion as revenue reaccelerates .
  • Watch KPIs: CTV mix and growth, emerging revenue contribution, SPO share, impressions processed/unit costs, and Activate adoption for signs of trajectory improvement .
  • Trade setup: Q4 guide suggests growth reacceleration in secular areas; beats vs consensus and guidance plus AI narrative may support sentiment, but display/DSP mix and FX remain monitoring points [GetEstimates].