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PubMatic, Inc. (PUBM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue was $85.5M (+1% YoY) but came in below the company’s Q4 guidance range of $86–$90M; non-GAAP diluted EPS was $0.41 (vs $0.45 YoY) while adjusted EBITDA was $37.6M (44% margin), ahead of internal expectations .
  • Mix shift accelerated: CTV more than doubled YoY to 20% of revenue; omnichannel video reached a record 43% of revenue, underpinned by political spend and curated live sports inventory .
  • Management guided Q1 2025 revenue to $61–$63M and adjusted EBITDA to $5–$7M, reflecting continued headwinds from one large DSP’s auction change; they expect total revenue to resume YoY growth in 2H25 after lapping the DSP impact at end of Q2 .
  • Underlying business (ex-DSP and political) grew 16% YoY in Q4; CFO emphasized durable margin structure and cost leverage from owned infrastructure and GenAI productivity gains (+15% in 2024) as catalysts .

What Went Well and What Went Wrong

What Went Well

  • CTV scaled to 20% of Q4 revenue, with omnichannel video at 43% of total; “Our platform is rapidly gaining CTV market share as CTV increasingly shifts from insertion order-based buying to programmatic… now work with 80% of the top 30 streamers” .
  • Adjusted EBITDA beat internal expectations in Q4 ($37.6M, 44% margin); CFO: “our Q4 adjusted EBITDA came in ahead of expectations… underscoring the benefit… higher-value revenue streams, operational efficiency and cost leverage” .
  • Activate and sell-side curation scaling: Activate customers grew nearly 6x YoY; SPO reached 53% of platform activity in 2024, improving efficiency and funneling unique demand to PubMatic inventory .

What Went Wrong

  • Revenue missed company guidance as holiday spending from a large DSP underperformed; “strong growth… helped offset softer spending from the large DSP… based on long-term historical trends… single digits” for that DSP .
  • GAAP diluted EPS in Q4 declined YoY to $0.26 (vs $0.34 in Q4’23); non-GAAP diluted EPS fell to $0.41 (vs $0.45), reflecting the DSP impact on display .
  • Operating cash flow and non-GAAP profitability trended lower YoY in Q4: operating cash flow $18.0M (vs $28.7M), non-GAAP net income $21.4M (vs $24.4M), as mix shift and DSP/display softness weighed on reported totals .

Financial Results

Quarterly Results (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$67.267 $71.786 $85.502
GAAP Diluted EPS ($)$0.04 $(0.02) $0.26
Non-GAAP Diluted EPS ($)$0.17 $0.12 $0.41
Adjusted EBITDA ($USD Millions)$21.078 $18.546 $37.646
Adjusted EBITDA Margin (%)31% 26% 44%

Q4 2024 vs Prior Year and Guidance

MetricQ4 2023Q4 2024Company Q4 2024 GuidanceComment
Revenue ($USD Millions)$84.600 $85.502 $86–$90 Miss vs guidance; +1% YoY
GAAP Diluted EPS ($)$0.34 $0.26 N/ADown YoY
Non-GAAP Diluted EPS ($)$0.45 $0.41 N/ADown YoY
Adjusted EBITDA ($USD Millions)$38.906 $37.646 $34–$37 Slight beat vs guidance midpoint
Net Cash from Ops ($USD Millions)$28.674 $18.048 N/ADown YoY

Revenue Mix & KPIs

KPIQ2 2024Q3 2024Q4 2024
Omnichannel Video Revenue Share (%)N/A36% 43%
CTV Revenue Share (%)N/AN/A20%
SPO Activity (% of Platform)>50% ~50% 53% (FY 2024)
Monetized Impressions (growth YoY, omni video)>50% ~50% N/A
CTV Monetized Impressions (growth YoY)Nearly 2x >100% N/A

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025N/A$61–$63 New
Adjusted EBITDA ($USD Millions)Q1 2025N/A$5–$7 New
Total Company Revenue YoY1H 2025N/ASlightly down YoY (low single digits) New
Total Company Revenue YoY2H 2025N/AHigh single-digit YoY growth (tough political comp) New
Adjusted EBITDA Margin (%)FY 2025N/AHigh-20% range (includes FX headwind) New
Cost of Revenue (seq. change)FY 2025N/ALow single-digit % sequential increases New
OpEx (seq. change)FY 2025 (from Q2)N/ALow single-digit % sequential increases New
CapEx ($USD Millions)FY 2025~$16–$18 (FY24 framework) ~ $18 (similar to 2024) Maintained
Free Cash FlowFY 2025N/ALower in 1H; normalize thereafter New
Political Advertising MixFY 2024 baselineN/A~6% of FY24 revenue (for comp context) Context

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
CTV scaling & programmatic shiftQ2: CTV impressions nearly doubled; onboarded Roku, Disney+ Hotstar; Q3: 70% of top 30 streamers; omni video 36% share CTV = 20% of revenue; omnichannel video = 43% share; Live Sports curation (TCL) Up
Sell-side curation & data (Connect)Q2: reallocating resources from Privacy Sandbox to Connect; Q3: curation driving political spend; emerging rev + Connect +140% YoY in Q4; 190 data sets; sell-side targeting emphasized Up
Activate & SPO momentumQ2: SPO >50%; Activate expanding with Dentsu OMG; Q3: SPO ~50% and holdco consolidation Activate customers ~6x YoY; SPO 53% FY; all six holding companies on Activate Up
GenAI adoption & productivityQ2: +10–15% eng productivity; Privacy Sandbox other income $4M +15% eng productivity in 2024; GenAI products (Creative Category Manager, PubMatic Assistant) Up
DSP auction change headwindQ2: Late-May change; display CPM pressure; impact ~$2M in Q2 Q4 holiday softness at DSP; headwind continues into 1H25; lap by end of Q2 Transitional
Macro/verticalsQ2: Tech, Auto, Travel, Arts soft; strong in Shopping/Finance/Health Q4: Political boost; display ex-DSP +20% YoY; DSP display down Mixed

Management Commentary

  • CEO (Rajeev Goel): “Revenue growth for the year more than doubled, growing 9% over 2023… CTV more than doubled to 20% of total revenue… we expect accelerated growth in our underlying business as ad buyers seek premium, brand safe, curated inventory” .
  • CFO (Steve Pantelick): “In Q4, strong growth in the underlying business helped offset softer spending from the large DSP… our Q4 adjusted EBITDA came in ahead of expectations at $37.6 million or 44% margin” .
  • CEO (on CTV marketplace and partnerships): “We continue to onboard new streamers and now work with 80% of the top 30 globally… our CTV marketplace integrates TCL viewership data and premium inventory with our privacy-safe targeting solution” .
  • CFO (on structural margin advantage): “A decade ago, we decided to own and operate our own equipment… cost of revenue line didn’t really increase… while impressions increased 20%” .

Q&A Highlights

  • DSP headwind specifics: Impact limited to display after a move to first-price-only auctions; holiday seasonality for that DSP was “about half” typical rates; relationship intact; expect apples-for-apples comparisons starting 2H25 .
  • CPM and volume trends: Company-wide CPMs positive in 2024; monetized impressions for CTV doubled; underlying business healthy despite DSP softness .
  • Data/curation opportunity: Shift to sell-side targeting as cookies wane; >90% impressions carry alternative IDs; Connect integrated with 190 data partners; incremental data fees plus SSP fees drive monetization .
  • Political & CTV mix: Political ~6% of FY24 revenue; ~one-third of CTV revenue in Q4 was political; even excluding political, CTV doubled YoY .
  • GenAI lever: Expect 5–15% annual productivity gains; GenAI used for internal efficiency and revenue-generating products (e.g., political creative classification) .

Estimates Context

  • Street consensus (S&P Global) for Q4 2024 was not retrievable at time of analysis due to SPGI API limit; therefore, comparisons to Wall Street revenue/EPS estimates are unavailable today. Company guidance for Q4 called for $86–$90M revenue and $34–$37M adjusted EBITDA; actuals were $85.5M revenue and $37.6M adjusted EBITDA, implying a revenue miss vs guidance and a modest adjusted EBITDA beat vs the range .

Key Takeaways for Investors

  • Mix shift is real: CTV scaled to 20% with omnichannel video at 43% of Q4 revenue; this should support structural margin resilience and higher average CPMs, even as desktop display faces DSP-specific pressure .
  • Near-term headwind, medium-term setup: Expect muted 1H25 reported growth due to DSP lapping; management targets underlying business growth of 15%+ and 2H25 total revenue growth in high single digits, setting up for estimate revisions later in the year .
  • Execution on buy-side solutions: Activate and SPO are scaling (6x customer growth; 53% of platform activity), increasingly directing unique budgets to PubMatic-integrated supply—supports share gains among premium publishers .
  • GenAI is becoming an edge: Demonstrated monetization unlocks (political), publisher tools (Assistant), and internal productivity (+15% in 2024) should provide operating leverage and incremental revenue opportunities .
  • Capital allocation remains supportive: No debt; $140.6M cash/marketable securities; ongoing buybacks ($134.6M cumulative through FY24) reduce diluted share count, bolstering per-share metrics over time .
  • Watch catalysts: Further CTV/live sports partnerships (e.g., TCL) and curated marketplaces, commerce media integrations (Western Union) that can add unique demand and data-driven performance across the open internet .
  • Trading lens: Q1 guide embeds DSP drag; any signs of faster normalization, continued CTV momentum, and adjusted EBITDA margins tracking high-20% for FY25 could be positive stock catalysts; conversely, extended DSP weakness or softer video CPMs are risks .