PubMatic posts 20% revenue growth in Q1

PubMatic, Inc., an independent technology company delivering digital advertising’s supply chain of the future, has reported record financial results for the first quarter ending March 31, 2024.

“We delivered another quarter of outstanding results, with accelerated revenue growth of 20%, highlighting our strong customer relationships, our breadth of solutions and growth across all formats and channels,” said Rajeev Goel, co-founder and CEO at PubMatic.

“The digital supply chain of the future we are building brings new opportunities that are best addressed on the sell-side of the ecosystem, which sits closest to the consumer. These opportunities, including the need for increased innovation and efficiency, changing privacy regulations, and an onslaught of new ad inventory from CTV and commerce media, require deep and specialized technology. Customers and partners like Instacart, Klarna, Roblox and GroupM are choosing to build their ad businesses on PubMatic technology. We have spent 17 years building differentiated solutions and we believe our competitive moat is widening while our logo list continues to grow.”

First Quarter 2024 Financial Highlights

Revenue in the first quarter of 2024 was $66.7 million, up 20% compared to the same period of 2023; Net dollar-based retention1 was 106% for the trailing twelve-months ended March 31, 2024, compared to 105% in the comparable trailing twelve-month period a year ago;

GAAP net loss was $(2.5) million with a margin of (4)%, or $(0.05) per diluted share in the first quarter, compared to GAAP net loss of $(5.9) million with a margin of (11)%, or $(0.11) per diluted share in the same period of 2023;

Adjusted EBITDA was $15.1 million, or 23% margin, an increase over $7.4 million, or a 13% margin, in the same period of 2023;
Non-GAAP net income was $4.8 million, or $0.09 per diluted share in the first quarter, compared to Non-GAAP net loss of $(0.1) million, or $0.00 per diluted share in the same period of 2023;

Net cash provided by operating activities was $24.3 million, a 90% increase over $12.8 million in the same period of 2023;

Total cash, cash equivalents, and marketable securities of $174.1 million as of March 31, 2024 with no debt;

From January 1, 2024 through April 30, 2024, used $20.1 million in cash to repurchase 1.1 million shares of Class A common stock. In 2023, 4.0 million shares were repurchased for a total of $59.3 million. We have $95.6 million remaining in the repurchase program through December 31, 2025.

The section titled “Non-GAAP Financial Measures” below describes our usage of non-GAAP financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data.

Business Highlights

Revenue growth across all formats and channels

Diversified across more than 20 advertiser verticals. The top 10 ad verticals, in aggregate, grew 20% year-over-year.
Monetized impressions in Q1 2024 increased 17% over Q1 2023
Revenue from high value formats and channels, mobile display and omnichannel video2 grew 26% over Q1 2023 and represented 77% of total revenue in the quarter, up 6 percentage points over Q1 2023.
Revenue from omnichannel video, which includes CTV, grew over 33% year-over-year in Q1 2024.

Scaled access to premium inventory, audiences and data attracts increased buyer demand

Supply Path Optimization represented 50% of total activity on our platform in Q1 2024, up from over 35% a year ago, driven by Activate and multi-year, strategic partnerships with top ad agencies and advertisers.
PubMatic’s strength in SPO, private marketplace and programmatic guaranteed fueled new partnerships with marquee CTV streamers including DISH Media, Vevo and Virgin Media UK.
Expanded into a new category of content creators and partnered with immersive platform Roblox to enable programmatic media buying of Roblox’s video advertising inventory. The partnership will allow more brands to seamlessly reach Roblox’s global community while enabling Roblox to gain scaled access to premium brand advertising demand.
Recently announced a first-of-its-kind solution with GroupM in which together we are delivering AI generated cohort-based audience segments customized for each advertiser client. Through use of first party data and alternative data signals, buyers across the open internet are moving toward higher value impressions and away from third-party cookies.
Increased buyer demand, adding Wpromote, a top independent advertising agency, as a preferred SPO partner to drive efficiency and maximize performance across the open internet.
Partnered with Instacart to power and enhance offsite media buys across channels, including CTV and premium video. Through Convert, our commerce media platform, Instacart enables ad buyers to leverage their first-party retail media data to reach audiences offsite and drives sales.
Recently partnered with Klarna, the global payments company, to bring PubMatic’s breadth of exclusive ad demand directly to their native mobile app inventory.

2024 operating priorities include investments for growth and continued efficiency gains

Aligned with our growth investments, increased global headcount by 11% in Q1 2024 on a year-over-year basis, adding new team members across product management, engineering and go-to-market teams in order to accelerate long-term revenue growth. Infrastructure optimization initiatives combined with limited capex, drove nearly 57.9 trillion impressions processed in Q1 2024, an increase of 25% over Q1 2023. Cost of revenue per million impressions processed decreased 10% on a trailing twelve month period, as compared to the prior period.

“Continuing our momentum from Q4, in the first quarter, we accelerated revenue growth, while delivering strong margins and free cash flow. Excluding revenue from Yahoo’s owned and operated inventory, revenue grew an impressive 25% over last year. Monetized impressions continued to grow across all formats and channels as the need from publishers and ad buyers for our differentiated sell-side technology increases,” said Steve Pantelick, CFO at PubMatic. He said: “We are making steady progress on our 2024 key operating priorities which include increasing investment for revenue growth acceleration, delivering cost efficiencies, and generating strong free cash flow. As a result, we are raising our full year guidance. At the midpoints, we expect year-over-year revenue growth to be 12%, and adjusted EBITDA margin to be approximately 31%.”