• Revenue Growth: 6% increase over Q2 last year.

• Omnichannel Video Revenue: Grew 19% year-over-year.

• Mobile App Revenue: Grew over 20% year-over-year for the third consecutive quarter.

• Gross Profit: $42.1 million, a 10% increase year-over-year.

• Adjusted EBITDA: $21 million, representing a 31% margin.

• Net Income: $2 million, or $0.04 per diluted share.

• Cash and Marketable Securities: $166 million with zero debt.

• Free Cash Flow: Approximately $7 million.

• Net Dollar-Based Retention: 108%, excluding Yahoo! it was 117%.

• Q3 Revenue Guidance: $65 million to $67 million, approximately 4% year-over-year growth at the midpoint.

• Full-Year Revenue Guidance: $288 million to $292 million, approximately 9% year-over-year growth at the midpoint.

• Full-Year Adjusted EBITDA Guidance: $87 million to $91 million, approximately 31% margin at the midpoint.

• Warning! GuruFocus has detected 8 Warning Signs with PUBM.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenue from omnichannel video, including CTV, mobile, and desktop devices, grew 19% over Q2 last year.

• Mobile app revenue grew over 20% for the third straight quarter, nearly double the expected market growth rate.

• PubMatic expanded its customer base with new marquee clients like Roku and Disney+ Hotstar.

• Emerging revenue streams, such as Activate and data partnerships, almost doubled year over year.

• The company maintained a strong balance sheet with $166 million in cash and marketable securities and zero debt.

Negative Points

• Revenue growth was lower than expected at 6% due to changes made by a large DSP buyer.

• Late-quarter weakness in several ad verticals contributed to a $1 million shortfall.

• The DSP bidding change resulted in a $2 million impact in Q2, with an additional $3 million expected in the second half of the year.

• Softness was observed in key verticals such as technology, automotive, travel, and arts and entertainment.

• The company adjusted its full-year revenue outlook downward by $5 million due to DSP changes and macroeconomic softness.

Q & A Highlights

Q: Can you provide more clarity on the DSP headwind and its impact on Q2 and Q3? A: Rajeev Goel, CEO, explained that the DSP headwind was due to a change in bidding approach to first-price auctions, which was slightly worse than expected in Q2. CFO Steven Pantelick added that the impact was $2 million in Q2 and is expected to be more weighted towards Q3, with improvements anticipated as optimizations are implemented.

Q: Why did you call out softness in certain verticals when others like Trade Desk did not? A: Steven Pantelick, CFO, stated that PubMatic is a broad-scale SSP with visibility across many verticals. They observed softness in technology, automotive, travel, and arts and entertainment, but also saw strong growth in shopping, business, and health sectors. The guidance reflects a prudent approach to these trends.