PubMatic beats Q3 2025 expectations with CTV growth, AI strategy

PubMatic delivered third quarter 2025 financial results on November 10, 2025, that surpassed expectations across revenue and profitability metrics. The independent technology company reported $68 million in revenue, exceeding the $63.97 million consensus forecast, while adjusted EBITDA reached $11.2 million with a 16% margin.

The programmatic advertising platform processed approximately 87 trillion impressions during the quarter, according to prepared remarks from the earnings call. Connected television revenue grew over 50% year-over-year when excluding political advertising, significantly outpacing market rates. Emerging revenue streams, including curation, commerce media, and non-SSP revenues, increased 80% year-over-year and contributed 10% of total revenue.

Revenue in Q3 2025 declined 5% year-over-year compared to $71.8 million in the same period of 2024. Q3 2024 included $5 million in revenue from political advertising. Excluding political spend, Q3 2025 revenue remained flat year-over-year, according to the company's SEC filing.

Net loss for the quarter reached $6.5 million with a margin of negative 9%, or negative $0.14 per diluted share. Non-GAAP net income totaled $1.6 million, or $0.03 per diluted share. Net cash from operating activities reached $32.4 million, an increase from $19.1 million in the same period of 2024.

AI infrastructure collaboration drives technical advantages

PubMatic deployed next-generation AI models through a multi-year technical collaboration with NVIDIA, according to CEO Rajeev Goel. The partnership delivers bid response speeds 5 times faster than previous systems, with auction timeouts reduced by 85%. Servers now process 3 times more ad requests, while physical infrastructure consolidated from five data center racks to one.

"Through our technical collaboration with NVIDIA, we are deploying next-generation AI models on the world's most advanced GPU architecture," Goel stated during the earnings call. The collaboration required physical infrastructure capable of deploying GPUs at scale, massive transaction volume for testing across the open internet, and technical sophistication for early adoption.

The infrastructure improvements recover millions in ad spend previously lost to latency, according to company statements. Faster bid responses unlock optimization strategies previously impossible at standard programmatic rates. Three times more ad requests processed per server expand impression capacity without proportional cost increases.

PubMatic's AI-powered live sports marketplace launched in July 2025, demonstrating practical applications of the infrastructure investments. Ad-buying activity from the Live Sports Marketplace grew sequentially more than 150% in Q3 2025 over Q2 2025.

Connected television momentum continues with premium content expansion

CTV revenue growth exceeded 50% year-over-year excluding political advertising, according to financial results. Including political advertising, CTV revenue grew over 10% year-over-year. The company now monetizes CTV inventory from over 90% of the top 30 global streamers.

PubMatic added and expanded partnerships with free ad-supported streaming services during the quarter, including Tubi, Future Today, and LocalNow. These additions complement existing relationships with premium streamers. Omnichannel video revenue, which includes CTV, grew 21% year-over-year excluding political advertising and represented approximately 38% of total revenue.

Fremantle, one of the world's largest entertainment content creators, generated a 78% increase in incremental programmatic demand across their expanding FAST channel portfolio by partnering with PubMatic, according to the earnings call. The company launched Pause Ads for CTV in collaboration with dentsu, allowing advertisers to serve dynamic, contextually relevant ads when viewers pause content.

PubMatic and MNTN expanded premium CTV access in October 2025, delivering a 10% revenue uplift for publishers through 14% more unique advertiser demand. The partnership connects performance-focused marketers with premium streaming inventory.

AI-powered platforms reduce campaign setup time, accelerate issue resolution

PubMatic launched AI-powered buyer and publisher platforms that cut campaign setup time by 87% and speed up issue resolution by 70%, according to company statements. The publisher suite includes 17 operational AI agents guiding yield, diagnostics, and creative setup.

The newly launched AI yield optimization solution for publishers uses adaptive learning models to automate pricing and improve auction efficiency, driving an average of 10% revenue growth for publishers. The solution unlocked tens of millions of dollars in incremental revenue for publishers within a few months of launch, generating a new PubMatic revenue stream.

Independent agency Butler/Till implemented PubMatic for Buyers platform. Scott Ensign, Chief Strategy Officer at Butler/Till, stated during the earnings call: "Historically, systems don't talk to each other—data sets are disparate, walled garden data is hard to connect. AI allows us to scale human reasoning and run campaigns that truly look across all channels and optimize across them."

Overwolf, one of PubMatic's largest omnichannel partners, noted that the PubMatic Assistant AI chatbot demonstrates unique accuracy and speed of execution, according to the earnings call. The company deployed a dozen AI agents internally during Q3 2025 to automate operational workflows, accelerate development, and reduce overhead.

Supply path optimization drives buyer consolidation

Supply Path Optimization represented over 55% of total activity on PubMatic's platform in Q3 2025, up from 50% a year ago. The increase reflects growth from Activate, CTV Marketplaces, and robust sell-side targeting capabilities, according to prepared remarks.

Customer adoption on Activate increased 35% over the trailing nine months, while the number of active campaigns grew 4 times over the trailing nine months in 2024. The direct-to-supply buying platform enables transparency, efficiency, and loyalty as buyers increase spend after seeing measurable ROI.

Ad spend from performance marketers and mid-tier focused DSPs grew 25%+ year-over-year in Q3 2025. PubMatic has been expanding its mid-market DSP relationships throughout 2025, onboarding over 25 new DSP partners during the year.

The company partnered with Blis, an omnichannel DSP that brings high-value demand from leading global brands across automotive, retail, and financial services. Blis combines T-Mobile's app engagement data with real-world movement patterns and transaction signals to drive performance-focused campaigns with measurable outcomes.

Operational efficiency improvements drive margin leverage

PubMatic processed nearly 87 trillion impressions in Q3 2025, an increase of 24% over Q3 2024 and 12% over Q2 2025. Nearly 60% of total impressions came from CTV and mobile app inventory. Cost of revenue per million impressions processed decreased 19% on a trailing twelve-month period compared to the prior period.

Infrastructure optimization initiatives combined with limited capital expenditures enabled the increased impression processing. Total operating expenses remained roughly flat at $51 million per quarter throughout 2025, while the company realigned investments to areas that deliver the strongest ROI. The buyer-focused sales team increased 19% in Q3 2025 compared to the prior year, while overall total headcount remained flat.

"We exceeded expectations on both revenue and adjusted EBITDA," stated CFO Steve Pantelick during the earnings call. "This outperformance was driven by CTV, online video and mobile app. We also managed expenses, leveraged AI and delivered healthy margins and strong free cash flow."

Adjusted EBITDA of $11.2 million marked the 38th consecutive quarter of adjusted EBITDA profitability. The 16% margin included approximately $1 million in foreign exchange costs due to the weakening U.S. dollar during the quarter.

Emerging revenue streams scale rapidly

Emerging revenues grew 80% year-over-year and included curation, commerce media, and other non-SSP revenues. The new AI-based yield optimization solution for publishers unlocked tens of millions of dollars in incremental revenue for publishers while generating new PubMatic revenue, according to the earnings call.

PubMatic expanded partnerships with leading data providers around the world. Nielsen named PubMatic as their exclusive sell-side partner to bring more than 10,000 audience segments to Australian advertisers and agencies. The curation and data business, Connect, grew over 40% year-over-year, according to prepared remarks.

PubMatic and DIGITS partnered in November 2024 to transform local grocery retail media advertising, leveraging the Convert platform for programmatic monetization. The commerce media segment continues gaining momentum as retailers and transaction-based enterprises seek to activate and monetize first-party audience intelligence.

Revenue from Activate grew over 100% year-over-year. The expanded partnership with a top three DSP introduced Programmatic Guaranteed deals that streamline execution for advertisers across premium streaming content, reducing friction in deal setup and accelerating time-to-market for campaigns.

Transaction layer innovation enables agent-to-agent communication

PubMatic served as a co-founder of the Ad Context Protocol (AdCP) alongside partners including Yahoo, LG Ad Solutions, and Raptive. The Ad Context Protocol launched on October 15, 2025, as an open-source advertising automation protocol providing a unified interface for AI agents.

The company became the first to publish a Model Context Protocol specification for agent-to-agent communication in the programmatic industry. The protocol establishes protocols, safety mechanisms, and interoperability standards that enable AI agents across the entire ecosystem to transact efficiently and securely, according to the earnings call.

"We're establishing the protocols, safety mechanisms, and the interoperability standards that will enable AI agents across the entire ecosystem to transact efficiently and securely," Goel stated during prepared remarks. The AdCP initiative positions PubMatic for the next major step in advertising automation, where advertisers' and publishers' AI agents can transact directly through infrastructure.

The company's AI strategy centers around three distinct layers of programmatic advertising: infrastructure, application, and transaction. PubMatic owns and operates its full technology stack, providing efficiencies, control, and independence that many peers lack, evidenced by multiple recent public cloud outages.

Financial position strengthens with cash generation

The company ended Q3 2025 with $136.5 million in cash and cash equivalents with zero debt. Since the beginning of 2021 through Q3 2025, PubMatic generated over $390 million in net cash from operations and more than $215 million in free cash flow.

Free cash flow for Q3 2025 reached $22.8 million, according to supplemental cash flow information. The DSP that made changes in mid-2024 returned to growth in Q3, which favorably improved days sales outstanding. Reduced cash taxes paid resulted from the new federal tax bill that went into effect earlier in 2025.

Through September 30, 2025, PubMatic used $180.6 million to repurchase 12.4 million shares of Class A common stock, representing 24% of fully diluted shares as of the program's inception. The company has $94.4 million remaining in the repurchase program authorized through December 31, 2026.

PubMatic has maintained profitability through challenging market conditions in 2025. The company reported its 36th consecutive quarter of adjusted EBITDA profitability in Q1 2025, continuing the streak through Q3.

Fourth quarter guidance reflects cautious macroeconomic outlook

PubMatic projected Q4 2025 revenue in the range of $73 million to $77 million, inclusive of an impact from one of the company's top DSP buyers. The guidance assumes flat revenue from the large DSP that declined in July relative to Q3 levels.

Adjusted EBITDA for Q4 2025 is expected in the range of $19 million to $21 million, representing approximately a 27% margin at the midpoint. The adjusted EBITDA expectation assumes negative foreign currency exchange impact predominantly from Euro and Pound Sterling.

Full-year 2025 revenue guidance ranged from $276 million to $280 million, with adjusted EBITDA between $53 million and $55 million. The full-year guidance includes more than $5 million of estimated negative foreign currency impact. Full-year capital expenditure outlook remained at approximately $15 million.

"In terms of the latest trends, in October, the typical holiday seasonal uptick thus far has been relatively muted for some consumer discretionary ad verticals such as Food & Drink and Arts & Entertainment," Pantelick stated during the earnings call. The company took a prudent approach to guidance based on recent trends.

Net dollar-based retention reached 98% for the trailing twelve months ended September 30, 2025, compared to 112% in the comparable trailing twelve-month period a year ago. The metric includes the impacted DSP and political advertising.

Market positioning for industry transformation

The ongoing Google AdTech antitrust trial presents potential opportunities for market share shifts. "With respect to potential remedies in the Google AdTech antitrust trial, we continue to believe that any remedies that level the competitive playing field, whether structural, behavioral, or both, will benefit the open internet and PubMatic," Pantelick stated during prepared remarks.

The company anticipates margin expansion at both gross and adjusted EBITDA levels in 2026 and beyond as revenue growth reaccelerates. The decade-plus experience owning and operating global private cloud infrastructure provides several advantages, including the ability to expand capacity while progressively reducing the rate of capital expenditures.

Total headcount is expected to remain relatively flat in 2026, while investments supporting the fastest-growing areas of the business will increase through internal reallocations. The company aims to increase cash flow in 2026 supported by further working capital improvements and incremental AI-driven efficiencies.

"As the industry rapidly redefines itself, we are actively shaping its future and fueling advertising performance, transparency and automation," Goel stated in the press release announcing the results.

Timeline

• May 11, 2025 – PubMatic reports Q1 2025 results with 50%+ CTV growth despite 4% revenue decline
• July 17, 2025 – PubMatic launches AI-powered Live Sports Marketplace with real-time game moment targeting
• August 11, 2025 – PubMatic announces Q2 2025 results with $71.1 million revenue and 20% adjusted EBITDA margin
• October 13, 2025 – PubMatic and MNTN expand premium CTV access, delivering 10% publisher revenue lift
• October 15, 2025 – Ad Context Protocol launches with PubMatic as founding member
• November 10, 2025 – PubMatic reports Q3 2025 results with $68 million revenue, 50%+ CTV growth, and 80%+ emerging revenue growth

Summary

Who: PubMatic Inc., an independent technology company delivering programmatic advertising infrastructure, announced third quarter 2025 financial results. CEO Rajeev Goel and CFO Steve Pantelick presented the results.

What: The company reported $68 million in revenue, exceeding consensus forecasts, with adjusted EBITDA of $11.2 million at a 16% margin. Connected television revenue grew over 50% year-over-year excluding political advertising, while emerging revenue streams increased 80% year-over-year. The company processed 87 trillion impressions, processed 24% more than the prior year, with cost per million impressions declining 19% on a trailing twelve-month basis.

When: Financial results for the third quarter ending September 30, 2025, were announced on November 10, 2025. Fourth quarter 2025 guidance projected revenue between $73 million and $77 million with adjusted EBITDA of $19 million to $21 million.

Where: PubMatic operates globally with owned-and-operated infrastructure processing programmatic advertising transactions. The company works with over 90% of the top 30 global streamers and approximately 1,950 publishers and app developers worldwide. Regional performance showed APAC revenues growing 12% year-over-year and EMEA revenues growing 7% year-over-year.

Why: The results demonstrate momentum in secular growth areas including connected television, mobile app, and emerging revenue streams. Infrastructure investments with NVIDIA delivered 5 times faster bid response speeds and 85% fewer auction timeouts. AI-powered platforms reduced campaign setup time by 87% and issue resolution by 70%. The company's three-layer AI strategy across infrastructure, application, and transaction layers positions it for market transformation as the advertising ecosystem shifts toward data targeting, performance measurement, and agent-to-agent automation.