PubMatic reports Q2 2024 results: revenue growth amid industry changes

PubMatic last week announced its financial results for the second quarter of 2024. The company reported revenue of $67.3 million, representing a 6% increase compared to the same period in 2023. This growth occurred despite challenges in the digital advertising landscape, including changes in bidding practices by a major demand-side platform (DSP) partner.

According to PubMatic's CEO Rajeev Goel, the company saw significant growth in key areas such as omnichannel video and mobile app advertising. Omnichannel video revenue, which includes connected TV (CTV), mobile, and desktop devices, grew by 19% year-over-year. Mobile app revenue increased by over 20% for the third consecutive quarter, outpacing the overall market growth rate of 13% expected for 2024.

The company's Chief Financial Officer, Steve Pantelick, explained that the revenue growth was partially offset by changes made by a large DSP buyer in late May. This impact, estimated at approximately $2 million, primarily affected desktop display advertising. Additionally, PubMatic experienced weakness in several advertising verticals towards the end of the quarter, representing an additional $1 million shortfall.

PubMatic's gross profit for Q2 2024 was $42.1 million, a 10% increase compared to the previous year. The company reported a GAAP net income of $2.0 million, or $0.04 per diluted share. Adjusted EBITDA, a non-GAAP measure, reached $21.1 million, representing a 31% margin.

One of the key highlights of PubMatic's Q2 performance was the growth in supply path optimization (SPO) activity. SPO, which aims to create more efficient and transparent programmatic advertising supply chains, represented over 50% of total activity on PubMatic's platform. This increase indicates a growing trend of ad buyers consolidating their spending through preferred technology partners.

The company also reported progress in emerging revenue streams, including new products like Activate and growing data partnerships. These streams nearly doubled year-over-year and contributed 2 percentage points to overall growth. PubMatic's investments in areas such as CTV, commerce media, and mobile app advertising appear to be paying off, with the company securing partnerships with major players like Roku, Disney+ Hotstar, and Roblox.

However, PubMatic faced challenges in certain advertising verticals. The company observed softness in technology and computing, automotive, travel, and arts and entertainment sectors. On the other hand, verticals such as shopping, business, food and drink, personal finance, and health and fitness showed strong growth, with increases above 20% year-over-year.

Looking ahead, PubMatic provided guidance for the third quarter and full year of 2024. For Q3, the company expects revenue between $65 million and $67 million, representing approximately 4% year-over-year growth at the midpoint. For the full year 2024, PubMatic projects revenue to be between $288 million and $292 million, or 9% year-over-year growth at the midpoint.

The company's financial outlook takes into account the ongoing impact of the DSP bidding change and recent macroeconomic trends. PubMatic reduced its full-year revenue outlook by $5 million due to the DSP change, including the $2 million impact in Q2 and an estimated $3 million impact in the second half of the year. Additionally, the company factored in a $5 million impact related to macro softness observed in several advertising verticals.

Despite these challenges, PubMatic remains optimistic about its growth prospects in key areas such as CTV, mobile app advertising, and commerce media. The company anticipates benefits from political advertising spending in the fourth quarter, particularly in the CTV segment where PubMatic has built a strong presence since the last presidential election cycle.

PubMatic's performance and outlook reflect broader trends in the digital advertising industry. The shift towards programmatic advertising, especially in emerging formats like CTV and mobile apps, continues to drive growth. However, the industry is also grappling with changes in privacy regulations, evolving technology standards, and macroeconomic uncertainties that can impact advertising budgets.

The company's focus on supply-side technology and its investments in areas like SPO and commerce media position it to capitalize on the increasing complexity of the digital advertising ecosystem. As more premium streaming inventory becomes available and advertisers seek efficient ways to reach audiences across multiple channels, companies like PubMatic that can provide transparency and control to both publishers and advertisers may be well-positioned for future growth.

In conclusion, PubMatic's Q2 2024 results highlight both the opportunities and challenges in the current digital advertising landscape. While the company faces headwinds from industry changes and economic uncertainties, its growth in key strategic areas and expanding partnerships with major media companies suggest potential for continued expansion in the rapidly evolving programmatic advertising market.

Key facts

PubMatic reported Q2 2024 revenue of $67.3 million, up 6% year-over-year.

Omnichannel video revenue grew 19% year-over-year.

Mobile app revenue increased over 20% for the third consecutive quarter.

Supply path optimization activity represented over 50% of total platform activity.

GAAP net income was $2.0 million, or $0.04 per diluted share.

Adjusted EBITDA was $21.1 million, with a 31% margin.

Full-year 2024 revenue guidance is between $288 million and $292 million.

The company faced a $2 million impact from DSP bidding changes in Q2.

PubMatic expects political advertising to benefit Q4 results, especially in CTV.