PubMatic’s third quarter results were met favorably by the market, as management attributed outperformance to rapid expansion in connected TV (CTV), the adoption of advanced artificial intelligence (AI) solutions, and the ongoing shift toward high-growth, diversified revenue streams. CEO Rajeev Goel highlighted that CTV revenue, excluding political advertising, grew over 50% year over year, driven by premium supply growth, new agency marketplaces, and increased participation from small and mid-market advertisers. The company’s efforts to leverage AI for yield optimization and operational efficiency were credited with supporting both top-line resilience and margin stabilization, despite broader declines in display advertising and pressure from a major demand-side platform (DSP).
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PubMatic (PUBM) Q3 CY2025 Highlights:
- Revenue: $67.96 million vs analyst estimates of $64.02 million (5.3% year-on-year decline, 6.1% beat)
- Adjusted EPS: $0.03 vs analyst estimates of -$0.01 (significant beat)
- Adjusted Operating Income: $1.09 million vs analyst estimates of -$13.56 million (1.6% margin, significant beat)
- Revenue Guidance for Q4 CY2025 is $75 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q4 CY2025 is $20 million at the midpoint, below analyst estimates of $20.14 million
- Operating Margin: -12.4%, down from -1.9% in the same quarter last year
- Market Capitalization: $437.7 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From PubMatic’s Q3 Earnings Call
- Andrew Boone (Raymond James) asked about PubMatic’s position amid Trade Desk’s OpenPath and reseller designations. CEO Rajeev Goel clarified that PubMatic is focused on direct publisher relationships and yield optimization, not reselling inventory, and highlighted collaboration on data APIs.
- Matthew John Swanson (RBC) inquired about CTV’s rapid growth, especially in live sports and mid-market DSP expansion. Goel attributed success to onboarding premium streamers, growing the advertiser base, and leveraging AI for campaign creation and optimization.
- Shweta R. Khajuria (Wolfe) pressed on the impact of Trade Desk’s Kokai platform and changing DSP dynamics. Goel stated that spend from the large DSP stabilized after machine learning and supply path optimizations, and emphasized the importance of diversifying DSP partners.
- Matthew Dorrian Condon (JMP) questioned the effect of AI-driven search on publisher traffic. Goel responded that the impact is limited, as 60% of processed impressions come from CTV and mobile, which are unaffected by search, and that AI search presents new monetization opportunities.
- Robert Coolbrith (Evercore) sought clarity on the infrastructure partnership with NVIDIA and the structural advantages versus demand-side counterparts. Goel explained that vertical integration enables faster bid processing, better targeting, and a competitive edge, especially for mid-market DSPs.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch for (1) adoption rates of AI-powered products and agentic AI solutions, (2) sustained CTV and live sports marketplace momentum, and (3) further diversification of DSP relationships and revenue streams. Execution on emerging revenue categories and the impact of industry regulatory developments, particularly around Google’s ad tech ecosystem, will also be closely followed as potential inflection points for PubMatic.
PubMatic currently trades at $9.50, up from $7.65 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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