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PubMatic’s 4Q Earnings Beat Estimates Post-IPO; Shares Spike 12% After-Hours

Shares of PubMatic jumped 12.1% in extended trading on Tuesday after the advertising software company’s 4Q earnings beat analysts’ estimates. The company reported 4Q diluted net income per share of $0.34, ahead of analysts’ estimate of $0.30. Revenue for the quarter came in at $56.2 million, up by 64% year-on-year, and beat consensus estimates of $47.54 million.

PubMatic’s (PUBM) co-founder and CEO Rajeev Goel said, “PubMatic brings the global infrastructure and scale that publishers need to power data-intensive, real time programmatic ad transactions in order to increase their revenues. We are executing well and growing organically in mobile, digital video, and over the top streaming and connected TV (OTT/CTV) [over-the-top and connected TV]. Our buyer supply path optimization relationships are expanding, and we are gaining market share in the large and growing global digital advertising market.”

These were the company’s fourth quarter earnings after its initial public offering (IPO) in December last year that resulted in net proceeds of $48.5 million. The strong growth in revenues was driven by strength across PUBM’s advertising verticals including eCommerce, technology and personal finance and robust omnichannel video growth including streaming platforms.

For the first quarter, PUBM expects revenue to be in the range of $38 million to $40 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be in the range of $8 million to $9 million. For FY21, the company has forecasted revenue to be in the range of $180 million to $185 million and adjusted EBITDA to land between $45 million to $49 million. (See PubMatic stock analysis on TipRanks)

Following the earnings release, Oppenheimer analyst Brian Schwartz raised the price target from $32 to $55 and reiterated a Buy rating on the stock. Schwartz said, “64% top-line growth shows how the pandemic has accelerated the spending shift to programmatic. Guidance implies some 2H:2021 business deceleration.”

“However, upside performance in 4Q:2020 and guidance lend support to our thesis that PUBM is well positioned and an attractive play on the cyclical rebound in the digital advertising market, and over time a good compounding growth story with high profit margins to support valuation and a bigger and more profitable business. While valuation may already imply a successful 2021 outcome for PUBM, guidance looks conservative,” Schwartz added.

The rest of the Street is bullish on the stock with a Strong Buy consensus rating. That’s based on 4 Buys and 1 Hold. The average analyst price target of $45.75 implies ~1% downside potential to current levels.

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