PubMatic (PUBM) AI Stock Analysis

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PubMatic

(NASDAQ:PUBM)

74Outperform

PubMatic demonstrates strong financial performance with consistent revenue growth and robust cash flow, which supports strategic initiatives. Technical indicators show positive momentum but suggest caution due to potential overbought conditions. While the P/E ratio indicates a potentially high valuation, the earnings call reinforces confidence with strong growth in CTV and emerging revenue streams.

Positive Factors

Connected TV (CTV) Growth

CTV represented 20% of revenue in Q4 and it more than doubled year over year.

Emerging Revenue Streams

Emerging revenue streams doubled in 2024, reaching 6% of revenue.

Omnichannel Video Revenue

The company's omnichannel video revenue grew 37% year over year.

Negative Factors

Political Ad Spending Absence

The company faces tough comps from the absence of political ad spending in the second half of the year.

Revenue Comparison Challenges

Pubmatic will be facing a headwind in the first half of the year while it anniversaries the prior year revenue comps from its large DSP.

PubMatic (PUBM) vs. S&P 500 (SPY)

Market Cap

$474.01M

Dividend YieldN/A

Average Volume (3M)568.28K

Price to Earnings (P/E)42.3

Beta (1Y)1.58

Revenue Growth9.08%

EPS Growth43.58%

CountryUS

Employees1,049

SectorTechnology

Sector Strength66

IndustrySoftware - Application

Share Statistics

EPS (TTM)-0.20

Shares Outstanding40,066,925

10 Day Avg. Volume480,001

30 Day Avg. Volume568,281

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.43

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit4.04

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.67

Price Target Upside42.45% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

PubMatic Business Overview & Revenue Model

Company DescriptionPubMatic, Inc. provides a cloud infrastructure platform that enables real-time programmatic advertising transactions for Internet content creators and advertisers worldwide. The company's solutions include Openwrap, a header bidding solution that provides enterprise-grade management and analytics tools; Openwrap OTT, a header bidding management solution for OTT; Openwrap SDK, a header bidding solution for in-app developers; private marketplace solutions; and media buyer consoles. In addition, it offers Real-Time Bidding (RTB) programmatic technologies, which provides various selling options across screens and ad formats; digital advertising inventory quality solutions to detect and filter out invalid traffic and other nefarious activity; Ad quality solutions targeting the reduction of security issues, quality issues, and performance issues; Identity Hub, an identity solution that allows for the use of any advertiser preferred user identifier in a scaled and privacy-compliant fashion; Audience Encore, an audience data platform; and cross-platform video, a sell side platform, which connects trusted video buyers to premium publishers. The company's platform supports an array of ad formats and digital device types, including mobile app, mobile web, desktop, display, video, over-the-top (OTT), connected television, and media. PubMatic, Inc. was incorporated in 2006 and is based in Redwood City, California.

How the Company Makes MoneyPubMatic generates revenue primarily through fees charged to publishers for using its sell-side platform to manage and monetize their advertising inventory. The company earns a percentage of the ad spend that flows through its platform, known as the take rate. Additionally, PubMatic benefits from its extensive partnerships with major publishers and advertisers, which enhance its platform's reach and effectiveness. The company's revenue is also influenced by the growth of digital advertising and the increasing demand for programmatic ad solutions.

PubMatic Key Performance Indicators (KPIs)

Any

Ad Impressions Processed

Ad Impressions Processed
Reflects the volume of ads PubMatic processes, showcasing the platform's capacity to handle demand and its effectiveness in monetizing digital advertising inventory.

Chart InsightsPubMatic's ad impressions processed have shown robust growth, reaching new highs in 2024. This aligns with strategic expansions in CTV and mobile apps, which have significantly boosted platform activity. The earnings call highlights a 9% revenue growth and a doubling of CTV's revenue share, underscoring the company's successful adaptation to market shifts. However, challenges with a DSP partner's bidding changes and a decline in display advertising revenue present potential risks. Looking ahead, PubMatic's focus on generative AI and high-engagement channels is expected to sustain growth momentum.

Data provided by:

Main Street Data

PubMatic Financial Statement Overview

Summary

PubMatic demonstrates steady growth and profitability with strong revenue growth, efficient cost management, and a solid balance sheet with low leverage. Despite a decline in free cash flow growth due to higher capital expenditures, cash flow metrics indicate robust cash generation. Overall, PubMatic is financially stable with opportunities for improvement in operational efficiencies.

Income Statement

Positive

PubMatic shows strong revenue growth with a growth rate of 8.73% from the previous year. Gross profit margin is robust at 65.44% TTM, highlighting efficient cost management. The net profit margin improved to 5.96% TTM, a positive indicator of profitability. EBIT and EBITDA margins are moderate at 3.29% and 14.85% TTM, respectively, indicating potential to enhance operational efficiency.

Balance Sheet

Positive

The company's balance sheet is stable, with a low debt-to-equity ratio of 0.13 TTM, indicating low financial leverage. ROE stands at 6.58% TTM, suggesting moderate returns on shareholder equity. The equity ratio is healthy at 38.20% TTM, showing a strong equity base against total assets.

Cash Flow

Very Positive

Free cash flow growth is notable at -13.75% TTM, a decrease due to higher capital expenditures. The operating cash flow to net income ratio is high at 4.86 TTM, indicating robust cash generation relative to net income. The free cash flow to net income ratio is also strong at 2.63 TTM, underscoring solid cash flow management.

Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
267.01M	256.38M	226.91M	148.75M	113.87M
	Gross Profit
167.78M	174.87M	168.59M	107.56M	77.77M
	EBIT
2.04M	40.52M	58.79M	31.75M	8.51M
	EBITDA
46.81M	40.52M	58.79M	47.50M	21.82M
	Net Income Common Stockholders
8.88M	28.70M	56.60M	26.61M	6.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
175.34M	174.40M	159.63M	100.98M	55.45M
	Total Assets
695.24M	642.17M	550.22M	371.25M	207.44M
	Total Debt
21.84M	26.59M	21.71M	1.56M	0.00
	Net Debt
-56.67M	-65.79M	-60.80M	-79.63M	-34.25M
	Total Liabilities
399.04M	329.99M	293.04M	195.82M	175.13M
	Stockholders Equity
296.20M	312.19M	257.18M	175.43M	32.32M
Cash Flow		Free Cash Flow
52.83M	38.32M	49.32M	-7.07M	20.13M
	Operating Cash Flow
81.12M	87.21M	88.68M	24.33M	35.13M
	Investing Cash Flow
-39.02M	-81.37M	-96.72M	-29.88M	-22.09M
	Financing Cash Flow
-55.98M	4.04M	9.36M	52.48M	-1.00K

PubMatic Technical Analysis

Technical Analysis Sentiment

Positive

Last Price11.00

Price Trends

50DMA

9.54

Positive

100DMA

12.38

Negative

200DMA

14.11

Negative

Market Momentum

MACD

0.25

Negative

RSI

67.96

Neutral

STOCH

78.23

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PUBM, the sentiment is Positive. The current price of 11 is above the 20-day moving average (MA) of 9.60, above the 50-day MA of 9.54, and below the 200-day MA of 14.11, indicating a neutral trend. The MACD of 0.25 indicates Negative momentum. The RSI at 67.96 is Neutral, neither overbought nor oversold. The STOCH value of 78.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PUBM.

PubMatic Risk Analysis

PubMatic disclosed 46 risk factors in its most recent earnings report. PubMatic reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

PubMatic Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OLO	81 Outperform	$1.24B	―	0.49%	―	24.81%	98.55%
PUBM	74 Outperform	$474.01M	42.33	1.94%	―	9.08%	43.58%
SEMR	72 Outperform	$1.54B	187.88	2.81%	―	22.75%	-47.45%
CXM	72 Outperform	$1.97B	16.81	18.83%	―	8.74%	150.66%
DSP	66 Neutral	$937.70M	438.53	4.15%	―	30.64%	―
ALKT	63 Neutral	$2.83B	―	-11.33%	―	26.55%	38.37%
Sector *	60 Neutral	$10.83B	10.47	-6.71%	2.99%	7.73%	-12.97%

* Technology Sector Average

Performance Comparison

PUBM

PubMatic

11.09

-11.40

-50.69%

DSP

Viant Technology

14.39

5.69

65.40%

OLO

Olo

8.65

4.03

87.23%

SEMR

SEMrush Holdings

10.38

-4.88

-31.98%

ALKT

Alkami Technology

29.41

3.33

12.77%

CXM

Sprinklr

8.05

-4.12

-33.85%

PubMatic Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 0.00%|

Next Earnings Date:Aug 12, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant growth in key segments such as CTV and emerging revenue streams, supported by strategic investments in AI and partnerships. While certain areas like display revenue and specific ad verticals faced challenges, the overall performance was strong, with positive cash flow and an expanded share repurchase program.

Q1-2025 Updates

Positive Updates

Exceeding Revenue Guidance

PubMatic exceeded Q1 2025 revenue guidance, driven by a 21% year-over-year revenue growth excluding certain factors. CTV revenue grew over 50% year-over-year, and SPO represented over 55% of total activity.

Strong Performance in CTV and Emerging Revenue Streams

CTV revenues increased over 50% year-over-year and emerging revenue streams more than doubled. Connect, the curation and data business, grew over 100% year-over-year.

Strategic Initiatives and AI Integration

Launched the industry's first GenAI-powered end-to-end platform. Expanded partnerships with Spectrum Reach and TCL, and achieved significant growth in mid-market DSP activity.

Strong Cash Flow and Share Repurchase Program

Generated $15.6 million in net cash from operations and $7.3 million in free cash flow in Q1. Expanded share repurchase program by $100 million.

Negative Updates

Decline in Display Revenue

Display revenue declined 10% year-over-year, primarily impacted by a large DSP buyer.

Softness in Certain Ad Verticals

Softer trends were observed in technology and computing and automotive verticals, which declined by over 10%.

Company Guidance

During PubMatic's earnings call for Q1 2025, management discussed their financial performance and strategic outlook. The company exceeded guidance on both the top and bottom line, with revenue growth accelerating to 21% year-over-year, excluding the impact of a large DSP buyer and political advertising. Key growth drivers included Connected TV (CTV), which grew over 50% year-over-year, and supply path optimization (SPO), which accounted for over 55% of total activity. The company highlighted strong performance in omni-channel video, which represented 40% of total revenues in Q1. Emerging revenue streams, particularly the Connect business, more than doubled year-over-year. The company's adjusted EBITDA for Q1 was $8.5 million or a 13% margin, marking their 36th straight quarter of profitability. Looking ahead, PubMatic expects Q2 revenue to be between $66 million and $70 million, with an adjusted EBITDA of $9 million to $12 million, and anticipates 15% plus growth in their underlying business for the second half of the year. Despite macroeconomic uncertainties, the company remains confident in its ability to navigate these challenges, emphasizing secular shifts in the market toward programmatic advertising and AI-driven solutions.

PubMatic Corporate Events

Stock BuybackBusiness Operations and StrategyFinancial Disclosures

PubMatic Increases Share Repurchase Program by $100M

Neutral

May 8, 2025

On May 7, 2025, PubMatic‘s Board of Directors authorized a $100 million increase to its share repurchase program, allowing for the repurchase of up to $130.8 million of Class A common stock through December 31, 2026. This decision reflects the company’s strategic focus on enhancing shareholder value amidst favorable market conditions. PubMatic reported its first-quarter 2025 financial results, highlighting a revenue of $63.8 million and a net loss of $9.5 million. Despite a decrease in revenue compared to the previous year, the company showed growth in key areas such as CTV and omnichannel video, with CTV revenue growing over 50% year-over-year. The company continues to invest in product innovation and market expansion, positioning itself at the forefront of the shift towards programmatic and AI-driven advertising solutions.

Spark’s Take on PUBM Stock

According to Spark, TipRanks’ AI Analyst, PUBM is a Neutral.

PubMatic’s overall stock score reflects its strong financial performance and positive earnings call sentiment, indicating growth potential, especially in the CTV and mobile app sectors. However, technical indicators suggest a bearish trend, and the stock’s high valuation poses risks if growth doesn’t meet expectations. Operational inefficiencies and challenges in display advertising are areas to watch.

To see Spark’s full report on PUBM stock, click here.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.