Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from omnichannel video, including CTV, mobile, and desktop devices, grew 19% over Q2 last year.
- Mobile app revenue grew over 20% for the third straight quarter, nearly double the expected market growth rate.
- PubMatic expanded its customer base with new marquee clients like Roku and Disney+ Hotstar.
- Emerging revenue streams, such as Activate and data partnerships, almost doubled year over year.
- The company maintained a strong balance sheet with $166 million in cash and marketable securities and zero debt.
Negative Points
- Revenue growth was lower than expected at 6% due to changes made by a large DSP buyer.
- Late-quarter weakness in several ad verticals contributed to a $1 million shortfall.
- The DSP bidding change resulted in a $2 million impact in Q2, with an additional $3 million expected in the second half of the year.
- Softness was observed in key verticals such as technology, automotive, travel, and arts and entertainment.
- The company adjusted its full-year revenue outlook downward by $5 million due to DSP changes and macroeconomic softness.
Q & A Highlights
Q: Can you provide more clarity on the DSP headwind and its impact on Q2 and Q3?
A: Rajeev Goel, CEO, explained that the DSP headwind was due to a change in bidding approach to first-price auctions, which was slightly worse than expected in Q2. CFO Steven Pantelick added that the impact was $2 million in Q2 and is expected to be more weighted towards Q3, with improvements anticipated as optimizations are implemented.
Q: Why did you call out softness in certain verticals when others like Trade Desk did not?
A: Steven Pantelick, CFO, stated that PubMatic is a broad-scale SSP with visibility across many verticals. They observed softness in technology, automotive, travel, and arts and entertainment, but also saw strong growth in shopping, business, and health sectors. The guidance reflects a prudent approach to these trends.
Q: Can you discuss the traction of emerging products and their impact on SPO relationships?
A: Rajeev Goel, CEO, highlighted that emerging products like OpenWrap and Activate are gaining traction through cross-sell and upsell strategies. These products are contributing to revenue growth and enhancing SPO relationships by offering innovative solutions to existing customers.
Q: How are you factoring political revenue into your guidance?
A: Steven Pantelick, CFO, noted that political revenue is expected to contribute primarily in Q4, based on historical patterns from the last presidential cycle. The growth in CTV business positions PubMatic well to capture political ad spend, which is expected to index more towards CTV.
Q: What trends are you seeing in pricing versus volume growth for the rest of the year?
A: Steven Pantelick, CFO, mentioned that growth is primarily volume-driven, with double-digit increases in monetized impressions for omnichannel video. While there is some CPM pressure in desktop display, overall company CPMs are stable, supported by a shift towards higher-value formats like video.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
