Earnings call transcript: PubMatic Q2 2025 sees revenue growth, stock dips

PubMatic Inc. reported its second-quarter 2025 earnings, revealing a notable revenue increase but a decline in stock price following the announcement. The company surpassed revenue expectations with $71.1 million, compared to the forecasted $67.84 million, marking a 4.81% surprise. However, the earnings per share (EPS) fell short, posting $0.05 against an expected -$0.16, resulting in a -131.25% surprise. Despite the positive revenue growth, PubMatic’s stock fell 3.29% to close at $10.93, further declining slightly in after-hours trading. According to InvestingPro data, the stock has experienced significant volatility, with a beta of 1.54 and a substantial 36.55% decline over the past six months.

Key Takeaways

• PubMatic’s Q2 revenue grew 6% year-over-year, reaching $71.1 million.
• The company maintained a 20% adjusted EBITDA margin, marking its 37th consecutive profitable quarter.
• PubMatic’s stock decreased by 3.29% following the earnings release.
• New AI-powered products and platform expansions were highlighted.
• Guidance for Q3 2025 projects revenue between $61 million and $66 million.

Company Performance

PubMatic demonstrated strong performance in Q2 2025, with revenue increasing by 6% year-over-year. The company’s underlying business, excluding certain advertising sectors, saw a 19% rise. It processed 78 billion impressions, up 28% from the previous year. Despite challenges in some advertising sectors, PubMatic’s focus on AI innovations and platform expansions contributed to its sustained profitability. InvestingPro analysis indicates the company maintains strong financial health with a current ratio of 1.44 and holds more cash than debt on its balance sheet. For deeper insights into PubMatic’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: $71.1 million, up 6% year-over-year
• Earnings per share: $0.05, below forecast
• Adjusted EBITDA: 20% margin
• Net operating cash flows: $14.9 million
• Cash reserves: $117.6 million, with zero debt

Earnings vs. Forecast

PubMatic’s revenue exceeded expectations by 4.81%, achieving $71.1 million against a forecast of $67.84 million. However, the EPS of $0.05 fell short of the forecasted -$0.16, surprising analysts with a -131.25% deviation. This mixed performance reflects the company’s ongoing investments in technology and market expansion.

Market Reaction

Following the earnings release, PubMatic’s stock fell by 3.29%, closing at $10.93. In after-hours trading, the stock experienced a slight further decline to $10.92. This movement contrasts with the company’s 52-week high of $17.74, indicating investor concerns despite strong revenue growth. InvestingPro analysis suggests the stock is currently undervalued, trading at significant discount to its Fair Value. The company maintains a healthy gross profit margin of 64.91% and has demonstrated consistent profitability over the last twelve months.

Outlook & Guidance

For Q3 2025, PubMatic projects revenue between $61 million and $66 million, with adjusted EBITDA expected to range from $7 million to $10 million. The company plans to continue diversifying its demand-side platform (DSP) mix, expand its buy-side investments, and leverage AI across its technology stack. While four analysts have recently revised their earnings expectations downward for the upcoming period, InvestingPro data shows analysts maintain a consensus target price range of $12-19, suggesting potential upside. InvestingPro subscribers have access to 10 additional exclusive ProTips and detailed valuation metrics for more informed investment decisions.

Executive Commentary

CEO Rajeev Goel emphasized the transformative impact of AI, stating, "We are building for what we believe will be one of the largest market shifts our industry has seen in years." CFO Steve Pantalek highlighted the focus on performance and transparency, noting that "Advertisers are going for performance, control, transparency."

Risks and Challenges

• Market saturation in certain advertising sectors
• Potential volatility in DSP platform changes
• Economic pressures affecting advertising budgets
• Competitive pressures in the ad tech industry
• Integration challenges with new AI technologies

Q&A

During the earnings call, analysts inquired about the impact of DSP platform changes on display advertising and PubMatic’s exposure to AI search risks. The company addressed these concerns by emphasizing its strategy to diversify revenue streams and its confidence in navigating current challenges.

Full transcript - Pubmatic Inc (PUBM) Q2 2025:

Orrin, Zoom Operator: Welcome, everyone. We will begin shortly. Hello, everyone. We will begin shortly. Hello, everyone, and welcome to PubMatic’s second quarter twenty twenty five earnings call.

My name is Orrin, and I will be your Zoom operator today. Thank you for your attendance today. As a reminder, this webinar is being recorded. I will now turn the call over to Stacy Clements with Blue Shirt Group.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Good afternoon, everyone, and welcome to PubMatic’s earnings call for the 2025. This is Stacy Clements with the Blue Shirt Group, and I’ll be your operator today. Joining me on the call are Rajeev Goel, Co Founder and CEO and Steve Pantalek, CFO. Before we get started, I have a few housekeeping items. Today’s prepared remarks have been recorded, after which Rajeev and Steve will host live q and a.

If you plan to ask a question, please ensure that you’ve set your Zoom name to display your full name and firm and use the raise hand function located at the bottom of your screen. A copy of our press release can be found on our website at investors.pubmatic.com. I would like to remind participants that during this call, management will make forward looking statements, including, without limitation, statements regarding our future performance, market opportunity, growth strategy and financial outlook. Forward looking statements are based on our current expectations and assumptions regarding our business, the economy and future conditions. These forward looking statements are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict.

You can find more information about these risks, uncertainties, and other factors in our reports filed from time to time with the Securities and Exchange Commission and are available at investors.paumatic.com, including our most recent Form 10 k and our subsequent filings on Forms 10 Q or eight k. Our actual results may differ materially from those contemplated by the forward looking statements. We caution you, therefore, against relying on any of these forward looking statements. All information discussed today is as of 08/11/2025, and we do undertake no obligation to update any forward looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. In addition, today’s discussion will include references to certain non GAAP financial measures, including adjusted EBITDA, non GAAP net income, cash flow from operations, and free cash flow.

These non GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our press release. And now I will turn the call over to Rajeev. Thank you, Stacy, and welcome, everyone. We delivered a strong second quarter with revenue and adjusted EBITDA ahead of expectations.

Revenue from our underlying business, which excludes the affected DSP and political advertising, grew 19 year over year. Importantly,

Rajeev Goel, Co-Founder and CEO, PubMatic: our reported revenue returned to year over year growth at 6%. Our performance was driven by CTV and emerging revenue streams, which includes Activate, sell side data targeting, and commerce media as clients increasingly turn to the Palmatic platform for greater performance, transparency, and control over their digital advertising strategies. Once again, our robust business model drove the incremental revenue through to the bottom line. We delivered 20% adjusted EBITDA margin, marking our thirty seventh consecutive quarter of adjusted EBITDA profitability. I’m proud of these results and the value that Pimatic delivers to clients.

Our journey to transform the business started years ago, evolving from an SSP provider only to an end to end platform serving publishers, ad buyers, commerce media networks, and data providers and curators. We pioneered supply path optimization and launched Activate to put more control in the hands of advertisers and agencies. We delivered significant growth with sell side data targeting and commerce media. We expanded relationships with the world’s largest streamers with CTV now representing nearly 20% of total revenue, and we recently added a top five US streamer, which increased our market penetration to 26 of the top 30 global streamers. The execution in these secular growth areas has been strong, and yet our financial results are not yet reflecting where I know they can be.

Today, our top legacy DSP partners contribute the majority of ad spend on our platform. Historically, this strategy has delivered growth and scale, but platform changes on their end are often done with limited visibility and create revenue headwinds for us while we take steps to mitigate them. The most recent example occurred just last month in July and will impact our revenue in the second half of this year as we work through mitigation initiatives. Steve will provide more details in a few minutes. I’ve seen this industry evolve for two decades, and it’s clear that we are at an inflection point.

The lines between SSPs and DSPs are blurring, and AI is fundamentally changing how advertising is created, transacted, and optimized. Long term, we believe the reshaping of the programmatic ecosystem will be to our advantage. The status quo simply won’t do. As we look to the second half and beyond, our key priority is to accelerate stronger, more sustainable growth. As our model continues to deliver significant efficiencies via AI and software optimizations, we are able to fund, even accelerate investments to match the pace of change we’re seeing across the ecosystem.

This includes diversifying our DSP mix, accelerating investment on the buy side, advancing our leadership in CTV, scaling emerging revenue streams, and integrating AI across our tech stack and operations. The good news is that we have already been investing in these areas. We have the team, the tech, the customer relationships, and the financial resources to accelerate the opportunities in front of us. My confidence stems from the progress we’ve already made in these areas. First, we have been actively diversifying our DSP mix over the past couple of years.

Performance marketers and mid tier DSPs are gaining share of ad budgets as spend shifts to ROI based outcomes, including in CTV. We see this on our platform. Ad spend from these newer DSPs is growing at 20% plus rates, and we’re adding more of these high growth ad buyers to our platform every quarter, including SMB CTV ad platforms like Mountain and TV Scientific and China based performance DSPs to support their non China business. Collectively, these DSPs strengthen our platform and bring better demand diversity, buyer resilience, and platform stickiness. Second, we are accelerating investment on the buy side.

The momentum we are seeing with our direct buying platform, Activate, is a testament that our strategy is working. Buying activity more than doubled from Q1 to Q2 as advertisers look beyond legacy platforms for increased performance, control, and transparency. We’re seeing success across both brand and agency partners. Omnicom Media Group Germany recently used Activate to power a CTV campaign for a leading online marketplace for handmade goods and was able to exceed their clients’ performance benchmarks. According to their managing partner, Nikolai Keiland, the collaboration with PubMatic allowed the agency to, quote, implement an efficient programmatic setup for the CTV campaign that delivered impressive results in both visibility and brand impact.

At the same time, commerce media players are integrating with Activate to power their programmatic advertising businesses. PayPal is leveraging Activate to combine their unique transaction based audience data from over 430,000,000 accounts with Pimatic’s premium inventory to streamline campaign execution for advertisers across multiple formats, including CTV. This demonstrates how buyers are increasingly turning to PubMatic’s unified platform to improve targeting precision, reduce operational complexity, and scale their programmatic commerce media strategies efficiently. I’m excited about the potential this partnership has in the near term, but more importantly, see it as a blueprint for broader adoption across the commerce media landscape. Their data in premium, brand safe environments, our end to end platform provides scalable programmatic infrastructure that complements their direct sales efforts.

These integrations unlock high margin revenue opportunities for PubMatic across data, media, and buying technology, further diversifying and accelerating our growth engine. To support growth, we are adding headcount in our go to market teams with a focus toward independent agencies and direct brand relationships. This complements our ongoing leadership and supply path optimization, which continues to represent a majority of activity on our platform. To capitalize on this increased demand, our third priority is to advance our leadership position in CTV as buyers increasingly move budgets from linear to programmatic stream. CTV revenue grew over 50% year over year in q two, indicating continued significant market share gains.

International expansion and new innovative formats are driving CTV growth. In a recent landmark partnership with Nippon TV, one of Japan’s largest broadcast companies, PubMatic is now powering programmatic access to their traditional broadcast TV inventory for the first time. This reflects a broader trend among broadcasters globally who are turning to Pimatic to modernize their monetization strategies at scale. We were also selected as the exclusive SSP partner for performance marketing company Wonderkind’s launch of PozAds across their premium CTV inventory. Also driving growth in CTV are our curated marketplaces.

Most recently, we launched our live sports marketplace, allowing advertisers to access sports inventory from fanserve, MLB, FuboTV, DIRECTV, Spectrum Reach, and Roku. Our proprietary marketplace solves ad monetization for one of the most underserved and high potential segments. Vanserv’s VP of demand partnerships, Ben Goodfred, explains, quote, it empowers brands to connect meaningfully at the exact moment that matter most across every platform they love, end quote. As our growing live sports footprint expands, related buyer activity in the 2025 was up nearly three x year over year. Fourth, we continue to scale emerging revenue streams that monetize outside of traditional auction dynamics.

This includes platform fees from data curation, commerce media, and enterprise software solutions, all of which are high margin and contribute to the natural flywheel of our existing platform. For example, we recently partnered with Trainline, Europe’s leading train and coach app with 27,000,000 active customers worldwide. This commerce focused company has integrated with our platform to drive incremental performance based revenue at scale. By leveraging our SSP as well as our Connect and OpenWrap offerings, they are monetizing both on-site inventory and off-site activations. This allows us to diversify our revenue via our SSP, data, and software fees.

Connect is a powerful solution that allows data owners, publishers, and commerce media networks to create curated audience segments using their first party data. For example, one large digital media company with a diverse portfolio across technology, gaming, and shopping leveraged our platform to unify audience data across their properties. This enabled advertisers to tap into an expansive set of high value audience segments like tech enthusiasts or deal seekers. By offering these holistic cross property segments, the publisher is able to drive increased advertiser demand and improve CPMs. Plus, they’re able to use Activate to monetize that audience across third party inventory as well.

These use cases demonstrate how publishers are moving from selling ad space to selling true audience insight and how Pneumatic is empowering them to do it with full control and transparency, all while unlocking revenue streams outside of traditional DSP controlled auction dynamics. And finally, as we accelerate these priorities, AI is a critical component integrated across our tech stack to further automate decisioning and streamline activation. This not only drives cost efficiency for our customers but enhances campaign performance and optimization. In the past twelve months alone, we’ve launched multiple AI powered capabilities that will help drive even greater adoption and usage of our platform, including PubMatic for buyers, our generative AI media buying solution launched in May that enables advertisers to build optimized campaigns using natural language prompts. Our solution lets buyers run campaigns through Activate or their DSP of choice, accelerating setup and improving time to value.

Thematic Assistant, an AI powered analytics engine that allows publishers and buyers to access insights, troubleshoot issues, and guide campaign decisions through an intuitive chat based interface. Predictive diagnostics that detect yield anomalies in real time and surface optimization opportunities via agentic AI workflows to improve publisher monetization with less manual effort, and a dynamic floor yield module currently in beta that uses live auction signals to adjust pricing per impression, out static solutions in early testing. We have owned and operated our infrastructure for many years and optimized our integrations with industry leading technology solutions to deploy high performance machine learning models that enable increased data ingestion and faster processing, setting us apart from others. The scale, premium inventory, and wide variety of datasets on our platform allow us to deliver measurable results that give us a differentiated advantage. We’re moving fast on the AI front, and it’s changing the game.

It’s opening up the market in new ways and deepening our customer engagements. We believe that focusing on these key priorities will ultimately result in a stronger, more sustainable revenue profile for PubMatic over time and drive better outcomes for our customers and shareholders. Further, these priorities are converging with a major inflection point in the industry that we believe could result in significant market share expansion. The recent ruling in the Google AdTech antitrust trial confirmed what we’ve long known. We’ve been operating in a monopolistic environment for decades, and yet PubMatic has grown our market share.

Now with Remedies on the horizon, we’re entering a new chapter. Advertisers and publishers will need trusted independent technology providers with the scale and innovation to replace what they’ve relied on in legacy systems. PubMatic is that partner. We anticipate that a significant portion of Google’s 60% market share will be up for grabs in 2026. Further, we estimate that a 1% market share shift to PubMatic would represent approximately 50 to 75,000,000 in net revenue, with most of that flowing through to our bottom line.

This is a singular once in a generation opportunity. On top of that, given our full stack platform and breadth of capabilities, we believe any structural changes could unlock multiplicative effects as ad buyers expand adoption of our end to end platform, such as adding audience targeting functionality or consolidating buying via activate and supply path optimization. In closing, our q two results reflect strong secular growth and highlight how our platform is meeting the needs of today’s digital advertising ecosystem. While we are actively addressing the recent disruption related to one of our DSP partners and seeing early signs of stabilization, it only reinforces conviction in our strategy to diversify demand and revenue streams and invest in the highest growth areas. We’re building for what we believe will be one of the largest market shifts our industry has seen in years.

As a programmatic ecosystem evolves, customers are demanding performance, control, and transparency, all of which is increasingly dependent on AI. We’ve built a platform that gives buyers and publishers choice and independence. We have the team to deliver, and we are making the investments. I’m confident that we are building a stronger, more sustainable growth business that creates long term value for our customers and shareholders. I’ll now turn the call over to Steve for the financial details and outlook.

Steve Pantalek, CFO, PubMatic: Thank you, Rajeev, and welcome everyone. We delivered a great second quarter and exceeded both revenue and adjusted EBITDA guidance. Driving this performance were secular growth area, CTV, and emerging revenue. We ended the quarter with strong margins and healthy free cash flow. We’ve made significant progress in transforming our business, and as Rajeev discussed earlier, we are accelerating our efforts.

We proactively began evolving PubMatic several years ago from an SSP provider to an end to end platform. This evolution has significantly increased our total addressable market, and we’ve accelerated growth in key secular areas and improved our profit mix. Today, I will briefly comment on the second quarter highlights, which underline our confidence in our go forward strategy. I’ll then spend the remaining time outlining our second half plan, anticipated changes, and how it flows through to our outlook. Starting with the revenue highlights.

Omnichannel video revenues grew 34% year over year and represented 41 of total revenues in the quarter. CTV revenues increased by over 50% year over year for the fourth consecutive quarter and represented approximately 20% of total revenue in the quarter. Emerging revenue streams more than doubled year over year and accounted for 8% of total revenue in the second quarter. Within this category, Connect, our curation and data business continued its rapid revenue growth trajectory, growing over a 100% year on year as publishers and buyers prioritize sell side targeting through a more controlled and transparent environment. Our strong momentum is being driven by expanded AI product capabilities and expanded sales team.

Revenue from display was flat year over year, a significant improvement from Q1’s year over year decline of 10%. As a reminder, we lapped a sizable DSP headwind in the second quarter. And as we had anticipated, this DSP spend returned to year over year growth in July. We processed approximately 78,000,000,000,000 impressions in q two, which was 28% higher than last year and a 4% increase versus q one. I wanna give a little more color on the composition of these impressions to address concerns around AI search traffic as it relates to our business.

Nearly 60% of all of these impressions were CTV and mobile app, which are unaffected by AI search. The remaining impressions are largely from web based premium publishers, which are primarily accessed via direct navigation rather than search. Additionally, with our expanding publisher and streaming partnerships, we have growing access to more high value traffic from which to choose and process. With respect to q two ad spending in aggregate, the top 10 ad verticals grew in the mid single digit percentages year over year. Health and fitness, technology and computing, travel, and arts and entertainment each increased over 20%.

We saw softer trends for shopping, automotive, and business, which declined by single digit percentages. On a regional basis, EMEA and APAC revenues grew 187% respectively, while Americas declined 1%. Dovetailing with Rajeev’s comments, we also made progress diversifying DSP spend across our platform. In the second quarter, we expanded the share of spending from DSPs outside the top five, a spend from performance marketers, and mid tier DSPs grew over 20% year over year. Turning to profitability.

Our robust leverage cost model highlights that when we meet or beat our revenue targets, we deliver high incremental flow through. Our revenue outperformance and continued focus on efficiency enable us to significantly exceed the upper end of adjusted EBIT expectations by over 15%, inclusive of a significant FX headwind. Q two adjusted EBITDA was 14,200,000.0 or 20% margin and was our thirty seventh straight quarter of adjusted EBITDA profitability. Included was a foreign exchange impact of approximately 2,000,000 due to the weakening US dollar over the quarter. Total operating expenses in the second quarter were 50,000,000, flat with q one as ongoing cost savings from AI driven efficiencies funded investments in high growth secular areas.

On a year on year basis, we managed our total headcount growth to less than 3% and realigned our team and resources to the highest growth areas like CTV, emerging revenues, and SPO. We increased our buyer focused sales team members by over 20% compared to q two last year, which helped diversify revenue and drive our quarter’s top line results. Q two GAAP net loss was minus 5,200,000.0 or minus 11¢ per diluted share. Moving to cash and our capital allocation. We have a healthy balance sheet and generate positive cash flow, which provides financial stability, while at the same time allowing us to consistently invest for revenue growth.

Over the last four years since q two twenty twenty one, we have produced approximately 350,000,000 in net cash from operations and more than 180,000,000 in free cash flow. In the second quarter, we generated 14,900,000.0 in net operating cash flows and free cash flow of 9,300,000.0. We ended the quarter with a 117,600,000.0 in cash and marketable securities and zero debt. Given the strength, we continue to deploy our capital to maximize shareholder value. Since the inception of our repurchase program in February 2023, through the ’2, we have bought back 12,200,000.0 Class A common shares for a 178,200,000.0.

We have 96,800,000.0 remaining in our repurchase program authorized through the 2026. To recap, through the first half of the year, our results came in well ahead of our expectations driven by CTV, growth in sell side data targeting, and activate. We added new publishers and DSPs to the platform, continue to scale commerce media, and are seeing significant growth in connect. Looking to the second half of the year, we are confident that we’ll we’ll continue to see growth in these secular areas. Our end to end platform, SPO, and recently launched AI driven solutions are helping customers scale their ad businesses while streamlining their operations.

At the same time, beginning in July, we saw a headwind emerge from another top DSP buyer, which recently made platform changes. As a result, we saw a notable drop in spend in July from this DSP, which has stabilized in August. Given the scale and complex we anticipate it will take us several months to iterate and optimize our activity with this DSP. Outside the top five DSPs, all other DSP spend increased over 30%. To successfully navigate this headwind and to accelerate the key priorities that Rajeev outlined, we are well positioned both in terms of our capabilities and financial resources.

We have a highly disciplined team focused on driving incremental cost efficiencies led by an AI first strategy. We will optimize our existing resources and apply them to where we can achieve accelerated sustainable revenues. And our financial discipline combined with our operating capabilities provides a strong foundation to deliver on our priorities. Turning to our outlook for the third quarter. We are taking a conservative approach as it relates to the current impact from the large DSP and the continued uncertainty in the macro environment.

Our July revenues came in slightly below last year, and we saw some sequential weakness versus June in several consumer discretionary ad verticals. We expect q three revenue to be in the range of 61 to 66,000,000. As a reminder, q three last year included approximately 5,000,000 in political advertising or 7% of revenue. We expect q three operating expenses to be relatively flat with q two as we realign resources and work aggressively to diversify our DSP spend and deliver continued growth in key sector areas. We expect our q three adjusted EBITDA to be in the range of 7 to 10,000,000, which also factors in a 1,000,000 plus incremental impact of continued weakness of the US dollar.

We are maintaining our full year CapEx projection at 15,000,000, which is a year over year reduction made possible by optimization efforts and cost saving measures. In closing, in q two, we delivered strong growth in key secular areas, continued investing for long term growth, and benefited from our robust operating model. While our outlook includes a reduction in ad spend from one of our top DSP partners, the underlying health of the business remains strong while we mitigate the impact. We are optimizing resources to accelerate our key priorities that include diversifying DSP mix and expanding investment on the buy side, growing CTV, scaling emerging revenue streams, and integrating AI across our tech stack and operations. We have a healthy balance sheet and generate positive cash flow and are confident in our long term strategy to drive durable, accelerated growth, increase profitability, and maximize shareholder value.

I will now turn the call over to Stacy for questions.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Thank you, Steve. As a reminder, you can ask a question by raising your hand located on the dashboard. Or if you’re on your phone, please press 9. In the interest of time, we ask that you please limit your question to one and one follow-up. Our first question comes from Matt Swanson at RBC.

Please go ahead, Matt.

Matt Swanson, Analyst, RBC: Hey, guys. Thanks for taking the question. Rajeev, I know sometimes you can’t give us all the details, but anything else you can kind of tell us about the nature of the change from the DSP just because we weren’t hearing this from some peers? And then also, so it sounds like drop in July, stable in August. What the process is of doing the iterations to optimize activity?

And then, Steve, if you guys kind of give us the balance between the DSP and the macro and how you were thinking about guidance, that that’d be great. Thank you.

Rajeev Goel, Co-Founder and CEO, PubMatic: Yeah. Thank you, Matt. So beginning in July, we saw a headwind emerge from a top DSP buyer, which recently, shifted a significant number of clients to a new platform that evaluates inventory differently. And so the parameters of how they value inventory have changed, and we are working to optimize the inventory that we send this DSP accordingly. Addition, for some of our SPO partners, they did not realize until after the changes were made that their SPO strategies were no longer implemented.

And so as a result, they need to reimplement their SPO settings on this DSP’s new platform, and that process takes time. So, accordingly, we saw this, notable drop in spend in July, and then we’ve seen that stabilize in August. Now given the scale and complexity of our real time platform, we anticipate that it will take several months to iterate and optimize the traffic that we send to this DSP. And so while we’re doing this, top priority for us is to accelerate the diversification of ad spend on our platform away from legacy DSPs. And we’ve been making progress, but we plan to accelerate our strategy.

So for instance, in q two, we expanded the share of spending from DSPs outside of the top five with performance marketers and mid tier DSPs growing 20% year over year, such as Mountain and TV Scientific and some China based DSPs. In July, that same cohort accelerated to over 30% year over year. And we think, generally, that there is significant opportunity as advertiser budgets outside of the top 250 advertisers, you know, and their old co representatives is growing significantly faster than, you know, the growth rate within that top 250. But it’s clear that the concentration of our legacy DSP relationships is a significant factor that’s constraining our growth, and we intend to address that head on. We’ll turn it over to Steve.

Steve Pantalek, CFO, PubMatic: Sure. With respect to the, outlook, Matt, the vast majority of the, outlook is being influenced by this, change by the DSP in July. Just give you some, additional color. And when, you know, in providing the, the range, the way that, I look at the bottom end of the range, it assumes that the latest trends that we’re seeing today continue as such, and, there’s minimal but some consumer softness, from the macro. And, of course, the upper end of the range assumes the mitigation of efforts, you know, take hold and, you know, start to improve that spend.

And there is limited, impact from the macro. And I think the key point to note, for investors is that, you know, as a business, we are, very focused on, you know, moving quickly. Obviously, we have a bias towards action. We were surprised. We had limited visibility, from this change, but, you know, the team is moving very quickly.

And as we’ve demonstrated with the, the DSP change that occurred mid last year, you know, we work through that. And as I commented in the prepared comments, you know, we grew that spend, for the first time in July from that DSP. So we’re confident we’re on the right track.

Matt Swanson, Analyst, RBC: Thank you.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Great. Thanks, Steve. Our next question comes from Jacob Armstrong at KeyBanc. Please go ahead, Jacob.

Jacob Armstrong, Analyst, KeyBanc: Taking my questions. This is Jacob on for Justin Patterson. With SPO now at 55% of activity on the platform, can you discuss how conversations with advertisers have evolved over time? And further, how is this impacting your go to market approach as you invest more behind direct sales efforts?

Rajeev Goel, Co-Founder and CEO, PubMatic: Sure. Yeah. Thanks for the question. So, SPO, as you mentioned, you know, has reached about 55%. And the way that our conversations are going are really going deeper in terms of how can we solve more of those advertisers and agencies’ problems.

Right? So the challenges they face around transition away from cookies into logged in users or identity, more performance based solutions. They’ve gotta demonstrate ROI if you’re an agency to the client or within the client to a CFO. They’re around sell side targeting and curation. We see a huge shift in that sense in in the market, and then we see, you know, mix in terms of format growth towards CTV and in commerce media.

So a lot of our conversations are about how can we go deeper with the technology solutions that we built, things like Activate, which we think are gonna be really important to our growth trajectory going forward, as well as commerce media and connect our data and curation platform. So all of this, I think, is, in our conversations, really about how to compose the right capabilities within our platform as a solution that we can hand, to the buyer. I do think as we expand, you know, more into the the mid market where we do see accelerated growth, our SPO metric, there’ll be a little bit of a push and pull there because not, all of those deals are gonna be SPO related. They may be more related to capabilities or performance or scale of media on our platform. And so we may see that, that statistic get a little bit more volatile in the future.

: Thank you. Our

Stacy Clements, Operator/Moderator, Blue Shirt Group: next question comes from at Wolff. Please go ahead,

Ashweta, Analyst: k. Thanks, Stacy. Let me try two, please. Rajiv, if the line between DSPs and SSPs are merging based on your earlier commentary, what’s your view on the evolution of the industry? Do you think that the stand alone DSPs and SSPs today will offer kind of an end to end solution, and or do you think that day crates for just stand alone DSPs and SSPs are are at risk?

And then the second question I have, for either Rajiv or Steve is on the specific inventory changes that, caused the headwind in the quarter. So is it fair to assume that PubMatic is still one of the platforms of choice or SSPs of choice? There’s just a different change that they are making. Just wanna understand what exactly that means. And, Steve, what is the concentration of DSPs today?

Thank you.

Rajeev Goel, Co-Founder and CEO, PubMatic: Thanks, Ashweta. So as as the industry evolves, right, and specifically around shift towards CTV, shift towards performance, right, whether it’s commerce media or outcomes, a shift away from cookies and towards more identity based targeting or or AI to to target users. And then even with the early onset of AI and workflows, what we see is that all of these things are driving more towards an end to end platform. Right? Meaning, you know, AI, for instance, works better if it’s not constrained, but instead can optimize, you know, across all aspects of a transaction.

And so that’s exactly in line with what our focus has been over the last couple of years with Activate, and we’re seeing great success and traction with that. As I mentioned in the in the script, you know, our Activate growth, Activate activity or spend more than doubled sequentially from q one to q two. So I do think there is this, you know, blurring of the lines, and I think we’re gonna see, as multiple, ad tech ecosystem participants focus on how to drive the best possible outcomes for advertisers, whether it’s to, gain more share of advertisers’ wallet or by the same token, focusing on those outcomes can drive better yield or better revenue for publishers. I think we’re gonna see, you know, this, this continue. Now I would just say that it’s not new.

Right? We’ve seen, you know, platforms like Google, Microsoft with Xander, Yahoo, and others. They’ve been on both sides of the transaction for some time. So we think performance, but we also think transparency and control are gonna be extremely important going forward. The other other part of your question, Shweta, I think, was around being a platform of choice.

So we absolutely continue to see ourselves, as a platform of choice, and that’s rooted, you know, in the scale of our, platform in terms of the volume of ad impressions, the omnichannel capabilities that we have, all of the datasets, that we have on our platform through our connect, business, as well as our global footprint and scale. So we absolutely see, you know, our continued investment in growth as being a platform of choice, not only to our existing, top DSP partners as well as, with a growing cohort of of, SMB advertisers. I’ll turn it over to Steve for the other part of your question.

Steve Pantalek, CFO, PubMatic: So, Shweta, so with respect to your question on, you know, the format mix of this, latest DSP change, know, you when we took a look at, you know, what happened in July, the majority of the impact is being felt in display, both desktop and mobile. We’re actually continuing to see really positive results in terms of CTV spending. And so, you know, from where we have been investing and focusing our energies, we’re well positioned, to continue to, you know, grow and to be successful. You know, it is a function of, you know, the areas that we focus on. And, you know, the q two results really indicated, you know, the strength that we see in those secular growth areas.

Now with respect to the, DSP concentration, our top two DSPs represent about half of our, overall spending. And, as I just commented, you know, notably, the, while there was some pressure in, display, CTV spend from both of these, DSPs continue to grow in the double digits. And, you know, when we step back, you know, take a look at over time, we see the concentration of these two DSPs declining as, other, you know, buyers, advertisers, DSPs are upping their spend. You know, of the top five, a commerce DSP is growing the fastest. And in July, what we saw for the first time in many years, we have a new number five DSP, you know, that’s, that we’ve been nurturing and growing over time and has, picked up the slack.

So we’re focusing on diversifying the DSP mix, you know, given the time frame, you know, an impact that just happened a couple weeks ago. We have some near term, headwinds, but, you know, we’re obviously very confident in, our strategy and, our ability to execute. And so as we’ve done before, we’re gonna execute through this.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Thanks, Rajeev. Thanks, Steve. Our next question comes from Jason Helfstein of Oppenheimer. Go ahead, Jason.

Jason Helfstein, Analyst, Oppenheimer: Hey, everybody. At risk of sounding foolish, I’m gonna try to do this. So is the best way to understand it that the this DSP platform who hit you in July, they did not like the way you ran the auction for display ads or how you accepted bids? Like, is that the, in a layman’s term, the best way to understand it? No.

I don’t

Rajeev Goel, Co-Founder and CEO, PubMatic: think it had anything to do with auction dynamics. Rather, it’s how they value inventory has changed, and so we need to do a better job, a different job to prioritize across all the hundreds of billions of daily ad impressions that we have, which subset of those impressions that we send to this DSP. And if we you know, that’s a normal part of our traffic shaping platform. And when we, you know, revise that, iterate that, and optimize that, then I would expect, to see our our spend with this DSP normalize.

Jason Helfstein, Analyst, Oppenheimer: Got it. It’s because you don’t make every impression available, only the ones you choose to make available.

Rajeev Goel, Co-Founder and CEO, PubMatic: That’s correct. And that’s how we operate with the vast majority of DSPs, and that, I think, is true across, the ecosystem is the just the volume of ad impressions k. That we take on, you know, across the world and in different formats is such that we need to to shape that to for each of our DSP partners.

Jason Helfstein, Analyst, Oppenheimer: And and what made it, like, what made it, like, specific to this this DSP? Like, the best you understand, like, what are you if if if your decision on what was valuable inventory was fine for everybody else, why was it not fine for this DSP suddenly?

Rajeev Goel, Co-Founder and CEO, PubMatic: Yeah. Our view is it was precipitated by a shift in clients that this DSP has from one platform to a different platform, and that shift, you know, corresponded with the, the quarter border. So we saw that impact, starting in July.

Jason Helfstein, Analyst, Oppenheimer: Alright. And then just two quick ones then. I mean, are you seeing any retaliation on the DSP side for, like, your continued effort on Activate?

Rajeev Goel, Co-Founder and CEO, PubMatic: No. I I don’t think we are. And, you know, the reality is Magnite has Clearline, so they’re out there with that. We’ve got Activate. There are, obviously, buyers, right, whether it’s Yahoo with Backstage, Trade Desk with OpenPath, you know, Viant with their direct platform.

So I think we’re seeing, you know, across the the ecosystem, in response to advertiser or buyer, you know, desire for for more outcomes or more performance, you know, the shift in the ecosystem as I as I described earlier. So I don’t think it’s really specific to to anything that we’re doing.

Jason Helfstein, Analyst, Oppenheimer: And then just a follow-up for Steve. Just on Shweta’s question on DSP concentration. I mean, I know you don’t wanna give us specific numbers, but if you just say, like, at this point, x percent of revenue is coming from DSPs buying display, and you just think about who the biggest buyers are, like, it’s just a way to kinda quantify, like, like, do you know, have we gotten past the point of concentration as we obviously had the issue with that DSP end of last year, right, or last year. But I guess just how should folks, like, get comfort that they shouldn’t worry about DSP concentration risk on display?

Steve Pantalek, CFO, PubMatic: So, I mean, it’s a process that we’ve been, working on and undertaking for some time. So, you know, the good news from our perspective, desktop display, you know, legacy format, is now, you know, roughly 20% of all of our revenue, you know, down from, you know, 30% approximately, two years ago. So we’re definitely moving in the right direction. And it’s a function of, you know, where we’re investing and and what, advertisers, buyers want. You know, the reality is we still have, you know, a significant amount of display, but, that sort of, let’s call it, you know, roughly flat.

As I shared, you know, in the second quarter, our display, revenues were flat year over year. Well, you know, CTV emerging revenue revenues, doubled. So it’s, you know, a shift over time. And when you look at the specific DSPs within, you know, what they’re buying, it’s absolutely shifting to, you know, the faster, secular growing areas. But, you know, at the end of the day, advertisers wanna touch consumers wherever they are.

So it doesn’t mean, like, display is gonna go away, but it’s gonna grow at different rates.

Rajeev Goel, Co-Founder and CEO, PubMatic: Yeah. And maybe I can just briefly add to that, Jason. So it’s clear that, it’s really critical for us to diversify our DSP mix. You know, we called out, Mountain and TV Scientific as two examples of, you know, ad platforms. We’re we’re bringing new, SMB dollars, small medium business dollars to our platform, China based DSPs.

I think it’s also maybe useful to call out as an example. You know, Amazon is a significant relationship for us both as an inventory provider as well as a DSP, buyer. So we previously shared that we are one of three SSPs in their certified supply exchange program. On the sell side, we monetize Fire TV app inventory from almost a dozen different streaming apps. We’ve been monetizing that inventory for many quarters now.

And as Amazon is scaling their ad business, we are scaling with them. In fact, in June and July, our Amazon revenues grew very healthy double digits.

Jason Helfstein, Analyst, Oppenheimer: Great. Thank you.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Our next question comes from Matt Condon at JMP. Go ahead, Matt.

: Taking my questions. My first one is just as as you focus on building more and more buy side direct relationships and you think about Activate, you just talk about what the differentiation of PubMatic is compared to some of those other large SSPs in the market?

Rajeev Goel, Co-Founder and CEO, PubMatic: Sure. Yeah.

Steve Pantalek, CFO, PubMatic: I think the

Rajeev Goel, Co-Founder and CEO, PubMatic: the key focus with Activate and by the way, a lot of what we do is about enabling a buyer to transact through their DSP of choice, or, through Activate. So for instance, we launched, earlier this year, AI powered curation where a buyer can come in and, know, using simple text, chat, or prompt. They can configure audiences, using, dozens, of different data providers. And they can take that deal ID, and they can run that in any DSP of their choice, or in in Activate. Really, what we’re focused on with Activate in terms of differentiation is how to create a much more efficient path for advertisers to be able to improve the outcomes from their business while at the same time, realizing transparency and control.

And so what I mean by that is in today’s ecosystem, you know, with, DSPs and SSPs underpinning most of the transactions, there is this, you know, traffic shaping where SSPs have to determine which impressions to send to a DSP. There’s latency. There’s hops. There’s discrepancies that occur between platforms. And so by unifying all of this in a single platform, we’re able to significantly, simplify the the transaction and deliver better outcomes.

So that’s a a key part of, what what we’re focused on with Activate. At the same time, we’re also focused on giving transparency and control so the buyer can come in and make sure they know exactly what inventory they’re buying, you know, what is the the fee, kind of footprint look like, and then be able, again, to to measure those outcomes. So that’s where, really, we’re seeing significant traction, in the growth of active Activate in in all regions of the world.

Steve Pantalek, CFO, PubMatic: And just a quick, stat. You know, in the second quarter, we more than doubled our activity, on Activate, you know, because of those features that Rajiv just described. And, we are going to be, accelerating the investment behind driving Activate in the coming months and quarters.

Rajeev Goel, Co-Founder and CEO, PubMatic: I do think it’s important to call out, though, that, you know, our DSP partners, I think, were very important for them, and they’re certainly very important for us. And so, you know, we plan to continue to work very closely, with DSPs, and, I think that that’s a key feature of our of our platform and our business model.

: Great. And maybe, Steve, just a follow-up. Just as as you’ve built out the the buyer Salesforce, just where are we today as far as that build out? Is it complete, or are there more investments that need to be made in the back half of the year? Thank you so much.

Steve Pantalek, CFO, PubMatic: Yeah. We think that, there’s definitely, incremental opportunities, in the back half of the year. Certainly, you know, in the mid tier areas that Rajiv described, you know, the performance marketers, mid tier agencies, as well as, putting more sales resources behind our emerging revenues, you know, commerce, connect. So we’re selectively identifying where we’re gonna have the greatest impact. And as I called out, you know, we’re not doing it by adding incremental cost.

We are optimizing the, the base that we have and, you know, putting those resources in the right, area.

Rob Kulbreath, Analyst, Evercore: Thank you.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Our next question comes from James Heaney at Jefferies. Please go ahead, James.

Stacy Clements, Operator/Moderator, Blue Shirt Group0: Great, guys. Thanks for the question. Rajeev, I just wanted to ask about generative AI and the potential risks, that could present to your display business. I’m interested just to hear what you’re seeing so far and and why you think you’re well positioned to navigate that secular shift.

Rajeev Goel, Co-Founder and CEO, PubMatic: Yeah. Absolutely. Thanks, James. So, look, we believe the exposure to our business is limited, as in single digit percentage of revenue if there was zero search traffic going to our publishers, and we took no steps to mitigate it. So as, Steve shared in the in the script, roughly 60% of all the impressions we are processing today are for CTV and mobile app, right, which is unaffected by AI search.

Of the remaining business, which is browser based, where, of course, search is relevant, industry data indicates that search referral traffic is roughly 15%. Given we work in the head of the market, you know, top publishers rather than the long tail, I would expect that share to be lower because most consumers are, you know, using direct navigation to get to those websites. So so we think, again, if you kind of run through that math, right, it’s a single digit percentage of revenue. But there’s also an offensive opportunity, right, which is that the growing cadre of AI search companies will likely need ad supported business models to support the growth in their cost base and and user growth. And I’m not just talking about the large guys like an OpenAI or Proplexity.

There’s those guys, of course, but they’re also b to b services, consumer AI chatbots, you know, retail experiences. I think there’s a wide canvas of, you know, probably thousands of companies in the not very distant future that will likely need ad supported AI search or chat pod, chat ad monetization, that create significant opportunity for us.

Stacy Clements, Operator/Moderator, Blue Shirt Group0: Great. Thanks. And then maybe, Steve, just another one for you. Is there anything that you can share just regarding the overall demand environment that you saw in April, post sort of tariff announcements and how that’s progressed through the remainder of the quarter?

Steve Pantalek, CFO, PubMatic: Sure. I mean, with respect to the second quarter, there’s a couple, categories on a year over year basis that, performed quite well, you know, technology computing, arts and entertainment, health and fitness. And each of those, you know, increased over 20%. We did see some softer trends, in a couple areas in, the second quarter, automotive, and business, two notable, areas. You know, they did decline.

Now in terms of July ad spending, you know, our total top 10 grew on a year over year basis, so that obviously was very positive. But we did see, some sequential, decline on a July versus June basis in a, a cohort, you know, that one could argue is sort of consumer discretionary. So food and drink, health and fitness, travel, arts and entertainment. Now it’s too early to say if that’s sort of a trend. And so as I called out, you know, incorporated a portion of that into our outlook.

But we are not seeing sort of a, you know, a significant, decline, on a year over year basis, and it’s more sort of on a sequential basis. But, you know, obviously, there is a lot of uncertainty out there, and, you know, that’s why we’re very focused on keep on, you know, driving our business towards the the fastest growing areas that, you know, can, you know, grow through these, challenges. And the other point, to call out is, you know, at the end of the day, you know, in this environment, you know, that is uncertain, advertisers are going for performance control transparency, and these are all strengths that we built, and continue to evolve, you know, through our various, product offerings. So in this kind of uncertain environment, we think we’re gonna continue to, you know, do well and then be well positioned, you know, when, this is all in the rearview mirror.

Stacy Clements, Operator/Moderator, Blue Shirt Group0: That’s great. Thank you.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Our next question comes from, Rob Kulbreath at Evercore. Please go ahead, Rob.

Rob Kulbreath, Analyst, Evercore: Great. Thank you for taking our questions. I think the platform shift that you’re shift that you’re talking about has been going on for some time. So just wondering if the triggering event in July was maybe incremental changes to that platform or, you know, a large number of your SPO customers, finally making that transition or something else? And then finally, any indication of a step up in activity around, direct connects, from that DSP?

And then, finally, I guess, second second question here would be, if you could just revisit the timelines for potential recovery both around getting those SPO instructions back up and running and optimizing the traffic shaping. If you could just repeat those, that’d be great. Thank you.

Rajeev Goel, Co-Founder and CEO, PubMatic: Sure. Yeah. Hey, Rob. So, I mean, we certainly saw an uptick or significant increase, of this, you know, activity from the DSP causing the the drop in spend in July. So I can’t speak to exactly kinda what, you know, what was their timeline or all all the history of changes that they made.

But that’s what that’s what we observed on our platform, which we are, again, we’ve stabilized but are working to, to improve. So there are things that we need to do to shape the traffic, accordingly from our platform, more to the liking of that DSP, and so we’re heavily engaged, in that process. And then I’ll turn it over to Steve for the, the second half of your question.

Steve Pantalek, CFO, PubMatic: Yeah. I mean, just to quickly, comment on, a little bit more on that, color. So that, DSP that made that change growing, you know, very nicely, double digits, in June and then, you know, a notable decline, negative year over year in July. So there was clearly a shift, on their side in terms of, you know, how they were valuing, inventory in terms of, you know, the what, it matters to them and, their how their platform operates. And, remind me the second part.

It was

Rob Kulbreath, Analyst, Evercore: Yeah. Just say, you know, the timeline that you have most with the stabilization in August, does that in indicate that most of your Sure. SPO customers have sort of gotten those instructions back into that platform? And and any timeline on the on, you know, the optimization of the traffic shaping, how you’re thinking about how long that could take to sort of, get back to normal?

Steve Pantalek, CFO, PubMatic: Sure. Well, our teams have absolutely been, reaching out to all of our SPO partners, letting them know that this has happened, that they need to go into this, platform, and to, reupload their, their, SPO parameters. And so that’s just a process that, you know, the SPO partners have to do on this DSP. So that’s in process and happening, you know, it’s, after letting them know, it’s largely in their hands. Now with respect to, you know, just the mitigation efforts, you know, when we saw the trend start to really, decel in July, Obviously, we got all the appropriate folks focused on, you know, assessing.

And, you know, the what we saw when we had this significant change, you know, a year ago, that there is a lot of iteration and testing that needs to be done because this is incredibly complex, you know, ecosystem. You’re talking about, you know, hundreds of billions, of impressions a day that we are ourselves are are processing. And so it takes testing, iterating, and then doing it all over again and seeing, you know, what works and does it meet the criteria that’s been established. So our, approach is, you know, we’re, working hard to mitigate it. You know, I incorporated, you know, at the low end of the outlook an assumption that, you know, the mitigation efforts are relatively limited in terms of effectiveness this quarter.

And, you know, we’re gonna keep working at it. I would say that, you know, given the the the important size of this DSP, it’s just gonna take time. And but, you know, we are well positioned to continue to work through it. And really wanna emphasize sort of if you step back, you know, this is, you know, a situation we have experienced doing. The big challenge here was we didn’t have any visibility, you know, in terms of the big desal, and so we’re obviously, reacting, pretty quickly.

Number two, you know, we are in really healthy financial shape. I mean, we have, you know, roughly a 120,000,000 in cash, no debt. We generate free cash. So we are in this for the long run, and we’re confident that we’re gonna work through this. And in the near term, we are gonna double down on the fastest growing areas that we have, diversify our DSP mix, etcetera.

So we’re we believe we’re on the the right track, and, you know, we’re gonna work through this.

Rob Kulbreath, Analyst, Evercore: Got it. Last quick one. Just, it sounds like OCV has been, you know, relatively, unimpacted. So just, know, is the implication there that that, you know, this DSP is, you know, wants to to see as much, OCD volume as they as they can take? There’s not really a traffic shaping element there or just anything you tell us about that.

Rajeev Goel, Co-Founder and CEO, PubMatic: Like What did you mean by OCD, Rob? I just wanna make sure understand.

Rob Kulbreath, Analyst, Evercore: Omnichannel Oh,

Rajeev Goel, Co-Founder and CEO, PubMatic: got it. Okay. Or CTV. Yeah. So and and repeat the question.

So you’re you’re

Rob Kulbreath, Analyst, Evercore: No. Just just just wondering, you know, if there if there is potentially an implication where, you know, is traffic shaping happening in in your CTV or OCV inventory or is or, you know, basically, is DSP willing to take as many QPS as they can within those those growth channels?

Rajeev Goel, Co-Founder and CEO, PubMatic: No. I think the, the the traffic shaping changes optimization that we are doing in response applies equally across all formats, including video, you know, omnichannel video. I do think, in general, video is is more resilient just given that’s where advertisers are shifting more of their budgets. So we do see that as a as a secular growth driver.

Rob Kulbreath, Analyst, Evercore: Got it. Thank you so much.

Stacy Clements, Operator/Moderator, Blue Shirt Group: Our next question comes from Eric Martinuzzi at Lake Street. Please go ahead, Eric. Eric, are you there? We can’t hear you.

Stacy Clements, Operator/Moderator, Blue Shirt Group1: Yep. And now I’m unmuted.

Stacy Clements, Operator/Moderator, Blue Shirt Group: There you go. The now.

Stacy Clements, Operator/Moderator, Blue Shirt Group1: Given the, you guys have seen a pretty steady progression in the percentage of revenue coming through the SPO, channel, I guess. Is there a chance we see a step down while this reconfiguration happens?

Rajeev Goel, Co-Founder and CEO, PubMatic: Yeah. I I can take that. So, I think more so than than this reconfiguration would just be, our diversification strategy around, you know, more of the the mid market, buyers, where those aren’t you know, given their size, they’re not off often they’re not coming in through an SPO, equation. And we do see that, in general, in the market, you know, the the advertiser segment that is growing the fastest is that mid market segment as opposed to the, you know, the top two fifty or so advertisers. So I think that would probably be a a bigger, impact in, you know, diluting some of that SPO spend, which isn’t doesn’t mean we’re shrinking the pure dollars, but it’s just a little bit of a mix shift.

Stacy Clements, Operator/Moderator, Blue Shirt Group1: Okay. And then a follow-up regarding just the, you know, the the fact that you guys were surprised that this large partner changed how it valued the inventory you were sending it, is there a risk that other DSPs come to this same conclusion? In other words, how how close are you to these DSPs where this kinda comes out of nowhere?

Rajeev Goel, Co-Founder and CEO, PubMatic: Yeah. I mean, in general, I think we’re pretty close to these DSPs, and it’s certainly our goal to be as close to them as possible. And I think it behooves the DSP as well to be, you know, continuously sharing feedback with us on, you know, what they wanna see more of or what they wanna see less of or, you know, how their advertiser requirements and mix is shifting. So I think, in general, we do a quite a good job of being close, to these DSPs. In this case, you know, we’re, reacting with with limited visibility.

So we we need to certainly, look into that and figure out how we can do a better job.

Stacy Clements, Operator/Moderator, Blue Shirt Group1: Thank you.

Stacy Clements, Operator/Moderator, Blue Shirt Group: At this time, there are no more questions in the queue. I’m now gonna turn the call back over to Rajiv for closing remarks.

Rajeev Goel, Co-Founder and CEO, PubMatic: Thank you, Stacy, and thank you all for joining us today. Through the first half of the year, our results came in well ahead of our expectations driven by CTV growth I’m sorry, CTV growth, growth in sell side data targeting, and Activate. We added new publishers and DSPs to the platform, continued to scale commerce media, and are seeing significant growth in Connect. We’re seeing one of the largest market shifts our industry has seen in years play out at a very fast pace, and we’re positioned extremely well given our differentiated approach. An end to end platform focused on performance, and we give buyers control and transparency they need in order to scale their ad business.

We look forward to seeing many of you at upcoming conferences, including Oppenheimer’s Virtual Tech Conference on Wednesday, Rosenblatt’s Virtual Tech Summit on August 19, and Wolf’s TMT Conference in San Francisco on September 10. We’ll also be on the road over the next few weeks in Denver and New York. Thanks everyone for joining us today. Have a great afternoon.

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