PubMatic (PUBM) AI Stock Analysis

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PubMatic

(NASDAQ:PUBM)

68Neutral

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.

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

$480.76M

Dividend YieldN/A

Average Volume (3M)599.57K

Price to Earnings (P/E)42.9

Beta (1Y)1.60

Revenue Growth9.08%

EPS Growth43.58%

CountryUS

Employees1,049

SectorTechnology

Sector Strength64

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.23

Shares Outstanding40,066,925

10 Day Avg. Volume588,429

30 Day Avg. Volume599,567

Financial Highlights & Ratios

PEG Ratio0.99

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 Cap1.41

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit4.04

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$17.00

Price Target Upside74.00% 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
Measures the volume of ad impressions managed by PubMatic, reflecting the platform's capacity, efficiency, and its role in the digital advertising ecosystem.

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

Negative

Last Price9.77

Price Trends

50DMA

10.27

Negative

100DMA

12.90

Negative

200DMA

14.56

Negative

Market Momentum

MACD

-0.06

Negative

RSI

56.59

Neutral

STOCH

91.86

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PUBM, the sentiment is Negative. The current price of 9.77 is above the 20-day moving average (MA) of 8.95, below the 50-day MA of 10.27, and below the 200-day MA of 14.56, indicating a neutral trend. The MACD of -0.06 indicates Negative momentum. The RSI at 56.59 is Neutral, neither overbought nor oversold. The STOCH value of 91.86 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ALKT	72 Outperform	$2.69B	―	-11.98%	―	26.06%	38.19%
CXM	72 Outperform	$1.97B	16.92	18.83%	―	8.74%	150.66%
PUBM	68 Neutral	$480.76M	42.93	4.36%	―	9.08%	43.58%
SEMR	68 Neutral	$1.52B	185.90	3.46%	―	22.47%	872.41%
OLO	66 Neutral	$1.06B	―	-0.13%	―	24.81%	98.55%
DSP	66 Neutral	$900.44M	420.88	3.87%	―	29.74%	―
Sector *	59 Neutral	$10.65B	10.45	-6.56%	3.01%	7.31%	-12.18%

* Technology Sector Average

Performance Comparison

PUBM

PubMatic

9.77

-13.01

-57.11%

DSP

Viant Technology

14.31

6.18

76.01%

OLO

Olo

6.20

1.28

26.02%

SEMR

SEMrush Holdings

10.28

-2.12

-17.10%

ALKT

Alkami Technology

26.69

2.29

9.39%

CXM

Sprinklr

7.69

-4.25

-35.59%

PubMatic Earnings Call Summary

Earnings Call Date:Feb 27, 2025

(Q4-2024)

% Change Since: -30.06%|

Next Earnings Date:May 08, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant achievements in revenue growth, particularly in CTV and mobile app sectors, along with successful use of generative AI. However, the company faced challenges with a DSP partner's bidding changes affecting display advertising. The overall sentiment reflects a positive outlook despite some hurdles.

Q4-2024 Updates

Positive Updates

Solid Revenue Growth and Margin Expansion

2024 marked a year of solid revenue growth of 9% over 2023 and expanded adjusted EBITDA margins of 32%.

CTV Business Growth

The CTV business represented 20% of Q4 revenue, more than doubling its share compared to the prior year.

Supply Path Optimization Success

Over 53% of platform activity was transacted via Supply Path Optimization, up from a third two years ago.

Generative AI Impact

Generative AI increased engineering productivity by over 15% in 2024 and led to new customer-facing products.

Mobile App Growth

Mobile app business grew 16% year-over-year, driven by the OpenWrap SDK.

Negative Updates

Impact from DSP Partner Change

A significant headwind from a DSP partner's bidding change resulted in softer than expected seasonal uptick in Q4.

Challenges in Display Advertising

Display advertising revenue declined 8% year-over-year due to weak holiday spending by a large DSP buyer.

Political Advertising Impact

Political advertising, while beneficial, contributed to tough comps for 2025, accounting for about 6% of 2024 revenue.

Company Guidance

During PubMatic's earnings call for the fourth quarter and full year 2024, the company provided guidance that highlighted several significant metrics and strategic directions. Rajeev Goel, the CEO, emphasized that the company achieved a 9% revenue growth over the previous year, with adjusted EBITDA margins expanding to 32%. Notably, Connected TV (CTV) accounted for 20% of Q4 revenue, more than doubling its share from the prior year. The company also highlighted that 53% of platform activity was transacted via Supply Path Optimization, marking substantial growth from two years prior. Political ad spending and new partnerships contributed to these positive trends, with Q4 revenue excluding political and DSP impacts growing 16% year-over-year. Looking forward, PubMatic is targeting 15%+ growth in its underlying business for 2025, with strategic investments in product innovation, generative AI, and expansion into high-engagement channels such as CTV, mobile apps, and commerce media. Additionally, the company reported strong cash flow, with $73 million in operating cash flow and $35 million in free cash flow, and it plans to continue leveraging generative AI to drive efficiency and growth.

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.