PUBM - Earnings call transcript Q4 2020

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Operator

Hello everyone and welcome to PubMatic's Fourth Quarter 2020 Earnings Call. My name is Kara and I will be your operator today.

Before I hand the call over to PubMatic team, I'd like to go over a few housekeeping notes.

As a reminder, the webinar is being recorded. [Operator Instructions] We'll host a short Q&A after the prepared remarks. get to question PubMatic's send team investorspubmatic.com. don't please today's Investor We at free feel your Instructions] to during your call, Relations [Operator questions into

We'll issues, you Thank your call attendance will out You over assist I for please And turn any best to technical to have investors@pubmatic.com. now do today. to our you. Solomon. reach the Dylan

Dylan Solomon

be prepared PubMatic's everyone. remarks fourth following live call. will and on operator is of for of you website. section available you, earnings A Thank call. been the being Relations good XXXX have A afternoon, today's replay Today's and webcast prerecorded. Q&A quarter follow. the also us that Thank full Please webcast year on today's company's Investor joining session the note call will

the Rajeev and Joining Goel, Pantelick, today Steve me are Co-Founder CFO. on and CEO call

like and that without statements, start, remind year strategy growth regarding we this Before statements first the of forward-looking limitation to would make XXXX. management including and quarter call, our for I full guidance performance, will future participants during our

assumptions statements and our that inherent looking predict. uncertainties are to based our business, future on These current statements subject expectations economy are forward in changes difficult are circumstances and risks, conditions. the to Forward-looking and regarding

Xth, You December perspectives XXXX. other about filed can find Exchange these our on more and factors with and in information risks, uncertainties Commission the Securities

We information, by as may caution update is All against and a obligation law. otherwise, XXrd, results materially as statements. required as whether by therefore accept any statements, did future differ we forward-looking from intend you may February or actual not statements. to on and contemplated no of Our developments XXXX, today these result any of those new relying be forward-looking discussed undertake information forward-looking of the

these filed is references in, turn accordance comparable most to for informational considered are Presentation, GAAP press our A to include the information with release financial should today measures now reconciliation earlier present measures presented our non-GAAP are investors.pubmatic.com. which only, will over the measures. call Investor discussion in purposes financial measure be Rajeev? a for of Rajeev. non-GAAP I'll to substitute supplemental certain at These of today's and directly addition, at In posted available not in both GAAP.

Rajeev Goel

Thank call honored welcome you us joining for to company. to today. you first a I'm our public as earnings

to we thank who all those XX supported begin, last have the want I us of Before years. over

gain We shift business within demonstrate continue million in XX.X% quarter, in delivered $X.X to We new momentum PubMatic business excited fourth and summarize market wonderful place and of to were advertising we embark market, advertising contribute for XXXX, state who having the XXX% operating have was the PubMatic's growth executing and multiple been growth. group colleagues, I digital to a are and investors fourth next quarter, revenue significant XX% team helped fortunate organic drivers which the customers, own results and profitability. phase shareholders strong growth on to a In have quarter welcome as the we in reflect million EBITDA our of We're year-over-year market If to of multiple today, outpace differentiated with our success. digital margin a increase in Adjusted as ecosystem. These our the the expectations purely industry rapid of $XX.X quarter growth share. advertising well in to drivers position of partners, PubMatic's XXXX. our fourth we a in grow that. growth or the of digital over to from against basis, benefiting were leverage exceeded contributed on the

form business and in the an be infrastructure media provide happy a specialized take call, through provides buying financial of community. start PubMatic quarter I'll then talk that programmatic and trends. we'll which questions. through critical your Steve to go brief update after guidance, will overview of and today's cloud a transactions publishers PubMatic on real-time with results highlights platform, advertising For the our fourth between enables and

Our through innovative sustainable our power can resilient XXXX approach net has and year our much margins, our outperformance business, digital be across of driven the but ecosystem with our income. created advertising approach in to The being positive profit. consecutive revenue seen fifth flowing of a of infrastructure

and on go of growth across year-over-year and XX% and holistic beliefs we How ad that a and accelerated executing advertisers onto is opportunity which market and and short with strategy. large our fourth combination our of publisher core and I consolidate video drivers we're TV outlining video represented from buying growth Omnichannel revenue as of our in against into in video, our XXXX. has QX, we grew increasing drivers, are PubMatic. each and strategic new customers, multiple a form solutions extending and start growth. positioned quarter have into but formats our OTT in platform. agencies expertise initiatives upsell CTV bidding drive over-the-top as that from a omnichannel to cross-sell digital connected some We initiatives growth these existing XXX% vision new our by over revenue, first devices of to ad detail streaming of leading header Mobile, acquisition, provider technology of by will let the guide me much

which advertisers. and applying digital will all publishers data. advertising outcomes digital advertising and means simply all automation First, programmatic, become advertising Programmatic and better will consumers, creates become for

significant brand professional grow content walled our the user-generated the Second, a of advertisers prefer opportunity the of business. giving gardens, the to open to safe content internet to

consumers to in which devices connected difficult by the will Third, used be predict it's future.

long-term operate and lastly, success And evolves. innovates consumers it always advertising However, an processed behavior will low-cost amounts more significant we and generate to customers. is better must by consumer more products. and omnichannel platform hardware of digital and us want ad create therefore, in can far their for point infrastructure. PubMatic that to real-time controlling always media network, in requires infrastructure consume efficiently stack, data want as our brands layers a than of enablement And makes will our durable and Every advertise all solutions. be impression individual outcomes software, including

service interests which capabilities interests. our programmatic business where infrastructure vast is core PubMatic from, publisher publishers our our on name via provides power don't The to customer's Our the transactions. of a is this publishers, automatic. technical usage majority comes focus with data model our aligns cloud combination real-time have of the and that PubMatic based essential through intensive needed

we expertise additional data bringing advertiser providing each revenue platform, and addition by publishers ad In increase to their header with our and to incremental impression bidding technology demand.

benefit across variety Our and all devices, of work highly formats, important of track to which Publishers bring efficient and us and ad a the this growing rapidly our compete also from OMNICHANNEL channels, properties, media of to sales platform an geographies. publishers record rapid on innovation, own industry. because their evolving independence allows perspective ecosystem. inventory, we we strong And not helps of them is in do with

and are top verticals, variety partnering developers games. of the publishers and company, Score, a IBM's As apps and of websites mobile app across end Flipboard QX, mobile work portfolio their Properties, with with eBay, weather a the including and of such and content Digital we of and X,XXX in Unity as leader the

with bring globe integrated dollars We platform side from course, the inventory to ad demand fill customers. and of also platforms to our are, across publisher our programmatically

that fewer chains strategically Over their on few as and agencies, have competitive infrastructure us believe mode. providers advertising PubMatic. a and to We to provides scale supply standardize while the their omnichannel more business spend quality, past us arrangements we transparency, our agencies and years, incense like We technology advertising larger inventory significant global value infrastructure advertisers they cloud extended increasing our and ROI. provide with specialized advertisers incumbent with

and digital from increasing the XXXX. it's in to And high next digital ad the a and will global eventually eMarketer performing to And three digital years. entire over to XXXX. in spend over Magna data than have with our and as these represent better they annually global efficient of According through all customer optimizing at advertising we benefit innovation. and rate benefit billion driven ad We extending are at us profits. industry XX% grow years, result that transactions by automated generate revenues control XX% our many the well it competitive infrastructure. positioning outcomes infrastructure allows capital us. greater for The We that of a expertise believe to infrastructure customers of built and and or our a represent that the significant the $XXX requirements market. approach infrastructure, will generate programmatic And expected the believe and is our ourselves is net spend continuously we more estimates advantage digital approaches continuous expertise along center footprint as deep

digital programmatic Within and market, the app, to both advertising X% years growing focused we gains are mobile grow are ahead, market in advertising continue currently video cater. mobile in market broader digital XX% structural and $XXX addressable want our at XXX sectors, three billion video and market market a share OTT of that given cater. X% CTV. share well-positioned is has grew of an by PubMatic from advantages. and billion on Programmatic Programmatic XX% believe the cater, a market. that growing programmatic a and OTT We share the estimate is gardens. gaining short a $XX We an digital solutions we growing independent share form decisively at a walled XX% video billion market our market share the we and or We to $XX is CTV at to our hybrid QX,

the to the forward of been of season. relevant transformation. are COVID-XX We stick, as has bigger as as believe pulled as to around online. opposed particularly of their multiple driving more than market these And going of online, QX activities offline opportunity consumer world people shopping stores. do that mortar e-commerce people holiday growth also the digital One it change, the example share, consumer significantly to shopping years acceleration We brick more behavioral will and anticipate transitioning during was accelerated further many of changes behavioral forecast is has the

that and the to the grew to the partners changes of scale channels. second we e-commerce between they half saw Given or flexibility seamlessly XXXX pandemic half advertisers shopping on XXXX. marketing vertical the XXXX, consumer pandemic first that bring shift The XXX% taught of and platform need also our over dollars has from nearly

to be impacted technology. and made made real-time also as innovative PubMatic year, and for benefit which ROI commerce. shifted. to Over the decisions more provider shutdowns advertising will stable in cost chains goods a advertising and while maintaining as had decisions infrastructure strategy local Physical past believe be and impacted of These supply the availability efficiencies, we budgets digital had and of sale

drivers at growth specific Let me the PubMatic. turn now to

has drivers gains addressable PubMatic our growth spend as and existing result of and future. for customer growth key a new can acquisition, market and that trends grow us give the As the are market rapidly buy-side opportunity consolidation. three grows, These share outsized experienced growth, publisher transformative confidence drivers, to industry we of tied directly foreseeable revenue convergence

First, Vungle and app. PLAYSTUDIOS In WeatherNation we new and new add signing publishing continue [ph] and XXX partners, in in customers. TV mobile added XXXX, and we to OTT Glue publisher including CTV

words, insertion actively Our transparent transactions video the the we orders. for industry market of CTV, non-programmatic strengthen has OTT/CTV manually. vast majority other towards mobile forward or via the Today, short formats bidding. header and also like pushing growing In in OTT are newer path formats and paved transactions transacted form where the

our We market for mobile growing In and and we our on the wrapper market, our digital to CTV generally in available solution video. bidding made XXXX, just the CTV successfully fast are mobile have technology beta this focused as with header QX. web, by exited app done bringing product program we programmatic disrupting

our Importantly, advertisers a publishers well parties. infrastructure is their for which and existing which relationships CTV ROI into extends and buyers, revenue, both With publishers as our extend generate our customer many existing positions increased global generate our OTT higher bidding and header approach ad for win to approach, inventory. advertising

building was via agency in resulting solution. in kinds They case while In to for recently CPMs, signals header they U.S. better a we advertisers. to by bidding increase the were their than are who published strong early a are that higher inventory results These XX buying the more purchased our CTV CTV fact, platform. with monetizing XX able maintaining inventory the approach slightly via impressions study top ROI flat our to lower of significantly we

over working end XX We are OTT now publishers and of specifically CTV, of for with the QX. as

short our I Digital rapidly important annually and three streaming market at $XX and a the XXXX, in CTV whereas video video, the call As is is form to longer to in format $XX a in times roughly content. at $XXX and opportunity growing actually or OTT CTV out and digital also size. today as XX% bigger excluding is growing for in Digital billion video billion exciting $XX strong is to CTV us, growth want more billion billion growing coming to XX% today, video years. OTT contrast

them mentioned business, at our the and that against the is our we revenue, ads a billion It QX, combination to share outset, fact market drive mobile video rapidly. OTT $XXX very we form is market growth very in expansion. successfully of over multiple XXXX. our I which majority both are excited and is video of that video today and to executing grew Similarly, As have a share year-over-year CTV of by growing XXX% about excited our over and display in and the I'm and business, we're monetization via drivers short omnichannel

new rapidly we're as customer we Just are growing growing from base, our also base. revenue publisher our existing

with full needs the revenue platform. onto based consolidate of of and strong our we to our their expand year the our For XXXX, XXX%, business retention net dollar demonstrating ability customers achieved

have high-growth solution. TV, bidding connected the by relationships of open our publisher new our well by and to header wrapper as introducing it value as wrap as app, formats, mobile increased as such We such expanding products, video ad

business our needs platforms of business Our to capture better advertiser and teams and efficiency, share sell-side while tasked educate known broadly onto and about customers Under agency our publisher accelerating Supply innovation of with via and their integrated servicing for are omnichannel our and them, spend, and to growth our higher budgets business. transparency to learn fewer continues to And consolidation greater has a a able driver been as identify our opportunities publisher ad extensive arrangements Optimization the agreements, be customer Path specifically grow growth platform. single the success their engaging ad lastly, customers for of our we're business.

ad by designed deal year-over-year spend buying For over in efficiency. supply example, increased result major that a optimization agency a was as XXX% to one of increase path QX

visibility budgets of ad to As greater increases makes and stickier a buyers with share us it allocate their revenue PubMatic, publishers. our

We as agency Bayer on like data of in into ramping features product and business our significant to these a as terms. platform Procter agreements and supply provide arrangements SPO complimentary path partners. optimization In & QX deals, have Gamble combination with on new over integrations, XX% demand XX% via XXXX. progress companies, and of large advertisers with entered we ad agreements major via our have the custom XXXX, platform holding all platforms, to volume-based as well are of continues of SPO in side made buying approximately our DSP buying and to compared QX our these All workflow

and gain we In addition continue to share. continues the to PubMatic is well-positioned these to to key evolve industry feel market growth drivers, strongly

industry the which size The gardens. of grow internet open the partnerships walled rapid to advertising the Desk announced X.X Hub providers of ID identity has market including is identity leading we key LiveRamp changes, recently many our Unified with Trade consumer driving with relative solution. through example, Identity the will PubMatic For globally, and believe

industry As specifically. that the economy our due unknowns in opportunities we excited acknowledge for look some remain about to we COVID-XX XXXX, ahead are to the global extremely and

certainty. There create verticals we Some underway others well-positioned important which the accelerating, of do within are changes in someone believe to digital we consumer like for, are are away while return. travel advertising but privacy, arena industry

to digital remain within ecosystem advertising programmatic we that shift which digital as to and in others unique continues incredible cannot. in very puts built compelling way the and company grow. We to However, serves an a and optimistic these continues takes, advertising

as I'm around has three people not of to success the team been Our significant much as entire a so remotely XXX market certifications We is now we more our places and XX added the globally employees to do, them work people poised a team across without would have company. that been possible public to PubMatic as began share is create team. work by world to awarded continents. pandemic. of this journey the gain as our our we incredible XXXX, onboarding There and These humbled to a consolidate it our fuels of in hard growth team ambition grow market. long-term our times to size of great the December, drivers is our today dedication continue ahead. the what XXXX, years due net market new XX success to The share and

growth ad call customer of a have cloud consistently And to keep I'll have delivering innovating addressable with strong profitable to the us which to and innovating our proven We grow while and a believe for devices. strong differentiated quickly Steve customers cash we that us the positions market ability turn lastly, formats platform Pantelick financials. infrastructure we shareholders. drive allows drive to our flow, over for well now our and to detailed retention,

Steve Pantelick

Thank PubMatic you, and welcome CFO. I Steve am Pantelick, Rajeev everyone.

call I'm our achieved $XX.X million. growth outstanding the discuss earnings with year-over-year, income very As a adjusted results company, pleased for to first $XX.X XX% public net of of of as quarter. record revenues million We EBITDA and fourth our

entered are With across we these with market. business and actively momentum participated a large results, global solid growing and our in XXXX

we world, apart well-positioned and global and grow with an in platforms to across customers company, existing As in ad formats from market are every and omnichannel major new China. the

of deals supply drive expansion continued will that optimization growth. anticipate path also We our our

recap of will drivers I the five into quarterly to success jump to believe financial that financials, long-term the would business. the Before briefly our lead key I like we

have industry. of businesses our global in few the we scale one First, fragmented highly

markets. both geographically existing and continue is world distributed expanding in with efficiently. the new allows presence infrastructure customers, effectively Our and major go-to-market all ad to across and specialized us cloud This local the

ability of model our from of and and our usage stickiness retain to combination corresponding existing and a based the high degree customers provides visibility. grow revenue revenue Second,

Third, we margins. have high gross

our driving our model Our customer automation excess CapEx long-term is average with of to XX% to coupled our an Fourth, manage growing over led nine of highly has business efforts last years. the gross margin workflow efficiency, base in efficient.

model is use infrastructure rigorous capital invest us generate Our efficient our management. operated And consistent enables long-term to we innovation. cash lastly, consistently and on emanating built offshore technological owned our that and advantages, expenditures from through R&D capital durable in flow of structural working and

of was year XXXX activities. result, positive cash operating consecutive seventh a As our from net

Now or growth revenue we the year-over-year. XX% into million of generated of In quarter. fourth $XX.X quarter, the

Our by lesser of advertising top strength spend line related across longer personal presidential and finance; XXXX notably growth was factors, to a a a election. extent ad incremental technology the driven XXXX; to and number to e-commerce several as holiday compared season verticals, U.S.

video We QX XX% represented in of video our growth revenues also the and sum short omnichannel the and revenue. OTT/CTV was mobile, our that grew OTT/CTV of combination XXX% of important milestone total key an revenues, achieved roughly form over video factor of A the as year-over-year.

full the the of XXXX. in a half revenue industry experienced the to growth, Revenue the our with recover display ad are video half; in second headwinds the There challenges outs throughout in couple of to in grew strong acceleration related desktop key regarding mobile pandemic turning second and the the half year. call strongly across XX%, the Now following year despite grew first XXXX earlier year. started market

was to video these results second customer grew the An of total growth. existing effect XX% important desktop revenue contributed our the year-over-year recovery, plus of in half mobile and With display combined XXXX.

retention the dollar year For based XXX%. we achieved strong full XXXX, net of

Overall, which for should business, our in desktop It contributed from total XXX concentration X,XXX added largest revenue new impacted developers about the it's at for to that publishers also Verizon solid saw end XXXX. of XXXX Media be single Group, and publishers were existing Verizon despite a noted COVID-XX the of recovery app we added the new XX% customer display while Revenue Group new XX% QX. of also a and revenue a significant ongoing publishers reduce number of pandemic growth revenues of customers pandemic. versus accounted by articularly we We XXXX. of Media

optimization driver important in deals for Another advertisers supply has us been XXXX path with agencies. and growth our

we seen ad to to increased our opportunities In XXXX. in relationships catalyst increased processed In XXXX point capacity. platform. XX.X order on take revenue impressions our platform of XX% we the trillion these the as advantage significant number onto serve have throughout buyers for the We growth. we a to consolidate in dollars And total, XXXX from trillion year, by of XX.X final

expand the to gross we in Turning compared XX% our margins. QX, our to In were year. significantly to able prior XX% margins

Our gross for margin to expanded XX% also to full compared XXXX. XX% year

As constantly to through With compensation profit. million operating targeted optimizing in The are headcount strong of operating direct margins our as optimization, process achieve year-over-year. incremental time, cost we are GAAP we to focus near targets, we're QX in we our in significant largely $XX.X cost fixed resulted of impressions XXXX, we operating expansion expenses platform implemented reduced earlier, our stock-based or to infrastructure. we year-over-year. a our a our result platform I and our expansion, high achieve combination for able mentioned quarter. achieve management, revenue have owning Because When XX% leverage. costs gross Illustrating a XX% capacity respect million get we revenue term, of to the flow we because successfully increased and typically exceed this at capacity point, expenses. Once point and planned by our of growth on QX per leverage

growth. For XXXX, related we drive plan to to and continue members in investments to team invest

Full to public XX% net was was XX% XX%. EBITDA by the over EPS $XX.X incur operating dollar in income flow higher from prior to $XX.X result in diluted XXX% of net over grew Overall, margin through the XXX% was revenue revenue XXXX. We EPS fourth incremental to year income XX% It Adjusted XXXX XXXX. of high $X.XX million, plan and impressive of QX profit for prior the which platform. the we compared million, year. QX also $XX.X will costs. we compared year and cost up due was basis year-over-year. ahead course was of strong the year substantially quarter revenue than $X.XX an of increase GAAP expect XXXX. in our on primarily year company or on compared prior absolute $X.XX million expenses leverage $X.XX to revenue was achieved of was our the This to net

EBITDA year, million profitability or our $XX.X full of the over internet spending incremental the For Acceleration a summarize, of in mobile was XX% revenue, key driven bottom of our consecutive XXXX. focus line growing QX, and To adjusted both EBITDA helped video spending a of our XXXX's deliver key buyer strong people increased several was increase adjusted result breakout of ad margin as omnichannel substantial optimization to in has profit drivers. XX%. long-term increase activity line. globally, This in in election is by related open platform U.S. our verticals and and presidential like profitability e-commerce target the to I also us reflection in and growth call want year and a activity on focus agreement XXXX, path due our to investments capacity. top XXXX out our the signed and eighth supply of that of

market $XX.X cash well trends share generating and growth to We cash long-term positions full platform believe advantage operating advertising in incremental ability of people, that activities generated to investments capture capabilities flow. of in Turning XXXX. through year targeted this cash take for the from and and We us capacity. digital net the million

cash of and in our ended securities support growth For with accelerated XXXX in $XXX million. cash, XXXX marketable and example, We XXXX we beyond. equivalents investments to capacity

Accordingly, assessing guidance. the full that year the I our XXXX particularly underlying unprecedented surrounding pandemic onto estimates several are difficult, for XXXX. based The for conditions unusually summarize. conditions market we of makes second and on half assumptions QX will the Now providing

our multiple our had and of omnichannel terms In XXXX. relationships well-suited eMarketer expanding a the we see this and from video, In take e-commerce to the Further study, SPO Coming be strengthen growth opportunity. clearly XXXX. global retail by advantage driving drivers year, from into is to we almost business grow favorable mobile to in regard, point, this XXXX speaking, sales according momentum to e-commerce. trends projected of are recent broadly revenues, e-commerce to XX% solid

quality advertisers from seeing elimination size have We of that of around uncertainty high audiences In solid inventory and Apple's there we momentum, with is and the QX, are IDFA. publishers e-commerce top reach. impact ad to timing but

was QX, we year-over-year stages comparison, year. spending when significantly impacted we early will as above For anticipate in the be fable average of the last pandemic advertising lapping

of second the Due Moving into the conservative of of strong XXXX, second the the think macroeconomic a to in to the conditions, is growth pandemic, terms and half around combination uncertainty of lapping year. be it appropriate half in very we our countervailing second we in year-over-year such that potential growth pandemic Despite status, elimination and factors half confident growth revenue guidance. year overall, Apple's year full IDFA could rates may of reduce uncertain XX%-plus. XXXX, the as of remain achieve we that

of terms in Now, specifics.

between million range EBITDA For to XX% year-over-year margin. to QX XXXX, $X and growth. or XX% we of a EBITDA million, million expect Adjusted $X revenue between $XX $XX million XX% and XX%

revenue are range to we $XX million EBITDA million. process XXXX, earlier full the this company XX% of increase CapEx we And very us by margin. more in our capital opportunities, total depending we the accelerate noted we closing, should XX%. our to are XXXX about XXXX, progress are between the planned growth $XXX $XX year-over-year. be It are excited expect we to pleased opportunities but on be of of expect of $XX number with $X Overall, XXXX million we ahead in phasing over the even year. $XXX costs XX% Full $XX in to expected year million XX% public and Adjusted of XX% or million. between incurring to and approximately expenditures For million In million year or may to impressions in XXXX.

the allows and profitable open to driving believe of that, forefront innovating record for revenue approach questions. operator industry. to for and continue platform of we the and at the delivery turn have track right it our growth customers With right us cash to be Operator? We up over our shareholders. to flows Our call our and I'll the

Operator

comes question and the Q&A Your be Brent. from doing of Steve with live We'll Rajeev. a first [Operator Instructions] line

Brent Thill

I you what you slowdown. Snap off and are I relates why years. Good next low afternoon. some the Steve, been of trying There's XX% understand to that of you as numbers the just very many backdrop the -- question. several would for it to today a think twenties Thank the bullish would see guide, said like a such just posted, in bit, the for Other ad reconcile taking guess, major industry grow they spend. companies that

a discuss expectations? If had quick just then I And you question your Rajeev. maybe could follow-up for

Steve Pantelick

with you, good Brent. Sure. speak Well, to

is aren't picture seeing we big really the the slowdown. So, material

are, is a XX%-plus very is, to we're was coming and growth second guide XX% we long-term strong our obviously, reality growth strong have XXXX, the XXXX that off and to in do which And growth of half year-over-year. target. We XXXX, continuing a

comps the that growing video degree broader there have. nicely there recovery no macro be omnichannel, we all good of we from very Both tough, is but our feeling to material in fair the having that, and uncertainty growing, desktop business. mobile said environment. seeing are a perspective. drivers, slowdown Rajeev And display is in We're going are have and very commented, I about growth we So the our

the the through and investing being at the And update we each calls, we'll year these appropriately go analyst we're of So, public. conservative. community as

Brent Thill

us that Okay. on on update connected And just Can through you Rajeev, progress and see you XXXX? Steve. Thanks, TV. the just how progressing

Rajeev Goel

Brent. to Good Hey Absolutely. reconnect. Yeah.

growth business. growth in CTV. look, OTT really in I'm and several our of excited one It's So, drivers by our high

are formats, insertion the really orders, is increased the or scaled the to as think ad app approached how And outcomes. heading, their needs focus with strategy header manual where transparency OTT/CTV approach. just publishers do automation vast increased video, focused consistent market programmatic for and using monetization from digital and with such better revenue. we're needs Today and with mobile is really transactions on CTV aligning ad other non-programmatic a is for majority Our for very ROI of which of we the via buyers is of data on spend bidding, we've which

in XXXX. shipped beta. So, XXXX we started it building product for in mid We this in

And innovation. volume with year-over-year. mentioned of growing by XXX% nicely year, Now that short is we combination I generally grew our continuous over form as which QX product OTT/CTV, as in omnichannel available video a made well of scaling XX publishers our revenue, to both last video as earlier, rapidly very and over

video progress So, to business bottom alongside think we another app, it's alongside driver with really there we're mobile alongside is and and the our line SPO. growth pleased adding

Brent Thill

you. Thank Great.

Rajeev Goel

Thanks, Brent.

Operator

next your question comes [indiscernible]. from And

Unidentified Analyst

Hi, for assuming right? guys. taking me, I'm the hear question. Thanks you can

Rajeev Goel

We can, yes.

Unidentified Analyst

Just checking. you. Yeah. Thank

from the platform. So, you you're CTV SPO, about then the recent on of talk just header more talk needs happen just can for for available to and commentary, move secondly, commonplace? the the more CTV what SPO become advertiser And little as adoption happen publisher bidding what as more you broadly, more an for kind bit trends Like, to needs to seeing product just about XX% of and perspective? Can drivers I plus think of a to following up there? well widely accounted a

Rajeev Goel

Sure. Yeah.

and start, CTV me then the Andrew, we'll with move to SPO Let question.

transparency. who And We us. in to market our covering spend of advertisers So, I because gains significantly management That's look, share their we're and continue path XXXX of omnichannel infrastructure, optimization efficiency supply and deals agencies executing think are our buyers resulting deals. in our invested in sales out leader focus continuing on scale building in invest consolidate team. for are the PubMatic in account executing our SPO and global and to XXXX and a onto ad

about feel good So, resulting offering and competitive very rate. we win our

their and to get And arms it around this starts with media as so buyers the their some in of chain. are drivers, buyers to digital why moving really direction, supply wanting

supply They everybody look So They to coming what transparency, audiences kinds be Obviously to know want the to to want efficient. to know had in of where businesses they're chain. want more relook are at want make up. pandemic, they're They buying, of data out the efficient. their of kinds ads what buying has know more against. what fees showing like they to how their

meet really across means really their their they're And fewer needs a is a to buying variety high they make and that that needs of thoughts. they then work ad want and so humans formats. with platforms for for around of well, of on that sure And that inventory, want we can larger to more And that looking the they're the buyers. right? third thing it can behalf of ad ROI the not quality innovation that meet So course, world for different do put focused these I where from all our and are do think And together we when so buyer we their budget. revenue a And gets that in buyer do more way it we on that the means publishers.

driving our gains share so And with market really, SPO. what's that's

CTV, transition, time format the are are transacted majority take every of we to does there. drivers majority buying particular are impressions your or people ad transition, bidding are has technology question second seen used in of to how to And do around and In think how what used the some over turning to buyers take with vast the that in to publishers a how but header terms also in we've Now, that process selling. market.

XX We with us a two good example we're seeing via top very started header inventory had a great our of CTV who a U.S. a bidding this where published week traction, study So in excited. ago buying or agency makes which solution. the case

were they ROI in while increase flat CPMs, able than lower which advertisers. -- for by slightly these maintaining higher they more significantly that XXX their to impressions results purchased to for So, the

super our drive in that number the at via over I'm two quarters. that to just technology time, deploy -- capability with about We XX of need and of XX excited that to that fact And continue already publishers so, header buying to the that we're data replicating we evangelize to of buyers. and the a we publishers on publisher will need same side. ramped to And more buyers kind with different bidding. kind

what going growth continue growth. a think, innovator on it's long-term I bit be can as very to replicating for drive But slower focus than to And this we're we others ourselves. drive think the a where well-positioned we that So the little to market be as we approach are is doing. important

Unidentified Analyst

you. Great. Thank

Rajeev Goel

you. Thank

Operator

Justin question Patterson. And from comes your next

Justin Patterson

Two, hope much. I'm I I very glad. you Thank if everyone's healthy can. now. and well right

growth on XXXX additional then are added CTV, capacity and follow-up. clearly around the a start new in of of given that. quick channels of come optimization? in you momentum impressions the like So, one investment the the I'll First, platform thinking you have and and capacity and had I'll But business with in lot that platform

Steve Pantelick

Sure.

good reconnect, So to Justin.

ensuring key when the to So, in perspective, nearly ingredients opportunity one approached investments that run impressions, very the new from we we when do that we've our see ability our of can the by on of And we competence, XX%. targeted was to the certainly increase make opportunity. whenever be case is over bring cost our the And profitable effectively. XXXX, long the we we those by impressions so have capacity monetize

So, multiple to as see across continue XXXX, at factors. we we look growth opportunities significant

talked display omnichannel of and, we've video, CTV Of recovery. of course, about and up the ramping the mobile course, desktop

there's We'll as And always that if XXXX a the XXXX, to we so we accelerate at take of to invest capital well. will do look chance expect I in us opportunity capacity beyond. grow believe in in about for $XX expenditure And in then, allow to XXXX. very expansion total the this to year that to million we investment when and And did as categories. range fully this $XX million all nicely continue across

Justin Patterson

your pricing open the There's come and inflationary identifiers, to it the privacy on like have targeting Steve. to appreciate the love IDFA as these the other industry and Got actually considered Rajeev, And thinking cases a where this some around and for I of it's alternatives could threat, out hear into comments emerge. you're sounds the Would growth we puts place. it. cases be the through third-party Thanks around just spend to remarks. then web. there then how cookies prepared during takes And

and the through think you how hear to takes. puts curious So,

Rajeev Goel

obviously of degree change. of area it And is Absolutely. an high Yeah.

building we that's opportunity to consumer of share a content and tremendous look, underway the open seeking for the And really to also and position cookies of like known identity previously about gardens. transition has open think scale. away from by its combination a with solution. moving the within the is safe opportunity relative ad that walled market the the our excited internet that is identity, a better that. or to anonymous known are IDFA And So, identity, not internet grow we're Advertisers third-party for existed at brand tracking,

this And heavily we're solutions. so, behind opportunity have multiple created and investing

So just minute if on those can, a solutions. I I'll spend

And valuable what lays of can we've advertiser solution. solutions, budgets. no allows to Trade a that created solution X.X, then to solution identity as from uptake Criteo, an identity is to advertisers infrastructure this publishers that's And first, done we're on may is our party users. the known high Unified working identity and access many anonymous with we've So, providers, them for And publishers that the their unique partnered advertiser's all layer which a Desk of groundwork first and provider publishers, the integrate others. have we've publisher a And with, data seamlessly seeing ecosystem, an identity. of for degree leading manage transition both so and the LiveRamp, ID these really the a from and software matter second, many

of by built up a make deals into and package both market, we segments the so, targetable private advertisers being them advertisers. by publishers users to these used that's And and solution marketplace

they're in. really logged an this audiences so, when not opportunity to is And target

and ad are on So, ultimately, we're known our both about from we the from lead brand means to we're to is wide for anonymous platform exposed infrastructure, that spent. a again, spend here of customers and the -- benefiting and the both will to utilization think any I benefits as leveraging the conversion our And why ROI we're advertising ad ad us. single key our our as increase spend transition we of different this omnichannel, variety not overly think formats identity which have to agencies performance advertisers potential device, well in platform, or increase so excited format and

Justin Patterson

Thank you both. Great.

Rajeev Goel

Thank you.

Operator

is question Brian from next Your Schwartz.

Steve Pantelick

we Brian, can Hey, hear you now.

Aaron Kessler

It’s Aaron Kessler.

Brian Schwartz

hear me now? okay You

Steve Pantelick

Yeah.

after. then got come we'll Aaron Brian. you And right you We to Okay.

Aaron Kessler

Okay.

Brian Schwartz

you So for wrap just quick two wanted in Aaron puts follow-up to there. between the that waiting the Steve, some on ask real up. of that. guidance, Thanks, one

type travel in distress what distressed terms economy of those a those customers? your baking With are you and in XXXX assuming the any or recovery industry guidance? Are you in from publishers those recovery the top of from of areas line,

Steve Pantelick

industries We've recovery recovery first saw see of We on starting have recovery are and hit some in And in a guidance. that the you do And later robust XXXX. on for a the -- QX the quarter. the hard first in the already of continuing take some We that hard timeframe. future. of think one. largely QX obviously, that's hit display, I'll Sure. seen in to perspective was desktop follow-ups any We year. see then, recover these pretty plan which I

say, all be emerge those robust as, technology do end really we're the we the of by So, an year, But and that the across advertising can omnichannel start globe. important finance, as recovery, will not as address that let's advertisers. needs given speaking, personal broadly areas. going e-commerce the company, the to there's think particular to we And

year. targets being business this And to it of long-term so, we able exceed have that's and portfolio of us why a growth of competence the gives XX%-plus our

Brian Schwartz

COGS you was talked the you're XXXX. We're bit to one think Can that. talk of a where investing see a happy here Thanks, great. the about your Steve. to the margins terms which in always And investments investing is versus and It CapEx guiding little XXXX? bit the you growth in little you're just on guidance. on follow-up looks like line expenses. I You're here, down more margin But

back on just So, Can light you going? a shed clearly, into the business. you're where maybe little is investing spending those Thanks.

Steve Pantelick

start gross that quarter, margin being in always there's takes track some we'll going of the many Sure. that investment. timing business. I years with we've of had of confident particular for because And XX% out and to be the I'll am margin. puts continued gross around Well, be on fairly

maintain that competent very and the that into going to So being achieve future. on able

out predominantly our aggressively development. company around engineers does we're of going growth, in -- India, And in investing Now of offshore new engineering. is we're all hiring our to the where that be particularly

The well as sales our of video. of and around audience to offerings is identity, as growth second new our course, continued area growth the initiatives mobile globe around and around marketing and, drive omnichannel

our people, growth line and capacity. towards our And achievable investments lesser are long-term beyond. be feeling in year of target XX% overall, extent XX% margin bottom very the is, this I'm -- and to So, and confident going is then that EBITDA to a

Rajeev Goel

little there. if could that, just to a more color I And bit briefly Brian, add

cars, think They're that a purchasing have anticipate opportunity on consumers obviously shift more Whether the significant we it's of and portion or a and spending didn't time. been future. the before. internet, doing food, activities things there's they how ordering that new internet these time online the huge that work-from-home, think in internet will leveraging that They more are types all size and of we banking the school-from-home, I stick of of right? of online, the in they're

And lot so, we us. a opportunity really see a of ahead long-term of runway, of lot

market not advantage and XXXX, drive really in take behavior point, the the years. are for coming for to to really but us expansion we Steve's shifts consumer investing so, over And share of only

Steve Pantelick

add just one could I if comment, Brian. And

public here incremental costs of million. company, $X a are we incurring about As

this that But, through and, is be structure course, and cost incremental XXXX stock-based beyond. an our obviously of normalized So add comp to will flows on of year. course, OpEx

Brian Schwartz

Thank you very much.

Steve Pantelick

Brian. Thanks,

Aaron Kessler

me? guys Can hear you

Rajeev Goel

can. we Yes,

Steve Pantelick

Yes.

Aaron Kessler

couple of guys. A quarter questions. Good easy. was That

brand? It around very QX and DR mentioned versus just for call you circling First you the bidding of -- advertisers of about Thanks. seems more the e-commerce And header versus Any debate, community? thinking marketplace strong. kind provide. publisher how just maybe can additional are bit other kind term. then longer I would CTV was of Rajeev, on of maybe upside, there color any private kind Do budget flushes? to think of a quickly. Is you the views a this difference see for as just you any also back verticals versus a

Steve Pantelick

Hello, Aaron. again. to connect Good

of an perform have factors. to business was and mobile we So, outstanding to mean, with very quarter, I a a respect The omnichannel and fourth continued really of did variety video function well. it quarter fourth

And of in of vertical, of that important the course business, of -- XXXX, ad mentioned, well technology, fourth success a comments, to over our is personal as over a finance that's course, business that, prepared I business very our As quarter. of e-commerce XXX%. second part the underneath half And advertising. accelerated the my big part as

operate we And in brush world. display how COVID shows other recovery. the nicely. felt we're is broad and wasn't particular it so out the global to for very desktop as a that, that's it important starting successfully saw of was we me, very figure And function area just sign And a it growing that one economy, component a because to

And presidential into so, trends be to beyond. expect this piece incremental continue pleasure And sure to won't and I'm one is, the I those the of that everybody's election. repeated, obviously U.S. year many

track was year. we a that nice replacement related find this incremental to on spend to there So which for that, are

Rajeev Goel

is transactions the as question, as that that about that prefer transparency the as And brings leads we of advertisers CTV see Great. we they we with allows transformation to -- private ROI on talked bidding. marketplace and header participate What driving the course, I well ultimately spend header publisher revenue. to higher bidding so, in mean, efficiency both higher them that more and because get

have seen Now, what in that And their mobile forces, on set annual is we've digital to short and can and happen well, in sales goals video as form those this term? and the often again, goals play app display publishers, basis. short are they an out

looking a buying same market to advertisers do. they're that's the get of in certain a they've into is drive more to to higher transactions. how out P&P it goes efficiency and ROI. order goal the what at more publisher are a And time, that transparency, shifting so and they're And got amount But

will middle. two the those So, in meet things

going every and a sense. more efficient approach have we makes the that confidence that so a more lot into driven, move automated to of And is obviously bidding market header

actively so, transition work and the we'll publishers play And that to with through. both see buyers

Aaron Kessler

Got you. Thank it.

Operator

today's Q&A back turn to concludes the over call of for any the call. I'll That Rajeev remarks. portion now closing

Rajeev Goel

Well, on extremely entire of for into thank earnings the excited joining and going and today. with our work momentum performance first for We're call here grateful us I'm everybody the hard you Great. XXXX. our PubMatic team. dedication And

share, and a increase drives approach day. our for expand We great drivers at us. better as and revenue growth against, multiple look have upcoming you and executing we outcomes driven forward Have market we events. to seeing our highlighted, profit for infrastructure our we our investor customers we're As

PubMatic (PUBM) 24 Feb 212020 Q4 Earnings call transcript