PUBM - Earnings call transcript Q3 2021

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Operator

Hello, everyone, and welcome to PubMatic's Third Quarter 2021 Earnings Call. My name is Meghan and I will be your operator today.

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

As a reminder this webinar is being recorded. After the speakers' remarks, there will be a Q&A session. for today. you Thank Instructions] your attendance [Operator I Clements with turn the to Stacie call over The will now Blueshirt Group.

Stacie Clements

Thank earnings third afternoon, us XXXX. you, everyone. Thank you good operator, for on call ended quarter PubMatics' the for September XX, and joining

call and on Goel, Rajeev our live of A Steve Pantelick, will the and been recorded, our Co-Founder remarks copy can on Today's host website prepared Joining have CEO; be press after Steve are me and CFO. investors.pubmatic.com. which found release Rajeev at Q&A.

Before I this regarding and start, without forward-looking would we strategy participants like statements that call, statements, to during our limitation, make growth outlook. remind future performance, management will financial including

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

uncertainties reports Forms with with are investors.pubmatic.com. You and Form and these X-K about Securities factors our most on any risks, can XX-K time on are which and to or other the Exchange time recent and our available more subsequent find the Commission, Commission from including filings and in XX-Q at Exchange information file Securities filed

in Additional XX, the on quarter will XXXX. our ended be information set Form also forth September report quarterly XX-Q for

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

information informational will press include financial GAAP only these in measures with accordance comparable to financial to will a purposes turn to directly most presented In our and supplemental GAAP. release. for measures. is These I addition, in substitute measures And the non-GAAP not for should non-GAAP presented over the available considered A now, measures call reconciliation of are be today's certain discussion references Rajeev.

Rajeev Goel

Thank you, Stacie, and welcome, everyone.

quarter, well ahead exceptional For of the delivered our fourth consecutive expectations. results, we

sell-side As future operations we underway year, increase a generated of net results. fuel margin, we inclusive XX% $XX.X million last market fueling year. last XXX% business income over are and million the key to GAAP and profitable in our record for market two dynamics growth, margin, growth from organic We million continued There growth invested adjusted XX% model. revenue industry-leading in $XX.X growth record EBITDA an generated XX% our investments outpaced in $XX.X quarter. platform, of $XX.X significantly or an or cash million strong or in are of that over

the last ad years, First, innovation sell value the pace, over the is of for a demand consolidating winners foreseeable grow just delivery as rate, the And rapid with ecosystem spend customers. five at a rapid the to consolidated at market based with and on second, expected continues to clear elevated side the digital actively future. side emerging

where trends, adjusted these margins. exceeded consecutive our EBITDA and revenue that to I'm of back results pleased four XX% marked we growth the On quarters share XX% year-over-year latest both have

business, is impact a an industry-wide further, our the industry not a iOS-based is to part on would the small I recent concerns removal basis. revenue mid-single of the go I like of percent Before This of digits address about Apple's IDFA. issue. of advertising

is limited So us. its for impact at most very

similar Apple’s years ahead innovating CTV, web, mobile for Equally platform get desktop We OTT are important, changes well iOS a in with hard have anticipated and to of work we at scale and as includes as been environments. several well-diversified and non-iOS them. which and omnichannel other app have

and first-party has our place, a IDFA alternative revenue advertising third-party cookie identity and Hub second. Identity aggressively. platform two-thirds bring our a we direct up to scale the continue Audience the platform at solutions, from data our to Over revenue example, level, to in a For identifiers Encore valuable majority first of and response At end of and are platform brand Apple's a of macro which QX.

conversion-based for more measurement set challenges in and detail this platform. are later advertiser have that verticals on So, on a will of attribution call. And relatively associated we have our finally, impactful less us. well-diversified Steve

the model, that Now, in moving advertising, share share on, garden our programmatic market the We a business through contrast, the SaaS of models, our with Expand coupled high-growth when ahead. addressable to grow XXx leading other X% we had of approach, to estimated of value IPO, our by X% this similar Land non-walled software do upside. incremental with as we deliver to participate time years we we their traditional market, revenue and to to In a in usage-based ambitions customers, companies.

of rate result, are a at As to the Xx Xx we the market. growth growing

and for expect alignment rates customer a time growth. revenue this visibility the into year-over-year strong giving over third future full provides XX% raise We the of XXXX retention high revenue year level year. drives expectations also to our Our us revenue greater confidence now

budgets CPMs. our their model of us their both Buyers expand concentrating our Publishers with activity expand by at a on of their that usage the incentivizes by behalf innovate share objective usage-based platform and ad on higher they digital to platform. monetizing Our of on continuously usage our growing ad inventory publishers on buyers higher expand platform. more

or this buyers, is interfaces via with APIs to and easy self-service of makes for All which publishers it seamless us. them business for done do

platform expand we of elements foundational high-margin more years technology flywheel drivers our in across core value business. their more the usage-based growth our our our breadth many spent to delivers, to customers. have our the continuously the We customers team the us and platform, the The generate, our more model, and reinvest enabling that usage support building revenue

further. flywheel we the Importantly, been providing us profitable the years even have for for to many dollars accelerate investment

buyers. supply platform, their path the create by their audience increased driven our of and into SPO, on talk optimization market automation, or offer via years usage ago. deals. our transparent we've path increasing. record Let ad several differentiated more with SPO because omnichannel global the pioneered ROI. how expand third a The us solutions optimization for about data and addressability supply spend Buyers ad and In solutions, our spend first rapidly trend high-quality alone, number entered me PubMatic, value is addressable Buyers inventory, consolidating all infrastructure. for we are integrations, advertiser We of we quarter workflow

which third-party data the is expansion, for A underway, the SPO. side buy sell of particularly Apple's the Additionally, value shifting out, drives the and ecosystem further to are significant the phased side buyers of as from proposition via transition is cookies in deliver IDFA we publishers. value to industry

innovation our with is Our unique data first-party this driving to results. opportunity and publishers on focus via long-term access great combined rapid

example, and For platform. Semasio applied their rather Germany platform Encore PubMatic Omnicom and demand-side directly partner use on than the Netherlands from our it data Audience via

a via relationships and than as for compared As tripled saw increased ROI. create supply same when to on value ad Further, a their the advertiser increased in these we Omnicom result, their Results DSP. and significant more the Omnicom of optimize uplift applying SPO buyer the PubMatic data click-through creates rates reach sticky like how demonstrate inventory needs. spend viewability campaign in

of five optimization. in ones supply and Over three the every will smaller the path major to we agency believe next years, engage many and advertiser

one of that omnichannel buyers' are only independent sell-side for media. being buyers' needs, meets criteria owned platforms of We couple of and any global a

do through to inventory, continuously Our for monetization whether monetize. through our and profitable which strategy approach this innovate our PubMatic products of with our more This incremental publishers ad drives and We This pool the cost ad increases to to to increase allow profit accelerates Land their through turn a deliver inventory. of unit larger their A or us Expand platform and digital flywheel. that in typically higher journey utilization. is starts and generate revenue creates growth monetization our monetizing their down impressions. with a by publishers ad strategy, publisher's drives with of need CPMs impressions

including add additional digital to generate PubMatic, are ad additional strong publishers and to properties formats. through As incentivized inventory our revenue more platform, they

formats, Local publisher dollar-based sticky Meredith Newer expand header and Other and usage revenue product Hub and inventory. are In the CTV Publishers platform broad CBS product to examples like first-party Encore last bidding CTV, and with and revenue publisher publishers, formats time. over in inventory These grew journey. factors expanding is our net CTV and for for XXX. existing for adoption. app our publisher identity Audience of these activation, started to and Ultimately, also data, new business such Identity or for mobile publisher through twelve our continued add their OpenWrap products, of forward create jumped provide visibility. their improves management our the significant very landing data new additional within expanded the publisher retention us over Newsy, path acquisition and desktop also as year-over-year us value over growth of count lead throughout of that Crackle industry-leading moat relationships in believe like months. third XXX% competitive and quarter, and base. products our into We our with for strong our a deployment for fuel Xx portfolio CTV, expansion a addressable

track distinct high profitability. revenue growth we combination and a of record indicates are driving GAAP Our

innovation, profitability which that differentiated, allows to turn in drives digital usage approach our increased Our in us resulting to of infrastructure driven platform. highly re-invest advertising customer continuously in is

for Our fastest of our runway we and in software grow share. create us to addressable of market global, independent of platform the companies to further accelerates the customers growing is our in usage-based large the which our to us business and share market, model, allows some omnichannel, capitalize similar The flywheel. value and significant with positions to a nature growing us ahead on world,

invest and such in Path CTV, and addressability, like variety of our in order usage. continue infrastructure, formats moat to as customer and grow our aggressively video, Optimization, as well mobile, operated to high-growth as Supply a growth enhance and owned initiatives, audience We online

Steve detail. provide Chief Let turn over Pantelick, additional me Officer, to now to our it Financial

Steve Pantelick

Rajeev, welcome and you, everyone. Thank

bottom-line from significant we on fourth growth, and operations, were quarter results ahead we consecutive cash QX We top of fronts. delivered well organic material Our generated flow guidance. outstanding a our number saw of and

Our last a significantly of XX% strong and of the on durable, growth model. by margin, record increase factors rapid year’s confidence These robust platform, usage-based significant over-performance third and marginal and with resulted cost $XX.X This or of income high XXX% Adjusted combination profitability EBITDA XX% million, was in XX% was top The last year. an growth. higher raise increase of $XX.X year year-over-year quarter our business and acceleration year-over-year. made revenue million, leverage the omnichannel guidance. to performance of our us scale $XX.X well-diversified net Revenue than have a giving XX%. million, driven a was full is for both resilient global an collectively our

Our platform the create owned financial they consistent, a become. the investment and across growth are format of innovation, long-term for operational excellence. in The and QX more region, value was was use by-product revenue channel. our of customers, results dynamics. our infrastructure and operated and favorable stickier QX the demonstration these our relationships every clear strong we more

out, brand on As advertising ad ad opposed budgets, are as Rajeev spend. with dollars associated platform primarily response pointed our direct to

In high our addition, small to channels ROI we ad of minimal IDFA on as other is of Accordingly, part saw iOS-based advertising elimination the and advertisers impact our a shifted Apple’s formats from platform. business. dollars

than placed ads programmatically via our platform. During XX,XXX QX, advertisers more

top by except spent platform the more double bids the is in advertiser Ad not formats, XX up for in ad across inventory. omnichannel Revenues businesses who array revenues on verticals saw over our of per XX%. for publisher represented aggregate our over approximately total across more two-thirds vertical than triple was impact grew publishers’ of impressions XX This and is every digits than XXXX. XX% marketplace our diversified spend impression QX us the limited. over The video With we bid, and year-over-year scale, delivers year-over-year. or chooses political to were well XX% mobile bidded ads and quarter. our ad of Spending verticals. and multiple growing the the increase and our to an advertisers $X,XXX real-time If number

monetized business formats Our up online last performed Group CTV related programmatically OTT of QX publishers and in inventory QX over third in was Total over the grew Verizon path from desktop company CTV our year. and deals. revenues usage QX. XX% represented ad more plays strongly all deals, in XXX than seven revenue agencies video than comprised inclusive we publishers spend our optimization and revenue spending in quarter, renew XXXX from of year-over-year launched up to times platform. sign with quarter, and last to XX% grew also formerly of more XX% XX% of year. in Yahoo Media Revenues display channels these across total the grew business and XX% XXXX. in down third our as Supply grow the SPO advertisers new and via an approximately ad over of existing expand total role agreements in line revenue In continued QX, SPO with quarter. important XXX

We and of publishers. same dollar-based last we impressions trillion With our from processed usage as from important new strategy, revenue QX, impressions Hub the satisfaction impressions our platform. We existing upsell processed Encore In also publishers. net publishers retention more continue we increases and expand for of footprint from and view the added XX our and amount our double driving Audience to nearly usage OpenWrap, an publisher retention. than of products like Identity expand our expands indicator our The land period year.

For ending year mark over high-water from comparison this metric naturally significantly the in QX no level longer results set. We'll a at comparable this QX XXXX, period up the XXXX months are a had normalize XXX%, ago. XX the once

infrastructure to our long-term improving us reduce and enables optimizing customer of while costs outcomes. Our strategy owning our unit

XX%. to quarter platform, reduced and Importantly, we margin, our impressions profitably successfully of focus our can XX% by quantity grow continues impressions we a gross optimization consecutive we processed we optimize million With fifth on the cost In per revenue of achieved and QX, monetize year-over-year. XX% our our above as efficiency increase.

increased leverage, costs increased successfully team growth, increased over a global of or of XX% year. from significantly year by and revenue four business growth income Moving million for up of With the combination last quarter points resulted diluted percentage operational incremental operating public and QX from benefits of EBITDA resulted from efficiencies The as year $X.XX. GAAP net Rapid and on majority technology our $XX up XX% million our in up revenue, year's in revenue have expenses XX% cost head OpEx strong in In revenue, Adjusted the in third the XX% $XX.X net ongoing level. in investments of revenue of or and a QX growth, count was margin in company was pursuit prior stock-based ago. we year-over-year. hires comp XX% revenue XX% $XX.X of EPS of the this go-to-market million, our in percent our to with teams. growth goals, operating expenses. of

securities $XX.X cash our net QX, increased to generated Year-to-date, ad increase $XX.X and flow. cash with QX. million, of our XX% by million. an Turning quarter from cash cash, In we cash million. of from we $XXX.X $XX.X activities marketable or higher We ended the of have total equivalents million

in adjusted year back spend in the due guidance. Now are and the some XXXX may in on about to our concerns chain. supply pull the revenue far outstanding we've a EBITDA. Anecdotally, QX Based on year advertisers and QX and our that fourth results momentum so to QX, full we heard for full both quarter raising guidance

possible there that in significant us are year. asset reasons occur less give personal business this such supply chains dependent health occurs A the may the for fitness. global confidence remainder it on is categories of as of proportion several finance While and and our

drivers. Our multiple scale marketplace omnichannel business because an global advertiser we have operate and with growth we to as shifts platform bidded is a resilient

spend. growth. political last benefited between or are $XX one-time in that $XX revenue as XX% expect strong we ad million we a QX, XX% Keep from effects For million to very year year-over-year and such lapping mind quarter

XX% of stack at revenue our plus two-year a stack growth to acceleration our is from growth momentum. XX% stack the the rate year two-year for XX% basis quarter growth achieved translates to picture on provides growth, XX%. we fourth QX Looking clear QX's last This guidance that our the a from adding an of

will we costs company fourth side, $X cost in new the a million the of public On quarter. incur approximately

rate our similar for as expenses percentage QX QX's. expect We GAAP to a increase at operating

to million quarter fourth the a approximately in and between EBITDA million margin. $XX XX% adjusted expect We or be $XX

$XXX year-over-year XX% significant $XX million are approximately implies million representing For we revenue EBITDA revenue million, our expect we a adjusted raising organic between basis, year expectations XX% whole year and XXXX, by In XX% our to guidance million XX%. by tier-stack $XX $XXX and million increase, and the expected expectations full revenue full are On our also of EBITDA revenue million growth. year raising XX% now to growth adjusted $XX line and our with $XX between or margin.

rates margins the into to million the We next will may be year. expect carry quarter to will QX brought through margin million XXXX. CapEx for A amount defer $XX be forward below slightly we future effect our consequently, months. costs significant from $XX The investment our put the over depreciation gross to QX of and XXXX. QX to be first of capacity And historical due from service several our full over investments

ad full more of our now to XXXX. expect terms in by than In compared increase year impressions of XX% to growth processed XXXX number impression the we

XXXX opportunities plan platform and to to the team in aggressively invest to revenue capacity. see, and growth Looking we we members hire

we consecutive quarters the have over we end cash XXXX. margins globe. in quarter even opportunities costs in-person excited related year our of into the are XX% growth into Additionally, progress customers reengages incur over office of to our the very expenses and pleased as adjusted re-openings are third but With ahead we higher and with of more momentum team incremental and will generation, closing, the entertainment material about and topline us. significant four we XX% significantly In the around with EBITDA going travel organic

ecosystem model. business to The benefit PubMatic trends Our global strength deliver owned rapidly scale our sell customers and our these we side to reflect and our value to the from operated our omnichannel the well-positioned infrastructure. and the due usage-based consolidating of financial is of results is and

a array over drivers We I are that we of will and turn to have of terms both confident could questions. call broad and set strong the on Based factors these coming and of a With revenue Stacie formats publishers diverse the years. we in growth growth significant channels. and profits buyers in achieve for

Stacie Clements

Thank Shweta you, Instructions] go Shweta. question [Operator from Please Steve. first Evercore. ahead the With Khajuria of comes that,

Shweta Khajuria

the about please. questions then, basis? could could what click what You rates -- you you're One Okay. this quick you as driving a lap us Two the your really me business? SPO, particular XXXX trailing those how rates product then Thanks on a from follow-up is portfolio this retention retention on expanding you on talked time having on your and XX-month a higher? topic, on normalized Stacie. you share is could seeing portfolio, of impact? much sort be what of Thanks. as same percentage double is but in biggest And SPO remind And did

Rajeev Goel

nice Well you to Great. see again, Shweta.

me first around and points let with So retention. your out start questions

important drivers And very So, solutions success. sure of one that publishers our that out our has have it really want. success we strategy the all of the about customer starts ensuring making been with

omnichannel you platform. have is ago demand we solutions advertisers onto that the we've know, years are in optimization path deals the and the formats as desired deals, that ecosystem. the bringing a And incremental on number across So, of by supply all launched SPO

the product combined dollar-based retention. advertisers publishers so of with And the effect helping having path us has offerings our been and net drive want, optimization supply cumulative that

of normalized the that, XXXX be XXX% now we our normalized companies with QX a a many the the the probably ourselves. that question set adjustment of to is spend level terms growth And in that the proportion, And comparison in with quarters line range. usage-based the will SPO regarding a terms in rate. SPO expectation revenue XXX% Now, level, once the very favorably like again grew benchmark is compares to that significant in

percentage line roughly is with our of total. quarter's proportion the So, last in

Stacie Clements

Great. Shweta. Thank you,

Helfstein Our next Go question from Jason with ahead, comes Oppenheimer. Jason.

Jason Helfstein

ask Thanks. two. will I guess I

ID of revenue So talked Meanwhile, adoption I alternative had out record of of identifier. start just want on identifier, X.X. the to Trade about said you two-thirds Desk kind an

XX% us I this then, the at together. a could just math, be So to range. help help of kind of bit systems XX% playing CTV least revenue bit revenue? a with might I understand if Thanks. maybe play be just maybe the two of around around was how just there Steve, refresher, a And a more probably in somewhere but work little in a

Rajeev Goel

will. I

let While answer Steve about first me thinks question, second the one. your

you and tracking to on that's years where So now as I from this Apple we've really third-party gets Jason right third-party a transition several delivering think cookie of much know, better things data what user, focused a away ad user like been voice ways right IDFA terms in the towards utilized. relevant has the for

I identifiers. our couple publishers a X.X software product in Identity LiveRamp so we're and Hub have and first-party area others allows that supporting a key which who a of publishers products another like is is of Hub allows solution more Encore. one those that now multiple have are Identity data. Desk's or And manage Unified And to dozen Audience identifiers this alongside Audience is think we then Trade audience identifiers. something ID Encore, first-party

maybe they're that know homes car to or some So data a targeted be consumer in use the like in campaigns. interested about they're sell sort able to of data have interested to to they

so, to expect of that increase our over And coverage together platform we on and rate to quarters. now to that's over gone from and continue the the two-thirds things that revenue driving are X% coming these

leads you talked a that to targeted third-party the and more consumer, say And not which around have higher us I CPMs, as relevant we further same challenges are ads of utilization our when platform. drive rates that much or I for would to better ads have we can of are And we about identity, the of and much that, the gives even cookie go lot seeing that others seeing so confidence deprecation. IDFA

think in on the replacement. for the than a building foundation better sustainable this It's advertising way the Internet. open actually future we is So relevant

Steve Pantelick

we've in over over But at growth broad separately a I'll And both when the you CTV to as mobile also, component of do of and break of last out that's CTV respect math, noted, set omnichannel from the XX%. is significant really sort strength Xx we we why overall your back-of-the-envelope focus revenue look grown our But business we and omnichannel with tell the that reason is mobile level. core Jason, that our seen And business. video on not the company. you year's offerings video

business vagaries the As And can the ecosystem formats of our up an navigate resilient in platform, publishers very successfully. focus on omnichannel that we want. the built consistent is advertisers innovation with that and a coming

from And a our CTV are And all it's is so, very our significant we down overall strong fact well perspective and the that business. and important the platform. growing alongside about creating mobile the path online very rapidly of video business

Rajeev Goel

could And Steve. to if I just that. briefly add Thanks

for Our quarters We've of than differentiated significantly faster been results major are participants not several growing market the now. new. several

If long-term focused to at building digital to of is XX% consecutive are Facebook quarters I that EBITDA really we to think Desk, of four for compared that And couple future advertising. XX% a our Pinterest to on last revenue on that's by quarters omnichannel. on growing adjusted Trade And for infrastructure Google because meaningfully to you look faster. the we're necessity

CTV. positioned is we're I these of ourselves really we've online we overly are focus in on results variety ad video single against. to obviously on high-growth differentiated think But a mobile opportunity a and for something with CTV significant app one innovating addition not well we're there And driving focused on formats. So, very format. focused because ad we're hard wide us

Stacie Clements

Matt mute. Matt. are RBC. ahead from think Swanson Matt, comes question on I Go you at next Our

Matt Swanson

saying there. again. off I on consecutive just said Okay by congratulations start I'll to mute quarters. three myself

I'll bandwagon So, the on SPO here. stay

Can and we about what secondarily, and functionalities accelerate differentiation really talk quarter great it's about are going another So that think and optimization see record as the differentiation. to number PubMatic? does down feels more value? really make like of driving to with to broadly benefits come more loss generating And deals. important then supply cookie of optimization just it unique supply more becomes consolidate IDFA When to you path who on features more customers guess I and

Rajeev Goel

Yes absolutely.

are first. the What with drivers start me of SPO. let the So

And I agency think with So to an SPO think of ago. know one years Number is, on pioneered deal innovate I our there's as with buyers. a we couple. a behalf you ability Matt several

or to buyers were first very having trend. then early those that So on delivering But ability innovate to since. up which SPO ROI I've deals means, many buyers obviously followed we with is an that critically behalf And for of important.

number different log of allows products them for have transparency we supply so their shading into a product data to bid advertising what's level chain. product example, sharing a in And which have digital happening

So are driving work of solutions us. in these types buyers with to quite differentiated

So quality And of highest we levels out sure out is buyers. were the fraud-free so first we put that guarantee making have innovation were inventory the is quality I one another believe inventory. a for of first we the to put to

can buy confidence platform. they would buying thought money or they DV I we with if omnichannel our platform refund So on our the scale. would highlight and key them there their ever through IAS or so global other And our others thing that they're then fraudulent inventory is on

able to formats. supply to agreements consumers do on be advertisers ad path optimization they as across are when formats be agencies and need able and ad reach need those they global basis a to executing So do to to it it they across want

on Valley solutions custom India. Silicon we're look our partly do team in at that a biggest I you based the when diverse then of because and partly the so bucket I And focus all those is of in in building And And engineering global we that other able very we're in buyers to for things think we the capabilities. think in thing a unique have industry. terms

some the that on So helps to with put are or specific advertiser it's projects workflow very a going operations. efficient that for to improve to be their engineers play efficiency agency other major able help integration us or

earlier SPO. really every all of I years ahead. prepared in think and out called think together engage think as the these will the in in helping of the I in us, we things SPO lead terms And So advertiser what's market remarks, are I major agency

consolidating major And in that's a terms in for winning us tailwind of think so market. and we the

Stacie Clements

Thanks, Rajeev.

Patterson Justin KeyBanc. from Go comes next at Our ahead, question Justin.

Justin Patterson

you. two Thank if can. guess I Great. I

growth. impression healthy very First,

lot As and we number as done hear Trade it's When investment opportunity largest impression in gains? threat? see further where That's as that has Then look Desk the you be do about from there Desk one. Jeff question of drive has drivers you how incremental toward and past. chain talked to you. the say comments those about simplifying question one versus do if you at that biggest growth, Trade the XXXX, potentially more Thank then DSPs, a what something the ahead think of number supply two. over could

Rajeev Goel

you take then first second? the can want to take the Steve and Do one I

Steve Pantelick

Yes.

So you nice with to Justin. reconnect

there So opportunities are significant underscoring. PubMatic cited, perspective, from for but the for worth that many reasons we've of already it's ahead our

able overall continue those the factors First, gaining and three market year. That very pandemic, positioned We're app. clearly really the but being into times video, The give growth and we CTV, benefiting share that the fact the aggressively future. tailwind keep combination to digital to continue XXXX sector online that us the to growing long-term expanded this we of behaviors certainly digital confidence many going fastest anticipate are sort started beyond. growing digital to two mobile business We're consumption. from to in well are with is of invest. times in The of XX%

that numerous one innovation, opportunities, of And particular advantage selected and game course, source. capacity of team on is not go-to-market increasing dependent drive plan to the globe, we so our because in opportunities these are around invest to to take going is

omni-channel consumption. seeing we multiple in drivers benefit have a there being really an of and a growing growth digital the where fragmentation are is world platform We of

Rajeev Goel

I so Justin And comments. on second see have to question, did a Jeff's chance your

of supply allows chain very very creators. deliver simpler, a our supply potential for advertisers, then line more the reason revenue in with our with is to say mission, And more greater a ROI And So own more content I spend and them focus. to means targeted publishers. for terms the the ad much is much line which creates his in chain of that that would simplifying in feel to efficient focus which campaign, that's Internet is

we positive. publishers, anything very that think drives is more So revenue for

I Desk multiple they've the driving looks for on a be another ultimately further chain. coming Trade platforms. like from an agency, improve years path among the simplify around I think supply advertiser and a lead optimization a but And consolidation process. been form winner that expect lot how from to So supply to lens I of sell-side now this Desk to we've from been working in variety think and initiatives again of with And beneficiary that we'll Trade different it versus a

Stacie Clements

at comes from Heaney Jefferies. ahead, question next Go James. Our James

James. think be on mute, I might you

Okay.

James Heaney

Sorry. me Yes. Hear No? now?

Stacie Clements

Yes.

James Heaney

I'm here.

that. Apologies. Sorry about

acceleration on So your implies guidance tier stack further QX a even basis. revenue

other prior you just that upside in strength nice Is clearly to you. is some my other the the the you So question. that's pretty behind would it What are biggest to any tailwinds of CTV, guide? that? magnitude first driving channels have say leading that's upside driver there of or That's

Steve Pantelick

strong year. our desktop from really cylinders. our all saw on XX% over mobile Xx growth video We very Well, We growth strong perspective, saw we of last XX%. CTV almost omni-channel over are hitting

to and through being see one Point will really pandemic. slowed be multiple our strong able number is, of been nothing course, point cash the our momentum across deliver we consecutive and our and down a this two, quarters. ahead invested doing revenue number us. higher. teammates investment for with quarter model the in This flow, fourth from with because significant new never We've perspective. is XX% And capacity opportunities tremendous and we this have of the or profit right business board. growth So We

seeing publishers really more that, bottom And the of is reflection is the The fact our around long-term as not they benefits helping model. top well. the our line but we line, a the beyond the more are focus business. strategy. a our quarter platform as our of on into that, self-reinforcing really fourth the just successful driving point effect. So we're usage-based a and a The successful, we the grow be more, they are this final And fact is use flywheel and the

are all we future. we really the heading growth the on factors So of are investing relevant for and

James Heaney

one another happening definitely in seen Steve. Great. Rajeev, space. a of Thanks, tech for maybe lot the we've And consolidation ad

in Is just acquisitions, there holding and if portfolio from the So that's just anything thinking are back that you been you think there about how interest you are maybe add of doing to? curious curious, could areas holistically. any that M&A guys you

Rajeev Goel

Yeah.

particular there's back. nothing, holding that's say us I in would So

M&A past, opportunities. the find at to I think, done we we've the some look in the to and transactions right continue market

a that are be things or think us those our that particular the where it could product, innovating. areas, and in in brings in I something map, that we're data-related in we're focused scale It would our in market accelerate a space. publisher geographic today, road not be technology build-outs very something could certain

own those can at rapid our agility a innovation all given we do us. given comes our rate. operating and with a we that I to ability I as ability you and So very it, of the our are have that, would very – on and demonstrated innovate on strong high focus think open organic focus say a really bar infrastructure, opportunities see owning have to

James Heaney

Great. Thanks, guys.

Rajeev Goel

James. Thanks,

Stacie Clements

from Marok comes Andrew. Andrew question next Go Our James. at ahead, Raymond

Andrew Marok

taking my for Thanks question.

the a little to down dynamics. this the on margin bit wanted about drill through You Q&A, spoke on versus call guys and I but growth the

Thank to sense And So incremental thinking to especially at drive further that and with from have And product you customers? R&D there how out? and you. sense I is side? model, the customers been might, might into that in really for margins are build on high make guess, to it that the what investment, high the for asking lean particular margins potentially anything value your point make about usage-based

Steve Pantelick

no something, our technology decade. equipment it's and for investments for and perspective, own innovation really of we've operated see there's a to go owned been shortage from in years. our benefits We've that can many So doing after. We close investment of the we

that for experiencing. going to us, drive of And the successful that so been retention we're the very continue do benefits model do revenue the we usage-based to have things the see are does that. And we because

going biggest opportunities. the so on growth focused And going be after going to innovation it's is be on to and focus our

mean, to that more doing investing of for the of effective one ROI more be that we see help a processes. offshore. to And more side able to that's for And the in team at optimization our important so future. out. And buy ecosystem of is very tremendous as faster that rates what have is And investment investment their of of the dollar higher supply the is so part We we're already technology related we us opportunity to pull the to have also path off. that a but Rajeev majority be to leverage points of in doing, called much, model innovate speak. done allows given I much, that of innovation our the

side drive And Hub, the innovation. buy last so the that be we're Identity successful new OpenWrap. the ranges well SPO publishers in through model help usage-based and as launched of putting to ecosystem, deals Encore the And those resources products really from all our work or as Audience help that two, year to we've

on business this all reinvesting of growth. keep and line on to us future. So, is built innovation we model part for allows driving top focused And the that the

Stacie Clements

ahead, from Andrew JMP. Go comes Our at Andrew. Boone question next

Andrew Boone

your that if that Rajeev, for there about do Two you market of XXx? make one questions. want I there other taking we early to did. guess SPO thing Hey. Rajeev to that from And XXx talked the drive be you to next to right be think that, I'm years and increasing I one Thanks have about two so can that able missing something your asking or is products gain? that, to kind is the in place coming able Jason of wave a that's be see you please, product can you on today add. portfolio do next Steve. want by first your share, I smile see kind you like in comments my one the for for if

Rajeev Goel

XXx goal a Look, long-term that look or objective. at as we as

signing carry perspective are towards space. going areas high growth not a rate to to innovation committing the approach up at But to to from we're the investment -- So, we within meaning, years. multi-pronged help question, your right, that objective. take next wide market And investing across those rapid mean we're a opportunity of in us aren't that a I things variety let an doing two really portfolio we product we're that

one. optimization like CTV, And so years. path at great Desk us several We've been of direction, is with high-growth there look make in ad we formats as one talked like app, like those. Audience the video. that supply in pushing online we've investing partners for to there. large and ecosystem. investments about Trade is clearly keep then, other we you'll along And continue And another see addressability And mobile big

one. that geographic format. singularly not are We there's Spain at. And focused think ad I we're in another is markets looking any and We then, presence on instance, announced other expansion for

help At as that So think get to XXx all create market that portfolio the a time these I of going we share. of consolidated. itself think investments time are it's of to over SSPs the us same market for

fast growth there's players to different of So opportunities. for all in and as the going grows, reasons a also we're very be of the investing on I fewer variety focused market think

Andrew Boone

understood of And of would I premium where quarter-over-quarter it's kind us of metric be XX% formats assume then, CTV with growth understand Steve, SPO were in down help just But weird output. growing that fairly that may if that's other kind quarter, kind an and that kind the CPMs the I think year-over-year CPMs shift Android, flat Can up the the a about of faster. you to in for ad CPMs? the

Steven Pantelick

Sure.

just question the bit. me unpack little Let a

the as our growing being how And an business. to indication want become that's really XX%. SPO flat nicely I First, percentage above it's to It's of just overall business is But in for the flat. opposed embedded is the growing business our total. articulate to of SPO

land-and-expand business. it to impression. successful that starts CPMs, very there's with the strategy. that we're to have When And our grow understand. Now a of strikes respect to we more out with in get our opportunities that with, the And doing dynamic important dynamic a out number we confidence

quoted impression of number take advantage that's And comments. in that trillion, we so XX to gross our expand capacity. the my that I And

So you marketplace. sell we the on actually up In have to trillion this depends created don't sell the dynamics of quarter. to past impressions bidded all XX It that. the opportunity marketplace a

those And monetized sold. our participate impressions. gross to total those get because get model, of it's usage-based model. proportion a and a that, In we in sell we So

CPMs our actually Now been up. to with respect CPMs, have stable to

bidded see be third that our CPMs overall the dynamic a which marketplace XX%. really and you function as revenue grew to drive our just in noted impressions revenues, able gross the we ability quarter of between is over So a and to and

we do our So infrastructure. own that to XX%. allows reduced of strategy past unit confidence these long-term quarter at operating This our XX%, our to year-over-year rates, QX us by by of we costs. this to have and Last reduce our grow owning because cost impressions unit

of ability capacity it's gross processing our long-term sets really get and monetization impressions successful us So our ultimately drive to is the what's foundation then for made those and all expand our efficiencies, success.

Stacie Clements

Right.

Alex Our Berenberg. at next question comes from Alex. ahead, Ross Go

Alex Ross

just Hi. one Thanks Hub. quarter. for taking had with the I my question on the respect to Identity congrats and

that the users dozen of are quarter more? if or a plus there a just was Are And you specific had are question. already solutions I ones asking had adding As wondering you for ID integrated. a IDs last then integrated? any plan second main for,

for mentioned first increased I this you rate You by the that know see XX%, head of you half I grow months XXXX? just wondering XXXX. the as of if head nine you. continuing it of count the first or to year was Thank of count. throughout increasing

Rajeev Goel

Identity in. the reason is the Steve data. Asia, that right? then every, sources in necessarily first different why prevalent US that same head or Hey, Alex, is important count and our identity are -- in regulatory to the piece? IDs respect are, not in of And why we different environments, say, participate Europe on geographic is integrate viable let's don't Hub, the let's geography the say, with Different solution we countries, the here ones So same in can question markets markets I to take follow-up the goal that

different might see IDs You the come forefront. to

support. really there is So we implement or limit no can what to

constantly implement buyers well and as platform -- we critical our requests ID on dialogue get of with are buyers So will for mass we sellers from sellers. and we we will a any put as in that

number that time. to Steve, continue you. expect over over would to increase I to So

Steve Pantelick

to speak Yes. Well, with nice Alex. you

spend we quarters profit I cash growth time, and have perspective, people from to-date to our higher as and We've down. outlined, of expected we current able And it and with investing digital is four about globally anticipate The this XX-ish Rajeev or XX% grow slowing been percent next will the ad generation. throughout us. Overall, year. been be flow and ahead infrastructure, have don't about considerable So multiple projections XX% in that we've XX% with that to success have drivers growth year. to

particularly rate around in XXXX. to expect go-to-market model. India, to of To faster our We double usage grow that we're the to infrastructure in teams keep based in technology that course, driving team investing globe by and keep support growth, going on members, our

future. things robust foreseeable results And so those the keep the for bottom going we're model revenue cash investing that when a very together, you factor on to that business line delivers ahead all proven us, opportunities and we see of

Alex Ross

Thank Great. you.

Stacie Clements

comes Our Chris question at Chris. next from Go ahead, Quintero Macquarie.

Chris Quintero

Two guys. Hey, the for me. take questions. questions for Thanks

Omnicom study Encore for product interesting. Audience really your the SPO thought case was First,

many guys way much how had from there's you can give CTV are to to gain into how on a major do said the players the do kind from customers are of and in it? controls you want a bit seeing XX growth think any CTV an as second players but think move see opportunity smaller And midsized media that more? update you medium-term? you product you I little more And DSPs? So that programmatic? quarter? short for with And a seems media quickly the machines, then inventory to share don't expand to you as drive some to It using you like too up on market question is, about that last

Rajeev Goel

Sure. Yes.

because And a first of sell big privacy Omnicom, regulations, the the get how the with one puts data targeted there consent consumer. meaningful right? becoming that applicability the from question data publisher And the which buy advertising shift publisher that that us, like driver's is from They're for to So ecosystem cookies, aware away, consumers the the the able that's privacy a on to their tailwind of is things ultimately seat Audience IDFA shifting side your more the Encore of happening part of used. relationship the has the because of regulations. and in is going enforce underway, side, the consumer. which third-party and to is able usage is They're think we for being

on triple able right of SSP, that's reason to you of DSP, SSP we for real at example And example there's to hops. some campaign. a consumer the the the And the between Audience And each additional publisher to reach that one the to have hop tailwind side, apply just Omnicom is where that cookie So us. with data think level is if just powerful Encore publisher, degradation. demand you the we're

you then a drops on side the the set when And of so we're with get the target of publisher, ecosystem. to the much you we're Because that that can number users broader embedded able to buy apply of users.

opportunity so that's And that, us. our infrastructure. that higher utilization of a commented to And that's think should -- for earlier of it on levels we big I a lead

when path a where our able think the key to we're part supply for that that revenue more the They're publisher. doing I advertisers pay buyer. part SPO and of value leads as in you buyer closer and partnerships can to it's to of agencies optimization engagements, what us, more willing ROI again engage we're to drive with more with show that for ad to for your we campaigns and the more and leads

question your second the Now CTV. of part

step a players in and it efficient reason I kind certain more big that because And back think in we participants. far last of creates take other campaign. go And to direct are service And in sell we the problems the advertisers that may bidded months simply managed a sales approach of of transparent more that believers the where of market approach. or a a quarter a just marketplace. for it's the in the is some for bidded So or saw all

approach, our advertiser a there's variety few is could XX a impression be typically could fully number to sell if bidders be bidded so take XX ad steps Well, an is different a gone. five of for to be now each that a In months could And back, campaign. which impression. you've got approach more the

private So talk lot about bids that there was leading advertising if to in one market. key how a it's think of whether of ad in or York, a are CTV transactions Adweek Xx we've transactions the CTV That's it's key drivers of or problem, buyer private and of us think that's executed plenty marketplace got impression. steps part the I deals what's of in back, it's And other for an programmatic a be that strategy. Recently our at open not growth more preponderance for of the New growth, one growth will future. of we

Chris Quintero

you. Thank

Stacie Clements

Rajeev. Thanks,

have come well. as have from We few questions a larger the in that investment community

power side. It's dynamic? script is first those the The around in for this in from concept helping about your question sell the you shift shift how are privacy the Rajeev. power tech the you side ad mentioned to changes happening demand And to

Rajeev Goel

Yeah.

on Hub and as innovation touched well we already applied as with think just there's premium Encore with positioned a beneficiaries real shift think I here is us. little a extensive data question. tailwind bit and multiyear that's relationships our focus world's think long-term Audience leaders I publishers. we're with as on and and the being footprint that most Chris' our in we And where again, a But for Identity

in changing is of foundation is well also of targeting And is going to data, away. of So unique data regulation, by and of consumer capture others, online And consented which from platform likes changes again, their first-party consumers the data between regulations. publisher. Google the and publisher what's consumer in data the sustainable consent the of industry relationship now more and that how enforce to how position data get and as as also is because used the are Apple, is more the is and the because third-party a aware privacy the

we a so, is And least this usage-based benefiting from at two model. One in we're have ways.

like able publishers' we to to put products inventory, more capabilities usage-based relationships much a and CPMs our And from with pricing those rise Audience have innovative us the model. advertisers data build benefit then and position are create Encore position they hub, of second Identity the not from they're stickier and demand application highly for higher publishers on in in themselves. value their So a Most this publisher. as those to

our deploy obviously relationship solutions, they for us. it stickier a when much So creates

Stacie Clements

understand we like think to better have for time This one question. approach. Great. And infrastructure-driven I more person our would

differentiator? savings, provide? cost does it from is your Aside what infrastructure competitive a benefits How other

Rajeev Goel

Yes.

more infrastructure-driven approach efficient moat higher our reasons: creates outcomes customers, for really So two a us its profitability. for better for to leading competitive us significant our for and

our with software. real by it's of industry infrastructure, all So infrastructure own important real-time that's and And able we're and That's that's control also that is it's layers in to network, the hardware characterized data-intensive. stack. right in transaction very an ads time processing, really

just how generate outcomes. two let you better give of So examples me brief we

with And day. of we DSPs. each the controlling per for auction layer, bids the network faster of more That transactions run we the demand-side process run. can hundreds So platforms can we means by get billions with auctions that we

and of always analysis usage-based real-time most liquidity, the up relationships revenue to higher do relevant have higher as to means the And for out we're that course racing you bids you within stickier transaction, us. to XXX against our where that times. the a to In processing And milliseconds auction hardware, specialized highest given our more the controlling much the our by model able which as we're speed price. maybe for milliseconds higher process ad XXX figure to with the clock creates can at transaction So means again, prices second, deploy publishers, hardware publishers. then

and set to speed data. data a means our do we're creates an for algorithms, stickier which can of can more get we we leads time analysis, the and time now again perspective, of the infrastructure you outcome. don't in optimal if to to own publishers because can't And more efficient prices publishers, can us. things things that hardware. do able relationships certain mentioned, broader have clearly, scale, processing don't public higher And for you We that run to higher more we use so So cloud, a different up owning have. once you And reach own from revenue which network our then as you with for clearly those we cost level our is a far own the

so a back can we about. flywheel our talked that portion our then And and moat, and take that key we've of drives really a is of part innovation effect this reinvest because profitability the into that

Stacie Clements

a at the two of or about the Great. minute top hour over We're that. just actually

to going I'm turn over So, for remarks. Rajeev it back to you closing

Rajeev Goel

companies for Great. model, fastest-growing Well, thank joining software with and everyone combination you many which consistent today. the distinct a for driving time in profitability. of world. usage-based exciting a is revenue high the us be us our growth very This of We're is

Thank And allows how invest opportunities variety to into flywheel that proven levers couldn't a you be wide of growth more we us and really all. excited have us. future. a we're for We the about the positioned front in of

Stacie Clements

everyone. coming of Thank with the rest your call weeks. Have This concludes afternoon you. We you look over to great forward our a speaking today.

PubMatic (PUBM) 10 Nov 212021 Q3 Earnings call transcript