PubMatic, Inc. — Call Transcript 2025

All right, why don't we go ahead and get started. Thanks again for joining us at this year's Raymond James TMT and Consumer Conference. I'm Andrew Marok, and I cover advertising technology and digital media here at RJ, and thrilled to have with me today Steve Pantelick, the CFO of PubMatic. Steve, thanks for joining us. Great to be here. Thank you. Why don't we go ahead and kick it off with the 30,000 ft view? So for those who maybe aren't as familiar with PubMatic, can you tell us a little bit about the company and where you fit within the digital advertising industry? Very happy to. So we were founded about 20 years ago. We're still led today by the technology co-founders. So we're very much product innovation focused. And we are an AI ad tech company. We are focused on delivering value to the four key partners that we have in the ecosystem: buyers, publishers, data owners, and commerce media networks. And our focus has been to build transparency, control, and now increasingly performance. And so we're very well poised to do that. We have tremendous horsepower behind innovation, scale, and we've been a pioneer throughout our life as a company. And it's probably worth me mentioning just a little bit about our partners. Please. Our partners, media buyers, obviously drive the decision-making. We have deep relationships with all the major agency holding companies, mid-tier agencies, the big brands, Mars, Procter & Gamble, and approximately 100 demand-side platforms across the globe. Our focus is to ensure that we are delivering on their value needs in terms of what they're trying to accomplish in their goals. We've done that from an innovative technology perspective as well as a commercial basis. The next important category, of course, are publishers. We have over approximately 2,000 publishers in our ecosystem. For example, last month we monetized on over 80,000 different apps. We have 50,000 advertisers buying every month on our publishers. We have relationships with the top 30 global streamers. We have over 90% of all of those global streamers. Very scaled, premium inventory, head-of-the-market inventory across the board. The next category, of course, are the data owners, data partners, companies like Experian, for example. And what we've done as a business is to transform our business to be able to be the place where media buyers can activate their campaigns utilizing now up to close to 200 different data owners on our platform to be able to find the right audience at the household level. And then finally, commerce media networks, a very fast-growing area, companies like Instacart, Klarna, where these businesses have very valuable audiences and are trying to expand beyond their immediate environment. And we provide the capabilities to do both on-site and off-site monetization. And so our mission has been to bring all of these parties together. And we are now doing that in a very efficient, effective way via our AI capabilities. Very interesting. And I'm sure we'll touch on all four of those constituencies as we run through the conversation here. But before we do, if we could kick off with a macro question. Sure. We kind of heard some uneven results from the companies under our coverage in 3Q, and you called out a little bit of softness in October in certain areas. From where you're sitting now, what's the latest on the macro environment, and how should investors think about the health of the ad buyer? Sure. From our perspective, just to start out from the PubMatic viewpoint, we had a very solid third quarter. We came in well ahead of guidance on the top and the bottom line, driven by the areas where we've been investing very extensively over the last couple of years. And that momentum certainly helped us going into the fourth quarter. Just for those who are not familiar with our third quarter results, our CTV business, which is nearly 20% of our revenues, grew double digits. Our merchant revenues, which now represent about 10% of revenues, grew over 80%. So really solid momentum. So in November, at our earnings, what I comment specifically on is that there were a couple of consumer discretionary verticals that had shown some, I'd say, muted seasonality. I wouldn't say it was like a negative. It was more typically you start to see an uptick in October, like leading into Halloween, but for a couple of those, muted, so instead of being X%, maybe a little bit less of an uptick. Now, having said all that, I also commented on there was not a widespread trend that we were seeing at the time, and so it's really think of it in terms of just a conservative viewpoint in terms of knowing and sharing what we viewed at that point, but one of the things that gave us confidence as we put our outlook forward for the fourth quarter is that we have a very diverse set of ad verticals, over 20 ad verticals across the globe, and the kinds of numbers I shared in terms of the advertisers that spend and the publishers that we have relationships with. So, our view is that going into our fourth quarter outlook felt really confident in terms of sort of the outlook that we were sharing, and arguably, based upon the data we had at the time, conservative viewpoint. Great. And then when you're talking about your four constituencies, I think people might be interested to hear buyers because the typical SSP value proposition has been the representative of the publishers. But we've seen, I don't know if you'd call it a collapse, but at least a blurring of the lines between the buy side and the sell side. So how has that ongoing industry dynamic affected the way that PubMatic has kind of come to market, and where do you see it playing out? So great question because I think it really speaks to who PubMatic is today. And so when I step back and take a look at what we're doing as a company in this ecosystem, there's a couple of really exciting things that are going on. Number one, we see advertisers becoming increasingly focused on performance. And coupled with that is the focus on transparency, control, automation. And so that's exactly what we do as a business. We've been expanding our relationships and our capabilities over a number of years. And so the trend in the industry is exactly what we've been preparing for. Number two, clearly there is now a shift towards value creation on the sell side of the ecosystem. That's where data is resident. That's where privacy compliance is well addressed. And so that is clearly here, and it's exactly where we've been positioned for 20 years, next to publishers and helping them manage and protect their most valuable asset, their consumer data. And then third is AI. And so we are well ahead of our peers in terms of AI capabilities. And that is creating some significant value creation opportunities for us that we're already taking advantage of. We started in some AI products in the presidential cycle, but this year that's really accelerated. We enhanced our AI capabilities for our buy-side focus product, Activate. And now on the publisher side, and that combination of being able to provide AI capabilities is really setting us up in a very strong position to continue to create incremental value for many years into the future. And ultimately, it's always what our customers say. In our products that we've launched this year, the one phrase that just rings in my head is that our buyers and our publishers are saying, "These products are exceptional." From my perspective, that's exactly what we need to be doing as a company, delivering on sort of their needs and doing it in an exceptional way. And I think you touched on a little bit there, the concept of the sell side being more important in some of the decision-making processes. So let's touch on the concept of curation or this ability for the SSPs to kind of package high-quality inventory packages for buyers to activate against. How is that concept of curation gaining adoption in the industry, and how are you capitalizing on it? So it very much is growing. And I think one of the most valuable things that we can do is to provide a very efficient, AI-driven platform to be able to take advantage of that. So by virtue of our long-standing and deep relationships with buyers, I referenced our many agreements that we have and the relationships, bringing those buyers into an AI-driven platform and being able to expose them to these very valuable data sets that allow their, whether it be an agency or direct brand, allow them to get more performance while getting control and insights at the household level. CTV performance is a very rapidly growing area. And so from our perspective, that's just going to become an increasingly valuable source of benefit to all sides of the ecosystem because ultimately, it's really getting the action as close to the ad as possible. And so from our perspective, we're very well poised, and we think that data is right in the heart of it. And that's why one of the important things that I'd like investors to really understand about us is that we've created a unified platform. We have not created silos where there's different you go to this part of the platform to do X and another part of the platform to do Y. You can do all that on one platform. So for example, Mars can go on and activate their campaign on our Activate product, leveraging the data, for example, from Instacart. And then right there on the platform, single hop to be able to then have control over what they're buying and then execute and see the results of that advertising. Really interesting. And maybe one more question on this kind of theme of the relationships between some of the various players in the space. You called out recently a DSP-related headwind and seemed to suggest that the headwinds on that were easing a little bit as we got into 4Q. So what's the latest on that? And kind of if you can give us a state of play on how you're diversifying your exposure to various DSPs. Got it. So I think the big picture for the audience who may be less familiar with the industry is that the industry has grown and scaled through the efforts by a couple of very large global buyers. You have Google, of course, The Trade Desk, Amazon, Yahoo, Xandr, etc. And so for our efforts, we've obviously grown with them, and they have become an important part of our buying ecosystem. Now, over the last couple of years, we also recognize that it's very important to start to diversify. And a really important trend has emerged, and that's the focus on performance buyers. And so what we've been doing to diversify away from the legacy DSPs is to identify those buyers and then work more closely with them to ensure that we're meeting their needs when they are delivering on behalf of their advertisers. And so our goal for diversification has been to obviously be the best partners we can with companies like Google and Trade Desk and Yahoo, but also expand relationships with sort of what we call internally the mid-tier, where the up-and-comers, where they are growing their business at a unique set of methodologies or data sets, and then making sure that they can define all that inventory on our platform in an AI-first approach. And so it's that diversification that we've been undertaking for a number of years now. One measure of that progress I shared the last quarter was that that category of mid-tier performance-centric DSPs grew 25% on a year-over-year basis. Another really important area are commerce DSPs. We have a very large commerce DSP that is growing double digits on our platform because they're able to bring the data onto the platform and then find the ultimate user that they're looking for. So it's not like a one sort of effort undertaking for us. It's multifaceted to do as much as we can with the legacy DSPs, but expand our footprint. Now, with respect to that one DSP that I called out the last quarter, The Trade Desk, from our perspective, we've stabilized that relationship. We are totally focused on being a great partner to them. You may have noticed that we are the first sell-side platform to do an important initiative that they're undertaking called Price Discovery. So from our perspective, we are open and expanding the appropriate efforts to work with everybody, but also expanding our business into many other areas as well. And finally, the last big competitive concern that we've gotten from investors on the Google trial, of course. So now we're in the home stretch here looking for the remedies decision likely in early 2026. So from your seat, how are you thinking about that potential range of outcomes now that we've heard all the arguments and the scale of the potential benefits for PubMatic? When we step back and just look at what's unfolded over the last couple of years, clearly the government brought the case and has now proven to operate a monopoly. That fact, obviously, is a really big positive because it underscores sort of the challenges that we and others have managed through over many years. Anything that's going to bring sort of a more level playing field is absolutely going to be a positive to us and others. From our perspective, obviously, what's on the table is both behavioral as well as structural remedies. It's not clear what the path might be. It might be both at this point. But if you just take a look at the behavioral remedies as an illustration, there are things that can be done relatively quickly that don't require a lot of, let's call it, spade work to get accomplished. And the judge can certainly say, "This is what the outcome should be," whether it be a monitor, whether it be elimination of uniform pricing rules, access to data. All of those things in the grand scheme of things are de minimis efforts. And so in that respect, if the judge decides to move quickly, she can certainly move quickly, and those things can get into effect pretty efficiently. And this is just reading the tea leaves. I have no insight other than to say I understand that the judge likes to move quickly in her decision-making. She clearly understands the gravity of the case and wants to right the wrong. We anticipate and believe that there could be some behavioral remedies in place mid-2026 or a little bit later. That's our perspective right now. Very interesting and definitely looking forward to see how that plays out. So you've talked over the course of the conversation so far about a lot of the AI initiatives that you're undertaking, but maybe if we could focus on a couple around the agentic space. You, as a founding member of the AdCP initiative, the announcement today of the integration with Context, I guess, how are you viewing agentic as an opportunity or even broader kind of AI-enabled advertising? It's an enormous opportunity, no question about it. And we have absolutely leaned in for a number of years. And I can confidently tell you today that we are well ahead of our peers in terms of execution, thinking, and making it happen on behalf of our customers. And so the things that we are well ahead of the game is first on the infrastructure side. So just as a level set, we have been owning and operating our own equipment for close to 15 years. And that has allowed us to be able to inject into that infrastructure the latest innovation at the pace and the context of what we think is going to have the greatest impact. So we've been collaborating with NVIDIA now for a couple of years, engineer to engineer, in terms of understanding what is possible. And that has led to some real substantive improvements into our infrastructure. And it's not aspirational. We are closing real-time bidded auctions more quickly. Think of it as sort of ad spend that has been reclaimed. So if you, and this is for illustration, if a real-time auction would close in 500 milliseconds, leveraging NVIDIA software and hardware that is able to be closed at under 20 milliseconds. Think of the upside to any company that can do that. And we are already doing that as a business because of sort of our leading position in terms of working with sort of the thought leaders and the companies out there. Now, that's just the infrastructure side. In terms of the application efforts, we've already been developing products for some time. I referenced an AI product that we launched with our political advertising efforts last year. Fast forward to this year, we've AI-enabled our Activate products, so fundamentally, anybody can walk up to that and execute a campaign. I think some of you might have seen some of our demos around that. On the publisher side, we've already launched this year 17 discrete agents for publishers to manage their business more effectively, quickly, impactfully, and so we are well ahead on sort of just putting agents in place, and the reality is so much of this is evolving so quickly that you just have to get your hands wet and sort of start working with the clay, and so that's what we're doing, and we're actually making material results, and then finally, to your point on sort of, I'll call it the transaction layer, we are a founding member with Yahoo, LG, Raptive, others, identifying what the standards should be in terms of agent-to-agent communication. It's obviously important that any leader sort of take that role, but it's specifically important for us because we've demonstrated an ability to be one step ahead. Understanding how these pieces are going to come together are going to allow us to continue to develop faster and more quickly and to market than anyone else. And why is that material? It's because the level of interest that we are seeing from buyers and publishers to talk with PubMatic about our AI efforts has just gone up dramatically. And it's not aspirational. We are doing it right now. And at some point, they'll talk to PubMatic's agent, right? But it's all fascinating stuff to see how quickly this is evolving. And the pace of innovation has been something to behold. Yes, absolutely, and I think that's one of the reasons why we believe that NVIDIA was very comfortable collaborating with us because they saw a company that moved very quickly, open to collaboration, and then actually executing. Yeah, great to hear, and then maybe kind of building off one of the points that you made in the course of that answer, I wanted to touch on Activate specifically, so how are you winning spend through Activate, and how are those customers kind of scaling into Activate usage? It's growing very rapidly. I shared last quarter that revenue from our Activate business grew 100% year over year. And just for those who are maybe unfamiliar with Activate, we've created a single layer of technology where a buyer can come onto our platform and to identify the data that they want to work with, Instacart, Experian, Klarna, and then execute their campaign right there with a feedback loop that tells them how they did. And so you get sort of efficiency, you get impact in terms of results and performance, you get measurement, and it's a self-fulfilling prophecy. And so a virtuous cycle. And so from our perspective, Activate is exactly on the trajectory that we would like to see it on. I'd say incrementally in 2026, we are going to invest even more resources in terms of the go-to-market effort. We have a great product-market fit, and we've already significantly ramped up our buyer sales team against our broad set of solutions. I shared at our last earnings call that year to date, we'd increased our headcount in that area by 20%. So we're very excited about it. It clearly delivers results. One of the things that resonates in my mind that Mars Petcare, which was an early adopter of Activate, in their words, Activate usage was a game changer for them. And so that is actually the best testimony that we have, and that's obviously getting traction. Great, thank you. Wanted also to talk about your CTV business. So you put up some strong numbers there in recent quarters. What's enabling you to win in the crowded space here? And while we're on the topic of how you're working with most of the top 30 publishers, do you think you'll get to all of them anytime soon? We're already working with over 90%. There's arguably one, maybe two, that we don't have access to. I would say we are super proud of what we've accomplished in CTV. We have grown this business organically. We've been doing it about four or five years. It's now just under 20% of all of our revenues. We've been growing faster than the market. In the last quarter, we grew over 50%. What's going on there? There's a whole host of things. Number one, getting more and more access to premium inventory and check the box on that. We're clearly doing that. Number two, we are finding new pockets of opportunity. We've seen great traction in live sports. We have created a live sports marketplace, and that's really resonating with buyers. We're also being innovative in terms of the formats. We have pause ads that we recently launched. An advertiser could come through Activate and do a pause ads campaign, and then from our perspective, a next sort of leg of growth is all the AI enablement that we built around that that will continue to sort of propel the Activate product, and then I'd be remiss if I don't mention we were a pioneer in developing supply path optimization relationships direct with brands, with agencies, and a core part of those relationships are around driving, obviously, more spend on our platform, but also about driving more spend through the most vibrant products like Activate, and so that will become, and CTV combined, that will become a real driver for CTV and Activate going forward. Got it. Thank you. I think we have time for maybe two more here. So the second to last being, over the course of the conversation here, we've talked about a number of different initiatives and product priorities and things like that. So how, from an investment lens, are you looking at the prioritization and scale of a lot of these different initiatives if there's a stack rank or kind of trying to do everything all at once? So we are definitely not going to do everything all at once. We've always been very targeted and measured in terms of our investment approach. I can unequivocally say that in 2026, CTV is going to continue to be a very strong investment area for us. Our new products, which we've really only touched upon a little bit, our emerging revenues, Activate will be a source of investment, commerce media, and of course, all the agentic work. So we have a clear understanding of the primary areas we're going to focus on. And then areas where we continue to invest at appropriate levels, we're going to continue to do so. And we are making choices. I had shared at the last earnings call that I don't anticipate our total company headcount to grow significantly, but we are going to put incremental resources behind these fastest growing areas like CTV, like Activate, like agentic. And we're going to do that by really allocating resources. So it's always a balanced approach for us. But what we've proven, and this is, I think, super important for investors to hear, is when we put wood behind sort of the key areas of opportunity, whether it be CTV beginning five years ago or Activate or now agentic workflows, we deliver the goods over time through our focus and execution. There's always wood to chop. And so before we let you go, the last question I like to ask everyone as we look forward into 2026, what's one thing that you feel the investment community should be focused on that you're excited about in the PubMatic story? So I'm going to take liberties here. I'm going to give you two things. You're allowed. Okay, so number one, we are very excited about sort of this head start that we have in AI. I mean, we're getting material results, and we're executing against that. And you'll see that sort of in our innovation and our revenues. Number two, following the headwind that you described with respect to Trade Desk, that's going to be in the rearview mirror. And we believe that we're going to be on track to re-accelerate growth in the second half of 2026. And so I encourage everybody to look below the level of sort of the top line and to look at what's really happening in our business. And over 80% of our business, if you exclude the Trade Desk and Political, we're growing quite nicely. And that's the expectation that I see you'll start to see in the reported numbers in the second half. But underneath the numbers, we are making great progress across CTV, our new emerging products, and now our AI capabilities. It all sounds great. Thank you for the discussion, Steve, CFO of PubMatic. Thanks for joining us. Thank you for having me.

Speaker 1: All right, why don't we go ahead and get started. Thanks again for joining us at this year's Raymond James TMT and Consumer Conference. I'm Andrew Marok, and I cover advertising technology and digital media here at RJ, and thrilled to have with me today Steve Pantelick, the CFO of PubMatic. Steve, thanks for joining us. All right, why don't we go ahead and get started. all right why don't we go ahead and get started Thanks again for joining us at this year's Raymond James TMT and Consumer Conference. thanks again for joining us at this year's raymond james tmt and consumer conference I'm Andrew Marok, and I cover advertising technology and digital media here at RJ, and thrilled to have with me today Steve Pantelick, the CFO of PubMatic. i'm andrew marok and i cover advertising technology and digital media here at rj and thrilled to have with me today steve pantelick the cfo of pubmatic Steve, thanks for joining us. steve thanks for joining us

Speaker 2: Great to be here. Thank you. Great to be here. great to be here Thank you. thank you

Speaker 1: Why don't we go ahead and kick it off with the 30,000 ft view? So for those who maybe aren't as familiar with PubMatic, can you tell us a little bit about the company and where you fit within the digital advertising industry? Why don't we go ahead and kick it off with the 30,000 ft view? why don't we go ahead and kick it off with the 30,000 ft view So for those who maybe aren't as familiar with PubMatic, can you tell us a little bit about the company and where you fit within the digital advertising industry? so for those who maybe aren't as familiar with pubmatic can you tell us a little bit about the company and where you fit within the digital advertising industry

Speaker 2: Very happy to. So we were founded about 20 years ago. We're still led today by the technology co-founders. So we're very much product innovation focused. And we are an AI ad tech company. We are focused on delivering value to the four key partners that we have in the ecosystem: buyers, publishers, data owners, and commerce media networks. And our focus has been to build transparency, control, and now increasingly performance. And so we're very well poised to do that. We have tremendous horsepower behind innovation, scale, and we've been a pioneer throughout our life as a company. And it's probably worth me mentioning just a little bit about our partners. Very happy to. very happy to So we were founded about 20 years ago. so we were founded about 20 years ago We're still led today by the technology co-founders. we're still led today by the technology co-founders So we're very much product innovation focused. so we're very much product innovation focused And we are an AI ad tech company. and we are an ai ad tech company We are focused on delivering value to the four key partners that we have in the ecosystem: buyers, publishers, data owners, and commerce media networks. we are focused on delivering value to the four key partners that we have in the ecosystem buyers publishers data owners and commerce media networks And our focus has been to build transparency, control, and now increasingly performance. and our focus has been to build transparency control and now increasingly performance And so we're very well poised to do that. and so we're very well poised to do that We have tremendous horsepower behind innovation, scale, and we've been a pioneer throughout our life as a company. we have tremendous horsepower behind innovation scale and we've been a pioneer throughout our life as a company And it's probably worth me mentioning just a little bit about our partners. and it's probably worth me mentioning just a little bit about our partners

Speaker 1: Please. Please. please

Speaker 2: Our partners, media buyers, obviously drive the decision-making. We have deep relationships with all the major agency holding companies, mid-tier agencies, the big brands, Mars, Procter & Gamble, and approximately 100 demand-side platforms across the globe. Our focus is to ensure that we are delivering on their value needs in terms of what they're trying to accomplish in their goals. We've done that from an innovative technology perspective as well as a commercial basis. The next important category, of course, are publishers. We have over approximately 2,000 publishers in our ecosystem. For example, last month we monetized on over 80,000 different apps. We have 50,000 advertisers buying every month on our publishers. We have relationships with the top 30 global streamers. We have over 90% of all of those global streamers. Very scaled, premium inventory, head-of-the-market inventory across the board. Our partners, media buyers, obviously drive the decision-making. our partners media buyers obviously drive the decision-making We have deep relationships with all the major agency holding companies, mid-tier agencies, the big brands, Mars, Procter & Gamble, and approximately 100 demand-side platforms across the globe. we have deep relationships with all the major agency holding companies mid-tier agencies the big brands mars procter & gamble and approximately 100 demand-side platforms across the globe Our focus is to ensure that we are delivering on their value needs in terms of what they're trying to accomplish in their goals. our focus is to ensure that we are delivering on their value needs in terms of what they're trying to accomplish in their goals We've done that from an innovative technology perspective as well as a commercial basis. we've done that from an innovative technology perspective as well as a commercial basis The next important category, of course, are publishers. the next important category of course are publishers We have over approximately 2,000 publishers in our ecosystem. we have over approximately 2,000 publishers in our ecosystem For example, last month we monetized on over 80,000 different apps. for example last month we monetized on over 80,000 different apps We have 50,000 advertisers buying every month on our publishers. we have 50,000 advertisers buying every month on our publishers We have relationships with the top 30 global streamers. we have relationships with the top 30 global streamers We have over 90% of all of those global streamers. we have over 90% of all of those global streamers Very scaled, premium inventory, head-of-the-market inventory across the board. very scaled premium inventory head-of-the-market inventory across the board The next category, of course, are the data owners, data partners, companies like Experian, for example. And what we've done as a business is to transform our business to be able to be the place where media buyers can activate their campaigns utilizing now up to close to 200 different data owners on our platform to be able to find the right audience at the household level. And then finally, commerce media networks, a very fast-growing area, companies like Instacart, Klarna, where these businesses have very valuable audiences and are trying to expand beyond their immediate environment. And we provide the capabilities to do both on-site and off-site monetization. And so our mission has been to bring all of these parties together. And we are now doing that in a very efficient, effective way via our AI capabilities. The next category, of course, are the data owners, data partners, companies like Experian, for example. the next category of course are the data owners data partners companies like experian for example And what we've done as a business is to transform our business to be able to be the place where media buyers can activate their campaigns utilizing now up to close to 200 different data owners on our platform to be able to find the right audience at the household level. and what we've done as a business is to transform our business to be able to be the place where media buyers can activate their campaigns utilizing now up to close to 200 different data owners on our platform to be able to find the right audience at the household level And then finally, commerce media networks, a very fast-growing area, companies like Instacart, Klarna, where these businesses have very valuable audiences and are trying to expand beyond their immediate environment. and then finally commerce media networks a very fast-growing area companies like instacart klarna where these businesses have very valuable audiences and are trying to expand beyond their immediate environment And we provide the capabilities to do both on-site and off-site monetization. and we provide the capabilities to do both on-site and off-site monetization And so our mission has been to bring all of these parties together. and so our mission has been to bring all of these parties together And we are now doing that in a very efficient, effective way via our AI capabilities. and we are now doing that in a very efficient effective way via our ai capabilities

Speaker 1: Very interesting. And I'm sure we'll touch on all four of those constituencies as we run through the conversation here. But before we do, if we could kick off with a macro question. Very interesting. very interesting And I'm sure we'll touch on all four of those constituencies as we run through the conversation here. and i'm sure we'll touch on all four of those constituencies as we run through the conversation here But before we do, if we could kick off with a macro question. but before we do if we could kick off with a macro question

Speaker 2: Sure. Sure. sure

Speaker 1: We kind of heard some uneven results from the companies under our coverage in 3Q, and you called out a little bit of softness in October in certain areas. From where you're sitting now, what's the latest on the macro environment, and how should investors think about the health of the ad buyer? We kind of heard some uneven results from the companies under our coverage in 3Q, and you called out a little bit of softness in October in certain areas. we kind of heard some uneven results from the companies under our coverage in 3q and you called out a little bit of softness in october in certain areas From where you're sitting now, what's the latest on the macro environment, and how should investors think about the health of the ad buyer? from where you're sitting now what's the latest on the macro environment and how should investors think about the health of the ad buyer

Speaker 2: Sure. From our perspective, just to start out from the PubMatic viewpoint, we had a very solid third quarter. We came in well ahead of guidance on the top and the bottom line, driven by the areas where we've been investing very extensively over the last couple of years. And that momentum certainly helped us going into the fourth quarter. Just for those who are not familiar with our third quarter results, our CTV business, which is nearly 20% of our revenues, grew double digits. Our merchant revenues, which now represent about 10% of revenues, grew over 80%. So really solid momentum. So in November, at our earnings, what I comment specifically on is that there were a couple of consumer discretionary verticals that had shown some, I'd say, muted seasonality. I wouldn't say it was like a negative. Sure. sure From our perspective, just to start out from the PubMatic viewpoint, we had a very solid third quarter. from our perspective just to start out from the pubmatic viewpoint we had a very solid third quarter We came in well ahead of guidance on the top and the bottom line, driven by the areas where we've been investing very extensively over the last couple of years. we came in well ahead of guidance on the top and the bottom line driven by the areas where we've been investing very extensively over the last couple of years And that momentum certainly helped us going into the fourth quarter. and that momentum certainly helped us going into the fourth quarter Just for those who are not familiar with our third quarter results, our CTV business, which is nearly 20% of our revenues, grew double digits. just for those who are not familiar with our third quarter results our ctv business which is nearly 20% of our revenues grew double digits Our merchant revenues, which now represent about 10% of revenues, grew over 80%. our merchant revenues which now represent about 10% of revenues grew over 80% So really solid momentum. so really solid momentum So in November, at our earnings, what I comment specifically on is that there were a couple of consumer discretionary verticals that had shown some, I'd say, muted seasonality. so in november at our earnings what i comment specifically on is that there were a couple of consumer discretionary verticals that had shown some i'd say muted seasonality I wouldn't say it was like a negative. i wouldn't say it was like a negative It was more typically you start to see an uptick in October, like leading into Halloween, but for a couple of those, muted, so instead of being X%, maybe a little bit less of an uptick. Now, having said all that, I also commented on there was not a widespread trend that we were seeing at the time, and so it's really think of it in terms of just a conservative viewpoint in terms of knowing and sharing what we viewed at that point, but one of the things that gave us confidence as we put our outlook forward for the fourth quarter is that we have a very diverse set of ad verticals, over 20 ad verticals across the globe, and the kinds of numbers I shared in terms of the advertisers that spend and the publishers that we have relationships with. It was more typically you start to see an uptick in October, like leading into Halloween, but for a couple of those, muted, so instead of being X%, maybe a little bit less of an uptick. it was more typically you start to see an uptick in october like leading into halloween but for a couple of those muted so instead of being x% maybe a little bit less of an uptick Now, having said all that, I also commented on there was not a widespread trend that we were seeing at the time, and so it's really think of it in terms of just a conservative viewpoint in terms of knowing and sharing what we viewed at that point, but one of the things that gave us confidence as we put our outlook forward for the fourth quarter is that we have a very diverse set of ad verticals, over 20 ad verticals across the globe, and the kinds of numbers I shared in terms of the advertisers that spend and the publishers that we have relationships with. now having said all that i also commented on there was not a widespread trend that we were seeing at the time and so it's really think of it in terms of just a conservative viewpoint in terms of knowing and sharing what we viewed at that point but one of the things that gave us confidence as we put our outlook forward for the fourth quarter is that we have a very diverse set of ad verticals over 20 ad verticals across the globe and the kinds of numbers i shared in terms of the advertisers that spend and the publishers that we have relationships with So, our view is that going into our fourth quarter outlook felt really confident in terms of sort of the outlook that we were sharing, and arguably, based upon the data we had at the time, conservative viewpoint. So, our view is that going into our fourth quarter outlook felt really confident in terms of sort of the outlook that we were sharing, and arguably, based upon the data we had at the time, conservative viewpoint. so our view is that going into our fourth quarter outlook felt really confident in terms of sort of the outlook that we were sharing and arguably based upon the data we had at the time conservative viewpoint

Speaker 1: Great. And then when you're talking about your four constituencies, I think people might be interested to hear buyers because the typical SSP value proposition has been the representative of the publishers. But we've seen, I don't know if you'd call it a collapse, but at least a blurring of the lines between the buy side and the sell side. So how has that ongoing industry dynamic affected the way that PubMatic has kind of come to market, and where do you see it playing out? Great. great And then when you're talking about your four constituencies, I think people might be interested to hear buyers because the typical SSP value proposition has been the representative of the publishers. and then when you're talking about your four constituencies i think people might be interested to hear buyers because the typical ssp value proposition has been the representative of the publishers But we've seen, I don't know if you'd call it a collapse, but at least a blurring of the lines between the buy side and the sell side. but we've seen i don't know if you'd call it a collapse but at least a blurring of the lines between the buy side and the sell side So how has that ongoing industry dynamic affected the way that PubMatic has kind of come to market, and where do you see it playing out? so how has that ongoing industry dynamic affected the way that pubmatic has kind of come to market and where do you see it playing out

Speaker 2: So great question because I think it really speaks to who PubMatic is today. And so when I step back and take a look at what we're doing as a company in this ecosystem, there's a couple of really exciting things that are going on. Number one, we see advertisers becoming increasingly focused on performance. And coupled with that is the focus on transparency, control, automation. And so that's exactly what we do as a business. We've been expanding our relationships and our capabilities over a number of years. And so the trend in the industry is exactly what we've been preparing for. Number two, clearly there is now a shift towards value creation on the sell side of the ecosystem. That's where data is resident. That's where privacy compliance is well addressed. So great question because I think it really speaks to who PubMatic is today. so great question because i think it really speaks to who pubmatic is today And so when I step back and take a look at what we're doing as a company in this ecosystem, there's a couple of really exciting things that are going on. and so when i step back and take a look at what we're doing as a company in this ecosystem there's a couple of really exciting things that are going on Number one, we see advertisers becoming increasingly focused on performance. number one we see advertisers becoming increasingly focused on performance And coupled with that is the focus on transparency, control, automation. and coupled with that is the focus on transparency control automation And so that's exactly what we do as a business. and so that's exactly what we do as a business We've been expanding our relationships and our capabilities over a number of years. we've been expanding our relationships and our capabilities over a number of years And so the trend in the industry is exactly what we've been preparing for. and so the trend in the industry is exactly what we've been preparing for Number two, clearly there is now a shift towards value creation on the sell side of the ecosystem. number two clearly there is now a shift towards value creation on the sell side of the ecosystem That's where data is resident. that's where data is resident That's where privacy compliance is well addressed. that's where privacy compliance is well addressed And so that is clearly here, and it's exactly where we've been positioned for 20 years, next to publishers and helping them manage and protect their most valuable asset, their consumer data. And then third is AI. And so we are well ahead of our peers in terms of AI capabilities. And that is creating some significant value creation opportunities for us that we're already taking advantage of. We started in some AI products in the presidential cycle, but this year that's really accelerated. We enhanced our AI capabilities for our buy-side focus product, Activate. And now on the publisher side, and that combination of being able to provide AI capabilities is really setting us up in a very strong position to continue to create incremental value for many years into the future. And ultimately, it's always what our customers say. And so that is clearly here, and it's exactly where we've been positioned for 20 years, next to publishers and helping them manage and protect their most valuable asset, their consumer data. and so that is clearly here and it's exactly where we've been positioned for 20 years next to publishers and helping them manage and protect their most valuable asset their consumer data And then third is AI. and then third is ai And so we are well ahead of our peers in terms of AI capabilities. and so we are well ahead of our peers in terms of ai capabilities And that is creating some significant value creation opportunities for us that we're already taking advantage of. and that is creating some significant value creation opportunities for us that we're already taking advantage of We started in some AI products in the presidential cycle, but this year that's really accelerated. we started in some ai products in the presidential cycle but this year that's really accelerated We enhanced our AI capabilities for our buy-side focus product, Activate. we enhanced our ai capabilities for our buy-side focus product activate And now on the publisher side, and that combination of being able to provide AI capabilities is really setting us up in a very strong position to continue to create incremental value for many years into the future. and now on the publisher side and that combination of being able to provide ai capabilities is really setting us up in a very strong position to continue to create incremental value for many years into the future And ultimately, it's always what our customers say. and ultimately it's always what our customers say In our products that we've launched this year, the one phrase that just rings in my head is that our buyers and our publishers are saying, "These products are exceptional." From my perspective, that's exactly what we need to be doing as a company, delivering on sort of their needs and doing it in an exceptional way. In our products that we've launched this year, the one phrase that just rings in my head is that our buyers and our publishers are saying, "These products are exceptional." From my perspective, that's exactly what we need to be doing as a company, delivering on sort of their needs and doing it in an exceptional way. in our products that we've launched this year the one phrase that just rings in my head is that our buyers and our publishers are saying "these products are exceptional." from my perspective that's exactly what we need to be doing as a company delivering on sort of their needs and doing it in an exceptional way

Speaker 1: And I think you touched on a little bit there, the concept of the sell side being more important in some of the decision-making processes. So let's touch on the concept of curation or this ability for the SSPs to kind of package high-quality inventory packages for buyers to activate against. How is that concept of curation gaining adoption in the industry, and how are you capitalizing on it? And I think you touched on a little bit there, the concept of the sell side being more important in some of the decision-making processes. and i think you touched on a little bit there the concept of the sell side being more important in some of the decision-making processes So let's touch on the concept of curation or this ability for the SSPs to kind of package high-quality inventory packages for buyers to activate against. so let's touch on the concept of curation or this ability for the ssps to kind of package high-quality inventory packages for buyers to activate against How is that concept of curation gaining adoption in the industry, and how are you capitalizing on it? how is that concept of curation gaining adoption in the industry and how are you capitalizing on it

Speaker 2: So it very much is growing. And I think one of the most valuable things that we can do is to provide a very efficient, AI-driven platform to be able to take advantage of that. So by virtue of our long-standing and deep relationships with buyers, I referenced our many agreements that we have and the relationships, bringing those buyers into an AI-driven platform and being able to expose them to these very valuable data sets that allow their, whether it be an agency or direct brand, allow them to get more performance while getting control and insights at the household level. CTV performance is a very rapidly growing area. And so from our perspective, that's just going to become an increasingly valuable source of benefit to all sides of the ecosystem because ultimately, it's really getting the action as close to the ad as possible. So it very much is growing. so it very much is growing And I think one of the most valuable things that we can do is to provide a very efficient, AI-driven platform to be able to take advantage of that. and i think one of the most valuable things that we can do is to provide a very efficient ai-driven platform to be able to take advantage of that So by virtue of our long-standing and deep relationships with buyers, I referenced our many agreements that we have and the relationships, bringing those buyers into an AI-driven platform and being able to expose them to these very valuable data sets that allow their, whether it be an agency or direct brand, allow them to get more performance while getting control and insights at the household level. so by virtue of our long-standing and deep relationships with buyers i referenced our many agreements that we have and the relationships bringing those buyers into an ai-driven platform and being able to expose them to these very valuable data sets that allow their whether it be an agency or direct brand allow them to get more performance while getting control and insights at the household level CTV performance is a very rapidly growing area. ctv performance is a very rapidly growing area And so from our perspective, that's just going to become an increasingly valuable source of benefit to all sides of the ecosystem because ultimately, it's really getting the action as close to the ad as possible. and so from our perspective that's just going to become an increasingly valuable source of benefit to all sides of the ecosystem because ultimately it's really getting the action as close to the ad as possible And so from our perspective, we're very well poised, and we think that data is right in the heart of it. And that's why one of the important things that I'd like investors to really understand about us is that we've created a unified platform. We have not created silos where there's different you go to this part of the platform to do X and another part of the platform to do Y. You can do all that on one platform. So for example, Mars can go on and activate their campaign on our Activate product, leveraging the data, for example, from Instacart. And then right there on the platform, single hop to be able to then have control over what they're buying and then execute and see the results of that advertising. And so from our perspective, we're very well poised, and we think that data is right in the heart of it. and so from our perspective we're very well poised and we think that data is right in the heart of it And that's why one of the important things that I'd like investors to really understand about us is that we've created a unified platform. and that's why one of the important things that i'd like investors to really understand about us is that we've created a unified platform We have not created silos where there's different you go to this part of the platform to do X and another part of the platform to do Y. we have not created silos where there's different you go to this part of the platform to do x and another part of the platform to do y You can do all that on one platform. you can do all that on one platform So for example, Mars can go on and activate their campaign on our Activate product, leveraging the data, for example, from Instacart. so for example mars can go on and activate their campaign on our activate product leveraging the data for example from instacart And then right there on the platform, single hop to be able to then have control over what they're buying and then execute and see the results of that advertising. and then right there on the platform single hop to be able to then have control over what they're buying and then execute and see the results of that advertising

Speaker 1: Really interesting. And maybe one more question on this kind of theme of the relationships between some of the various players in the space. You called out recently a DSP-related headwind and seemed to suggest that the headwinds on that were easing a little bit as we got into 4Q. So what's the latest on that? And kind of if you can give us a state of play on how you're diversifying your exposure to various DSPs. Really interesting. really interesting And maybe one more question on this kind of theme of the relationships between some of the various players in the space. and maybe one more question on this kind of theme of the relationships between some of the various players in the space You called out recently a DSP-related headwind and seemed to suggest that the headwinds on that were easing a little bit as we got into 4Q. you called out recently a dsp-related headwind and seemed to suggest that the headwinds on that were easing a little bit as we got into 4q So what's the latest on that? so what's the latest on that And kind of if you can give us a state of play on how you're diversifying your exposure to various DSPs. and kind of if you can give us a state of play on how you're diversifying your exposure to various dsps

Speaker 2: Got it. So I think the big picture for the audience who may be less familiar with the industry is that the industry has grown and scaled through the efforts by a couple of very large global buyers. You have Google, of course, The Trade Desk, Amazon, Yahoo, Xandr, etc. And so for our efforts, we've obviously grown with them, and they have become an important part of our buying ecosystem. Now, over the last couple of years, we also recognize that it's very important to start to diversify. And a really important trend has emerged, and that's the focus on performance buyers. And so what we've been doing to diversify away from the legacy DSPs is to identify those buyers and then work more closely with them to ensure that we're meeting their needs when they are delivering on behalf of their advertisers. Got it. got it So I think the big picture for the audience who may be less familiar with the industry is that the industry has grown and scaled through the efforts by a couple of very large global buyers. so i think the big picture for the audience who may be less familiar with the industry is that the industry has grown and scaled through the efforts by a couple of very large global buyers You have Google, of course, The Trade Desk, Amazon, Yahoo, Xandr, etc. And so for our efforts, we've obviously grown with them, and they have become an important part of our buying ecosystem. you have google of course the trade desk amazon yahoo xandr etc and so for our efforts we've obviously grown with them and they have become an important part of our buying ecosystem Now, over the last couple of years, we also recognize that it's very important to start to diversify. now over the last couple of years we also recognize that it's very important to start to diversify And a really important trend has emerged, and that's the focus on performance buyers. and a really important trend has emerged and that's the focus on performance buyers And so what we've been doing to diversify away from the legacy DSPs is to identify those buyers and then work more closely with them to ensure that we're meeting their needs when they are delivering on behalf of their advertisers. and so what we've been doing to diversify away from the legacy dsps is to identify those buyers and then work more closely with them to ensure that we're meeting their needs when they are delivering on behalf of their advertisers And so our goal for diversification has been to obviously be the best partners we can with companies like Google and Trade Desk and Yahoo, but also expand relationships with sort of what we call internally the mid-tier, where the up-and-comers, where they are growing their business at a unique set of methodologies or data sets, and then making sure that they can define all that inventory on our platform in an AI-first approach. And so it's that diversification that we've been undertaking for a number of years now. One measure of that progress I shared the last quarter was that that category of mid-tier performance-centric DSPs grew 25% on a year-over-year basis. Another really important area are commerce DSPs. And so our goal for diversification has been to obviously be the best partners we can with companies like Google and Trade Desk and Yahoo, but also expand relationships with sort of what we call internally the mid-tier, where the up-and-comers, where they are growing their business at a unique set of methodologies or data sets, and then making sure that they can define all that inventory on our platform in an AI-first approach. and so our goal for diversification has been to obviously be the best partners we can with companies like google and trade desk and yahoo but also expand relationships with sort of what we call internally the mid-tier where the up-and-comers where they are growing their business at a unique set of methodologies or data sets and then making sure that they can define all that inventory on our platform in an ai-first approach And so it's that diversification that we've been undertaking for a number of years now. and so it's that diversification that we've been undertaking for a number of years now One measure of that progress I shared the last quarter was that that category of mid-tier performance-centric DSPs grew 25% on a year-over-year basis. one measure of that progress i shared the last quarter was that that category of mid-tier performance-centric dsps grew 25% on a year-over-year basis Another really important area are commerce DSPs. another really important area are commerce dsps We have a very large commerce DSP that is growing double digits on our platform because they're able to bring the data onto the platform and then find the ultimate user that they're looking for. So it's not like a one sort of effort undertaking for us. It's multifaceted to do as much as we can with the legacy DSPs, but expand our footprint. Now, with respect to that one DSP that I called out the last quarter, The Trade Desk, from our perspective, we've stabilized that relationship. We are totally focused on being a great partner to them. You may have noticed that we are the first sell-side platform to do an important initiative that they're undertaking called Price Discovery. So from our perspective, we are open and expanding the appropriate efforts to work with everybody, but also expanding our business into many other areas as well. We have a very large commerce DSP that is growing double digits on our platform because they're able to bring the data onto the platform and then find the ultimate user that they're looking for. we have a very large commerce dsp that is growing double digits on our platform because they're able to bring the data onto the platform and then find the ultimate user that they're looking for So it's not like a one sort of effort undertaking for us. so it's not like a one sort of effort undertaking for us It's multifaceted to do as much as we can with the legacy DSPs, but expand our footprint. it's multifaceted to do as much as we can with the legacy dsps but expand our footprint Now, with respect to that one DSP that I called out the last quarter, The Trade Desk, from our perspective, we've stabilized that relationship. now with respect to that one dsp that i called out the last quarter the trade desk from our perspective we've stabilized that relationship We are totally focused on being a great partner to them. we are totally focused on being a great partner to them You may have noticed that we are the first sell-side platform to do an important initiative that they're undertaking called Price Discovery. you may have noticed that we are the first sell-side platform to do an important initiative that they're undertaking called price discovery So from our perspective, we are open and expanding the appropriate efforts to work with everybody, but also expanding our business into many other areas as well. so from our perspective we are open and expanding the appropriate efforts to work with everybody but also expanding our business into many other areas as well

Speaker 1: And finally, the last big competitive concern that we've gotten from investors on the Google trial, of course. So now we're in the home stretch here looking for the remedies decision likely in early 2026. So from your seat, how are you thinking about that potential range of outcomes now that we've heard all the arguments and the scale of the potential benefits for PubMatic? And finally, the last big competitive concern that we've gotten from investors on the Google trial, of course. and finally the last big competitive concern that we've gotten from investors on the google trial of course So now we're in the home stretch here looking for the remedies decision likely in early 2026. so now we're in the home stretch here looking for the remedies decision likely in early 2026 So from your seat, how are you thinking about that potential range of outcomes now that we've heard all the arguments and the scale of the potential benefits for PubMatic? so from your seat how are you thinking about that potential range of outcomes now that we've heard all the arguments and the scale of the potential benefits for pubmatic

Speaker 2: When we step back and just look at what's unfolded over the last couple of years, clearly the government brought the case and has now proven to operate a monopoly. That fact, obviously, is a really big positive because it underscores sort of the challenges that we and others have managed through over many years. Anything that's going to bring sort of a more level playing field is absolutely going to be a positive to us and others. From our perspective, obviously, what's on the table is both behavioral as well as structural remedies. It's not clear what the path might be. It might be both at this point. When we step back and just look at what's unfolded over the last couple of years, clearly the government brought the case and has now proven to operate a monopoly. when we step back and just look at what's unfolded over the last couple of years clearly the government brought the case and has now proven to operate a monopoly That fact, obviously, is a really big positive because it underscores sort of the challenges that we and others have managed through over many years. that fact obviously is a really big positive because it underscores sort of the challenges that we and others have managed through over many years Anything that's going to bring sort of a more level playing field is absolutely going to be a positive to us and others. anything that's going to bring sort of a more level playing field is absolutely going to be a positive to us and others From our perspective, obviously, what's on the table is both behavioral as well as structural remedies. from our perspective obviously what's on the table is both behavioral as well as structural remedies It's not clear what the path might be. it's not clear what the path might be It might be both at this point. it might be both at this point But if you just take a look at the behavioral remedies as an illustration, there are things that can be done relatively quickly that don't require a lot of, let's call it, spade work to get accomplished. And the judge can certainly say, "This is what the outcome should be," whether it be a monitor, whether it be elimination of uniform pricing rules, access to data. All of those things in the grand scheme of things are de minimis efforts. And so in that respect, if the judge decides to move quickly, she can certainly move quickly, and those things can get into effect pretty efficiently. And this is just reading the tea leaves. I have no insight other than to say I understand that the judge likes to move quickly in her decision-making. She clearly understands the gravity of the case and wants to right the wrong. But if you just take a look at the behavioral remedies as an illustration, there are things that can be done relatively quickly that don't require a lot of, let's call it, spade work to get accomplished. but if you just take a look at the behavioral remedies as an illustration there are things that can be done relatively quickly that don't require a lot of let's call it spade work to get accomplished And the judge can certainly say, "This is what the outcome should be," whether it be a monitor, whether it be elimination of uniform pricing rules, access to data. and the judge can certainly say "this is what the outcome should be," whether it be a monitor whether it be elimination of uniform pricing rules access to data All of those things in the grand scheme of things are de minimis efforts. all of those things in the grand scheme of things are de minimis efforts And so in that respect, if the judge decides to move quickly, she can certainly move quickly, and those things can get into effect pretty efficiently. and so in that respect if the judge decides to move quickly she can certainly move quickly and those things can get into effect pretty efficiently And this is just reading the tea leaves. and this is just reading the tea leaves I have no insight other than to say I understand that the judge likes to move quickly in her decision-making. i have no insight other than to say i understand that the judge likes to move quickly in her decision-making She clearly understands the gravity of the case and wants to right the wrong. she clearly understands the gravity of the case and wants to right the wrong We anticipate and believe that there could be some behavioral remedies in place mid-2026 or a little bit later. That's our perspective right now. We anticipate and believe that there could be some behavioral remedies in place mid-2026 or a little bit later. we anticipate and believe that there could be some behavioral remedies in place mid-2026 or a little bit later That's our perspective right now. that's our perspective right now

Speaker 1: Very interesting and definitely looking forward to see how that plays out. So you've talked over the course of the conversation so far about a lot of the AI initiatives that you're undertaking, but maybe if we could focus on a couple around the agentic space. You, as a founding member of the AdCP initiative, the announcement today of the integration with Context, I guess, how are you viewing agentic as an opportunity or even broader kind of AI-enabled advertising? Very interesting and definitely looking forward to see how that plays out. very interesting and definitely looking forward to see how that plays out So you've talked over the course of the conversation so far about a lot of the AI initiatives that you're undertaking, but maybe if we could focus on a couple around the agentic space. so you've talked over the course of the conversation so far about a lot of the ai initiatives that you're undertaking but maybe if we could focus on a couple around the agentic space You, as a founding member of the AdCP initiative, the announcement today of the integration with Context, I guess, how are you viewing agentic as an opportunity or even broader kind of AI-enabled advertising? you as a founding member of the adcp initiative the announcement today of the integration with context i guess how are you viewing agentic as an opportunity or even broader kind of ai-enabled advertising

Speaker 2: It's an enormous opportunity, no question about it. And we have absolutely leaned in for a number of years. And I can confidently tell you today that we are well ahead of our peers in terms of execution, thinking, and making it happen on behalf of our customers. And so the things that we are well ahead of the game is first on the infrastructure side. So just as a level set, we have been owning and operating our own equipment for close to 15 years. And that has allowed us to be able to inject into that infrastructure the latest innovation at the pace and the context of what we think is going to have the greatest impact. So we've been collaborating with NVIDIA now for a couple of years, engineer to engineer, in terms of understanding what is possible. It's an enormous opportunity, no question about it. it's an enormous opportunity no question about it And we have absolutely leaned in for a number of years. and we have absolutely leaned in for a number of years And I can confidently tell you today that we are well ahead of our peers in terms of execution, thinking, and making it happen on behalf of our customers. and i can confidently tell you today that we are well ahead of our peers in terms of execution thinking and making it happen on behalf of our customers And so the things that we are well ahead of the game is first on the infrastructure side. and so the things that we are well ahead of the game is first on the infrastructure side So just as a level set, we have been owning and operating our own equipment for close to 15 years. so just as a level set we have been owning and operating our own equipment for close to 15 years And that has allowed us to be able to inject into that infrastructure the latest innovation at the pace and the context of what we think is going to have the greatest impact. and that has allowed us to be able to inject into that infrastructure the latest innovation at the pace and the context of what we think is going to have the greatest impact So we've been collaborating with NVIDIA now for a couple of years, engineer to engineer, in terms of understanding what is possible. so we've been collaborating with nvidia now for a couple of years engineer to engineer in terms of understanding what is possible And that has led to some real substantive improvements into our infrastructure. And it's not aspirational. We are closing real-time bidded auctions more quickly. Think of it as sort of ad spend that has been reclaimed. So if you, and this is for illustration, if a real-time auction would close in 500 milliseconds, leveraging NVIDIA software and hardware that is able to be closed at under 20 milliseconds. Think of the upside to any company that can do that. And we are already doing that as a business because of sort of our leading position in terms of working with sort of the thought leaders and the companies out there. Now, that's just the infrastructure side. In terms of the application efforts, we've already been developing products for some time. I referenced an AI product that we launched with our political advertising efforts last year. And that has led to some real substantive improvements into our infrastructure. and that has led to some real substantive improvements into our infrastructure And it's not aspirational. and it's not aspirational We are closing real-time bidded auctions more quickly. we are closing real-time bidded auctions more quickly Think of it as sort of ad spend that has been reclaimed. think of it as sort of ad spend that has been reclaimed So if you, and this is for illustration, if a real-time auction would close in 500 milliseconds, leveraging NVIDIA software and hardware that is able to be closed at under 20 milliseconds. so if you and this is for illustration if a real-time auction would close in 500 milliseconds leveraging nvidia software and hardware that is able to be closed at under 20 milliseconds Think of the upside to any company that can do that. think of the upside to any company that can do that And we are already doing that as a business because of sort of our leading position in terms of working with sort of the thought leaders and the companies out there. and we are already doing that as a business because of sort of our leading position in terms of working with sort of the thought leaders and the companies out there Now, that's just the infrastructure side. now that's just the infrastructure side In terms of the application efforts, we've already been developing products for some time. in terms of the application efforts we've already been developing products for some time I referenced an AI product that we launched with our political advertising efforts last year. i referenced an ai product that we launched with our political advertising efforts last year Fast forward to this year, we've AI-enabled our Activate products, so fundamentally, anybody can walk up to that and execute a campaign. I think some of you might have seen some of our demos around that. On the publisher side, we've already launched this year 17 discrete agents for publishers to manage their business more effectively, quickly, impactfully, and so we are well ahead on sort of just putting agents in place, and the reality is so much of this is evolving so quickly that you just have to get your hands wet and sort of start working with the clay, and so that's what we're doing, and we're actually making material results, and then finally, to your point on sort of, I'll call it the transaction layer, we are a founding member with Yahoo, LG, Raptive, others, identifying what the standards should be in terms of agent-to-agent communication. Fast forward to this year, we've AI-enabled our Activate products, so fundamentally, anybody can walk up to that and execute a campaign. fast forward to this year we've ai-enabled our activate products so fundamentally anybody can walk up to that and execute a campaign I think some of you might have seen some of our demos around that. i think some of you might have seen some of our demos around that On the publisher side, we've already launched this year 17 discrete agents for publishers to manage their business more effectively, quickly, impactfully, and so we are well ahead on sort of just putting agents in place, and the reality is so much of this is evolving so quickly that you just have to get your hands wet and sort of start working with the clay, and so that's what we're doing, and we're actually making material results, and then finally, to your point on sort of, I'll call it the transaction layer, we are a founding member with Yahoo, LG, Raptive, others, identifying what the standards should be in terms of agent-to-agent communication. on the publisher side we've already launched this year 17 discrete agents for publishers to manage their business more effectively quickly impactfully and so we are well ahead on sort of just putting agents in place and the reality is so much of this is evolving so quickly that you just have to get your hands wet and sort of start working with the clay and so that's what we're doing and we're actually making material results and then finally to your point on sort of i'll call it the transaction layer we are a founding member with yahoo lg raptive others identifying what the standards should be in terms of agent-to-agent communication It's obviously important that any leader sort of take that role, but it's specifically important for us because we've demonstrated an ability to be one step ahead. Understanding how these pieces are going to come together are going to allow us to continue to develop faster and more quickly and to market than anyone else. And why is that material? It's because the level of interest that we are seeing from buyers and publishers to talk with PubMatic about our AI efforts has just gone up dramatically. And it's not aspirational. We are doing it right now. It's obviously important that any leader sort of take that role, but it's specifically important for us because we've demonstrated an ability to be one step ahead. it's obviously important that any leader sort of take that role but it's specifically important for us because we've demonstrated an ability to be one step ahead Understanding how these pieces are going to come together are going to allow us to continue to develop faster and more quickly and to market than anyone else. understanding how these pieces are going to come together are going to allow us to continue to develop faster and more quickly and to market than anyone else And why is that material? and why is that material It's because the level of interest that we are seeing from buyers and publishers to talk with PubMatic about our AI efforts has just gone up dramatically. it's because the level of interest that we are seeing from buyers and publishers to talk with pubmatic about our ai efforts has just gone up dramatically And it's not aspirational. and it's not aspirational We are doing it right now. we are doing it right now

Speaker 1: And at some point, they'll talk to PubMatic's agent, right? But it's all fascinating stuff to see how quickly this is evolving. And the pace of innovation has been something to behold. And at some point, they'll talk to PubMatic's agent, right? and at some point they'll talk to pubmatic's agent right But it's all fascinating stuff to see how quickly this is evolving. but it's all fascinating stuff to see how quickly this is evolving And the pace of innovation has been something to behold. and the pace of innovation has been something to behold

Speaker 2: Yes, absolutely, and I think that's one of the reasons why we believe that NVIDIA was very comfortable collaborating with us because they saw a company that moved very quickly, open to collaboration, and then actually executing. Yes, absolutely, and I think that's one of the reasons why we believe that NVIDIA was very comfortable collaborating with us because they saw a company that moved very quickly, open to collaboration, and then actually executing. yes absolutely and i think that's one of the reasons why we believe that nvidia was very comfortable collaborating with us because they saw a company that moved very quickly open to collaboration and then actually executing

Speaker 1: Yeah, great to hear, and then maybe kind of building off one of the points that you made in the course of that answer, I wanted to touch on Activate specifically, so how are you winning spend through Activate, and how are those customers kind of scaling into Activate usage? Yeah, great to hear, and then maybe kind of building off one of the points that you made in the course of that answer, I wanted to touch on Activate specifically, so how are you winning spend through Activate, and how are those customers kind of scaling into Activate usage? yeah great to hear and then maybe kind of building off one of the points that you made in the course of that answer i wanted to touch on activate specifically so how are you winning spend through activate and how are those customers kind of scaling into activate usage

Speaker 2: It's growing very rapidly. I shared last quarter that revenue from our Activate business grew 100% year over year. And just for those who are maybe unfamiliar with Activate, we've created a single layer of technology where a buyer can come onto our platform and to identify the data that they want to work with, Instacart, Experian, Klarna, and then execute their campaign right there with a feedback loop that tells them how they did. And so you get sort of efficiency, you get impact in terms of results and performance, you get measurement, and it's a self-fulfilling prophecy. And so a virtuous cycle. And so from our perspective, Activate is exactly on the trajectory that we would like to see it on. I'd say incrementally in 2026, we are going to invest even more resources in terms of the go-to-market effort. It's growing very rapidly. it's growing very rapidly I shared last quarter that revenue from our Activate business grew 100% year over year. i shared last quarter that revenue from our activate business grew 100% year over year And just for those who are maybe unfamiliar with Activate, we've created a single layer of technology where a buyer can come onto our platform and to identify the data that they want to work with, Instacart, Experian, Klarna, and then execute their campaign right there with a feedback loop that tells them how they did. and just for those who are maybe unfamiliar with activate we've created a single layer of technology where a buyer can come onto our platform and to identify the data that they want to work with instacart experian klarna and then execute their campaign right there with a feedback loop that tells them how they did And so you get sort of efficiency, you get impact in terms of results and performance, you get measurement, and it's a self-fulfilling prophecy. and so you get sort of efficiency you get impact in terms of results and performance you get measurement and it's a self-fulfilling prophecy And so a virtuous cycle. and so a virtuous cycle And so from our perspective, Activate is exactly on the trajectory that we would like to see it on. and so from our perspective activate is exactly on the trajectory that we would like to see it on I'd say incrementally in 2026, we are going to invest even more resources in terms of the go-to-market effort. i'd say incrementally in 2026 we are going to invest even more resources in terms of the go-to-market effort We have a great product-market fit, and we've already significantly ramped up our buyer sales team against our broad set of solutions. I shared at our last earnings call that year to date, we'd increased our headcount in that area by 20%. So we're very excited about it. It clearly delivers results. One of the things that resonates in my mind that Mars Petcare, which was an early adopter of Activate, in their words, Activate usage was a game changer for them. And so that is actually the best testimony that we have, and that's obviously getting traction. We have a great product-market fit, and we've already significantly ramped up our buyer sales team against our broad set of solutions. we have a great product-market fit and we've already significantly ramped up our buyer sales team against our broad set of solutions I shared at our last earnings call that year to date, we'd increased our headcount in that area by 20%. i shared at our last earnings call that year to date we'd increased our headcount in that area by 20% So we're very excited about it. so we're very excited about it It clearly delivers results. it clearly delivers results One of the things that resonates in my mind that Mars Petcare, which was an early adopter of Activate, in their words, Activate usage was a game changer for them. one of the things that resonates in my mind that mars petcare which was an early adopter of activate in their words activate usage was a game changer for them And so that is actually the best testimony that we have, and that's obviously getting traction. and so that is actually the best testimony that we have and that's obviously getting traction

Speaker 1: Great, thank you. Wanted also to talk about your CTV business. So you put up some strong numbers there in recent quarters. What's enabling you to win in the crowded space here? And while we're on the topic of how you're working with most of the top 30 publishers, do you think you'll get to all of them anytime soon? Great, thank you. great thank you Wanted also to talk about your CTV business. wanted also to talk about your ctv business So you put up some strong numbers there in recent quarters. so you put up some strong numbers there in recent quarters What's enabling you to win in the crowded space here? what's enabling you to win in the crowded space here And while we're on the topic of how you're working with most of the top 30 publishers, do you think you'll get to all of them anytime soon? and while we're on the topic of how you're working with most of the top 30 publishers do you think you'll get to all of them anytime soon

Speaker 2: We're already working with over 90%. There's arguably one, maybe two, that we don't have access to. I would say we are super proud of what we've accomplished in CTV. We have grown this business organically. We've been doing it about four or five years. It's now just under 20% of all of our revenues. We've been growing faster than the market. In the last quarter, we grew over 50%. What's going on there? There's a whole host of things. Number one, getting more and more access to premium inventory and check the box on that. We're clearly doing that. Number two, we are finding new pockets of opportunity. We've seen great traction in live sports. We have created a live sports marketplace, and that's really resonating with buyers. We're also being innovative in terms of the formats. We're already working with over 90%. we're already working with over 90% There's arguably one, maybe two, that we don't have access to. there's arguably one maybe two that we don't have access to I would say we are super proud of what we've accomplished in CTV. i would say we are super proud of what we've accomplished in ctv We have grown this business organically. we have grown this business organically We've been doing it about four or five years. we've been doing it about four or five years It's now just under 20% of all of our revenues. it's now just under 20% of all of our revenues We've been growing faster than the market. we've been growing faster than the market In the last quarter, we grew over 50%. in the last quarter we grew over 50% What's going on there? what's going on there There's a whole host of things. there's a whole host of things Number one, getting more and more access to premium inventory and check the box on that. number one getting more and more access to premium inventory and check the box on that We're clearly doing that. we're clearly doing that Number two, we are finding new pockets of opportunity. number two we are finding new pockets of opportunity We've seen great traction in live sports. we've seen great traction in live sports We have created a live sports marketplace, and that's really resonating with buyers. we have created a live sports marketplace and that's really resonating with buyers We're also being innovative in terms of the formats. we're also being innovative in terms of the formats We have pause ads that we recently launched. An advertiser could come through Activate and do a pause ads campaign, and then from our perspective, a next sort of leg of growth is all the AI enablement that we built around that that will continue to sort of propel the Activate product, and then I'd be remiss if I don't mention we were a pioneer in developing supply path optimization relationships direct with brands, with agencies, and a core part of those relationships are around driving, obviously, more spend on our platform, but also about driving more spend through the most vibrant products like Activate, and so that will become, and CTV combined, that will become a real driver for CTV and Activate going forward. We have pause ads that we recently launched. we have pause ads that we recently launched An advertiser could come through Activate and do a pause ads campaign, and then from our perspective, a next sort of leg of growth is all the AI enablement that we built around that that will continue to sort of propel the Activate product, and then I'd be remiss if I don't mention we were a pioneer in developing supply path optimization relationships direct with brands, with agencies, and a core part of those relationships are around driving, obviously, more spend on our platform, but also about driving more spend through the most vibrant products like Activate, and so that will become, and CTV combined, that will become a real driver for CTV and Activate going forward. an advertiser could come through activate and do a pause ads campaign and then from our perspective a next sort of leg of growth is all the ai enablement that we built around that that will continue to sort of propel the activate product and then i'd be remiss if i don't mention we were a pioneer in developing supply path optimization relationships direct with brands with agencies and a core part of those relationships are around driving obviously more spend on our platform but also about driving more spend through the most vibrant products like activate and so that will become and ctv combined that will become a real driver for ctv and activate going forward

Speaker 1: Got it. Thank you. I think we have time for maybe two more here. So the second to last being, over the course of the conversation here, we've talked about a number of different initiatives and product priorities and things like that. So how, from an investment lens, are you looking at the prioritization and scale of a lot of these different initiatives if there's a stack rank or kind of trying to do everything all at once? Got it. got it Thank you. thank you I think we have time for maybe two more here. i think we have time for maybe two more here So the second to last being, over the course of the conversation here, we've talked about a number of different initiatives and product priorities and things like that. so the second to last being over the course of the conversation here we've talked about a number of different initiatives and product priorities and things like that So how, from an investment lens, are you looking at the prioritization and scale of a lot of these different initiatives if there's a stack rank or kind of trying to do everything all at once? so how from an investment lens are you looking at the prioritization and scale of a lot of these different initiatives if there's a stack rank or kind of trying to do everything all at once

Speaker 2: So we are definitely not going to do everything all at once. We've always been very targeted and measured in terms of our investment approach. I can unequivocally say that in 2026, CTV is going to continue to be a very strong investment area for us. Our new products, which we've really only touched upon a little bit, our emerging revenues, Activate will be a source of investment, commerce media, and of course, all the agentic work. So we have a clear understanding of the primary areas we're going to focus on. And then areas where we continue to invest at appropriate levels, we're going to continue to do so. And we are making choices. So we are definitely not going to do everything all at once. so we are definitely not going to do everything all at once We've always been very targeted and measured in terms of our investment approach. we've always been very targeted and measured in terms of our investment approach I can unequivocally say that in 2026, CTV is going to continue to be a very strong investment area for us. i can unequivocally say that in 2026 ctv is going to continue to be a very strong investment area for us Our new products, which we've really only touched upon a little bit, our emerging revenues, Activate will be a source of investment, commerce media, and of course, all the agentic work. our new products which we've really only touched upon a little bit our emerging revenues activate will be a source of investment commerce media and of course all the agentic work So we have a clear understanding of the primary areas we're going to focus on. so we have a clear understanding of the primary areas we're going to focus on And then areas where we continue to invest at appropriate levels, we're going to continue to do so. and then areas where we continue to invest at appropriate levels we're going to continue to do so And we are making choices. and we are making choices I had shared at the last earnings call that I don't anticipate our total company headcount to grow significantly, but we are going to put incremental resources behind these fastest growing areas like CTV, like Activate, like agentic. And we're going to do that by really allocating resources. So it's always a balanced approach for us. But what we've proven, and this is, I think, super important for investors to hear, is when we put wood behind sort of the key areas of opportunity, whether it be CTV beginning five years ago or Activate or now agentic workflows, we deliver the goods over time through our focus and execution. I had shared at the last earnings call that I don't anticipate our total company headcount to grow significantly, but we are going to put incremental resources behind these fastest growing areas like CTV, like Activate, like agentic. i had shared at the last earnings call that i don't anticipate our total company headcount to grow significantly but we are going to put incremental resources behind these fastest growing areas like ctv like activate like agentic And we're going to do that by really allocating resources. and we're going to do that by really allocating resources So it's always a balanced approach for us. so it's always a balanced approach for us But what we've proven, and this is, I think, super important for investors to hear, is when we put wood behind sort of the key areas of opportunity, whether it be CTV beginning five years ago or Activate or now agentic workflows, we deliver the goods over time through our focus and execution. but what we've proven and this is i think super important for investors to hear is when we put wood behind sort of the key areas of opportunity whether it be ctv beginning five years ago or activate or now agentic workflows we deliver the goods over time through our focus and execution

Speaker 1: There's always wood to chop. And so before we let you go, the last question I like to ask everyone as we look forward into 2026, what's one thing that you feel the investment community should be focused on that you're excited about in the PubMatic story? There's always wood to chop. there's always wood to chop And so before we let you go, the last question I like to ask everyone as we look forward into 2026, what's one thing that you feel the investment community should be focused on that you're excited about in the PubMatic story? and so before we let you go the last question i like to ask everyone as we look forward into 2026 what's one thing that you feel the investment community should be focused on that you're excited about in the pubmatic story

Speaker 2: So I'm going to take liberties here. I'm going to give you two things. So I'm going to take liberties here. so i'm going to take liberties here I'm going to give you two things. i'm going to give you two things

Speaker 1: You're allowed. You're allowed. you're allowed

Speaker 2: Okay, so number one, we are very excited about sort of this head start that we have in AI. I mean, we're getting material results, and we're executing against that. And you'll see that sort of in our innovation and our revenues. Number two, following the headwind that you described with respect to Trade Desk, that's going to be in the rearview mirror. And we believe that we're going to be on track to re-accelerate growth in the second half of 2026. And so I encourage everybody to look below the level of sort of the top line and to look at what's really happening in our business. Okay, so number one, we are very excited about sort of this head start that we have in AI. okay so number one we are very excited about sort of this head start that we have in ai I mean, we're getting material results, and we're executing against that. i mean we're getting material results and we're executing against that And you'll see that sort of in our innovation and our revenues. and you'll see that sort of in our innovation and our revenues Number two, following the headwind that you described with respect to Trade Desk, that's going to be in the rearview mirror. number two following the headwind that you described with respect to trade desk that's going to be in the rearview mirror And we believe that we're going to be on track to re-accelerate growth in the second half of 2026. and we believe that we're going to be on track to re-accelerate growth in the second half of 2026 And so I encourage everybody to look below the level of sort of the top line and to look at what's really happening in our business. and so i encourage everybody to look below the level of sort of the top line and to look at what's really happening in our business And over 80% of our business, if you exclude the Trade Desk and Political, we're growing quite nicely. And that's the expectation that I see you'll start to see in the reported numbers in the second half. But underneath the numbers, we are making great progress across CTV, our new emerging products, and now our AI capabilities. And over 80% of our business, if you exclude the Trade Desk and Political, we're growing quite nicely. and over 80% of our business if you exclude the trade desk and political we're growing quite nicely And that's the expectation that I see you'll start to see in the reported numbers in the second half. and that's the expectation that i see you'll start to see in the reported numbers in the second half But underneath the numbers, we are making great progress across CTV, our new emerging products, and now our AI capabilities. but underneath the numbers we are making great progress across ctv our new emerging products and now our ai capabilities

Speaker 1: It all sounds great. Thank you for the discussion, Steve, CFO of PubMatic. Thanks for joining us. It all sounds great. it all sounds great Thank you for the discussion, Steve, CFO of PubMatic. thank you for the discussion steve cfo of pubmatic Thanks for joining us. thanks for joining us

Speaker 2: Thank you for having me. Thank you for having me. thank you for having me