PubMatic (PUBM) Q1 2025: CTV Revenue Surges 50% as Secular Growth Mix Hits 70%
PubMatic’s Q1 results underscore a decisive pivot toward high-growth video and data-driven channels, with CTV and SPO now dominating the revenue mix. Management’s expanded buyback signals confidence, while the Google antitrust ruling and AI-powered tools set the stage for share gains. With DSP headwinds set to lap, investors should watch for accelerating core growth and further margin leverage in the back half.
Summary
- Secular Growth Mix Shift: CTV, SPO, and emerging channels now account for 70% of revenue, driving underlying growth.
- AI and Platform Innovation: GenAI-powered buying tools and unified supply chain solutions are gaining early traction with agencies and advertisers.
- Regulatory and Market Tailwinds: The Google antitrust verdict and cookie policy stability position PubMatic to capture incremental share in a transforming programmatic market.
Performance Analysis
PubMatic delivered a Q1 performance that exceeded both top and bottom-line guidance, propelled by secular growth engines—CTV (Connected TV, streaming video ads), Supply Path Optimization (SPO, advertiser-direct buying), and emerging products like Connect (curation and data). While headline revenue was down due to a single DSP partner and last year’s political ad surge, the core business grew 21% year-over-year, up from 17% in the prior half, and now comprises 70% of total revenue.
Omnichannel video, including CTV, rose 20% and reached 40% of total sales, with CTV alone up over 50%. Emerging streams, led by Connect, more than doubled. Display was down 10% due to the DSP headwind, but excluding that, display grew over 20%, reflecting diversification and resilience. Margins benefited from mix shift and infrastructure efficiency, with adjusted EBITDA margins of 13% and the 36th consecutive profitable quarter. Cash flow remains robust, enabling a $100 million expansion of the buyback program.
- Secular Growth Engines Dominate: CTV, SPO, and emerging products now drive the majority of revenue and growth.
- Operational Leverage Evident: Impression processing up 60% in two years, with cost of revenue rising only 16%, fueling reinvestment and margin protection.
- Diversification Mitigates Headwinds: Over 50,000 advertisers and 20+ verticals, with health, fitness, and food offsetting softness in tech and auto.
PubMatic’s core business is now structurally positioned for double-digit growth, with DSP and political spending laps clearing the way for cleaner comps and incremental margin upside in the second half.
Executive Commentary
"Our business continues to shift to secular growth areas, an important transformation that will provide resiliency as we navigate the current ad spend environment. Moreover, there are two significant and recent developments that provide long-term tailwinds to our business. First, the verdict in the Google ad tech antitrust case will provide us with a more level playing field in the open internet... As a leading SSP provider, Pubmatic is already positioned to take advantage of this structural shift."
Rajiv Goel, Co-founder & CEO
"We delivered a strong quarter with revenue ahead of expectations driven by significant growth in the long-term secular drivers of our business. CTV, SPO, and our emerging revenue streams... These drivers accelerated the growth of our underlying business to 21% year-over-year, up from 17% in the second half of last year. This excludes the large DSP buyer in political advertising and now accounts for 70% of all revenue."
Steve Pantelik, CFO
Strategic Positioning
1. Secular Growth Mix and Platform Differentiation
PubMatic’s business model is rapidly shifting toward high-growth, high-value channels. CTV and omnichannel video now account for 40% of revenue, with CTV up 50% year-over-year. SPO activity reached a record 55% of total, and leadership targets 75% long-term, reflecting deepening adoption by both agency holding companies and independent buyers. Investments in Activate (SPO), Convert (Commerce Media), and Connect (Curation/Data) are resonating, driving stickier, more diversified engagement across the digital supply chain.
2. AI-Driven Innovation and Operational Efficiency
AI is now foundational to PubMatic’s product and operational strategy. The launch of a GenAI-powered end-to-end platform enables buyers to create and activate optimized deal packages using natural language, streamlining the media buying process and reducing manual workflows. Internally, AI is driving engineering productivity and accelerating innovation without increasing headcount, supporting margin expansion even as the company invests in growth.
3. Market and Regulatory Tailwinds
The Google ad tech antitrust verdict and the continuation of third-party cookies in Chrome unlock new share-gain opportunities. PubMatic’s independent SSP (Supply Side Platform, connects publishers to advertisers) model is increasingly attractive to publishers and buyers seeking alternatives to Google’s stack. Leadership estimates each 1% share gain in the market could yield $50-75 million in net revenue, with PubMatic’s current share at just 4% versus Google’s 60%.
4. Diversification and Global Reach
Revenue streams are broadening across geographies and verticals, with international growth in Europe, Australia, India, and Japan, and new partnerships such as the BBC’s free ad-supported streaming channels. Commerce media and mid-market DSPs are scaling rapidly, as evidenced by tripling performance DSP activity and case studies like Kroger and Instacart driving measurable cost savings and reach through PubMatic’s platform.
Key Considerations
Q1 marked a strategic inflection, as PubMatic’s mix shift to secular growth drivers now dominates the business, with core performance increasingly insulated from legacy headwinds. Platform innovation, regulatory catalysts, and expanded capital allocation all reinforce the forward trajectory.
Key Considerations:
- DSP Headwind Nears Completion: The impact from a single DSP buyer and political spend will be fully lapped by Q2, setting up for clearer core growth visibility and easier comps.
- AI-Enabled Productivity Gains: GenAI is not only powering customer-facing tools but also boosting internal engineering efficiency, supporting both innovation velocity and cost discipline.
- Buyback Expansion Signals Confidence: A $100 million increase in the repurchase program underscores management’s conviction in durable cash flow and undervaluation.
- Secular Tailwinds in Streaming and Commerce: The shift from linear TV to CTV and from upper-funnel to lower-funnel (performance) advertising are accelerating, playing into PubMatic’s strengths in video and commerce media.
Risks
PubMatic remains exposed to macro ad spend volatility, especially in verticals like technology and automotive, which declined over 10% year-over-year. While management sees no broad-based pullback, any deterioration in the ad environment could impact results. The company’s reliance on continued CTV and SPO expansion also carries execution risk, and regulatory outcomes around Google, while promising, are not yet fully resolved. Currency fluctuations, particularly a weakening US dollar, present an additional variable to margin and EBITDA guidance.
Forward Outlook
For Q2, PubMatic guided to:
- Revenue of $66 to $70 million, assuming 15%+ underlying growth
- Adjusted EBITDA of $9 to $12 million, factoring in US dollar weakness
For full-year 2025, management maintained its outlook:
- 15%+ growth in the underlying business, with second-half reported revenue growth despite a 5-7 percentage point political spend headwind
- CapEx reduction of at least 15% to $15 million
Management highlighted:
- Momentum in CTV, SPO, and emerging products as the primary growth drivers
- Diversification across 20+ verticals and 50,000 monthly advertisers as a buffer against sector-specific weakness
Takeaways
PubMatic’s structural pivot to CTV, SPO, and data-driven channels is now the dominant force shaping results and outlook.
- Secular Mix Drives Growth: With 70% of revenue from high-growth channels, PubMatic is positioned for sustained double-digit expansion as legacy headwinds fade.
- AI and Platform Leverage: GenAI-powered tools and operational efficiencies are translating into both customer traction and margin protection, supporting reinvestment.
- Share Gain Opportunity: Google’s antitrust verdict and market fragmentation create a tangible path for PubMatic to capture incremental market share and accelerate growth in 2026 and beyond.
Conclusion
PubMatic’s Q1 marks a clear turning point, with secular growth drivers now firmly in control of the business model. With DSP and political headwinds set to roll off, and platform innovation accelerating, the company is poised to capitalize on both structural and cyclical tailwinds in programmatic advertising.
Industry Read-Through
PubMatic’s results reinforce a decisive industry shift: CTV and programmatic video are rapidly gaining share from linear TV, while SPO and AI-driven buying tools are becoming table stakes for both advertisers and publishers. The Google antitrust case and ongoing cookie policy changes are catalyzing a move toward independent, transparent platforms. Peers in ad tech and digital media should expect intensified competition for programmatic dollars, with buyers consolidating spend around platforms that deliver efficiency, data, and performance. The rise of commerce media and sell-side data activation signals that the next phase of digital advertising will be defined by agility, cross-channel orchestration, and AI-powered optimization.