Programmatic advertising platform Pubmatic (NASDAQ: PUBM) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 5.7% year on year to $71.1 million. On the other hand, next quarter’s revenue guidance of $63.5 million was less impressive, coming in 10.8% below analysts’ estimates. Its non-GAAP profit of $0.05 per share was significantly above analysts’ consensus estimates.

Is now the time to buy PUBM? Find out in our full research report (it’s free).

StockStory’s Take

PubMatic’s second quarter was marked by mixed results, as the company delivered year-on-year revenue growth and outperformed Wall Street expectations on both revenue and adjusted profit. However, the market reacted sharply negatively, reflecting concerns about platform changes by a major demand-side partner (DSP) that created revenue headwinds. CEO Rajeev Goel highlighted that strong gains in connected TV (CTV) and emerging revenue streams, such as data targeting and commerce media, were offset by disruptions from one top DSP. Management acknowledged the surprise impact of the DSP’s new inventory valuation model and emphasized ongoing efforts to diversify demand sources and stabilize the business.

Looking ahead, PubMatic’s guidance for the next quarter reflects continued caution as it navigates the fallout from the DSP platform change and macroeconomic uncertainty. CFO Steve Pantelick noted that mitigation efforts to address the DSP disruption are underway but will take several months to fully implement. Management is prioritizing diversification of its demand base, investment in direct-buying platforms like Activate, and expansion in high-growth areas such as CTV and commerce media. Goel stated, “We are accelerating our efforts to diversify our DSP mix and scale emerging revenue streams, even as we manage near-term headwinds.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to robust growth in CTV, expanding partnerships, and success in emerging segments, while acknowledging that DSP-related disruption weighed on overall momentum.

• CTV growth drives top-line: CTV revenue rose over 50% year-over-year, now accounting for nearly 20% of total revenue, as advertisers shifted budget from traditional TV to programmatic streaming. The addition of a top-five U.S. streamer expanded PubMatic’s reach to 26 of the top 30 global streamers.

• Emerging revenue streams scale: Newer business lines—such as data targeting, commerce media, and the Activate direct-buying platform—drove significant growth. Activate’s buying activity more than doubled sequentially, and the Connect data curation business grew over 100% year-over-year.

• DSP concentration remains challenge: Management noted that legacy DSPs still account for a large share of platform spend, and recent changes by a top DSP—specifically a revised inventory valuation model—resulted in a sharp drop in spend in July. Goel acknowledged, “the concentration of our legacy DSP relationships is a significant factor that's constraining our growth.”

• AI integration accelerates efficiency: PubMatic continued to roll out new AI-powered tools, including generative media buying and predictive analytics, to improve campaign performance and internal efficiency. Management highlighted these capabilities as key to reducing costs and enhancing customer outcomes.

• Geographic and segment mix evolving: While Americas revenue was down slightly, EMEA and APAC regions both posted strong growth. Performance marketers and mid-tier DSPs are gaining share, with spending from these segments up more than 20% year-over-year.

Drivers of Future Performance

PubMatic’s outlook is shaped by efforts to manage DSP-related disruption, ongoing investment in high-growth segments, and persistent macro uncertainty.

• Mitigating DSP platform change: The company is actively iterating its traffic-shaping and optimization processes to align with new DSP inventory requirements. Management expects it will take several months to fully recover spend from the affected DSP, with the low end of guidance reflecting minimal near-term improvement.

• Diversifying demand and growing CTV: Accelerating efforts to reduce reliance on legacy DSP partners, PubMatic is expanding relationships with mid-tier and performance-focused DSPs, as well as investing in direct-buying platforms. CTV remains a primary growth area, with international expansion and new formats, such as live sports marketplaces, supporting future revenue opportunities.

• AI and operational efficiency: Integration of AI tools is expected to drive cost efficiencies and improve targeting precision, allowing PubMatic to reinvest savings into go-to-market resources and product development. Management believes these efforts will help offset macroeconomic headwinds and industry shifts.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace and effectiveness of mitigation efforts to recover DSP-related revenue, (2) continued growth and adoption of CTV and emerging revenue streams—including Activate and Connect—and (3) PubMatic’s progress diversifying its DSP mix and reducing concentration risk. Execution on AI-driven product innovation and international expansion will also be important indicators of strategic progress.

PubMatic currently trades at $7.30, down from $10.56 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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