PubMatic (NASDAQ:PUBM) reported second-quarter revenue growth of 11% year over year, returning to double-digit growth ahead of its prior expectations, as the company cited momentum in connected TV, mobile applications and AI-powered products.
Adjusted EBITDA rose 38% from a year earlier to $19.6 million, representing a 25% margin, while free cash flow increased 47% to $13.7 million. The company reported a GAAP net loss of $1.2 million, or $0.03 per diluted share.
CTV, Mobile App and AI Products Drive Growth
Global CTV revenue increased 13% year over year and accounted for approximately 20% of total revenue. CTV revenue in the Americas rose 25%, aided by new advertisers, premium inventory and live sports activity.
Mobile-app revenue grew more than 40% and represented about 25% of quarterly revenue. Pantelick attributed that growth to mediation-platform integrations, product development and expansion of PubMatic’s global app-publisher base.
Emerging revenue streams nearly doubled year over year to an all-time high of roughly 15% of revenue, driven in part by adoption of newer AI products, including AgenticOS. Direct buying through Activate more than doubled globally from a year earlier, management said.
PubMatic also said total display revenue rose 12%, mainly due to mobile-app growth. The company generated several million dollars of incremental revenue during the quarter from the World Cup, Amazon Prime Day and political advertising.
Its top 10 advertising verticals grew 15% in aggregate. Shopping, health and fitness, and personal finance posted double-digit gains, which helped offset softness in food and drink, arts and entertainment, and travel.
Agentic Advertising and Platform Expansion
Goel said PubMatic has delivered more than 80 agentic campaigns since launching AgenticOS in January, up from 30 campaigns in the prior quarter. The campaigns included work with all five global agency holding companies.
Management described AgenticOS as a set of more than 20 agents that automate and optimize advertising buying and selling workflows. The company this week introduced an enterprise-buyer agent with configurable controls, approved workflows and audit trails for autonomous campaigns.
Goel said customer adoption remains at an early-adopter stage, though he said clients that have run agentic campaigns have returned with more business. He reiterated his expectation that roughly 25% of the company’s ecosystem could trade agentically by the end of 2028 and 50% by the end of 2030.
PubMatic also highlighted Decision Fabric, introduced in June, which allows advertisers, demand-side platforms and technology partners to run proprietary models within PubMatic’s infrastructure closer to its inventory, data and point of auction. The company named MiQ, Chalice AI, Swim.ai and Empowered among its launch partners.
Management said it believes the movement toward agentic advertising and containerized decisioning shifts more transaction processing to the sell side. Goel said the company aims to reduce the distance between publishers and advertisers by using AgenticOS, Activate and its sell-side platform to support end-to-end execution.
Efficiency, Cash Generation and Capital Returns
Gross profit increased 19%, outpacing the 11% revenue increase. PubMatic said it is adjusting its compute and processing resources toward AI-native products and higher-value transactions. During the quarter, gross impressions processed declined 2% sequentially while monetized impressions increased 4%.
Pantelick said the company expects its monetization rate to rise as it prioritizes impressions that create greater value. AI and automation also contributed to lower total headcount year over year across engineering, marketing, customer success and finance, while the company increased go-to-market headcount by 12%.
Operating expenses increased 4%, below revenue growth, as PubMatic continued investing in its buyer-focused sales organization and broader go-to-market efforts.
The company generated $20.2 million in operating cash flow, up 36% from the prior-year period. It ended the quarter with $137.5 million in cash and marketable securities and no debt.
During the quarter, PubMatic repurchased 2.1 million Class A shares for $21.5 million. Since starting its repurchase program in February 2023 through the end of the second quarter, the company has repurchased 15.5 million shares for $211.4 million. It had $63.6 million remaining under the authorization through the end of 2026.
Outlook and Leadership Transition
For the third quarter, PubMatic forecast revenue of $75 million to $77 million, representing 12% growth at the midpoint, and adjusted EBITDA of $17 million to $19 million. The company expects low-single-digit sequential increases in cost of revenue and operating expenses as it maintains go-to-market investment.
Management said it expects fourth-quarter adjusted EBITDA margin to be similar to the prior year’s fourth quarter, resulting in meaningful full-year margin expansion. PubMatic raised its full-year capital-expenditure outlook to $20 million to $25 million to support AI workloads and its NVIDIA-related innovation efforts. Pantelick said the added investments are expected to generate incremental revenue with a payback period of about 12 months or less.
The company also expects political advertising to increase later in the year, particularly in the fourth quarter, though Pantelick said the contribution is not expected to match the level seen during the 2024 presidential election cycle.
Separately, Pantelick said he plans to retire early in 2027. He will remain CFO into the first quarter of 2027 and then serve in an advisory role through July 1 to support the transition. PubMatic has begun a search for his successor. The company also said Megan Ram will join as global chief revenue officer on Aug. 10.
About PubMatic (NASDAQ:PUBM)
PubMatic is a cloud-based digital advertising technology company that provides a supply-side platform (SSP) enabling publishers to automate and optimize the sale of their ad inventory across display, mobile, video and connected TV channels. Its core offerings include real-time bidding infrastructure, header bidding solutions under the OpenWrap brand and data analytics tools that deliver actionable insights on audience engagement and monetization performance. By facilitating seamless auctions and providing transparent reporting, PubMatic helps publishers maximize yield while improving buyer experiences.
Founded in 2006 by Rajeev Goel and a team of ad-tech veterans, PubMatic grew from an early entrant in programmatic selling to a publicly traded company, listing on the Nasdaq (symbol: PUBM) in December 2020.
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