PubMatic's (NASDAQ:PUBM) Q1 Sales Top Estimates, Stock Soars

Adam Hejl /
2024/05/07 4:39 pm EDT

Programmatic advertising platform Pubmatic (NASDAQ: PUBM) beat analysts' expectations in Q1 CY2024, with revenue up 20.4% year on year to $66.7 million. Guidance for next quarter's revenue was also better than expected at $70 million at the midpoint, 1.8% above analysts' estimates. It made a non-GAAP profit of $0.09 per share, improving from its loss of $0.11 per share in the same quarter last year.

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PubMatic (PUBM) Q1 CY2024 Highlights:

  • Revenue: $66.7 million vs analyst estimates of $62.18 million (7.3% beat)
  • EPS (non-GAAP): $0.09 vs analyst estimates of $0.03 ($0.06 beat)
  • Revenue Guidance for Q2 CY2024 is $70 million at the midpoint, above analyst estimates of $68.78 million
  • Gross Margin (GAAP): 61.9%, up from 56.9% in the same quarter last year
  • Free Cash Flow of $16.26 million, down 16.8% from the previous quarter
  • Net Revenue Retention Rate: 106%, up from 101% in the previous quarter
  • Market Capitalization: $1.18 billion

“We delivered another quarter of outstanding results, with accelerated revenue growth of 20%, highlighting our strong customer relationships, our breadth of solutions and growth across all formats and channels,” said Rajeev Goel, co-founder and CEO at PubMatic.

Founded in 2006 as an online ad platform helping ad sellers, Pubmatic (NASDAQ: PUBM) is a fully integrated cloud-based programmatic advertising platform.

Advertising Software

The digital advertising market is large, growing, and becoming more diverse, both in terms of audiences and media. As a result, there is a growing need for software that enables advertisers to use data to automate and optimize ad placements.

Sales Growth

As you can see below, PubMatic's revenue growth has been solid over the last three years, growing from $43.61 million in Q1 2021 to $66.7 million this quarter.

PubMatic Total Revenue

This quarter, PubMatic's quarterly revenue was once again up a very solid 20.4% year on year. However, the company's revenue actually decreased by $17.9 million in Q1 compared to the $20.92 million increase in Q4 CY2023. Regardless, we aren't too concerned because PubMatic's sales seem to follow a seasonal pattern and management is guiding for revenue to rebound in the coming quarter.

Next quarter's guidance suggests that PubMatic is expecting revenue to grow 10.5% year on year to $70 million, improving on the 0.5% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 8% over the next 12 months before the earnings results announcement.

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Product Success

One of the best parts about the software-as-a-service business model (and a reason why SaaS companies trade at such high valuation multiples) is that customers typically spend more on a company's products and services over time.

PubMatic Net Revenue Retention Rate

PubMatic's net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 106% in Q1. This means that even if PubMatic didn't win any new customers over the last 12 months, it would've grown its revenue by 6%.

Significantly up from the last quarter, PubMatic has a decent net retention rate, showing us that its customers not only tend to stick around but also get increasing value from its software over time.

Key Takeaways from PubMatic's Q1 Results

We were impressed by PubMatic's superb growth in net revenue retention this quarter. We were also excited its revenue and EPS outperformed Wall Street's estimates. Its revenue guidance for next quarter came in above analysts' expectations at $70 million. Overall, we think this was a really good quarter that should please shareholders. The stock is up 8.9% after reporting and currently trades at $26.19 per share.

PubMatic may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.