PubMatic, Inc. Class A Common Stock 2026 Q2 Earnings Call

Hello everyone, welcome to PubMatic's second quarter 2026 earnings call. My name is Annabeth and I will be your Zoom operator today. Thank you for your attendance today. As a reminder, this webinar is being recorded. I will now turn the call over to Stacie Clements.

Good afternoon everyone, welcome to PubMatic's earnings call for the second quarter of 2026. This is Stacie Clements, I'll be your operator today. Joining me on the call are Rajeev Goel, co-founder and CEO, and Steve Pantelick, CFO. Before we get started, I have a few housekeeping items. Today's prepared remarks have been recorded, after which Rajiv and Steve will host live Q&A. If you plan to ask a question, please ensure you've set your Zoom to display your full name and firm and use the raise hand function located at the bottom of your screen. A copy of our press release can be found on our website at investors.pubmatic.com. I would like to remind participants that during this call, management will make forward-looking statements, including without limitation, statements regarding our future performance, market opportunity, growth strategy and financial outlook.

Forward-looking statements are based on our current expectations and assumptions regarding our business, macroeconomic environment, and future conditions. These forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult to predict. You can find more information about these risks and uncertainties in our reports filed with the Securities and Exchange Commission and available at investors.pubmatic.com, including our most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. All information discussed today is as of August 6th, 2026, we do not intend and undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law.

In addition, today's discussion will include references to certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, cash flows from operations, free cash flow, and free cash flow margin. These non-GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our press release. Now I will turn the call over to Rajiv.

Thank you, Stacie, and good afternoon everyone. We delivered an outstanding second quarter. More importantly, we returned to double-digit year-over-year revenue growth well ahead of schedule, and we expect that growth will accelerate through the second half of the year. I'm extremely proud of what the team has accomplished, in particular our innovation and leadership in agentic advertising. Over the past several years, we've made disciplined investments to diversify the business and strengthen our competitive position to deliver both faster growth and strong operating leverage. Today, approximately 60% of our business comes from CTV, mobile app, and emerging revenues, all of which fuel profitable double-digit growth. This represents a remarkable transformation of our business and fundamentally strengthens our long-term growth profile. With this strong foundation in place, Steve has announced his plans to retire.

He will remain as CFO into the first quarter of 2027 and then in an advisory role through July 1st, ensuring a smooth transition as we conduct a search for his successor. Steve and I have worked together for 15 years, it's difficult to overstate the impact he's had on PubMatic. Under his leadership, we've built a global company with the financial discipline to invest for the future while consistently generating cash, maintaining a debt-free balance sheet, and returning capital to shareholders. I'm deeply grateful for his partnership, his friendship, and his many, many contributions to PubMatic. He's built an exceptional finance organization that positions PubMatic to create long-term value for years to come. Helping us build that future is our new global chief revenue officer, Megan Ram, who joins us on Monday, August 10th.

Megan brings deep direct to brand and performance advertising expertise with established relationships across marquee brands. Her rigor around sales process and execution will enhance our sales effectiveness and is a natural fit with our culture. Together, these strengths will help accelerate adoption of our AI-powered platform while strengthening our commercial capabilities. These leadership milestones reflect the evolution of both our company and our industry. It is clear digital advertising is entering its next major technology transition as AI reshapes how media is bought and sold across the open internet. PubMatic is at the epicenter of this change with market-leading scale. Since launching AgenticOS in January, we've delivered over 80 agentic campaigns, including with all five global agency holding companies. This is up from 30 campaigns just a quarter ago.

For years, the walled gardens have delivered superior advertising performance because they operate a single integrated technology platform that optimizes media and audiences for advertisers. With Activate and AgenticOS, we're bringing those same performance and technical advantages to the open internet. As a result, we're monetizing far more of the value chain between advertisers and publishers than at any point in our history and attracting entirely new customer types to our platform. Because our business is built on outcomes and usage, we generate revenue when we deliver the best outcomes for our customers. This creates powerful alignment as advertisers increasingly prioritize measurable performance and efficiency. Further, as advertising shifts to agentic execution, competitive advantage will be determined not by traditional software user interfaces, but rather by AI-native infrastructure, proprietary intelligence, and the ability to consistently deliver superior outcomes. We've spent two decades building these capabilities.

Today, they're redefining how value is created across the open internet by delivering compelling, measurable outcomes. Level Agency is a great example of this. In a controlled comparison against their incumbent DSP, AgenticOS delivered in excess of 2 times more reach per $ on qualified audiences while significantly accelerating campaign setup and activation time. Additionally, AgenticOS delivered retargeting at scale within days, compared to the 1-2 months ramp typically required by DSP-led campaigns. As a result, Level increased ad spend with PubMatic to expand its buying across the open internet. Patrick van Gorder, Chief Partnership Officer at Level Agency, said it best: "What AgenticOS delivered changed how we're thinking about where the open internet can compete for client budgets, and that's exactly the kind of adaptive advantage and innovation we're always looking for." Level is one of many examples.

Across Havas and Telefónica, Amnet and INTERBEV, Abovo Maxlead, Butler/Till, and many others, we're consistently delivering better performance, faster execution, and greater efficiency, it's changing how buyers are thinking about the value chain. Those results are driven by our unified platform, where multiple competitive advantages compound and are increasingly difficult to replicate. They're built on years of investment across our infrastructure, intelligence solutions, and customer relationships. First is AgenticOS. We have deployed over 20 agents to automate and optimize core buying and selling workflows. As Agentic advertising compresses the traditional workflow, more of the transaction runs through PubMatic's infrastructure. This allows us to create more value for our customers and drive incremental revenue back to PubMatic. This week, we announced an exciting new agent for enterprise buyers. It provides configurable controls, approved workflows, and full audit trails for autonomous campaigns.

As customers move more budget into Agentic buying, trusted governance becomes essential, and we believe this capability will help accelerate enterprise adoption of AgenticOS. Second is Activate. Activate enables advertisers to buy directly in our SSP. This significantly increases working media and operational efficiency, while also targeting audiences at the point of auction. The result is better advertiser performance and improved publisher yield. Third is our proprietary data intelligence and AI-native infrastructure. We combine signals from more than 300 data partners, including Comscore, Nielsen, Experian, TransUnion, PayPal, Intuit, Klarna, Walmart, and more with our own proprietary bitstream data, which exists only on PubMatic. As our business continues to grow, particularly in logged-in environments like CTV and mobile app, the quality and depth of those signals continues to improve, making our platform smarter with every campaign and every transaction. This intelligence runs on our AI-native infrastructure.

Through our partnership with NVIDIA, we're able to process massive amounts of data and execute increasingly sophisticated AI-driven decisioning in real time. Fourth is our premium SSP inventory, which includes nearly the entire open internet. Over 2,000 publishers representing 100,000-plus streamers, mobile apps, and websites. Most recently, we added marquee broadcaster Channel 4 in the U.K. and announced a strategic partnership with Sony Pictures Entertainment as their preferred sell-side platform, delivering access to hundreds of millions of monthly users across PlayStation and Sony BRAVIA TVs. Importantly, these advantages reinforce one another. Premium supply generates unique signals. Those signals strengthen our proprietary intelligence. That intelligence improves advertising outcomes. Better outcomes attract more advertisers, more campaigns, and more data, creating a compounding advantage with every transaction. Building on this advantage, in Q2, we introduced Decision Fabric, the next evolution of our platform.

Introduced in June, Decision Fabric enables advertisers, DSPs, and technology partners to securely deploy their proprietary models directly within PubMatic's infrastructure. This is commonly referred to as containerization. By running their models closer to our inventory, data, and the point of auction, customers remove the traffic shaping and latency constraints that have historically limited performance across the open internet, allowing them to unlock better advertising outcomes. We're seeing encouraging transaction with launch partners, including MiQ, Chalice AI, Swim.ai, Empowered, and a growing number of DSPs. This is an exciting opportunity that we believe will transform the way advertising is transacted on the open internet. More importantly, our unified platform and compounding intelligence are unlocking performance advertising budgets on PubMatic. It's expanding our market, adding entirely new categories of advertisers and ad budgets to our platform.

For example, programmatic trading desk Klever on behalf of Rouge Care, a direct-to-consumer wellness brand, expanded into premium CTV without sacrificing the performance measurement and optimization it relies on in social media. Using Agentic OS, the campaign delivered a 5X return on ad spend, double the client's original objective, while significantly accelerating optimization and campaign execution. We're seeing the same trend scale across our DSP partnerships. SMOTX, a leading performance CTV advertising platform for apps and games, and a business unit of Entravision partnered with PubMatic to leverage our premium CTV inventory using our first-party audience targeting and cross-device measurement capabilities. As performance improved, SMOTX's increased spend on PubMatic over 10X year-over-year, with 75% of that incremental spend flowing into CTV. This kind of measurable performance is unlocking entirely new advertiser budgets for PubMatic, it's reshaping the inventory advertisers want to buy.