I would like to remind participants that during this call, management will make forward-looking statements, including without limitations, statements regarding our future performance, market opportunity, growth strategy, and financial outlook. In addition, today's discussion will include references to certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP net income, cash flow from operations, and free cash flow. Emerging revenues grew over 80% year over year as sell-side targeting and newly launched AI solutions quickly ramped. We also strengthened our end-to-end platform with cutting-edge AI innovations that are deepening our competitive moat and unlocking measurable incremental revenue opportunities.

This AI solution is driving growth for our publishers, increasing their revenue on average by 10%. In the last two months, we deployed a dozen AI agents internally to automate operational workflows, accelerate development, and reduce overhead. Our goal is to deploy substantially more agents in the coming quarters to give us measurable margin leverage while we continue to invest and strengthen our long-term moat. AI will continue to drive higher usage across our platform, generate incremental revenue streams, and improve operational leverage.

While AI is a powerful driver of our long-term growth strategy, it's equally important that we execute across the four other strategic priorities I outlined last quarter. We also launched a new partnership with Blis, an omnichannel DSP that brings high-value demand from leading global brands across automotive, retail, and financial services. In Q3, ad spend from this segment grew 25%+ year over year, reflecting meaningful progress in our diversification strategy. Supply path optimization remains a key growth driver, with the majority of this addressable market as greenfield opportunity.

What went well
  • Connected TV (CTV) revenue grew over 50% year-over-year excluding political advertising, driven by premium supply, agency marketplaces, and the AI-powered live sports marketplace (live sports buying up more than 150% sequentially).
  • Emerging revenues grew over 80% year-over-year and scaled to about 10% of total revenue, with Activate up over 100% and the Connect curation/data business up over 40%.
  • Revenue and adjusted EBITDA both came in ahead of guidance; the company generated $32.4 million of operating cash flow and $22.8 million of free cash flow, ending the quarter with $136.5 million in cash and zero debt.
  • Processed roughly 87 trillion gross impressions, up 24% year-over-year and 12% sequentially, while trailing-12-month unit costs fell 19% on its owned infrastructure.
  • Delivered its 38th consecutive quarter of positive adjusted EBITDA and continued diversifying its buyer base, with mid-tier DSP ad spend up more than 25% year-over-year.
What went wrong
  • Display revenue declined 5% year-over-year, the format most affected by a large DSP that reduced spend (display grew low-single-digits excluding that DSP).
  • Americas revenue fell 14% year-over-year, driven primarily by the large DSP buyer's spend declines.
  • The company reported a US GAAP net loss of $6.5 million, or -$0.14 per diluted share.
  • Q3 adjusted EBITDA of $11.2 million (16% margin) absorbed roughly $1 million of foreign-exchange cost from a weakening US dollar.
  • The October holiday seasonal uptick was relatively muted in some consumer-discretionary verticals such as food and drink and arts and entertainment, prompting cautious Q4 guidance.

More on PubMatic, Inc.

Reported 2025-11-10 · figures from the PubMatic, Inc. Q3 2025 earnings call.

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