Pubmatic 2025 Q3 Earnings Deepened Losses Amid Revenue Decline and AI-Driven Growth

Pubmatic (PUBM) reported Q3 2025 earnings on November 11, 2025, with revenue declining 5.3% year-over-year to $67.96 million but exceeding analyst estimates by 6.1%. The stock surged 14.3% post-earnings, though guidance for Q4 revenue of $73–77 million aligns with expectations.

Revenue

CTV revenue surged 50% year-over-year, excluding political advertising, while emerging revenue streams saw an 80% increase. Omnichannel video revenue grew 21% YoY, driven by partnerships with Tubi and LocalNow. Despite these gains, total revenue fell 5.3% to $67.96 million, reflecting broader declines in display advertising and a major DSP transition.

Earnings/Net Income

Pubmatic’s net loss widened to $6.45 million (607.5% year-over-year increase), with a per-share loss of $0.14. Non-GAAP profit of $0.03 per share exceeded estimates, but operating margins deteriorated to -12.4%. The company’s Altman Z-Score of 1.41 signals financial distress risk.

Post-Earnings Price Action Review

A strategy of buying PUBM on revenue beats and holding for 30 days shows potential, supported by a 14.3% post-earnings rally and Q3’s 6.1% revenue beat. Guidance for $75 million in Q4 revenue aligns with expectations, while non-GAAP profit outperformed. However, a declining operating margin, insider selling, and valuation metrics near five-year lows (P/S, P/B) highlight risks. The Altman Z-Score and margin pressures underscore the need for caution despite AI-driven operational efficiency and CTV growth.

CEO Commentary

CEO Rajeev Goel highlighted AI-powered platform improvements, reducing campaign setup time by 87% and accelerating issue resolution by 70%. CTV growth (50% YoY) and a 100% YoY increase in Activate revenue were cited as growth drivers. Collaborations with NVIDIA and new AI tools position Pubmatic as a leader in programmatic ad tech.

Guidance

Q4 2025 revenue guidance of $73–77 million (midpoint: $75M) and adjusted EBITDA of $19–21 million (27% margin) reflect stable macroeconomic assumptions. CFO Steve Pantelick emphasized margin expansion from efficient infrastructure and business model leverage, though no GAAP net income guidance was provided due to stock-based compensation volatility.

Additional News

1. Share Buyback: Pubmatic repurchased 12.4 million shares (24% of outstanding stock), signaling confidence in long-term value.

2. AI Collaboration: A multi-year partnership with NVIDIA improved bid response times and publisher revenue by 10%.

3. Analyst Upgrades: B. Riley Securities raised its price target to $10.00 (from $9.00), while six analysts maintain "buy" ratings, with a median 12-month target of $11.00 (33% upside).

Financial Health

Pubmatic’s gross margin of 64.87% and $136.5 million cash reserves offset a -1.34% operating margin. While CTV and AI initiatives drive top-line resilience, insider selling and a declining Altman Z-Score underscore structural risks. Analysts remain split, with a "buy" consensus but caution on margin sustainability.