Slide 1: Q1 2023 Earnings Presentation
Q1 2023 Earnings Presentation May 9, 2023 © 2023 PUBMATIC, INC. PUBMATIC IS A REGISTERED TRADEMARK OF PUBMATIC, INC., U.S. PAT. & TM. OFF. AND OTHER COUNTRIES. OTHER TRADEMARKS ARE THE PROPERTIES OF THEIR RESPECTIVE OW NERS. CONFIDENTIAL & PROPRIETARY.
Slide 2: Safe Harbor
SAFE HARBOR This presentation contains forward-looking statements. These statements may relate to, but are not limited to, expectations of Q2 2023 and full-year 2023 operating results or financial performance, market size and growth opportunities, the calculation of certain of our key financial and
Slide 3: Q1 2023 Financial Highlights
MISSION PubMatic Fuels the Endless Potential of Internet Content Creators Q1 2023 FINANCIAL HIGHLIGHTS REVENUE GAAP NET ADJUSTED CASH FLOW FROM INCOME EBITDA1 O P E R AT I O N S 2 $55.4M ($5.9)M $8.4M $12.8M +2% YOY - 11 % M AR G I N 1 5 % M AR G I N 1 Adjusted EBITDA and Adjusted EBITDA Margin are
Slide 4: Industry consolidation creates foundation for deeper customer relationships
INDUSTRY CONSOLIDATION CREATES FOUNDATION FOR DEEPER CUSTOMER RELATIONSHIPS 65+ NEW PUBLISHERS SIGNED IN Q1 2023 HIGH-M ARGIN I N N O VAT I O N REVENUE D R I V E S VA L U E NEARLY 1,700 PUBLISHER AND APP DEVELOPER C U S T O M E R S G L O B A L LY E X PA N D E D CUSTOMER USAGE 4
Slide 5: Connected TV & online video drive revenue growth
CONNECTED TV & ONLINE VIDEO DRIVE REVENUE GROWTH M AJ O R G L O B AL CTV PUBLISHERS GLOBAL OM NICHANNEL VIDEO GROWING THEIR AD SPEND (2023) 1 AC T I V I T Y W I T H P U B M AT I C $215 BILLION ONLINE VIDEO: CTV: $150 BILLION $65 BILLION CTV REVENUE GROWTH YOY IN Q1 2023 50%+ 1 PubMatic analysis of i
Slide 6: Continuous product innovation deepens publisher relationships
CONTINUOUS PRODUCT INNOVATION DEEPENS PUBLISHER RELATIONSHIPS P U B L I S H E R S AR E E M B R AC I N G YOY GROWTH OF SIGNED OPENWRAP O P E N W R AP AS ALT E R N AT I V E AGREEM ENTS IN Q1 2023 TO R E S O U R C E - I N T E N S I V E PREBID SETUPS 27% UNIFIED BIDDING ACROSS F O R M AT S A N D C H A N
Slide 7: Supply path optimization acceleration widens competitive advantage
SUPPLY PATH OPTIMIZATION ACCELERATION WIDENS COMPETITIVE ADVANTAGE D R I V E R S O F S P O O N P U B M AT I C SPO SHARE OF OVERALL ACTIVITY ON P U B M AT I C P L AT F O R M I N Q 1 2 0 2 3 G lo b a l Sc a le 35%+ Omnic hannel Pla t f orm SEQ INCREASE IN BUYERS INTERESTED I N ENGAGI NG I N SPO FOR TH
Slide 8: Introducing a new industry paradigm for the supply chain of the future
INTRODUCING A NEW INDUSTRY PARADIGM FOR THE SUPPLY CHAIN OF THE FUTURE TRADITIONAL PROGRAMMATIC SUPPLY CHAIN is an end-to-end SPO solution BUYER DSP SSP PUBLISHER that allows buyers to execute PROGRAMMATIC DIRECT SUPPLY CHAIN non-bidded deals on the PubMatic BUYER PUBLISHER platform. CONFIDENTIAL &
Slide 9: Activate brings programmatic benefits to direct deals across high-value formats
ACTIVATE BRINGS PROGRAMMATIC BENEFITS TO DIRECT DEALS ACROSS HIGH-VALUE FORMATS E X P E C T E D P U B M AT I C B E N E F I T S O F A C T I VAT E L A U N C H PA R T N E R S AC T I VAT E In c r e a sed Pr o g r a mma tic T A M A c c e lerated Shif t t o C TV a nd O n lin e Vid e o F o r ma t s G r e a
Slide 10: Commerce media represents a strong growth opportunity
COMMERCE MEDIA REPRESENTS A STRONG GROWTH OPPORTUNITY M AJ O R R E TAI L E R R E TA I L M E D I A M A R K E T S I Z E AN D C O M M E R C E C O M PAN I E S AR E $141 WORKING WITH $133 P U B M AT I C $122 $111 $98 In Billions 2021 2022 2023E 2024E 2025E Source: GroupM, December 2022 10
Slide 11: Solid foundation for long-term success
SOLID FOUNDATION FOR LONG-TERM SUCCESS Key Differentiators Drive PubMatic continues to consolidate Rapid TAM Expansion the market as customers seek alternatives to the walled gardens O M N I C H AN N E L P L AT F O R M G L O B AL S C AL E Focused investment strategy optimized to drive market share S
Slide 12: Financial Results
Financial Results 12
Slide 13: Q1 Financial Highlights
Q1 FINANCIAL HIGHLIGHTS REVENUE GAAP NET INCOME $54.6 $55.4 ($5.9M) - 11 % N E T I N C O M E M A R G I N $43.6 AD J U S T E D E B I T D A 1 $8.4M 15% ADJ. EBITDA MARGIN ($ in Millions) C AS H F L O W F R O M O P E R AT I O N S 2 Q1'21 Q1'22 Q1'23 $12.8M 1 Adjusted EBITDA and Adjusted EBITDA Margin a
Slide 14: Platform diversity and strong customer relationships drive revenue benefits
PLATFORM DIVERSITY AND STRONG CUSTOMER RELATIONSHIPS DRIVE REVENUE BENEFITS YOY OMNICHANNEL TTM-Q1’23 NET DOLLAR TTM-Q1’23 SPO BUYER VIDEO1 REVENUE REVENUE RETENTION NET SPEND RETENTION GROWTH RATE2 OF PUBLISHERS R AT E 3 13% 105% 116% 1 Omnichannel video, which spans across desktop, mobile and CTV
Slide 15: Strong track record of durable growth and profits
STRONG TRACK RECORD OF DURABLE GROWTH AND PROFITS AD J . E B I T D A 1 28 th CONSECUTI VE QUARTER OF POSITIVE ADJ. EBITDA1 33% 31% 15% 9 th ($ in Millions) CONSECUTI VE YEAR Q1'21 Q1'22 Q1'23 G E N E R AT I N G C A S H F R O M O P E R AT I O N S Adj.EBITDA 1 Adj.EBITDA Margin 1 1 Adjusted EBITDA and
Slide 16: Owned & optimized infrastructure driving down unit costs
OWNED & OPTIMIZED INFRASTRUCTURE DRIVING DOWN UNIT COSTS WHILE IMPROVING CUSTOMER OUTCOMES AD IMPRESSIONS ( T R A I L I N G T W E LV E M O N T H S ) +42% 16% REDUCTION IN UNIT COSTS 46.5 YOY IN TTM-Q1 2023 +76% 32.6 18.5 OVER 60% In Trillions REDUCTION IN CAPEX IN 2023 TTM Ending Q1'21 Q1'22 Q1'23 1
Slide 17: Operating expenses: investing for growth
OPERATING EXPENSES: INVESTING FOR GROWTH $45,000 $42 $40,000 DRIVERS $13 ▪ Q1’23 operating expenses $32 $35,000 $30,000 include incremental costs $25 $11 for Martin acquisition of $2.8M and incremental $25,000 $20,000 $8 stock-based compensation $23 $15,000 expense of $2.1M $16 ▪ Q1’23 includes addi
Slide 18: GAAP and non-GAAP diluted earnings per share
GAAP AND NON-GAAP DILUTED EARNINGS PER SHARE GAAP AND NON-GAAP NET INCOME $7.8 $8.1 $4.9 $4.8 $ in Millions $0.9 Q1'21 Q1'22 Q1'23 Net Income 1 Non-GAAP Net Income $(5.9) GAAP AND NON-GAAP DILUTED EARNINGS $0.14 PER SHARE $0.09 $0.09 $0.08 $0.02 Q 1 ' 2 1 Q 1 ' 2 2 Q 1 ' 2 3 Q1’21 Q1’22 Q1’23 2 GAAP
Slide 19: Delivering cash flow
DELIVERING CASH FLOW NET CASH PROVIDED FREE STOCK BY OPERATING CASH FLOW1 REPURCHASE ACTIVITIES PROGRAM $19.3 $14.9 $12.8 $15.4M CASH USED TO ($ in Mill ions ) $5.3 REPURCHASE 1.1M SHARES ( ~ 2 % F D S O 2) Q1'22 Q1'23 Q1'22 Q1'23 1 Free Cash Flow is a non-GAAP measure. A reconciliation of free cash
Slide 20: Q2 2023 Guidance
Q2 2023 GUIDANCE Q2 2023 ($ in Millions) Low High R e ve n u e $58 $61 Ad j u s t e d E B I T D A $13 $15 Ad j u s t e d E B I T D A M a r g i n 22% 25% Note: Numbers rounded for presentation purposes FY 2023 we expect: ▪ Adjusted EBITDA margin to be 30%+ ▪ Free cash flow on par with 2022 ▪ CapEx to
Slide 21: Long term drivers of shareholder value
LONG TERM DRIVERS OF SHAREHOLDER VALUE Durable Efficient Cost Strong and Focused Business Model Structure To Growing Innovation On With Strong Drive Margin Customer High-Growth Cash Flows Expansion Relationships Revenue Drivers 21
Slide 22: Appendix
Appendix 22
Slide 23: Non-GAAP Reconciliation – Adjusted EBITDA
NON-GAAP RECONCILIATION – ADJUSTED EBITDA ($ in Millions) Three Months Ended March 31, 2021 2022 2023 Net Income $4.9 $4.8 ($5.9) Add back (deduct): Stock-Based Compensation 3.2 5.1 7.1 Unrealized gain(loss) on equity - (1.4) - investments Depreciation and Amortization 4.6 7.2 11.4 Interest Income (
Slide 24: Non-GAAP Net Income Reconciliation
NON-GAAP NET INCOME RECONCILIATION ($ in Millions, except for Non-GAAP Diluted EPS1 ) Three Months Ended March 31, 2021 2022 2023 Net Income $4.9 $4.8 ($5.9) Add back (deduct): Stock-Based Compensation 3.2 5.1 7.1 Unrealized (gain)loss on equity investments - (1.4) - Acquisition-related and other ex
Slide 25: Free Cash Flow Reconciliation
FREE CASH FLOW RECONCILIATION ($ in Millions) Three Months Ended March 31, 2021 2022 2023 Net Cash provided by (used in) $12.7 $19.3 $12.8 Operating Activities Deduct: Purchases of Property and Equipment (0.3) (0.1) (1.4) Capitalized Software Development Costs (3.0) (4.2) (6.0) Free Cash Flow $9.4 $