Slide 1: Q2 2023 Earnings Presentation
Q2 2023 Earnings Presentation August 8, 2023 © 2 0 2 3 P UB M A T I C, I NC. P UB M A T I C I S A RE G I S T E RE D T RA DE M A RK O F P UB M A T I C, I NC. , U. S . P A T . & T M . O FF. A ND O T HE R CO UNT RI E S . O T HE R T RA DE M A RK S A RE T HE P RO P E RT I E S O F T HE I R RE S P E CT I V
Slide 2: Safe Harbor
S AF E H AR B O R This presentation contains forward-looking statements. These statements may relate to, but are not limited to, expectations of Q3 2023 and full-year 2023 operating results or financial performance, market size and growth opportunities, the calculation of certain of our key financia
Slide 3: Q2 2023 Financial Highlights
M ISSION PubMatic Fuels the Endless Potential of Internet Content Creators Q2 2023 FINANCIAL HIGHLIGHTS RE V E NUE G AAP NE T AD J US T ED C AS H F L O W F RO M INC O M E E B IT DA1 O P E R AT I O N S 2 $63.3M ($5.7M) $12.0M $15.8M + 0 . 5 % YO Y - 9 % MA R GIN 1 9 % MA R GIN IN C L U DE S $5.7M B A
Slide 4: Targeted investments and efficient optimization drive long-term value creation
T AR G E T E D I N V E S T M E N T S AN D E F F I C I E N T O P T I M I Z AT I O N D R I V E P U B M AT I C ’ S L O N G - T E R M V AL U E C R E AT I O N P R OD U C T L A U N C H E S G R OW T OTA L ADDRESSABLE M ARKET HIG H M ARG IN I N N O V AT I O N RE V E NUE D RIV E S VAL UE C US T OME R VAL UE
Slide 5: Connected TV embraces programmatic automation, unlocking growth opportunities
C O N N E C T E D T V E M B R AC E S P R O G R AM M AT I C AU T O M AT I O N , U N L O C K I N G G R O W T H O P P O R T U N I T I E S F O R P U B M AT I C MAJ OR CTV P UB L I S HE R S G R O W I NG T HE I R A C T I VI T Y W I T H P UB M AT I C C T V R E VE NUE G R O W T H YO Y I N Q2 2023 30%+ 5
Slide 6: Supply path optimization growth drives topline growth and margin expansion
S U P P L Y P AT H O P T I M I Z AT I O N G R O W T H D R I V E S T O P L I N E G R O W T H & M AR G I N E X P AN S I O N S P O S HA R E O F T O TA L A C T I VI T Y 1 O N P UB M AT I C P L AT F O R M 40%+ L O NG - T E R M S P O E X P E C TAT I O N 50%+ Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2020
Slide 7: Activate gaining traction as buyers seek greater control and efficiency
AC T I V AT E G AI N I N G T R AC T I O N AS B U Y E R S S E E K G R E AT E R C ON T R OL & EF F IC IEN C Y OVER M ED IA BU Y S E X P E C T E D P U B M AT I C B E N E F I T S OF A C T I VAT E is an end-to-end SPO I n c re as ed P r o g ram ma tic T AM solution that allows buyers to execute non-bidde
Slide 8: Introducing a more efficient solution for commerce media
INTRODUCING A M ORE EFFICIENT SOLUTION FOR COM M ERCE M EDIA INE F F IC IE NC IE S OF C OM ME RC E ME DIA B UY ING S P ONS ORED P RODUCT L I S T I NGS S UP P L Y CHAI N ON-SITE DISPLAY SUPPLY CHAIN is a unified OF F -S I T E V I DEO S UP P L Y CHAI N COMMER C E self-service BUYE R M EDI A NET W O R
Slide 9: Introducing a new industry paradigm for the commerce media supply chain
I N T R O D U C I N G A N E W I N D U S T R Y P AR AD I G M F O R T H E C O M M E R C E M E D I A S U P P L Y C H AI N O F T H E F U T U R E COMMERCE O F F E R I NG L A UNC H PA R T NE R S 9
Slide 10: Strategically positioned for long-term, durable growth
S T R AT E G I C AL L Y P O S I T I O N E D F O R L O N G - T E R M , D U R AB L E GROWTH Drivers of Market Optimizing capacity to accelerate Consolidation shift towards higher value formats and channels O M NI C HA NNE L P L AT F O R M GLOBAL SCALE Expanding our total addressable m arket with focus
Slide 11: Financial Results
Financial Results 11
Slide 12: Q2 Financial Highlights
Q 2 F I N AN C I AL H I G H L I G H T S R E VE NUE G A A P NE T I NC O M E $63.3 $63.0 ($5.7M) $49.7 - 9 % NE T I NC O M E M AR G I N A D J US T E D E B I T D A 1 $12.0M 1 9 % AD J . E B I T D A M AR G I N ($ in Millions ) FREE CASH FLOW 2 Q2'21 Q2'22 Q2'23 $10.8M On June 30, 2023, a Demand Side Pla
Slide 13: Diversified growth drivers offset challenging ad spend environment
D I V E R S I F I E D G R O W T H D R I V E R S O F F S E T C H AL L E N G I N G AD S P E N D E N V I R O N M E N T Q2 2 0 2 3 YOY Q2 2 0 2 3 YOY Q2 2 0 2 3 YOY C ONNE C T E D T V R E VE NUE GR OW T H OF E ME A R E VE NUE R E VE NUE GR OW T H T OP 1 0 AD VE RT ICAL S GROW TH 30%+ 8% 16% 13
Slide 14: Owned & operated infrastructure driving down unit costs while improving customer outcomes
O W N E D & O P E R AT E D I N F R AS T R U C T U R E D R I V I N G D O W N U N I T COSTS WHILE IM PROVING CUSTOM ER OUTCOM ES AD IMPRESSIONS ( TR A IL IN G TWE LV E MONTHS ) +52% ~70% 185.7 Y O Y R E D U C T I O N I N T O TA L C A P E X F O R 2 0 2 3 C O M PA R E D +85% TO 2022 122.2 66.2 85% (In T
Slide 15: Operating Expenses: Targeted Investments for Growth
O P E R AT I N G E X P E N S E S : T AR G E T E D I N V E S T M E N T S F O R G R O W T H $50,00 $45 DRIVERS $45,00 $40,00 ▪ Q2’23 operating expenses $35,00 $34 $19 include incremental costs for Martin acquisition of $30,00 $26 $11 $2.1M $25,00 $20,00 $9 ▪ Q2’23 operating expenses $15,00 $20 include
Slide 16: GAAP and Non-GAAP Net Income and Diluted Earnings Per Share
G AAP AN D N O N - G A AP D I L U T E D E AR N I N G S P E R S H AR E GA A P A ND NON- GA A P NE T INC OME $13.1 $13.0 $9.9 Net Income $7.8 Non-GAAP Net Income 1 $ in Millions $1.3 ($5.7) Q2'21 Q2'22 Q2'23 GA A P A ND NON- GA A P D IL UT E D E A R NINGS P E R S HA R E $0.23 $0.23 2 $0.18 GAAP Dilute
Slide 17: Delivering Cash Flow
D E L I V E R I N G C AS H F L O W NE T C A S H P R OVID E D FREE STOCK B Y OP E R A T ING CASH FLOW 1 R E P UR C HA S E ACT IVIT IE S PROGRAM (AS OF 7/31/23) $20.5 $15.8 $10.8 $27M C A S H US E D T O ($ in Millions ) $5.7 R E P UR C HA S E 1 . 8 M S HA R E S (~3 % FDSO2) Q2'22 Q2'23 Q2'22 Q2'23 1 F
Slide 18: Q3 2023 Guidance
Q 3 2 0 2 3 G U I D AN C E Q3 2 0 2 3 ($ in Millions ) Low High Revenue $58 $61 Adjusted EBITDA $13 $15 Adjusted EBITDA M argin 22% 25% Note: Numbers rounded for presentation purposes FY 2023 we expect CapEx to be in the range of $10M - $13M (vs. $36M in 2022, ~70% YoY reduction) A lt hough we provi
Slide 19: 2023 Operating Priorities
2 0 2 3 O P E R AT I N G P R I O R I T I E S TA R G E T E D DRIVE COS T GE NE R A T E INVE S T ME NT S T O S T R UC T UR E S IGNIF IC A NT F R E E A C C E L E R AT E E F F I C I E N C I E S T H AT CASH FLOW S R E VE NUE S W HE N A D L EAD T O MARGIN S P E N D S TA B I L I Z E S E X PA N S I O N 19
Slide 20: Appendix
Appendix 20
Slide 21: Non-GAAP Reconciliation – Adjusted EBITDA
N O N - G AA P R E C O N C I L I AT I O N – AD J U S T E D E B I T D A ($ in Millions) Three Months Ended June 30, 2021 2022 2023 Net Income $9.9 $7.8 ($5.7) Add back (deduct): Stock-Based Compensation 3.6 5.4 7.3 Unrealized gain(loss) on equity - 0.9 - investments Depreciation and Amortization 5.1
Slide 22: Non-GAAP Net Income Reconciliation
N O N - G AA P N E T I N C O M E R E C O N C I L I AT I O N ($ in Millions, except for Non-GAAP Diluted EPS1 ) Three Months Ended June 30, 2021 2022 2023 Net Income $9.9 $7.8 ($5.7) Add back (deduct): Stock-Based Compensation 3.6 5.4 7.3 Unrealized (gain)loss on equity investments - 0.9 - Acquisitio
Slide 23: Free Cash Flow Reconciliation
F R E E C AS H F L O W R E C O N C I L I AT I O N ($ in Millions) Three Months Ended June 30, 2021 2022 2023 Net Cash provided by (used in) $21.1 $20.5 $15.8 Operating Activities Deduct: Purchases of Property and Equipment (11.5) (12.2) (1.1) Capitalized Software Development Costs (1.8) (2.5) (3.9)