Slide 1: Q3 2022 Earnings Presentation
Q3 2022 Earnings Presentation November 8, 2022
Slide 2: Safe Harbor
SAFE HARBOR This presentation contains forward-looking statements. These statements may relate to, but are not limited to, expectations of Q4 2022 and full-year 2022 operating results or financial performance, market size and growth opportunities, the calculation of certain of our key financial and
Slide 3: Q3 2022 Financial Highlights
MISSION PubMatic Fuels the Endless Potential of Internet Content Creators Q3 2022 FINANCIAL HIGHLIGHTS REVENUE GAAP NET ADJUSTED CASH FLOW FROM INCOME EBITDA1 O P E R AT I O N S 2 $64.5M $3.3M $25.3M $28.1M + 11 % Y O Y 5 % M AR G I N 3 9 % M AR G I N 1 Adjusted EBITDA and Adjusted EBITDA Margin are
Slide 4: Sell-side technology is increasingly relevant to the digital advertising ecosystem
SELL-SIDE TECHNOLOGY IS INCREASINGLY RELEVANT TO THE DIGITAL ADVERTISING ECOSYSTEM DEM AND SIDE P L AT F O R M S PUBLISHERS AND APP DEVELOPERS SPECIALIZED CLOUD INFRASTRUCTURE ADVERTISERS AGENCIES 4
Slide 5: The open internet is gaining share
THE OPEN INTERNET IS GAINING SHARE VAL U E O F I N D E P E N D E N T TECHNOLOGY T r a n s p a ren cy OPEN INTERNET vs. SOCIAL Control YOY AD SPEND GROWTH 1.5X+ Q u a lity Source: MAGNA 5
Slide 6: Audience targeting moves to the sell-side, unlocking opportunity for PubMatic
AUDIENCE TARGETING MOVES TO THE SELL -SIDE, UNLOCKING OPPORTUNITY FOR PUBMATIC AC T I VAT I N G D ATA Known Identity ON THE SELL-SIDE D E L I V E R S S C AL E & ROI FOR BUYERS 1 st & 2 nd Party Data Contextual Signals S T R E N G T H I N D ATA AC T I VAT I O N O P E N S R E TAI L M E D I A Seller-De
Slide 7: Expanding usage via supply path optimization underscores increased value for buyers
EXPANDING USAGE VIA SUPPLY PATH OPTIMIZATION UNDERSCORES INCREASED VALUE FOR BUYERS B U Y E R S AR E C O N S O L I D AT I N G SPEND ON P U B M AT I C E N H AN C E D Q3 2022 SPO SHARE OF M E AS U R E M E N T & T O TA L A C T I V I T Y REPORTING C APAB I L I T I E S OVER 30% 7
Slide 8: The rise of automated connected TV grows the programmatic opportunity
THE RISE OF AUTOMATED CONNECTED TV GROWS THE PROGRAMMATIC OPPORTUNITY UNIFIED BIDDING OPENS MORE Ef f ic ie nc y B U Y I N G P O T E N T I AL IN CTV Me a s u ra bility O P E N W R AP O T T E N H AN C E M E N T S Sc a le D R I V E VAL U E F O R PUBLISHERS T r a n s p a rency 8
Slide 9: Usage-based model fuels resiliance and market share gains
USAGE-BASED MODEL FUELS RESILIANCE AND MARKET SHARE GAINS HIGH-MARGIN I N N O VAT I O N REVENUE USAGE BASED D R I V E S VA L U E MODEL E X PA N D E D CUSTOMER USAGE 9
Slide 10: Dual focus on revenue growth & profitability provides foundation for long-term success
DUAL FOCUS ON REVENUE GROWTH & PROFITABILITY PROVIDES FOUNDATION FOR LONG-TERM SUCCESS Long Track Record Innovation unlocks revenue today of Success and should result in outsized gains in the future P R O F I TAB L E GROWTH S I G N I F I C AN T F R E E C AS H F L O W Focus on maximizing efficiency S
Slide 11: Financial Results
Financial Results 11
Slide 12: Q3 2022 Financial Highlights
Q3 2022 FINANCIAL HIGHLIGHTS GAAP NET INCOME REVENUE + 11 % $70 +54% $65 $3.3M $60 $58 5% NET INCOME MARGIN $50 AD J U S T E D E B I T D A 1 $40 $38 $30 $25.3M 39% ADJ. EBITDA MARGIN ($ in Millions) $20 $10 C AS H F L O W F R O M O P E R AT I O N S 2 $0 Q3'20 Q3'21 Q3'22 $28.1M 1 Adjusted EBITDA is
Slide 13: Business model reduces impact of macro-economic headwinds
BUSINESS MODEL REDUCES IMPACT OF MACRO -ECONOMIC HEADWINDS Economic Pressures Favorable Revenue / Impact Display Margin Mix Towards Advertising Growth Omnichannel Video Diversification and Softness in Ad Spend Breadth of Across Select Advertisers Limits Verticals Impact 13
Slide 14: Diversified business drives growth
DIVERSIFIED BUSINESS DRIVES GROWTH YOY OMNICHANNEL YOY CTV REVENUE YOY AD SPEND VIDEO1 REVENUE GROWTH GROWTH FROM TOP GROWTH 10 VERTICALS 45% 150%+ 19% 1 Omnichannel video is the sum of online digital video plus CTV/OTT. 14
Slide 15: Owned & optimized infrastructure driving down unit costs
OWNED & OPTIMIZED INFRASTRUCTURE DRIVING DOWN UNIT COSTS WHILE IMPROVING CUSTOMER OUTCOMES AD IMPRESSIONS COST OF REVENUE PER ONE MILLION ( T R A I L I N G T W E LV E M O N T H S ) AD IMPRESSIONS ( T R A I L I N G T W E LV E M O N T H S ) +79% 140.4 $0.99 ( 4 5 %) +97% 78.3 +58% In Trillions 39.6 $0
Slide 16: 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 $25 14 th $24 CONSECUTIVE QUARTER OF POSI TIVE GAAP NET I NCOM E $13 42% 39% 35% 26 th ($ in Millions) CONSECUTIVE QUARTER OF Q3'20 Q3'21 Q3'22 POSITIVE ADJ. EBITDA1 Adj.EBITDA 1 Adj.EBITDA Margin 1 1 Adjusted EBITDA is a non-GAA
Slide 17: Delivering cash flow
DELIVERING CASH FLOW NET CASH PROVIDED FREE DRIVERS BY OPERATING CASH FLOW1 ACTIVITIES ▪ Workflow automation $96.5 ▪ Continuous optimization of +40% infrastructure (software and hardware) $50.2 +91% ▪ Offshore R&D leverage $68.8 ▪ Focus on profitable publishers $26.3 and ad impressions ($ in Million
Slide 18: Investments in innovation fuel operational success
INVESTMENTS IN INNOVATION FUEL OPERATIONAL SUCCESS I N N O VAT I O N D R I V E S G R O W T H P O T E N T I AL Su p p ly Pa t h O p t imiza tio n YOY INCREASE IN INDIA- BASED TECHNOLOGY TEAM A c q u is itio n o f M a r t in HEADCOUNT IN Q3 2022 46% F o u n d a t io n f o r F u t u r e In n o va t io
Slide 19: Operating expenses: investing for growth
OPERATING EXPENSES: INVESTING FOR GROWTH $35,000 $33 63% DRIVERS $28 $5 ▪ Increased headcount by $30,000 58% $4 29% with focus on $25,000 $20 53% technical and go-to-market $20,000 52% $15 52% teams $3 $15,000 48% $16 48% ▪ Q3'22 includes incremental stock-based compensation $11 43% $10,000 and retu
Slide 20: GAAP and non-GAAP diluted earnings per share
GAAP AND NON-GAAP DILUTED EARNINGS PER SHARE $16.7 Includes (a) $6.4M GAAP AND NON-GAAP loss on an equity NET INCOME $13.5 investment (non $12.4 cash) (b) $1.1M for acquisition-related Net Income $7.5 and other expenses $6.2 $ in Millions 1 Non-GAAP Net Income $3.3 Q3'20 Q3'21 Q3'22 GAAP AND NON-GAA
Slide 21: 2022 Guidance
2022 GUIDANCE Q4 2022 FY 2022 ($ in Millions) Low High Low High R e ve n u e $75 $78 $257 $260 Y/Y% (1%) 3% 13% 15% Ad j u s t e d E B I T D A $33 $36 $98 $101 Ad j u s t e d E B I T D A M a r g i n 44% 46% 38% 39% Note: Numbers rounded for presentation purposes We expect FY 2022 CapEx to be in the
Slide 22: Long term competitive advantages
LONG TERM COMPETITIVE ADVANTAGES 1 Scaled, Global Omnichannel Platform 2 Owned & Operated Infrastructure 3 Innovation Engine and Resources to Invest 4 Consistently Profitable with Strong Cash Flow 22
Slide 23: Appendix
Appendix 23
Slide 24: Non-GAAP Reconciliation – Adjusted EBITDA
NON-GAAP RECONCILIATION – ADJUSTED EBITDA ($ in Millions) Three Months Ended September 30, 2020 2021 2022 Net Income $6.2 $13.5 $3.3 Add back (deduct): Stock-Based Compensation 1.4 3.7 4.7 Unrealized gain(loss) on equity investments - - 6.4 Depreciation and Amortization 4.2 6.3 9.1 Interest Income (
Slide 25: Non-GAAP Net Income Reconciliation
NON-GAAP NET INCOME RECONCILIATION ($ in Millions, except for Non-GAAP Diluted EPS1 ) Three Months Ended September 30, 2020 2021 2022 Net Income $6.2 $13.5 $3.3 Add back (deduct): Stock-Based Compensation 1.4 3.7 4.7 Unrealized (gain)loss on equity investments - - 6.4 Acquisition-related and other e
Slide 26: Free Cash Flow Reconciliation
FREE CASH FLOW RECONCILIATION ($ in Millions) Three Months Ended September 30, 2020 2021 2022 Net Cash provided by (used in) Operating $3.7 $26.6 $28.1 Activities Deduct: Purchases of Property and Equipment (5.5) (11.0) (14.6) Capitalized Software Development Costs (1.4) (1.9) (2.8) Free Cash Flow (