Slide 1: Q2 2022 Earnings Presentation
Q2 2022 Earnings Presentation August 8, 2022
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 2022 and full-year 2022 operating results or financial performance, market size and growth opportunities, the calculation of certain of our key financia
Slide 3: Q2 2022 Financial Highlights
M ISSION PubMatic Fuels the Endless Potential of Internet Content Creators Q2 2022 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 $63.0M $7.8M $23.0M $20.5M + 2 7 % YO Y 1 2 % MA R GIN 3 7 % MA R GIN 1 Adjusted EBITDA and Adjuste
Slide 4: PubMatic is committed to building digital advertising's supply chain of the future
P U B M AT I C I S C O M M I T T E D T O B U I L D I N G D I G I T AL AD V E R T I S I N G ’ S S U P P L Y C H AI N O F T H E F U T U R E All advertising will become digital, and all T h e S u p p ly C h a i n 1 digital advertising will become programmatic o f t h e F u t u re T R A NS PA R E NT 2 T
Slide 5: Consolidation and expanded customer use of our platform fuel growth
C O N S O L I D AT I O N AN D E X P AN D E D C U S T O M E R U S E O F O U R P L AT F O R M F U E L G R O W T H P u b lis hers & Ad v e r tis ers & D e m and S i d e Ap p D e v e lope rs Ag e n c ies P l a t f orm s 130% 30% NEARLY 2X Q2 2 0 2 2 NE T R E VE NUE Q2 2 0 2 2 S P O S HA R E I N C R E A
Slide 6: Consolidation fuels long runway for growth
C O N S O L I D AT I O N F U E L S L O N G R U N W AY F O R G R O W T H C ON S OL I D AT I ON D R I V E R S E S T I M AT E D P UB M AT I C M A R K E T S HA R E 1 O m nicha nnel P l a t f orm 3-4% Ad d r es sa bility & L O NG - T E R M M A R K E T S u p ply P a t h O p t im izat ion S HA R E O B J E
Slide 7: Driving omnichannel expansion from fastest growing formats
D R I V I N G O M N I C H AN N E L E X P AN S I O N F R O M F AS T E S T G R O W I N G F O R M AT S G L OB A L , OM N I C H A N N E L S C A L E D R I V E S D U R A B L E G R OW T H C T V / OT T C T V R E VE NUE G R O W T H YO Y IN Q2 2 0 2 2 On l i n e Vi d eo OVER 150% O M NI C HA NNE L VI D E O S
Slide 8: Audience addressability innovation drives expansion of platform usage
AU D I E N C E AD D R E S S A B I L I T Y I N N O V AT I O N D R I V E S E X P AN S I O N O F P L AT F O R M U S AG E & S U P P L Y P AT H O P T I M I Z AT I O N A C T I VAT I NG D ATA K n o wn I d e n tit y O N T HE S E L L - S I D E D E L I VE R S R E S ULT S F O R B UYE R S 1 st & 2 nd P a r t y
Slide 9: Delivering transparent and efficient advertising across the open internet
D E L I V E R I N G T R AN S P AR E N T & E F F I C I E N T AD V E R T I S I N G AC R O S S T H E O P E N I N T E R N E T C OM M I TT ED T O R U N N I N G A S U S TA I N A B L E , R E S P ON S I B L E A D V E R T I S I N G P L AT F OR M P E R C E N T R E N E WA B L E E N E R G Y P OW E R I N G G L O
Slide 10: Consolidation on PubMatic platform driving continued market share gains
C O N S O L I D AT I O N O N P U B M AT I C P L AT F O R M D R I V I N G C O N T I N U E D M AR K E T S H AR E G AI N S HIG H-M ARG IN I N N O V AT I O N RE V E NUE US AG E B AS E D D RIV E S VAL UE M O DE L E X PAND ED C US T OME R US AG E 10
Slide 11: Financial Results
Financial Results 11
Slide 12: Q2 Financial Highlights
Q 2 2 0 2 2 F I N AN C I AL H I G H L I G H T S R E VE NUE YO Y R E VE NUE G R O W T H $7 0 $6 0 $63 27% $50 $5 0 NE T I NC O M E M A R G I N $4 0 $3 0 $26 12% $2 0 ($ in Millions) $1 0 A D J US T E D E B I T D A M A R G I N 1 $0 Q2'20 Q2'21 Q2'22 37% 1 Adjusted EBITDA is a non-GAAP measure. A recon
Slide 13: Strong track record of durable growth and profits
S T R O N G T R AC K R E C O R D O F D U R AB L E G R O W T H AN D P R O F I T S R E VE NUE 8 th $76 C O N S E C UT I V E Q U A R T E R O F $63 2 0 % + RE V E NUE G RO WT H 88% $58 $56 $55 $44 $50 64% $38 54% 54% 13 th 33% 34% C O N S E C UT I V E Q U A R T E R O F 25% 27% P O S IT I V E G A A P N E
Slide 14: Diversified scale drove advertiser spend growth in multiple verticals
D I V E R S I F I E D S C AL E D R O V E AD V E R T I S E R S P E N D G R O W T H I N Q2 2022 M U LT I P LE V E R T I C A L S D E L I V E R E D S T R ON G G R OW T H S h o pping T r av el YOY A D S P E ND GR OW T H OF T OP 1 0 AD VE R T IC A L S F o o d & D r i nk 40%+ Ar t s & E n t e rt ainm ent 1
Slide 15: Strong revenue growth across channels in Q2 2022
S T R O N G R E V E N U E G R O W T H AC R O S S C H AN N E L S I N Q 2 2 0 2 2 YOY MOBIL E & YOY C T V R E VE NUE YOY D IS P L A Y OMNIC H A N N E L VID E O 1 GROW TH R E VE NUE GR OW T H R E VE NUE GR OW T H 43% 150%+ 19% 1 Omnichannel video is the sum of online digital video plus CTV/OTT. 15
Slide 16: Growing revenue visibility and predictability
G R O W I N G R E V E N U E V I S I B I L I T Y AN D P R E D I C T AB I L I T Y NE T D O L L A R - B A S E D R E T E NT I O N 1 Exp an d ed U sag e f ro m Bu yers Vi a 149% Su p p l y Pat h 130% Op t i m i z at i o n 122% Exp an d ed U sag e f ro m Pu b l i sh ers Vi a L an d & Exp an d St rat eg y
Slide 17: Robust gross margins
R O B U S T G R O S S M AR G I N S $44 DRIVE RS $37 High marginal profitability from structural leverage: ▪ Increased investments in 74% capacity for future growth $17 70% ▪ Scale efficiencies from continued reduction in cost of revenue per 65% ($ in Millions) million impressions processed ▪ High in
Slide 18: Owned and optimized infrastructure driving down unit costs
O W N E D & O P T I M I Z 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 C O S T O F R E VE NUE P E R ONE MIL L ION ( T R AI L I NG T W E LVE M O NT HS ) AD IMPRESSIONS ( T R AI L I NG T W E LVE M O NT HS ) +85% 122 (48%) $1.09
Slide 19: Operating expenses: investing for growth
O P E R AT I N G E X P E N S E S : I N V E S T I N G F O R G R O W T H $35,00 $34 DRIVE RS $5 63% 62% ▪ Increased headcount by $30,00 $26 $25,00 $4 58% 25% with focus on technical and go-to-market 54% $20,00 53% 53% teams $16 $18 $15,00 $3 $14 48% ▪ Q2'22 includes incremental stock-based compensatio
Slide 20: GAAP and non-GAAP 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 $13.0 $13.0 GA A P A ND NON- GA A P NE T INC OME $9.9 $7.8 Net Income $ in Millions 1 Non-GAAP Net Income $0.7 $1.1 Q2'20 Q2'21 Q2'22 GA A P A ND NON- GA A P $0.23 $0.23 D IL UT E D E A R NINGS $0.18 P E R S HA R E $0.14 GAAP Dilu
Slide 21: 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 CASH FLOW 1 DRIVE RS B Y OP E R A T ING ACT IVIT IE S ▪ W orkflow automation $21 ▪ Continuous optimization of $20 infrastructure (software and hardware) ▪ Offshore R&D leverage ($ in Millions) $8 $6 ▪ Focus on profitable publishers Q2
Slide 22: Guidance
2 0 2 2 G U I D AN C E Q3 2 0 2 2 FY 2022 ($ in Millions) Low High Low High Revenue $66 $68 $277 $281 Y/ Y% 14% 17% 22% 24% Adjusted EBITDA $23 $25 $103 $108 Adjusted EBITDA M argin 35% 37% 37% 38% Note: Numbers rounded for presentation purposes W e expect FY 2022 CapEx to be in the range of $33M –
Slide 23: Q2 results underscore strength of our platform
Q 2 2 0 2 2 R E S U L T S U N D E R S C O R E S T R E N G T H O F O U R P L AT F O R M 1 Structural Advantage in Owned & Operated Infrastructure Significant Growth in Digital Ad Spend Drives Addressable Market 2 Expansion 3 Scaled, Global Om nichannel Platform Driving Consolidation on PubMatic 4 Con
Slide 24: Appendix
Appendix 24
Slide 25: Non-GAAP Reconciliation – Adjusted EBITDA
N O N - G AA P R E C O N C I L I AT I O N – AD J U S T E D E B I T D A ($ in Millions) Three Months Ended June 30, 2020 2021 2022 Net Income $0.7 $9.9 $7.8 Add back (deduct): Stock-Based Compensation 0.5 3.6 5.4 Impairment of Internal Use Software - - - Unrealized gain(loss) on equity investments -
Slide 26: Non-GAAP Net Income Reconciliation
N O N - G AA P N E T I N C O M E R E C O N C I L I AT I O N ($ in Millions, except for Non-GAAP Diluted EPS1 ) Three Months Ended June 30, 2020 2021 2022 Net Income $0.7 $9.9 $7.8 Add back (deduct): Stock-Based Compensation 0.5 3.6 5.4 Unrealized (gain)loss on equity - - 0.9 investments Adjustment f
Slide 27: Free Cash Flow Reconciliation
F R E E C AS H F L O W R E C O N C I L I AT I O N ($ in Millions) Three Months Ended June 30, 2020 2021 2022 Net Cash provided by (used in) Operating ($2.7) $21.1 $20.5 Activities Deduct: Purchases of Property and Equipment (6.1) (11.5) (12.2) Capitalized Software Development Costs (1.5) (1.8) (2.5)