Q1: PubMatic Chugs Along With Revenue Growth And SPO As A Top Priority

It’s chilly out there, but PubMatic had a decent quarter.

Organic revenue for Q1 totaled $54.6 million, up 25% year-over-year, representing PubMatic’s seventh consecutive quarter of 20% revenue growth or more. PubMatic’s stock was up a smidge, about .5%, in after-hours trading.

CEO Rajeev Goel attributed the company’s consistent revenue growth to PubMatic’s fully in-house tech stack.

“We own our infrastructure, which gives us the ability to control and optimize the entire technology stack, as well as benefit from increased usage of our platform,” Goel told investors on Monday.

Goel also said the company plans to continue prioritizing supply-path optimization (SPO), audience addressability and omnichannel solutions as key growth areas for the year.

(Sensing a theme here.)

Growth drivers

The amount of ad spend on PubMatic SSPs that came through SPO agreements represented more than 27% of total ad spending on the platform in Q1, up from 10% two years ago.

Part of that uptick is thanks to PubMatic’s partnership with GroupM and the rollout of GroupM’s Premium Marketplace offering, which connects media buyers directly to publisher inventory.

PubMatic struck a deal with GroupM in March 2021 to be the holding company’s preferred SSP.

The partnership allows GroupM to simplify the media-buying process and make it more transparent, Goel said, and also helps publishers monetize more effectively and get exposure to new clients within the GroupM portfolio.

And as advertisers shift more of their ad spend to programmatic and publishers seek to simplify their workflows, PubMatic is hoping to push its omnichannel capabilities and drive expansion across fast-growing ad formats, such as online video and (you guessed it) connected TV.

PubMatic’s combined mobile and video revenue grew 41% compared to Q1 2021. The company’s mobile and video business represented 67% of its total revenue for Q1 2022.

CTV revenue for this quarter was five times higher than this time last year, and PubMatic now has 176 publisher partners that use its platform to monetize their CTV inventory programmatically, up from 167 partners in Q4.

Without naming names, Goel boasted that PubMatic recently signed deals to extend access to programmatic demand to three of the top five largest CTV manufacturers.

Beyond SPO and CTV, PubMatic is also looking to hitch its star to the RMN (retail media network) trend. The retail media market is expected to exceed $140 billion in total revenue by 2024, and PubMatic isn’t the only ad tech company looking for a slice.

PubMatic’s retail media pitch is tied to audience addressability.

“We’re building technology and solutions to help retailers monetize their own media, extend their data off-site to monetize impressions from nonretail publishers and to optimize ROI for buyers,” Goel said, adding that some ecommerce platforms are using PubMatic’s SSP to power audience-based private marketplaces.

Market-share strategy

As a long-term goal, PubMatic is still aiming to increase its market share to 20% from its current market share of 3% to 4%.

Although hiring was slower than anticipated in the quarter, the company increased its tech worker headcount by about 40% year over year, mainly in India.

The consolidation trend could also help bolster PubMatic’s plans to increase its share of the market.

“We absolutely are seeing consolidation on the sell side,” Goel said, “which really feeds into our goal for 20% market share.”

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