PubMatic, Inc.

Hello, everyone, and welcome to Pubmatic's fourth quarter and full year 2025 earnings call. My name is Reece, and I will be your Zoom operator today. Thank you for your attendance today. And as a reminder, this webinar is being recorded. I will now turn the call over to Stacey Clements.

Good afternoon, everyone, and welcome to POMATIC's earnings call for the fourth quarter and full year 2025. This is Stacey Clements, and I'll be your operator today. Joining me on the call are Rajiv Goel, co-founder and CEO, and Steve Pantelik, CFO. Before we get started, I have a few housekeeping items. Today's prepared remarks have been recorded, after which Rajiv and Steve will host live Q&A. If you plan to ask a question, please ensure you've set your Zoom to display your full name and firm, and use the raise hand function located at the bottom of your screen. A copy of our press release can be found on our website at investors.podmatic.com. I would like to remind participants that during this call, management will make forward-looking statements, including without limitations, statements regarding our future performance, market opportunity, growth strategy, and financial outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and future conditions. These forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult to predict. You can find more information about these risks, uncertainties, and other factors in our forms filed from time to time with the Securities and Exchange Commission and are available at investors.podmatic.com, including our most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these discussed today is as of February 26, 2026, and we do not intend and undertake no obligation to update any forward review statement, whether as a result of new information, future developments, or otherwise, except as may be required by law. In addition, today's discussion will include references to certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP land income, cash flow from operations, and free cash flow. These non-GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our press release. And now I will turn the call over to Rajiv.

Thank you, Stacey, and welcome, everyone. We delivered an exceptionally strong fourth quarter with revenue and adjusted EBITDA ahead of guidance, healthy margins, and strong cash flow. Our results highlight continued growth in our underlying business, our leadership position in AI solutions, and the durability of our business model. For the full year, CTV grew over 50% year-over-year, excluding political, and Activate activity grew over 3x. Emerging revenues, which include Activate, Commerce Media, and New AI Solutions, nearly doubled over 2024 and now represent nearly 10% of total revenues. Over the past year, we made decisive moves to reposition Pubmatic for renewed, profitable growth. Those actions are bearing fruit and have directly contributed to our performance over the last two quarters. They have strengthened our competitive moat and have positioned us to deliver accelerated, double-digit percentage growth for the second half of 2026. These moves represent the first critical steps of our five-year roadmap designed to reaccelerate growth, expand margins, and compound long-term shareholder value. This roadmap marks an important turning point for Pubmatic and coincides with a pivotal transformation in the industry driven by AI. In fact, AI, in the form of agentic advertising, has emerged as a new and incremental tailwind to our business. Advertising is entering a new phase, one defined by AI-driven, autonomous systems operating in real time. We sit at the center of a highly competitive, millisecond-level auction environment where value is determined by measurable outcomes such as yield, performance, and efficiency. Fematic is enabling AI adoption across the open Internet. Our proprietary data, scaled infrastructure, and thousands of deep integrations across buyers and publishers form a real-time execution layer that cannot be replicated by vibe-coded software. Our leadership in agentic advertising gives us confidence we can shape this next evolution of digital advertising, and we are investing and executing aggressively to capture that opportunity. In October, we co-founded the Ad Context Protocol alongside Yahoo, LG Ad Solutions, Raptive, and others, setting industry standards for safe and interoperable agent-to-agent interaction. In December, we partnered with Butler Till and Geloso Beverage Group to launch the industry's first fully-autonomous end-to-end adjuncted campaign, proving that Pubmatics agents can execute media plans and optimize outcomes on behalf of advertisers. The campaign delivered more than 5x cost efficiencies, enabling significantly more advertisers' spend to shift directly into working media. Following this success, the agency quickly launched a second campaign, In addition to delivering top-tier agent performance, our AI-powered platform handles more complexity with significantly less manual effort. We are cutting campaign setup time by 87% and speeding up issue resolution time by 70%. This means faster activations, higher productivity, and better outcomes for our customers. In January, agent-to-agent transactions became a scalable reality. At the Consumer Electronics Show, We unveiled a Gentic OS alongside our launch partners, including WPP Media, Foxtel Media, and multiple independent agencies and tech partners. As Skyler McGill, head of video and programmatic at independent agency WPromote, put it, we're witnessing the biggest transformation in programmatic since real-time bidding. Our work with Pumatic puts us at the forefront of defining how human strategy and autonomous systems converge to unlock new capabilities and personalization and scale. Now building on this momentum, we recently delivered one of the industry's first agentic CTV advertising campaigns with the Vovo MaxLead in Europe, integrating directly with the largest independent media agency in the Netherlands. Adoption of Agentic OS continues to be swift. We have already run over 250 agentic deals across our platform, many of which represent new and incremental advertisers to Pubmatic. Our agentic AI accelerator program enables customers and partners to launch live agentic campaigns within weeks and quickly scale usage. Remarkably, almost 100 brands, agencies, and streamers have applied to join, making it the fastest early stage adoption of any product we've launched. This strong uptake underscores two important and distinctive points. First is the magnitude of the secular growth opportunity as digital advertising adopts agentic AI. By 2028, I expect 25% of all digital advertising to be executed autonomously via agentic AI, and by 2030, I expect that to jump to 50%. As an early AI leader, this unlocks transformative growth for Pubmatic long before our peers. With our scale already building in Agentic AI, this leading advantage is widening, with each transaction enhancing our model's ability to drive improved performance, fueling long-term revenue growth and incremental margin expansion. And second, the opportunity is much bigger than simply a technology revolution. Agentic AI will upend and collapse the industry's value chain, bringing advertisers and publishers much closer together. This will create a step function change in advertising efficiency and effectiveness, which will significantly expand the open internet advertising market in aggregate with new advertisers and increased budgets. In short, AI is an incremental tailwind for Pubmatic, and we are uniquely positioned to take advantage of this opportunity with nearly 2,000 premium publisher integrations representing over 100,000 sites and apps, 250-plus data partners on Connect, our direct buying platform Activate, and our fully owned AI-enabled infrastructure. While the past 20 years were about real-time bidding, the next decade will be about AI-led intelligence that connects the entire customer journey. The depth of our publisher inventory, combined with our tech stack, gives Pomatic a clear competitive advantage in this transition. We own our own infrastructure, sit at the intersection of media and the consumer, and innovate rapidly without dependence on third parties. These strengths power our three-layer architecture of advertising intelligence. At the infrastructure layer, our NVIDIA partnership enables next-gen AI models to run in our private cloud, with hardware and software solutions optimized for digital advertising. Owning our infrastructure also means that as compute requirements grow, our efficiency and margins expand with scale. At the application layer, AI is embedded into core workflows and publisher solutions that unlock new revenue opportunities. Nearly 10% of publishers on our platform are now deriving revenue from our AI solutions and generating incremental revenue for Pubmatic. And at the transaction layer, Activate and Agentic OS are transforming how advertisers and publishers connect, delivering higher performance and efficiency. Together, these layers form a flywheel for growth. Each innovation drives usage and strengthens our long-term competitive mode. They also allow us to innovate around growing opportunities within open internet advertising. We recently partnered with Context, a monetization layer for generative AI content experiences. Our integration enables publishers to monetize conversational AI experiences programmatically while maintaining control over their content, data, and user experience. Our direct integrations and AI-first infrastructure position us well to support and scale as these and other emerging ad formats evolve. Even as agentic advertising accelerates, we remain sharply focused on the five strategic priorities we set mid last year. These priorities are fueling underlying growth across our platform and will underpin double digit revenue expansion in the second half of 2026. First, we continue to diversify our buyer mix, integrating with 50 new DSP partners last year. The mid-market advertisers represented by these DSPs are the fastest-growing segment of the market as demand for performance-oriented solutions accelerates. This growth is reflected by the strength of the open Internet, which offers professionally created content and a growing logged-in user base across CTV and mobile app. This logged-in scale is critical for measurement, conversion, and ROI, making the open Internet increasingly compelling for performance advertisers. Second, we grew our buyer-focused go-to-market team by nearly 20% year-over-year and strengthened that team with new leadership to support deeper market penetration and account expansion. These investments are translating into stronger direct relationships with brands and agencies, with Activate consistently delivering top-tier performance that drives repeat spend and broader adoption. For example, in an IPG Kineso-led campaign, Activate outperformed on every key metric, generating 72% more clicks, 11% more impressions purchased, and nearly 20% lower CPMs for a leading global oil company, upending their traditional approach to programmatic buying. Similarly, MIQ, a global programmatic partner, significantly boosted brand visibility. Using Activate, MIQ powered a CTV campaign that required transparent, show-level reporting, capabilities unavailable in its legacy-buying platform. These outcomes demonstrate how Activate collapses the value chain in the open Internet, improving efficiency and ROI. What's more, with the Gentic OS, Activate will increasingly serve as a gateway to AI-enabled advertising for a broad range of advertisers. Third, CTV remains one of our most exciting growth channels. We recently added a new marquee global streamer to our platform and now partner with 28 of the top 30 global streamers, including Roku, Samsung TV+, DirecTV, Fox Sports, 2V, Vizio, and more. This leadership continues to attract top global brands to our platform. Sony Network Communications recently chose Pumatic to seamlessly reach both linear and CTV audiences programmatically via our platform. The campaign highlights how Pomatic helps brands unlock new incremental customers while driving stronger monetization for CTV publishers. Longer term, this campaign illustrates how Pomatic's programmatic solutions can drive execution across linear formats. Similarly, our mobile app business continued to scale with major mediation solutions. Most recently, we announced that Pubmatic's OpenRap SDK is now integrated with one of the largest global mobile ad networks, Google AdMob and Google Ad Manager for mobile app. This integration gives buyers a direct connection to high-quality, brand-safe inventory. As we enter 2026, mobile remains a strong, secular growth area for us with more partnership announcements in the near future. Fourth, emerging revenues will continue to be a significant growth driver in 2026 as adoption increases across several new products, in particular new AI-powered solutions. Strategically, these solutions strengthen our revenue model in two ways. They increase platform usage as automation drives more transactions and higher performance, and they introduce incremental revenue streams. For example, earlier this month, we announced AI Insights, which gives publishers actionable sales intelligence so they can maximize yield. Using these insights, leading CTV and online video publishers are unlocking 20% plus higher CPMs. Realtor.com Senior Vice President of Digital Media and Advertising, Yi-Fei Nguyen, explained that Pubmatics AI insights deliver the timely, market-level visibility we need to spot performance opportunities, understand shifts in demand, and make confident, real-time optimizations as conditions change. And finally, just as we are using AI to drive increased customer performance, we're also using AI to drive our own operational excellence. AI has become a core productivity engine across Pubmatic, embedding into processes and work streams across the business. In engineering, over 40% of new code in the second half of 2025 was written by AI, boosting productivity and accelerating time to market. These efficiencies funded new investments in sales and marketing while slightly reducing overall headcount. We'll continue to drive increased productivity in 2026 through AI adoption, which in turn will fund investments for profitable growth. I'm proud of the progress we've made in the discipline with which we built a more durable, scalable growth model. As we enter 2026, we remain focused on our key strategic priorities, activated adoption, DSP diversification, and accelerating growth in CTV, mobile, and emerging revenue streams. We expect these initiatives to drive double-digit year-over-year revenue growth in the second half of the year. Looking ahead, Agentic AI is an incremental tailwind and a defining advantage for Pomatic. It enhances advertiser performance, expands our addressable market, and increases the flow of budgets to the open internet. With adoption accelerating faster than anticipated, Pomatic is leading the next wave of innovation, helping our customers drive better outcomes through more automated, intelligent, and transparent advertising. We have the strategy, technology, and team in place to capture the opportunities ahead and to create lasting value for our shareholders. I will now turn the call over to Steve.