Sell-side ad technology platform PubMatic (NASDAQ: PUBM) has only presented some solid numbers for its shareholders — especially given the tough operating environment it’s facing. Revenue rose 25% year over year to $54.6 million.
These are refreshing results from a digital advertising company after a string of digital advertising companies including meta platforms (NASDAQ:Facebook)recorded significantly lower growth in the same period.
A closer look at PubMatic’s robust growth
PubMatic’s 25% year-over-year growth in the first quarter is particularly impressive considering the tough year-over-year comparison the tech company faced. In the first quarter of 2021, revenue grew 54% year over year. Additionally, PubMatic’s first quarter 2022 revenues are above the midpoint of management’s guidance range for the period, despite the macro environment affecting advertising budgets (largely due to the war in Ukraine and uncertainty about the impact of rising interest rates on the economy) since then The company announced its outlook for the first quarter.
“PubMatic continued its outstanding track record of sustained growth, GAAP profitability and cash generation,” said Rajeev Goel, co-founder and CEO of PubMatic, in the company’s first quarter disclosure. “This consistent performance is driven by our unique infrastructure-driven approach to digital advertising.”
It’s worth noting that PubMatic’s Q1 growth far outpaced the 7% revenue growth of Meta and its sell-side platform competitor magnetis 15% (NASDAQ:MNI) Pro forma revenue growth excluding traffic acquisition costs (TAC).
An optimistic outlook
Looking ahead, PubMatic believes it can sustain strong growth. Management expects first-quarter revenue to increase 20% to 25% year over year to $60 million to $62 million. In particular, the midpoint of this forecast range corresponds to sequential growth of 12%.
Management said in its first-quarter earnings release that this guidance is “conservative” given the headwinds advertisers are facing, including the war in Ukraine, high inflation, rising interest rates and ongoing COVID-related issues (eg. e.g. supply chain challenges and social distancing measures in some markets).
However, this again represents a more optimistic outlook than Facebook parent company Meta and competitor Magnite. The midpoint of Meta’s guidance for the second quarter is just 4% growth. And the midpoint of Magnite’s second-quarter pro forma ex-TAC revenue guidance implies 6% sequential growth.
Looking ahead to the full year, PubMatic maintained its previously mentioned full-year guidance of total revenue growing to $282-$286 million, or 25% growth at mid-term.
Investors should note, however, that PubMatic’s management said in its first-quarter results release that the guidance it provided for both the first quarter and the full year assumes that macroeconomic headwinds, with it is facing “does not deteriorate and cause economic conditions to deteriorate or otherwise significantly deteriorate advertiser demand.”
Overall, Magnite’s strong momentum in a difficult operating environment underscores the technology company’s strong positioning in a growing market and management’s continued execution of key growth opportunities.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Daniel Sparks has no position in any of the stocks mentioned. Its customers may own stocks of the named companies. The Motley Fool has positions in and recommends Magnite, Meta Platforms, and PubMatic. The Motley Fool has a disclosure policy.
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