Advertising technology (adtech) supply-side platform (SSP) shares PubMatic (NASDAQ: PUBM) skyrocketed Thursday after the company reported third-quarter 2023 financial results.
Turnover was lower than in the same period last year. But investors are seeing signs that the company is starting to recover. And that’s why PubMatic shares were up 22% as of 11:10 a.m. ET.
How was the third quarter good for PubMatic?
In the third quarter, PubMatic generated revenue of $63.7 million, which exceeded management’s expectations of $58 million to $61 million. But it was about 1% lower than the same period last year. The company’s net profit of $1.8 million was also significantly lower than the third quarter 2022 net profit of $3.3 million.
Market expectations for PubMatic were very low going into the third quarter report, as the adtech market in general is struggling right now. However, the company gave the market a glimmer of hope.
In the third quarter, PubMatic’s ad impressions increased 33% year-over-year – this is the number of ads the company serves. And CFO Steve Pantelick said the company’s cost per mille (CPM) – the amount it gets per ad – stabilized in July.
In summary, PubMatic has weathered the worst of the ad slowdown, and the market is celebrating today.
Back to growth
According to PubMatic management, the fourth quarter has started with year-over-year revenue growth. The company expects to generate revenue of $76 million to $80 million in the fourth quarter, which would be nicely higher than revenue of $74.3 million in the same period last year. Furthermore, the low end of this forecast would still be record quarterly revenue.
However, PubMatic’s guidance comes with a catch. Management expects the CPM stabilization it is experiencing to continue for the remainder of the year. But this is largely beyond the company’s control and driven by macroeconomic conditions.
Therefore, PubMatic’s results and guidance are very encouraging for shareholders. But this could fall short if economic headwinds unexpectedly increase.
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Jon Quast has positions in PubMatic. The Motley Fool holds positions in and recommends PubMatic. The Motley Fool has a disclosure policy.
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