0001422930-26-000024
SEC filingRevenue declined 2% YoY due to DSP platform changes, while cost discipline narrowed operating loss.
For the three months ended March 31, 2026, PubMatic reported revenue of $62.6 million, a 2% decline from $63.8 million in the prior-year period. The decrease was primarily attributed to platform changes implemented by one of its DSP buyers in the second half of 2025, which caused a year-over-year decline in revenues. Gross profit fell 5% to $36.5 million, and gross margin contracted 200 basis points to 58%, driven by the revenue decline and a 2% increase in cost of revenue. Cost of revenue rose due to a $2.0 million increase in data center costs, partially offset by a $1.5 million decrease in depreciation and amortization. Operating loss widened to $15.3 million from $11.9 million, as total operating expenses increased 3% to $51.7 million. Sales and marketing expenses rose 8% to $29.0 million, driven by higher personnel costs. Technology and development costs decreased 9% to $8.0 million, primarily due to lower personnel costs. General and administrative expenses increased 2% to $14.8 million, reflecting higher professional services. Net loss deepened to $12.5 million from $9.5 million. Adjusted EBITDA, a non-GAAP measure, declined 69% to $2.6 million from $8.5 million, reflecting the lower revenue and higher operating expenses.
PubMatic does not report segment-level revenue or operating income. However, the MD&A provides key operational metrics. The company served approximately 1,970 publishers and app developers as of March 31, 2026, up from approximately 1,950 a year earlier. Net dollar-based retention rate fell to 96% for the trailing twelve months ended March 31, 2026, from 102% in the prior-year period, indicating publisher contraction or churn. Supply Path Optimization (SPO) remained a major growth driver, representing approximately 56% of total activity for the quarter. The company continues to invest in SPO technology and partnerships. Revenue was primarily driven by impressions processed, new revenue streams, and growth in customer relationships, but these were negatively impacted by the DSP platform changes.
Management expects revenues to be affected by macroeconomic conditions for the remainder of 2026 and to continue to be impacted by the DSP platform changes in the near term. Cost of revenue is expected to be higher in absolute dollars in 2026 compared to 2025, as the company continues to support its data centers. Technology and development expenses are expected to be flat in absolute dollars. Sales and marketing expenses are expected to increase due to additional headcount investments and marketing programs. General and administrative expenses are expected to increase due to additional professional services. The company believes its existing cash, cash equivalents, and anticipated cash from operations, together with available borrowings under its credit facility, will be sufficient to meet working capital requirements for at least the next 12 months. The board authorized an additional $100 million for share repurchases under the 2023 Repurchase Program, extending it to December 31, 2026. As of March 31, 2026, $85.1 million remained available for future repurchases.
Operating cash flow of $17.3M significantly exceeded the net loss of $12.5M, indicating strong cash generation from operations. The primary positive adjustments were depreciation and amortization ($10.0M), stock-based compensation ($8.5M), and a large decrease in accounts receivable ($21.3M). However, working capital also included negative contributions from accounts payable (-$1.0M) and accrued liabilities (-$11.4M). Capex intensity was moderate at $6.6M, mostly for capitalized software, resulting in a robust operating cash flow to capex coverage ratio of 2.6x. Share repurchases of $8.5M were funded by operating cash flow and existing cash, demonstrating a commitment to returning capital. The overall cash flow profile is healthy, with operating cash flow growing 10.7% year-over-year, driven by improved collections despite a higher net loss.