Sell-side ad technology platform PubMatic (PUBM -1.99%) just put up some solid numbers for its shareholders -- particularly in light of the tough operating environment it's facing. Its top line increased 25% year over year to $54.6 million.
These are refreshing results from a digital advertising company after a number of digital advertising companies, including Meta Platforms (META -1.52%), posted growth well below this for the same period.
A closer look at PubMatic's robust growth
PubMatic's 25% year-over-year growth in its first quarter is particularly impressive when investors consider the tough year-ago comparison the tech company was up against. In the first quarter of 2021, revenue soared 54% year over year. Further, PubMatic's first-quarter 2022 revenue is above the midpoint of management's guidance range for the period, despite the macro environment for advertising budgets deteriorating (due primarily to the war in Ukraine and uncertainty surrounding the impact of rising interest rates on the economy) since the company provided its first-quarter outlook.
"PubMatic continued its outstanding track record of durable growth, GAAP profitability and cash generation," said PubMatic co-founder and CEO Rajeev Goel in the company's first-quarter earnings release. "This consistent performance is driven by our unique infrastructure driven approach to digital advertising."
It's worth noting that PubMatic's growth during Q1 was well ahead of Meta's 7% revenue growth and sell-side platform competitor Magnite's 15% (MGNI -2.53%) pro forma top-line growth when excluding traffic acquisition costs (TAC).
An upbeat outlook
Looking ahead, PubMatic thinks it can maintain strong growth. Management guided for first-quarter revenue to grow 20% to 25% year over year to $60 to $62 million. The midpoint of this guidance range notably represents 12% sequential growth.
Management said in its first-quarter earnings release that this guidance was "conservative" in light of the headwinds advertisers are facing, including the war in Ukraine, high inflation, rising interest rates, and continued COVID-related issues (e.g. supply chain challenges and social distancing measures in some markets).
Once again, however, this represents a more optimistic outlook than what was provided by Facebook parent Meta and competitor Magnite. The midpoint of Meta's second-quarter guidance represents just 4% growth. And the midpoint of Magnite's second-quarter pro forma ex-TAC revenue guidance implies 6% sequential growth.
Looking to the full year, PubMatic maintained its previously stated full-year guidance for total revenue to increase to between $282 million and $286 million, or 25% growth at the midpoint.
But investors should note that PubMatic management said in its first-quarter earnings release that the guidance it provided for both the first quarter and the full year assumes the macroeconomic headwinds it is facing "do not worsen and cause economic conditions to deteriorate or otherwise significantly reduce advertiser demand."
Overall, PubMatic's strong momentum in a difficult operating environment highlights the tech company's good positioning within a growing market and management's continued execution on key growth opportunities.