What happened

Shares of Pubmatic (PUBM -3.59%), a supply-side adtech platform, were falling today after the company issued a disappointing third-quarter earnings report, and its guidance called for revenue growth to grind to a halt in the fourth quarter.

As of 2:14 p.m. ET, the stock was down 14.2%.

So what

Revenue in the quarter grew just 11% to $64.5 million, showing the company is getting hit by the same macro headwinds as much of the rest of the advertising industry. That missed estimates at $66.9 million.

Omnichannel video was a bright spot for Pubmatic, which helps publishers optimize their ad inventory, as revenue in that category was up 45%, and connected TV revenue jumped 150%.

Net revenue retention over the last four quarters slowed from 157% in the quarter a year ago to 120%, showing the company grew revenue from its existing customer base by 20%.

Profitability was strong as Pubmatic reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $25.3 million, a 39% margin, but on the bottom line, adjusted earnings per share fell from $0.30 to $0.22, though that was well ahead of the consensus at $0.13.

CEO Rajeev Goel said in a statement, "Despite the near-term economic pressure, we are well positioned to continue to gain market share."

Now what

Pubmatic's fourth-quarter guidance was particularly concerning as the company called for revenue to grow just 1% at the midpoint of its range of $75 million to $78 million as management cited macroeconomic pressures on its display advertising business. It also said it sees adjusted EBITDA of $33 million to $36 million, or a margin of 45% to 48%.

Given the weak guidance, it's not surprising that Pubmatic stock is sinking today. While this still looks like a solid business over the long term, it's likely to struggle as the economy slows down.