What happened
Shares of Pubmatic (PUBM +4.69%), a supply-side adtech stock, were moving lower today after the company reported missed top-line estimates in its fourth-quarter earnings report and offered weak guidance for the current period.
As of 10:20 a.m. ET, the stock is down 5.3% on the news.
NASDAQ: PUBM
Key Data Points
So what
Pubmatic, which helps online publishers optimize their ad inventories, said that revenue in the quarter fell 2% to $74.3 million, trending with other digital ad businesses that have also reported stiff headwinds. That result missed analyst expectations at $76.7 million.
The company continued to see solid growth in omnichannel video, with revenue up 25% from the quarter a year ago, showing it's benefiting from the boom in ad-based streaming television.
Its net retention rate in the quarter was just 108%, showing existing customers increased their spend by 8% over the last four quarters.
Costs also outgrew revenue in the period as earnings before interest, taxes, depreciation, and amortization (EBITDA) fell from $38.9 million to $32.6 million. On the bottom line, adjusted earnings per share slipped from $0.48 to $0.33, though that topped estimates at $0.26.
Management touted market-share gains in 2022, saying its estimated market share rose to between 4% and 4.5%, "significantly up from when we went public just over two years ago," according to CEO Rajeev Goel.
He also promised, "Recent actions to organize more of our resources toward higher-growth formats and channels such as CTV and online video will diversify our revenue mix while delivering strong, profitable growth."
The company also announced a $75 million share repurchase program.
Now what
Despite that optimism from Goel, Pubmatic's first-quarter guidance reflects the ongoing headwinds in the adtech sector.
For the first quarter, the company expects revenue of $50 million to $52 million, which is worse than the analyst consensus of $54.9 million and indicates a decline of 7% from the quarter a year ago at the midpoint.
The company did say it expected its adjusted EBITDA margin to improve throughout the year, but given that forecast, it's not surprising to see the stock trading lower today.
