What Happened: Shares of programmatic advertising platform Pubmatic (NASDAQ: NASDAQ:PUBM) jumped 37.3% in the pre-market session after the company reported fourth-quarter results that blew past analysts' expectations for revenue and non-GAAP EPS. Pubmatic also generated strong free cash flow during the quarter. Notably, revenue growth (+14% year on year) accelerated during the quarter, a significant improvement compared to the decline recorded in the previous year. The strong topline results benefitted from increased monetized impressions and contributions from new revenue-generating streams such as Activate, Connect, and OpenWrap. These catalysts more than offset the anticipated headwinds from the Yahoo sell-side platform, which was shuttered. The Yahoo business was estimated at 5% of total revenue in the last quarter. Looking ahead, next quarter's revenue guidance came in higher than Wall Street's estimates. Zooming out, this was a strong quarter that should have shareholders cheering.
Is now the time to buy PubMatic? Find out by reading the original article on StockStory.
What is the market telling us: PubMatic's shares are quite volatile and over the last year have had 18 moves greater than 5%. But moves this big are very rare even for PubMatic and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 4 months ago, when the stock gained 14.1% on the news that the company reported third-quarter results that exceeded Wall Street's expectations for revenue and EPS. In addition, revenue and adjusted EBITDA guidance for the next quarter blew past analysts' expectations. The strong topline result was attributed to an increase in monetized impressions across both video and display formats. The company noted that Q4 has started out on solid footing, with October revenues growing both sequentially and year-over-year in the single-digit percentage range driven by increased monetized impressions.
On the other hand, its net revenue retention fell, and its gross margin decreased. While not a perfect quarter, we still think this was still a strong one that should satisfy most shareholders.
PubMatic is up 33.9% since the beginning of the year. Investors who bought $1,000 worth of PubMatic's shares at the IPO in December 2020 would now be looking at an investment worth $728.35.
