A glance beneath the hood as PubMatic goes public

PubMatic, the supply-side platform founded in 2006, has officially gone public.

One month after filing the S-1, the company is now trading on the Nasdaq under PUBM and opening for $ 20 per share. PubMatic, which is incorporated in Delaware but operates in the California Bay Area, plans to raise $ 118 million.

All of this comes from the fact that other ad tech companies, including DoubleVerify and AppLovin, are also allegedly preparing to go public. This wave of “Public Ad Tech 2.0” is judged in the context of programmatic actors who went public with mixed results in the early to mid-2010s.

The company's S-1 records provide financial observers with an honest representation of the landscape in which a company operates, according to management. Below is some information that PubMatic's management has had to provide to investors.

PubMatic's business has been positive cash flow for six years

The company had revenue of $ 92.5 million for the first three quarters of 2020, up 33% year over year. Gross profit for the first nine months of the year was $ 62.77 million.

But a lot of that money comes from a handful of players

On the sales side, PubMatic has had at least a fifth of its sales since 2018 with Verizon Media Group, its largest publishing partner.

On the buyer side, The Trade Desk and Google's DV360 account for a “significant part” of the ad impressions bought by the SSP. PubMatic signed contracts with The Trade Desk and Google in 2011 and 2012.

PubMatic has no minimum spend for buyers to use its platform. Both the sell and buy-side deals are automatically renewed annually, unless one of the parties says otherwise.

PubMatic: "In the third quarter of 2020 we served around 1,100 publishers and app developers worldwide on our platform, which consists of over 55,000 domains and 8,000 apps."

The inevitable identity problem

Like any other ad tech company, PubMatic has to deal with the impact of Google's decision to remove third-party cookies from its Chrome browser and Apple's decision to enable mobile identifier IDFA.

Both steps limit the ability for companies like PubMatic to track users on the web and in mobile apps, which could ultimately cause PubMatic to degrade ad impressions.

“While we believe our platform is well positioned to customize critical cookies to our publishers without cookies and to continue to provide critical data information, this transition could be more disruptive, slower or more expensive than currently thought and significantly affect our ability to service our customers and our business , the earnings position and the financial position could be adversely affected ”, so the S-1.

CTV as a savior

Connected TV has seen massive growth as people stream more content while staying at home during the pandemic. This shift from linear television to streaming is expected to continue over the next year.

While identity is still largely fragmented and not standardized, CTV doesn't rely on dwindling trackers like cookies or IDFA.

PubMatic recently developed new streaming tech offerings to capture the advertising dollars flowing into CTV. This includes "ad potting" or the ability to place the desired number of ads in a commercial break

"We have invested a lot of time and resources cultivating relationships with CTV publishers to establish best practices and take advantage of programmatic CTV," the company said.

From open auctions to private marketplaces

With third-party cookies and IDFAs disappearing, advertisers and publishers are looking to build closer relationships with their first-party data in order to continue to deliver targeted ads to users.

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