PubMatic (NASDAQ:PUBM) reported 17% year-over-year revenue growth in the third quarter of 2026, marking its third consecutive quarter of accelerating growth as connected TV, mobile app advertising and newer products drove gains.
Adjusted EBITDA more than doubled to $26 million, with a margin of 33%, compared with $11.2 million and a 16% margin a year earlier. CEO Rajeev Goel said both revenue and adjusted EBITDA were well ahead of expectations.
The company reported GAAP net income of $5.5 million, or $0.11 per diluted share. Cash from operations was $30.8 million, while free cash flow was $17.6 million.
CTV, Mobile and Emerging Products Drive Growth
Connected TV, mobile app and emerging revenue streams—including Activate, AI and commerce-related solutions—grew more than 50% combined and represented nearly two-thirds of total revenue, up from approximately 60% in the previous quarter.
CFO Steve Pantelick said global connected TV revenue increased more than 30% and accounted for 21% of revenue. Growth exceeded 40% in the Americas, where political advertising provided a boost. Mobile app revenue rose nearly 40% and represented approximately 27% of the total.
Emerging revenue streams more than doubled and reached approximately 18% of revenue. Buying activity on Activate, which connects ad buyers directly to PubMatic inventory, rose more than eightfold from a year earlier. Pantelick said political advertising contributed to that growth, alongside commerce buyers, independent agencies and agency holding companies.
Political revenue totaled $5.6 million, compared with $1.1 million in the year-earlier quarter. Spending through mid-market demand-side platform partners increased more than 40%, according to the company.
AI Adoption and OpenAI Partnership
Goel said buyers had run more than 120 fully agentic campaigns on PubMatic’s AgenticOS since its January launch, up from more than 80 at the end of the prior quarter. All five agency holding companies had run such campaigns, he said, while publishers had created 14,000 AI-powered deals on the platform.
Goel said the company recently partnered with OpenAI and expects ChatGPT advertising to become a regular part of advertisers’ media plans. He described the broader category as a potential growth opportunity as more AI platforms develop advertising businesses.
PubMatic is investing in tools that allow advertising decisions to be made on its platform, closer to publishers’ inventory and data. Goel said independent agencies have been the fastest early adopters of Activate, while the company’s Decision Fabric offering remains at an earlier stage of adoption.
Margins Improve as PubMatic Adjusts Infrastructure
Gross margin rose to nearly 70% from 63% a year earlier. Pantelick attributed five percentage points of the improvement to revenue growth and productivity, with another two percentage points coming from a change in the assumed useful life of server infrastructure.
Pantelick said PubMatic extended the useful-life assumption for servers to five years from three. The company increased monetized impressions by 15% while reducing gross impressions processed by 8%, as it redirected computing capacity toward higher-value activity.
Operating expenses fell 8% year over year, partly because of productivity gains and partly because some hiring and go-to-market spending shifted into the fourth quarter. Goel said PubMatic plans to reinvest efficiency savings, particularly from AI adoption, in its buyer-focused sales team.
Fourth-Quarter Outlook and Buybacks
PubMatic forecast fourth-quarter revenue of $91 million to $93 million, representing 15% growth at the midpoint. It expects adjusted EBITDA of $31 million to $33 million. The outlook assumes political advertising will account for roughly 7% to 8% of quarterly revenue.
For the full year, the company projects revenue of $312 million to $314 million and adjusted EBITDA of $79 million to $81 million. It raised its capital expenditure outlook to $24 million to $28 million as it invests in GPU-centered infrastructure.
Pantelick said the company would discuss its 2027 outlook in February. He said the fourth-quarter forecast assumes no benefit from potential remedies in the Google Ad Tech case, although he expects the remedies to be positive for PubMatic once implemented.
PubMatic ended the quarter with $144 million in cash and marketable securities and no debt. Its board approved a $150 million expansion of the share repurchase program and extended it through 2028, leaving approximately $198 million allocated to buybacks, including the prior authorization’s remaining amount.
About PubMatic (NASDAQ:PUBM)
PubMatic, Inc is a cloud infrastructure and digital advertising technology company that provides solutions for the programmatic advertising industry. Its platform helps publishers, app developers and content creators manage and monetize advertising inventory across websites, mobile applications, connected television and other digital channels.
The company operates primarily as a sell-side platform, connecting publishers with advertisers, agencies and demand-side platforms. Its offerings include tools for real-time bidding, yield management, audience targeting, identity solutions, supply-path optimization and header bidding.
