Well, hello, everyone, and welcome to PubMatic's Third Quarter 2024 Earnings Call. My name is Kelsey, and I will be your Zoom operator today. We thank you all for your attendance today. And as a reminder, this webinar is being recorded. And now I would like to turn the call over to Stacie Clements with the Blueshirt Group. Stacie, over to you.

Good afternoon, everyone, and welcome to PubMatic's earnings call for the third quarter ended September 30, 2024. This is Stacie Clements with the Blueshirt Group, and I'll be your operator today. Joining me on the call are Rajeev Goel, Co-Founder and CEO, and Steve Pantelick, CFO. Before we get started, I have a few housekeeping items. Today's prepared remarks have been recorded, after which Rajeev and Steve will host live Q&A. A copy of our press release can be found on the website at investors.pubmatic.com. I would like to remind participants that during this call, management will make forward-looking statements, including, without limitation, statements regarding our future performance, market opportunity, growth strategy, and financial outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and future conditions. These forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are difficult to predict. You can find more information about these risks, uncertainties, and other factors in our reports filed from time to time with the Securities and Exchange Commission and are available at investors.pubmatic.com, including our most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. All information discussed is as of November 12, 2024, and we do not intend and undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law. In addition, today's discussion will include references to certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP net income, and free cash flow. These non-GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our press release. And now I will turn the call over to Rajeev.

Thanks, Stacie, and welcome, everyone. Our third-quarter results exceeded expectations on both the top and bottom line. Revenue in the quarter grew 13% year-over-year. Clients continue to build their advertising businesses on our platform, and we are becoming more embedded into clients' tech stacks and more integrated across the ecosystem. Over the last few months, driven by the strength and scale of our CTV solutions as well as the depth of our expertise, we capitalized on the surge of political advertising demand. In just a few short years, we have organically scaled our CTV business, and we now work with 70% of the top 30 streaming publishers. Even as we further penetrate the head of this market where the bulk of consumers are spending their time, we also have tremendous opportunity to expand our existing streamer relationships. On average, CTV monetized impression volume was up over 100% year-over-year for the third straight quarter as we have reached a critical mass of streaming inventory to meet the surge in ad demand on our platform. Included in this surge was greater-than-expected activity from political advertising, which was heavily focused on CTV. Certainly, the increase in streaming inventory on our platform drove growth in this category, but more impactful is our ability to quickly build new products that drive incremental growth. In Q3, we launched new tools to help unlock streaming inventory in order to better capitalize on political ad budgets. For context, many publishers typically block political ads altogether as a way to protect the user experience from unwanted political issues or candidates. But this is a blunt strategy and leaves money on the table. We developed a better approach for streamers utilizing generative AI technology. Our solution classifies each ad on granular criteria such as political party, federal, state, or local candidate or issue, sentiment, and more. As a result, more than 250 incremental publishers and streamers that have historically blocked political ads chose to open their inventory to PubMatic for political campaigns that meet their user experience criteria. This enabled us to scale political spend on our platform much faster than we expected as buyers were able to reach the audiences they were targeting while content creators maintained control over their inventory. Further, political buyers were able to leverage Connect to curate rich political data sets on PubMatic inventory for targeted higher ROI advertising. This underlying Gen AI technology will have ongoing applications as we leverage it in other ad-sensitive categories or markets such as language and sentiment detection. Looking forward, we'll continue to build solutions that unlock inventory and increase monetization. This includes our recently launched CTV marketplace, which offers real-time inventory curation along numerous dimensions built on sell-side technology. With the simple opt-in, streamers can unlock more value from their inventory while making it easier for buyers to access premium content and targeted audiences. For example, ad buyers specifically looking to reach sports fans can leverage our off-the-shelf and easy-to-buy live sports inventory. DIRECTV advertising and Roku are already leveraging PubMatic CTV marketplace with positive feedback from both publishers and buyers. As the CTV marketplace grows, we believe it will create stickiness for our CTV business. We continue to onboard new streamers, growing our streaming customer count by 13% year-over-year to over 280. For example, we recently signed Xumo, a joint venture between Comcast and Charter that offers streaming devices and services to tens of millions of customers per month. Through this partnership, PubMatic will bring demand from our SPO relationships across their content portfolio, including Xumo Stream Box, Xumo TV, and its fast app, Zumo Play. Also aiding our growth are agencies and advertisers that increasingly consolidate buying on PubMatic. Half of our activity is from SPO as buyers move more ad spend to our platform due to our growing technology, workflow, and data capabilities. Major agency holding companies have moved and are in the process of moving direct buys on behalf of their clients to our platform to capitalize on their supply path optimization relationships with us, including through Activate. Earlier this year, Dentsu launched Mercury for Media, which is a centralized data, media activation, and creative execution platform that is being rolled out across its agencies. We are thrilled to partner with Dentsu on this transformative initiative as PubMatic technology is being integrated at the center of Mercury for Media. PubMatic's Connect will increase audience reach and cost efficiency, particularly within CTV and streaming. Activate will provide end-to-end cookie-less digital media activation and measurement at scale. Our platform sits at the intersection of data, commerce media, SPO, omnichannel inventory, and global scale. Our innovative technology and differentiated approach are what enable us to scale with our clients and partners as they build integrated digital ad businesses. It's also why clients and partners choose PubMatic. PubMatic's SSP is one of the only omnichannel platforms with a scaled SDK footprint, which seamlessly integrates directly into publishers' apps. This key differentiator was just one of the reasons that one of the largest global mobile mediation platforms expanded their partnership with us. We are now a certified bidder and exchange partner, making it easier for app developers to integrate our solution with the click of a button, streamlining access to PubMatic's valuable advertising demand that app publishers have historically struggled to access at scale. The partnership expansion brings more than 80,000 global app developers into our sales funnel, creating a significant growth opportunity for us. Our mobile app business grew over 20% year-over-year for the fourth consecutive quarter. Our strong foothold in this market positions us well for continued growth. Per Magna's forecast, $58 billion in mobile app ad spend is expected to flow through the open Internet this year. The value of our comprehensive integrated platform offers multiple new revenue streams and TAM expansion opportunities like Commerce Media. As retailers and transactional commerce companies lean into advertising as a major revenue and profit driver, they are realizing their need for SSP technology. For example, PubMatic's integrated platform allows Western Union to scale its advertising initiatives more effectively. Originally integrated to support on-site monetization, we have recently expanded our partnership as they launched their Western Union Media network earlier this year. Using Convert, Western Union will leverage our off-site media solutions, applying insights from their 115 million annual consumer money transfer transactions in the U.S. across PubMatic's premium inventory. This gives them the power to manage their monetization strategy via a single unified tech stack, streamline operations, and enhance efficiency. At the same time, the publishers integrated into our SSP benefit from unique ad budgets only available on the PubMatic platform when Western Union data is applied. The added value customers receive through solutions like Convert also creates incremental revenue opportunities such as data and SSP fees for PubMatic. Another vector for our long-term growth includes social media companies entering the open Internet arena as they expand their ad businesses outside of their own walled gardens. To do this, they need solutions to help them monetize their audiences, curate their inventory, and access open Internet ad budgets. Signaling a strategic focus, many of these companies have hired programmatic leaders with industry expertise and are partnering with PubMatic to help them build and scale. We are particularly excited to launch advertising with X, formerly known as Twitter, which serves more than 335 million users. Historically, X had only accessed social media ad budgets. They selected PubMatic as an SSP partner, opening up their traditionally closed ecosystem to tap into the $26 billion in open Internet native display and video ad spend. PubMatic is able to build differentiated solutions across these customer segments because of the strength of our integrated platform and our consistent track record of organic innovation. Over the last two years, we've been successfully adopting generative AI technology across our software development, testing, and release process. We estimate a 10% to 15% increase in engineering productivity so far this year with more gains to come. What's even more exciting is that we are also leveraging new AI capabilities and customer-facing solutions to drive higher revenue. In Q3, we hosted our first AI-focused hackathon, where internal teams took two days to ideate and innovate around the clock. In annual tradition since 2014, this was our largest hackathon to date. More than a third of our global employee base participated across 90 teams. One-third of the submissions incorporated AI and machine learning. The idea creation and collaboration were inspiring, highlighting PubMatic's deep commitment to innovation and technology. The AI-based creative classification tool that helps publishers monetize political ad budgets across our CTV inventory came from our hackathon. I'm particularly pleased with how quickly we were able to launch it in our live environment in time for this year's election cycle. Looking ahead, we have a number of additional customer-facing applications on the horizon related to reporting, private marketplace deals, and workflow. I recently spent time at Advertising Week in New York, where conversations were centered around the need for end-to-end supply chain control, transparency, efficiency, effectiveness, and privacy. We'll continue to innovate and invest in key growth areas to drive greater value across the ecosystem. As publishers, buyers, and data partners build and scale their ad businesses, they must address the complex needs of the evolving ecosystem, with sell-side technology becoming a critical component. The growing importance of sell-side technology has led Forrester to address the SSP category for the first time in more than a decade. I couldn't be more proud of our team's vision and their accomplishments. PubMatic was recognized as an SSP leader in the Forrester Wave, achieving the highest possible scores in the criteria of programmatic auctions, publisher protections, commerce media, and innovation. Our platform provides a foundation for innovation and expansion for many of our clients across the ecosystem, including publishers, app developers, agencies, and commerce media platforms. Plus, the strength of our leading SSP is driving new entrants to the open Internet sector to select PubMatic as their tech partner. These trends have resulted in significant growth in key secular areas of the business, and I'm excited by the large opportunity in front of us as content creators and buyers alike choose PubMatic to scale their ad businesses. I'll now turn the call over to Steve for the financials.

Thank you, Rajeev, and welcome, everyone. Revenue grew 13% over Q3 last year, above expectations, driven by strong growth in CTV. In addition, we successfully monetized more inventory against the strong political ad buying cycle. Even more exciting, our business grew 17% year-over-year, excluding political advertising and the large DSP buyer that I called out earlier this year. Highlighting our differentiated infrastructure approach, gross profit increased at an even faster pace. Due to the combination of cost management, productivity improvements, and an increasing proportion of high-value impressions like CTV, gross profit was up 23% year-over-year. Other important callouts in the quarter. We increased monetized impressions across all formats and channels, with the fastest growth coming from omnichannel video impressions at nearly 50% growth year-over-year. With the growing mix of video, our overall platform CPM also increased. In addition, emerging revenue streams more than doubled year-over-year and contributed an incremental three percentage points of year-over-year growth. Our Q3 performance underscores the value of our diverse omnichannel platform and the significant impact of our strategic multiyear investments in key secular growth areas. It also demonstrates the strength of our durable model and our ability to deliver profitable growth. We delivered adjusted EBITDA of $18.5 million or 26% margin, ahead of expectations. Breaking down Q3 by format and channel, we saw continued secular growth above market rates for omnichannel video revenue, which grew 25% over Q3 last year, an acceleration from last quarter's 19% growth. The share of omnichannel video revenue to total revenue hit an all-time high of 36% in the quarter. Notably, CTV monetized impressions more than doubled over last year. Our mobile app business continued to perform strongly and grew over 20% year-over-year for the fourth quarter in a row. Our display revenues across both mobile and desktop channels grew 9% year-over-year. We saw strong organic growth as our existing publisher revenues on a trailing 12-month basis continued to grow with net dollar-based retention at 112%. SPO represented approximately 50% of total activity on our platform. Underscoring the long-term strategic value and stickiness of these relationships, the trailing 12-month net spend retention rate from SPO partners with at least three years of spending was 113%. Across the globe, all regions grew in the third quarter. Looking at growth in ad spend, the top 10 ad verticals inclusive of political increased by 20% year-over-year. Among the four verticals that I commented on last quarter, we saw some recovery in travel and arts and entertainment, while technology and automotive remained soft. Shifting to our operating priorities, we continue to make significant progress. As a reminder, our priorities are focused on delivering multiyear revenue growth and incremental margin expansion. First, we continue to invest in areas where we see the highest revenue growth opportunities. We have added over 100 team members in sales and technology since Q3 of last year. As a result of our innovation and focused sales efforts, we have reached critical mass in our CTV business and are seeing strong CTV growth as buyers and publishers are making us a preferred partner. We are also investing in supply path optimization to address the large greenfield opportunities from independent agencies and direct brands. We have filled the majority of the buyer-focused sales positions we had planned to hire this year. As these team members ramp, we expect increased productivity that will position us well for continued growth in 2025. And our investment in people and technology to drive emerging revenues is paying off. As I mentioned, emerging revenue streams contributed three percentage points of growth in Q3 and are on track to be four to five percentage of total revenue in Q4. We are at the early stages in the adoption cycle of these products. And looking ahead, we anticipate that these innovative solutions will continue adding meaningful incremental revenue and profit growth in 2025 and beyond. Second, we continue to prioritize efficiency and operational excellence by optimizing our infrastructure and making prudent investments in CapEx. As a result, we've increased capacity on our platform while improving margins and unlocking dollars to fund new products. We added 20% incremental gross impression capacity on our platform year-over-year. At the same time, software optimization initiatives led to lower unit costs. The cost of revenue per million impressions was down 18% on a trailing 12-month basis. This productivity contributed to the 23% gross profit increase year-over-year, which was an acceleration over Q2's growth of 10%. Overall, the progress we have made against our operating priorities has allowed us to return value to shareholders through our expanded share repurchase program. For example, we increased the pace of repurchases in Q3 to $29 million and bought back 1.8 million shares or 3.3% of fully diluted shares outstanding. Moving down the P&L, Q3 GAAP operating expenses were $47.6 million or 3% sequential increase from Q2 as we made targeted investments in technology and sales team members. Q3 GAAP net loss was $0.9 million or a loss of $0.02 per diluted share. Adjusted EBITDA was $18.5 million or 26% margin. Moving to cash and our capital allocation, we have a healthy balance sheet and generated positive cash flow, which supports our long-term capital allocation strategy. We believe our strong capital structure and effective capital allocation plan will help us deliver long-term shareholder value. We ended the quarter with $140.4 million in cash and marketable securities and zero debt. Since the inception of our repurchase program in February 2023, through the end of Q3, we have bought back 7.6 million Class A common shares for $124.1 million. As of the end of the third quarter, we had $50.9 million remaining in our repurchase program authorized through December 31, 2025. In Q3, we generated $19.1 million in net cash provided by operating activities. Free cash flow in the quarter was $2.9 million and was impacted by the two items I called out last quarter: one, the timing of our CapEx investments, which peaked in Q3; and two, the increase in DSO resulting from a change in our receivables mix associated with the option changes made by one of our large DSPs. We view this DSO change as a short-term phenomenon that will work its way through our working capital by mid-next year. Now turning to our outlook. We are pleased with the growth we're seeing, particularly from secular growth drivers, and we remain cautiously optimistic as we head into the peak holiday season. In October, omnichannel video revenues grew in the double-digit percentages, and political advertising continued its strong momentum. As we had expected, spending from the large DSP we called out earlier this year was steady, though as a reminder, at a reduced level year-over-year. In terms of Q4 holiday spending, trends were muted leading up to the election. Taking all these factors into account, we expect revenue in the fourth quarter to be in the range of $86 million to $90 million. On an apples-for-apples basis, excluding political advertising and the DSP buyer, the implied Q4 year-over-year revenue growth rate is over 15%. As a reminder, we will lap the DSP impact at midyear 2025. For the full year, we have raised our revenue guidance to be between $292 million and $296 million or 10% year-over-year growth at the midpoint, including the negative impact from the DSP buyer. In terms of costs, we expect Q4 GAAP costs to increase sequentially in the low single-digit percentages. With our revenue guidance and targeted investments associated with our operating plan, we expect Q4 adjusted EBITDA to be between $34 million and $37 million, approximately 40% margin at the midpoint. For the full year, we expect adjusted EBITDA to be between $89 million and $92 million or approximately 31% margin at the midpoint. In summary, we are pleased with our Q3 results and the growth we're seeing across the business, especially in CTV. Our investments in the secular growth areas of video and mobile are showing excellent results, and we are building the pipeline for further incremental growth in the future with our emerging revenue products. Heading into 2025, the combination of our strong financial health, momentum in the fastest-growing areas of programmatic advertising, and our differentiated scaled technology platform give me confidence that we are well positioned to deliver significant value to our customers and shareholders.

Our first question today comes from Shweta Khajuria at Wolfe. Please go ahead, Shweta.

Thanks, Stacie. Let me try two, please. One is on what you've seen in terms of demand trends quarter-to-date from advertisers as well as just consumer spend. If you have that visibility, that would be great, but specifically advertiser spend. And then the second one is next year. So Steve, as you think about next year with headcount, OpEx, how are you positioning the company in terms of your goals for next year, especially in light of maybe there was some change around 1% of headcount fairly recently.

Sure. It's great to reconnect, Shweta. First, regarding recent trends, as I mentioned earlier, we started the quarter strongly. Omnichannel video has maintained its double-digit growth throughout the year, and we continue to see robust political spending. However, this significant political spending has somewhat dampened holiday spending. Nonetheless, we are approaching the peak holiday spending period from mid-November onwards. From our viewpoint, all fundamentals appear very positive. I noted that when looking at the business without considering the DSP change and political factors, it grew 17% compared to last year's third quarter. Our implied guidance is over 15%, indicating that our core business remains healthy. We are cautiously optimistic about the fourth quarter, and overall, we are making the right investments to support long-term growth drivers. Looking ahead to 2025, our focus on efficiency and productivity will continue. We will actively seek opportunities for greater efficiency, as Rajeev mentioned with AI, and we expect to enhance productivity as well. We probably won't increase our team size as much as in previous years; instead, we'll focus on targeted hiring for essential roles that we already have in place. We feel confident about our current resource levels in the market.

Our next question comes from Matt Swanson at RBC.

Maybe building off Shweta's question, and you mentioned the 100 team members in sales and technology. Could you just expand a little bit about kind of the go-to-market motion with these new products and the emerging revenue stream and kind of how you're able to let people know the value proposition for them?

Sure. Yes. Why don't I take that one? So, I think a big part of what we've been doing over the last couple of years and is continuing is to get deeper and closer on the buy side of the ecosystem, such with agencies and advertisers, primarily given our SPO value proposition. And we mentioned earlier in the call that we're now 70% penetrated into, for instance, the top 30 streamers. We're growing the Commerce Media business. We announced an Activate partnership and Connect with Dentsu. So, we really think that it's important that we engage with a growing sector of the buyer ecosystem. And while a couple of years ago, we started with the agency holding companies, there's no shortage of large advertisers that also want to engage in supply path optimization, along with independent agencies. So, the go-to-market is really a combination of two things. One is we have relationship-focused people on the buy side, so they're covering the big buyers. And then more recently, we've moved to or in the process of moving to a specialist sales structure where we will have product specialists that are going in with those relationship folks in order to expand those relationships. So, we think that's a critical part of the opportunity. Again, the Dentsu example is a good one where we've been working with them with SPO for quite some time and now expanding that into Connect and into Activate. GroupM is another good example where we've been powering the premium marketplace for a number of years, and we've had a steady geographic expansion. We started in Europe, then into the U.S. and now most recently into Latin America.

That's super helpful. And then maybe just a question on the DSP change. We talked a bit last quarter about the need to do some algorithm optimization post the change and about that taking some time. Could you just kind of give us an update? I know it's still early on just what you're seeing from your reaction to the reaction, I guess?

Sure. Yes, go ahead, Steve.

Yes, happy to. So, one of the things that I commented at, Rajeev, as well, that it was a process that we're going to work through, and we had confidence that we're going to be able to do that. And the good news is that the spend from this buyer has stabilized. And so, there was an adjustment at midyear. And since then, it's been steady going. So, I'd say that as we called out, it's a change in the level of spend, but not the change in terms of how we're operating with that DSP. And we feel very enthusiastic about the ability to grow that over time. But we are going through an adjustment period, as noted last quarter and this quarter, and we will for the first half of 2025. But the key point to note is the rest of the business, which is the majority of the business, over two-thirds, is growing significantly in the third quarter, 17%, slated to grow 15% plus in the fourth quarter. So the fundamentals of our business are very robust. We see the DSP change as in the rearview mirror, and we're just working through it now.

Yes. Maybe I can just add a quick comment on that. So, it's true, of course, Matt, we're going to have a bit of a headwind with that DSP until middle of next year. But to Steve's point, we're getting much more deeply embedded into advertising-driven businesses. The X announcement, the supply path optimization with Dentsu with Connect and Activate, Western Union and Commerce. We've expanded the Roku relationship into CTV marketplaces. So, these are all good examples of how we're getting more and more embedded into really large players in the advertising ecosystem. What I'm really excited about is how the pieces are very much overlapping and reinforcing. So, when we engage in supply path optimization, that brings more streamers and publishers and commerce media customers to our platform because they want access to those dollars. Commerce Media partners bring more streamers to us because we can overlay the commerce data onto the streaming inventory. And then Commerce and Connect participants create more bids for our publishers, which generate more revenue for them. So, I think we're getting into a really interesting point where all of these pieces are coming together and reinforcing each other.

Our next question comes from James Heaney at Jefferies. Please go ahead, James.

Great. Thank you for taking the question. Rajeev, what do you think is helping you get to critical mass in CTV? Is that due to the increased focus on your buy-side solutions? Or do you feel like the big difference is the amount of CTV supply growth that you're seeing?

Yes. I think it's a combination of a couple of things. One is technology innovation. And then the second is our SPO buyer relationships. And then the third is what I was just referencing, but all of the pieces coming together like Connect for curation and data, as well as Commerce Media and Activate. So, just to unpack that a little bit, we built, I think, a very significant now CTV business organically over the last couple of years. So, we're excited to be at 70% of the top 30, and that creates a level of critical mass. But it's really coming through organic innovation, building all of those product capabilities. The Gen AI example that we cited earlier is a great example of how we were able to unlock a significant volume of political ad spend through innovation. Second, of course, is supply path optimization, right? So, because of the relationships that we have with buyers, that brings streamers to our platform. This Dentsu announcement is a great example where, as that gets going, there will be dollars flowing through Activate on our platform. And so, then streamers know that, hey, in order to access those budgets, we need to be working with PubMatic. And as we mentioned earlier, those agencies are also moving their direct buy. So, that's a single buyer, single advertiser to a single publisher's inventory. They're moving those buys to our platform as well. And then lastly, as we scale up our Connect platform for curation and data partners and we scale up Commerce Media, that just brings more and more incremental demand to our publishers, and that is not necessarily demand that they'd be able to get elsewhere. And so, I think that combination of innovation, SPO, and then the other demand drivers is really what's driving streamers to lean into working with us.

Great. And then maybe just a follow-up for Steve. Can you talk about the capacity needs for the business for the rest of 2024 and 2025? Do you expect you'll need to invest incrementally in infrastructure in the near to medium term to support the next leg of growth?

Sure. We're already locked and loaded for 2024. And so that's done, and that's reflective of the CapEx that I referenced in the prepared comments. And as we look to 2025, our expectations are going to be continuing what we've seen work very effectively. First, we look for opportunities to optimize our existing infrastructure. So, no net new CapEx. And then when we see sort of the runway for that opportunity, then we determine the incremental opportunity. And the great news is that we are really driving our CTV impressions, our omnichannel video impressions. And those carry with it a lot higher value CPMs. And so, our expectation over time is that we won't need to invest at the same level as we have historically. And there's a variety of reasons why we feel very good about the gross margin profile, but not the least of which is a long-term focus on efficiency, and then managing our CapEx and then always looking for optimizations. And we think those opportunities are going to just continue to be in front of us. But I do not expect sort of a major uptick in CapEx in 2025 beyond sort of the similar levels of the last year or so.

Our next question comes from Ian Peterson at Evercore. Please go ahead.

Thank you for taking my questions. Two, if I may. First question, there's a pretty significant acceleration in U.S. revenue in Q3. Can you just help us unpack that a little bit further? How much of that was just a function of political contribution, easier comps, or other factors such as emerging products contribution? And if emerging products contributed, can you just give us some hints on which products are driving that? And secondly, related to the $7 million headwind you called out on the last earnings call related to the DSP and macro environment. Can you just remind us how much of that played out in Q3, and how to think about that headwind that's implied in the Q4 guide?

Sure. So, with respect to the first question, just unpacking our outperformance, the real driver has been CTV, very strong growth, and it's all volume-driven impressions that we sold. And so, that was the lion's share of our performance. Now as Rajeev also commented on, because we have such significant scale, the innovation that we brought to bear in terms of the AI tool, most of the political advertising that we generated was via CTV. So, in that respect, they're both related. But number one, CTV was the key driver of outperformance. Number two, we continue to see great progress with mobile app. And as you know, we recently launched a partnership with a very large mobile app company. And that gives us access to over 80,000 mobile app publishers around the world. And so, we saw strong growth out of mobile app, over 20% growth. It was the fourth quarter in a row delivering that kind of growth. And then we also saw some solid display results. So, across the board, we feel like all the levers were in place. And the areas that we've been investing in are really showing dividends, as I just outlined. Now in terms of just thinking through the outlook that I gave, I mean, the most important point is that situation has stabilized. And now we're just growing through that as evidenced by the commentary that I shared on the fourth quarter. Overall, when you adjust for apples-to-apples, the expectation is that the implied growth is over 15%. So, I'd say put the DSP change in a box, and we're going to grow through that in Q1 and Q2. But on an apples-for-apples basis, it will be comparable Q3 onwards. And the most important factor is over two-thirds of our business is growing in the mid-teens, and that's helping us manage through this change that occurred midyear.

Our next question comes from Tim Nollen at Macquarie. Please go ahead, Tim.

Hi everyone. Thanks for your question. Rajeev, could you provide more details on the work you're doing in curation, especially in CTV? While it's not a brand new concept, it does seem to be gaining traction. You mentioned it as a potential factor in your recent success in CTV. Can you share some examples or further insights into how your approach to curation differs from others?

Sure. We’ve been discussing sell-side targeting for several years now, and our Connect platform is about five years old. As third-party cookies decline in usage and privacy regulations increase, first-party publisher data is becoming more crucial. This shift means that targeting and curation will increasingly move to the sell side, and we believe our platform is a leader in this area. To clarify, we define curation as the process of packaging and selecting inventory. This often involves aggregating the right inventory based on a buyer's specific needs, making it easy for them to purchase that inventory. Traditionally, this has been managed on the demand side, but as I mentioned, it is transitioning to the sell side. Our success stems from a robust set of features and a significant scale of omnichannel inventory on a global level, which contributes to our emerging revenue streams. For instance, we might add political data through our Connect platform to our inventory—this is common in Q3 and October. We would combine political data with inventory across various verticals and locations. A buyer may be interested in reaching Pennsylvania residents in certain ZIP codes with specific audience profiles, looking for CTV inventory or online video with a high viewable completion rate. We can package that inventory and make it available for purchase, creating a compelling opportunity. Another example involves incorporating commerce media data sets. We’ve previously discussed layering Instacart data onto our platform, which aligns well with CTV since we often have logged-in users that we can match. This strategy presents a great opportunity as it attracts unique ad spend to our platform, emphasizes the strength of PubMatic, and brings more streamers and buyers into our ecosystem, along with additional commerce and data participants.

Great. Can I just tag on one more related question? Do you think the really big rise in inventory of CTV ads over the last year or two contributes to more demand for curation services?

Yes, I think it does. I mean, I think if we think about the growth in CTV inventory, what it's causing is sellers to evolve their playbook in terms of how they sell that inventory. So whereas, let's say, a couple of years ago, there was a lot less supply and there was a more demand focus in the market. So, there's an imbalance more demand than supply, then sellers could choose to say, okay, hey, I'm going to just sell on a one-to-one basis, right? So, my sales force is going to go out, and they're going to sell the value proposition of whatever the streamer's brand is. As you get to more and more supply and you have obviously the entrance of purely digital players with no legacy businesses, I'm thinking of folks here like Amazon and Netflix, then that causes, I think, the typical seller to have to rethink their playbook, right? So, they might get the most premium CPM through that one-to-one deal where they're selling on the strength of their brand or the show, but then they need to fill the rest of their inventory. And so, they're going to look to sell using curation. They're going to look to sell via our CTV marketplace. They're going to build that full book of demand at different price points. And we think we have a significant role to play in doing that, given the scale of the inventory on our platform from streamers, our connect capabilities, our commerce, and convert capabilities, and then supply path optimization.

Our next question comes from Brianna Diaz at JMP. Please go ahead.

Thank you so much for taking my question. Just one for me. With budgets increasingly moving into video, can you talk through the impact to monetization and take rates for 2025 and longer-term?

Sure. I'll start by discussing our view on omnichannel video, including CTV and online video, which we see as strong areas. We have been investing in this space for several years. At the start of this year, I indicated that I expected omnichannel video to grow in double digits, and we are on track to meet that expectation. I anticipate this growth will continue into 2025 and beyond, as it offers advertisers the right context, content, and targeting. While there will always be fluctuations in supply and demand, we are in a favorable position because we focus on reducing costs significantly. By investing and growing our video business, we can achieve marginal profitability since the cost of processing a video impression is similar to that of a display impression. Consequently, regardless of video pricing trends, we believe we will benefit from this marginal profitability. Looking ahead, we expect our video mix to expand; we reached a record high of 36% last quarter, which contributed positively to our gross profit and improved our average CPM. There are many favorable factors for video, and we expect this to continue in the near future.

Thanks, Steve. At this time, I'm going to turn the call back over to Rajeev for closing remarks.

Thank you, Stacie, and thank you all for joining us today. Our strong results in the quarter highlight our progress in the secular growth areas of our business: omnichannel video, CTV, mobile app, SPO, and our emerging revenue streams, all contributing to an accelerated year-over-year growth rate of 17% when excluding political and the one DSP buyer. We're launching new products and serving the critical mass of publishers and streamers while unlocking incremental value for our customers and us. We are partnering with some of the largest companies on the Internet as they choose to build their advertising businesses on PubMatic. We have an exciting opportunity in front of us. We look forward to seeing many of you at upcoming conferences. Thanks, everyone, for joining us today, and have a great afternoon.