Hello, everyone, and welcome to PubMatic's First Quarter 2026 Earnings Call. My name is Christian, and I will be your Zoom operator for today. Thank you for your attendance today. And as a reminder, this webinar is being recorded. I will now turn the call over to Stacy Clements.

Good afternoon, everyone, and welcome to PubMatic's earnings call for the first quarter of 2026. This is Stacy Clements, and I'll be your host 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 on 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 today is as of May 7, 2026, and we do not intend and undertake no obligation to update any forward-looking statements, 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, adjusted EBITDA margin, non-GAAP net income, cash flow from operations 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. I will now turn the call over to Rajeev.

Thank you, Stacy, and welcome, everyone. We delivered an exceptional first quarter with revenue and adjusted EBITDA ahead of guidance. These results reflect the continued strength of our business and accelerating adoption of our AI solutions. We delivered 13% year-over-year growth in our underlying business. Emerging revenues grew over 80% year-over-year and climbed to 14% of total revenues, aided by AgenticOS. The new strategy we launched in summer of 2025 is delivering tangible results. We're diversifying our DSP mix, growing in high consumer engagement channels such as CTV and mobile app and creating more value for key stakeholders across the advertising ecosystem. As a pioneer in AI, our multiyear investments are paying off in fueling new revenue streams, operating leverage and market-leading advantages that are at the early stages of compounding. Agentic AI is more than just a productivity tool. It's a structural shift that is redefining the entire digital advertising market. It simplifies the connections between advertisers and outcomes and transforms how value flows through the ecosystem. Over the past two decades, digital advertising has undergone two profound transformations, each creating markets measured in the hundreds of billions of dollars. The first was real-time bidding and the second was the shift to mobile consumption. Today, a third transformation of even larger magnitude is underway, AI-driven agentic advertising. AI simplifies the ecosystem by automating decisions that once required large teams using fragmented systems. Our platform sits at the intersection of buyers, publishers and audiences, enabling us to apply AI at global scale across the entire value chain from planning and discovery to activation and measurement. Our approach fundamentally changes how value is created. It drives performance that the legacy fragmented model is structurally challenged to deliver. Importantly, Agentic AI prioritizes outcomes, not interfaces. At the same time, AI is leveling the playing field between walled gardens and the open Internet. Capabilities that once benefited closed platforms like efficiency, lower operating costs and stronger advertising ROI are now achievable in the open Internet with the added benefits of transparency and choice. As advertisers allocate spend based on measurable performance, our addressable market expands, and we are well positioned to capture that shift. Importantly, our growth engine is directly aligned with customer outcomes. We're evaluated on our ability to monetize every ad impression we process, and we earn revenue only when we deliver superior results for publishers and buyers. As customers see stronger performance, they increase usage, creating a self-reinforcing model where greater adoption and utilization drive both customer ROI and our own profitable growth. Our AgenticOS and Activate products extend this alignment further into the value chain. Underpinning this model are five competitive advantages, assets that are increasingly difficult for new entrants to replicate and that compound over time. Further, they cannot be easily copied. First is scale. Nearly the entire advertising-supported open Internet is available on PubMatic. We have nearly 2,000 premium publishers representing over 100,000 websites, apps and streamers, including 28 of the top 30 global streamers. This breadth and depth of access to omnichannel inventory is built through years of trust and performance. Second is Activate. Our direct buying platform was designed from the beginning to drive performance and simplify the complexity of the ecosystem. By connecting ad demand and premium supply in a single environment, advertisers see higher ROI and publishers benefit from increased yield. Third is AgenticOS and our growing portfolio of AI agents. We have over 20 different operational agents available for media buyers and publishers with new agents rolling out every month to automate and optimize core advertising workflows. Our newest agent enables buyers to discover and activate curated omnichannel supply in seconds through natural language queries. For example, a media buyer simply asks for CTV inventory for male sports enthusiasts, and the agent instantly surfaces relevant opportunities, audience reach estimates and deal options. This process used to take hours or days and is now reduced to minutes. Fourth, our owned and operated infrastructure. This is a structural advantage in the AI era. Our long-standing collaboration with NVIDIA brings advanced GPU technology directly into our platform with a variety of distinct benefits. GPU technology improves data processing to handle the massive advertising-specific workloads that underpin bidding, pricing and campaign optimization, cutting compute time and cost. We're using NVIDIA Triton Inference Server to deploy real-time inferencing for bidding and audience decisioning. As a result, we process data and train models faster and more cost effectively than cloud-based alternatives while also improving model performance. In AI, faster feedback loops lead to better models and better models attract more advertising activity. By owning our infrastructure, we keep that compounding advantage within PubMatic, allowing our competitive moat to widen with every transaction processed. Our data platform, Connect, is a key input of this flywheel, comprised of data assets from over 300 data and Commerce Media partners; it's our fifth competitive advantage. With faster processing, we are improving our proprietary model training in real time, resulting in significant performance improvements and better optimization for advertiser return on ad spend. Connect is a powerful platform that enables advertisers to shift their audience targeting strategies to the sell side with greater efficiency and reach, which is a further catalyst for Activate and AgenticOS performance. There is no other company that has all five of these components and is innovating at this pace. Further, revenue growth is building and customer adoption continues to scale quickly. PubMatic now has AI embedded across its entire platform. Publishers use PubMatic AI Assistant to seamlessly make their inventory available to buyers on PubMatic via deals. Over 1,000 AI-powered deals have been transacted to date, resulting in millions of dollars in publisher monetization. Similarly, buyers use our AI assistant chat-based interface to discover audiences and inventory and to activate new advertising campaigns. Even more exciting is the adoption of fully autonomous Agentic campaigns. What launched at CES in January with a single campaign has now scaled to more than 30 live fully autonomous campaigns from independent agencies, large buying platforms and global brands across the United States, France, the Netherlands, Australia and India. PubMatic is the only platform that has operationalized fully Agentic campaigns at scale. Agencies like Butler/Till, MiQ and Brkthru, a digital media solutions provider for more than 1,000 brands and 235 agencies, alongside Amnet and Abovo Maxlead in EMEA are seeing compelling results, a material reduction in fees, more dollars shifting into working media, high-performing KPIs and 80% to 90% time savings in campaign setup. These aren't marginal gains. These are step function efficiency unlocks that validate Agentic buying as a value chain shift. I'm incredibly proud of the team and the results we're delivering. We have the technology, infrastructure, scale and innovation to lead the seismic industry shift. At the same time, we continue to strengthen our underlying business. The DSP landscape continues to evolve and fragment with a growing share of digital advertising spend coming from outside the Fortune 1000 advertisers. Our growth profile mirrors this trend as we diversify our business and accelerate expansion beyond the largest DSPs. In Q1, activity from mid-market and performance DSPs continued to grow over 20% year-over-year. Many of these DSPs are also quickly innovating around Agentic. AdRoll became the first DSP to connect to PubMatic's PMP deal troubleshooting AI agent via Model Context Protocol. This integration enables their agents to autonomously troubleshoot private marketplace deals, cutting resolution time from days to minutes as compared to traditional programmatic workflows. This is an exciting area of innovation and demonstrates how existing software interfaces are quickly becoming obsolete. We also continue to innovate with the largest performance DSPs. A significant milestone this quarter was our integration with Amazon's Dynamic Traffic Engine now launched globally. This integration shares demand signals from Amazon directly with PubMatic so that we can better match inventory to their advertiser demand in real time. Early results are delivering increased monetization for publishers on PubMatic, up to a 10% increase in CPM since its launch. We also delivered growth in high consumer engagement channels, including CTV and mobile app. New products like Creative Innovation Suite are now live across AgenticOS, enabling brands to connect with viewers across interactive content and devices. For example, a viewer may start a show on their TV, pick it up later on a phone or pause the content to check something online. Our technology lets advertisers deliver a consistent story across all of these moments. Premium publishers like Sling TV are unlocking more value from their inventory, while agencies such as Horizon Media, Crossmedia and Kelly Scott Madison use Creative Innovation Suite to deliver more engaging, measurable campaigns for their clients. Our live sports marketplace continues to be one of the most powerful ways to reach engaged audiences. Through PubMatic, buyers can access premium CTV inventory across major sporting leagues and global events. The scale behind this growth opportunity is significant. We expect the FIFA World Cup alone will bring more than 100 million high-value impressions per day to our platform with growing demand from buyers across the U.K., France, Germany and Italy. According to industry estimates, digital live sports viewership is projected to grow 20% between now and 2030. With expansive partnerships across some of the largest premium live sports inventory, coupled with over 300 data partners and innovative CTV solutions, we expect live sports to be a strong growth driver over the next several years. Our mobile app business grew over 25% year-over-year. Over the past quarter, we deepened our integrations across the mobile ecosystem. We're now live with the three leading global mediation platforms, AppLovin MAX, Google AdMob and most recently, Unity LevelPlay. PubMatic now has access to over 90% of global SDK inventory. For example, Zynga, a global leader in interactive entertainment that reaches hundreds of millions of players worldwide, has integrated our SDK to provide advertisers with programmatic access to their high-value mobile audiences at global scale. Much like mobile app, Commerce Media also benefits from logged-in user engagement, where buyers can prioritize performance and measurable outcomes. With an addressable market of $18 billion, we see a significant long-term opportunity in Commerce Media. Fueling this are new partnerships that add scale and audience data to the PubMatic Connect platform. We recently announced an exciting partnership with Walmart Connect, which unlocks new advertisers and new ad spend on our platform, particularly for CTV. Our partnership with Walmart Connect Select integrates their first-party shopper audiences with the media on our platform, enabling new performance-oriented ad transactions for SMB and enterprise advertisers. I'm also excited to share that we have integrated with payments leader PayPal, integrating the PayPal ID. This integration brings over 25 billion transactions across 400 million verified PayPal and Venmo accounts to the platform, giving buyers high-value data to activate across the open Internet. It enhances targeting accuracy, verified identity across devices and true closed-loop attribution in a privacy-safe way. As this partnership scales, we expect it to contribute to emerging revenue streams and deliver incremental margin. In closing, we delivered a great quarter. We continue to add marquee partnerships, focus on innovation and execute across our strategic priorities. AI is an accelerant to our already diverse growth engine. The repeat engagement we're seeing from customers underscores that this technology is driving performance. Each additional transaction compounds our data advantage, driving superior performance and accelerating organic growth across our core business, including CTV, mobile app and Commerce Media. With our proven model, differentiated infrastructure and expanding global footprint, PubMatic is positioned to capture this next transformational shift in digital advertising, creating long-term value for our customers, partners and shareholders. I'll now turn the call over to Steve for the financials.

Thank you, Rajeev, and welcome, everyone. We delivered a strong quarter with Q1 revenue of $62.6 million and adjusted EBITDA of $2.6 million, both ahead of the preliminary figures we shared on April 22 and well above the high end of our guidance ranges. Excluding revenues related to the legacy DSP referenced mid-2025, our underlying business grew 13% year-over-year and represented 83% of our total revenues. This double-digit growth reflects the health of our business, ongoing benefits from our multiyear secular growth investments and the momentum of our strategic transformation. This execution, coupled with the rapid expansion of PubMatic's AI tools and AgenticOS, positions us for accelerating double-digit revenue growth in the second half of the year. The majority of the revenue beat once again flowed through to adjusted EBITDA. Q1 was the 40th consecutive quarter of positive adjusted EBITDA, underscoring the inherent durability of our model, ongoing productivity gains and expense discipline. We also generated $10.7 million of free cash flow, a 17% free cash flow margin and returned value to shareholders through the repurchase of 1 million Class A common shares. Moving on to the quarterly highlights. Our outperformance was driven by double-digit year-over-year growth in total company monetized impressions, reflecting the structural strength of our usage-based model. Our investments in high-value formats and channels also delivered outsized growth. Combined, revenue from CTV, mobile app and emerging revenues grew over 20% year-over-year and represented the majority of total revenues. Breaking this down further, strength in CTV was led by the Americas, where revenues grew 13% year-over-year and represented approximately 80% of total CTV revenue. With 28 out of the top 30 global streamers on PubMatic's platform and growing access to live sports, we saw an increase in both the number of CTV advertisers and premium inventory available. Excluding the legacy DSP buyer, global CTV revenues grew 18% year-over-year. Mobile app extended its momentum as revenue increased over 25% year-over-year. This growth reflects the ramp-up of strategic partnerships, ongoing product innovation and continued expansion of our global app publisher base. Notably, mobile app saw broad-based growth in both video and display. With its sizable scale on our platform, mobile app also meaningfully contributed to our overall display revenues, which grew 5% year-over-year. Emerging revenue streams were again a standout category and grew over 80% year-over-year and represented 14% of total revenues, driven by increased adoption across our new AI products, including AgenticOS. On a global basis, direct buy and Activate grew more than 3x year-over-year. We also continued to diversify our DSP mix. Q1 ad spend from our mid-market DSP partners was up over 20% year-over-year, highlighting the impact of our increased focus and investment, accelerating these high-growth innovative partners. Revenues in the first quarter related to the legacy DSP buyer were better than expected as we further optimize our platform to meet the needs of this buyer. Across our well-diversified portfolio of ad verticals, we saw double-digit percentage growth in health and fitness, technology and computing and hobbies and interest. This growth helped offset softness in the business and food and drink verticals. Overall, our top 10 ad verticals increased mid-single-digit percentages year-over-year. Regionally, our APAC and EMEA businesses grew rapidly with year-over-year revenue growth of 25% and 10%, respectively, offsetting a 12% decline in the Americas, which was primarily due to the spend declines we anticipated from the legacy DSP buyer. Turning to our owned and operated infrastructure. The number of impressions we processed increased 26% year-over-year through optimization efforts and targeted CapEx investments. The combination of these efforts and AI-driven efficiencies enabled us to manage our cost of revenue growth to 2% year-over-year despite industry-wide utility cost pass-throughs from data center colo providers. On a trailing 12-month basis, our unit cost declined 20% year-over-year. Today, we efficiently process over 1 trillion impressions per day, which is a significant asset and long-term revenue opportunity for us as we accelerate our strategic transformation. Our platform is becoming smarter, faster and more profitable because of the compounding effects of our multiyear investments in AI and advanced computing, growing pool of premium inventory and 300-plus data partnerships. We will continue shifting our investment away from predominant capacity expansion towards targeted GPU-centric infrastructure that supports higher value, differentiated offerings like live sports, CTV, mobile app and AgenticOS. We believe this approach will be a durable accelerator to growth over the long term and supports the broader industry shift to performance-based advertising. We will also continue to harness AI and automation internally across our company. Last quarter, I called out significant productivity gains in engineering, finance and legal. We also extended AI operationally across our customer success organization, which is now achieving double-digit productivity gains performing their function. Cumulatively, these internal efficiency gains are sizable and allow us to reallocate people and investments toward our biggest revenue growth initiatives. Moving on to operating expenses. Total operating expenses in the first quarter marginally increased 3% as compared to last year and includes the incremental investments in our buyer-focused sales team and broader go-to-market organization. Our productivity gains from AI that I just called out helped fund these investments. Our total company headcount was down year-over-year as a result of this disciplined operating strategy. Q1 adjusted EBITDA was $2.6 million or a 4% margin, which included a foreign exchange headwind of approximately $1 million due to the weakening U.S. dollar over the quarter. Q1 GAAP net loss was $12.5 million or negative $0.27 per diluted share. Moving to cash and our capital allocation. Our balance sheet remains a core strategic advantage. We generated $17.3 million in net operating cash flows in the first quarter, up 11% over Q1 last year and delivered free cash flow of $10.7 million, a 47% increase over last year. To underscore our long-term ability to generate cash, since the beginning of 2021 through Q1 2026, we have generated over $429 million in net cash from operations and more than $232 million in free cash flow. We ended the quarter with $145 million in cash and 0 debt. Our capital allocation strategy remains disciplined and balanced, focused on long-term shareholder value creation. We continue to invest in innovation and infrastructure to drive incremental organic growth while maintaining the flexibility to pursue strategic M&A opportunities. We have also made a long-term commitment to return capital to shareholders via our share repurchase program. Since the inception of our repurchase program in February 2023 through the end of Q1, we have bought back 13.5 million Class A common shares for $190 million. We have $85 million remaining in this program authorized through the end of 2026. Moving on to our outlook. We expect Q2 revenue to be in the range of $68 million to $70 million, which includes continued momentum from high-value formats and channels and expanded use of our AI tools and AgenticOS. In April, our usage-based model continued to perform well with continued growth in monetized impressions. Ad spend across our top 10 ad verticals was also healthy in April. As a reminder, our Q2 outlook includes the impact from the legacy DSP we called out mid-2025 and which we will lap in Q3. Q2 adjusted EBITDA is expected to be in the range of $8 million to $10 million and assumes a similar FX headwind as Q1. The sequential margin expansion compared to Q1 reflects our revenue scaling on a largely fixed cost base. Beginning in Q3, we expect to return to revenue growth and accelerate through the second half. With this revenue growth, we anticipate margin expansion supported by targeted investments in sales and AI products, expense discipline and continued AI-driven cost efficiencies across all functional areas. Sequentially, quarterly cost of revenue and operating expenses are anticipated to marginally increase in the low to mid-single-digit percentages. Full year CapEx is projected to be approximately $16 million to $19 million, with the majority of our CapEx to be invested in AI capabilities and advanced computing infrastructure. In closing, Q1 was a strong start to the year, demonstrating both the durability of our model and the momentum building behind our strategic transformation. Our growing diversification across DSPs, verticals, geographies and high engagement environments reduces concentration risk and positions us to grow from a broader base. As we lap the DSP impact in Q3 and accelerate through the second half, we are well positioned for both revenue and margin expansion. Importantly, AI is not just a product catalyst, it is a financial lever. We are driving new revenue from AI-powered solutions while using AI to expand margins, improve productivity and fund the investments that drive our next phase of growth. With that, I'll turn the call over to Stacy for questions.

Our first question comes from Matt Swanson at RBC.

Great. I guess just a couple of things. First, Steve, picking up where you left off, the headwind from the DSP last year has obviously made things a little bit murkier to see all the good growth drivers. Can you just remind us in terms of timing in Q3? Is Q3 like completely neutral, so no more headwind? Or was it at a certain point within the quarter that the headwind really started to pick up? Just first to kind of think about that.

Sure. Good to reconnect, Matt. We'll see the benefit of lapping it not really at the start of the quarter. We saw some of the impact flow in at the beginning of the quarter. But by mid-quarter, we'll be fully lapping the impact.

And then maybe for Rajeev. Once we get through that headwind, you guys will just have to deal with the cyclical secular conversation everybody else still does. So you've got a lot of really fast-growing segments of your business. And then there's also areas that are growing less quickly. Can you help us think through how these newer emerging technologies ramp? And how you think about those as they become a larger portion of your business and what the timeline would be on that?

Sure. Thanks, Matt. I think there are a couple of things that give us good confidence to achieve double-digit growth in the second half of the year. First, AI. As I said in the prepared remarks, there's a huge agentic transformation underway in the industry. I think it will be the third transformation after real-time bidding and mobile, and actually larger than those two. That opportunity for us is something we're innovating on very aggressively and making terrific progress. For us, AI is a huge TAM expansion opportunity because it's more than a technical revolution; it's a value chain revolution where we can connect the buyer and the advertiser much closer together and increase our addressable market. That will cut across every ad format, not just high-growth formats like CTV, mobile app or Commerce Media. Even within display and online video, as we reshape the value chain with Agentic execution, there's an opportunity for us to deliver more value across the ecosystem and capture more value. I'm excited about the AI growth opportunity, and also about CTV growth, mobile app growth, Commerce Media where we're gaining steam, and our other emerging revenue streams, which, as Steve noted, grew over 80% year-over-year in Q1.

Our next question comes from Barton Crockett at Rosenblatt.

Yes, I first wanted to understand in the guide, given the noise around the DSP exit, did you tell us what the growth is ex-DSP in your guide for the second quarter?

No, we didn't share that. But the trajectory will be similar to what we saw in the first quarter. As Rajeev and I have called out, we have a lot of really strong growth drivers and Q2 is going to be the last full quarter where we're lapping the impact. I would expect the midpoint of the guide is in the single-digit range, excluding the DSP impact, and the upper boundary is high single digits. That underscores the fundamental growth we're seeing across the business — it's not just one particular format or channel. It's mobile app, CTV, and even display showed strong growth in Q1.

Okay. So backing into the numbers you gave, it suggests slower than the robust 18% growth ex-DSP in Q1. Is that conservatism in the guide? Or is there something like a tougher comp or less contribution that argues for a bit of a slowdown?

Just to clarify, the Q1 underlying growth rate was 13%. It's absolutely not that we're pessimistic. We're feeling very good about the momentum. We're being appropriately prudent given macro uncertainty globally, including geopolitical impacts and consumer reticence. But we're well set up for a solid Q2 and more importantly for momentum into the second half. We anticipate returning to reported growth in Q3 and accelerating to double-digit growth in the second half.

Okay. And then one final question. When you're talking about growth in Agentic volume, you mentioned campaigns. To reality check, this is still an immaterial percentage of your business, correct? And what is the degree of materiality you think we might see over the next few quarters?

Think of our AI initiatives across multiple vectors. It's not just fully Agentic campaigns. It's also tools that help publishers set up campaigns more quickly and troubleshoot deals. Emerging revenues grew over 80%, and AI-powered revenues are a big part of that growth. I fully anticipate that across the spectrum — from publisher enablement to fully Agentic campaigns — AI will help drive double-digit revenue growth for us in the second half, alongside momentum in mobile app and CTV.

Our next question comes from James Heaney at Jefferies.

Great. Can you talk about the momentum you're seeing within the mid-market DSP segment? Over time, how big of a driver can that be for your business compared to the top five DSPs?

Thanks, James. We see tremendous growth opportunity in the mid-market DSP cohort. Advertising spend growth is coming from challenger brands, mid-market and SMBs. Their advertising budgets are growing faster than many large incumbents. As a result, DSP spend is fragmenting. In the last year, we've added over 50 DSPs and continue to add more. This diversifies the market and the opportunity base for us. AI will enhance this because it lowers onboarding and servicing costs for mid-market advertisers. I don't have an exact forecast for what percentage this cohort will represent, but it is already significant and should grow as a share of the total in coming years.

Steve, on the second half environment you're assuming, any macro assumptions? Is there conservatism baked in? Also, how are you sizing up political advertising for Q3 and Q4?

April results showed healthy ad spending and double-digit growth in several verticals. We have a well-diversified set of ad verticals, which helps offset softness in any one area. The environment right now is stable and healthy. Programmatic advertising can benefit when there's stress because we offer transparency and measurable results. I'm cautiously optimistic for the balance of the year. Against that, we have significant drivers: AI leadership, DSP diversification with performance DSPs, CTV leadership and secular investments in emerging revenues. Given a stable macro environment, we expect to return to double-digit growth in the second half.

Our next question comes from Rob Coolbrith from Evercore.

Congratulations on the results. Steve, any improvement in trends of the legacy DSP in the quarter? There was disruption with direct connects; did those direct connects lose share within the DSP during the quarter? Also, did you see any slowdown in March related to the situation in the Middle East or fuel prices and subsequent recovery in April? Finally, Rajeev, with moves around Agentic AI, can you discuss the potential opportunity to power ads within AI platforms themselves? Are those discussions happening?

Great question. Regarding the legacy DSP referenced mid-2025, our Q1 results were a bit better than we anticipated, contributing to outperformance. We've optimized our platform to meet buyer needs and established a more stable business with this DSP after the initial drop mid-2025. In April, circumstances were similar, and we'll lap this impact in the coming months, which will aid our acceleration in the second half. On macro, we remain diversified across verticals; the first quarter was healthy overall with normal puts and takes. In April, more than half of our ad verticals grew nicely; there was some softness in travel and arts and entertainment, but broadly not constraining. Historically, being in programmatic with a focus on performance, transparency and data tends to be advantageous in stressed environments. Over to Rajeev on the AI platform question.

Thanks, Steve. On the point about AI platforms, we saw the large LLM players express big ambitions in advertising. That suggests they will need to work with a wide variety of partners across the ecosystem to tap enterprise advertisers, SMBs, brand and performance channels and multiple ad formats. We have an opportunity to partner with such companies by bringing our relationships, infrastructure, data and buyer connections. We're already working with smaller companies in the space and innovating on ad formats and signals to monetize that inventory, which puts us in a good position to engage with larger players as they develop their advertising strategies.

Our next question comes from Eric Martinuzzi at Lake Street. Eric, I'll put you back in the queue. We cannot hear you unless you are unmuted.

Can you hear me? Sorry about that. Did you give a net dollar-based retention number for Q1, Steve?

Yes. It was basically flattish, very similar to our overall reported number and reflects the impact from the legacy DSP. I fully anticipate it returning to positive heading into the second half.

When you say flattish, was it sequentially up versus Q4? I think Q4 was 96%.

Yes, it was a little bit better than Q4.

And historically you've been above 100%. Is that what you expect once you anniversary the large DSP?

Absolutely. We expect to return to growth and improved retention after the anniversary in Q3, driven by our secular initiatives and diversification.

You had a high-level leadership turnover that was part of the reason for the preliminary results. Any update there, specifically on the global CRO search?

Sure. We have two long-tenured leaders leaving for personal reasons. Pauline, our Chief Growth Officer, is leaving due to health reasons, and Kyle Dozeman, our Americas CRO, is pursuing an entrepreneurial opportunity. Both are assisting during a transition period. We've engaged Heidrick & Struggles for a global CRO search with the opportunity to consolidate revenue-generating functions under a global CRO for improved execution. We have a deep leadership bench and full confidence in the team, and the search is progressing with strong candidate quality. We expect to have the right person in place in the next couple of months.

Our next question comes from Justin Patterson at KeyBanc.

Can you expand on what the business looks like over time as AgenticOS scales and more AI runs through the platform? Should we expect changes in market structure and in the type of client needs you can serve?

Yes. There's an opportunity to simplify the complexity in today's ecosystem. Currently, the ecosystem is siloed across advertisers, agencies, DSPs, SSPs and publishers. Our approach is to apply AI across the full value chain, not in isolated silos. True value from AI emerges when data and agents operate end-to-end. That leads to better outcomes because AI agents can optimize across the entire stack for customer objectives. When customers use Activate for direct buying combined with AgenticOS, they see working media efficiencies — more of their dollars go to media, with improvements like 30% to 40% better CPMs and 40% more media being bought, along with revenue increases because we're delivering better ROI. AI levels the playing field between walled gardens and the open Internet by enabling similar advertiser ROI with transparency and choice. Finally, user interfaces are becoming less central; AI agents reduce the need for traditional UIs. Clients using AgenticOS report 80% to 90% time savings in campaign setup, which is a major value add for agencies and advertisers.

From a financial perspective, this is an ideal moment for us because we've long invested in owning infrastructure and applying AI. This positions us to capture revenue and margin upside as we leverage our fixed cost base. We'll continue to allocate resources into advanced infrastructure and secular growth areas while maintaining expense discipline and productivity gains to drive margin expansion as revenues scale.

Our next question comes from Ken Wu at Wolfe.

Rajeev, can you provide an update on your view of Google's antitrust trial and the potential impact?

We, like many in the ecosystem, are awaiting the verdict and the remedies. Behavioral remedies can be implemented relatively quickly, and we see potential near-term opportunity depending on the remedies announced. As a reminder, Google is estimated at about 60% market share, and we believe each 1% of market share shift could add $50 million to $75 million in revenue to our business with high margins. We currently have about a 4% share and see a potential to grow that materially depending on remedies. It's a significant opportunity and we're watching closely.

We have time for one more question. Brianna Diaz of Citizens.

Rajeev, on AgenticOS, it launched a couple of months ago and you've already seen thousands of deals. What surprised you most about how customers are using AgenticOS? How is that feedback shaping the product roadmap? Also, any updates on pricing structure for these deals?

Thanks, Brianna. Several things stood out. We expected efficiency gains — less manual time for setup and reporting — and we are seeing that. What pleasantly surprised me was the improvement in advertising effectiveness. AI is optimizing faster than humans and without some human biases, delivering both efficiency and effectiveness. We're investing heavily behind this and using internal AI efficiencies to reallocate resources into sales, go-to-market and product innovation, which will drive growth in the second half. Another surprise was the rapid adoption by independent agencies; they're moving very quickly around AI. Holdcos are focused as well but tend to move more slowly. That speed among independent agencies is a powerful signal. On pricing, we anticipate Activate, our direct buying interface, to follow a revenue-share model as the interface for Agentic buying. We're also evaluating subscription models for certain AI tools. Importantly, when an Agentic buyer uses Activate, the entire media dollar purchased stays within our ecosystem and accrues to our publishers, instead of going to an external DSP. We capture revenue share from Activate plus our usual supply-side revenue, so there's significant incremental upside.

Just to add briefly: we expect revenue-share economics for Activate integrations and are exploring subscriptions for select AI tools. When Agentic buying increases use of Activate, the dollars remain in our ecosystem, which creates incremental revenue and margin upside for PubMatic.

Thanks, Steve. We are out of time. I'm going to turn the call back over to Rajeev for a few closing remarks.

Thank you, Stacy. We delivered a strong Q1 with momentum continuing into the second quarter. Further, we expect to return to double-digit revenue growth in the second half of this year, along with corresponding margin expansion. Agentic advertising is transforming the industry. It's creating automation and workflow efficiencies that no longer require a software interface and will materially change the value chain of our industry. We are scaling Agentic faster than our peers, and each additional transaction compounds our data advantage and drives superior performance. I'm looking forward to seeing many of you at upcoming conferences, including the Needham Technology, Media & Consumer Conference in New York, the Jefferies Software, Internet, and AI Conference in Newport Coast, Evercore's TMT Global Conference in San Francisco and Rosenblatt Age of AI Technology Virtual Summit. Thank you, everyone, for joining us today, and have a great rest of your afternoon.