Conference Transcript - PUBM 2026-05-13

Laura Martin, Analyst — Needham & Company

I'm Laura Martin. I'm the senior media analyst at Needham & Company, so let me introduce our speaker today, Rajiv Gohl, CEO of Pubmatic. He's the co-founder and CEO, where he spent nearly two decades scaling the company into a leading independent SSP, which has recently pivoted to become an agnostic OS, AI-powered operating system. A serial entrepreneur and tech visionary, he previously co-founded Chipshot.com. Rajiv also serves as a trustee for Johns Hopkins University and a board member for the Interactive Advertising Bureau. Okay, so I want to start with a question on leadership. So even the last two sessions, both men have started with the saying that generative AI is transformational. So my question is, how do you think about a leader in this kind of period of uncertainty and tech disruption?

Rajeev Goel, CEO

Yeah. Well, I think, you know, we've been working in an industry, leading in an industry. It's obviously incredibly complex. You know, sometimes people liken it to wartime. And I feel like I've been a wartime CEO for 20 years. You know, we compete with Google, which is a declared monopolist. Right. And so you think about, OK, you've got to compete with somebody like that. You know, we view our opportunity as roughly a four percent market share leader versus, you know, Google at 60 percent. So there's a lot of upside for us. And I think with AI, I mean, I view this as really the third major transformation in our industry. And we're right at the early stages of it. The first was real-time bidding. The second was the consumer shift to mobile. And that obviously created a lot of disruption, winners and losers. And now AI. And we're in, I think, the second branch of AI. So the first was machine learning, which works on structured data. That came into our industry about 15 years ago, and this transformation with generative AI, I think is going to be Significantly larger and the reason is that you know structured data has only been around Since really the 50s or 60s right think about you know data in a database Unstructured data is the world around us and it's a hundred X the size of structured data, right? It's More right so it's audio it's video. It's the spoken word, right? So it's the human interface to how the world exists and so it's just a much much bigger opportunity and we really view it not so much as just a technological revolution which of course it is but really an opportunity to revolutionize the value chain in our industry right so to really bring the publisher and advertiser much closer together remove a lot of the complexity in the ecosystem which for us means an opportunity to drive performance advertising increase our TAM and create a lot more value I want to know about leadership sure what does this say how do you have to lead differently in a period, let's say it's only 18 months, of technological disruption to your employee base, the fear factor.

Laura Martin, Analyst — Needham & Company

How does that change? Are you saying it's just the same as when you went through mobile? Is that the point you're making and internet?

Rajeev Goel, CEO

Yeah. So I think those transformations required a significant level of leadership. And specifically, I think number one is honesty. So honesty with yourself, with your team, with your capabilities, where you have holes where you have gaps where you have opportunities and then the second is to really question every assumption right and so it's it's really important to not think about what are the things that we've been good at historically and therefore we're going to continue to focus on but really what is it that we can do for our customers what are the what's the value that we can generate for them and really hone in on that and then move the business in that such a fascinating answer because it's so systemic.

Laura Martin, Analyst — Needham & Company

It's not about people. So you must not see leadership as people. You must think it is strategic from a systems point of view.

Rajeev Goel, CEO

I don't agree with that because I said honesty at the beginning, right?

Laura Martin, Analyst — Needham & Company

Honesty, you can't tell me you're dishonest if there's not a transition between mobile. I assume you're honest all the time. That's not a change.

Rajeev Goel, CEO

Well, I think leaders aren't always honest with their team, right? Sometimes there are unknowns and you have to say, hey, we don't know. We got to figure it out.

Laura Martin, Analyst — Needham & Company

Sometimes you've got to change the skills of the team sometimes you got to bring in new people so I think all of those things require a high degree of honesty in a period of significant change more so maybe but I think I would say most CEOs think they're honest all the time well that's a different issue whether they are or not they may think that they are I think that's totally fair okay so let's start so I missed you at possible I came honest about your booth but you were so busy everybody was so crazy at possible but um you guys made a lot of product announcements at possible so let's go over some of those and just your agentic OS your AI insights your creative innovation suite let's talk about the big product announcements you guys are doing and why you think they're important to the

Rajeev Goel, CEO

future of problematic well I think the the biggest one by far and the biggest growth driver for us in the in the coming years is agentic OS and so what with what we're doing with agentic OS is MCP model context protocol or you know generative AI enabling all of the core use cases on our platform and so that's everything from inventory discovery and planning to media activation to reporting and measurement fee transparency you know guardrails for buyers so this extends well beyond purely the ssp capability set and it moves into many more buyer connected workflows so many of the examples that i just gave you are actually things that buyers want to do and so we've been building towards this moment for the last four or five years and we'll get into our data platform uh we we launched a couple of years ago a product called activate which allows buyers to buy directly in our ssp and so by doing that what we're doing is back to what i said earlier about revolutionizing the the value chain uh via ai we're collapsing the value chain in the industry removing complexity and allowing buyers to buy directly in our ssp and agentic os brings that all together where what we see is that software the legacy software user interfaces those are very quickly becoming obsolete so i think one of the big advantages that incumbent dsps have had over the years is uh they've trained the agency trader or the advertiser you know trader to use their platform and what we see is that with ai the expectation of the customer is hey i don't need i don't need a complex interface i don't want to take two hours to set up a campaign i want to use ai and be able to do it in minutes i don't want to have to log in and troubleshoot a campaign I want the system to tell me hey this this campaign has an issue here's three options to resolve it you can pick or maybe an AI agent will do that autonomously and that's exactly the value proposition that we're delivering with the Gentic OS so a Gentic OS is a product but then you need action on the side of the ad agency presumably to create an agent that can talk to your agent OS so right so a buyer will use an agent they can use an agent that we're providing them they can use an agent they've built or an agent that they've licensed and using any of those buyer agents so our agent is part of agentic OS or they can connect in with their own agent to our to our system but they can't use a DSP like trade does doesn't have an agent that can talk to your agent OS on the SSP as far as I'm aware they do not I don't know if they will in the future if a buyer if a DSP wants to connect with us via model context protocol we're open and available to do that so the idea is to streamline and cut some of the fees this is another like aspect of like trying to pull fees out of the ecosystem that's the agent ago yes objective so our objective with agentic OS is to deliver performance in the open internet and the key part of delivering performance is to simplify the ecosystem so when you have a DSP and you have an SSP it's very difficult to actually deliver performance outcomes because there's a huge data divide between the platforms we think about you know what a walled gardens look like right there's a single layer of technology that connects the ad campaign with the inventory and the audiences right it's exactly so they're not living in this world of hey we have these disparate systems that have limitations and how they can connect instead they're they're one platform that combines everything and so we're taking the same

Laura Martin, Analyst — Needham & Company

approach with the open internet so with activate you can buy directly in our SSP with the Gentic OS you can do it using an AI agent we expose all of the services agentically and that product is growing incredibly quickly so I have a question I guess I don't understand something so activate is your clear line equivalent where you just can direct a DSP can go directly to you through activate and buy directly on your SSP thereby disintermediated a bunch of the fees in the open internet how is that different from a Gentic OS sure it seems it's exactly the same except one has to interact with an agent and one has to interact through a DSP so with with so I wouldn't compare activate to clear line I think there's some huge differences well our focus is

Rajeev Goel, CEO

on collapsing the value chain in the ecosystem so that a DSP and an SSP is not needed now traditionally that's done via software interface so user will you know come into a UI or activate UI and they'll set up a campaign and they'll buy. With Argentic OS, they don't need to use the user interface. They can do this all via AI. So they can log into Claude if they want to. Right.

Laura Martin, Analyst — Needham & Company

Like Claude does have a buyer agent.

Rajeev Goel, CEO

Correct. So they can log into there. They can connect to our model context protocol service. They can discover all of the services. They can use that. They can do it via OpenAI. They can do it via Gemini. So they can use any system that they want. They can deploy their own agent that they've built.

Laura Martin, Analyst — Needham & Company

But I guess my question is, aren't we just moving money from one pocket to another? The brand is the same, and you're just giving a brand. Let's call it Coke. Instead of going through a DSP and paying the DSP fee, you're saying you can go through an agent, skip the DSP, and come straight. But it's the same. All we're doing is moving money from Coke from one place to another, right?

Rajeev Goel, CEO

Well, when you collapse the value.

Laura Martin, Analyst — Needham & Company

I guess, are we adding value to the ecosystem? Are we just moving money?

Rajeev Goel, CEO

So let me give you a couple of case studies around this. So when you collapse the ecosystem like what we're doing, you're creating a lot of value for the advertiser and for the publisher.

Laura Martin, Analyst — Needham & Company

That's true. The two endpoints get more value because you're pulling out fees.

Rajeev Goel, CEO

You're pulling out fees. You're removing operational overhead and complexity. You are increasing the amount of data that's available for targeting. You're building solutions that are privacy safe. A big problem in programmatic is dispersion of data across the ecosystem. You're reducing the amount of time that's needed to set up and manage campaigns. So I'll give you a couple of examples of this. We did a demo, live demo on stage at a architecture event a couple months ago with MIQ as the buying platform. Their trader got on stage and said, using Padmatics Agentec OS, I can cut down the campaign setup time by 98%. So it would take me a couple of hours to set up a complex campaign in a traditional DSP. Now there's no user interface. I just type in or I upload my planning brief or you talk, whatever you like to do. and we can set up that campaign in 2% of the time. So if you compound that across the ecosystem, we're talking about thousands of, millions of hours of labor that's saved. Millions of jobs lost. Well, I think millions of jobs focused on higher value add activity, right? That's how I would define progress. Second is by collapsing the value chain, we're able to deliver much higher ROI. So above Omaxlead, largest independent ad agency in the Netherlands, probably nobody here has ever heard of them, but they play an important role in that market. They're able to generate 40% lower CPMs for the media that they buy and 30% to 40% improvement on return on ad spend. And that's because we are removing the DSP from that equation, so compressing the supply chain. Well, I don't know anybody that's paying 12%. It's usually much, much higher than that when you look at the all-in fee that DSPs are charging. But it also removes a lot of that operational complexity. So when a deal doesn't scale, for instance, now a trader on the buy side has to log into the DSP. They're working with somebody, let's say, Pubmatic at the SSP or the publisher trying to figure out, okay, am I sending you the inventory? Are you seeing it? Why are you not bidding on it? So all of that complexity is eliminated when you're in a single platform.

Laura Martin, Analyst — Needham & Company

But you say you've launched this cool product. agentic os and you say it's growing fast but i don't get that because really what you're waiting on is ad agencies who are not typically very fast they need to create a buyer agent let's call it a set of rails there's programmatic rails that have dsp and ssp you're saying and i think people agree with you we're moving to agentic rails but those rails are different they're a different caliber of railroad size. So you need a buyer and a traditionally slow-moving buyer to create an agent that can talk to your agentic OS. So who is it that is driving the growth in this product?

Rajeev Goel, CEO

Sure. So we launched the industry's first fully autonomous agentic campaign in December with an independent agency called Butler Till. And the advertiser is a malt beverage geloso beverage group some canned cocktail i believe and we shared in our earnings call last week that we now have 30 campaigns live okay with that guy or with that across the ecosystem so uh densu amnet in france we have some hold codes in asia we have a bovo max lead independent agency in the netherlands so i agree with you that the big agency hold codes they tend to move slowly However, that's not our sole focus. So we have a big focus on the indie or independent agency market.

Laura Martin, Analyst — Needham & Company

That makes sense to me.

Rajeev Goel, CEO

And they move very quickly. And that's also where a lot of the ad budget growth is. So if we look at, you know, who are the clients behind the agency holdcoats? Typically Fortune 1000 advertisers. Or 100. Or 100. What's the growth in media budget, advertising budget at a Unilever, at a Coca-Cola, at a BMW? It's flat, right? Maybe even down. But when you get into the mid-market, you look at challenger brands, right? Vori instead of Levi's, ChimeBank instead of Citigroup. That's where the growth is, and that's where the growth in ad budgets are, and that's a huge driver of our growth.

Laura Martin, Analyst — Needham & Company

Okay, and that's who's adopting this agentic OS.

Rajeev Goel, CEO

Correct, and buyers don't need to wait. So, again, they can log into ChatGPT. They can log into Anthropic. They can use that chat interface. They can use our chat interface. some of them are you know hiring an Accenture or somebody like that to build a buyer agent for them some of them are building it internally so they can connect their agent to our platform so there's there's no obstacle right now other than I would say the human component of change management leadership leadership exactly that is preventing buyers from from executing this way so it's four years from now five years from now which feels like three forevers in a generative AI ecosystem what percent of the like of our programmatic advertising has moved to agentic would you estimate so i said two earnings calls ago that i estimate i expect that by the end of 2028 25 percent of media transacted in our ecosystem will be agentic no way and by the end of 2030 it'll be 50 percent uh and in the two quarters since i think i may take the under i think i may have been too conservative no yes that implies the big ad agency holding companies who are 75 percent of ad spend have adopted this No, the big agency holdcos are 40-ish percent of ad spend today. They were 55 percent about 10 years ago. Their share of the budgets has shrunk. And it does imply that the big holdcos will have adopted this, and I fully expect that they will by the end of 2027.

Laura Martin, Analyst — Needham & Company

I'm taking the under on that. I went to an upfront yesterday, and Wall Street's been trying to kill upfronts for 30 years. And I still have upfronts this week.

Rajeev Goel, CEO

For sure, and more and more of the upfront.

Laura Martin, Analyst — Needham & Company

And that is the ad agencies.

Rajeev Goel, CEO

More and more of the upfront is being transacted programmatically.

Laura Martin, Analyst — Needham & Company

True, but I'm just saying these ad agencies are still doing upfronts. It's two decades since they've been relevant.

Rajeev Goel, CEO

Upfronts are salesmanship. That's all that is, right? And so you've got to sell your wares.

Laura Martin, Analyst — Needham & Company

You know, infrastructure and systems are ponderous, and they're slow-moving.

Rajeev Goel, CEO

Sure, but upfronts are going to drive more programmatic selling and more agentic selling and buying, not less.

Laura Martin, Analyst — Needham & Company

Maybe. We'll see. I think you're being a little optimistic. But it probably doesn't matter to your company. It's small enough. You can grow no matter how much moves.

Rajeev Goel, CEO

If 10% moves, you're going to grow. Our Activate product is growing 3x year over year. So this is the direct buying in the SSP. And now a greater and greater portion of that is going to be done agentically.

Laura Martin, Analyst — Needham & Company

I do wonder whether one cannibalizes the other, though. It feels like it's the same guy that would adopt your Activate clear line product as the Agentec product.

Rajeev Goel, CEO

Agentec is a great on-ramp for our Activate solution. So I see them as going hand-in-hand.

Laura Martin, Analyst — Needham & Company

Seems like they're on different rails, so they're substituted.

Rajeev Goel, CEO

No, they're not on different rails. So, agentic OS is a way to agentically access a variety of capabilities on our platform. One of those capabilities is buying directly in our SSP, which is activate. Another set of capabilities is the SSP itself. Another set is connect our data platform, so 300-plus data partners. So, it's the ability to attach data to any campaign. So all of these are now exposed agentically via agentic OS. So think of agentic OS as a wrapper, as a front end, to agentically access any capabilities on our platform.

Laura Martin, Analyst — Needham & Company

Interesting. Okay. So you don't want to talk about the other announcements you've made, like AI insights or creative innovation. That one sounded interesting to me. But you think agentic OS is the number one driver of financial upside, revenue upside for Pubmatic? Okay, cool. All right. So one of the questions I think a lot of people, investors are particularly worried about is this take rate question. If both sides of the equation, both DSPs and SSPs, are trying to cut out fees of the middlemen, doesn't that hurt everybody's take rate? I mean, what do you see happening to your take rates over the next three years?

Rajeev Goel, CEO

So we see our take rates as stable to growing. And the reason is that we are bringing more value across the ecosystem to our customers. So I mentioned earlier that with Activate and Agentec OS, we are reaching deeper into buyer workflows, right? And so as we do that, we're creating more value for publishers and buyers on our platform. And that means we're able to charge incremental fees. So for instance, when a buyer uses Activate, we charge a fee for that. When a publisher or a buyer uses our Connect Data Platform and they activate data from any of 300 different parties, then we charge a fee for that. so these are all you know take rate additive opportunities we're growing our TAM we're growing the value we create for the ecosystem and I also don't think it's correct to believe that as we do this or as others you know move in a similar direction perhaps that there's going to be a revenue collapse in the ecosystem what I see is that as advertising gets more efficient and more effective we should be moving bringing more dollars into the ecosystem and that's exactly what we're we're focused on doing well ideally because you'd love to pull it out of the wild gardens for sure the more efficient you get the more you look like a walled garden not not only pulling it from the walled gardens but if the marginal uh effectiveness of advertising goes up i mean those dollars are not capped right so a brand will advertise more in order to sell more products and that would be the profit maximizing thing for them to do so that you know that that describes the growth of meta for instance fair enough one of the one of the meetings I had it possible that was really fascinating was an SSP private, and he was saying that his curation, his data is growing 80% a year, and it's now, like, I'm going to say 40% of his business.

Laura Martin, Analyst — Needham & Company

And I'm going to explain curation in a minute, but is curation a driver for you guys?

Rajeev Goel, CEO

Curation is a driver for us.

Laura Martin, Analyst — Needham & Company

Okay, so we need to explain what curation is. I just want to make sure it was important to your business before I brought it up. Yeah, yeah, absolutely. So why don't you explain what curation is, and then we'll talk about this, because this is a new thing going on in SSPs. I'm more excited about than a Gentic. I want you to know. Oh, interesting.

Rajeev Goel, CEO

I think you have that backwards, but I'll come back next year. I get it. And we'll see. We'll be honest. That's what makes markets markets. Yeah, exactly.

Laura Martin, Analyst — Needham & Company

Okay, so first explain curation because I think it's really important.

Rajeev Goel, CEO

So historically, advertisers have attached data on the buy side of the ecosystem, meaning in a DSP, right? So if you go into Google or any large DSP, Amazon, Trade Desk, sure, they have extensive data partnerships where you can, you know, layer in Nielsen, Comscore, et cetera, data. Over the last, really over the last five years, there's been a conservative...

Laura Martin, Analyst — Needham & Company

I'd say two or three years, really. It's more recent.

Rajeev Goel, CEO

I mean, we've been generating revenue there for five years. It's accelerating, though, so I'll give you that. We've seen a shift in how the ecosystem operates and a shift in where buyers are applying data to the sell side of the ecosystem in the SSP. And there's a couple of reasons for this. One is the scale of audiences is larger, much larger in the SSP than it is in the DSP because you have to do audience matching, and the further you get from the publisher and the consumer, there's typically a 20% to 40% falloff rate. Second is privacy. So with privacy regulations increasing around the world, there's a need for consent from the consumer. Consent exists at the publisher, not typically with the advertiser, and so there's more data to be applied there. And then third is, it can be done, applying data can be done much more efficiently. And many DSPs, you know, data has become 30, 40, 50% of their revenue, where they're charging, you know, very high take rates against that data. So we built, we've been building now for five plus years a Connect platform, which is our data platform. I think it's probably one of the largest scaled data platforms in the ecosystem. There are over 300 data partners that are plugged in. Everything from, I mentioned Comscore Nielsen, Serkana, to a very rich set of commerce media partners. Klarna, Kroger, Intuit, Shopify. We announced that at possible Walmart and PayPal. So with PayPal, there's 25 billion transactions, 400 million Venmo and PayPal accounts. So this is very rich data that's sitting in our platform. and so what we do with curation back to your question is we package the data in the media for a buyer's objective so a buyer might say okay I'm watching a movie in June and I need to find these types of audiences and so we will take the right data from our platform 300 plus data partners we will take the trillion plus ad impressions that we process on a daily basis and we will figure out we will curate the right set of media and advertising to sell to them exactly to help them meet their objectives and so we generate a data fee

Laura Martin, Analyst — Needham & Company

when we curate and leverage one of our data partners our data partners generate revenue but we did generate a data fee in addition to our SSP fee I thought the big I thought the big thing about curation was that you guys didn't charge on the data side it was just free but you just got a higher CPM because the data makes the CPM that you're selling at a more valuable CPM so you just charge your take rate on a bigger CPM. I didn't know you were charging for data separately. I would say most SSPs are not charging for the data piece.

Rajeev Goel, CEO

Well last quarter was our 40th consecutive quarter of profitability at adjusted EBITDA so you know we like to generate fee revenue where we're adding value to our to our partners.

Laura Martin, Analyst — Needham & Company

Okay yeah okay interesting okay that's the first time I've heard okay so But anyway, this trend, so how much of your growth is being driven by attaching data to how much of your revenue is now because you're attaching data to the sale?

Rajeev Goel, CEO

So we don't break out that specifically, Connect, but a lot of the products that we've been talking about, Connect Data Platform with curation, Activate, Agentic OS, we put that in a category called Emerging Revenue Streams. That category we just shared last week is 14% of our revenue, and it grew 80% year over year last quarter. So this collective set of newer products, which is where we see the industry evolving to, is growing very quickly.

Laura Martin, Analyst — Needham & Company

A year from now, you're going to sit on my stage, and I want you to break out this 14% and see which is bigger, and I bet it is curation and not agentic. Bet you. A year from now.

Rajeev Goel, CEO

Let's see. So curation today is bigger because it's been around longer, right?

Laura Martin, Analyst — Needham & Company

Agentec is two quarters. I was going to say two months old. Exactly, exactly.

Rajeev Goel, CEO

But let's see. I think there's a decent chance.

Laura Martin, Analyst — Needham & Company

I'm going to be right, and you're going to come in and go, oh, but it's 120% growth in Agentec from $2 to $3 million.

Rajeev Goel, CEO

I think Agentec will be bigger by next year, but let's see. I disagree with you, but we'll see.

Laura Martin, Analyst — Needham & Company

It's a discernible fact one year from now. Either way, we win. Either way, Pobmatic will win, and our shareholders will win. I really am very high on this curation stuff. Okay, so where is AI already driving measurable ROI today, either by yield optimization or matching or cost efficiencies, or you're not hiring as many people? Tell me where it's actually delivering financial returns today, and what you see the biggest upside from specifically generative AI over the next year.

Rajeev Goel, CEO

Sure, so I think a good framework, let's say for our customers, and then we can turn to internal application of AI, is really just efficiency and effectiveness. I think whenever we're thinking about innovation and advertising, we can think about those two categories. So efficiency, we've talked about already quite a bit, right? So 98% reduction in time spent to set up a campaign, significant reduction, 7x time reduction in campaign troubleshooting and management. So these are all efficiency measures where a significant amount of labor is saved. Effectiveness is where there's still a lot of work being done as AI scales up from very early stages. But a couple of examples of this. So we've been able to reduce fees taken in a media buy by 40%. And so that means lower CPMs, 30% to 40% more working media for an advertiser. So that's a great example of increased effectiveness. But you're an SSP.

Laura Martin, Analyst — Needham & Company

All you should care about is higher CPMs for your publisher.

Rajeev Goel, CEO

Well, but the point is, how do you generate higher CPMs? It's not a zero-sum game to say, hey, we just want to get the advertiser to pay more. What we focus on at Pubmatic is delivering higher CPMs by delivering more performance for the advertiser. When we deliver more performance, the advertiser is happy to pay more, which is how we connect the dot to higher CPM. So that effectiveness and performance is really important. Now, we talked earlier about 300 data partners in curation. One of the biggest challenges in curation is what data and what media should I apply to this advertiser's campaign? So this is where I think the big wave of AI and effectiveness is going to come, which is using AI to figure out which dozens of the 300 data partners of the 2,000 publishers on our platform, which hundreds of those publishers. so for instance today when that RFP comes out hey studios launching a movie the agency is working on behalf of that studio to launch that movie they typically will send an RFP out via email so it's very old-school right send an RFP out to 20 or 30 publishers there's no reason that that shouldn't be happening across hundreds of relevant publishers and that's where a seller agent for a publisher and a buyer agent for an advertiser can do that matching job uh much much better so this is yet to come but this is where i think there's a lot of opportunity around effectiveness okay so i think the question though was where is ai already driving measurable roi is there anything on the cost side i mean usually ceos sit up here and they talk about costs because they can see sure so we talked about that already the efficiency piece that's where i started the answer right so is that helping your ftes not grow as fast or okay so uh everything that i talked about is for customers right we can talk about you know internal right So we operate a self-serve platform, so we're not sitting there logging into our own system and have teams of ad ops people. Our biggest investments are in product and engineering and in sales. So about 80% of the code on our platform now is generated via AI. That's a good number. So it's a very healthy number. And so what we've been able to do is ship product, more product, much faster over the last several years, even as we've flattened or decreased the size of our engineering team. So significant improvement in efficiency due to AI. Our current focus, because that 80% obviously is going to hit a ceiling, is in every other function, finance, marketing, sales, sales ops, account management. AI enabling every single one of those functions. And if we looked at our headcount number from our K, it's down somewhere in the 5% to 10% range, even as we're growing revenue. That's fantastic.

Laura Martin, Analyst — Needham & Company

That's a very good... We keep track of FTEs religiously for every one of our ad tech companies.

Rajeev Goel, CEO

Yes, I know you published those stats.

Laura Martin, Analyst — Needham & Company

Yeah, and Meta's down 8% over the last three years, but they sort of lay off 10%, higher 10%, and then they sort of do this.

Rajeev Goel, CEO

So we have not been doing that. What we have been doing is certainly investing from a CapEx perspective in new AI-enabled capabilities. So we historically have invested CapEx, this year's numbers in the $15 to $19 million range, but historically we've invested in two areas. One is increasing capacity, and the second is in new capabilities. And an important thing to note is that we own all of our own ad-serving infrastructure. So we do very little in the public cloud. We've had this approach for 10 plus years It's a key driver of the the cache that we generate. We own tens of thousands of servers around the world So this year one of the things that's different is we are putting no capex into impression volume growth We've been eliminating redundancy across our platform redundancy of impressions And instead all of that capex is going into new hardware to deliver AI solutions And we can talk about our NVIDIA partnership.

Laura Martin, Analyst — Needham & Company

Yeah, let's do that. Let's do that next. Let's go to the NVIDIA partnership.

Rajeev Goel, CEO

So we've been working with NVIDIA for, I think, three years now, where we co-innovate around solving specific advertising domain problems with the help of their hardware and software engineers with our software engineers. So I'll give you an example of this. So I think probably people have heard of inferencing, which is, okay, we have a model that's been trained, and now we want to query that model to ask a question or figure something out. One of the big challenges in our ecosystem is I've got a trillion ad impressions per day. Which impressions should I send to which DSPs? We have 150 DSPs that are bidding on our platform, some in particular geos. They have different campaigns at any given point in time, different ad formats, different audiences. So this is a key inferencing problem. So we have worked with NVIDIA to develop inferencing solutions that help us figure out exactly which ad impressions to send to which DSPs. And the reason we have this integrated stack of software and hardware is we're able to control both the software and the hardware level versus layers, versus if we were in public cloud where we can only control the software. So we've deployed specific NVIDIA Triton chips within our infrastructure to solve exactly this problem.

Laura Martin, Analyst — Needham & Company

Questions from the audience? for Rajiv. Yes, Scott.

Operator

Yes, sure.

Rajeev Goel, CEO

So I think everybody's waiting, you know, with bated breath, at least in this track of your conference, for that Remedies verdict to be handed down. Yeah, exactly. So just to give you some numbers, so we estimate every point of market share shift is worth $50 to $75 million of revenue to us, of which 80 to 90% would drop to our bottom line. We have a, you know, high fixed cost, low variable cost business. So every point of market share that shifts as a result of remedies. There's two, generally speaking, two classes of remedies. There's behavioral and there's structural. We don't know what the mix of those will be. I think the behavioral remedies, which is where Google has to change some of its practices or policies, those, in my opinion, can be implemented very quickly within weeks to months. so we could see benefit as early as later this year. Structural remedies are things like Google having to spin certain entities out or sell them off, operate them at arm's length in some way. I think those are likely to take longer to come into effect. I think that is true, but I also don't think it's either or, right? And of course, I don't know what the judge is going to decide, but it could very well be that there's behavioral remedies in the run-up to a structural remedy because based on, you know, my interaction with the judge in the case, she's, you know, very aware of the harms that Google has created across the ecosystem and, you know, focused on correcting those harms.

Laura Martin, Analyst — Needham & Company

Any other questions? Yes, sir?

Rajeev Goel, CEO

Yeah, sure. So there's been a very significant unwind and concentration over the last couple of years. I would say, you know, if we went back like five years, it was a story of DSP consolidation. You know, there's a couple of DSPs that, you know, were driving most of the market share growth. If we look now, you know, I talked earlier about the mid-market advertiser. Many of the two of the largest incumbent DSPs, they're not really focused on that mid-market arena. right and so there's you know a lot of fast-growing mid-market DSPs companies like StackAdapt for instance Viant who I think you have here later this week so that number is growing significantly and what we see is that the concentration is reducing on a year-over-year basis like one of the metrics we haven't broken out the concentration specifically but we did share that that mid-market DSP cohort is growing 20% year over year on our platform in terms of the the spend or activity so it's a very very significant growth it's amazing there's such low barriers to entry for DSPs yes there are very low barriers to enter and I think with AI it's it's a huge opportunity to remove what I think is the last barrier which was software UI incumbency right so again if you go into you know big agency holdco the big challenge for them to move off of a DSP if they wanted to expand their portfolio is well hey I've got thousands of traders around the world and you know they need to know Google's DSP in order to buy YouTube they need to know Amazon's in order to buy you know Amazon Prime video and for you know shopping use cases and so we don't have time to learn you know for other DSP UIs but now with AI the expectation is well if you can type, right, and you know, you don't even need to know English, yeah, or talk, you can do it in any language, then you can give an agent your instructions and execute those. And that's why, one of the reasons why we see such great growth with the Gentic OS and Activate.

Laura Martin, Analyst — Needham & Company

Any other questions? Okay. Let's go to your commerce initiatives. Can you talk about your commerce media platform and your connect platform and how your commerce products are driving upside at Primatic?

Rajeev Goel, CEO

So, again, our focus is on performance advertising in the open Internet. That, for us, is the North Star. And so commerce partnerships, commerce data is, you know, critically important to that. You know, where most of the growth is in the ecosystem is where you have known user identity. So think of CTV and mobile app and where you have the ability to measure the outcomes. And so commerce media, obviously, is a key area of that. So we have dozens of commerce media partnerships. I went through some of the names earlier. and last week what we announced was possible last week was it two weeks ago okay so what we announced that possible was partnership with PayPal and with Walmart so with Walmart obviously Walmart Connect they have great chopper you know knowledge audiences at scale absolutely and so they're combining their data with the streaming inventory and the mobile app inventory on our platform and giving their advertisers whether they're enterprise advertisers or SMB advertisers the ability to find those Walmart audiences off of Walmart dot-com right so now an advertiser can say great I Walmart knows that this user is you know high propensity to buy my product and I want to reach them when they're watching Landman you know on Paramount or they're watching you know Bill Maher on HBO or whatever the case is so so that's what we're doing with Walmart. So obviously huge scale and partner. With PayPal, there's a couple of things that we're doing there. One is very similar. So taking that data and making that available to any advertiser, not just PayPal's clients. PayPal is also a user of Activate. So they're buying directly in our SSP when they go out and they sell campaigns. And then the third thing is they launched PayPal Ads ID. So their own ID graph. So identifying who users are and we're merging their graph, integrating their graph with our graph so that anybody, any advertiser that's using PayPal's graph can find those users on our platform. So all of these are around identifying and delivering high-value relevant campaigns to the user, which is where we drive return on ad spend, which is what pushes the CPMs up for our publisher.

Laura Martin, Analyst — Needham & Company

Okay, we're almost out of time. Just want to make sure there's no other questions for Raju before I call it. No, okay, I will call it there. We have 30 seconds left. Thank you. Thank you so much, Laura.