PUBM - PubMatic: Emerging Products Are Driving Growth But Sustainability Of SSP Model Is A Concern

2024-04-16 02:42:48 ET

Summary

• PubMatic is realizing higher growth and improved margins, despite a sluggish demand environment, in large part due to its newer products.
• Growth should remain robust going forward, driven by stable demand, industry consolidation, CTV, and commerce media.
• PUBM's valuation is still reasonably modest given the company's growth rate and ability to generate free cash flow. There remain questions about the sustainability of the SSP business model, though.

PubMatic ( PUBM ) is going from strength to strength at the moment, with growth accelerating and margins improving. This is occurring despite the demand environment being fairly sluggish and could be due to some of the company's newer products.

On an absolute basis, the stock still appears inexpensive given the company's ability to generate free cash flow, leaving room for further upside. PubMatic is beginning to look expensive relative to peers, though, and the broader market also looks stretched. The path of least resistance is probably still up, provided that PubMatic's financial results continue to improve....

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