PubMatic, an Adtech Startup, Raises $118 Million Cash in IPO

By Bruce Harpham Monday, January 4, 2021

PubMatic (NASDAQ: PUBM), an advertising technology startup, went public on December 9, 2020. Founded by Rajeev Goel, Anand Das, Amar Goel, and Mukul Kumar in 2006, the advertising tech firm helps advertisers manage inventory and improve their digital advertising effectiveness. Through the initial public offering (IPO), PubMatic sought to raise $100 million in cash from investors.

While more than a million shares changed hands in the first few days of trading, there is some skepticism about the company's value. PubMatic's shares started trading at $29.45 and closed at $25.05 on December 11. As of December 11, PubMatic's market capitalization exceeded $1 billion.

PubMatic Revenue, Customers, and Profitability

The digital advertising business is relatively mature. Major Internet firms like Google, Facebook, and Microsoft have a significant market share. Yet, PubMatic has carved out a niche in helping advertisers manage their advertising across multiple platforms.

  • Revenue. In the first three quarters of 2020, PubMatic earned $92 million in revenue, up from $79 million in the same period of 2019.
  • Profitability. PubMatic's is profitable and has grown profits considerably. In the first nine months of 2019, the company reported $2.5 million in profits, increasing to $7.7 million in the same period of 2020.
  • Customers. More than 56,000 companies use PubMatic, according to estimates. Current customers include Trail Appliances, Road Runner Sports, and New York's Metropolitan Opera Association. According to the company's S1 filing with the SEC, "[Pubmatic] served approximately 1,100 publishers and app developers representing over 63,000 individual domains and apps worldwide on our platform across a diverse group of content verticals including news, eCommerce, gaming, media, weather, fashion, technology, and more" as of the third quarter of 2020.
  • Cash and Accounts Receivable. Before its IPO, Pubmatic had $40 million in cash on its balance sheet, up from $34 million in late 2019. In addition to cash, the ad tech company expects to receive $140 million from its customers (i.e., $140 million in net accounts receivable).
  • Growth. The company's growth rate is also quite striking. In the third quarter of 2020, the company achieved a 33% year over year revenue growth. Furthermore, customers stay with PubMatic: the ad tech firm has a 110% net dollar-based retention rate

Who Funded PubMatic Before the IPO?

From 2008 to 2015, PubMatic raised a total of $63 million in pre-IPO funding across several funding rounds. The company's investors include NGP Capital, Nexus Venture Partners, and August Capital. NGP Capital, based in Palo Alto, has invested in more than one hundred companies with numerous successful exits (e.g., Hipmunk, Verve, and Celect).

Data Centers Around the World Power PubMatic

Cloud computing services like Microsoft Azure, Google Cloud, and Amazon give industrial-scale computing resources to anybody willing to pay. Nonetheless, Pubmatic has taken a different approach to its computing infrastructure. The company has built a network of data centers covering nearly every continent: three in the United States (California, New Jersey, and Virginia), Europe (UK and Netherlands), and Asia-Pacific (Japan and Singapore). With this global reach, the company's platforms process 1.65 petabytes of data daily.

Building its digital infrastructure means that PubMatic has higher operating costs than many other technology companies. However, the company justifies this expense by pointing to the need to provide high-speed service to advertisers. High-end digital advertisers use sophisticated tools to change their advertising in fractions of a second. The lag times involved in using a cloud provider would slow down the company's advertising service.

Why P&G and Bayer Use PubMatic

PubMatic's blue-chip customer list includes Bayer (a German multinational in the pharmaceutical industry) and Procter & Gamble (a global household goods company that earned over $70 billion in revenue). These companies spend millions of dollars annually on advertising and demand powerful advertising tools. PubMatic's product suite includes Ad Quality (i.e., a tool to protect brand safety), Audience Encore (i.e., improves the accuracy of accuracy through better audience targeting), and Private Marketplaces (i.e., a place to find and buy unique advertising opportunities).

PubMatic also helps publishers and website owners earn more revenue. Reference website has used PubMatic to increase advertising revenue by 26%. Future PLC global media company with more than 300 million users, used PubMatic to increase advertising revenue by more than 60%.

About the Author

Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in, InfoWorld, Canadian Business, and other organizations. Visit for articles, interviews with tech leaders, and updates on future books.

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