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PubMatic, a prominent Supply-Side Platform (SSP), has declared that both its company and the broader digital advertising industry are standing at a critical inflection point, signaling a strategic pivot towards agentic artificial intelligence (AI) as a cornerstone for its future growth. This declaration comes in the wake of the company’s fourth-quarter 2025 earnings call, where it reported $80 million in revenue, a 6% decrease year-over-year. For the full fiscal year 2025, PubMatic’s revenue stood at $282.9 million, down 3% from the previous year.
Despite the reported decline in revenue, PubMatic framed these results as a positive performance, primarily due to exceeding its own revenue projections. This resilience, coupled with a 6% surge in its stock price in after-hours trading, indicated investor confidence in the company’s strategic direction and future potential.
Navigating a Shifting DSP Landscape
PubMatic’s Chief Financial Officer, Steve Pantelick, attributed the full-year revenue figures to a period of reduced spending by a significant, though unnamed, incumbent Demand-Side Platform (DSP). This downturn was followed by a subsequent normalization of spend. To mitigate the impact of this strategic shift from a key partner, PubMatic has actively diversified its DSP relationships, onboarding new midtier partners who demonstrate substantial potential for increased investment.
PubMatic CEO Rajeev Goel further elaborated on the company’s forward-looking strategy, asserting that the adoption of PubMatic’s proprietary AgenticOS, combined with robust demand in Connected TV (CTV) and mobile advertising, and a resurgence in display advertising, are poised to propel the company into double-digit growth in the latter half of the current year.
The Rise of Agentic AI in Advertising
Central to PubMatic’s long-term vision is the transformative potential of agentic AI. Goel projected that by 2028, agentic AI will be responsible for executing approximately 25% of all digital advertising transactions. This share is anticipated to expand significantly, reaching 50% by 2030. PubMatic’s proactive positioning as an early leader in this domain, marked by the introduction of AgenticOS and its involvement in the development of the Ad Context Protocol, is expected to yield substantial dividends as this paradigm shift unfolds.
Since its inaugural agent-executed CTV campaign, launched in collaboration with the ad agency Butler/Till in January, PubMatic has successfully facilitated over 250 such campaigns. These initiatives have attracted a considerable number of new advertisers to PubMatic’s platform, demonstrating that agentic solutions are a potent driver of incremental revenue.
Furthermore, PubMatic benefits from additional fees generated by AgenticOS campaigns, which are separate from its standard SSP take rate. This creates a new, distinct revenue stream, mirroring the additional revenue generated through PubMatic’s Activate direct-to-buyer connection.
To accelerate the adoption of this cutting-edge technology, PubMatic initiated an AI accelerator program. The program has garnered significant interest, with nearly 100 brands, agencies, and streaming platforms already participating, a testament to what Goel described as "the fastest early-stage adoption of any product we’ve launched."
Strategic Realignment with DSP Partners
Beyond the embrace of agentic AI, PubMatic’s earnings call highlighted a dynamic evolution in its relationships with DSP partners. The full-year 2025 revenue figures were undeniably impacted by The Trade Desk’s decision in August of the previous year to reclassify all SSPs as resellers. This classification led The Trade Desk to prioritize its OpenPath direct-to-publisher connections, a move that effectively bypassed SSPs in the supply chain and consequently reduced PubMatic’s revenue from this major partner.
Both Goel and Pantelick alluded to the impact of an unnamed DSP partner that exerted downward pressure on PubMatic’s third-quarter revenue. However, spend from this platform began to stabilize around August and September. Pantelick emphasized that, excluding the influence of this specific DSP and the substantial political ad spend recorded in 2024, PubMatic’s revenue would have seen an 18% year-over-year increase in Q4 and a 9% increase for the full year 2025.
In response to this evolving landscape, PubMatic’s primary growth objective, as outlined in its five-point plan, is to diversify its DSP partner ecosystem by actively cultivating relationships with midtier and specialized platforms. The company has recently welcomed 50 new DSP partners and has strategically reoriented its largest DSP relationships to focus on high-growth commerce and premium advertising verticals such as pharmaceuticals.
An intriguing development, potentially indicative of the intensifying competition between Amazon and The Trade Desk, is Amazon DSP’s emergence as one of PubMatic’s top five buyers.
Concurrently, ad spend from midmarket DSPs experienced a significant 30% year-over-year increase in Q4. Pantelick noted that midmarket advertisers, represented by these DSPs, constituted the "fastest-growing segment of the market" in the preceding year.
PubMatic’s Five-Point Growth Strategy
The diversification of its DSP mix is just the first pillar of PubMatic’s comprehensive growth strategy. The second point focuses on the expansion of its Activate direct-to-buyer business, which demonstrated remarkable growth by tripling its volume in Q4. Supply-path optimization (SPO), with Activate representing a substantial component, accounted for 55% of all activity on PubMatic’s platform in 2025.
The third strategic priority is the sustained growth in Connected TV (CTV), mobile advertising, and other emerging revenue streams. Excluding the impact of 2024 political ad spend, PubMatic’s CTV revenue surged by 50% year-over-year in Q4. Mobile app revenue saw a robust 25% increase during the same quarter. Emerging revenues, which encompass Activate, commerce media, and novel AI solutions, experienced a substantial 75% growth in Q4 and now represent close to 10% of PubMatic’s total revenue.
In contrast, PubMatic’s established display advertising business witnessed a 20% uplift in Q4.
The fourth and fifth points of PubMatic’s growth plan address emerging AI solutions and internal AI optimizations, respectively. During the latter half of the previous year, an impressive 40% of new code developed by the company was generated by AI. Currently, 10% of PubMatic’s publishers are generating revenue from AI-driven solutions, including AgenticOS and other publisher-facing products.
Goel expressed optimism about this trajectory, stating, "It’s great that it’s in double digits, but that number should be 100% eventually. We’re still early, and there’s a lot of runway ahead of us." This sentiment underscores the company’s belief in the vast, untapped potential of AI within the advertising ecosystem.
Contextualizing the Industry Shift
The digital advertising industry is indeed at a crossroads, facing a confluence of technological advancements, regulatory pressures, and evolving market dynamics. The deprecation of third-party cookies, the increasing focus on data privacy, and the rise of sophisticated AI technologies are fundamentally reshaping how ads are bought, sold, and measured.
PubMatic’s emphasis on agentic AI is a strategic bet on a future where autonomous agents will manage and optimize ad campaigns with unprecedented efficiency and effectiveness. These agents, powered by AI, are expected to understand complex campaign objectives, identify optimal placements, negotiate pricing, and execute trades in real-time, all while adhering to predefined parameters and privacy constraints.
The Ad Context Protocol, in which PubMatic is involved, aims to provide a standardized framework for understanding the context in which ads are placed. This is crucial for agentic AI, as it needs to interpret environmental signals to make informed decisions about ad suitability and relevance, moving beyond simple demographic targeting.
The challenge for SSPs like PubMatic is to adapt to these changes and offer solutions that not only streamline the advertising process but also provide enhanced value to both publishers and advertisers. The move towards direct connections, as exemplified by The Trade Desk’s OpenPath, signifies a broader trend of disintermediation in ad tech. PubMatic’s response, by strengthening its direct-to-buyer offerings (Activate) and focusing on AI-driven services, suggests a strategy to remain indispensable in this evolving ecosystem.
The growth in CTV and mobile advertising reflects a natural migration of audience attention and advertising spend to these platforms. PubMatic’s reported strong performance in these areas suggests a successful alignment with these market trends.
Broader Implications for the Ad Tech Landscape
PubMatic’s strategic pivot towards agentic AI has significant implications for the broader ad tech landscape. If its projections hold true, agentic AI could lead to:
- Increased Efficiency and Automation: Agentic AI can automate many of the manual tasks involved in campaign management, freeing up human resources for more strategic initiatives.
- Enhanced Performance: By analyzing vast datasets and adapting in real-time, agentic AI has the potential to deliver significantly improved campaign performance and ROI.
- New Revenue Opportunities: The development and deployment of agentic AI solutions create new revenue streams for ad tech companies, as seen with PubMatic’s AgenticOS fees.
- Shifts in Market Power: Companies that successfully leverage agentic AI could gain a competitive advantage, potentially leading to consolidation or shifts in market leadership.
- Evolving Role of Intermediaries: The traditional roles of intermediaries in the ad supply chain may be redefined as AI agents become more capable of executing complex transactions.
PubMatic’s earnings report, while showing a dip in revenue, paints a picture of a company strategically positioning itself for the future. Its embrace of agentic AI, coupled with its efforts to diversify partnerships and capitalize on high-growth channels like CTV and mobile, suggests a proactive approach to navigating the current inflection point in the digital advertising industry. The success of these initiatives will be closely watched as the industry continues its rapid transformation.
