This article was originally published on Forbes on Aug 18, 2022,12:37pm EDTForbes on Aug 18, 2022,12:37pm EDT
The ad-tech sector's performance is closely linked with the macroeconomy. This sector has been hit hard in the last few months due to global uncertainty. We believe this sector will recover when the economy starts picking up. It is practically impossible to time the market. However, we believe that being prudent and buying stocks during the downturn helps to outperform the market in the long term.
Below we review the stocks in the sector to find out which companies have performed well in the recent quarter results and which companies stand out in revenue growth, profits, cash flows, and earnings surprise.
Top Ad-Tech Stocks with the highest revenue growth rates in Q2
Source: YCharts
FuboTV led the ad-tech sector with the highest revenue growth rate in the recent Q2 results. The company’s revenue grew by 70% YoY to $221.9 million. North American revenue grew by 65% YoY to $216.2 million. For the next quarter, it expects North American revenue from $200 million to $205 million, representing a YoY growth of 29% at the mid-point of the guidance.
The company also announced that it would place Fubo Gaming under strategic review due to the changing macro environment. David Gandler, co-founder and CEO of the company, said, “We recognized that the market has changed and therefore, we have made the decision to place fubo Gaming, our online sports wagering business under strategic review. We will no longer pursue this opportunity on our own and are exploring the best path forward to scale the business. We look forward to continuing to update you as conversations progress.” The market reaction was positive following the strong results and the announcement on gaming.
The company’s first investor day on August 16th drew interest as the stock closed the day with 45% gains. The company’s CFO, John Janedis, said, "We continue to work towards long-term targets of adjusted EBITDA profitability and positive cash flow in 2025, and the Fubo flywheel will help us track towards that goal, as we execute a plan of controlled growth, alongside margin expansion."
Quarterly Revenue Surprise
Source: YCharts
DoubleVerify has crushed the analysts’ revenue estimates by 8% in the Q2 results and leads the ad-tech sector. It was followed by PubMatic, which beat analysts’ revenue estimates by 4%. PubMatic’s Q2 revenue grew by 27% YoY to $63 million, and the company reported an adjusted EPS of $0.23, which beat the analysts’ estimates by $0.08. The company’s CFO, Steve Pantelick, said, “We saw broad strength in the Americas region, led by fast-growing ad formats CTV, online video and mobile, and continued momentum in Supply Path Optimization.” The company also benefitted from the diversified portfolio of advertisers from over 20 different verticals.
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Top Ad-Tech stocks with the highest revenue growth estimate for Q3
Source: YCharts
The Ad-Tech stocks are expected to show strong growth rates in Q3. IAC leads the sector, with the analysts’ expecting its revenue to grow 44%, followed by FuboTV, which is expected to grow 37%, and DoubleVerify is expected to grow 32%. Advertisement measurement and analytics company DoubleVerify shares got listed in April 2021. The company’s revenue in Q2 grew by 43% YoY to $109.8 million. The company’s CEO, Mark Zagorski, said, “We delivered an outstanding second quarter and surpassed our expectations for growth and profitability fueled by record Activation revenue and continued momentum on Social and CTV platforms,” The company also raised the full-year revenue guidance from a 33% YoY growth to 35% YoY growth of $449 million at the mid-point of the guidance.
