PubMatic (NASDAQ: PUBM) stock got hit with big sell-offs in Friday's trading. The advertising-technologies company's share price closed out the daily session down 23.9%. The S&P 500 index closed out the day up 1.5%, and the Nasdaq Composite ended the session up 1.6%.
PubMatic reported its fourth-quarter results after the market closed, and posted earnings that beat the market's expectations. On the other hand, sales missed Wall Street's guidance -- and the company's forward guidance raised a big red flag.
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PubMatic stock tanks on Q4 report
PubMatic posted non-GAAP (adjusted) earnings per share of $0.41 on sales of $85.5 million in Q4. For comparison, the average analyst estimate had called for the business to post adjusted earnings per share of $0.37 on sales of $88.2 million. Revenue for the period was up just 1.1% year over year, and earnings per share were down 8.9% compared to the prior-year period. PubMatic's margins weakened along key lines, and the company's forward guidance didn't offer much for investors to be excited about.
What's next for PubMatic?
For the current quarter, PubMatic is guiding for sales to come in between $61 million and $63 million. At the midpoint of the guidance range, that suggests a 7% year-over-year sales decline. On a sequential quarterly basis, sequential quarterly sales would decline at a 27.5% annual rate based on the midpoint of the target.
PubMatic is continuing to manage costs effectively, but the weak sales growth outlook raises questions about the business' prospects. Recent earnings reports suggest that the company is losing ground in the highly competitive ad tech market.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PubMatic. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
