Trade Desk stock (NASDAQ: TTD) fell sharply after the company missed its own revenue floor and guided to a possible year-over-year decline. PubMatic (NASDAQ: PUBM) beat the top of its forecast, but its smaller scale and lingering risks make the comparison more complicated than the share-price moves suggest.

Digital advertising investors received two opposing earnings signals Thursday night.

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At around 7:45 a.m. ET Friday, The Trade Desk shares (NASDAQ: TTD) were down roughly 27%, while PubMatic (NASDAQ: PUBM) was up more than 30% before the opening bell. The clearest explanation lay in how each company performed against its own forecast.

The Trade Desk reported second-quarter revenue of $715.1 million, about $35 million below the minimum $750 million it had forecast in May. PubMatic generated $78.6 million, exceeding the top of its $68 million-to-$70 million guidance range by $8.6 million.

Put differently, ABBO News calculations show that The Trade Desk finished 4.7% below its own revenue floor, while PubMatic beat the upper end of its forecast by 12.3%.

That gap matters more than the headline earnings-per-share figures. The Trade Desk entered the quarter as the much larger, consistently profitable platform, but its growth and margins deteriorated. PubMatic remained far smaller and posted a modest GAAP net loss, yet its revenue mix, cost efficiency and forward guidance all moved in the opposite direction.

The Q2 Scorecard

Source: Company earnings releases and prior guidance. Percentage comparisons and guidance deltas are ABBO News calculations. Adjusted EBITDA is a non-GAAP measure, and company definitions can differ; each company’s margin trend is more informative than a direct comparison of the two levels.

Why The Trade Desk Stock Selloff Extends Beyond One Revenue Miss

The sharp reaction in Trade Desk stock reflects a break in a growth story that investors had already been questioning.

Revenue increased 3% from $694.0 million a year earlier, compared with 19% growth in the second quarter of 2025. Adjusted EBITDA declined nearly 11% to $241.3 million, and its margin contracted to 33.7% from 39.0%. GAAP operating margin also fell to 14.2% from 16.8%.

The expense pattern makes the slowdown harder to dismiss as a single weak sales quarter. Platform-operations expense rose 22.1% year over year to $184.3 million, more than seven times the pace of revenue growth. Total operating expenses, before stock-based compensation, rose about 12.4%.

Management said the platform spending reflected infrastructure optimization, AI-powered tools and the migration of critical workloads from third-party cloud providers to company-owned data centers. Those investments could support future efficiency. For now, costs are expanding faster than sales, reversing the operating leverage that growth investors typically expect.

The third-quarter outlook raises the stakes. The Trade Desk forecast revenue of at least $650 million and adjusted EBITDA of approximately $160 million. According to The Trade Desk’s Q3 2025 results, revenue was $739.4 million and adjusted EBITDA was $317.5 million in the year-earlier period.

Using those prior-year figures, the new revenue floor is about 12% lower, while the EBITDA guide is nearly 50% below last year’s result. At the $650 million revenue floor, the outlook indicates an adjusted EBITDA margin of roughly 25%, versus 43% a year earlier. Because management describes revenue as “at least” $650 million, the eventual growth rate could be better, but the guide establishes a much lower starting point.

Macro Pressure is Real, But Execution Is Now Part of the Thesis

Chief Executive Jeff Green attributed the shortfall to a combination of difficult conditions for large advertisers and the company’s own execution.

During the earnings call, Green said consumer packaged goods and automotive customers account for roughly 25% of The Trade Desk’s business. Both groups have faced pressure from tariffs, oil prices and uneven consumer spending. The company’s heavy reliance on large global brands can therefore lead to results that differ from those of platforms serving more small and mid-sized advertisers.

That explanation is relevant, but it does not fully remove company-specific risk. Management also acknowledged that The Trade Desk did not execute as well as it could have. The company has recently added a new chief financial officer, chief marketing officer, chief commercial officer, and other senior leaders while working to upgrade its Kokai media-buying platform.

The quarter still contained measurable strengths. Customer retention remained above 95%. Management said more than half of its 100 largest accounts continued to grow at double-digit rates, while connected-TV revenue in both EMEA and Asia-Pacific increased more than 50%. The company also ended June with almost $1.49 billion in cash and short-term investments.

Green said The Trade Desk’s public dispute with advertising agency Publicis was behind the companies, but investors will still need to watch whether large-agency relationships and customer spending normalize. Product announcements alone will not settle that question; revenue growth and margin recovery will.

PubMatic Delivered Operating Leverage Alongside Faster Growth

PubMatic’s quarter stood out because sales growth translated into stronger profitability and cash generation.

Revenue rose 10.5% to $78.6 million. Adjusted EBITDA climbed 38% to $19.6 million, expanding the adjusted margin to 25% from 20%. The company reported GAAP operating income of $579,000, compared with a $5.5 million operating loss a year earlier, although taxes resulted in a $1.2 million net loss. 

Gross profit increased 18.5%, and gross margin expanded by approximately 4.5 percentage points to 67.1%. That improvement came as cost of revenue declined nearly 3%, despite an 18% increase in impressions processed. PubMatic also said its trailing 12-month cost per million impressions fell 20%.

Free cash flow increased 47% to $13.7 million. The company finished the quarter with $137.5 million in cash, equivalents, and marketable securities and no debt. It repurchased 2.1 million shares during Q2, equal to 4.2% of its fully diluted share count as of June 30.

The revenue mix also shifted toward faster-growing areas. Connected TV accounted for about 20% of revenue and grew 13%. Mobile app revenue, roughly 25% of the total, increased more than 40%. Emerging revenue—including Activate, commerce media, Connect and AI solutions—doubled, contributing approximately 15% of total revenue.

Together, connected TV, mobile app, and emerging products accounted for about 60% of PubMatic’s revenue, approximately twice their share three years earlier. This diversification is important because the company has previously been hurt when a large demand-side platform changed its inventory evaluation criteria. 

PubMatic’s AI Numbers Need Context

PubMatic said its AgenticOS platform had delivered more than 80 autonomous campaigns and processed over 4,000 AI-powered deals by the end of Q2, up from more than 30 campaigns and just over 1,000 deals one quarter earlier.

Those adoption figures show momentum, but they do not represent standalone AI revenue. PubMatic does not separately disclose sales from AgenticOS; AI solutions sit inside the broader emerging-revenue category alongside other products.

For retail investors, the more reliable evidence is the combination of revenue growth, higher gross margin and stronger cash flow. The AI activity becomes financially meaningful if those metrics continue improving as adoption scales.

The base effect also warrants caution. PubMatic’s first-quarter results showed revenue fell 2% and its adjusted EBITDA margin was 4%. Across the entire first half, revenue grew approximately 4.6%, while adjusted EBITDA declined about 2%. Q2 may mark an inflection, but one strong quarter is not yet a durable trend.

TTD and PUBM Are Not Direct Substitutes

The opposing stock moves can create the impression that PubMatic took business directly from The Trade Desk. The companies’ disclosures do not establish that.

The Trade Desk primarily operates a demand-side platform that helps advertisers and agencies buy and optimize digital media. PubMatic built its business on sell-side technology that helps publishers monetize inventory, although it is expanding into buyer-facing activation, curation and autonomous campaign tools.

Their markets increasingly overlap as the traditional boundaries between buying and selling platforms blur, but their customers, revenue accounting, scale and cost structures remain different. The Trade Desk generated more than nine times PubMatic’s Q2 revenue and retained a higher adjusted EBITDA margin. Percentage growth from the two businesses should therefore not be treated as an apples-to-apples market-share score.

The useful comparison is execution: one company materially missed its own forecast and guided to a possible contraction; the other exceeded its forecast and guided to another quarter of double-digit growth.

What Retail Investors Should Watch Next

For Trade Desk stock investors, five indicators will determine whether the selloff represents a temporary reset or a deeper growth problem:

1. Q3 revenue versus the $650 million floor. Merely beating the stated floor may not be enough; investors will look for evidence that year-over-year growth can return to positive territory.
2. Platform costs versus revenue. Operating leverage cannot recover sustainably while platform-operations expense grows far faster than sales.
3. CPG and automotive spending. Stabilization in these categories would support management’s macro explanation.
4. Kokai and new-product monetization. Zuma, Audience Unlimited and enterprise agreements need to produce measurable spending growth, not just adoption claims.
5. Agency and leadership execution. The new management team must show that customer relationships, product delivery and forecasting have stabilized.

For PubMatic, the key tests are different:

1. Whether Q3 reaches the $75-$77 million range: The midpoint implies roughly 12% growth from the $68.0 million reported in Q3 2025, while the full range implies approximately 10% to 13% growth.
2. Whether emerging products remain additive: Investors need evidence that AI, commerce media, and Activate are creating incremental revenue rather than shifting existing activity between products. 
3. Demand-partner concentration. Faster growth from mid-market DSPs is encouraging, but dependence on major buyers remains an operating risk.
4. GAAP profitability. GAAP profitability. Adjusted EBITDA and free cash flow are positive, but PubMatic still reported a GAAP net loss for the quarter. 
5. Post-rally expectations. A sharp share-price increase raises the standard for subsequent quarters, particularly for a cyclical advertising business.

The Bottom Line

The Q2 divergence does not crown PubMatic the new ad-tech winner, nor does it prove that The Trade Desk’s long-term position has failed. It changes the burden of proof for both companies.

The Trade Desk still has greater scale, a far larger liquidity pool, and higher absolute profitability, but investors now need numerical evidence that management can restore growth and operating leverage. PubMatic has demonstrated faster growth and better Q2 execution, but it must prove the improvement can survive beyond one quarter and translate into consistent GAAP profits.

For Trade Desk stock, the next phase is recovery; for PubMatic stock, repeatability.

This article is for informational purposes only and does not constitute investment advice.