Shares of PubMatic, Inc. (PUBM) are plummeting 33.49% in pre-market trading on Tuesday, following the ad tech company's release of its second-quarter 2025 financial results and third-quarter outlook. Despite beating analyst expectations for Q2, PubMatic's weak revenue guidance for Q3 has sparked significant concerns among investors about the company's growth trajectory.

PubMatic reported strong Q2 results, with revenue of $71.1 million, surpassing the analyst estimate of $67.9 million. The company also posted an adjusted earnings per share of $0.05, significantly better than the expected loss of $0.16 per share. However, the company's outlook for the third quarter has overshadowed these positive results.

The ad tech firm forecasts Q3 revenue to be between $61 million and $66 million, which falls well below analysts' average estimate of $70.6 million. This guidance suggests a potential decline from the current quarter. CFO Steve Pantelick noted, "While our outlook includes a reduction in ad spend from one of our top DSP partners, the underlying health of the business remains strong while we mitigate the impact." The weak forecast, coupled with concerns about reduced ad spend from a key partner, has contributed to the sharp stock decline as investors worry about the company's growth prospects and the impact of changing market dynamics in the digital advertising space.

In response to the earnings report, several analysts have adjusted their ratings and price targets for PubMatic. B. Riley Securities downgraded the stock to Neutral from Buy and lowered its price target to $9 from $17. RBC Capital also reduced its price target to $11 from $14, while maintaining an Outperform rating. These analyst actions reflect the market's concerns about PubMatic's near-term growth prospects.