Hello, everyone, and welcome to PubMatic's fourth quarter and full year 2021 earnings call. My name is Kara and I will be your operator today. Before I hand the call over to the PubMatic team, I'd like to go over a few housekeeping notes. As a reminder, the webinar is being recorded. After the speaker's remarks, there will be a Q&A session. If you plan to ask a question, please ensure you've set your Zoom name to display your full name and firm. If you would like to ask a question during this time, please use the Raise Hand function located at the bottom of your screen. Thank you for your attendance today, and I will now turn the call over to Stacie Clements with The Blueshirt Group.
Thank you, operator, and good afternoon, everyone. Thank you for joining us on PubMatic's earnings call for the fourth quarter and year ended December 31, 2021. Joining me on the call are Rajeev Goel, Co-Founder and CEO, and Steve Pantelick, CFO. Today's prepared remarks have been recorded, after which Rajeev and Steve will host live Q&A. A copy of our press release can be found on our website at investors.pubmatic.com. Before we start, I would like to remind participants that during this call, management will make forward-looking statements, including, without limitation, statements regarding our future performance, growth strategy and financial outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and future and other future conditions. These forward-looking statements are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict.
You can find more information about these risks and uncertainties and other factors in our reports filed from time to time with the Securities and Exchange Commission, including our most recent Form 10-K and our subsequent filings on Forms 10-Q or 8-K, which are on file with the Securities and Exchange Commission and are available at investors.pubmatic.com. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. All information discussed today is as of February 28, 2022, and we do not intend and undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law. In addition, today's discussion will include references to certain non-GAAP financial measures.
These non-GAAP measures are presented for supplemental information purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. A reconciliation of these measures to GAAP measures is available in our press release. Now I will turn the call over to Rajeev.
Thank you, Stacie, and welcome everyone. It's an exciting time at PubMatic as we continue to deliver an incredible combination of durable, high-growth revenue and profitability. While we have grown significantly in the past year, I'm most excited about the number and magnitude of growth opportunities in front of us. We delivered record fourth quarter organic revenue of $75.6 million, up 34%. We also delivered a strong adjusted EBITDA margin of 51%, placing our performance over double the rule of forty benchmark for the fifth consecutive quarter. These results illustrate the value of our unique infrastructure-driven approach, coupled with a usage-based software model that leads to an ability to grow our market share while delivering an incredible combination of growth and profitability. For the full year, we delivered 53% organic revenue growth, a significant increase over 31% in 2020.
We delivered 25% GAAP net income margin, or $56.6 million, with adjusted EBITDA margin of 42%. Our profit margin demonstrates the leverage in our model and provides us with a strong foundation for continued investment and market share gains. We ended the year with a record $88.7 million generated in cash from operations. These results reflect PubMatic's significant share gains in a rapidly growing market. In 2021, the digital advertising market grew 31%, almost double the pre-pandemic growth level, with double-digit spend increases expected again in 2022. Latest projections show that growth in digital advertising is not a pull forward, but rather reflects permanent consumer behavior changes, in part due to the pandemic. For example, banking is predicted to move more online, evidenced by the closure of a record 2,900 branches in the U.S. last year.
Grocery e-commerce is projected to grow 17% annually over the next four years as consumers flock to online grocery shopping. These changes have increased our addressable market opportunity considerably. PubMatic is committed to delivering the digital advertising supply chain of the future, where both publishers and buyers can maximize value. As an independent technology company focused on the best interests of publishers, we provide a platform that connects disparate parts of the ecosystem with robust audience addressability solutions and cross-screen targeting that power the open internet. Our infrastructure-driven approach is delivering superior outcomes and cost efficiencies that both our customers and we benefit from. The more value our platform delivers, the more our customers use our technology. This generates more high-margin revenue for us, which we continuously reinvest in innovation and growth.
The competitive advantages we derive from our infrastructure, combined with our usage-based software model, are driving PubMatic's outsized growth rate well ahead of the market. At the time of our IPO, we estimated our market share to be 2%-3%. Updated industry data now estimates our market share to be 3%-4% as of December 31, 2021. A shift in 1 percentage point over the course of a year is quite significant given the large and growing total addressable market, and reflects the increasing value we are delivering to our customers. Over the long term, our objective is to grow our market share to 20%+. Our key growth drivers, supply path optimization, omni-channel formats and channels, audience addressability, and global expansion, are driving increased usage of our platform and long-term growth opportunities. We pioneered supply path optimization several years ago.
Buyers are continuously looking for ways to optimize ad spend through robust targeting, direct technology integrations and workflows, and premium ad inventory across channels and formats. The investments we make in these areas create a long-term strategic partnership that aligns buyers' success with our success. The outcome is increased utilization of our platform with more predictable, sticky revenues. At the end of 2021, we grew the number of SPO partners by 44% over the prior year. In fact, over a quarter of activity on our platform is now via SPO agreements, up from approximately 10% at the beginning of 2020. Our omni-channel approach enables us to match buyer needs to publisher inventory at scale, regardless of device or content type in use by the consumer. This has proven particularly resilient during the pandemic and as COVID becomes endemic.
Further, high-growth channels such as CTV/OTT have expanded our addressable market opportunity and contributed to market share gains. Although just launched in Q3 of 2020, we're seeing tremendous growth in our CTV business with over 6x growth over Q4 of 2020. We continue to invest aggressively in scaling a transparent programmatic marketplace for CTV/OTT, while also expanding our capabilities in online video, mobile app, and mobile web. A long-term strategic area that we continue to invest in is audience addressability. We have facilitated a growing and robust partner ecosystem on our platform that includes first-party data owners, identity solution providers, and contextual data providers to deliver best-in-class solutions that increase addressability in privacy safe ways.
Identity Hub is a software solution that allows publishers to seamlessly manage, integrate, and configure a multitude of identity solutions, simplifying their workflows and allowing them to connect their valuable audiences with advertiser demand in a privacy-compliant way to drive increased ad revenue. Identity Hub is now broadly deployed across our publisher base. We recently partnered with LiveRamp to measure the impact of Identity Hub and LiveRamp's authenticated traffic solution, and found that publishers were able to more than double CPMs and triple fill rates in cookieless browsers like Safari and Firefox. Audience Encore allows any first-party data owner, whether it's a publisher, advertiser, agency, or data provider, to monetize and scale their audience data across our billions of daily ad impressions and generate an incremental high-value revenue stream. We recently announced an extended partnership with Samba TV in Australia to bring first-party connected TV data to media buyers across our platform.
The partnership helped media agency IPG Matterkind find and engage relevant audiences for a global streaming client's programmatic ad campaign. We also recently enhanced our platform for contextual targeting with greater access to and usage of contextual data across CTV, video, mobile app, and web. As the use of contextual targeting increases, we are well-positioned to support publishers' and buyers' needs to package and monetize contextually targeted impressions, both in the open market and private marketplace deals. We are starting to see momentum build as third-party cookies are deprecated, and we believe the growth in these areas will accelerate. Existing customers are already starting to expand use of our platform through our audience addressability solutions, and we're also seeing these solutions attract new customers to PubMatic.
It's worth noting that Google's recent announcement of the deprecation of Android advertising ID in two years is expected to have minimal, if any, impact to our business. We know from prior experience that ad dollars shift to channels where buyers find success and high ROI. Because we're an omni-channel platform, we are able to fulfill ad buyers' needs with other channels, such as CTV or mobile web. We saw this dynamic on our platform when Apple eliminated IDFA with no impact. Second, we expect that our addressability solutions, such as first-party data, contextual targeting, and our ongoing work with Google on topics and Privacy Sandbox, will continue to make Android advertising ROI positive for certain buyers. We also continue to expand our platform into new geographies. Last year, we entered South Korea and opened offices in Madrid, Paris, and Shanghai.
Within China, we are focused on the non-Chinese audiences and inventory from Chinese app developers. Based on our experience and success internationally, we believe our international investments will develop into significant long-term growth opportunities. Further expanding our addressable market is the large opportunity for retail media solutions, which represents over $140 billion in global media retail ad spend by 2024, which is comprised of on-site and off-site advertising. We already work with several dozen e-commerce companies as publishers, such as eBay and Gap Advertising, to monetize impressions across their properties. Additionally, e-commerce ad spending is a top five buyer vertical for us. As retailers increasingly prioritize media as a growth driver for their businesses, we see significant opportunity for PubMatic, and we intend to invest behind this opportunity. Retail media plays to many of our strengths.
As an SSP, we are close to the publisher or e-retailer and consumer. We have an omni-channel and global platform complete with a portfolio of addressability solutions, including identity, first-party data, and contextual solutions. We have strong buyer relationships from SPO. Our focus is on helping retailers monetize their own media, extend their data off-site to monetize impressions from non-retail publishers and to optimize ROI for buyers. As a provider of specialized cloud infrastructure for digital advertising, innovation and efficiency are key differentiators that enable us to deliver customer value and expand platform usage. This year, we intend to make substantial new investments based on where we see long-term growth potential.
These areas include our machine learning and data processing consistent with the evolving nature of addressability towards first-party data, identity, and contextual targeting, tools for buyers to expand their supply path optimization implementation on our platform, private marketplace and Programmatic Guaranteed capabilities for connected TV and online video transactions, and retail media capabilities. These are long-term investments that we believe will pay off in increased customer value and market share gains over the next several years. At the same time, we intend to improve efficiency across the company, driving additional infrastructure cost reductions and automation, which will allow us to ship software faster and increase the pace of innovation. Given our decade-plus track record of profitable innovation, we plan to accelerate the growth of our engineering team in order to take advantage of the enormous number of growth opportunities in front of us.
Our hiring plans call for doubling our engineering team over the next 12-18 months, and we anticipate a record number of software releases as we expand the breadth and depth of our platform. Lastly, we are expanding our sales and customer success teams around the globe on both the publisher-focused and buyer-focused teams. In summary, our omni-channel and global platform drove significant share gains in a rapidly growing market. We were able to drive increased customer value through a combination of our infrastructure-driven approach to digital advertising, our usage-based software model, and aggressive investment in innovation. I'm incredibly proud of the entire team at PubMatic as we overachieved virtually every goal we set for ourselves in 2021, and we enter 2022 in a strong position with many growth opportunities in front of us. Let me now turn it over to our Chief Financial Officer, Steve Pantelick, to provide additional detail.
Thank you, Rajeev, and welcome everyone. The fourth quarter capped a superb year for PubMatic. In our first full year as a public company, we achieved a powerful combination of standout financial results and organic market share gains while investing significantly in the future of our business. As a result of our omni-channel platform, global scale, well-established usage-based model, and outstanding team, we've built a highly productive and resilient company. These factors set us up well for strong results in 2022 and beyond. In 2021, we delivered $227 million in revenue or year-over-year growth of 53%, almost double market growth. Looking at our fourth quarter, revenue was a record $76 million, an increase of 34% year-over-year. This achievement is particularly impressive considering last year's Q4 growth of 64%.
Excluding Q4 2020 political spend, Q4 2021 revenue was up 40%. For the 6th straight year, we delivered positive GAAP net income, which was $57 million, a company record. Adjusted EBITDA was $96 million or 42% margin, also both company records. In Q4, our revenue growth combined with the significant leverage embedded in our platform helped us achieve net income of $28 million or 37% net margin. Adjusted EBITDA was outstanding at $39 million or 51% margin, an increase of 44% over last year's Q4. Q4 revenue was strong across every region, format, and channel. EMEA in particular grew strongly with 55% year-over-year growth. Overall, we built a truly global business with Americas at 63% of full year 2021 revenue, EMEA at 28%, and APAC at 9%.
Ad spend on our platform is well diversified across more than 20 verticals. While we saw some headwinds related to Omicron in December, which dampened peak ad spending related to in-person activities such as food and drink, strength across other verticals more than compensated. For example, shopping grew 78% and technology grew 65%. The top 10 ad verticals in aggregate grew over 50% year-over-year. As was the case throughout 2021, we saw minimal impact from the elimination of Apple's IDFA as advertisers shifted ad dollars to other high ROI formats and channels on our platform. It is also worth noting with respect to Google's recent announcement of the deprecation of Android advertising ID in two years, we expect the impact to be negligible for the same reason. During Q4, more than 60,000 advertisers placed ads programmatically via our platform.
This scale, combined with our real-time bidded marketplace, delivers multiple bids per impression for our publisher's ad inventory, powering a robust, resilient platform. Revenues for our mobile and omnichannel video businesses grew 41% year-over-year and accounted for 67% of our total revenues in Q4. This growth was on top of the prior year's growth of more than 100%. Our CTV business, inclusive of OTT, grew more than 6x over last year's Q4. In the quarter, 167 publishers programmatically monetized CTV inventory, up from 154 publishers in Q3. Our total desktop business comprised of display and online video also performed well, with revenue up 26% year-over-year on top of the prior year's 28% growth.
Favorable mix trends contributed to higher overall CPMs on our platform for Q4 and the full year on a year-over-year basis, which is similar to what we saw in 2020. Revenues related to Yahoo, formerly Verizon Media, across all formats and channels grew more than 30% year- over- year and represented approximately 16% of our total revenues in the fourth quarter, down from 25% of revenue in Q4 2019. Supply path optimization relationships play an important role in terms of growth and revenue stickiness as advertisers and agencies expand usage of our platform. In Q4, we continued to sign new SPO deals, renew existing agreements, and grow ad spending via these deals. Our multi-year success with SPO supports further investment behind this opportunity, and we are building more tools to allow buyers to interact with us to find the right audiences and media on our platform.
Q4 SPO represented over 25% of total ad spending in the quarter. As SPO activity becomes a larger share of our overall spend, we anticipate trends will increasingly exhibit seasonal patterns. All else being equal, SPO share of total activity will generally be lowest in Q1 and then sequentially ramp up over the course of the year as agencies and advertisers execute their annual investment plans. Our land and expand strategy drove incremental impressions from existing publishers. In addition to our core platform offerings, products like OpenWrap, Identity Hub, and Audience Encore provide upsell opportunities. As we expand our product footprint, customers increasingly rely on us for more innovation. We plan to expand our investments into these market-leading products to further develop our data and monetization advantages. An important indicator of publisher satisfaction and usage of our platform is net dollar-based retention.
For full year 2021, this metric was outstanding at 149% compared to 122% for 2020. It will naturally normalize and come down from this level once Q2 2020 results are no longer in the comparison set. Our long-term strategy of owning and operating our infrastructure enables us to reduce our unit costs while improving customer outcomes. For the full year 2021, we processed over 90 trillion impressions, nearly double the prior year. Since Q1 2020, we've reduced our cost of revenue per million impressions processed by nearly 50%. Our ability to drive operational efficiencies has translated into significant competitive advantage to us, which it compounds over time.
To give you a sense of the magnitude of these savings, if our cost reduction had been 25% or half the rate that we actually achieved, our 2021 cost of revenue would have been $20 million higher. We've invested these savings into growth initiatives and increased our profit and cash flow. With the benefit of scale, increased usage of our platform, and our long-term focus on efficiency, we achieved a 78% gross margin in the fourth quarter and 74% for the full year. As has been the case historically, there will be some quarter-to-quarter variability of our gross margins due to the timing of investments and seasonal ad spend. We anticipate continuing our full-year gross margins well ahead of pre-pandemic levels. Moving on to operating expenses.
In support of our growth goals, we successfully increased our global team by 30% in 2021, with the vast majority of hires in technology and development. As a mission-driven company with an employee-centric culture, we added outstanding new team members despite the challenges presented by the pandemic. In Q4, the combination of increased headcount for growth, incremental public company costs, and stock-based compensation resulted in operating expenses of $31 million, up 36% year-over-year. Excluding stock-based compensation, Q4 operating expenses increased 27%. On a full-year basis, operating expenses increased 45% or $110 million. Excluding stock-based compensation, 2021's operating expenses were $96 million, up 33% year-over-year.
Rapid revenue growth, operational efficiencies, and ongoing benefits from investments in our business resulted in GAAP net income in the fourth quarter of $28 million and $57 million for the full year, more than double 2020's net income. Note, Q4 and full year 2021 included an unrealized gain on equity investments of approximately $5 million. Q4 and full year 2021 GAAP diluted EPS was $0.50 and $1.00, respectively. Non-GAAP net income, which adjusts for stock-based compensation, the unrealized gain on equity investments, and related income tax effects was $27 million in Q4 and $65 million for full year 2021. Non-GAAP diluted EPS for Q4 and full year 2021 was $0.48 and $1.14 respectively. With respect to our cash generation, we stand out as one of the few technology companies that have demonstrated that we can both grow and produce cash.
For the full year 2021, net cash provided by operating activities was $89 million, and free cash flow was $49 million. We achieved these exceptional results after funding significant investments for future growth, comprised of $40 million in CapEx in capitalized software development costs, and a 30% increase in our global team. We ended the year in a very strong cash and liquidity position with cash equivalents, and marketable securities of $160 million, an increase of approximately 60% from year-end 2020. We have no debt on our balance sheet. Turning to our outlook. As Rajeev outlined, we have numerous paths in 2022 to achieve our 25% revenue growth target while delivering strong profits and cash flow. Over the past two years, we have bolstered our financial strength and increased our market share.
In addition, the addressable market opportunity has grown due to permanent consumer behavior changes towards more online activity. These factors contribute to our growing confidence in our business. For the full year 2022, we expect revenue between $282 million and $286 million, representing 25% year-over-year growth at the midpoint. Based on the latest market growth projections, we also anticipate continued market share gains. For Q1 2022, we anticipate revenue to be in the range of $53 million-$55 million or 25% year-over-year growth at the midpoint. As a reminder, we had a very strong Q1 last year with 54% growth. On a two-year stack basis, this translates to 79% growth for the two-year period. Note, we are taking a slightly cautious stance on our guidance as the December Omicron overhang on selected ad verticals extended into early Q1.
Looking ahead, we are excited about the number and magnitude of growth opportunities in front of us. Accordingly, we are accelerating our investments in a number of areas. Our track record demonstrates that we are adept at identifying new investment areas and bringing them to fruition. At the top of our list is stepped-up investment in our innovation growth engine. Over the next 12-18 months, we plan on doubling our technology organization with the majority of new hires to be added in our India technology center. For a frame of reference, over the last two years, we increased our India headcount by 80% and have already seen a terrific return on investment from these efforts. We also plan to add key go-to-market team members across the globe to continue driving new product adoption and new market expansion.
Our EMEA and APAC businesses are growing rapidly and are still in the early days of their growth, and therefore warrant investment now for long-term market share gains. On a full year basis, we anticipate that operating expenses will increase at roughly a similar rate to the 2021 increase, with some quarter-to-quarter variability as the year progresses based on timing of hiring and investments. Included in our estimate of expense growth are incremental operating costs related to new offices we are adding, office reopenings, and significantly higher travel and entertainment expenses as our team reengages in person with customers around the globe. We estimate these incremental costs in the range of $6 million-$8 million for the full year. Overall, what is clear is that our business is emerging from the pandemic with structurally higher levels of profitability than prior to the pandemic.
We anticipate our full year gross margin to remain above its pre-pandemic level and our 2022 adjusted EBITDA margin to be nearly double its pre-pandemic level. Given our revenue guidance, our planned level of investment, and the incremental cost for reopening, we expect our full year adjusted EBITDA between $101 million and $106 million or approximately 36%-37% margin. In line with earlier comments on expense phasing and typical seasonal ad spending levels, we expect adjusted EBITDA in the first quarter between $14 million and $16 million or approximately 27%-29% margin. We anticipate CapEx to be in the range of $30 million-$33 million for the full year.
In 2022, the nature of our CapEx investments are changing from primarily capacity driven to an even mix of both capacity and capability driven investment so we can process more data, execute more private marketplace deals, process more CTV and online video transactions, and continue to lead the market with respect to supply path optimization. In terms of projected impressions processed, we anticipate an increase of more than 50% versus 2021. In closing, we are very proud of what we've accomplished in our first year as a public company, but we are even more excited about the opportunities ahead of us. The sell side of the digital advertising ecosystem is rapidly consolidating, as evidenced by the recent announcement that GroupM has selected us as a partner to support the supply chain of the future and their GroupM premium marketplace.
PubMatic is well-positioned to capitalize on these trends with our global omni-channel scale and our owned and operated infrastructure. Today, we are in outstanding financial shape with our business engine delivering both significant profit and cash flow. The critical building blocks of our business are all favorable. Net dollar-based retention, favorable channel mix, and CPM increases. We will use these strengths to capture numerous growth opportunities with our existing customers, new customers, new markets, and new products. We believe these factors together will help us drive market share gains in the years to come. With that, I will turn the call over to Stacie.
Thanks, Steve. While I take a minute to compile the queue, Rajeev has a few words he'd like to add.
Thank you, Stacie. These remarks were pre-recorded a few days ago. I would like to acknowledge the escalating war in Ukraine right now. We have employees, customers, and partners who have been personally impacted by the invasion or who have family and friends in Ukraine and Eastern Europe, and our hearts go out to them. While we are reporting our results today, our thoughts remain with those affected by these terrible events. I'll turn the call back over to you, Stacie.
Great. Thank you, Rajeev. We'll get going on Q&A. Our first question comes from Shweta Khajuria at Evercore. Go ahead, Shweta.
Okay. Thanks, Stacie. Let me try a couple questions, please. Rajeev, any comments on The Trade Desk's announcement around OpenPath and the potential impact that may have on PubMatic? And then for Steve, a couple questions for you, please. How should we think about cadence of top line growth through the year given your Q1 guidance? And then the follow-up to that would be, could you spell out what Omicron-related headwinds you saw? You called out CPG, I think, but any other verticals some of the others have called out, perhaps a couple other verticals like travel. Did you see anything around that, around that? Any color there would be great. Thank you.
Thanks, Shweta. Good to connect with you. On the first part of your question around The Trade Desk, we see puts and takes. They announced two things. One is that they are stopping buying via Google's open bidding, and we view this as an opportunity to gain share of spend as they move to more transparent and direct paths. We have a multi-integration approach with each publisher that we work with, and so we typically have multiple paths into each publisher, and so we anticipate we'll be able to shift existing TTD spend, and then grow, given that, you know, many SSPs don't have these direct integrations, have not invested in direct integrations with publishers.
The other part is their OpenPath announcement, which is a direct connection between Trade Desk and the publisher in situations where the publisher wants it and has their own technology for yield management. We view it as pretty limited in nature and frankly, likely competitive with the agencies as it disintermediates a key value proposition of the agency, which is buying scale and controlling the flow of ad spend. I think it's important to keep in mind that, you know, we have a pretty broad set of solutions for publishers, not only yield, but also our OpenWrap header bidding solution, Identity Hub, Audience Encore, etc . Unless publishers plan to build these solutions in-house, you know, which we know from experience is very challenging even for large publishers, given the expertise that's required, we think publishers will still need additional technology to power their inventory.
On your follow-up questions, Shweta, you know, a couple things. First, the performance that we had in fourth quarter obviously was really outstanding when you factor in there was growth of 34% on top of the prior year's quarter of 64%. The starting point is quite high. Typically, you know, what we see as a progression through the course of the year is due to timing of ad spending, the first quarter has a drop on a relative basis versus the fourth quarter. Looking back in time, that's anywhere from 20%-30% drop. We are actually guiding a little bit above average for our first quarter guidance.
Then in Q2, Q3, of course, recovery, as agencies and advertisers start to ramp up their investment plans. Q2 is typically around, let's call it 10-ish%, versus Q1. The same is the case with Q3. Clearly a big uptick, anywhere from 25%-40% in the fourth quarter. I see a return to some level of normalcy in 2022. We're, you know, obviously had significant growth, as others have called out. You know, last year we were, you know, well above the rule of 40, and our guidance continues, in fact, above the rule of 60 in 2022.
Now, on the point regarding the what I call the dampening effects for a couple of ad verticals that we saw in December, it was very much isolated to what I'll describe as in-person type activities. Food and drink was affected, health and fitness was affected, and a couple other you know areas that are in-person centric. Our other ad verticals, because we are an omnichannel platform, global scale, more than compensated for that. In total, the top 10 ad verticals grew over 50%. We're feeling really good that the platform we built and the focus on creating a robust omnichannel focus allows us to be resilient and to grow you know through these blips. The good news is we are feeling really good about the way the year is progressing.
Okay. Thanks, Rajeev. Thanks, Steve.
Thank you.
Great. Thank you. Our next question comes from Brent Thill at Jefferies. Please go ahead, Brent.
Good afternoon. Steve, just back on the comment for the quarter. You know, Q3, you beat by about 11%. You were inside your guidance range. It seemed just going back to the factors you just described were the primary reasons why you were kind of inside the range and didn't show upside. Is that? Or was there something else that we need to consider, as it relates to that?
No, very much it was isolated and really temporary from my perspective. When I look at sort of what happened October, November, very strong. December, a couple of those ad verticals, as I called out in the prior response, put a dampening effect. They still grew year-over-year. Typically, at the end of the year, you see very nice peaks. All else being equal, you know, the numbers would have been even higher. You know, when I compare our results versus others who have reported, I am feeling very good about our comparisons to the peer set. Almost across the board, we performed more strongly in the fourth quarter.
That's great. Thanks for the color. Rajeev, just on connected TV, maybe give us your 40,000-foot aspirations for the year. You know, how big could this be for the business? What's remaining kind of the pieces of the bridge that you're laying, if you will, to kinda get in place to where you wanna be? Thanks.
Yeah, look, we're really excited about our growth in CTV and how far we've come in a really short period of time. You know, as we mentioned, you know, we grew over 6x year-over-year in the fourth quarter. Grew the number of publishers to 167. I would say probably what I see happening is that the vision that we have, which is a bidded marketplace, whether it's private market transactions or it's open auction transactions, that bidded marketplace is resonating very strongly with agencies, advertisers, and publishers. The reason for that is pretty straightforward.
There's a huge amount of growth, obviously, in consumption, but there's also a lot of growth in both the number of advertisers that wanna participate in CTV, as well as the number of content producers or, you know, shows or channels showing up on the sell side. Really the only way to scale from linear TV, hundreds of channels to now thousands in CTV, maybe tens of thousands eventually, and then on the advertiser side, you know, hundreds of thousands of advertisers to tens of thousands to over a hundred thousand buyers, is to have a bidded marketplace. Our vision, we're finding, is unique in that regard. We're finding that, you know, more and more agencies and publishers are leaning into that vision.
I think a great example of that is the expansion of the supply path optimization deal that we announced with GroupM. We announced version one of that about a year ago of our GroupM relationship, and now they just announced last week that they'll be partnering with us closely to create a premium supply marketplace, primarily focused on CTV and online video. To the other part of your question, Brent, if I look at where we wanna be at the end of the year, we wanna continue to grow the number of publishers. We see a lot of runway there. We see a lot of opportunity to continue to bring more demand onto our platform. Again, whether it's in private marketplace, I think that would be the primary transaction method still through the end of this year. We do see signs of open auction transactions starting to grow as well.
Thank you.
Our next question comes from Justin Patterson at KeyBanc. Go ahead, Justin.
Great. Good afternoon. Thank you very much. Rajeev, could you talk more about the retail media opportunity? How much revenue do you have from that today, and what are the steps to add more partners? Steve, I was hoping you'd talk a little bit more about just what you've seen from Omicron so far. Obviously, we've seen some improvements in terms of just cases in recent weeks. I'm curious if you've seen any pickup as cases have started to dwindle. Thank you.
Hey, Justin. Let me start with the retail media question, and then I'll turn it over to Steve. Look, we're really excited. I'm really excited about the retail media opportunity. I think it's a long-term growth opportunity for us and really a natural extension of our platform. 2024-ish estimate is around $140 billion of ad spend within retail media, so you know, clearly a huge opportunity. I think we have a lot of assets that are in place, and we've been building a lot of capabilities around that. First of all, you know, we're close to the retailers. We work with dozens of retailers as publishers, like eBay and Gap. Then shopping, you know, Steve has talked about, is a top five advertiser vertical for us.
We know that retailers are increasingly looking to monetize on-site inventory and then leverage their valuable data to monetize inventory off-site. We have a lot of solutions to help them do this. For instance, our identity solution with Identity Hub, first-party data, with Audience Encore, our contextual targeting growth. We've got, of course, strong relationships with the largest advertisers and agencies. I think it's a very large market, and a natural opportunity for us to extend our platform to create more value across the ecosystem. In terms of revenue, you know, we're not breaking that out specifically. It's still quite early, but we're really focused on continuing to build out the capabilities, and bring more retail partners on the sell side and on the buy side to our platform. That's gonna be a key part of our engineering focus. You know, we talked about doubling the size of our engineering team over the next 12-18 months, investing in infrastructure and data processing capabilities. A lot of that is related to the retail media opportunity.
Hey, Justin. With respect to your question on Omicron, you know, we definitely have seen a decelerating impact through the quarter of this year, first quarter of this year. It's really a function of, you know, what everybody sees around them, you know. Everything's reopening, and there's much more of a level of comfort as we move into the endemic phase. I very much look at what occurred in December, early Q1 as temporary. You know, the proof point for us as a business, you know, were we able to grow through it, and we have. Of course, COVID has been incredibly unpredictable.
You know, I may be too much of an optimist, but right now, what we anticipate is more of a natural, endemic phase, and the normal strengths of our business will continue to drive us forward. You may recall, last earnings, we were one of the few companies, if any at all, who had gone out and said that, you know, based on our core fundamentals, net dollar retention, the fact that we have SPO deals that make our business stickier, led us to guide to 25% revenue growth. Couple months forward, we are still highly confident of doing that. Really speaks to sort of the business that we've created.
Of course, you know, the omni-channel nature, but the diversity of it and the fact that we have consistently invested throughout the pandemic, you know, in terms of people and capabilities, where many other companies took their foot off the pedal. When you factor all those elements in, we're feeling really good about where we are today, and we're gonna keep on accelerating our investment to deliver long-term growth.
Thank you.
Our next question comes from Matt Swanson, RBC. Go ahead, Matt.
Okay, perfect. Thank you guys for taking my questions. First one, I guess, for Steve. You know, we talked about this a lot, kind of the price volume equation, looking out to guidance. You obviously gave us some color on the volume being over 50%. When we're thinking about the price, maybe now we've got enough history to maybe look at some early SPO partners. Could you talk to us a little bit about how those partners are expanding? Obviously, Rajeev, you talked a lot about kind of the upsell portions, kind of how we can make those SPO partners, you know, more valuable on a dollar for dollar basis over time.
Yeah, Steve, you want me to start on the second part of that, and then, yeah, I'll turn it over to you. You know, look, we're continuing to sign new deals, and we're expanding existing ones, right? GroupM is a perfect example of that. I think we've got a lot of great momentum in SPO, and it's a key long-term growth driver. I think what we're seeing is that, you know, more and more of what advertisers and agencies want to do, they're finding that they can action through a sell-side platform, you know, through PubMatic.
You know, broadly speaking, I think the industry is looking to become more transparent and more efficient, and that's, you know, exactly what we are endeavoring to do, which is to build a digital advertising supply chain that works great for buyers and publishers that is both transparent and efficient. Whether buyers are looking to find the right consumer, verify the content that an ad may be placed next to, understanding how to value an ad impression, you know, a lot of that can best be accomplished with technology on the sell side, and that demonstrates the expanded value that our platform and our position in the market can create.
I think, you know, we're sitting at this interesting time, with due to the advent of header bidding, we've reached, you know, very significant scale in terms of the volume of impressions and reach of consumers we have on our platform. Also with cookies and other forms of anonymous targeting going away, a lot of that activation is moving to the sell side. This is, you know, technology we've been building for a number of years, and we're gonna continue to invest here. It's a key part of our roadmap and engineering expansion to continue to create value for buyers and thereby deliver on our mission and what we're trying to do for publishers. Let me turn it over to Steve for the other half of that.
Great. Well, Matt, the really important part of SPO, supply path optimization deals are ultimately when those grow and expand, it increases the utilization of our platform. When we process an impression over 90 trillion last year, we have to process that whether or not we actually monetize it. We do that because it's a strategic way for us to get competitive advantage, build our moat. We demonstrated over many years that we can do it efficiently and still deliver very high gross margin. When these SPO deals ramp, in effect, the utilization grows, and we don't have to necessarily increase our capacity as much because we've already created that capacity. Think of it as sort of a light switch going on. When GroupM decides that they're gonna be our partner of the supply chain of the future, this allows us to leverage the existing capacity that we already built. Net-net, the implications for our businesses are very positive as these deals ramp up.
If I'm allowed to count that as one question, Rajeev, when we talk about the 1% market share gain, can you give us just any color on kind of where you see that coming from? Then when we look to the 16%-17% gain that you talked about in the future, you know, where that comes from in terms of, you know, who currently owns that market share?
Sure. Yeah, we're, you know, really excited about that market share gain. You know, 1% in the span of a year is, I think, great progress. I think, you know, where we're capturing that market share, I think we're capturing it really from across the board. You know, as Steve mentioned, you know, when we look at other companies that have reported, and I think it's clear that we've been growing, you know, quite a bit faster than most, if not all of them, on an organic basis. Look, there's smaller point solution SSPs, they're single ad format or they're single geography. We're clearly taking market share from them, you know, given our omni-channel and global platform.
Supply path optimization is a key part of that, as well as our investment and focus on the high growth ad formats. I think we're also taking share from SSPs that are larger than us because of the level of profitability that we have in our business and our ability to invest in innovation and bringing new solutions to market. You know, our growth rate for our entire business, that's display, you know, mobile web, online video, CTV, that's larger than purely the CTV growth rate of you know, some of the larger SSPs that are out there. I think we're taking market share across the board.
The third thing I'd comment on is that the industry, you know, from our point of view, buyers and sellers are increasingly looking for independent solutions as opposed to walled gardens. You know, there's been a lot of antitrust, anti-competitive sentiment out there. There's been, you know, a lot of regulatory review. We find that both buyers and sellers of media believe that they can only get a fair and equitable results from an independent platform like ours. I think we're really taking share across the board. When I look forward, you know, to our long-term ambition of 20+ market share growth, I think it's gonna be more of the same. I think there's still some of the smaller sell-side platforms to be consolidated out of the ecosystem. I think we're gonna continue to see share gains from some of the bigger ones as well.
Thank you.
Our next question comes from Andrew Boone at JMP. Please go ahead, Andrew.
Hi, guys. Good afternoon, and thanks for taking my questions. This actually kind of piggybacks on the last question, but given the disclosures that came out around Google's Project Bernanke, can you actually talk about how advertisers and publishers responded to that? What did that mean for you guys? Is there any sort of, dare I say, crack in kind of Google's positioning? And then as we think about SPO, you know, I was looking at the Advertiser Perceptions report, and they were saying that the publishers still use an average of 5.4 SSPs. Like, where are we in that process, right? Like, is it still early days? Help us understand kind of where we are in terms of, you know, is it any one or any four or w here are we? Thanks so much.
Sure. Yeah. In terms of the first part of your question, you know, I think it was around Project Bernanke and the disclosure from the state attorney general's lawsuit against Google. You know, that's a perfect example. You know, that obviously made big news in the industry. A lot of buyers saw that, buyers meaning advertisers and agencies. A lot of publishers, of course, saw that. A common reaction for them is to say, you know, "I knew I was not getting a, you know, fair shake out of that walled garden, and now I have data points to substantiate that." Right?
Regardless, I think of what happens from a legal perspective, right, I mean, that case could take years to play out, and I think nobody knows, you know, how it will get decided. The sentiment and the feeling among our customer base and prospects is very clear, which is that they increasingly value independent technology providers, transparent technology providers, and people like us that are creating a more direct connection between the buyer and the seller. You see our ability to grow based on that, you know, through all of the things that we've been talking about, you know, growth in overall growth in our business, growth in supply path optimization, you know, growth with GroupM, for instance.
I think that sentiment creates, you know, a very significant tailwind and opportunity for us. Of course, we have to go, you know, execute against it and deliver for our customers. I think we're doing a great job of exactly that, and as evidenced by the market share gains. Now, in terms of the Advertiser Perceptions study, you know, I think an important thing to keep in mind as it relates to supply path optimization is that the incentive to consolidate is really on the buy side more so than the sell side.
I think publishers will continue to work with, you know, five, six, some cases more, sell-side platforms, as the technology, with header bidding and, you know, our wrapper solution, others in the market, makes it relatively easy, for the publisher to do exactly that. Where the consolidation is happening, though, is on the buy side, where buyers are consolidating down, to fewer and fewer sell-side platforms, because of their desire to have, you know, automation, efficiency, transparency, high quality inventory and, you know, all of the things that we've been talking about for quite a while with SPO.
I think the GroupM example is a great example of that, where you know they version 1 of SPO, it went from maybe dozens of SSPs down to a single-digit number or maybe a 12 or so. Now in their latest announcement with the premium supply product, they're partnering with 2 SSPs. I just think a further continuation of that consolidation that's happening across the ecosystem.
Thanks, Rajiv. Our next question comes from Jason Helfstein at Oppenheimer. Please go ahead, Jason.
Thanks. Rajeev, first I'll ask you just about the GroupM deal. From the press reports, it sounded like they used CTV as kind of a o ne of the grading factors and Magnite won the U.S. business. You won, I guess the international, you know, the EMEA business. Maybe just talk about, you know, in your roadmap, kind of what you're working on so that the next time one of these comes up, you also win the North American business. Second on Steve, you know, we saw gross margins down year-over-year in the fourth quarter off of what was a record level last year. Maybe just give us some perspective how you're thinking about gross margins for 2022. Clearly, you know, you guys are choosing to kind of focus more on internally developed features and acquisitions, which should, over time, get you more significant gross margin leverage. Maybe, like, help us think about that relative to, like, a long term, like, EBITDA to free cash flow conversion effects.
Yeah. Great. Hey, Jason. You know, on the first part of your question around CTV, you know, I think the U.S., and then I'd say broadly non-U.S., but let's use EMEA here. CTV markets are evolving, you know, in different ways and at kind of different paces or different speeds. CTV in the U.S. has obviously been going on now for a little while, but it's primarily insertion order based or IO driven. And that's really not the focus of our business or of our platform. Insertion orders are great, but you know, we think there's a different future in terms of where CTV will be a couple of years from now and where it will be biggest, and that's really what we're going after.
It takes a little bit more time, but we think ultimately it's gonna be the right way to build out, you know, a really large business. Our focus again is on that bid-based marketplace, private marketplace deals, Programmatic Guaranteed deals, and eventually open market transactions as well. What we're seeing is that, you know, that vision is coming to fruition. I think, you know, our competitor here in the U.S. does have a bigger CTV business, no doubt. A lot of that is, as we understand it, built on, I mean, sort of insertion order basis. We're excited to partner with GroupM in EMEA. We can see, you know, as I commented on earlier, we can see great signs of growth against our vision of a bidded CTV future.
Jason, with respect to gross margins, great question, and, you know, let me give you a quick sort of progression. You know, in the course of the pandemic, last year, you know, our gross margins in the fourth quarter were obviously outstanding at 80%. One of the things that, you know, we had concluded through the course of 2021 is that there is a risk of hardware chip shortages. We decided to pull forward investment into 2021, partly of what you're seeing in the Q4 margin down to 78%. Again, bear in mind, these are very high gross margins and, either, best of class or one of the best in terms of a usage-based model. We ended the year with 78% gross margin.
When I take a look at the impact of this acceleration, we added about, you know, 1.5 percentage points hit to that gross margin because of that acceleration. It's proven to be exactly the right decision because after we placed the purchase orders, we learned that many of the deliveries that had been made after us are six months delayed. We made it for strategic reasons, are very comfortable doing so. Now when I look ahead to the future, I'm very positive on our gross margin trends for several reasons. You know, number one, I commented on briefly, SPO is a long-term catalyst for increased margin. You know, as we expand these deals on our platform, the usage or the optimization of our platform grows, and that will definitely, you know, be a benefit to gross margin.
We are also 2/3 of our business is mobile and video. Video, very high CPMs, and that mix has been growing over time, so that will be a net positive to our gross margin. At the same time, as I mentioned, you know, we are taking a very strategic view in terms of capacity investments. It is a competitive moat because we can go out and we can process more impressions more cost effectively, so we're gonna continue to do that. When I look ahead to 2022, I'm very comfortable with sort of the trajectory of our gross margins. You know, let's call it in the low 70s% range, still well ahead of where we were in the pandemic. As a reminder, Q4 two years ago, our gross margin was 66%.
I'm feeling very good about the trajectory of gross margins. Of course, as we've talked about in the past, the leverage we get in our operating expenses. As you noted in our guidance, we have lifted our full-year guidance of EBITDA margins 36%-37%. That is a significant uptick based upon structurally, we are a stronger company, more scale, and we are very confident in our ability to now operate with growth at higher margin levels.
Great. Thank you, Steve. We are at the top of the hour. We have time for one more question. Andrew Marok from Raymond James, please go ahead.
Thanks for taking my question. One last one on the GroupM partnership. I guess to the extent that you can talk about it, how much of that engineering work is really kind of done bespoke for GroupM? And how much can be maybe lifted to other partners? And I guess, was there anything in terms of the relationship that you guys have with GroupM in particular that made them one of the first to take on one of these advanced level deals? And what might be some of the gating factors to expansion of those? Thank you. Yeah. Hey, Andrew. On the first part of your question, no, I'd say it's a combination of some custom capabilities, but also, you know, capabilities that could be applicable elsewhere.
I mean, part of what I think GroupM is trying to do is achieve, you know, some significant benefits for their clients when they buy through GroupM. We absolutely respect that and wanna help them achieve that. Their business model is a little bit different than other agencies. They have some unique things in terms of data assets, in terms of capabilities, in terms of how they serve clients, that are different from other agencies. Again, I would say it's a combination of, you know, some things that are custom to GroupM and some that are applicable to others. Keep in mind, this is part of the reason why we are expanding our engineering team to the extent that we are.
You know, as Steve mentioned, we plan to double engineering in the next 12-18 months. We think we have a proven, you know, really strong proven track record and ability to build products and innovate on behalf of our customers. We are actively looking for opportunities to build customer unique solutions for the largest, you know, either customers or prospects that are out there so that we can help them. Then Andrew, remind me, what was the second half of your question?
Just what made GroupM kind of unique as a leader in this kind of advanced form of partnership? What are some of the gating factors that might be in place to see more of these advanced partnerships with other agencies?
Yeah. Look, I think every agency is at a different place in their supply path optimization journey, right? You know, I commented earlier that I think the ecosystem generally is focused on more transparency, more efficiency, more direct paths to supply. Every agency, again, is in a different position in terms of you know, how they organize themselves, what are the capabilities that they're delivering to clients and how much they're engaging in you know, digital media activation and buying versus you know, in creative or in data science or in other areas. I think in the case of GroupM, you know, they were very early in supply path optimization initially, have seen many benefits from that and you know, wanted to take another step forward. I think that's just specific to their evolution in the industry, and we're excited to partner with them on that.
Great. Thank you, Rajeev. That concludes our question and answer session. Rajeev, I'm gonna hand it back to you for closing remarks.
Thank you, Stacie. Look, it's clear that our business and the opportunity is fundamentally different now as compared to prior to the pandemic. Our revenue is now double the pre-pandemic level, and our profitability is nearly double as well. The size of the opportunity is hundreds of billions of dollars larger as people rely on the internet for more of their day-to-day activities, content consumption and entertainment. We have delivered our 15th consecutive quarter of double the Rule of 40 metric with strong revenue growth and profitability, which affords us the ability to continue to be agile and invest in the incredible number of growth opportunities in front of us. Thank you all for your time today, and I look forward to seeing many of you at upcoming conferences.