/C O R R E C T I O N -- Direct Digital Holdings/
In the news release, Direct Digital Holdings Reports Fourth Quarter & Full-Year 2022 Financial Results, issued
Correction: Direct Digital Holdings Reports Fourth Quarter & Full-Year 2022 Financial Results
Full-Year 2022 Revenue Up
Fourth Quarter 2022 Revenue Up
Fourth Quarter 2022 Financial Highlights:
- Revenue was
$29.4 million $16.5 million 128% over the$12.9 million - Sell-side advertising segment revenue grew to
$22.3 million $15.6 million 231% growth over the$6.7 million - Buy-side advertising segment revenue grew to
$7.1 million $0.9 million 15% growth over the$6.2 million - Operating income was
$1.2 million $1.3 million - Net income was
$0.2 million $2.1 million - Adjusted EBITDA(1) was
$1.8 million $1.8 million
Fiscal Year 2022 Financial Highlights:
- Revenue in fiscal year 2022 was
$88.0 million $49.9 million 131% , over the$38.1 million - Sell-side advertising segment ended the year at
$58.7 million $46.7 million 389% growth over the$12.0 million - Buy-side advertising segment ended the year at
$29.3 million $3.2 million 12% growth over the$26.1 million - Operating income increased
$2.3 million 52% , to$6.7 million $4.4 million - Operating income for the buy-side and sell-side advertising segments combined totaled
$14.0 million $7.1 million 102% , compared to$6.9 million - Net income for 2022 was
$2.9 million $1.5 million - Adjusted EBITDA(1) for 2022 was
$8.8 million $6.4 million - Cash and accounts receivable balances as of
December 31, 2022 were$29.1 million $12.6 million December 31, 2021 .
As previously disclosed, on
Based on our expectations of cash flows from operations and the available cash held, we believe that we will have sufficient cash resources to finance our operations and service any debt obligations until at least the end of fiscal year 2023.
Business Highlights
- For the fourth quarter ended
December 31, 2022 ,Direct Digital Holdings processed approximately 132 billion monthly impressions through its sell-side advertising segment, an increase of81% over the same period of 2021, with over 833 billion bid requests for the quarter. - In addition, the Company's sell-side advertising platforms received over 17 billion bid responses in the fourth quarter of 2022, an increase of over
25% over the same period in 2021, through 170,000 buyers for the quarter, which equates to a109% increase over the same period in 2021. - The Company's buy-side advertising segment served approximately 218 customers in the fourth quarter of 2022, an increase of
7% compared to the same period of 2021.
Financial Outlook
Assuming the
- For fiscal year 2023, we expect revenue to be in the range of
$118 million $122 million 36% year-over-year growth at the mid-point.
"As we enter into our second year as a public company, we remain disciplined in our strategic organic growth initiatives, continue to focus on increasing EBITDA and aim to provide maximum value for our shareholders," commented
Conference Call and Webcast Details
Footnote
(1) "Adjusted EBITDA" is a non-GAAP financial measure. The section titled "Non-GAAP Financial Measures" below describes our usage of non-GAAP financial measures and provides reconciliations between historical GAAP and non-GAAP information contained in this press release. |
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and which are subject to certain risks, trends and uncertainties.
As used below, "we," "us," and "our" refer to the Company. We use words such as "could," "would," "may," "might," "will," "expect," "likely," "believe," "continue," "anticipate," "estimate," "intend," "plan," "project" and other similar expressions to identify forward-looking statements, but not all forward-looking statements include these words. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements.
All of our forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Our forward-looking statements are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance expressed in or implied by the forward-looking statements, including, but not limited to: our dependence on the overall demand for advertising, which could be influenced by economic downturns; any slow-down or unanticipated development in the market for programmatic advertising campaigns; the effects of health epidemics; operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems; any significant inadvertent disclosure or breach of confidential and/or personal information we hold, or of the security of our or our customers', suppliers' or other partners' computer systems; any unavailability or non-performance of the non-proprietary technology, software, products and services that we use; unfavorable publicity and negative public perception about our industry, particularly concerns regarding data privacy and security relating to our industry's technology and practices, and any perceived failure to comply with laws and industry self-regulation; restrictions on the use of third-party "cookies," mobile device IDs or other tracking technologies, which could diminish our platform's effectiveness; any inability to compete in our intensely competitive market; any significant fluctuations caused by our high customer concentration; our limited operating history, which could result in our past results not being indicative of future operating performance; any violation of legal and regulatory requirements or any misconduct by our employees, subcontractors, agents or business partners; any strain on our resources, diversion of our management's attention or impact on our ability to attract and retain qualified board members as a result of being a public company; our dependence, as a holding company, of receiving distributions from
About
CONSOLIDATED BALANCE SHEETS | ||||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 4,047,453 | $ | 4,684,431 | ||||
Accounts receivable, net | 25,034,728 | 7,871,181 | ||||||
Prepaid expenses and other current assets | 883,322 | 1,225,447 | ||||||
Total current assets | 29,965,503 | 13,781,059 | ||||||
Property, equipment and software, net | 673,218 | - | ||||||
6,519,636 | 6,519,636 | |||||||
Intangible assets, net | 13,637,759 | 15,591,578 | ||||||
Deferred tax asset, net | 5,164,776 | - | ||||||
Deferred financing costs, net | - | 96,152 | ||||||
Operating lease right-of-use assets | 798,774 | - | ||||||
Other long-term assets | 46,987 | 11,508 | ||||||
Total assets | $ | 56,806,653 | $ | 35,999,933 | ||||
LIABILITIES AND MEMBERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 17,695,404 | $ | 6,710,015 | ||||
Accrued liabilities | 4,777,764 | 1,044,907 | ||||||
Notes payable, current portion | 655,000 | 550,000 | ||||||
Operating lease liability, current portion | 91,989 | - | ||||||
Deferred revenues | 546,710 | 1,348,093 | ||||||
Related party payables | 1,003,841 | 70,801 | ||||||
Income taxes payable | 102,278 | - | ||||||
Current portion of liability related to tax receivable agreement | 182,571 | - | ||||||
Total current liabilities | 25,055,557 | 9,723,816 | ||||||
Notes payable, net of short-term portion and | 22,913,589 | 19,358,268 | ||||||
Liability related to tax receivable agreement, net of current portion | 4,149,619 | - | ||||||
Operating lease liabilities, net of current portion | 745,340 | - | ||||||
Mandatorily redeemable non-participating preferred units | - | 6,455,562 | ||||||
Line of credit | - | 400,000 | ||||||
Paycheck Protection Program loan | - | 287,143 | ||||||
Economic Injury Disaster Loan | 150,000 | 150,000 | ||||||
Total liabilities | 53,014,105 | 36,374,789 | ||||||
MEMBERS' EQUITY (DEFICIT) | ||||||||
Units, 1,000,000 units authorized at | - | 4,294,241 | ||||||
Class A common stock, authorized, 3,252,764 shares issued and outstanding as of | 3,253 | - | ||||||
Class B common stock, 11,278,000 shares issued and outstanding as of | 11,278 | - | ||||||
Additional paid-in capital | 8,224,012 | - | ||||||
Accumulated deficit | (4,445,995) | (4,669,097) | ||||||
Total members' equity (deficit) | 3,792,548 | (374,856) | ||||||
Total liabilities and members' equity (deficit) | $ | 56,806,653 | $ | 35,999,933 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues | ||||||||||||||||
Buy-side advertising | $ | 7,065,731 | $ | 6,152,552 | $ | 29,348,775 | $ | 26,127,787 | ||||||||
Sell-side advertising | 22,357,596 | 6,747,940 | 58,691,572 | 12,009,075 | ||||||||||||
Total revenues | 29,423,327 | 12,900,492 | 88,040,347 | 38,136,862 | ||||||||||||
Cost of revenues | ||||||||||||||||
Buy-side advertising | 2,743,560 | 2,446,568 | 10,438,547 | 9,927,295 | ||||||||||||
Sell-side advertising | 19,254,440 | 5,431,686 | 49,599,110 | 9,780,442 | ||||||||||||
Total cost of revenues | 21,998,000 | 7,878,254 | 60,037,657 | 19,707,737 | ||||||||||||
Gross profit | 7,425,327 | 5,022,238 | 28,002,690 | 18,429,125 | ||||||||||||
Operating expenses | ||||||||||||||||
Compensation, taxes and benefits | 4,228,620 | 2,387,488 | 14,124,266 | 8,519,418 | ||||||||||||
General and administrative | 2,030,996 | 1,310,878 | 7,218,871 | 5,525,107 | ||||||||||||
Total operating expenses | 6,259,616 | 3,698,366 | 21,343,137 | 14,044,525 | ||||||||||||
Income from operations | 1,165,711 | 1,323,872 | 6,659,553 | 4,384,600 | ||||||||||||
Other (expense) income | (960,532) | (3,446,022) | (3,485,739) | (5,828,171) | ||||||||||||
Tax expense | 39,324 | 8,648 | 254,436 | 63,526 | ||||||||||||
Net income (loss) | $ | 165,855 | $ | (2,130,798) | $ | 2,919,378 | $ | (1,507,097) | ||||||||
Net income (loss) per common unit: | ||||||||||||||||
Basic | $ | .01 | $ | (62.34) | $ | 0.23 | $ | (44.09) | ||||||||
Diluted | $ | .01 | $ | (62.34) | $ | 0.23 | $ | (44.09) | ||||||||
Weighted-average common units outstanding: | ||||||||||||||||
Basic | 14,538,409 | 34,182 | 12,637,551 | 34,182 | ||||||||||||
Diluted | 14,567,669 | 34,182 | 12,637,551 | 34,182 | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
2022 | 2021 | |||||||
Cash Flows Provided By (Used In) Operating Activities: | ||||||||
Net income (loss) | $ | 2,919,378 | $ | (1,507,097) | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) | ||||||||
Amortization of deferred financing costs | 598,018 | 356,442 | ||||||
Amortization of intangible assets | 1,953,818 | 1,953,818 | ||||||
Loss on early extinguishment of debt | - | 2,663,148 | ||||||
Amortization of right-of-use asset | 136,706 | - | ||||||
Amortization of capitalized software | 31,769 | - | ||||||
Depreciation of property and equipment | 2,449 | - | ||||||
Stock-based compensation | 153,778 | - | ||||||
Deferred income taxes | 105,433 | - | ||||||
Payment on tax receivable agreement | (114,538) | - | ||||||
Forgiveness of Paycheck Protection Program loan | (287,143) | (10,000) | ||||||
Paid-in-kind interest | - | 269,260 | ||||||
Gain from revaluation and settlement of earnout liability | - | (31,443) | ||||||
Loss on redemption of non-participating preferred units | 590,689 | 41,622 | ||||||
Bad debt expense | 16,664 | 91,048 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (17,180,211) | (3,282,853) | ||||||
Prepaid expenses and other current assets | 306,649 | (1,005,159) | ||||||
Accounts payable | 10,965,910 | 3,446,689 | ||||||
Accrued liabilities | 2,797,355 | (273,735) | ||||||
Income taxes payable | 102,278 | - | ||||||
Operating lease liability | (98,151) | - | ||||||
Deferred revenues | (801,383) | 1,039,411 | ||||||
Related party payable | (70,801) | - | ||||||
Net cash provided by operating activities | 2,128,667 | 3,751,151 | ||||||
Cash Flows Used In Investing Activities: | ||||||||
Cash paid for capitalized software and property and equipment | (687,957) | - | ||||||
Net cash used in investing activities | (687,957) | - | ||||||
Cash Flows Provided By (Used In) Financing Activities: | ||||||||
Proceeds from note payable | 4,260,000 | 22,000,000 | ||||||
Payments of notes payable | (576,250) | (15,672,912) | ||||||
Payments of litigation settlement | (64,500) | - | ||||||
Proceeds from lines of credit | - | 400,000 | ||||||
Payments on lines of credit | (400,000) | (407,051) | ||||||
Payment of deferred financing costs | (525,295) | (2,190,874) | ||||||
Proceeds from Paycheck Protection Program loan | - | 287,143 | ||||||
Proceeds from Issuance of Class A common stock, net of transaction costs | 11,167,043 | - | ||||||
Redemption of common units | (7,200,000) | - | ||||||
Redemption of non-participating preferred units | (7,046,251) | (3,500,000) | ||||||
Payments on seller notes and earnouts payable | - | (358,975) | ||||||
Distributions to members | (1,692,435) | (1,236,049) | ||||||
Net cash used in financing activities | (2,077,688) | (678,718) | ||||||
Net (decrease) increase in cash and cash equivalents | (636,978) | 3,072,433 | ||||||
Cash and cash equivalents, beginning of the period | 4,684,431 | 1,611,998 | ||||||
Cash and cash equivalents, end of the year | $ | 4,047,453 | $ | 4,684,431 | ||||
NON-GAAP FINANCIAL MEASURES
In addition to our results determined in accordance with
In addition to operating income and net income, we use Adjusted EBITDA as a measure of operational efficiency. We believe that this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons:
- Adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance without regard to items such as depreciation and amortization, interest expense, provision for income taxes, and certain one-time items such as acquisition transaction costs and gains from settlements or loan forgiveness that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;
- Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of operating performance and the effectiveness of our business strategies and in communications with our board of directors concerning our financial performance; and
- Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Our use of this non-GAAP financial measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. The following table presents a reconciliation of Adjusted EBITDA to net income (loss) for each of the periods presented:
NON-GAAP FINANCIAL METRICS | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income (loss) | $ | 165,855 | $ | (2,130,798) | $ | 2,919,378 | $ | (1,507,097) | ||||||||
Add back (deduct): | ||||||||||||||||
Amortization of intangible assets | 488,454 | 488,454 | 1,953,818 | 1,953,818 | ||||||||||||
Depreciation and amortization of property and | 34,218 | - | 34,218 | - | ||||||||||||
Stock compensation expense | 68,340 | - | 153,780 | - | ||||||||||||
Loss on early extinguishment of debt | - | 2,663,148 | - | 2,663,148 | ||||||||||||
Interest expense | 960,969 | 751,463 | 3,230,612 | 3,184,029 | ||||||||||||
Forgiveness of Paycheck Protection Program | - | - | (287,143) | (10,000) | ||||||||||||
Tax expense | 39,324 | 8,648 | 254,436 | 63,526 | ||||||||||||
Gain from revaluation and settlement of seller notes and earnout liability | - | - | - | (31,443) | ||||||||||||
Loss on early redemption of non-participating Preferred units | - | 41,622 | 590,689 | 41,622 | ||||||||||||
Adjusted EBITDA | $ | 1,757,160 | $ | 1,822,537 | $ | 8,849,788 | $ | 6,357,603 | ||||||||
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