Direct Digital Holdings Reports Q3 2024 Financial Results
Direct Digital Holdings (DRCT) reported Q3 2024 financial results, with revenue declining 85% to $9.1 million compared to $59.5 million in Q3 2023. The company faced significant challenges due to a defamatory disinformation campaign that led to business disruptions and a major customer temporarily pausing its connection with Colossus SSP. The sell-side segment revenue fell 96% to $2.2 million, while buy-side revenue decreased 12% to $6.9 million. The company secured a $20 million Equity Reserve Facility and launched Colossus Connections to accelerate direct integrations with demand-side platforms. DRCT provided FY2024 revenue guidance of $60-70 million and FY2025 guidance of $90-110 million.
Direct Digital Holdings (DRCT) ha riportato i risultati finanziari del terzo trimestre del 2024, con un fatturato in calo dell'85% a 9,1 milioni di dollari rispetto ai 59,5 milioni di dollari del terzo trimestre del 2023. L'azienda ha affrontato sfide significative a causa di una campagna di disinformazione diffamatoria che ha portato a interruzioni commerciali e a un importante cliente che ha temporaneamente sospeso la sua connessione con Colossus SSP. I ricavi del segmento sell-side sono diminuiti del 96% a 2,2 milioni di dollari, mentre i ricavi del segmento buy-side sono scesi del 12% a 6,9 milioni di dollari. L'azienda ha ottenuto un'equity reserve facility di 20 milioni di dollari e ha lanciato Colossus Connections per accelerare le integrazioni dirette con le piattaforme side-demand. DRCT ha fornito una previsione di fatturato per l'anno fiscale 2024 di 60-70 milioni di dollari e una previsione per l'anno fiscale 2025 di 90-110 milioni di dollari.
Direct Digital Holdings (DRCT) publicó los resultados financieros del tercer trimestre de 2024, con un ingreso que disminuyó un 85% a 9,1 millones de dólares en comparación con 59,5 millones de dólares en el tercer trimestre de 2023. La compañía enfrentó desafíos significativos debido a una campaña de desinformación difamatoria que provocó interrupciones en los negocios y a un cliente importante que pausó temporalmente su conexión con Colossus SSP. Los ingresos del segmento de venta cayeron un 96% a 2,2 millones de dólares, mientras que los ingresos del segmento de compra disminuyeron un 12% a 6,9 millones de dólares. La compañía aseguró una Línea de Reserva de Capital de 20 millones de dólares y lanzó Colossus Connections para acelerar las integraciones directas con plataformas del lado de la demanda. DRCT proporcionó una guía de ingresos para el año fiscal 2024 de 60-70 millones de dólares y una guía para el año fiscal 2025 de 90-110 millones de dólares.
Direct Digital Holdings (DRCT)는 2024년 3분기 재무 결과를 발표했으며, 수익은 2023년 3분기의 5,950만 달러에 비해 85% 감소한 910만 달러로 보고되었습니다. 이 회사는 비방적인 허위 정보 캠페인으로 인해 상당한 도전에 직면하여 사업 중단이 발생했고, 주요 고객이 Colossus SSP와의 연결을 일시적으로 중단했습니다. 판매 측 수익은 96% 감소하여 220만 달러가 되었고, 구매 측 수익은 12% 감소한 690만 달러에 이르렀습니다. 회사는 2천만 달러의 주식 유보 자금을 확보하고, 수요 측 플랫폼과의 직접 통합을 가속화하기 위해 Colossus Connections를 출시했습니다. DRCT는 2024 회계연도 수익 가이던스를 6천만~7천만 달러, 2025 회계연도 가이던스를 9천만~11억 달러로 제공했습니다.
Direct Digital Holdings (DRCT) a publié les résultats financiers du troisième trimestre 2024, avec un chiffre d'affaires en baisse de 85% à 9,1 millions de dollars par rapport à 59,5 millions de dollars au troisième trimestre 2023. L'entreprise a rencontré des défis importants en raison d'une campagne de désinformation diffamatoire qui a entraîné des perturbations commerciales et un client majeur a temporairement suspendu sa connexion avec Colossus SSP. Les revenus du segment sell-side ont chuté de 96% à 2,2 millions de dollars, tandis que les revenus du segment buy-side ont diminué de 12% à 6,9 millions de dollars. L'entreprise a sécurisé un prêt d'équité de 20 millions de dollars et a lancé Colossus Connections pour accélérer les intégrations directes avec les plateformes côté demande. DRCT a fourni des prévisions de revenus pour l'exercice 2024 de 60 à 70 millions de dollars et des prévisions pour l'exercice 2025 de 90 à 110 millions de dollars.
Direct Digital Holdings (DRCT) hat die finanziellen Ergebnisse für das 3. Quartal 2024 veröffentlicht, mit einem Rückgang des Umsatzes um 85% auf 9,1 Millionen USD im Vergleich zu 59,5 Millionen USD im 3. Quartal 2023. Das Unternehmen stand vor erheblichen Herausforderungen aufgrund einer diffamierenden Desinformationskampagne, die zu Geschäftsunterbrechungen führte und einen wichtigen Kunden dazu bewog, seine Verbindung zu Colossus SSP vorübergehend auszusetzen. Der Umsatz im Sell-Side-Segment fiel um 96% auf 2,2 Millionen USD, während der Umsatz im Buy-Side-Segment um 12% auf 6,9 Millionen USD sank. Das Unternehmen sicherte sich eine Eigenkapitalreserve von 20 Millionen USD und startete Colossus Connections, um direkte Integrationen mit Demand-Side-Plattformen zu beschleunigen. DRCT gab eine Umsatzprognose für das Geschäftsjahr 2024 von 60-70 Millionen USD und für das Geschäftsjahr 2025 von 90-110 Millionen USD ab.
- Secured $20 million Equity Reserve Facility for financial flexibility
- Major paused customer has restored connection with platform
- Gross profit margin improved to 39% from 20% YoY
- Launched Colossus Connections initiative with two leading demand-side partners
- Revenue declined 85% YoY to $9.1 million
- Sell-side advertising revenue dropped 96% to $2.2 million
- Operating loss of $3.7 million vs income of $4.5 million in Q3 2023
- Net loss of $6.4 million vs net income of $3.4 million YoY
- Cash position decreased to $4.1 million from $5.1 million in December 2023
Insights
The Q3 2024 results reveal significant challenges for Direct Digital Holdings, with revenue plummeting
The secured
While gross margins improved to
The company's strategic pivot with Colossus Connections and direct demand-side platform integrations represents a important adaptation to rebuild market trust. The focus on underrepresented publishers and new product development in carbon, attention and media quality metrics aligns with current industry trends and advertiser demands.
The unification of buy-side operations and emphasis on small/mid-sized clients could help stabilize revenues, as this market segment increasingly shifts to digital advertising. However, the competitive adtech landscape and lingering effects of reputational damage pose significant challenges to market share recovery.
Company Launches Colossus Connections to Accelerate Direct Integration Efforts with Leading Demand-Side Platforms
New Unified Buy-Side Operating Structure Creates Additional Business Lines and Revenue Opportunities
Company to Host Conference Call at 5:00 PM ET Today
Mark D. Walker, Chairman and Chief Executive Officer, commented, "The past few quarters have presented significant challenges for our company due to a targeted and defamatory disinformation campaign. We describe this as disinformation not only because it contained factual inaccuracies, but also because it omitted key insights and context that would have clarified our business practices. As a result, Direct Digital Holdings experienced an unexpected business disruption among our partners, advertisers, and clients, including a major customer who paused its connection with our supply-side platform, Colossus SSP, which led to a temporary reduction in our revenues."
Walker continued, "We moved swiftly to address these claims, working closely with all of our partners to ensure they understood the truth of our practices and taking legal action against the author of the defamatory claims. Our paused customer has since restored its connection, with volumes through our sell-side platform steadily increasing, though not yet fully returned to previous levels. Throughout this, we have been working diligently with our multi-national HoldCo agencies, our Fortune 500 brand partners, and demand-side partners, to resume business, which many already have. While we are confident we will return the Company to normalcy, it will take time to rebuild. We are grateful for the resiliency and focus of our employees as they work to position us to rebound from these challenges."
Revenues for the third quarter of 2024 were
Keith Smith, President, commented, "Our recently announced
Walker added, "Over these past few months, we have innovated and optimized our business and are now in a position of strength, well-situated to capitalize on several of our key growth initiatives. Direct Digital Holdings' technology platform, diversified client base, optimized cost structure and new financing sources allow us to expand into new industry verticals, accelerate our direct integrations with leading demand-side platforms, advance our technological capabilities across our business and maintain our commitment to bringing underrepresented publishers into the programmatic ecosystem."
Advancing Innovation for Colossus SSP
The Company expects to make investments to drive technological advancements for Direct Digital Holdings' supply-side platform, Colossus SSP, including the launch of Colossus Connections, an aggressive initiative the Company is already executing to accelerate direct integrations with leading demand platforms. This initiative will aim to unlock direct access to more demand partners and revenue, while optimizing transaction costs and efficiency for Colossus SSP and its clients. As a result of Colossus Connections, the Company has already signed two of the leading demand-side partners, with those direct connections expected to go live in 2025.
Additionally, for Colossus SSP, the Company is developing new curation and segment-based products in areas such as carbon, attention, and media quality, which are in high-demand among advertisers. The Company is also expanding efforts to bring underrepresented publishers and creators into the programmatic ecosystem, with their unique and premium inventory available through Colossus SSP.
Enhancing Growth on the Demand Side
On the demand-side, the Company expects that funding will support the recently announced unification of Direct Digital Holdings' buy-side divisions, Orange 142 and Huddled Masses. This will enable the delivery of new capabilities, particularly in helping clients navigate emerging technologies, such as artificial intelligence and machine learning, as well as emerging, high-growth channels such as marketing-enabled services, connected TV, social media and retail media. Small- and mid-sized clients will be a key focus for the combined entity, as these clients are increasingly shifting advertising budgets to digital and require support to navigate its complexities and optimize their ad spend. Currently, the Company serves hundreds of small- and mid-sized clients, enabling over 2,000 campaigns each year.
Third Quarter 2024 Financial Highlights:
- For the third quarter of 2024, revenue was
$9.1 million $50.4 million 85% decline compared to the$59.5 million - Sell-side advertising segment revenue fell to
$2.2 million $51.6 million 96% decrease year-over-year. As described above, the key driver for this reduction was the suspension by one of our large customers following the defamatory article against the Company, and this customer has since restored its connection. - Buy-side advertising segment revenue fell to
$6.9 million $7.9 million 12% year-over-year decline.
- Sell-side advertising segment revenue fell to
- Gross profit was
$3.5 million 39% of revenue, in the third quarter of 2024 compared to$11.8 million 20% of revenue, in the same period of 2023. - Operating expenses were
$7.2 million $0.1 million 1% , over$7.3 million - Consolidated operating loss was
$3.7 million $4.5 million $8.2 million 181% . - Net loss was
$6.4 million $3.4 million - Adjusted EBITDA(1) was a loss of
$2.9 million $5.4 million - As of September 30, 2024, the Company held cash and cash equivalents of
$4.1 million $5.1 million
(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. |
Financial Outlook
Assuming the
Diana Diaz, Chief Financial Officer, stated, "As we move forward, we are pleased to return to a normal cadence of reporting our financial results which will provide our investors with the timely and accurate information they deserve. We're committed to delivering sustainable growth for our investors while offering our partners industry-leading marketing and advertising capabilities."
Smith added, "While Direct Digital Holdings is working to overcome these recent challenges, defamatory disinformation attacks go far beyond the advertising technology industry, distorting public perception, manipulating stock prices, often to the disadvantage of everyday investors, and stifling innovation. The weaponization of disinformation is posing a profound risk to small and up-and-coming businesses such as ours, and calls for a deeper dive into this pernicious and increasingly ubiquitous issue and an appropriate systemic response."
Conference Call and Webcast Details
Direct Digital will host a conference call on Tuesday, November 12, 2024 at 5:00 p.m. Eastern Time to discuss the Company's third quarter 2024 financial results. The live webcast and replay can be accessed at https://ir.directdigitalholdings.com/. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. For those who cannot access the webcast, a replay will be available at https://ir.directdigitalholdings.com/ for a period of twelve months.
Cautionary Note Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws that are subject to certain risks, trends and uncertainties. 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 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. Accordingly, any such statements are qualified in their entirety by reference to the information described under the caption "Risk Factors" and elsewhere in our most recent Annual Report on Form 10 K (the "Form 10-K") and subsequent periodic and or current reports filed with the Securities and Exchange Commission (the "SEC").
The forward-looking statements contained in this press release 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. As you read and consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions.
Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that 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. We believe these factors include, but are not limited to, the following: conditions to our ability to sell Class A common stock under our equity reserve facility; the restrictions and covenants imposed upon us by our credit facilities; the substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing; our ability to secure additional financing to meet our capital needs; our ineligibility to file short-form registration statements on Form S-3, which may impair our ability to raise capital; our failure to satisfy applicable listing standards of the Nasdaq Capital Market resulting in a potential delisting of our common stock; failure to remedy any listing deficiencies noted in the deficiency letters from the Listing Qualifications Department of The Nasdaq Stock Market LLC; the risk that the Listing Qualifications Department of The Nasdaq Stock Market LLC does not accept the Company's plan to regain compliance with applicable rules to maintain its listing on The Nasdaq Capital Market; costs, risks and uncertainties related to the restatement of certain prior period financial statements; any significant fluctuations caused by our high customer concentration; risks related to non-payment by our clients; reputational and other harms caused by our failure to detect advertising fraud; 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; restrictions on the use of third-party "cookies," mobile device IDs or other tracking technologies, which could diminish our platform's effectiveness; 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; our failure to manage our growth effectively; the difficulty in identifying and integrating any future acquisitions or strategic investments; any changes or developments in legislative, judicial, regulatory or cultural environments related to information collection, use and processing; challenges related to our buy-side clients that are destination marketing organizations and that operate as public/private partnerships; any strain on our resources or diversion of our management's attention as a result of being a public company; the intense competition of the digital advertising industry and our ability to effectively compete against current and future competitors; 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; as a holding company, we depend on distributions from Direct Digital Holdings, LLC ("DDH LLC") to pay our taxes, expenses (including payments under the Tax Receivable Agreement) and any amount of any dividends we may pay to the holders of our common stock; the fact that DDH LLC is controlled by DDM, whose interest may differ from those of our public stockholders; any failure by us to maintain or implement effective internal controls or to detect fraud; and other factors and assumptions discussed in our Form 10-K and subsequent periodic and current reports we may file with the SEC.
Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove to be incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this press release to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. New factors that could cause our business not to develop as we expect emerge from time to time, and it is not possible for us to predict all of them. Further, we cannot assess the impact of each currently known or new factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
About Direct Digital Holdings
Direct Digital Holdings (Nasdaq: DRCT) brings state-of-the-art sell- and buy-side advertising platforms together under one umbrella company. Direct Digital Holdings' sell-side platform, Colossus SSP, offers advertisers of all sizes extensive reach within the general market and multicultural media properties. The Company's buy-side platform, Orange 142, delivers significant ROI for middle-market advertisers by providing data-optimized programmatic solutions at scale for businesses in sectors that range from energy to healthcare to travel to financial services. Combined, Direct Digital Holdings' sell- and buy-side solutions generate billions of impressions per month across display, CTV, in-app and other media channels.
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
September 30, 2024 | December 31, 2023 | ||
ASSETS | |||
CURRENT ASSETS | |||
Cash and cash equivalents | $ 4,087 | $ 5,116 | |
Accounts receivable, net of provision for credit losses of | 6,287 | 37,207 | |
Prepaid expenses and other current assets | 1,112 | 759 | |
Total current assets | 11,486 | 43,082 | |
Property, equipment and software, net | 409 | 599 | |
Goodwill | 6,520 | 6,520 | |
Intangible assets, net | 10,219 | 11,684 | |
Deferred tax asset, net | — | 6,132 | |
Operating lease right-of-use assets | 873 | 788 | |
Related party receivable | 1,737 | 1,737 | |
Other long-term assets | 47 | 130 | |
Total assets | $ 31,291 | $ 70,672 | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
CURRENT LIABILITIES | |||
Accounts payable | $ 6,452 | $ 33,926 | |
Accrued liabilities | 881 | 3,816 | |
Liability related to tax receivable agreement, current portion | 41 | 41 | |
Current maturities of long-term debt | 36,667 | 1,478 | |
Deferred revenues | 976 | 381 | |
Operating lease liabilities, current portion | 183 | 126 | |
Income taxes payable | 99 | 34 | |
Total current liabilities | 45,299 | 39,802 | |
Long-term debt, net of current portion | 150 | 28,578 | |
Liability related to tax receivable agreement, net of current portion | — | 5,201 | |
Operating lease liabilities, net of current portion | 832 | 773 | |
Total liabilities | 46,281 | 74,354 | |
COMMITMENTS AND CONTINGENCIES | |||
STOCKHOLDERS' EQUITY | |||
Class A Common Stock, | 4 | 3 | |
Class B Common Stock, | 11 | 11 | |
Additional paid-in capital | 3,481 | 3,067 | |
Accumulated deficit | (6,593) | (2,538) | |
Noncontrolling interest | (11,893) | (4,225) | |
Total stockholders' deficit | (14,990) | (3,682) | |
Total liabilities and stockholders' deficit | $ 31,291 | $ 70,672 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Three Months Ended | Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenues | |||||||
Sell-side advertising | $ 2,202 | $ 51,622 | $ 33,001 | $ 89,006 | |||
Buy-side advertising | 6,873 | 7,850 | 20,204 | 27,093 | |||
Total revenues | 9,075 | 59,472 | 53,205 | 116,099 | |||
Cost of revenues | |||||||
Sell-side advertising | 2,654 | 44,606 | 30,670 | 77,190 | |||
Buy-side advertising | 2,907 | 3,113 | 8,091 | 10,650 | |||
Total cost of revenues | 5,561 | 47,719 | 38,761 | 87,840 | |||
Gross profit | 3,514 | 11,753 | 14,444 | 28,259 | |||
Operating expenses | |||||||
Compensation, taxes and benefits | 3,526 | 4,747 | 12,216 | 12,934 | |||
General and administrative | 3,646 | 2,512 | 10,757 | 8,718 | |||
Total operating expenses | 7,172 | 7,259 | 22,973 | 21,652 | |||
(Loss) income from operations | (3,658) | 4,494 | (8,529) | 6,607 | |||
Other income (expense) | |||||||
Other income | 99 | 83 | 190 | 175 | |||
Loss on early termination of line of credit | — | — | — | (300) | |||
Revaluation of tax receivable agreement liability | 5,201 | — | 5,201 | — | |||
Interest expense | (1,413) | (1,060) | (4,068) | (3,104) | |||
Total other expense, net | 3,887 | (977) | 1,323 | (3,229) | |||
(Loss) income before income taxes | 229 | 3,517 | (7,206) | 3,378 | |||
Income tax expense | 6,606 | 166 | 6,132 | 166 | |||
Net (loss) income | (6,377) | 3,351 | (13,338) | 3,212 | |||
Net (loss) income attributable to noncontrolling interest | (3,687) | 2,780 | (9,283) | 2,663 | |||
Net (loss) income attributable to Direct Digital Holdings, Inc. | $ (2,690) | $ 571 | $ (4,055) | $ 549 | |||
Net (loss) income per common share: | |||||||
Basic | $ (0.71) | $ 0.09 | $ (1.11) | $ 0.09 | |||
Diluted | $ (0.71) | $ 0.09 | $ (1.11) | $ 0.09 | |||
Weighted-average number of shares of common stock outstanding: | |||||||
Basic | 3,793 | 2,990 | 3,667 | 2,938 | |||
Diluted | 3,793 | 3,044 | 3,667 | 3,080 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
Nine Months Ended September 30, | |||
2024 | 2023 | ||
Cash Flows (Used In) Provided By Operating Activities: | |||
Net (loss) income | $ (13,338) | $ 3,212 | |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||
Amortization of deferred financing costs | 558 | 435 | |
Amortization of intangible assets | 1,465 | 1,465 | |
Reduction in carrying amount of right-of-use assets | 115 | 124 | |
Depreciation and amortization of property, equipment and software | 205 | 185 | |
Stock-based compensation | 811 | 546 | |
Deferred income tax expense | 6,132 | 82 | |
Loss on early termination of line of credit | — | 300 | |
Revaluation of tax receivable agreement liability | (5,201) | — | |
Provision for credit losses/bad debt expense, net of recoveries | 36 | 98 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 30,884 | (28,381) | |
Prepaid expenses and other assets | (394) | (524) | |
Accounts payable | (27,474) | 27,326 | |
Accrued liabilities and tax receivable agreement payable | (1,471) | (753) | |
Income taxes payable | 65 | (61) | |
Deferred revenues | 595 | 497 | |
Operating lease liability | (83) | (70) | |
Net cash (used in) provided by operating activities | (7,095) | 4,481 | |
Cash Flows Used In Investing Activities: | |||
Cash paid for capitalized software and property and equipment | (17) | (137) | |
Net cash used in investing activities | (17) | (137) | |
Cash Flows Provided by (Used In) Financing Activities: | |||
Payments on term loan | (373) | (491) | |
Proceeds from lines of credit | 6,700 | — | |
Payments on shares withheld for taxes | (551) | — | |
Payment of deferred financing costs | — | (442) | |
Proceeds from options exercised | 92 | — | |
Proceeds from warrants exercised | 215 | 12 | |
Distributions to holders of LLC Units | — | (1,988) | |
Net cash provided by (used in) financing activities | 6,083 | (2,909) | |
Net (decrease) increase in cash and cash equivalents | (1,029) | 1,435 | |
Cash and cash equivalents, beginning of the period | 5,116 | 4,047 | |
Cash and cash equivalents, end of the period | $ 4,087 | $ 5,482 | |
Supplemental Disclosure of Cash Flow Information: | |||
Cash paid for taxes | $ 263 | $ 349 | |
Cash paid for interest | $ 3,472 | $ 2,667 | |
Non-cash Financing Activities: | |||
Accrual of warrant redemption liability | $ — | $ 3,540 | |
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, stock-based compensation, revaluation of tax receivable agreement liability and certain one-time items such as acquisition costs, losses from early termination or redemption of credit agreements or preferred units 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 | |||||||
Three Months Ended | Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net (loss) income | |||||||
Add back (deduct): | |||||||
Interest expense | 1,413 | 1,060 | 4,068 | 3,104 | |||
Amortization of intangible assets | 488 | 488 | 1,465 | 1,465 | |||
Stock-based compensation | 149 | 242 | 811 | 546 | |||
Depreciation and amortization of property, equipment and software | 67 | 64 | 205 | 185 | |||
Loss on early termination of line of credit | — | — | — | 300 | |||
Income tax expense | 6,606 | 166 | 6,132 | 166 | |||
Revaluation of tax receivable agreement liability | (5,201) | — | (5,201) | — | |||
Adjusted EBITDA | |||||||
Contacts:
Investors:
Brett Milotte, ICR
investors@directdigitalholdings.com
View original content to download multimedia:https://www.prnewswire.com/news-releases/direct-digital-holdings-reports-q3-2024-financial-results-302303281.html
SOURCE Direct Digital Holdings
FAQ
What caused Direct Digital Holdings (DRCT) revenue decline in Q3 2024?
What is Direct Digital Holdings' (DRCT) revenue guidance for 2024 and 2025?
What was DRCT's Q3 2024 revenue compared to Q3 2023?
What new initiative did DRCT launch to improve platform integration?
