DoubleVerify Reports Third Quarter 2023 Financial Results

Increased Revenue by 28% Year-over-Year to $144.0 Million Driven by Global Growth in Social, CTV Measurement and Programmatic Activation

Achieved Net Income of $13.3 Million and Adjusted EBITDA of $45.7 Million, representing a 32% Adjusted EBITDA margin

Completed the Acquisition of Scibids, the Global Leader in AI Powered Digital Campaign Optimization

NEW YORK--(BUSINESS WIRE)-- DoubleVerify (“DV”) (NYSE: DV), a leading software platform for digital media measurement, data and analytics, today announced financial results for the third quarter ended September 30, 2023.

“We delivered an outstanding third quarter with business momentum far outpacing the industry and our competitors across all key geographies and digital media environments. We also completed the acquisition of Scibids, an AI powered optimization platform that will dynamically optimize DV & client data in programmatic activation applications, creating a highly differentiated product offering,” said Mark Zagorski, CEO of DoubleVerify. “We grew Advertiser revenue by 32% year-over-year in Q3, fueled by market share gains across Measurement and Activation, both of which delivered more than 30% growth on a year-over-year basis. Our strong business performance was driven by existing customers meaningfully growing their use of DV’s solutions as well as expanding market share through recently won customers ramping business on our platform. Rapid, AI-driven product innovation and unparalleled global coverage across Social, Programmatic, CTV and Retail Media environments have made DV the end-to-end platform for reducing media waste and maximizing campaign effectiveness with advertisers continuing to turn to DV solutions to optimize their media investment while protecting their brand equity.”

Third Quarter 2023 Financial Highlights:

(All comparisons are to the third quarter of 2022)

  • Total revenue of $144.0 million, an increase of 28%.
  • Activation revenue of $81.7 million, an increase of 31%.
  • Measurement revenue of $51.3 million, an increase of 32%.
    • Media Transactions Measured (“MTM”) for Social and CTV increased by 61% and 29%, respectively.
    • International measurement revenue increased by 62% with EMEA growth of 75% and APAC growth of 46%.
  • Supply-Side revenue of $11.0 million, a decrease of 2%.
  • Net income of $13.3 million and adjusted EBITDA of $45.7 million, which represented a 32% adjusted EBITDA margin.

Third Quarter and Recent Business Highlights:

  • Grew Total Advertiser revenue by 32% year-over-year in the third quarter primarily due to a 27% increase in Media Transactions Measured (“MTM”) and a 2% increase in Measured Transaction Fee (“MTF”).
  • Continued to achieve a Gross Revenue Retention rate of over 95% in the third quarter.
  • Grew premium-priced Authentic Brand Suitability (ABS) revenues by 40% year-over-year in the third quarter primarily due to volume expansion by large existing global advertisers as well as by new customer activations.
  • Drove global market share growth through product upsells, international expansion and new enterprise logo wins. Notable new business wins include:
    • Expansions: Uber and Colgate
    • New enterprise customer wins: Total Energie, Miele, Mizkan, Riyadh Expo and Saudi Coffee Company
  • Planned testing third-party brand suitability verification for Facebook and Instagram Feed, as well as Instagram and Facebook Reels in the fourth quarter.
  • Expanded measurement capabilities by being the first third-party verification solution to offer brand suitability, viewability, attention, fraud and invalid traffic protection to advertisers using Amazon custom audiences in Amazon DSP.
  • Expanded fraud, viewability and geo coverage to Twitch inventory via both Amazon’s DSP and the Twitch Ad Server.
  • Developing platform-wide invalid traffic detection and viewability verification on Instacart, the leading grocery technology company in North America, to enable media verification and maximize advertiser performance across the platform.
  • Partnered with Attain to directly connect attention data to real-time sales, at scale. Advertisers working with both companies have the unique advantage of connecting attention metrics with sales outcomes, enabling a more comprehensive understanding of the consumer’s path from ad exposure and engagement to purchase.
  • Partnered with Magnite to provide brand safety and contextual insights to evaluate premium quality publishers.
  • Launched a platform-wide agreement with Liftoff to provide invalid traffic detection and avoidance across the Vungle Exchange, helping advertisers ensure their ads are seen by real people.

“We expanded DV’s global footprint within our existing customer base and ramped our recent customer wins as demand for our solutions rose across key digital media environments, especially on Social,” said Nicola Allais, CFO of DoubleVerify. “DV’s 28% year-over-year revenue growth and 32% adjusted EBITDA margins in the third quarter underscore the strength of our platform as well as our ability to balance innovation and new business growth with strong profitability and cash flow generation. We are pleased to be raising our revenue and adjusted EBITDA guidance for the full year, while reiterating our industry-leading revenue growth and profitability expectations for the fourth quarter as we continue to meaningfully outpace the digital advertising industry and gain market share.”

Fourth Quarter and Full-Year 2023 Guidance:

DoubleVerify anticipates Revenue and Adjusted EBITDA to be in the following ranges:

Fourth Quarter 2023:

  • Revenue of $170 to $174 million, a year-over-year increase of 29% at the midpoint.
  • Adjusted EBITDA in the range of $57 to $61 million, representing a 34% margin at the midpoint.

Full Year 2023:

  • Revenue of $570 to $574 million, a year-over-year increase of 27% at the midpoint.
  • Adjusted EBITDA in the range of $179 to $183 million, representing a 32% margin at the midpoint.

With respect to the Company’s expectations under "Fourth Quarter and Full Year 2023 Guidance" above, the Company has not reconciled the non-GAAP measure Adjusted EBITDA to the GAAP measure net income in this press release because the Company does not provide guidance for depreciation and amortization expense, acquisition-related costs, interest income, and income taxes on a consistent basis as the Company is unable to quantify these amounts without unreasonable efforts, which would be required to include a reconciliation of Adjusted EBITDA to GAAP net income. In addition, the Company believes such a reconciliation would imply a degree of precision that could be confusing or misleading to investors.

Conference Call, Webcast and Other Information

DoubleVerify will host a conference call and live webcast to discuss its third quarter 2023 financial results at 4:30 p.m. Eastern Time today, November 9, 2023. To access the conference call, dial (877) 841-2987 for the U.S. or Canada, or (215) 268-9878 for international callers. The webcast will be available live on the Investors section of the Company’s website at https://ir.doubleverify.com/. An archived webcast will be available approximately two hours after the conclusion of the live event.

In addition, DoubleVerify plans to post certain additional historical quarterly financial information on the investor relations portion of its website for easy access to investors.

Key Business Terms and Notes

Activation revenue is generated from the evaluation, verification and measurement of advertising impressions purchased through programmatic demand-side and social media platforms.

Measurement revenue is generated from the verification and measurement of advertising impressions that are directly purchased on digital media properties, including publishers and social media platforms.

Supply-Side revenue is generated from platforms and publisher partners who use DoubleVerify’s data analytics to evaluate, verify and measure their advertising inventory.

Gross Revenue Retention Rate is the total prior period revenue earned from advertiser customers, less the portion of prior period revenue attributable to lost advertiser customers, divided by the total prior period revenue from advertiser customers.

Media Transactions Measured (MTM) is the volume of media transactions that DoubleVerify’s software platform measures.

Measured Transaction Fee (MTF) is the fixed fee DoubleVerify charges per thousand Media Transactions Measured.

International Revenue Growth Rates are inclusive of foreign currency fluctuations.

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

 

 

 

 

 

 

As of

 

As of

(in thousands, except per share data)

 

September 30, 2023

 

December 31, 2022

Assets:

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

259,212

 

 

$

267,813

 

Trade receivables, net of allowances for doubtful accounts of $10,397 and $8,893 as of September 30, 2023 and December 31, 2022, respectively

 

 

190,673

 

 

 

167,122

 

Prepaid expenses and other current assets

 

 

19,473

 

 

 

10,161

 

Total current assets

 

 

469,358

 

 

 

445,096

 

Property, plant and equipment, net

 

 

55,764

 

 

 

47,034

 

Operating lease right-of-use assets, net

 

 

61,480

 

 

 

64,692

 

Goodwill

 

 

431,307

 

 

 

343,011

 

Intangible assets, net

 

 

147,306

 

 

 

135,429

 

Deferred tax assets

 

 

7,983

 

 

 

35

 

Other non-current assets

 

 

1,981

 

 

 

1,731

 

Total assets

 

$

1,175,179

 

 

$

1,037,028

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade payables

 

$

9,638

 

 

$

6,675

 

Accrued expenses

 

 

41,751

 

 

 

33,085

 

Operating lease liabilities, current

 

 

9,080

 

 

 

7,041

 

Income tax liabilities

 

 

 

 

 

11,953

 

Current portion of finance lease obligations

 

 

3,101

 

 

 

1,846

 

Contingent consideration

 

 

1,193

 

 

 

 

Other current liabilities

 

 

9,987

 

 

 

8,310

 

Total current liabilities

 

 

74,750

 

 

 

68,910

 

Operating lease liabilities, non-current

 

 

72,802

 

 

 

74,086

 

Finance lease obligations

 

 

3,406

 

 

 

779

 

Deferred tax liabilities

 

 

9,334

 

 

 

12,890

 

Other non-current liabilities

 

 

3,602

 

 

 

3,504

 

Total liabilities

 

 

163,894

 

 

 

160,169

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $0.001 par value, 1,000,000 shares authorized, 169,918 shares issued and 169,905 outstanding as of September 30, 2023; 1,000,000 shares authorized, 165,448 shares issued and 165,417 outstanding as of December 31, 2022

 

 

170

 

 

 

165

 

Additional paid-in capital

 

 

857,561

 

 

 

756,299

 

Treasury stock, at cost, 13 shares and 31 shares as of September 30, 2023 and December 31, 2022, respectively

 

 

(397

)

 

 

(796

)

Retained earnings

 

 

165,878

 

 

 

127,517

 

Accumulated other comprehensive loss, net of income taxes

 

 

(11,927

)

 

 

(6,326

)

Total stockholders’ equity

 

 

1,011,285

 

 

 

876,859

 

Total liabilities and stockholders' equity

 

$

1,175,179

 

 

$

1,037,028

 

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands, except per share data)

 

2023

 

2022

 

2023

 

2022

Revenue

 

$

143,974

 

 

$

112,254

 

 

$

400,312

 

 

$

318,782

 

Cost of revenue (exclusive of depreciation and amortization shown separately below)

 

 

26,466

 

 

 

19,323

 

 

 

76,609

 

 

 

55,036

 

Product development

 

 

32,315

 

 

 

23,932

 

 

 

92,811

 

 

 

68,742

 

Sales, marketing and customer support

 

 

32,971

 

 

 

27,118

 

 

 

90,220

 

 

 

78,535

 

General and administrative

 

 

23,280

 

 

 

19,395

 

 

 

63,223

 

 

 

60,599

 

Depreciation and amortization

 

 

10,706

 

 

 

8,089

 

 

 

29,365

 

 

 

25,446

 

Income from operations

 

 

18,236

 

 

 

14,397

 

 

 

48,084

 

 

 

30,424

 

Interest expense

 

 

288

 

 

 

226

 

 

 

791

 

 

 

681

 

Other (income) expense, net

 

 

(1,633

)

 

 

231

 

 

 

(6,843

)

 

 

422

 

Income before income taxes

 

 

19,581

 

 

 

13,940

 

 

 

54,136

 

 

 

29,321

 

Income tax expense

 

 

6,234

 

 

 

3,609

 

 

 

15,775

 

 

 

4,121

 

Net income

 

$

13,347

 

 

$

10,331

 

 

$

38,361

 

 

$

25,200

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

$

0.06

 

 

$

0.23

 

 

$

0.15

 

Diluted

 

$

0.08

 

 

$

0.06

 

 

$

0.22

 

 

$

0.15

 

Weighted-average common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

168,606

 

 

 

164,297

 

 

 

166,937

 

 

 

163,512

 

Diluted

 

 

173,980

 

 

 

170,876

 

 

 

172,812

 

 

 

170,558

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

13,347

 

 

$

10,331

 

 

$

38,361

 

 

$

25,200

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency cumulative translation adjustment

 

 

(6,417

)

 

 

(4,630

)

 

 

(5,601

)

 

 

(11,834

)

Total comprehensive income

 

$

6,930

 

 

$

5,701

 

 

$

32,760

 

 

$

13,366

 

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Income (Loss)

 

Total

 

 

Common Stock

 

Treasury Stock

 

Paid-in

 

Retained

 

Net of

 

Stockholders’

(in thousands)

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Earnings

 

Income Taxes

 

Equity

Balance as of January 1, 2023

 

165,448

 

$

165

 

31

 

 

$

(796

)

 

$

756,299

 

 

$

127,517

 

$

(6,326

)

 

$

876,859

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,193

 

 

 

1,193

 

Shares repurchased for settlement of employee tax withholdings

 

 

 

 

30

 

 

 

(787

)

 

 

 

 

 

 

 

 

 

 

(787

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

11,992

 

 

 

 

 

 

 

 

11,992

 

Common stock issued upon exercise of stock options

 

527

 

 

1

 

 

 

 

 

 

 

1,765

 

 

 

 

 

 

 

 

1,766

 

Common stock issued upon vesting of restricted stock units

 

182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock reissued upon settlement of equity awards

 

 

 

 

(35

)

 

 

914

 

 

 

(914

)

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

12,175

 

 

 

 

 

12,175

 

Balance as of March 31, 2023

 

166,157

 

$

166

 

26

 

 

$

(669

)

 

$

769,142

 

 

$

139,692

 

$

(5,133

)

 

$

903,198

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(377

)

 

 

(377

)

Shares repurchased for settlement of employee tax withholdings

 

 

 

 

57

 

 

 

(1,966

)

 

 

 

 

 

 

 

 

 

 

(1,966

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

15,399

 

 

 

 

 

 

 

 

15,399

 

Common stock issued under employee purchase plan

 

49

 

 

 

 

 

 

 

 

 

1,138

 

 

 

 

 

 

 

 

1,138

 

Common stock issued upon exercise of stock options

 

711

 

 

1

 

 

 

 

 

 

 

3,990

 

 

 

 

 

 

 

 

3,991

 

Common stock issued upon vesting of restricted stock units

 

333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock reissued upon settlement of equity awards

 

 

 

 

(67

)

 

 

2,107

 

 

 

(2,107

)

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

12,839

 

 

 

 

 

12,839

 

Balance as of June 30, 2023

 

167,250

 

$

167

 

16

 

 

$

(528

)

 

$

787,562

 

 

$

152,531

 

$

(5,510

)

 

$

934,222

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,417

)

 

 

(6,417

)

Shares repurchased for settlement of employee tax withholdings

 

 

 

 

28

 

 

 

(945

)

 

 

 

 

 

 

 

 

 

 

(945

)

Issuance of common stock as consideration for acquisition

 

1,642

 

 

2

 

 

 

 

 

 

 

52,935

 

 

 

 

 

 

 

 

52,937

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

16,088

 

 

 

 

 

 

 

 

16,088

 

Common stock issued upon exercise of stock options

 

653

 

 

1

 

 

 

 

 

 

 

2,052

 

 

 

 

 

 

 

 

2,053

 

Common stock issued upon vesting of restricted stock units

 

373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock reissued upon settlement of equity awards

 

 

 

 

(31

)

 

 

1,076

 

 

 

(1,076

)

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

13,347

 

 

 

 

 

13,347

 

Balance as of September 30, 2023

 

169,918

 

$

170

 

13

 

 

$

(397

)

 

$

857,561

 

 

$

165,878

 

$

(11,927

)

 

$

1,011,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2022

 

162,347

 

$

162

 

50

 

 

$

(1,802

)

 

$

717,228

 

 

$

84,249

 

$

(771

)

 

$

799,066

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,570

)

 

 

(1,570

)

Shares repurchased for settlement of employee tax withholdings

 

 

 

 

41

 

 

 

(1,058

)

 

 

 

 

 

 

 

 

 

 

(1,058

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

10,994

 

 

 

 

 

 

 

 

10,994

 

Common stock issued to non-employees

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued upon exercise of stock options

 

572

 

 

1

 

 

 

 

 

 

 

1,677

 

 

 

 

 

 

 

 

1,678

 

Common stock issued upon vesting of restricted stock units

 

195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

4,579

 

 

 

 

 

4,579

 

Balance as of March 31, 2022

 

163,118

 

$

163

 

91

 

 

$

(2,860

)

 

$

729,899

 

 

$

88,828

 

$

(2,341

)

 

$

813,689

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,634

)

 

 

(5,634

)

Shares repurchased for settlement of employee tax withholdings

 

 

 

 

320

 

 

 

(8,133

)

 

 

 

 

 

 

 

 

 

 

(8,133

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

9,517

 

 

 

 

 

 

 

 

9,517

 

Common stock issued under employee purchase plan

 

41

 

 

 

 

 

 

 

 

 

768

 

 

 

 

 

 

 

 

768

 

Common stock issued upon exercise of stock options

 

176

 

 

 

 

 

 

 

 

 

838

 

 

 

 

 

 

 

 

838

 

Common stock issued upon vesting of restricted stock units

 

798

 

 

1

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

Treasury stock reissued upon settlement of equity awards

 

 

 

 

(128

)

 

 

3,447

 

 

 

(3,447

)

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

10,290

 

 

 

 

 

10,290

 

Balance as of June 30, 2022

 

164,133

 

$

164

 

283

 

 

$

(7,546

)

 

$

737,574

 

 

$

99,118

 

$

(7,975

)

 

$

821,335

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,630

)

 

 

(4,630

)

Shares repurchased for settlement of employee tax withholdings

 

 

 

 

19

 

 

 

(492

)

 

 

 

 

 

 

 

 

 

 

(492

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

11,080

 

 

 

 

 

 

 

 

11,080

 

Common stock issued upon exercise of stock options

 

490

 

 

1

 

 

 

 

 

 

 

2,390

 

 

 

 

 

 

 

 

2,391

 

Common stock issued upon vesting of restricted stock units

 

110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock reissued upon settlement of equity awards

 

 

 

 

(265

)

 

 

7,036

 

 

 

(7,036

)

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

10,331

 

 

 

 

 

10,331

 

Balance as of September 30, 2022

 

164,733

 

$

165

 

37

 

 

$

(1,002

)

 

$

744,008

 

 

$

109,449

 

$

(12,605

)

 

$

840,015

 

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30,

(in thousands)

 

2023

 

2022

Operating activities:

 

 

 

 

 

 

Net income

 

$

38,361

 

 

$

25,200

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

Bad debt expense

 

 

6,901

 

 

 

3,629

 

Depreciation and amortization expense

 

 

29,365

 

 

 

25,446

 

Amortization of debt issuance costs

 

 

221

 

 

 

221

 

Non-cash lease expense

 

 

4,899

 

 

 

5,534

 

Deferred taxes

 

 

(19,721

)

 

 

(5,974

)

Stock-based compensation expense

 

 

42,771

 

 

 

31,224

 

Interest expense

 

 

176

 

 

 

7

 

Loss on disposal of fixed assets

 

 

5

 

 

 

1,353

 

Impairment of long-lived assets

 

 

 

 

 

1,510

 

Other

 

 

874

 

 

 

318

 

Changes in operating assets and liabilities, net of effects of business combinations

 

 

 

 

 

 

Trade receivables

 

 

(25,787

)

 

 

(23,842

)

Prepaid expenses and other assets

 

 

(9,370

)

 

 

(2,110

)

Trade payables

 

 

2,475

 

 

 

3,452

 

Accrued expenses and other liabilities

 

 

(3,484

)

 

 

(7,607

)

Net cash provided by operating activities

 

 

67,686

 

 

 

58,361

 

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(12,309

)

 

 

(27,719

)

Acquisition of businesses, net of cash acquired

 

 

(67,240

)

 

 

 

Net cash (used in) investing activities

 

 

(79,549

)

 

 

(27,719

)

Financing activities:

 

 

 

 

 

 

Proceeds from revolving credit facility

 

 

50,000

 

 

 

 

Payments to revolving credit facility

 

 

(50,000

)

 

 

 

Payment of contingent consideration related to Zentrick acquisition

 

 

 

 

 

(3,247

)

Proceeds from common stock issued upon exercise of stock options

 

 

7,810

 

 

 

4,907

 

Proceeds from common stock issued under employee purchase plan

 

 

1,138

 

 

 

768

 

Payments related to offering costs

 

 

 

 

 

(6

)

Finance lease payments

 

 

(1,605

)

 

 

(1,286

)

Shares repurchased for settlement of employee tax withholdings

 

 

(3,698

)

 

 

(9,683

)

Net cash provided by (used in) financing activities

 

 

3,645

 

 

 

(8,547

)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

 

(389

)

 

 

(1,015

)

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(8,607

)

 

 

21,080

 

Cash, cash equivalents, and restricted cash - Beginning of period

 

 

267,938

 

 

 

221,725

 

Cash, cash equivalents, and restricted cash - End of period

 

$

259,331

 

 

$

242,805

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

259,212

 

 

$

242,687

 

Restricted cash (included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets)

 

 

119

 

 

 

118

 

Total cash and cash equivalents and restricted cash

 

$

259,331

 

 

$

242,805

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for taxes

 

$

52,738

 

 

$

10,210

 

Cash paid for interest

 

$

427

 

 

$

519

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities, net of impairments and tenant improvement allowances

 

$

2,017

 

 

$

80,060

 

Acquisition of equipment under finance lease

 

$

5,479

 

 

$

 

Capital assets financed by accounts payable and accrued expenses

 

$

 

 

$

5,305

 

Stock-based compensation included in capitalized software development costs

 

$

708

 

 

$

367

 

Common stock issued in connection with acquisition

 

$

52,937

 

 

$

 

Liabilities for contingent consideration

 

$

1,193

 

 

$

 

Comparison of the Three and Nine Months Ended September 30, 2023 and September 30, 2022

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Change

 

Change

 

Nine Months Ended September 30,

 

Change

 

Change

 

2023

 

2022

 

$

 

%

 

2023

 

2022

 

$

 

%

 

(In Thousands)

 

 

 

 

 

 

(In Thousands)

 

 

 

 

 

 

Revenue by customer type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Activation

$

81,700

 

$

62,170

 

$

19,530

 

 

31

%

 

$

229,534

 

$

175,696

 

$

53,838

 

31

%

Measurement

 

51,263

 

 

38,847

 

 

12,416

 

 

32

 

 

 

137,637

 

 

111,584

 

 

26,053

 

23

 

Supply-side customer

 

11,011

 

 

11,237

 

 

(226

)

 

(2

)

 

 

33,141

 

 

31,502

 

 

1,639

 

5

 

Total revenue

$

143,974

 

$

112,254

 

$

31,720

 

 

28

%

 

$

400,312

 

$

318,782

 

$

81,530

 

26

%

Adjusted EBITDA

In addition to results determined in accordance with GAAP, management believes that certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin, are useful in evaluating our business. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenue. The following table presents a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable financial measure prepared in accordance with GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

 

(In Thousands)

 

(In Thousands)

Net income

$

13,347

 

 

$

10,331

 

 

$

38,361

 

 

$

25,200

 

Net income margin

 

9

%

 

 

9

%

 

 

10

%

 

 

8

%

Depreciation and amortization

 

10,706

 

 

 

8,089

 

 

 

29,365

 

 

 

25,446

 

Stock-based compensation

 

15,791

 

 

 

10,971

 

 

 

42,771

 

 

 

31,224

 

Interest expense

 

288

 

 

 

226

 

 

 

791

 

 

 

681

 

Income tax expense

 

6,234

 

 

 

3,609

 

 

 

15,775

 

 

 

4,121

 

M&A and restructuring costs (a)

 

921

 

 

 

39

 

 

 

1,621

 

 

 

1,219

 

Offering, IPO readiness and secondary offering costs (b)

 

286

 

 

 

726

 

 

 

595

 

 

 

726

 

Other (recoveries) costs (c)

 

(267

)

 

 

(228

)

 

 

(800

)

 

 

3,659

 

Other (income) expense (d)

 

(1,633

)

 

 

231

 

 

 

(6,843

)

 

 

422

 

Adjusted EBITDA

$

45,673

 

 

$

33,994

 

 

$

121,636

 

 

$

92,698

 

Adjusted EBITDA margin

 

32

%

 

 

30

%

 

 

30

%

 

 

29

%

  1. M&A and restructuring costs for the three and nine months ended September 30, 2023 consist of transaction costs related to the acquisition of Scibids Technology SAS (“Scibids”). M&A and restructuring costs for the three and nine months ended September 30, 2022 consist of transaction costs, integration and restructuring costs related to the acquisition of OpenSlate.
  2. Offering, IPO readiness and secondary offering costs for the three and nine months ended September 30, 2023 consist of third-party costs incurred for underwritten secondary public offerings by certain stockholders of the Company. Offering, IPO readiness and secondary offering costs for the three and nine months ended September 30, 2022 consist of third-party costs incurred for the Company’s filing of a “shelf” registration statement on Form S-3.
  3. Other recoveries for the three and nine months ended September 30, 2023 consist of sublease income for leased office space. For the three and nine months ended September 30, 2022, other (recoveries) costs consist of sublease income for lease office space, offset by costs related to the departures of the Company’s former Chief Operating Officer and Chief Customer Officer, impairment related to a subleased office space and costs related to the disposal of furniture for unoccupied lease office space.
  4. Other (income) expense for the three and nine months ended September 30, 2023 and September 30, 2022 consist of interest income earned on interest-bearing monetary assets, and of the impact of changes in foreign currency exchange rates.

We use Adjusted EBITDA and Adjusted EBITDA Margin as measures of operational efficiency to understand and evaluate our core business operations. We believe that these non-GAAP financial measures are useful to investors for period to period comparisons of the core business and for understanding and evaluating trends in operating results on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Some of the limitations of these measures are:

  • they do not reflect changes in, or cash requirements for, working capital needs;
  • Adjusted EBITDA does not reflect capital expenditures or future requirements for capital expenditures or contractual commitments;
  • they do not reflect income tax expense or the cash requirements to pay income taxes;
  • they do not reflect interest expense or the cash requirements necessary to service interest or principal debt payments; and
  • although depreciation and amortization are non-cash charges related mainly to intangible assets, certain assets being depreciated and amortized will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

In addition, other companies in the industry may calculate these non-GAAP financial measures differently, therefore limiting their usefulness as a comparative measure. You should compensate for these limitations by relying primarily on our GAAP results and using the non-GAAP financial measures only supplementally.

Total stock-based compensation expense recorded in the Condensed Consolidated Statements of Operations and Comprehensive Income is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

(in thousands)

 

2023

 

2022

 

2023

 

2022

Product development

 

$

6,235

 

$

3,665

 

$

16,589

 

$

10,575

Sales, marketing and customer support

 

 

4,945

 

 

4,302

 

 

13,198

 

 

10,718

General and administrative

 

 

4,611

 

 

3,004

 

 

12,984

 

 

9,931

Total stock-based compensation

 

$

15,791

 

$

10,971

 

$

42,771

 

$

31,224

Forward-Looking Statements

This press release includes “forward-looking statements”. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Any statements in this press release regarding future revenues, earnings, margins, financial performance or results of operations (including the guidance provided under “Fourth Quarter and Full-Year 2023 Guidance”), and any other statements that are not historical facts are forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. These risks, uncertainties, assumptions and other factors include, but are not limited to, the competitiveness of our solutions amid technological developments or evolving industry standards, the competitiveness of our market, system failures, security breaches, cyberattacks or natural disasters, economic downturns and unstable market conditions, our ability to collect payments, data privacy legislation and regulation, public criticism of digital advertising technology, our international operations, our use of “open source” software, our limited operating history and the potential for our revenues and results of operations to fluctuate in the future. Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make.

Further information on these and additional risks, uncertainties, and other factors that could cause actual outcomes and results to differ materially from those included in or contemplated by the forward-looking statements contained in this press release are included under the caption “Risk Factors” under our Annual Report on Form 10-K filed with the SEC on March 1, 2023, Form 10-Q filed with the SEC on July 31, 2023 and other filings and reports we make with the SEC from time to time.

We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. Any forward-looking information presented herein is made only as of the date of this press release, and, except as required by law, we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

About DoubleVerify

DoubleVerify is a leading software platform for digital media measurement and analytics. Our mission is to make the digital advertising ecosystem stronger, safer and more secure, thereby preserving the fair value exchange between buyers and sellers of digital media. Hundreds of Fortune 500 advertisers employ our unbiased data and analytics to drive campaign quality and effectiveness, and to maximize return on their digital advertising investments – globally.

Investor Relations

Tejal Engman
DoubleVerify
IR@doubleverify.com

Media Contact

Chris Harihar
Crenshaw Communications
646‑535‑9475
chris@crenshawcomm.com

Source: DoubleVerify