UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40349

DoubleVerify Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

82-2714562

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

462 Broadway

New York, NY, 10013

(Address of Principal Executive Offices)

(212) 631-2111

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.001 per share	DV	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 6, 2023, there were 169,986,052 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

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DoubleVerify Holdings, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2023

TABLE OF CONTENTS

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Part I FINANCIAL INFORMATION (Unaudited)

		Page

Item 1.	Condensed Consolidated Financial Statements	4

	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

Part II OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

Signatures		34

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (“Quarterly Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Quarterly Report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs, savings and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “plan,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct.

You should read the “Special Note Regarding Forward-Looking Statements” and “Risk Factors” sections of our Annual Report on Form 10-K, for the year ended December 31, 2022 and filed with the Securities and Exchange Commission (“SEC”), on March 1, 2023, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this report. There may be other factors not presently known to us or which we currently consider to be immaterial that may cause our actual results to differ materially from the forward-looking statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report and in the Annual Report on Form 10-K for the year ended December 31, 2022. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

“DoubleVerify,” “the DV Authentic Ad,” “Authentic Brand Suitability,” “DV Pinnacle” and other trademarks of ours appearing in this report are our property and we deem them particularly important to the marketing activities conducted by each of our businesses. Solely for convenience, the trademarks, service marks and trade names referred to in this report are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies' trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.

Unless the context otherwise requires, the terms “DoubleVerify,” ‘‘we,’’ ‘‘us,’’ ‘‘our,’’ and the ‘‘Company,’’ as used in this report refer to DoubleVerify Holdings, Inc. and its consolidated subsidiaries.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

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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

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

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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

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

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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	$	—

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

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DoubleVerify Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except per share data, unless otherwise stated)

1. Description of Business

DoubleVerify Holdings, Inc. (the “Company”) is a leading software platform for digital media measurement and analytics. Our mission is to create stronger, safer, more secure digital transactions that drive optimal outcomes for global advertisers. Through our software platform and the metrics it provides, we help preserve the fair value exchange between buyers and sellers of digital media. The Company’s solutions provide advertisers unbiased data analytics that enable advertisers to increase the effectiveness, quality and return on their digital advertising investments. The DV Authentic Ad is our proprietary metric of digital media quality, which measures whether a digital ad was delivered in a brand suitable environment, fully viewable, by a real person and in the intended geography. The Company’s software interface, DV Pinnacle, delivers these metrics to our customers in real time, allowing them to access critical performance data on their digital transactions. The Company’s software solutions are integrated across the entire digital advertising ecosystem, including programmatic platforms, social media channels and digital publishers. The Company’s solutions are accredited by the Media Rating Council, which allows the Company’s data to be used as a single source standard in the evaluation and measurement of digital ads.

The Company was incorporated on August 16, 2017, is registered in the state of Delaware and is the parent company of DoubleVerify Midco, Inc. (“MidCo”), which is in turn the parent company of DoubleVerify Inc. On August 18, 2017, DoubleVerify Inc. entered into an agreement and plan of merger (the “Agreement”), whereby the Company and Pixel Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of the Company, agreed to provide for the merger of the Merger Sub with DoubleVerify Inc. pursuant to the terms and conditions of the Agreement.

On the effective date, Merger Sub was merged with and into DoubleVerify Inc. whereupon the separate corporate existence of Merger Sub ceased and DoubleVerify Inc. continued as the surviving corporation.

Through the merger, the Company acquired 100% of the outstanding equity instruments of DoubleVerify Inc., (the “Acquisition”) resulting in a change of control at the parent level. The merger resulted in the application of acquisition accounting under the provisions of Financial Accounting Standards Board (“FASB”) Topic Accounting Standards Codification (“ASC”) 805, “Business Combinations.”

The Company is headquartered in New York, New York and has wholly-owned subsidiaries in numerous jurisdictions, including Israel, the United Kingdom, the United Arab Emirates, Germany, Singapore, Australia, Canada, Brazil, Belgium, Mexico, France, Japan, Spain, Finland, Italy, and India, and operates in one reportable segment.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Preparation and Principles of Consolidation

The accompanying Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2023 and 2022, the Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022, and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair presentation of the results for the periods shown in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the SEC for interim financial reporting periods. Accordingly, certain information and footnote disclosures have been condensed or omitted pursuant to SEC rules that would ordinarily be required under GAAP for complete financial statements. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2022.

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DoubleVerify Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except per share data, unless otherwise stated)

Use of Estimates and Judgments in the Preparation of the Condensed Consolidated Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expense during the reporting periods. Significant estimates and judgments are inherent in the analysis and measurement of items including, but not limited to: revenue recognition criteria including the determination of principal versus agent revenue considerations, income taxes, the valuation and recoverability of goodwill and intangible assets, the assessment of potential loss from contingencies, assumptions in valuing acquired assets and liabilities assumed in business combinations, the allowance for doubtful accounts, and assumptions used in determining the fair value of stock-based compensation. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. These estimates are based on the information available as of the date of the Condensed Consolidated Financial Statements.

Cash and Cash Equivalents

The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Pursuant to the Company’s investment policy, its surplus funds are kept as cash or cash equivalents in treasury bills, money market funds and savings accounts to reduce the Company’s exposure to market risk.

3. Revenue

The following table disaggregates revenue between advertiser customers, where revenue is generated based on number of ads measured for Measurement or measured and purchased for Activation, and Supply-side customers, where revenue is generated based on contracts with minimum guarantees or contracts that contain overages after minimum guarantees are achieved.

Disaggregated revenue by customer type is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Activation	$	81,700	$	62,170	$	229,534	$	175,696
Measurement		51,263		38,847		137,637		111,584
Supply-side customer		11,011		11,237		33,141		31,502
Total revenue	$	143,974	$	112,254	$	400,312	$	318,782

Contract assets relate to the Company’s conditional right to consideration for completed performance under the contract (e.g., unbilled receivables). Trade receivables, net of allowance for doubtful accounts, include unbilled receivable balances of $51.9 million and $52.7 million as of September 30, 2023 and December 31, 2022, respectively.

4. Business Combinations

Scibids Technology SAS

On August 14, 2023, the Company acquired all of the outstanding stock of Scibids Technology SAS (“Scibids”), a global leader in artificial intelligence (“AI”) technology for digital campaign optimization. The acquisition combines DoubleVerify’s proprietary data with Scibids’ AI-powered optimization technology to provide advertiser customers with enhanced insights and control over their advertising performance.

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DoubleVerify Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except per share data, unless otherwise stated)

The following table summarizes the components of the purchase price that constitutes the consideration transferred:


(in thousands)
Cash, net of cash acquired	$	67,240
Common stock issued in connection with the acquisition		52,937
Fair value of contingent consideration		1,193
Total	$	121,370

The fair value of the Company’s common stock issued (1,642 shares of common stock) as consideration in the transaction was determined on the basis of market prices of our common stock available on August 14, 2023, the trading day on the acquisition date.

The purchase price includes a performance-based deferred payment that has a total maximum payout of $25.0 million (“Scibids Contingent Payment”) and varies based upon the achievement of certain performance metrics in fiscal year 2023 (“Earn-Out Period”). If the performance metrics during the Earn-Out Period do not exceed a certain threshold, no payment shall be made. The Scibids Contingent Payment has been accounted for at fair value as contingent consideration in the business combination. The settlement of the Scibids Contingent Payment would consist of both cash and common stock consideration.

As of September 30, 2023, Scibids Contingent Payment had a fair value of $1.2 million and is recorded in Contingent consideration in the Condensed Consolidated Balance Sheets. There were no changes in fair value in the Condensed Consolidated Statement of Operations and Comprehensive Income for the three and nine months ended September 30, 2023.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:


(in thousands)	Acquisition Date
Assets:
Cash and cash equivalents	$	1,705
Trade receivables		5,197
Prepaid expenses		50
Other assets		1,382
Intangible assets:
Technology		18,000
Customer relationships		15,000
Total intangible assets		33,000
Goodwill		92,053
Total assets acquired	$	133,387
Liabilities:
Trade payables	$	530
Other liabilities		1,259
Deferred tax liability		8,523
Total liabilities assumed		10,312
Total purchase consideration	$	123,075
Cash acquired		(1,705)
Purchase consideration, net of cash acquired	$	121,370

Table of Contents

DoubleVerify Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except per share data, unless otherwise stated)

The acquired intangible assets of Scibids will be amortized over their estimated useful lives. Accordingly, customer relationships will be amortized over ten years and developed technology will be amortized over four years. The weighted-average useful life of the acquired intangible assets is 6.7 years. The Company recognized a deferred tax liability of $8.5 million in relation to the intangible assets acquired.

The goodwill and identified intangible assets are not deductible for tax purposes. The Company incurred acquisition-related transaction costs of $0.9 million and $1.6 million included in General and administrative expenses in the Condensed Consolidated Statement of Operations and Comprehensive Income for the three and nine months ended September 30, 2023, respectively.

The goodwill associated with Scibids includes the acquired assembled work force, the value associated with the opportunity to leverage the work force to continue to develop the future generations of AI technology assets, as well as the ability to grow the Company through adding additional customer relationships or new solutions in the future.

The preliminary allocations of the purchase price for Scibids are subjec