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Table of Contents

 

 

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, 2024

or

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 October 25, 2024, there were 169,165,009 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

 

 

Table of Contents

DoubleVerify Holdings, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2024

TABLE OF CONTENTS

0

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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, 2024 and December 31, 2023

4

Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2024 and 2023

5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023

6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

32

Item 4.

Controls and Procedures

32

Part II

OTHER INFORMATION

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

34

Item 6.

Exhibits

35

Signatures

36

2

Table of Contents

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, 2023 and filed with the Securities and Exchange Commission (“SEC”), on February 28, 2024, 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, 2023. 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.

3

Table of Contents

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, 2024

December 31, 2023

Assets:

 

  

 

  

Current assets

 

  

 

  

Cash and cash equivalents

$

311,910

$

310,131

Short-term investments

50,686

Trade receivables, net of allowances for doubtful accounts of $9,983 and $9,442 as of September 30, 2024 and December 31, 2023, respectively

193,303

206,941

Prepaid expenses and other current assets

 

23,609

 

15,930

Total current assets

 

579,508

 

533,002

Property, plant and equipment, net

 

67,421

 

58,020

Operating lease right-of-use assets, net

70,432

60,470

Goodwill

 

437,646

 

436,008

Intangible assets, net

 

119,654

 

140,883

Deferred tax assets

 

31,732

 

13,077

Other non-current assets

 

5,960

 

1,571

Total assets

$

1,312,353

$

1,243,031

Liabilities and Stockholders' Equity:

 

Current liabilities

 

Trade payables

$

13,376

$

12,932

Accrued expenses

 

46,541

 

44,264

Operating lease liabilities, current

10,761

9,029

Income tax liabilities

 

696

 

5,833

Current portion of finance lease obligations

 

2,528

 

2,934

Other current liabilities

 

14,295

 

8,863

Total current liabilities

 

88,197

 

83,855

Operating lease liabilities, non-current

79,571

71,563

Finance lease obligations

 

1,331

 

2,865

Deferred tax liabilities

 

9,635

 

8,119

Other non-current liabilities

 

3,039

 

2,690

Total liabilities

181,773

169,092

Commitments and contingencies (Note 15)

 

Stockholders’ equity

 

Common stock, $0.001 par value, 1,000,000 shares authorized, 173,288 shares issued and 170,631 outstanding as of September 30, 2024; 1,000,000 shares authorized, 171,168 shares issued and 171,146 outstanding as of December 31, 2023

173

171

Additional paid-in capital

949,456

878,331

Treasury stock, at cost, 2,657 shares and 22 shares as of September 30, 2024 and December 31, 2023, respectively

(50,700)

(743)

Retained earnings

 

231,814

 

198,983

Accumulated other comprehensive loss, net of income taxes

 

(163)

 

(2,803)

Total stockholders’ equity

 

1,130,580

 

1,073,939

Total liabilities and stockholders' equity

$

1,312,353

$

1,243,031

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

4

Table of Contents

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)

    

2024

    

2023

    

2024

    

2023

Revenue

$

169,556

$

143,974

$

466,228

$

400,312

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

 

29,479

26,466

 

82,199

 

76,609

Product development

 

39,306

32,315

 

115,506

 

92,811

Sales, marketing and customer support

 

40,525

32,971

 

123,260

 

90,220

General and administrative

 

23,039

23,280

 

68,180

 

63,223

Depreciation and amortization

 

11,483

10,706

 

33,415

 

29,365

Income from operations

 

25,724

 

18,236

 

43,668

 

48,084

Interest expense

 

353

288

 

818

791

Other income, net

 

(4,225)

(1,633)

 

(8,561)

(6,843)

Income before income taxes

 

29,596

19,581

 

51,411

 

54,136

Income tax expense

 

11,395

6,234

 

18,580

15,775

Net income

$

18,201

$

13,347

$

32,831

$

38,361

Earnings per share:

 

 

Basic

$

0.11

$

0.08

$

0.19

$

0.23

Diluted

$

0.10

$

0.08

$

0.19

$

0.22

Weighted-average common stock outstanding:

 

 

 

 

Basic

 

170,254

168,606

171,060

166,937

Diluted

 

173,911

173,980

175,868

172,812

Comprehensive income:

 

 

Net income

$

18,201

$

13,347

$

32,831

$

38,361

Other comprehensive income (loss):

 

 

Foreign currency cumulative translation adjustment

 

9,079

 

(6,417)

 

2,640

 

(5,601)

Total comprehensive income

$

27,280

$

6,930

$

35,471

$

32,760

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

5

Table of Contents

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

Accumulated Other

Additional

Comprehensive

Total

Common Stock

Treasury Stock

Paid-in

Retained

(Loss) Income

Stockholders’

(in thousands)

  

Shares

  

Amount

  

Shares

  

Amount

  

Capital

  

Earnings

  

Net of Income Taxes

  

Equity

Balance as of January 1, 2024

171,168

$

171

22

$

(743)

$

878,331

$

198,983

$

(2,803)

$

1,073,939

Foreign currency translation adjustment

 

 

 

 

 

(4,625)

 

(4,625)

Shares repurchased for settlement of employee tax withholdings

48

(1,792)

(1,792)

Stock-based compensation expense

 

 

 

20,718

 

 

 

20,718

Common stock issued upon exercise of stock options

153

1,695

1,695

Common stock issued upon vesting of restricted stock units

435

 

1

 

 

(1)

 

 

 

Treasury stock reissued upon settlement of equity awards

(38)

1,389

(1,389)

Net income

 

 

 

 

7,156

 

 

7,156

Balance as of March 31, 2024

171,756

172

32

(1,146)

899,354

206,139

(7,428)

1,097,091

Foreign currency translation adjustment

(1,814)

(1,814)

Shares repurchased for settlement of employee tax withholdings

30

(660)

(660)

Stock-based compensation expense

25,315

25,315

Common stock issued under employee purchase plan

124

1,914

1,914

Common stock issued upon exercise of stock options

126

870

870

Common stock issued upon vesting of restricted stock units

628

1

(1)

Shares repurchased under the Repurchase Program

1,369

(25,027)

(25,027)

Treasury stock reissued upon settlement of equity awards

(41)

1,390

(1,390)

Net income

7,474

7,474

Balance as of June 30, 2024

172,634

173

1,390

(25,443)

926,062

213,613

(9,242)

1,105,163

Foreign currency translation adjustment

9,079

9,079

Shares repurchased for settlement of employee tax withholdings

34

(636)

(636)

Stock-based compensation expense

23,474

23,474

Common stock issued upon exercise of stock options

53

324

324

Common stock issued upon vesting of restricted stock units

601

Shares repurchased under the Repurchase Program

1,254

(25,025)

(25,025)

Treasury stock reissued upon settlement of equity awards

(21)

404

(404)

Net income

18,201

18,201

Balance as of September 30, 2024

173,288

$

173

2,657

$

(50,700)

$

949,456

$

231,814

$

(163)

$

1,130,580

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

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)

    

2024

    

2023

Operating activities:

 

  

 

  

Net income

$

32,831

$

38,361

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

 

Bad debt expense

 

3,546

 

6,901

Depreciation and amortization expense

 

33,415

 

29,365

Amortization of debt issuance costs

 

334

 

221

Non-cash lease expense

5,329

4,899

Deferred taxes

 

(17,253)

 

(19,721)

Stock-based compensation expense

 

67,906

 

42,771

Interest (income) expense, net

 

(854)

 

176

Loss on disposal of fixed assets

5

Other

1,360

874

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

 

Trade receivables

 

10,333

 

(25,787)

Prepaid expenses and other assets

 

(12,592)

 

(9,370)

Trade payables

 

617

 

2,475

Accrued expenses and other liabilities

 

(2,692)

 

(3,484)

Net cash provided by operating activities

 

122,280

 

67,686

Investing activities:

 

 

Purchase of property, plant and equipment

 

(19,792)

 

(12,309)

Acquisition of businesses, net of cash acquired

(67,240)

Purchase of short-term investments

(81,937)

Proceeds from maturity of short-term investments

32,210

Net cash used in investing activities

 

(69,519)

 

(79,549)

Financing activities:

 

 

Proceeds from revolving credit facility

50,000

Payments to revolving credit facility

(50,000)

Proceeds from common stock issued upon exercise of stock options

2,889

7,810

Proceeds from common stock issued under employee purchase plan

1,914

1,138

Finance lease payments

(1,940)

(1,605)

Shares repurchased under the Repurchase Program

(50,052)

Shares repurchased for settlement of employee tax withholdings

(3,088)

(3,698)

Net cash (used in) provided by financing activities

 

(50,277)

 

3,645

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

 

150

 

(389)

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

 

2,634

 

(8,607)

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

 

310,257

 

267,938

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

$

312,891

$

259,331

Cash and cash equivalents

$

311,910

$

259,212

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

 

128

 

119

Restricted cash - non-current (included in Other non-current assets on the Condensed Consolidated Balance Sheets)

853

Total cash and cash equivalents and restricted cash

$

312,891

$

259,331

Supplemental cash flow information:

 

 

Cash paid for taxes

$

36,141

$

52,738

Cash paid for interest

$

430

$

427

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

$

14,553

$

2,017

Acquisition of equipment under finance lease

$

$

5,479

Capital assets financed by accounts payable and accrued expenses

$

82

$

Stock-based compensation included in capitalized software development costs

$

1,585

$

708

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 one of the industry’s leading media effectiveness platforms that leverages artificial intelligence (“AI”) to drive superior outcomes for global brands. By creating more effective, transparent ad transactions, we make the digital advertising ecosystem stronger, safer and more secure, thereby preserving 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, 2024 and December 31, 2023, the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2024 and 2023, the Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023, and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 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, 2023.

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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.

Restricted Cash

Restricted cash represents amounts pledged as collateral for certain agreements with third parties. Upon satisfying the terms of the relevant agreements, the funds are expected to be released and available for use by the Company. Restricted cash is recorded in the Condensed Consolidated Balance Sheets in Prepaid expenses and other current assets or Other non-current assets, depending on if such funds will be released and available for use by the Company within the next twelve months.

Short-term Investments

Debt Securities

The Company’s accounting for debt securities varies depending on the legal form of the security, our intended holding period for the security, and the nature of the transaction. Investments in marketable debt securities include U.S. treasury bills. The Company considers all of its marketable debt securities as available for use in current operations and, therefore, classifies these securities as Short-term investments on the Condensed Consolidated Balance Sheets. Marketable debt securities are classified as available-for-sale and are initially recorded at fair value. Unrealized gains and losses related to available-for-sale debt securities are recorded as a separate component of Other comprehensive income (loss), net of tax on the Condensed Consolidated Statements of Operations and Comprehensive Income until realized. Interest on marketable debt securities classified as available-for-sale is included as a component of Other income, net on the Condensed Consolidated Statements of Operations and Comprehensive Income. Refer to Note 8 for further information.

The Company accounts for credit losses on available-for-sale debt securities in accordance with ASC 326, “Financial Instruments - Credit Losses” (“ASC 326”). The Company uses ASC 326 to assess the investment portfolio for impairment at the individual security level and evaluates all securities in an unrealized loss position to determine if the impairment is credit related (realized loss recorded in earnings) or non-credit related (unrealized loss).

Debt Issuance Costs

The New Revolving Credit Facility (as defined in Note 9) includes debt issuance costs that meet the definition of an asset and are recorded in the Condensed Consolidated Balances Sheets in Other non-current assets. Debt issuance costs for the New Revolving Credit Facility are amortized to interest expense over the contractual term of the underlying debt instrument on a straight-line basis through the maturity date of the New Revolving Credit Facility on August 12, 2029.

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DoubleVerify Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Recently Issued Accounting Pronouncements

Segment Reporting – Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The updated standard is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the update requires retrospective application to all prior periods presented. The Company is currently in the process of evaluating the impact of this standard on the Company’s Condensed Consolidated Financial Statements.

Income Taxes – Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which expands annual disclosure requirements related to the rate reconciliation and income taxes paid disclosures. ASU 2023-09 requires consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid to be disaggregated by jurisdiction. The updated standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted and the update may be applied on a prospective basis with retrospective application permitted. The Company is currently in the process of evaluating the impact of this standard on the Company’s Condensed Consolidated Financial Statements.

3.     Revenue

The following table disaggregates revenue between advertiser customers, where revenue is generated based on the number of ads measured and purchased for Activation or measured for Measurement, and Supply-side, 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 was as follows:

Three Months Ended

    

Nine Months Ended

September 30, 

September 30, 

(in thousands)

    

2024

    

2023

    

2024

    

2023

Activation

$

96,791

$

81,700

$

263,584

$

229,534

Measurement

 

58,468

 

51,263

 

162,560

 

137,637

Supply-side

 

14,297

 

11,011

 

40,084

 

33,141

Total revenue

$

169,556

$

143,974

$

466,228

$

400,312

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 $59.3 million and $55.0 million as of September 30, 2024 and December 31, 2023, respectively.

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DoubleVerify Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Remaining Performance Obligations

As of September 30, 2024, the Company had $29.7 million of remaining performance obligations which are expected to be recognized over the next one to three years. These non-cancelable arrangements have original expected durations longer than one year and for which the consideration is not variable. These obligations relate primarily to the Company’s Supply-side revenue which represented $40.1 million, or 8.6% of the Company’s total revenue for the nine months ended September 30, 2024. The vast majority of the Company’s revenue is derived primarily from our advertising customers and partners based on the volume of media transactions, or ads, that our software platform measures, and not from supply-side arrangements. In determining the remaining performance obligations, the Company applied the allowable practical expedient and did not disclose information about (1) contracts remaining performance obligations that have original expected durations of one year or less and (2) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

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 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.

The total purchase price of $121.1 million, net of cash acquired, includes measurement period adjustments of $0.3 million recorded during the nine months ended September 30, 2024. The effect of these adjustments on the preliminary purchase price allocation was a decrease to the purchase consideration of $0.3 million and a corresponding decrease recorded to Goodwill on the Condensed Consolidated Balance Sheets.

As of September 30, 2024, the purchase price allocation for Scibids is final.

5.    Goodwill and Intangible Assets

The following is a summary of changes to the goodwill carrying value from December 31, 2023 to September 30, 2024:

(in thousands)

    

    

Goodwill at December 31, 2023

$

436,008

Measurement period adjustments

(300)

Foreign exchange impact

1,938

Goodwill at September 30, 2024

$

437,646

The following table summarizes the Company’s intangible assets and related accumulated amortization:

(in thousands)