Tag: Media

Friday, November 11, 2022

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Strong Q3 results. The company reported another strong quarter, beating our estimates on both revenue and adj. EBITDA. Revenue of $26.0 million was 41% better than our forecast of $18.4 million and adj. EBITDA of $2.4 million beat our forecast of $1.8 million by 34%.

Sell-side revenue jumps. Sell-side revenue from Colossus SSP continues to drive the company’s impressive growth. The SSP generated $18.9 million in the quarter, 64% better than our forecast of $11.5 million.

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November 10, 2022 7:00am EST Download as PDF

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Third Quarter 2022 Revenue Up 211% Year-Over-Year to $26.0 Million

Third Quarter Net Income Up Year-Over-Year to $0.8 Million, or $0.06 per Share

Company Raises Revenue Guidance to $85 Million-$90 Million for Full-Year 2022

HOUSTON, Nov. 10, 2022 /PRNewswire/ — Direct Digital Holdings, Inc. (Nasdaq: DRCT) (“Direct Digital Holdings” or the “Company”), a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC (“Colossus SSP”), Huddled Masses LLC (“Huddled Masses”) and Orange142, LLC (“Orange142”), today announced financial results for the third quarter ended September 30, 2022.

Mark Walker, Chairman and Chief Executive Officer of Direct Digital Holdings, commented, “We are pleased to report strong revenue and EBITDA for the third quarter of 2022, demonstrating strong growth across both our sell- and buy-side business segments and continued expansion of our portfolio and client reach.”

Keith Smith, President of Direct Digital Holdings, added, “Our team has effectively responded to the recent uncertainty and volatility in the market, capitalizing on brands and businesses moving dollars from less efficient traditional advertising outlets towards digital media. We believe that Direct Digital Holdings is well-positioned to continue its record of strong growth and market expansion or the remainder of the year and, as such, we are thrilled to announce we will be raising revenue guidance for full-year 2022.”

Third Quarter 2022 Financial Highlights:

• Revenue increased to $26.0 million in the third quarter of 2022, an increase of $17.6 million, or up 211% over the $8.4 million in the same period of 2021.
  • Sell-side advertising segment, consisting of the Colossus SSP business, grew to $18.9 million and contributed $16.5 million of the increase, or up 710% over the $2.3 million in the same period of 2021.
  • Buy-side advertising segment, consisting of the Huddled Masses and Orange142 businesses, grew to $7.1 million and contributed $1.1 million of the increase, or up 18% over the $6.0 million in the same period of 2021.
• Operating income increased $1.3 million, up 225%, to $1.8 million for the third quarter of 2022, compared to income of $0.6 million in the same period of 2021. Increased costs resulting from headcount additions, higher commission and bonus expense, public company related costs, as well as a one-time severance charge of approximately $0.5 million impacted operating income in the third quarter of 2022.
• Net income was $0.8 million in the third quarter of 2022, up 458%, compared to ($0.2) million loss in the same period of 2021.
• Adjusted EBITDA⁽¹⁾ increased 128% to $2.4 million in the third quarter 2022, compared to $1.1 million in the same period of 2021.
• Net operating cash provided by operating activities for the nine-months ended September 30, 2022 was $3.4 million, compared to a net operating cash of $3.2 million generated in the same period of 2021.

Business Highlights

• For the third quarter ended September 30, 2022, Direct Digital Holdings processed approximately 125 billion monthly impressions through its sell-side advertising segment, an increase of 56% over the same period of 2021, with over 1.3 trillion bid requests for the quarter.
• In addition, the Company’s sell-side advertising platforms received over 11 billion bid responses, an increase of over 120% over the same period in 2021, through 129,000 buyers for the quarter.
• The Company’s buy-side advertising segment served over 200 customers, an increase of 2% compared to the same period of 2021.

Financial Outlook

Direct Digital Holdings’ guidance assumes that the U.S. economy continues to grow at a moderate pace, and there are no major COVID-19-related setbacks or other shocks that may cause economic conditions to deteriorate or otherwise significantly reduce advertiser demand. Direct Digital Holdings plans to offer annual guidance and update it throughout the year. Accordingly, the Company estimates the following:

• For fiscal year 2022, Direct Digital Holdings is raising expectations for guidance by approximately 20% to increase from a range of $70 million-$75 million to $85 million-$90 million, or up 130% year-over-year growth at the mid-point, while targeting an Adjusted EBITDA Margin in the double digits.

Conference Call and Webcast Details

Direct Digital Holdings will host a conference call on Thursday, November 10, 2022 at 5:00 p.m. Eastern Time to discuss the Company’s quarterly results. The live webcast and replay can be accessed at https://ir.directdigitalholdings.com/. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. For those who cannot access the webcast, a replay will be available at https://ir.directdigitalholdings.com/ for a period of twelve months following the live webcast.

Footnote

⁽¹⁾ “Adjusted EBITDA” is a non-GAAP financial measure and Adjusted EBITDA Margin is an operating ratio derived from a non-GAAP financial measure. The section titled “Non-GAAP Financial Measures” below describes our usage of non-GAAP financial measures and provides reconciliations between historical GAAP and non-GAAP information contained in this press release.  

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and which are subject to certain risks, trends and uncertainties.

As used below, “we,” “us,” and “our” refer to Direct Digital Holdings. We use words such as “could,” “would,” “may,” “might,” “will,” “expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,” “plan,” “project” and other similar expressions to identify forward-looking statements, but not all forward-looking statements include these words. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements.

All of our forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Our forward-looking statements are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance expressed in or implied by the forward-looking statements, including, but not limited to: our dependence on the overall demand for advertising, which could be influenced by economic downturns; any slow-down or unanticipated development in the market for programmatic advertising campaigns; the effects of health epidemics, such as the ongoing global COVID-19 pandemic; operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems; any significant inadvertent disclosure or breach of confidential and/or personal information we hold, or of the security of our or our customers’, suppliers’ or other partners’ computer systems; any unavailability or non-performance of the non-proprietary technology, software, products and services that we use; unfavorable publicity and negative public perception about our industry, particularly concerns regarding data privacy and security relating to our industry’s technology and practices, and any perceived failure to comply with laws and industry self-regulation; restrictions on the use of third-party “cookies,” mobile device IDs or other tracking technologies, which could diminish our platform’s effectiveness; any inability to compete in our intensely competitive market; any significant fluctuations caused by our high customer concentration; any violation of legal and regulatory requirements or any misconduct by our employees, subcontractors, agents or business partners; any strain on our resources, diversion of our management’s attention or impact on our ability to attract and retain qualified board members as a result of being a public company; our dependence, as a holding company, of receiving distributions from Direct Digital Holdings, LLC to pay our taxes, expenses and dividends; and other factors and assumptions discussed in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and other sections of our filings with the SEC that we make from time to time. Should one or more of these risks or uncertainties materialize or should any of these assumptions prove to be incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this release to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

About Direct Digital Holdings

Direct Digital Holdings (Nasdaq: DRCT), owner of operating companies Colossus SSP, Huddled Masses, and Orange 142, brings state-of-the-art sell- and buy-side advertising platforms together under one umbrella company. Direct Digital Holdings’ sell-side platform, Colossus SSP, offers advertisers of all sizes extensive reach within general market and multicultural media properties. The company’s subsidiaries Huddled Masses and Orange142 deliver significant ROI for middle market advertisers by providing data-optimized programmatic solutions at scale for businesses in sectors that range from energy to healthcare to travel to financial services. Direct Digital Holdings’ sell- and buy-side solutions manage approximately 90,000 clients monthly, generating over 100 billion impressions per month across display, CTV, in-app and other media channels. The company has been named a top minority-owned business by The Houston Business Journal.

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SOURCE Direct Digital Holdings

Released November 10, 2022