DoubleVerify Reports Third Quarter 2023 Financial Results
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. “...
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: 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) | ||||||||
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| As of |
| As of | ||||
(in thousands, except per share data) |
| September 30, 2023 |
| December 31, 2022 | ||||
Assets: |
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Current assets |
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Cash and cash equivalents |
| $ | 259,212 |
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| $ | 267,813 |
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Trade receivables, net of allowances for doubtful accounts of $10,397 and $8,893 as of September 30, 2023 and December 31, 2022, respectively |
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| 190,673 |
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| 167,122 |
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Prepaid expenses and other current assets |
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| 19,473 |
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| 10,161 |
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Total current assets |
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| 469,358 |
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| 445,096 |
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Property, plant and equipment, net |
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| 55,764 |
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| 47,034 |
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Operating lease right-of-use assets, net |
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| 61,480 |
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| 64,692 |
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Goodwill |
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| 431,307 |
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| 343,011 |
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Intangible assets, net |
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| 147,306 |
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| 135,429 |
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Deferred tax assets |
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| 7,983 |
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| 35 |
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Other non-current assets |
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| 1,981 |
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| 1,731 |
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Total assets |
| $ | 1,175,179 |
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| $ | 1,037,028 |
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Liabilities and Stockholders' Equity: |
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Current liabilities |
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Trade payables |
| $ | 9,638 |
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| $ | 6,675 |
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Accrued expenses |
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| 41,751 |
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| 33,085 |
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Operating lease liabilities, current |
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| 9,080 |
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| 7,041 |
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Income tax liabilities |
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| — |
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| 11,953 |
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Current portion of finance lease obligations |
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| 3,101 |
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| 1,846 |
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Contingent consideration |
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| 1,193 |
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| — |
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Other current liabilities |
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| 9,987 |
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| 8,310 |
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Total current liabilities |
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| 74,750 |
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| 68,910 |
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Operating lease liabilities, non-current |
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| 72,802 |
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| 74,086 |
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Finance lease obligations |
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| 3,406 |
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| 779 |
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Deferred tax liabilities |
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| 9,334 |
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| 12,890 |
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Other non-current liabilities |
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| 3,602 |
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| 3,504 |
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Total liabilities |
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| 163,894 |
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| 160,169 |
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Commitments and contingencies (Note 14) |
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Stockholders’ equity |
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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 |
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| 170 |
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| 165 |
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Additional paid-in capital |
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| 857,561 |
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| 756,299 |
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Treasury stock, at cost, 13 shares and 31 shares as of September 30, 2023 and December 31, 2022, respectively |
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| (397 | ) |
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| (796 | ) |
Retained earnings |
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| 165,878 |
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| 127,517 |
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Accumulated other comprehensive loss, net of income taxes |
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| (11,927 | ) |
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| (6,326 | ) |
Total stockholders’ equity |
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| 1,011,285 |
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| 876,859 |
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Total liabilities and stockholders' equity |
| $ | 1,175,179 |
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| $ | 1,037,028 |
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DoubleVerify Holdings, Inc. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) | ||||||||||||||||
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
(in thousands, except per share data) |
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||
Revenue |
| $ | 143,974 |
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| $ | 112,254 |
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| $ | 400,312 |
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| $ | 318,782 |
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Cost of revenue (exclusive of depreciation and amortization shown separately below) |
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| 26,466 |
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| 19,323 |
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| 76,609 |
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| 55,036 |
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Product development |
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| 32,315 |
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| 23,932 |
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| 92,811 |
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| 68,742 |
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Sales, marketing and customer support |
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| 32,971 |
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| 27,118 |
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| 90,220 |
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| 78,535 |
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General and administrative |
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| 23,280 |
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| 19,395 | <
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