DoubleVerify Reports Third Quarter 2022 Financial Results

Increased Revenue by 35% Year-over-Year to $112.3 Million, the Highest in Any Quarter, Driven by Growth in Pre-Campaign Activation Across Programmatic, Social and CTV

Activation Revenue Increased 48% to $62.2 Million

Achieved Net Income of $10.3 Million and Third Quarter Adjusted EBITDA of $34.0 Million, representing a 30% Adjusted EBITDA margin

Raised Midpoint of Full-Year 2022 Guidance Range to 36% Total Revenue Growth and 31% Adjusted EBITDA margins

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, 2022.

“We delivered another strong quarter and outstanding year-to-date performance fueled by continued momentum in programmatic activation and Social and CTV measurement,” said Mark Zagorski, CEO of DoubleVerify. “Our revenue growth of 35% in the third quarter and 40% year-to-date has significantly outpaced that of the broader digital advertising industry as we continue to win new customers and gain market share across geographies and platforms. Additionally, we continue to expand product coverage across premium CTV environments such as Netflix and pre-eminent Social media platforms such as TikTok, Linkedin and Twitter. Scaling our solutions to ‘verify everywhere’ gives advertisers the ability to consistently measure their media investment across environments, platforms, formats, devices and types of content. As the macroeconomic advertising environment becomes increasingly challenging, advertisers continue to turn to DV solutions to optimize their media investment and reduce media waste while protecting brand equity.”

Third Quarter 2022 Financial Highlights:

(All comparisons are to the third quarter of 2021)

  • Total revenue of $112.3 million, an increase of 35%.
  • Activation revenue of $62.2 million, an increase of 48%.
  • Measurement revenue of $38.8 million, an increase of 14%.
    • Media Transactions Measured (“MTM”) for CTV and Social increased by 48% and 23% respectively.
    • International measurement revenue increased by 2%, with a decline in EMEA revenue of -6% and APAC revenue growth of 16%.
  • Supply-Side revenue of $11.2 million, an increase of 57%.
  • Net income of $10.3 million and adjusted EBITDA of $34.0 million, which represented a 30% adjusted EBITDA margin.

Third Quarter and Recent Business Highlights:

  • Grew Total Advertiser revenue by 33% year-over-year in the third quarter primarily due to a 17% increase in Media Transactions Measured (“MTM”) and a 10% increase in Measured Transaction Fee (“MTF”), and continued to achieve a Gross Revenue Retention rate of over 95% in the third quarter.
  • Grew premium-priced Authentic Brand Suitability (ABS) revenues by 46% year-over-year in the third quarter driven by new advertisers activating the solution as well as by existing client upsells and geographic expansion.
  • Drove global market share growth through product upsells, international expansion and new enterprise logo wins including GAP, Mattel, Kroger Precision Marketing, TUI, Club Med, Marina Bay Sands, Hyundai Motor Company, Michelin, SC Johnson and SmartEnergy UK.
  • Expanded coverage across premium video and CTV environments with a partnership with Netflix to enable media verification and maximize advertiser performance. The partnership will leverage DV’s technology and data to help Netflix advertisers ensure their video ads are fully viewed, by real people and safe from Fraud/Invalid Traffic (“IVT”).
  • Expanded partnership with TikTok to offer advertisers post campaign Brand Safety and Suitability measurement. This proprietary solution leverages DV’s artificial intelligence, machine learning, ontology, and manual review to give advertisers confidence that their ads across TikTok are appearing next to content that is brand safe and suitable.
  • Completed the development of Brand Safety and Suitability measurement on Twitter’s newsfeed, known as Timeline, and are launching the beta in the coming weeks.
  • Launched DV Authentic Attention Snapshot and DV Attention Lab™ to help advertisers optimize campaign performance by leveraging DV’s industry-leading technology platform and attention dataset.
  • Launched DV’s Election Task Force to help advertisers navigate the challenging media landscape ahead of the 2022 US midterm elections and beyond. DV anticipates the next presidential election in 2024 to be characterized by a fast-evolving news cycle. The Election Taskforce helps shed light on trends relative to specific events, individuals and hot button topics and provides actionable data insights and analysis to protect brand equity and safeguard media investment ahead of, during and following elections.
  • Uncovered a CTV fraud scheme, LeoTerra, that spoofs IoT (Internet of Things) devices including smart refrigerators and smart watches, protecting DV customers from wasting millions of dollars of investment each month.
  • Achieved ISO 27001:2013 certification, the most widely recognized international standard for information security management, a testament to DV’s continued dedication to information security and to creating a culture of trust and excellence for the benefit of its clients and partners.

“In the third quarter, we continued to deliver strong business performance with year-over-year revenue growth of 35% and adjusted EBITDA margins of 30% driven by product successes in fast-growth sectors such as programmatic Activation, Social and CTV,” said Nicola Allais, CFO of DoubleVerify. “We are raising the midpoint of our full-year guidance range by the magnitude of our outperformance in the third quarter. Our outlook for the fourth quarter is based on our current visibility and assumes a typical upswing in our Activation business into year end. We continue to monitor the impact of the macroeconomic environment on our client’s ad budgets and to engage them in regular dialogue as we execute our plan through the end of the year and the longer term.”

Fourth Quarter and Full-Year 2022 Guidance:

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

Fourth Quarter 2022:

  • Revenue of $131 to $135 million, a year-over-year increase of 26% at the midpoint.
  • Adjusted EBITDA in the range of $45 to $47 million, representing a 35% margin at the midpoint.

Full Year 2022:

  • Revenue of $450 to $454 million, a year-over-year increase of 36% at the midpoint.
  • Adjusted EBITDA in the range of $138 to $140 million, representing a 31% margin at the midpoint.

With respect to the Company’s expectations under "Fourth Quarter and Full Year 2022 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 stock-based compensation expense, 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 2022 financial results at 4:30 p.m. Eastern Time today, November 8, 2022. 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

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

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

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

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

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

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

International Revenue Growth Rates are inclusive of foreign currency fluctuations.

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

 

 

 

 

 

 

As of

 

As of

(in thousands, except per share data)

 

September 30, 2022

 

December 31, 2021

Assets:

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

242,687

 

 

$

221,591

 

Trade receivables, net of allowances for doubtful accounts of $7,860 and $6,527 as of September 30, 2022 and December 31, 2021, respectively

 

 

141,444

 

 

 

122,938

 

Prepaid expenses and other current assets

 

 

21,215

 

 

 

23,295

 

Total current assets

 

 

405,346

 

 

 

367,824

 

Property, plant and equipment, net

 

 

42,511

 

 

 

17,575

 

Operating lease right-of-use assets, net

 

 

74,413

 

 

 

 

Goodwill

 

 

336,545

 

 

 

350,560

 

Intangible assets, net

 

 

140,841

 

 

 

153,395

 

Deferred tax assets

 

 

60

 

 

 

60

 

Other non-current assets

 

 

1,699

 

 

 

2,780

 

Total assets

 

$

1,001,415

 

 

$

892,194

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade payables

 

$

12,489

 

 

$

3,853

 

Accrued expense

 

 

30,524

 

 

 

41,456

 

Operating lease liabilities, current

 

 

5,560

 

 

 

 

Income tax liabilities

 

 

 

 

 

1,321

 

Current portion of finance lease obligations

 

 

2,144

 

 

 

1,970

 

Contingent considerations, current

 

 

 

 

 

1,717

 

Other current liabilities

 

 

7,146

 

 

 

6,716

 

Total current liabilities

 

 

57,863

 

 

 

57,033

 

Operating lease liabilities, non-current

 

 

75,611

 

 

 

 

Finance lease obligations

 

 

1,120

 

 

 

2,579

 

Deferred tax liabilities

 

 

24,174

 

 

 

30,307

 

Other non-current liabilities

 

 

2,632

 

 

 

3,209

 

Total liabilities

 

$

161,400

 

 

$

93,128

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $0.001 par value, 1,000,000 shares authorized, 164,733 shares issued and 164,696 outstanding as of September 30, 2022; 1,000,000 shares authorized, 162,347 shares issued and 162,297 shares outstanding as of December 31, 2021

 

 

165

 

 

 

162

 

Additional paid-in capital

 

 

744,008

 

 

 

717,228

 

Treasury stock, at cost, 37 shares and 50 shares as of September 30, 2022 and December 31, 2021, respectively

 

 

(1,002

)

 

 

(1,802

)

Retained earnings

 

 

109,449

 

 

 

84,249

 

Accumulated other comprehensive loss, net of income taxes

 

 

(12,605

)

 

 

(771

)

Total stockholders’ equity

 

 

840,015

 

 

 

799,066

 

Total liabilities and stockholders' equity

 

$

1,001,415

 

 

$

892,194

 

 

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)

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

112,254

 

 

$

83,098

 

$

318,782

 

 

$

227,208

 

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

 

 

19,323

 

 

 

13,435

 

 

55,036

 

 

 

35,929

 

Product development

 

 

23,932

 

 

 

16,359

 

 

68,742

 

 

 

45,658

 

Sales, marketing and customer support

 

 

27,118

 

 

 

19,539

 

 

78,535

 

 

 

54,653

 

General and administrative

 

 

19,395

 

 

 

14,465

 

 

60,599

 

 

 

58,317

 

Depreciation and amortization

 

 

8,089

 

 

 

7,492

 

 

25,446

 

 

 

21,989

 

Income from operations

 

 

14,397

 

 

 

11,808

 

 

30,424

 

 

 

10,662

 

Interest expense

 

 

226

 

 

 

249

 

 

681

 

 

 

936

 

Other expense, net

 

 

231

 

 

 

365

 

 

422

 

 

 

365

 

Income before income taxes

 

 

13,940

 

 

 

11,194

 

 

29,321

 

 

 

9,361

 

Income tax expense

 

 

3,609

 

 

 

3,270

 

 

4,121

 

 

 

8,361

 

Net income

 

$

10,331

 

 

$

7,924

 

$

25,200

 

 

$

1,000

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

0.05

 

$

0.15

 

 

$

0.01

 

Diluted

 

$

0.06

 

 

$

0.05

 

$

0.15

 

 

$

0.01

 

Weighted-average common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

164,297

 

 

 

158,045

 

 

163,512

 

 

 

144,305

 

Diluted

 

 

170,876

 

 

 

167,045

 

 

170,558

 

 

 

153,547

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,331

 

 

$

7,924

 

$

25,200

 

 

$

1,000

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency cumulative translation adjustment

 

 

(4,630

)

 

 

303

 

 

(11,834

)

 

 

(141

)

Total comprehensive income

 

$

5,701

 

 

$

8,227

 

$

13,366

 

 

$

859

 

 

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Income (Loss)

 

Total

 

 

Common Stock

 

Preferred Stock

 

Treasury Stock

 

Paid-in

 

Retained

 

Net of

 

Stockholders’

(in thousands)

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Earnings

 

Income Taxes

 

Equity

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2021

 

140,222

 

$

140

 

61,006

 

 

$

610

 

 

15,146

 

 

$

(260,686

)

 

$

620,679

 

 

$

54,941

 

 

$

1,011

 

 

$

416,695

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(799

)

 

 

(799

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,538

 

 

 

 

 

 

 

 

 

2,538

 

Common stock issued upon exercise of stock options

 

180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

538

 

 

 

 

 

 

 

 

 

538

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,644

 

 

 

 

 

 

5,644

 

Balance as of March 31, 2021

 

140,402

 

$

140

 

61,006

 

 

$

610

 

 

15,146

 

 

$

(260,686

)

 

$

623,755

 

 

$

60,585

 

 

$

212

 

 

$

424,616

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

355

 

 

 

355

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,714

 

 

 

 

 

 

 

 

 

4,714

 

Common stock issued upon exercise of stock options

 

871

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

2,907

 

 

 

 

 

 

 

 

 

2,909

 

Common stock issued upon vesting of restricted stock units

 

217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series A preferred stock to common stock

 

5,190

 

 

5

 

(61,006

)

 

 

(610

)

 

(15,146

)

 

 

260,686

 

 

 

(260,081

)

 

 

 

 

 

 

 

 

 

Issuance of common stock upon initial public offering

 

9,977

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

269,380

 

 

 

 

 

 

 

 

 

269,390

 

Private placement stock issuance concurrent with initial public offering

 

1,111

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

29,999

 

 

 

 

 

 

 

 

 

30,000

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,568

)

 

 

 

 

 

(12,568

)

Balance as of June 30, 2021

 

157,768

 

$

158

 

 

 

$

 

 

 

 

$

 

 

$

670,674

 

 

$

48,017

 

 

$

567

 

 

$

719,416

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

303

 

 

 

303

 

Shares repurchased for settlement of employee tax withholdings

 

 

 

 

 

 

 

 

 

50

 

 

 

(1,802

)

 

 

 

 

 

 

 

 

 

 

 

(1,802

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,848

 

 

 

 

 

 

 

 

 

4,848

 

Common stock issued upon exercise of stock options

 

651

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

2,066

 

 

 

 

 

 

 

 

 

2,067

 

Common stock issued upon vesting of restricted stock units

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,924

 

 

 

 

 

 

7,924

 

Balance as of September 30, 2021

 

158,524

 

$

159

 

 

 

$

 

 

50

 

 

$

(1,802

)

 

$

677,588

 

 

$

55,941

 

 

$

870

 

 

$

732,756

 

 

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30,

(in thousands)

 

2022

 

2021

Operating activities:

 

 

 

 

 

 

Net income

 

$

25,200

 

 

$

1,000

 

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

 

 

 

 

 

 

Bad debt expense (recovery)

 

 

3,629

 

 

 

(1,186

)

Depreciation and amortization expense

 

 

25,446

 

 

 

21,989

 

Amortization of debt issuance costs

 

 

221

 

 

 

221

 

Non-cash lease expense

 

 

5,534

 

 

 

 

Deferred taxes

 

 

(5,974

)

 

 

(4,572

)

Stock-based compensation expense

 

 

31,224

 

 

 

12,100

 

Interest expense

 

 

7

 

 

 

130

 

Loss on disposal of fixed assets

 

 

1,353

 

 

 

 

Impairment of long-lived assets

 

 

1,510

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

57

 

Offering costs

 

 

 

 

 

21,797

 

Other

 

 

318

 

 

 

661

 

Changes in operating assets and liabilities net of effect of business combinations

 

 

 

 

 

 

Trade receivables

 

 

(23,842

)

 

 

690

 

Prepaid expenses and other assets

 

 

(2,110

)

 

 

4,428

 

Trade payables

 

 

3,452

 

 

 

425

 

Accrued expenses and other liabilities

 

 

(7,607

)

 

 

694

 

Net cash provided by operating activities

 

 

58,361

 

 

 

58,434

 

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(27,719

)

 

 

(5,499

)

Acquisition of business, net of cash acquired

 

 

 

 

 

(24,323

)

Net cash (used in) investing activities

 

 

(27,719

)

 

 

(29,822

)

Financing activities:

 

 

 

 

 

 

Payments of long-term debt

 

 

 

 

 

(22,000

)

Deferred payment related to Zentrick acquisition

 

 

 

 

 

(50

)

Payment of contingent consideration related to Zentrick acquisition

 

 

(3,247

)

 

 

 

Proceeds from common stock issued upon exercise of stock options

 

 

4,907

 

 

 

5,514

 

Proceeds from common stock issued under employee purchase plan

 

 

768

 

 

 

 

Proceeds from issuance of common stock upon initial public offering

 

 

 

 

 

269,390

 

Proceeds from issuance of common stock in connection to concurrent private placement

 

 

 

 

 

30,000

 

Payments related to offering costs

 

 

(6

)

 

 

(21,797

)

Finance lease payments

 

 

(1,286

)

 

 

(1,222

)

Shares repurchased for settlement of employee tax withholdings

 

 

(9,683

)

 

 

(1,802

)

Net cash (used in) provided by financing activities

 

 

(8,547

)

 

 

258,033

 

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

 

 

(1,015

)

 

 

(173

)

Net increase in cash, cash equivalents, and restricted cash

 

 

21,080

 

 

 

286,472

 

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

 

 

221,725

 

 

 

33,395

 

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

 

$

242,805

 

 

$

319,867

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

242,687

 

 

 

319,825

 

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

 

 

118

 

 

 

42

 

Total cash and cash equivalents and restricted cash

 

$

242,805

 

 

$

319,867

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for taxes

 

 

10,210

 

 

 

5,586

 

Cash paid for interest

 

 

519

 

 

 

580

 

Non-cash investing and financing activities:

 

 

 

 

 

 

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

 

 

80,060

 

 

 

 

Acquisition of equipment under finance lease

 

 

 

 

 

1,518

 

Capital assets financed by accounts payable

 

 

5,305

 

 

 

41

 

Conversion of Series A preferred stock to common stock

 

 

 

 

 

610

 

Treasury stock reissued upon the conversion of Series A preferred stock for common stock

 

 

 

 

 

260,686

 

Stock-based compensation included in capitalized software development costs

367

 

Comparison of the Three and Nine Months Ended September 30, 2022 and September 30, 2021

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Change

 

Change

 

Nine Months Ended September 30,

 

Change

 

Change

 

2022

 

2021

 

$

 

%

 

2022

 

2021

 

$

 

%

 

(In Thousands)

 

 

 

 

 

 

 

(In Thousands)

 

 

 

 

 

 

Revenue by customer type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Measurement (f/k/a Advertiser - direct)

$

38,847

 

$

34,057

 

$

4,790

 

14

%

 

$

111,584

 

$

93,260

 

$

18,324

 

20

%

Activation (f/k/a Advertiser - programmatic)

 

62,170

 

 

41,902

 

 

20,268

 

48

 

 

 

175,696

 

 

113,694

 

 

62,002

 

55

 

Supply-side customer

 

11,237

 

 

7,139

 

 

4,098

 

57

 

 

 

31,502

 

 

20,254

 

 

11,248

 

56

 

Total revenue

$

112,254

 

$

83,098

 

$

29,156

 

35

%

 

$

318,782

 

$

227,208

 

$

91,574

 

40

%

Adjusted EBITDA

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

 

(In Thousands)

 

(In Thousands)

Net income

$

10,331

 

 

$

7,924

 

 

$

25,200

 

 

$

1,000

 

Net income margin

 

9

%

 

 

10

%

 

 

8

%

 

 

0

%

Depreciation and amortization

 

8,089

 

 

 

7,492

 

 

 

25,446

 

 

 

21,989

 

Stock-based compensation

 

10,971

 

 

 

4,848

 

 

 

31,224

 

 

 

12,100

 

Interest expense

 

226

 

 

 

249

 

 

 

681

 

 

 

936

 

Income tax expense

 

3,609

 

 

 

3,270

 

 

 

4,121

 

 

 

8,361

 

M&A and restructuring costs (a)

 

39

 

 

 

1,079

 

 

 

1,219

 

 

 

1,128

 

Offering, IPO readiness and secondary offering costs (b)

 

726

 

 

 

318

 

 

 

726

 

 

 

22,465

 

Other (recoveries) costs (c)

 

(228

)

 

 

878

 

 

 

3,659

 

 

 

987

 

Other expense (d)

 

231

 

 

 

365

 

 

 

422

 

 

 

365

 

Adjusted EBITDA

$

33,994

 

 

$

26,423

 

 

$

92,698

 

 

$

69,331

 

Adjusted EBITDA margin

 

30

%

 

 

32

%

 

 

29

%

 

 

31

%

_____________________

(a)

M&A and restructuring costs for the three and nine months ended September 30, 2022 consist of transaction costs, integration and restructuring costs related to the acquisition of OpenSlate. M&A costs for the three and nine months ended September 30, 2021 consist of transaction costs related to the acquisition of Meetrics and other reductions to deferred compensation liabilities related to acquisitions.

(b)

Offering, IPO readiness and secondary offering costs for the three and nine months ended September 30, 2022 consist of third-party costs incurred for the Company’s filing of a “shelf” registration statement on Form S-3. Offering, IPO readiness and secondary offering costs for the three and nine months ended September 30, 2021 consist of third-party costs incurred for the Company’s IPO and an underwritten secondary public offering by certain stockholders of the Company.

(c)

Other (recoveries) costs for the three and nine months ended September 30, 2022 consist of sublease income for lease office space, offset by costs related to the departures of the Company’s former Chief Operating Officer and Chief Customer Officer, impairment related to a subleased office space and costs related to the disposal of furniture for unoccupied lease office space. For the three and nine months ended September 30, 2021, other costs include reimbursements paid to Providence for costs incurred prior to the IPO date, and non-recurring recognition of a cease-use liability related to unoccupied lease office space.

(d)

Other expense for the three and nine months ended September 30, 2022 and September 30, 2021 consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities.

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

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

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

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

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

(in thousands)

 

2022

 

2021

 

2022

 

2021

Product development

 

$

3,665

 

$

1,239

 

$

10,575

 

$

1,953

Sales, marketing and customer support

 

 

4,302

 

 

1,423

 

 

10,718

 

 

3,743

General and administrative

 

 

3,004

 

 

2,186

 

 

9,931

 

 

6,404

Total stock-based compensation

 

$

10,971

 

$

4,848

 

$

31,224

 

$

12,100

Forward-Looking Statements

This press release includes “forward-looking statements”. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Any statements in this press release regarding future revenues, earnings, margins, financial performance or results of operations (including the guidance provided under “Fourth Quarter and Full-Year 2022 Guidance”), and any other statements that are not historical facts are forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. These risks, uncertainties, assumptions and other factors include, but are not limited to, the competitiveness of our solutions amid technological developments or evolving industry standards, the competitiveness of our market, system failures, security breaches, cyberattacks or natural disasters, economic downturns and unstable market conditions, our ability to collect payments, data privacy legislation and regulation, public criticism of digital advertising technology, our international operations, our use of “open source” software, our limited operating history and the potential for our revenues and results of operations to fluctuate in the future. Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make.

Further information on these and additional risks, uncertainties, and other factors that could cause actual outcomes and results to differ materially from those included in or contemplated by the forward-looking statements contained in this press release are included under the caption “Risk Factors” under our Annual Report on Form 10-K filed with the SEC on March 8, 2022 and other filings and reports we make with the SEC from time to time.

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

About DoubleVerify

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

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