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DoubleVerify Announces First Quarter 2021 Financial Results

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Revenue Increased 32% Year-Over-Year to $67.6 Million Driven by Strong CTV and Social Volume Growth

Advertiser Programmatic Revenue Increased 42% to $33.9 Million

Net Income Increased to $5.6 Million; Adjusted EBITDA Increased 41% to $21.7 Million, or 32% of Revenue

DoubleVerify ("DV") (NYSE: DV), a leading software platform for digital media measurement, data and analytics, today announced financial results for the first quarter ended March 31, 2021.

"Successfully completing our IPO was an important milestone for DoubleVerify, providing additional capital to further fuel our mission to create a stronger, safer and more secure digital ad ecosystem," said Mark Zagorski, CEO of DoubleVerify. "We delivered record first quarter revenue, which grew 32% year-over-year, with Adjusted EBITDA exhibiting 41% growth. Our solid topline momentum was driven by global expansion via recent enterprise client wins, product success in fast growing sectors such as CTV, Social and Programmatic and the introduction of new solutions that leverage our ability to measure and verify across both the walled gardens and open internet without cookies or third-party tracking technologies. We are optimistic about continued strong growth for the remainder of 2021 and beyond."

First Quarter 2021 Financial Highlights:
(All comparisons are to the first quarter of 2020)

  • Total revenue of $67.6 million, an increase of 32%.

  • Advertiser Direct revenue of $27.5 million, an increase of 24%.

    • Media Transactions Measured ("MTM") for both CTV and Social increased by approximately 75%.

  • Advertiser Programmatic revenue of $33.9 million, an increase of 42%.

  • Supply-Side revenue of $6.1 million, an increase of 18%.

  • Net income increased to $5.6 million, compared to $2.4 million.

  • Adjusted EBITDA of $21.7 million, an increase of 41%.

  • Diluted earnings per share increased to $0.04, compared to $0.02.

First Quarter 2021 Business Highlights:

  • Grew revenue with recently won business at Unilever, UPS, UK Government (via Omnicom UK), Fujifilm Japan and Arnott’s Australia among numerous others.

  • Expanded Custom Contextual targeting for programmatic advertisers, including activation on The Trade Desk.

  • Expanded international coverage for CTV on Roku, building upon our existing measurement partnership, with plans for further international expansion.

  • Continued to grow supply side business, with new customer wins including News Corp, Time, Inc. and Ziff Davis, among others.

  • Enhanced the leadership team with the appointment of Julie Eddleman as EVP, Global Chief Commercial Officer (CCO), who will lead the Company’s sales and client service organizations worldwide, and Doug Campbell as Chief Strategy Officer, who will lead corporate strategy and M&A.

  • Achieved additional Media Rating Council (MRC) accreditation in CTV for display and video rendered ad impression measurement and sophisticated invalid traffic (SIVT) filtration, including app fraud.

  • Launched DV Authentic Attention™, the first privacy-friendly data solution to provide timely, impression-level insights to optimize campaign performance.

  • Expanded Brand Safety/Suitability Services on Facebook video products, now offering the widest brand safety/suitability coverage of any provider on the platform.

"DoubleVerify continues to outpace the growth of the digital advertising market and is well positioned to deliver strong revenue growth and profitability in 2021," said Nicola Allais, CFO of DoubleVerify. "In the first quarter, revenue growth was driven by continued success in launching new products and expanding market share in the programmatic, CTV and Social sectors. Additionally, we maintained strong customer retention in the quarter, evidenced by a gross revenue retention rate of over 95%. After the quarter closed, we received aggregate net proceeds of $282 million from the IPO and a concurrent private placement, further strengthening our balance sheet and bolstering our ability to expand our global footprint and accelerate our technology roadmap."

Second Quarter and Full-Year 2021 Guidance:

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

Second quarter 2021:

  • Revenue of $72 to $74 million, a year-over-year increase of 38% at the midpoint.

  • Adjusted EBITDA in the range of $20 to $22 million, a year-over-year improvement of 34% at the midpoint.

Full year 2021:

  • Revenue of $322 to $326 million, a year-over-year increase of 33% at the midpoint.

  • Adjusted EBITDA in the range of $103 to $105 million, a year-over-year increase of 42% at the midpoint.

With respect to the Company’s expectations under "Second Quarter and Full Year 2021 Guidance" above, the Company has not reconciled the non-GAAP measure Adjusted EBITDA to the GAAP measure net income (loss) 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 (loss). In addition, the Company believes such a reconciliation would imply a degree of precision that could be confusing or misleading to investors.

Conference Call and Webcast Information

DoubleVerify will host a conference call and live webcast to discuss its first quarter 2021 financial results at 4:30 p.m. Eastern Time today, May 25, 2021. To access the conference call, dial (877) 841-2987 for the U.S. or Canada, or (215) 268-9878 for international callers and provide conference ID 13719679. The webcast will be available live on the Investors section of the Company's website at https://ir.doubleverify.com/. In addition, an archived webcast will be available approximately two hours after the conclusion of the live event.

Key Business Terms

Advertiser Direct 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.

Advertiser Programmatic revenue is generated from the evaluation, verification and measurement of advertising impressions purchased through programmatic demand-side 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 Media Transaction Measured.

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of

As of

(in thousands, except per share data)

March 31, 2021

December 31, 2020

Assets:

Current assets

Cash and cash equivalents

$

49,815

$

33,354

Trade receivables, net of allowances for doubtful accounts of $6,412 and $7,049 as of March 31, 2021 and December 31, 2020 respectively

86,798

94,677

Prepaid expenses and other current assets

12,068

13,904

Total current assets

148,681

141,935

Property, plant and equipment, net

18,948

18,107

Goodwill

227,349

227,349

Intangible assets, net

117,245

121,710

Deferred tax assets

82

82

Other non-current assets

2,089

2,151

Total assets

$

514,394

$

511,334

Liabilities and Stockholders' Equity:

Current liabilities

Trade payables

$

3,567

$

3,495

Accrued expense

20,213

25,419

Income tax liabilities

1,107

1,277

Current portion of capital lease obligations

2,140

1,515

Contingent considerations current

1,660

1,198

Other current liabilities

1,993

1,116

Total current liabilities

30,680

34,020

Long-term debt

22,000

22,000

Capital lease obligations

4,112

3,447

Deferred tax liabilities

30,090

31,418

Other non-current liabilities

2,896

3,292

Contingent considerations non-current

462

Total liabilities

$

89,778

$

94,639

Commitments and Contingencies

Stockholders’ equity

Common stock, $0.001 par value, 700,000 shares authorized, 140,402 shares issued and 125,256 shares outstanding as of March 31, 2021; 140,222 shares issued and 125,074 shares outstanding as of December 31, 2020

140

140

Preferred stock, $0.01 par value, 61,006 shares authorized, issued, and outstanding as of March 31, 2021 and December 31, 2020. Liquidation preference: $350,000 as of March 31, 2021 and December 31, 2020

610

610

Additional paid-in capital

623,755

620,679

Treasury stock, at cost, 15,146 shares as of March 31, 2021 and December 31, 2020

(260,686)

(260,686)

Retained earnings

60,585

54,941

Accumulated other comprehensive income, net of income taxes

212

1,011

Total stockholders’ equity

424,616

416,695

Total liabilities and stockholders' equity

$

514,394

$

511,334

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended March 31,

(in thousands, except per share data)

2021

2020

Revenue

$

67,586

$

51,219

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

10,203

7,310

Product development

14,179

10,331

Sales, marketing and customer support

15,534

12,319

General and administrative

11,835

10,696

Depreciation and amortization

7,057

5,934

Income from operations

8,778

4,629

Interest expense

390

1,164

Other (income), net

(49)

(320)

Income before income taxes

8,437

3,785

Income tax expense

2,793

1,345

Net income

$

5,644

$

2,440

Earnings per share:

Basic

$

0.05

$

0.02

Diluted

$

0.04

$

0.02

Weighted-average common stock outstanding:

Basic

125,112

139,741

Diluted

133,578

147,233

Comprehensive income:

Net income

$

5,644

$

2,440

Other comprehensive (loss):

Foreign currency cumulative translation adjustment

(799)

(153)

Total comprehensive income

$

4,845

$

2,287

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, 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

Balance as of January 1, 2020

139,721

$

140

$

$

$

283,457

$

34,488

$

(67)

$

318,018

Foreign currency translation adjustment

(153)

(153)

Stock-based compensation expense

802

802

Common stock issued upon exercise of stock options

32

70

70

Net income

2,440

2,440

Balance as of March 31, 2020

139,753

$

140

$

$

$

284,329

$

36,928

$

(220)

$

321,177

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended

March 31,

(in thousands)

2021

2020

Operating activities:

Net income

$

5,644

$

2,440

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

Bad debt (recovery) expense

(390)

709

Depreciation and amortization expense

7,057

5,934

Amortization of debt issuance costs

74

72

Accretion of acquisition liabilities

21

Deferred taxes

(1,328)

(1,624)

Stock-based compensation expense

2,538

802

Interest expense (income)

66

(29)

Change in fair value of contingent consideration

(979)

Offering costs

3,073

870

Other

(68)

621

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

Trade receivables

7,803

4,098

Prepaid expenses and other current assets

1,754

811

Other non-current assets

(12)

(44)

Trade payables and other liabilities

(524)

1,291

Accrued expenses

(6,469)

(3,854)

Other current liabilities

1,102

1,093

Other non-current liabilities

(856)

470

Net cash provided by operating activities

19,464

12,702

Investing activities:

Purchase of property, plant and equipment

(1,915)

(3,049)

Net cash (used in) investing activities

(1,915)

(3,049)

Financing activities:

Payments of long-term debt

(188)

Payments related to offering costs

(1,181)

(676)

Payment of contingent consideration related to Zentrick acquisition

(601)

Proceeds from common stock issued upon exercise of stock options

538

70

Capital lease payments

(235)

(418)

Net cash (used in) financing activities

(878)

(1,813)

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

(209)

(143)

Net increase in cash, cash equivalents, and restricted cash

16,462

7,697

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

33,395

11,342

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

$

49,857

$

19,039

Cash and cash equivalents

49,815

18,730

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

42

309

Total cash and cash equivalents and restricted cash

$

49,857

$

19,039

Supplemental cash flow information:

Cash paid for taxes

1,045

541

Cash paid for interest

147

1,069

Non-cash investing and financing activities:

Acquisition of equipment under capital lease

1,518

973

Capital assets financed by accounts payable

16

Offering costs included in accounts payable and accrued expense

1,889

306

Comparison of the Three Months Ended March 31, 2021 and March 31, 2020

Revenue

Three Months Ended March 31,

Change

Change

2021

2020

$

%

(In Thousands)

Revenue by customer type:

Advertisers - direct

$

27,541

$

22,187

$

5,354

24

%

Advertisers - programmatic

33,912

23,851

10,061

42

Supply - side customer

6,133

5,181

952

18

Total revenue

$

67,586

$

51,219

$

16,367

32

%

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. A metric similar to Adjusted EBITDA is used in certain calculations under our New Revolving Credit Facility. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. 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. In addition, other companies in our industry may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. 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 March 31,

2021

2020

(In Thousands)

Net income

$

5,644

$

2,440

Net income margin

8%

5%

Depreciation and amortization

7,057

5,934

Stock-based compensation

2,538

802

Interest expense

390

1,164

Income tax expense

2,793

1,346

M&A (recoveries) costs (a)

(18)

215

Offering costs and IPO readiness costs (b)

3,261

1,641

Other costs (c)

109

2,163

Other (income) (d)

(49)

(320)

Adjusted EBITDA

$

21,725

$

15,385

Adjusted EBITDA margin

32%

30%

  1. M&A (recoveries) costs for the three months ended March 31, 2021 and 2020 consist of third-party costs and deferred compensation costs related to acquisitions.

  2. Offering costs and IPO readiness costs for the three months ended March 31, 2021 and 2020 consist of third-party costs incurred in preparation for our IPO.

  3. Other costs for the three months ended March 31, 2021 and 2020 consist of reimbursements paid to Providence. For the three months ended March 31, 2020, other costs also include costs related to the departure of our former Chief Executive Officer, and third-party costs incurred in response to investigating and remediating certain IT/cybersecurity matters that occurred in March 2020.

  4. Other (income) consists of interest income, change in fair value associated with contingent considerations, and 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, our working capital needs;

  • Adjusted EBITDA does not reflect our 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 our interest expense or the cash requirements necessary to service interest or principal payments on our debt; 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. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue.

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

Three Months Ended

March 31,

(in thousands)

2021

2020

Product development

$

278

$

101

Sales, marketing and customer support

624

172

General and administrative

1,636

529

Total stock-based compensation

$

2,538

$

802

Forward-Looking Statements

This press release includes "forward-looking statements," including with respect to the initial public offering. 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. In addition, 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 forward-looking information presented herein is made only as of the date of this press release, and 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210525005896/en/

Contacts

Media Contact
Chris Harihar
Crenshaw Communications
646-535-9475
chris@crenshawcomm.com

Investor Relations
Tejal Engman
DoubleVerify
IR@doubleverify.com