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DoubleVerify Announces Second Quarter 2021 Financial Results

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  • DV

Revenue Increased 44% Year-over Year to $76.5 Million, driven by Growth in Programmatic, CTV, Social and International Revenue

Advertiser Programmatic Revenue Increased 57% to $37.9 Million

Full-Year 2021 Revenue Outlook Raised

NEW YORK, July 29, 2021--(BUSINESS WIRE)--DoubleVerify ("DV") (NYSE: DV), a leading software platform for digital media measurement, data and analytics, today announced financial results for the second quarter ended June 30, 2021.

"We delivered an outstanding second quarter fueled by record Programmatic Revenue as advertisers adopted our industry-leading Authentic Brand Safety solution on Google’s DV360 and additional programmatic buying platforms," said Mark Zagorski, CEO of DoubleVerify. "Product innovation success, industry-leading accreditations in fast-growing sectors such as CTV and Social, and continued investments in enhancing our international footprint have yielded new enterprise client wins and meaningful expansion opportunities within our existing blue-chip customer base. Our ongoing product and market leadership combined with digital advertising spend tailwinds, make us optimistic about our growth prospects for the rest of the year and beyond."

Second Quarter 2021 Financial Highlights:

(All comparisons are to the second quarter of 2020)

  • Total revenue of $76.5 million, an increase of 44%.

  • Advertiser Direct revenue of $31.7 million, an increase of 34%.

    • Media Transactions Measured ("MTM") for Social increased by 100% and for CTV increased by 89%.

    • APAC revenue increased by 73%.

    • EMEA revenue increased by 62%.

  • Advertiser Programmatic revenue of $37.9 million, an increase of 57%.

  • Supply-Side revenue of $7.0 million, an increase of 35%.

  • Net loss of $12.6 million due to $18.9 million of one-time IPO transaction costs, and a decrease in diluted earnings per share to $(0.08).

  • Adjusted EBITDA of $21.2 million, an increase of 35% while the Company continues to invest in global operations, including product and engineering, to continue to drive long-term growth.

Second Quarter and Recent 2021 Business Highlights:

  • Grew premium-priced Authentic Brand Safety revenues by 112% year-over-year in the second quarter driven by wide adoption on Google’s DV360 and a second-quarter launch on other programmatic buying platforms including Adform, Quantcast and Pulsepoint.

  • Doubled the number of weekly advertisers using DV Custom Contextual™ in the second quarter compared to the first quarter of 2021 as our privacy-safe, cookie-free targeting solution was made available to programmatic advertisers through leading DSPs, including The Trade Desk, MediaMath, Adform, Amazon, Verizon Media and Xandr.

  • Won global business at new enterprise clients including Diageo, BMW, Philip Morris International, Grupo Bimbo, and Bumble.

  • Won new enterprise clients in the Americas including Progressive, Target, Zaxby’s, CarGurus and Truist.

  • Launched an app-level CTV brand suitability solution offering wide coverage across all CTV platforms, apps and devices.

  • Extended Media Rating Council (MRC) accreditation of CTV capabilities to include DV Video Filtering, a component of DV’s Video Complete CTV Solution, in addition to Fully-On Screen metrics and CTV IVT (invalid traffic) accreditation.

  • Launched TikTok open beta in 14 markets, including viewability and fraud measurement and protection.

  • First in the industry to be awarded three privacy certification seals from TrustArc, aligning DV’s data protection mechanisms with core international data protection principles and standards.

"We achieved 44% total revenue growth and continued to achieve over 95% gross revenue retention in the second quarter. Our solid second quarter EBITDA margins of 28% reflect ongoing strategic investments that will help accelerate our product development roadmap and enhance our expansion in international markets, where we are steadily growing our market share," said Nicola Allais, CFO of DoubleVerify. "Our revenue growth expectations for the second half of the year are driven by a positive outlook for the fourth quarter, which tends to benefit from seasonally higher spending on advertising campaigns. In addition to delivering performance that exhibits the high growth and high profitability ‘rule of 60’, our debt-free balance sheet and quarter-end cash position of $330 million dollars provides us the financial flexibility to elevate our long-term growth profile and capture a greater share of a large and growing market opportunity."

Third Quarter and Full-Year 2021 Guidance:

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

Third quarter 2021:

  • Revenue of $81 to $83 million, a year-over-year increase of 34% at the midpoint.

  • Adjusted EBITDA in the range of $22 to $24 million, a year-over-year improvement of 59% at the midpoint.

Full year 2021:

  • Revenue of $325 to $330 million, a year-over-year increase of 34% at the midpoint, higher than the previous guidance range of $322 to $326 million provided on May 25, 2021.

  • Adjusted EBITDA in the range of $103 to $105 million, a year-over-year increase of 42% at the midpoint, unchanged from the previous guidance range provided on May 25, 2021.

With respect to the Company’s expectations under "Third 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 second quarter 2021 financial results at 4:30 p.m. Eastern Time today, July 29, 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 13721124. 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)

June 30, 2021

December 31, 2020

Assets:

Current assets

Cash and cash equivalents

$

330,355

$

33,354

Trade receivables, net of allowances for doubtful accounts of $6,889 and $7,049 as of June 30, 2021 and December 31, 2020 respectively

85,555

94,677

Prepaid expenses and other current assets

14,106

13,904

Total current assets

430,016

141,935

Property, plant and equipment, net

17,572

18,107

Goodwill

227,349

227,349

Intangible assets, net

112,780

121,710

Deferred tax assets

82

82

Other non-current assets

2,303

2,151

Total assets

$

790,102

$

511,334

Liabilities and Stockholders' Equity:

Current liabilities

Trade payables

$

4,122

$

3,495

Accrued expense

25,460

25,419

Income tax liabilities

670

1,277

Current portion of capital lease obligations

2,021

1,515

Contingent considerations current

1,717

1,198

Other current liabilities

2,101

1,116

Total current liabilities

36,091

34,020

Long-term debt

22,000

Capital lease obligations

3,618

3,447

Deferred tax liabilities

28,243

31,418

Other non-current liabilities

2,734

3,292

Contingent considerations non-current

462

Total liabilities

$

70,686

$

94,639

Commitments and contingencies (Note 13)

Stockholders’ equity

Common stock, $0.001 par value, 1,000,000 shares authorized, 157,768 shares issued and outstanding as of June 30, 2021; 700,000 shares authorized, 140,222 shares issued and 125,074 shares outstanding as of December 31, 2020

158

140

Preferred stock, $0.01 par value, 100,000 shares authorized and zero shares issued and outstanding as of June 30, 2021 and 61,006 shares authorized, issued, and outstanding as of December 31, 2020. Liquidation preference: $350,000 as of December 31, 2020

610

Additional paid-in capital

670,674

620,679

Treasury stock, at cost, zero shares and 15,146 shares as of June 30, 2021 and December 31, 2020, respectively

(260,686

)

Retained earnings

48,017

54,941

Accumulated other comprehensive income, net of income taxes

567

1,011

Total stockholders’ equity

719,416

416,695

Total liabilities and stockholders' equity

$

790,102

$

511,334

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except per share data)

2021

2020

2021

2020

Revenue

$

76,524

$

53,020

$

144,110

$

104,239

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

12,291

7,655

22,494

14,965

Product development

15,120

10,906

29,299

21,237

Sales, marketing and customer support

19,580

12,833

35,114

25,152

General and administrative

32,017

8,262

43,852

18,958

Depreciation and amortization

7,440

6,146

14,497

12,080

(Loss) income from operations

(9,924

)

7,218

(1,146

)

11,847

Interest expense

297

936

687

2,100

Other expense (income), net

49

198

(122

)

(Loss) income before income taxes

(10,270

)

6,084

(1,833

)

9,869

Income tax expense

2,298

2,006

5,091

3,351

Net (loss) income

$

(12,568

)

$

4,078

$

(6,924

)

$

6,518

(Loss) earnings per share:

Basic

$

(0.08

)

$

0.03

$

(0.05

)

$

0.05

Diluted

$

(0.08

)

$

0.03

$

(0.05

)

$

0.04

Weighted-average common stock outstanding:

Basic

149,596

139,756

137,355

139,748

Diluted

149,596

146,541

137,355

146,927

Comprehensive (loss) income:

Net (loss) income

$

(12,568

)

$

4,078

$

(6,924

)

$

6,518

Other comprehensive (loss) income:

Foreign currency cumulative translation adjustment

355

231

(444

)

78

Total comprehensive (loss) income

$

(12,213

)

$

4,309

$

(7,368

)

$

6,596

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

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

RSU vested

217

Conversion of Series A preferred stock to common stock in connection with initial public offering

5,190

5

(61,006)

(610)

(15,146)

260,686

(260,081)

Issuance of common stock in connection with initial public offering

9,977

10

269,380

269,390

Issuance of common stock in connection with the private placement concurrent with the 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

$

$

$

$

48,017

$

567

$

719,416

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

Foreign currency translation adjustment

231

231

Stock-based compensation

1,140

1,140

Common stock issued upon exercise of stock options

58

51

51

Net income

4,078

4,078

Balance as of June 30, 2020

139,811

$

140

$

$

$

285,520

$

41,006

$

11

$

326,677

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended

June 30,

(in thousands)

2021

2020

Operating activities:

Net (loss) income

$

(6,924

)

$

6,518

Adjustments to reconcile net (loss) income to net cash provided by operating activities

Bad debt expense

199

1,748

Depreciation and amortization expense

14,496

12,080

Amortization of debt issuance costs

147

142

Accretion of acquisition liabilities

36

Deferred taxes

(3,175

)

(3,096

)

Stock-based compensation expense

7,252

1,942

Interest expense (income)

9

(42

)

Change in fair value of contingent consideration

57

(899

)

Offering costs

21,801

1,058

Other

62

621

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

Trade receivables

8,518

(47

)

Prepaid expenses and other current assets

(284

)

855

Other non-current assets

(299

)

3

Trade payables and other liabilities

541

2,057

Accrued expenses

121

(2,978

)

Other current liabilities

827

(2,680

)

Other non-current liabilities

(1,120

)

148

Net cash provided by operating activities

42,228

17,466

Investing activities:

Purchase of property, plant and equipment

(3,513

)

(4,562

)

Net cash (used in) investing activities

(3,513

)

(4,562

)

Financing activities:

Payments of long-term debt

(22,000

)

(189

)

Deferred payment related to Leiki acquisition

(2,033

)

Deferred payment related to Zentrick acquisition

(50

)

(50

)

Payment of contingent consideration related to Zentrick acquisition

(601

)

Proceeds from common stock issued upon exercise of stock options

3,447

121

Proceeds from issuance of common stock upon initial public offering

269,390

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

30,000

Payments related to offering costs

(21,708

)

(1,107

)

Capital lease payments

(804

)

(874

)

Net cash provided by (used in) financing activities

258,275

(4,733

)

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

13

(80

)

Net increase in cash, cash equivalents, and restricted cash

297,003

8,091

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

33,395

11,342

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

$

330,398

$

19,433

Cash and cash equivalents

330,355

19,038

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

43

395

Total cash and cash equivalents and restricted cash

$

330,398

$

19,433

Supplemental cash flow information:

Cash paid for taxes

3,305

7,777

Cash paid for interest

525

1,654

Non-cash investing and financing activities:

Conversion of Series A preferred stock to common stock in connection with the initial public offering

610

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

260,686

Acquisition of equipment under capital lease

1,518

973

Capital assets financed by accounts payable

76

Offering costs included in accounts payable and accrued expense

89

100

Comparison of the Three and Six Months Ended June 30, 2021 and June 30, 2020

Revenue

Three Months Ended June 30,

Change

Change

Six Months Ended June 30,

Change

Change

2021

2020

$

%

2021

2020

$

%

(In Thousands)

(In Thousands)

Revenue by customer type:

Advertiser - direct

$

31,662

$

23,707

$

7,955

34

%

$

59,203

$

45,894

$

13,309

29

%

Advertiser - programmatic

37,880

24,128

13,752

57

71,792

47,979

23,813

50

Supply-side customer

6,982

5,185

1,797

35

13,115

10,366

2,749

27

Total revenue

$

76,524

$

53,020

$

23,504

44

%

$

144,110

$

104,239

$

39,871

38

%

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. 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 June 30,

Six Months Ended June 30,

2021

2020

2021

2020

(In Thousands)

(In Thousands)

Net (loss) income

$

(12,568

)

$

4,078

$

(6,924

)

$

6,518

Net (loss) income margin

(16

)%

8

%

(5

)%

6

%

Depreciation and amortization

7,440

6,146

14,497

12,080

Stock-based compensation

4,714

1,140

7,252

1,942

Interest expense

297

936

687

2,100

Income tax expense

2,298

2,006

5,091

3,351

M&A costs (a)

67

8

49

223

Offering costs and IPO readiness costs (b)

18,886

585

22,147

2,227

Other costs (c)

561

109

2,724

Other expense (income) (d)

49

198

(122

)

Adjusted EBITDA

$

21,183

$

15,658

$

42,908

$

31,043

Adjusted EBITDA margin

28

%

30

%

30

%

30

%

(a)

M&A costs for the three and six months ended June 30, 2021 consist of reductions to deferred compensation liabilities related to acquisitions. M&A costs for the three and six months ended June 30, 2020 consist of third-party costs and deferred compensation costs related to acquisitions.

(b)

Offering costs and IPO readiness costs for the three and six months ended June 30, 2021 and 2020 consist of third-party costs incurred in preparation and completion for our IPO.

(c)

Other costs for the three and six months ended June 30, 2021 consist of reimbursements paid to Providence. For the three and six months ended June 30, 2020, other costs include reimbursements paid to Providence as well as 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.

(d)

Other expense (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.

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

Three Months Ended

Six Months Ended

June 30,

June 30,

(in thousands)

2021

2020

2021

2020

Product development

436

152

$

714

$

253

Sales, marketing and customer support

1,696

392

2,320

564

General and administrative

2,582

596

4,218

1,125

Total stock-based compensation

$

4,714

$

1,140

$

7,252

$

1,942

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/20210729006055/en/

Contacts

Media Contact

Chris Harihar
Crenshaw Communications
646‑535‑9475
chris@crenshawcomm.com

Investor Relations

Tejal Engman
DoubleVerify
IR@doubleverify.com