DoubleVerify Reports Second Quarter 2022 Financial Results

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Increased Revenue by 43% Year-over-Year to $109.8 Million, a Record for the Second Quarter, Driven by Global Growth in Pre-Campaign Activation Across Programmatic, Social and CTV

Activation Revenue Increased 60% to $60.5 Million

Achieved Net Income of $10.3 Million and Second Quarter Record Adjusted EBITDA of $34.0 Million, representing a 31% Adjusted EBITDA margin

Raised Midpoints of Full-Year 2022 Guidance Ranges to 35% Total Revenue Growth and 31% Adjusted EBITDA margins

DoubleVerify ("DV") DV, a leading software platform for digital media measurement, data and analytics, today announced financial results for the second quarter ended June 30, 2022.

"We delivered an outstanding second quarter and surpassed our expectations for growth and profitability fueled by record Activation revenue and continued momentum on Social and CTV platforms," said Mark Zagorski, CEO of DoubleVerify. "As advertisers seek stability and clarity in an increasingly unstable and opaque marketing environment, they continue to choose DV's industry-leading quality and performance solutions to protect their brands and reduce media waste, ultimately driving better outcomes and ROI. Based on our strong results in the first half of 2022, we are raising our guidance for full year revenue and adjusted EBITDA. We remain confident that our growing global scale, market leading innovation, and legacy of trust will further deepen our client relationships and fuel steady growth that will outperform our competitors and the broader digital ad industry in 2022 and beyond."

Second Quarter 2022 Financial Highlights:
(All comparisons are to the second quarter of 2021)

  • Total revenue of $109.8 million, an increase of 43%.
  • Activation revenue of $60.5 million, an increase of 60%.
  • Measurement revenue of $38.9 million, an increase of 23%.
    • Media Transactions Measured ("MTM") for CTV and Social increased by 56% and 26% respectively.
    • International measurement revenue increased by 18%, with EMEA revenue growth of 14% and APAC revenue growth of 25%.
  • Supply-Side revenue of $10.4 million, an increase of 49%.
  • Net income of $10.3 million and adjusted EBITDA of $34.0 million, which increased by 60% and represented a 31% adjusted EBITDA margin.

Second Quarter and Recent Business Highlights:

  • Grew Total Advertiser revenue by 43% year-over-year in the second quarter primarily due to a 24% 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 second quarter.
  • Grew premium-priced Authentic Brand Suitability (ABS) revenues by 52% year-over-year in the second quarter driven by existing client upsells and geographic expansion as well as by a 20% year-over-year increase in the number of advertisers activating the solution in the second quarter of 2022.
  • Drove global market share growth through product upsells, international expansion and new enterprise logo wins including British Airways, Taco Bell, Universal Parks, Roshfrans, Meta, Asda, Califia Farms, Infiniti and Smile Direct.
  • Continued to expand our coverage in the digital gaming sector and began working with Twitch Ads on a solution to identify contextually brand-safe and suitable livestreamed content for advertisers on Twitch. The solution is currently in closed beta. Twitch is an interactive livestreaming service and global community.
  • Launched an exclusive partnership with Reddit to enable full-suite media verification and maximize advertiser performance across its dynamic, user generated content environment.
  • Launched an exclusive partnership with Scope3 to provide advertiser and agency customers with a comprehensive campaign-based carbon footprint metric via DV's flagship service and analytics platform, DV Pinnacle®.
  • Launched a platform-wide agreement with the LinkedIn Audience Network to provide brand safety and fraud prevention for all LinkedIn native ads across desktop, mobile web and in-app. The integration uses DV's technology and data to not only ensure that all campaigns activated through the LinkedIn Audience Network are brand safe, but also fraud-free.

"We delivered strong revenue growth in the first half of 2022 due to the resilience of our business model and the essential nature of our products," said Nicola Allais, CFO of DoubleVerify. "Our revenue outperformance translated into stronger than expected adjusted EBITDA margins, which also benefited from the faster integration of recent acquisitions and our overall financial discipline, ensuring that our operating expense growth was commensurate with our expected revenue growth. At the midpoints of our raised full-year guidance range, we now expect 35% revenue growth and 31% adjusted EBITDA margins. We continue to monitor the impact of the macroeconomic and geopolitical environment on our clients' ad budgets, and to engage them in regular dialogue as we successfully execute our plan for the rest of the year."

Third Quarter and Full-Year 2022 Guidance:

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

Third Quarter 2022:

  • Revenue of $108 to $110 million, a year-over-year increase of 31% at the midpoint.
  • Adjusted EBITDA in the range of $32 to $34 million, representing a 30% margin at the midpoint.

Full Year 2022:

  • Revenue of $448 to $450 million, a year-over-year increase of 35% at the midpoint.
  • Adjusted EBITDA in the range of $136 to $140 million, representing a 31% margin at the midpoint.

With respect to the Company's expectations under "Third 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 second quarter 2022 financial results at 4:30 p.m. Eastern Time today, August 3, 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. Based on this methodology, the international measurement revenue growth rate is 32% for the first quarter ended March 31, 2022 and 24% for the six months ended June 30, 2022. For prior periods, international revenue growth rates excluded foreign currency fluctuations.

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DoubleVerify Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

 

 

 

 

 

 

As of

 

As of

(in thousands, except per share data)

 

June 30, 2022

 

December 31, 2021

Assets:

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

223,738

 

$

221,591

Trade receivables, net of allowances for doubtful accounts of $7,961 and $6,527 as of June 30, 2022 and December 31, 2021, respectively

 

 

142,152

 

 

122,938

Prepaid expenses and other current assets

 

 

20,624

 

 

23,295

Total current assets

 

 

386,514

 

 

367,824

Property, plant and equipment, net

 

 

24,958

 

 

17,575

Operating lease right-of-use assets, net

 

 

75,613

 

 

Goodwill

 

 

339,489

 

 

350,560

Intangible assets, net

 

 

147,612

 

 

153,395

Deferred tax assets

 

 

60

 

 

60

Other non-current assets

 

 

1,771

 

 

2,780

Total assets

 

$

976,017

 

$

892,194

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade payables

 

$

6,035

 

$

3,853

Accrued expense

 

 

27,431

 

 

41,456

Operating lease liabilities, current

 

 

5,266

 

 

Income tax liabilities

 

 

1,182

 

 

1,321

Current portion of finance lease obligations

 

 

2,045

 

 

1,970

Contingent considerations, current

 

 

 

 

1,717

Other current liabilities

 

 

6,025

 

 

6,716

Total current liabilities

 

 

47,984

 

 

57,033

Operating lease liabilities, non-current

 

 

75,861

 

 

Finance lease obligations

 

 

1,598

 

 

2,579

Deferred tax liabilities

 

 

26,239

 

 

30,307

Other non-current liabilities

 

 

3,000

 

 

3,209

Total liabilities

 

$

154,682

 

$

93,128

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Common stock, $0.001 par value, 1,000,000 shares authorized, 164,133 shares issued and 163,850 outstanding as of June 30, 2022; 1,000,000 shares authorized, 162,347 shares issued and 162,297 shares outstanding as of December 31, 2021

 

 

164

 

 

162

Additional paid-in capital

 

 

737,574

 

 

717,228

Treasury stock, at cost, 283 shares and 50 shares as of June 30, 2022 and December 31, 2021, respectively

 

 

(7,546)

 

 

(1,802)

Retained earnings

 

 

99,118

 

 

84,249

Accumulated other comprehensive loss, net of income taxes

 

 

(7,975)

 

 

(771)

Total stockholders' equity

 

 

821,335

 

 

799,066

Total liabilities and stockholders' equity

 

$

976,017

 

$

892,194

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)

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

109,805

 

$

76,524

 

$

206,528

 

$

144,110

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

 

 

18,836

 

 

12,291

 

 

35,713

 

 

22,494

Product development

 

 

23,222

 

 

15,120

 

 

44,810

 

 

29,299

Sales, marketing and customer support

 

 

24,733

 

 

19,580

 

 

51,417

 

 

35,114

General and administrative

 

 

21,529

 

 

32,017

 

 

41,204

 

 

43,852

Depreciation and amortization

 

 

8,317

 

 

7,440

 

 

17,357

 

 

14,497

Income (loss) from operations

 

 

13,168

 

 

(9,924)

 

 

16,027

 

 

(1,146)

Interest expense

 

 

223

 

 

297

 

 

455

 

 

687

Other expense, net

 

 

145

 

 

49

 

 

191

 

 

Income (loss) before income taxes

 

 

12,800

 

 

(10,270)

 

 

15,381

 

 

(1,833)

Income tax expense

 

 

2,510

 

 

2,298

 

 

512

 

 

5,091

Net income (loss)

 

$

10,290

 

$

(12,568)

 

$

14,869

 

$

(6,924)

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

$

(0.08)

 

$

0.09

 

$

(0.05)

Diluted

 

$

0.06

 

$

(0.08)

 

$

0.09

 

$

(0.05)

Weighted-average common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

163,610

 

 

149,596

 

 

163,114

 

 

137,355

Diluted

 

 

170,223

 

 

149,596

 

 

170,359

 

 

137,355

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

10,290

 

$

(12,568)

 

$

14,869

 

$

(6,924)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency cumulative translation adjustment

 

 

(5,634)

 

 

355

 

 

(7,204)

 

 

(444)

Total comprehensive income (loss)

 

$

4,656

 

$

(12,213)

 

$

7,665

 

$

(7,368)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

DoubleVerify Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30,

(in thousands)

 

2022

 

2021

Operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

14,869

 

$

(6,924)

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

 

 

 

 

 

 

Bad debt expense

 

 

1,997

 

 

199

Depreciation and amortization expense

 

 

17,357

 

 

14,496

Amortization of debt issuance costs

 

 

147

 

 

147

Non-cash lease expense

 

 

3,882

 

 

Deferred taxes

 

 

(3,974)

 

 

(3,175)

Stock-based compensation expense

 

 

20,253

 

 

7,252

Interest expense

 

 

72

 

 

9

Loss on disposal of fixed assets

 

 

1,345

 

 

Impairment of long-lived assets

 

 

1,510

 

 

Change in fair value of contingent consideration

 

 

 

 

57

Offering costs

 

 

 

 

21,801

Other

 

 

(302)

 

 

62

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

 

 

 

 

 

 

Trade receivables

 

 

(21,942)

 

 

8,518

Prepaid expenses and other assets

 

 

(949)

 

 

(583)

Trade payables

 

 

2,262

 

 

541

Accrued expenses and other liabilities

 

 

(9,978)

 

 

(172)

Net cash provided by operating activities

 

 

26,549

 

 

42,228

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(13,606)

 

 

(3,513)

Net cash (used in) investing activities

 

 

(13,606)

 

 

(3,513)

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

 

 

2,516

 

 

3,447

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)

 

 

(21,708)

Finance lease payments

 

 

(907)

 

 

(804)

Shares repurchased for settlement of employee tax withholdings

 

 

(9,191)

 

 

Net cash (used in) provided by financing activities

 

 

(10,067)

 

 

258,275

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

 

 

(738)

 

 

13

Net increase in cash, cash equivalents, and restricted cash

 

 

2,138

 

 

297,003

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

 

 

221,725

 

 

33,395

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

 

$

223,863

 

$

330,398

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

223,738

 

 

330,355

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

 

 

125

 

 

43

Total cash and cash equivalents and restricted cash

 

$

223,863

 

$

330,398

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for taxes

 

 

1,161

 

 

3,305

Cash paid for interest

 

 

282

 

 

525

Non-cash investing and financing activities:

 

 

 

 

 

 

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

 

 

79,565

 

 

Acquisition of equipment under finance lease

 

 

 

 

1,518

Offering costs included in accounts payable and accrued expense

 

 

 

 

89

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

 

 

258

 

 

Comparison of the Three and Six Months Ended June 30, 2022 and June 30, 2021

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Change

 

Change

 

Six Months Ended June 30,

 

Change

 

Change

 

2022

 

2021

 

$

 

%

 

2022

 

2021

 

$

 

%

 

(In Thousands)

 

 

 

 

 

 

 

(In Thousands)

 

 

 

 

 

 

Revenue by customer type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Measurement (f/k/a Advertiser - direct)

$

38,903

 

$

31,662

 

$

7,241

 

23

%

 

$

72,737

 

$

59,203

 

$

13,534

 

23

%

Activation (f/k/a Advertiser - programmatic)

 

60,495

 

 

37,880

 

 

22,615

 

60

 

 

 

113,526

 

 

71,792

 

 

41,734

 

58

 

Supply-side customer

 

10,407

 

 

6,982

 

 

3,425

 

49

 

 

 

20,265

 

 

13,115

 

 

7,150

 

55

 

Total revenue

$

109,805

 

$

76,524

 

$

33,281

 

43

%

 

$

206,528

 

$

144,110

 

$

62,418

 

43

%

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 June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

 

(In Thousands)

 

(In Thousands)

Net income (loss)

$

10,290

 

$

(12,568)

 

$

14,869

 

$

(6,924)

Net income (loss) margin

 

9%

 

 

(16)%

 

 

7%

 

 

(5)%

Depreciation and amortization

 

8,317

 

 

7,440

 

 

17,357

 

 

14,497

Stock-based compensation

 

9,259

 

 

4,714

 

 

20,253

 

 

7,252

Interest expense

 

223

 

 

297

 

 

455

 

 

687

Income tax expense

 

2,510

 

 

2,298

 

 

512

 

 

5,091

M&A and restructuring costs (a)

 

527

 

 

67

 

 

1,180

 

 

49

Offering, IPO readiness and secondary offering costs (b)

 

 

 

18,886

 

 

 

 

22,147

Other costs (c)

 

2,690

 

 

 

 

3,887

 

 

109

Other expense (d)

 

145

 

 

49

 

 

191

 

 

Adjusted EBITDA

$

33,961

 

$

21,183

 

$

58,704

 

$

42,908

Adjusted EBITDA margin

 

31%

 

 

28%

 

 

28%

 

 

30%

  1. M&A and restructuring costs for the three and six months ended June 30, 2022 consist of transaction costs, integration and restructuring costs related to the acquisition of OpenSlate. M&A costs for the three and six months ended June 30, 2021 consist of reductions to deferred compensation liabilities related to acquisitions.
  2. Offering, IPO readiness and secondary offering costs for the three and six months ended June 30, 2021 consist of third-party costs incurred for the Company's IPO and secondary offering.
  3. Other costs for the three and six months ended June 30, 2022 consist of 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, partially offset by sublease income. For the three and six months ended June 30, 2021, other costs include reimbursements paid to Providence.
  4. Other expense for the three and six months ended June 30, 2022 and June 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

 

Six Months Ended

 

 

June 30,

 

June 30,

(in thousands)

 

2022

 

2021

 

2022

 

2021

Product development

 

$

3,544

 

$

436

 

$

6,910

 

$

714

Sales, marketing and customer support

 

 

2,587

 

 

1,696

 

 

6,416

 

 

2,320

General and administrative

 

 

3,128

 

 

2,582

 

 

6,927

 

 

4,218

Total stock-based compensation

 

$

9,259

 

$

4,714

 

$

20,253

 

$

7,252

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 "Third 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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