Direct Digital (DRCT) 10-Q 15 Oct 24 2024 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Jun. 30, 2024	Oct. 11, 2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	001-41261
Entity Registrant Name	DIRECT DIGITAL HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-2306185
Entity Address, Address Line One	1177 West Loop South
Entity Address, Address Line Two	Suite 1310
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77027
City Area Code	832
Local Phone Number	402-1051
Title of 12(b) Security	Class A Common Stock, par value $0.001 per share
Trading Symbol	DRCT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001880613
Current Fiscal Year End Date	--12-31
Class A
Entity Common Stock, Shares Outstanding		3,795,199
Class B Common Stock
Entity Common Stock, Shares Outstanding		10,868,000

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
CURRENT ASSETS
Cash and cash equivalents	$ 1,069	$ 5,116
Accounts receivable, net of provision for credit losses of $335000 and $344000	19,517	37,207
Prepaid expenses and other current assets	889	759
Total current assets	21,475	43,082
Property, equipment and software, net	471	599
Goodwill	6,520	6,520
Intangible assets, net	10,707	11,684
Deferred tax asset, net	6,607	6,132
Operating lease right-of-use assets	912	788
Related party receivable	1,737	1,737
Other long-term assets	47	130
Total assets	48,476	70,672
CURRENT LIABILITIES
Accounts payable	12,372	33,926
Accrued liabilities	1,125	3,816
Liability related to tax receivable agreement, current portion	41	41
Current maturities of long-term debt	1,840	1,478
Deferred revenues	734	381
Operating lease liabilities, current portion	179	126
Income taxes payable	44	34
Total current liabilities	16,335	39,802
Long-term debt, net of current portion	34,833	28,578
Liability related to tax receivable agreement, net of current portion	5,201	5,201
Operating lease liabilities, net of current portion	879	773
Total liabilities	57,248	74,354
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ DEFICIT
Additional paid-in capital	3,444	3,067
Accumulated deficit	(3,903)	(2,538)
Noncontrolling interest	(8,328)	(4,225)
Total stockholders’ deficit	(8,772)	(3,682)
Total liabilities and stockholders’ deficit	48,476	70,672
Class A
STOCKHOLDERS’ DEFICIT
Common stock	4	3
Class B Common Stock
STOCKHOLDERS’ DEFICIT
Common stock	$ 11	$ 11

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Accounts receivable, net of provision for credit losses of $335000 and $344000	$ 335	$ 344
Class A
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	160,000,000	160,000,000
Common stock, shares issued (in shares)	3,788,446	3,478,776
Common stock, shares outstanding (in shares)	3,788,446	3,478,776
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	10,868,000	10,868,000
Common stock, shares outstanding (in shares)	10,868,000	10,868,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues
Total revenues	$ 21,855	$ 35,404	$ 44,130	$ 56,627
Cost of revenues
Total cost of revenues	15,924	25,331	33,201	40,121
Gross profit	5,931	10,073	10,929	16,506
Operating expenses
Compensation, taxes and benefits	4,166	4,553	8,690	8,187
General and administrative	3,830	3,265	7,112	6,205
Total operating expenses	7,996	7,818	15,802	14,392
(Loss) income from operations	(2,065)	2,255	(4,873)	2,114
Other income (expense)
Other income	8	42	92	92
Loss on early termination of line of credit	0	0	0	(300)
Interest expense	(1,358)	(1,028)	(2,655)	(2,045)
Total other expense, net	(1,350)	(986)	(2,563)	(2,253)
(Loss) income before income taxes	(3,415)	1,269	(7,436)	(139)
Income tax (benefit) expense	(274)	74	(475)	0
Net (loss) income	(3,141)	1,195	(6,961)	(139)
Net (loss) income attributable to noncontrolling interest	(2,551)	1,003	(5,596)	(117)
Net (loss) income attributable to Direct Digital Holdings, Inc.	$ (590)	$ 192	$ (1,365)	$ (22)
Net (loss) income per common share:
Basic (in dollars per share)	$ (0.16)	$ 0.03	$ (0.38)	$ (0.01)
Diluted (in dollars per share)	$ (0.16)	$ 0.03	$ (0.38)	$ (0.01)
Weighted-average number of shares of common stock outstanding:
Basic (in shares)	3,700,615	2,921,258	3,604,220	2,911,801
Diluted (in shares)	3,700,615	3,113,189	3,604,220	2,911,801
Sell-side advertising
Revenues
Total revenues	$ 14,298	$ 23,601	$ 30,799	$ 37,384
Cost of revenues
Total cost of revenues	13,209	20,743	28,016	32,584
Buy-side advertising
Revenues
Total revenues	7,557	11,803	13,331	19,243
Cost of revenues
Total cost of revenues	$ 2,715	$ 4,588	$ 5,185	$ 7,537

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT - USD ($) $ in Thousands	Total	Common Stock Class A	Common Stock Class B Common Stock	APIC	Accumulated Deficit	Noncontrolling Interest
Balance at beginning of period (in shares) at Dec. 31, 2022		2,900,000	11,278,000
Balance at beginning of period at Dec. 31, 2022	$ 5,595	$ 3	$ 11	$ 2,611	$ (344)	$ 3,314
Stock-based compensation	304			304
Issuance related to vesting of restricted stock units, net of tax withholdings (in shares)		86,716
Warrants exercised (in shares)		2,200
Warrants exercised	12			12
Distributions to holders of LLC Units	(752)					(752)
Net income (loss)	(139)				(22)	(117)
Balance at end of period (in shares) at Jun. 30, 2023		2,988,916	11,278,000
Balance at end of period at Jun. 30, 2023	5,020	$ 3	$ 11	2,927	(366)	2,445
Balance at beginning of period (in shares) at Dec. 31, 2022		2,900,000	11,278,000
Balance at beginning of period at Dec. 31, 2022	5,595	$ 3	$ 11	2,611	(344)	3,314
Net income (loss)	(6,800)
Balance at end of period (in shares) at Dec. 31, 2023		3,478,776	10,868,000
Balance at end of period at Dec. 31, 2023	(3,682)	$ 3	$ 11	3,067	(2,538)	(4,225)
Balance at beginning of period (in shares) at Mar. 31, 2023		2,902,200	11,278,000
Balance at beginning of period at Mar. 31, 2023	4,367	$ 3	$ 11	2,717	(558)	2,194
Stock-based compensation	210			210
Issuance related to vesting of restricted stock units, net of tax withholdings (in shares)		86,716
Net income (loss)	1,195				192	1,003
Balance at end of period (in shares) at Jun. 30, 2023		2,988,916	11,278,000
Balance at end of period at Jun. 30, 2023	5,020	$ 3	$ 11	2,927	(366)	2,445
Balance at beginning of period (in shares) at Dec. 31, 2023		3,478,776	10,868,000
Balance at beginning of period at Dec. 31, 2023	(3,682)	$ 3	$ 11	3,067	(2,538)	(4,225)
Stock-based compensation	662			662
Issuance related to vesting of restricted stock units, net of tax withholdings (in shares)		192,138
Issuance related to vesting of restricted stock units, net of tax withholdings	0	$ 1		(1)
Warrants exercised (in shares)		39,101
Warrants exercised	215			215
Stock options exercised (in shares)		8,754
Stock options exercised	82			82
Issuance of stock in lieu of cash bonus, net of tax withholdings (in shares)		69,677
Issuance of stock in lieu of cash bonus, net of tax withholdings	912			912
Net income (loss)	(6,961)				(1,365)	(5,596)
Noncontrolling interest rebalancing	0			(1,493)		1,493
Balance at end of period (in shares) at Jun. 30, 2024		3,788,446	10,868,000
Balance at end of period at Jun. 30, 2024	(8,772)	$ 4	$ 11	3,444	(3,903)	(8,328)
Balance at beginning of period (in shares) at Mar. 31, 2024		3,684,278	10,868,000
Balance at beginning of period at Mar. 31, 2024	(5,791)	$ 4	$ 11	3,441	(3,313)	(5,934)
Stock-based compensation	158			158
Issuance related to vesting of restricted stock units, net of tax withholdings (in shares)		103,752
Stock options exercised (in shares)		416
Stock options exercised	2			2
Net income (loss)	(3,141)				(590)	(2,551)
Noncontrolling interest rebalancing	0			(157)		157
Balance at end of period (in shares) at Jun. 30, 2024		3,788,446	10,868,000
Balance at end of period at Jun. 30, 2024	$ (8,772)	$ 4	$ 11	$ 3,444	$ (3,903)	$ (8,328)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Cash Flows (Used In) Provided By Operating Activities:
Net income (loss)	$ (3,141)	$ 1,195	$ (6,961)	$ (139)	$ (6,800)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization of deferred financing costs			372	272
Amortization of intangible assets	500	500	977	977
Reduction in carrying amount of right-of-use assets			76	85
Depreciation and amortization of property, equipment and software			137	121
Stock-based compensation			662	304
Deferred income taxes			(475)	(6)
Loss on early termination of line of credit	0	0	0	300
Provision for credit losses/bad debt expense, net of recoveries			(13)	52
Changes in operating assets and liabilities:
Accounts receivable			17,704	(3,326)
Prepaid expenses and other assets			(130)	(257)
Accounts payable			(21,554)	5,662
Accrued liabilities and tax receivable agreement payable			(1,226)	(944)
Income taxes payable			10	(152)
Deferred revenues			350	404
Operating lease liability			(40)	(48)
Related party payable			0	(251)
Net cash (used in) provided by operating activities			(10,111)	3,054
Cash Flows Used In Investing Activities:
Cash paid for capitalized software and property and equipment			(10)	(137)
Net cash used in investing activities			(10)	(137)
Cash Flows Provided by (Used In) Financing Activities:
Payments on term loan			(372)	(328)
Proceeds from lines of credit			6,700	0
Payments on shares withheld for taxes			(551)	0
Payment of deferred financing costs			0	(228)
Proceeds from options exercised			82	0
Proceeds from warrants exercised			215	12
Distributions to holders of LLC Units			0	(752)
Net cash provided by (used in) financing activities			6,074	(1,296)
Net (decrease) increase in cash and cash equivalents			(4,047)	1,621
Cash and cash equivalents, beginning of the period			5,116	4,047	4,047
Cash and cash equivalents, end of the period	$ 1,069	$ 5,668	1,069	5,668	$ 5,116
Supplemental Disclosure of Cash Flow Information:
Cash paid for taxes			257	349
Cash paid for interest			$ 2,235	$ 1,769

Organization and Description of

Organization and Description of Business	6 Months Ended
	Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	Note 1 — Organization and Description of Business Direct Digital Holdings, Inc., incorporated as a Delaware corporation on August 23, 2021 and headquartered in Houston, Texas, together with its subsidiaries, operates an end-to-end, programmatic advertising platform primarily focused on providing advertising technology, data-driven campaign optimization and other solutions intended for underserved and less efficient markets on both the sell- and buy-side of the digital advertising ecosystem. Direct Digital Holdings, Inc. is the holding company for Direct Digital Holdings, LLC (“DDH LLC”), which is, in turn, the holding company for the business formed by DDH LLC’s founders in 2018 through the acquisition of Colossus Media, LLC (“Colossus Media”) and Huddled Masses, LLC (“Huddled Masses ® ” or “Huddled Masses”). Colossus Media operates the Company’s proprietary sell-side programmatic platform operating under the trademarked banner of Colossus SSP TM (“Colossus SSP”). In late September 2020, DDH LLC acquired Orange142, LLC (“Orange 142”) to further bolster its overall programmatic buy-side advertising platform and to enhance its offerings across multiple industry verticals such as travel, healthcare, education, financial services, consumer products, and other sectors with particular emphasis intended for small and mid-sized businesses transitioning into digital with growing digital media budgets. In February 2022, Direct Digital Holdings, Inc. completed an initial public offering of its securities and, together with DDH LLC, effected a series of transactions (together, the “Organizational Transactions”) whereby Direct Digital Holdings, Inc. became the sole managing member of DDH LLC, the holder of 100% of the voting interests of DDH LLC and the holder of 19.7% of the economic interests of DDH LLC, commonly referred to as an “Up-C” structure. (See Note 6 — Related Party Transactions). In these condensed consolidated financial statements, the “Company,” “Direct Digital,” “Direct Digital Holdings,” “DDH,” “we,” “us” and “our” refer to Direct Digital Holdings, Inc., and, unless otherwise stated, all of its subsidiaries, including DDH LLC and its subsidiaries. All of the subsidiaries are incorporated in the state of Delaware, except for DDH LLC, which was formed under the laws of the State of Texas. The subsidiaries of Direct Digital Holdings, Inc. are as follows: Subsidiary Current % Business Date of Formation Date of Colossus Media, LLC 100% Sell-side September 8, 2017 June 21, 2018 Orange142, LLC 100% Buy-side March 6, 2013 September 30, 2020 Huddled Masses, LLC 100% Buy-side November 13, 2012 June 21, 2018 Direct Digital Holdings, LLC (1) N/A June 21, 2018 February 15, 2022 (1) DDH owns 100% of the voting interest in Direct Digital Holding, LLC. As of June 30, 2024, DDH owns 25.8% of the economic interest in Direct Digital Holdings, LLC. See further discussion of the Up-C structure in Note 6 of our condensed consolidated financial statements. Colossus SSP is a stand-alone platform intended to deliver targeted advertising to diverse and multicultural audiences as well as to general audiences. Both buy-side subsidiaries, Orange 142 and Huddled Masses, offer technology-enabled advertising solutions and consulting services to clients through demand side platforms (“DSPs”). Providing both the front-end, buy-side operations coupled with the Company’s proprietary sell-side operations enables the Company to curate the first through the last mile in the ad tech ecosystem execution process to drive higher results.

Basis of Presentation and Conso

Basis of Presentation and Consolidation and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation and Consolidation and Summary of Significant Accounting Policies	Note 2 — Basis of Presentation and Consolidation and Summary of Significant Accounting Policies Basis of presentation and consolidation The accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 8-03 of Regulation S-X. Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The consolidated financial statements data for the year ended December 31, 2023 included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of June 30, 2024, the results of its operations for the three and six months ended June 30, 2024 and 2023, cash flows for the six months ended June 30, 2024 and 2023, and stockholders’ deficit for the three and six months ended June 30, 2024 and 2023. The results of operations for the three and six months ended June 30, 2024, respectively, are not necessarily indicative of the results to be expected for the full year. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenues and expenses reported during the period. Actual results could differ from estimates. The accompanying condensed unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the accompanying notes for the year ended December 31, 2023, which was included in Form 10-K filed with the SEC on October 15, 2024. The condensed consolidated financial statements include the accounts of Direct Digital Holdings, Inc. and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards otherwise applicable to public companies until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The adoption dates discussed below reflect this election. Revenue recognition The Company recognizes revenue using the following five steps: 1) identification of a contract with a customer; 2) identification of the performance obligation(s) in the contract; 3) determination of the transaction price; 4) allocation of the transaction price to the performance obligation(s) in the contract; and 5) recognition of revenue when, or as, the performance obligation(s) are satisfied. The Company’s revenues are derived primarily from two sources: sell-side advertising and buy-side advertising. Thus, the Company disaggregates the revenue earned into these two segments. For additional segment disclosures, refer to Note 7 — Segment Information of our condensed consolidated financial statements. The Company maintains agreements with its customers in the form of written service agreements, which set out the terms of the relationship, including payment terms (typically 30 to 90 days) and access to its platform. For the sell-side advertising segment, the Company generates revenue by selling advertising inventory (digital ad units) that the Company purchases from publishers to advertisers through a process of monetizing ad impressions on the Company’s proprietary sell-side programmatic platform operating under the trademarked banner Colossus SSP. For the buy-side advertising segment, the Company generates revenue from customers that enter into agreements with the Company to provide managed advertising campaigns, which include digital marketing and media services to purchase digital advertising space, data and other add-on features. In connection with the Company’s analysis of principal vs agent considerations, the Company has evaluated the specified goods or services and considered whether the Company controls the goods or services before they are provided to the customer, including the three indicators of control. Based upon this analysis and the Company’s specific facts and circumstances, the Company concluded that it is a principal for the goods or services sold through both the Company’s sell-side advertising segment and buy-side advertising segment because the Company controls the specified good or service before it is transferred to the customer and the Company is the primary obligor in the agreement with customers. Therefore, the Company reports revenue on a gross basis inclusive of all supplier costs and pays suppliers for the cost of digital media, advertising inventory, data and any add-on services or features. In the advertising industry, companies commonly experience seasonal fluctuations in revenue. For example, in our sell-side advertising segment, many advertisers allocate the largest portion of their budgets to the fourth quarter of the calendar year in order to coincide with increased holiday purchasing while, in our buy-side segment, the second and third quarters of the year reflect our highest levels of advertising activity and the first quarter reflects the lowest level of such activity. Sell-side advertising The Company partners with publishers to sell advertising inventory to the Company’s Colossus Media-curated clients and the open markets (collectively referred to as “buyers”) seeking to access the general market as well as unique multi-cultural audiences. The Company generates revenue from the delivery of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile mediums using its proprietary programmatic sell-side platform (“SSP”). The Company refers to its publishers, app developers, and channel partners collectively as its "publishers". The Company’s platform allows the Company to sell, in real time, ad impressions from publishers to buyers and provides automated inventory management and monetization tools to publishers across various device types and digital ad formats. The Company recognizes revenue at a point in time when an ad is delivered or displayed in response to a winning bid request from ad buyers. Buy-side advertising The Company purchases media based on the budget established by its customers with a focus on leveraging data services, customer branding, real-time market analysis and micro-location advertising. The Company offers its services on a fully managed basis, which is recognized over time using the output method when the performance obligation is fulfilled. An “impression” is delivered when an advertisement appears on pages viewed by users. The performance obligation is satisfied over time as the volume of impressions are delivered up to the contractual maximum. Many customers run several different campaigns throughout the year to capitalize on different seasons, special events and other happenings at their respective regions and localities. The Company provides digital advertising and media buying capabilities with a focus on generating measurable digital and financial life for its customers. Revenue arrangements are evidenced by a fully executed insertion order (“IO”) and/or a master service agreement (“MSA”) covering a combination of marketing tactics. Generally, IOs specify the number and type of advertising impressions to be delivered over a specified time at an agreed upon price and performance objectives for an ad campaign. Performance objectives are generally a measure of targeting, as defined by the parties in advance, such as number of ads displayed, consumer clicks on ads or consumer actions (which may include qualified leads, registrations, downloads, inquiries or purchases). These payment models are commonly referred to as CPM (cost per impression), CPC (cost per click) and CPA (cost per action). The majority of the Company’s contracts are flat-rate, fee-based contracts. Cash payments received prior to the Company’s delivery of its services are recorded to deferred revenue until the performance obligation is satisfied. The Company recorded deferred revenue (contract liabilities) to account for billings in excess of revenue recognized, primarily related to contractual minimums billed in advance and customer prepayment, of $0.7 million and $0.4 million as of June 30, 2024 and December 31, 2023, respectively. Revenue recognized during the six months ended June 30, 2024 and 2023 from amounts included within the deferred revenue balances at the beginning of each respective period amounted to $0.4 million and $0.5 million, respectively. Accounting Standards Codification ("ASC") 606 provides various optional practical expedients. The Company elected the use of the practical expedient relating to the disclosure of remaining performance obligations within a contract and will not disclose remaining performance obligations for contracts with an original expected duration of one year or less. Goodwill As of June 30, 2024 and December 31, 2023, goodwill was $6.5 million, which includes $2.4 million as a result of the acquisition of Huddled Masses and Colossus Media in 2018 and $4.1 million from the acquisition of Orange 142 in 2020. The Company expects to deduct goodwill for tax purposes in future years. Goodwill is attributable to entry into new markets not previously accessible and generation of future growth opportunities. Goodwill is assessed for impairment at least annually (December 31) starting with a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in our management, strategy and primary user base. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a quantitative goodwill impairment analysis is performed. Depending upon the results of the quantitative measurement, the recorded goodwill may be written down and an impairment expense is recorded in the condensed consolidated statements of operations when the carrying amount of the reporting unit exceeds the fair value of the reporting unit. Goodwill is reviewed annually and tested for impairment upon the occurrence of a triggering event. The Company determined that there was no impairment of goodwill during the six months ended June 30, 2024 and 2023. Intangible assets, net Intangible assets consist of customer relationships, trademarks and non-compete agreements. Intangible assets are recorded at fair value at the time of their acquisition and are stated within the condensed consolidated balance sheets net of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives and recorded as amortization expense within general and administrative expenses in the condensed consolidated statements of operations. The Company’s intangible assets are being amortized over their estimated useful lives, using the straight-line method with non-compete agreements over 5 years and other intangibles over 10 years. Impairment of long-lived assets The Company evaluates the recoverability of long-lived assets, including property, equipment and software costs and intangible assets if facts or circumstances indicate that any of those assets might be impaired. ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows to determine if a write-down to fair value is necessary. No impairment loss was recognized during the six months ended June 30, 2024 and 2023. Stock-based compensation Stock-based compensation cost for options and restricted stock units (“RSU”) awarded to employees and directors is measured at the grant date based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Contingently issued awards with a requisite service period that precedes the grant date are measured and recognized at the start of the requisite service period and remeasured each reporting period until the grant date. The Company estimates the fair value of RSU’s based on the closing price of the Company’s common stock on the date of the grant. The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the fair value of the Company’s common stock, as well as assumptions regarding the expected common stock price volatility over the term of the stock options, the expected term of the stock options, risk-free interest rates and the expected dividend yield. Given the Company's short history as a public company, the expected volatility is determined based on the trading history of several unrelated public companies within the industry that the Company considers to be comparable and the expected term is determined based on a combination of the terms of stock options and peer data. The risk-free interest rate is derived using the U.S. Treasury yield curve in effect at date of grant. Other assumptions are based on historical experience and activity. The Company considers an estimated forfeiture rate for stock options based on historical experience and the anticipated forfeiture rates during the future contract life. Income taxes In February 2022, concurrent with the Organizational Transactions, the Company entered into a tax receivable agreement (“Tax Receivable Agreement” or “TRA”) with DDH LLC and Direct Digital Management, LLC (“DDM”). The TRA provides for certain income (loss) allocations between the Company and DDH LLC under the agreement. DDH LLC is a limited liability company, is treated as a partnership for federal income tax purposes and generally is not subject to any entity-level U.S. federal income tax and certain state and local income taxes. Any taxable income or loss generated by the Company is allocated to holders of LLC units (“LLC Units”) in accordance with the Second Amended and Restated Limited Liability Company Agreement (“LLC Agreement”), and distributions to the owners of LLC Units in an amount sufficient to fund their tax obligations. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss under the LLC Agreement. Pursuant to the Company’s election under Section 754 of the Internal Revenue Code (the “Code”), the Company expects to obtain an increase in its share of the tax basis in the net assets of DDH, LLC when LLC Units are redeemed or exchanged by the members of DDH, LLC. The Company made an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC interest occurred. During the six months ended June 30, 2024 and 2023, members of DDM exchanged no shares of Class B Common Stock into shares of Class A Common Stock. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. As of June 30, 2024 and December 31, 2023, the Company recorded a valuation allowance of $0.5 million and $0.5 million, respectively. Accounts receivable, net Accounts receivable primarily consists of billed amounts for products and services rendered to customers under normal trade terms. The Company performs credit evaluations of its customers’ financial condition and generally does not require collateral. Accounts receivable are stated at net realizable value. The Company insures a significant portion of its accounts receivable with unrelated third-party insurance companies in an effort to mitigate any future write-offs and establishes provision for credit losses as deemed necessary for accounts not covered by this insurance. Management periodically reviews outstanding accounts receivable for reasonableness. If warranted, the Company processes a claim with the third-party insurance company to recover uncollected balances, rather than writing the balances off to bad debt expense. The guaranteed recovery for the claim is approximately 90% of the original balance, and if the full amount is collected by the insurance company, the remaining 10% is remitted to the Company. If the insurance company is unable to collect the full amount, the Company records the remaining 10% to bad debt expense. The Company’s provision for credit losses reflects the current expected credit loss inherent in the accounts receivable considering the Company’s aging analysis, historical collection experience, customer creditworthiness, current and future economic conditions and market conditions. Accounts receivable balances are written off against the provision when the Company believes it is probable the receivable will not be recovered. For the six months ended June 30, 2024 and 2023 the Company's provision for credit losses net of recoveries, as reflected in the condensed consolidated statements of cash flows was less than $0.1 million. Concentrations of customers and suppliers There is an inherent concentration of credit risk associated with accounts receivable arising from revenue from major customers on both the sell-side and buy-side of the business. For the three months ended June 30, 2024 and 2023, one customer of the sell-side of the business represented 28% and 63% of revenues, respectively. For the six months ended June 30, 2024 and 2023, one customer of the sell-side of the business represented 62% and 62% of revenues, respectively. As of June 30, 2024 and December 31, 2023, one customer of the sell-side of the business accounted for 64% and 83%, respectively, of accounts receivable. As of June 30, 2024 and December 31, 2023, three sellers of advertising inventory each accounted for at least 10%, and collectively accounted for 36% and 77%, respectively, of consolidated accounts payable. Accrued Liabilities The components of accrued liabilities on the balance sheet as of June 30, 2024 and December 31, 2023 are as follows (in thousands): June 30, December 31, Accrued compensation and benefits $ 371 $ 2,789 Accrued expenses 604 631 Accrued severance 27 190 Accrued litigation settlement (1) 42 171 Accrued interest 81 36 Total accrued liabilities $ 1,125 $ 3,816 (1) In July 2022, the Company entered into a litigation settlement agreement with a vendor of Huddled Masses related to a delinquent balance from 2019 and agreed to pay a total of $0.5 million with monthly installment payments over 24 months beginning September 1, 2022. Cash and cash equivalents Cash and cash equivalents consist of funds deposited with financial institutions and highly liquid instruments with original maturities of three months or less. Such deposits may, at times, exceed federally insured limits. The risk of loss attributable to any uninsured balances is mitigated by depositing funds only in high credit quality financial institutions. The Company has not experienced any losses in such amounts and believes it is not exposed to any significant credit risk to cash. Deferred offering costs The Company records certain legal, accounting and other third-party fees that are directly associated with an offering to stockholders’ equity or debt in the event that the Company completes an offering. Costs associated with debt offerings are amortized to interest expense using the straight-line method over the life of the debt. As of June 30, 2024 and December 31, 2023, $1.4 million and $1.7 million, respectively, of unamortized deferred financing costs are netted against debt in the condensed consolidated balance sheets. Net income (loss) per share Basi c net income (loss) per share excludes dilution and is determined by dividing net income (loss) by the w eighted average number of common shares outstanding including participating securities during the period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock. Recent Accounting Pronouncements Accounting pronouncements adopted No standards have been adopted which have had a material impact on the Company’s condensed consolidated financial statements. Accounting pronouncements not yet adopted In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures , a final standard on improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for emerging growth companies for annual periods beginning after December 15, 2025. This accounting standard is effective in the first quarter of the Company's fiscal year ending December 31, 2026. The Company is currently evaluating the impact of adoption on our financial disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures . The ASU requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the Company's chief operating decision maker ("CODM"). The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of adoption on our financial disclosures. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements. Liquidity and capital resources Going Concern The Company evaluated whether relevant conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern. Substantial doubt exists when conditions and events, considered in the aggregate, indicate it is probable that a company will not be able to meet its obligations as they become due within one year after the issuance date of its financial statements. Management’s assessment is based on the relevant conditions that are known or reasonably knowable as of the date these consolidated financial statements were issued or were available to be issued. As discussed in Note 9, one of the Company’s sell-side customers paused its connection to the Company for a couple of weeks in May 2024, which reduced sell-side sales volumes. As of the date of this report, sell-side volumes related to this customer have resumed but not yet at the levels experienced prior to the pause in May 2024 which has created significant disruption in the Company’s sell-side business. The Company is actively working with its partners to achieve prior volume levels. However, there can be no assurance that the Company will be able to achieve prior volume levels with its partners or on the timing of achieving such volume levels. Additionally, the Company (1) incurred a net loss of $6.8 million in 2023 primarily related to payments made to a few publishers of $8.8 million associated with a disputed short payment from a customer and a net loss of $7.0 million in the six months ended June 30, 2024 reflecting the impact of the sell-side disruption described above and a decrease in customer spend on the buy-side, (2) reported an accumulated deficit of $3.9 million as of June 30, 2024, (3) reported cash and cash equivalents of $1.1 million as of June 30, 2024, (4) has borrowed $9.7 million as of June 30, 2024 and the date of this report, under the Credit Agreement which matures in July 2025, (5) was notified on April 17, 2024 that the Company’s auditor had resigned and (6) was unable to timely file its 2023 annual report and quarterly reports for the first two quarters of 2024. The delay in filing the Company’s annual and quarterly reports disrupted existing capital-raising efforts and created additional audit, legal and other expenses. These factors raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months. The Company anticipates sources of liquidity to include cash on hand and cash flow from operations and has taken several actions to address liquidity concerns. These actions include (1) a plan to reduce expenses through a staff reduction, a pause on hiring and cost savings measures that were executed on July 1, 2024, (2) working with lenders to provide temporary various relief from debt covenants (see Note 3 – Long-Term Debt) while rebuilding sell-side volumes, (3) raising capital through arrangements with various providers, and (4) regaining compliance with respect to delinquent SEC filings which will allow the Company to access the capital markets as well as other financing sources. There can be no assurance that the Company’s actions will be successful or that additional financing will be available when needed or on acceptable terms. The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

Long-Term Debt

Long-Term Debt	6 Months Ended
	Jun. 30, 2024
Debt Disclosure [Abstract]
Long-Term Debt	Note 3 — Long-Term Debt At June 30, 2024 and December 31, 2023, long-term debt consisted of the following (in thousands): June 30, 2024 December 31, 2023 2021 Credit Facility $ 28,221 $ 28,594 Credit Agreement 9,700 3,000 Economic Injury Disaster Loan 150 150 Total long-term debt 38,071 31,744 Less: deferred financing costs (1,398) (1,688) Total long-term debt, net of deferred financing costs 36,673 30,056 Less: current portion (1,840) (1,478) Total long-term debt, net of current portion $ 34,833 $ 28,578 The components of interest expense and related fees for long-term debt is as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Interest expense – Lafayette Square $ 981 $ 890 $ 1,955 $ 1,769 Interest expense – East West Bank 189 — 324 — Interest expense – Other 2 2 4 4 Amortization of deferred financing costs 186 136 372 272 Total interest expense and amortization of deferred financing costs $ 1,358 $ 1,028 $ 2,655 $ 2,045 Lafayette Square On December 3, 2021, the Company entered into the Term Loan and Security Agreement (the “2021 Credit Facility”) with Lafayette Square Loan Services, LLC ("Lafayette Square") as administrative agent, and the various lenders thereto. The term loan under the 2021 Credit Facility initially provided for a term loan in the principal amount of up to $32.0 million, consisting of a $22.0 million closing date term loan (the "Term Loan") and an up to $10.0 million delayed draw term loan (the “Delayed Draw Loan”). The loans under the 2021 Credit Facility originally bore interest at LIBOR plus the applicable margin minus any applicable impact discount. The applicable margin under the 2021 Credit Facility was determined based on the consolidated total net leverage ratio of the Company and its consolidated subsidiaries, at a rate of 6.50% per annum if the consolidated total net leverage ratio is less than 2.00 to 1.00 and up to 9.00% per annum if the consolidated total net leverage ratio was greater than 4.00 to 1.00. On June 1, 2023, as originally contemplated under the 2021 Credit Facility, the Company entered into an agreement with Lafayette Square to convert the existing LIBOR based rate to a Term Secured Overnight Financing Rate ("SOFR") with a credit spread of 0.15% per annum for the interest periods of three months and providing for a credit spread adjustment of 0.10%, 0.15% or 0.25% per annum for interest periods of one month, three months or six months, respectively. The loans under the 2021 Credit Facility bear interest at SOFR plus the applicable credit spread adjustment plus the applicable margin minus any applicable impact discount. Prior to entering into the Fifth Amendment as defined below, the applicable margin under the 2021 Credit Facility was based on the consolidated total net leverage ratio of the Company at a rate of 7.00% per annum if the consolidated total net leverage ratio was less than or equal to 1.00 to 1.00 with gradual increases as the ratio increased up to 10.00% per annum if the consolidated total net leverage ratio was greater than 3.50 to 1.00. The maturity date of the 2021 Credit Facility is December 3, 2026. On July 28, 2022, the Company entered into the Second Amendment and Joinder to Term Loan and Security Agreement and received proceeds of $4.3 million borrowed under the Delayed Draw Loan to pay the balance owed on the common unit redemption as well as costs associated with the transaction. Subsequently, on October 3, 2023, the Company entered into the Fourth Amendment to the 2021 Credit Facility (the “Fourth Amendment”) and received proceeds of $3.6 million borrowed under the Delayed Draw Loan to make payments in connection with the consummation of the 2023 warrant tender offer and fees and expenses incurred as described in Note 4 — Stockholders’ Deficit and Stock-Based Compensation in the notes to the condensed consolidated financial statements. In connection with the Fourth Amendment, the Company agreed it would not be permitted to request any additional funds under the Delayed Draw Loan, and Lafayette Square would not be obligated to fund any such requests. Quarterly installment payments on the Term Loan and the Delayed Draw Loan, due on the last day of each fiscal quarter, began March 31, 2022 with a final installment due December 3, 2026 for remaining balances outstanding under each loan. Each quarterly installment payment under the closing date term loan was $0.1 million from January 1, 2022 through December 31, 2023, and each installment payment thereafter until maturity is $0.3 million. Each quarterly installment payment under the Delayed Draw Loan was 0.625% of the amount of the Delayed Draw Loan through December 31, 2023, and each installment payment thereafter until maturity is 1.25% of the amount of the Delayed Draw Loan. Under the 2021 Credit Facility, dividends and distributions by DDH LLC to the Company and any shareholders of the Company are permitted so long as (i) no default or event of default is continuing or would occur after giving pro forma effect to such dividends and distributions under the 2021 Credit Facility, (ii) the Company, on a pro forma basis, maintains a consolidated senior net leverage ratio of not greater than 1.5 to 1.0, and (iii) the Company, on a pro forma basis, maintains liquidity of not less than $15.0 million. The obligations under the 2021 Credit Facility are secured by senior, first-priority liens on all or substantially all assets of the Company. As of June 30, 2024, the Company owed a balance on the 2021 Credit Facility of $28.2 million. No additional deferred financing costs were incurred during the six months ended June 30, 2024 and less than $0.1 million of additional deferred financing costs were incurred during the six months ended June 30, 2023. Unamortized deferred financing costs as of June 30, 2024 and December 31, 2023 were $1.4 million and $1.7 million respectively. Accrued and unpaid interest was less than $0.1 million and $0.1 million as of June 30, 2024 and December 31, 2023, respectively. The 2021 Credit Facility contains customary affirmative and negative covenants. Prior to entering into the Fifth Amendment, the Company was required to maintain a net leverage ratio of no more than 3.50 to 1.00 as of December 31, 2021 and the last day of each fiscal quarter through December 31, 2023, 3.25 to 1.00 as of March 31, 2024 and the last day of each fiscal quarter through March 31, 2025, 3.00 to 1.00 as of June 30, 2025 and September 30, 2025, with incremental tightening of the ratio to 2.50 to 1.00 as of June 30, 2026 and thereafter through maturity. Prior to entering into the Fifth Amendment, the 2021 Credit Facility also required the Company to maintain a fixed charge coverage ratio of not less than 1.50 to 1.00 as of the last day of each fiscal quarter, as well as restrictions on the ability to incur indebtedness, create certain liens, make certain investments, make certain dividends and other types of distributions, and enter into or undertake certain mergers, consolidations, acquisitions and sales of certain assets and subsidiaries. The Company was in compliance with all the financial covenants under the 2021 Credit Facility as of June 30, 2024 after giving effect to the amendments to the 2021 Credit Facility under the Fifth Amendment. With the Fifth Amendment, the Company expects to be in compliance with all amended covenants for at least one year from the balance sheet date in this quarterly report. On October 15, 2024, with an effective date of June 30, 2024, the Company and Lafayette Square entered into the Fifth Amendment to the Term Loan and Security Agreement (the “Fifth Amendment”) which among other things, (1) defers quarterly installment payments on the Term Loan and the Delayed Draw Loan for the periods from June 30, 2024 through December 31, 2025, (2) requires that the Company pay a commitment fee of 50 basis points or an amount of $0.1 million to Lafayette Square, (3) allows proceeds from future equity raises by the Company, if any, to cure potential financial covenant noncompliance, (4) provides for one-month and three-month interest periods, (5) replaces the calculation of the consolidated total net leverage ratio with a consolidated total leverage ratio for purposes of calculating the applicable margin and the financial covenant and (6) replaces the financial covenants under the 2021 Credit Facility (effective as of June 30, 2024) with the following: As of Minimum TTM* EBITDA ($ in millions) Minimum Liquidity ($ in millions) Maximum Consolidated Total Leverage Ratio Minimum Fixed Charge Coverage Ratio June 30, 2024 n/a n/a n/a n/a September 30, 2024 $5.0 $1.5 n/a n/a December 31, 2024 $3.5 $1.5 n/a n/a March 31, 2025 $5.5 $2.0 n/a n/a June 30, 2025 $7.5 $2.0 n/a 1.50 to 1.00 September 30, 2025 n/a $2.0 4.25 to 1.00 1.50 to 1.00 December 31, 2025 n/a $2.0 4.00 to 1.00 1.50 to 1.00 March 31, 2026 n/a $2.0 3.75 to 1.00 1.50 to 1.00 June 30, 2026 n/a $2.0 3.50 to 1.00 1.50 to 1.00 September 30, 2026 n/a $2.0 3.25 to 1.00 1.50 to 1.00 * TTM = Trailing Twelve Months 2023 Revolving Line of Credit - East West Bank On July 7, 2023, the Company entered into a Credit Agreement (as amended, the “Credit Agreement”), with East West Bank (“EWB”), as lender. The Credit Agreement provides for a revolving credit facility in the principal amount of up to $10 million, subject to a borrowing base determined based on eligible accounts, and an up to $5 million uncommitted incremental revolving facility. Loans under the Credit Agreement mature on July 7, 2025 (the “Maturity Date”), unless the Credit Agreement is otherwise terminated pursuant to the terms of the Credit Agreement. Borrowings under the Credit Agreement bear interest at a rate per annum equal to the one-month Term SOFR rate and as determined by EWB on the first day of the applicable interest period, plus 0.10% (10 basis points), plus 3.00% per annum (the “Loan Rate”); provided, that, in no event shall the Loan Rate be less than 0.50% of the Loan Rate effective as of the date of the Credit Agreement nor more than the maximum rate of interest allowed under applicable law. Upon an event of default under the Credit Agreement, the outstanding principal amounts of any advances will accrue interest at a rate per annum equal to the Loan Rate plus five percent (5%), but in no event in excess of the maximum rate of interest allowed under applicable law. At the Company’s option, the Company may at any time prepay the outstanding principal balance of the Credit Agreement in whole or in part, without fee, penalty or premium. All accrued but unpaid interest on outstanding advances under the Credit Agreement are payable in monthly installments on the last day of each monthly interest period until the Maturity Date when the then-outstanding principal balance of the advances and all accrued but unpaid interest thereon becomes due and payable. The obligations under the Credit Agreement are secured by all or substantially all of the borrowers’ assets. Prior to entering into the Third Amendment as defined below, the Company was required to maintain compliance at all times with the following financial covenants on a consolidated basis: (i) a fixed charge coverage ratio of not less than 1.25 to 1.0, beginning with the fiscal quarter ended on June 30, 2023 and at the end of each fiscal quarter thereafter; (ii) a total funded debt-to-EBITDA ratio of no more than 3.50 to 1.00 as of June 30, 2023 and the last day of each fiscal quarter through December 31, 2023, 3.25 to 1.00 as of March 31, 2024 and the last day of each fiscal quarter through March 31, 2025 and 3.00 to 1.00 as of June 30, 2025 and thereafter through maturity; and (iii) a liquidity covenant requiring the Company to maintain minimum liquid assets at all times (calculated in the manner provided for in the Credit Agreement), in one or more accounts held with EWB plus Revolving Credit Availability in the amount of $1.0 million. Revolving Credit Availability is defined as an amount such that the ratio of the value of eligible accounts to the aggregate amount of all outstanding advances under the credit agreement at such time is not less than 2.0 to 1.0. The Company was in compliance with all the financial covenants under the Credit Agreement as of June 30, 2024 after giving effect to the amendments to the Credit Agreement under the Third Amendment. Additionally, the amounts outstanding under the Credit Agreement exceeded the Company’s borrowing base as of June 30, 2024 by $0.5 million, which was addressed in the Third Amendment, requiring a $1.0 million principal payment on the outstanding loans under the Credit Agreement as of the date of the Third Amendment. With the Third Amendment, the Company expects to be in compliance with all amended covenants for at least one year from the balance sheet date in this quarterly report. On October 15, 2024, with an effective date of June 30, 2024, the Company and EWB entered into the Third Amendment to the Credit Agreement (the “Third Amendment”) which, among other things, (1) provides that the Company will make prepayments of the outstanding principal balance of the Credit Agreement of $1.0 million upon execution of the Third Amendment, $1.0 million on or before January 15, 2025 and $2.0 million on or before April 15, 2025, (2) requires the Company to file a registration statement with the SEC to establish an equity line of credit offering on or before October 31, 2024 and to use commercially reasonable efforts to cause such registration statement to become effective, (3) requires the net proceeds of a potential equity line of credit to be applied to the outstanding principal balance under the Credit Agreement in an amount that would cause the ratio of the value of eligible accounts to the aggregate amount of revolving credit advances to be not less than 1.00 to 1.00, (4) requires the consent of EWB prior to the ability of the Company to make certain restricted payments, including cash dividends, (5) requires the Company to make additional prepayments in the amount by which the outstanding loans under the Credit Agreement exceed the borrowing base between the calendar months ending November 30, 2024 and April 15, 2025, and (6) replaces the financial covenants under the Credit Agreement, effective as of June 30, 2024, with the following: As of Minimum TTM (1) EBITDA ($ in millions) Minimum Liquid Assets ($ in millions) Maximum Total Funded Debt to EBITDA Leverage Ratio Minimum Fixed Charge Coverage Ratio Revolving Credit Availability (as of each month end) June 30, 2024 n/a $1.0 n/a n/a n/a September 30, 2024 $5.0 $1.5 n/a n/a n/a December 31, 2024 $3.5 $1.5 n/a n/a 1.00 to 1.00 (2) March 31, 2025 $5.5 $2.0 n/a n/a 1.50 to 1.00 (3) June 30, 2025 $7.5 $2.0 n/a 1.25 to 1.00 2.00 to 1.00 (4) (1) TTM = Trailing Twelve Months (2) Beginning November 30, 2024 (3) Beginning January 31, 2025 (4) Beginning April 15, 2025 The Credit Agreement contains customary representations and warranties and includes affirmative and negative covenants applicable to the borrowers and their respective subsidiaries. The affirmative covenants include, among others, covenants requiring the Company to maintain its legal existence and governmental compliance, deliver certain financial reports and maintain insurance coverage. The negative covenants include, among others, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. The Credit Agreement also includes customary events of default, including, among other things, non-payment defaults, covenant defaults, inaccuracy of representations and warranties, defaults under any of the loan documents, certain cross-defaults to other indebtedness, certain bankruptcy and insolvency events, invalidity of guarantees or grant of security interest, certain ERISA-related transactions and events, certain orders of forfeiture, change of control, certain undischarged attachments, sequestrations, or similar proceedings, and certain undischarged or non-stayed judgments, in certain cases subject to certain thresholds and grace periods. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement of the Company or other borrowers. During the six months ended June 30, 2024, the Company did not incur any deferred financing costs associated with the Credit Agreement. As of June 30, 2024, there was $9.7 million outstanding under the Credit Agreement. The collateral securing the obligations under the 2021 Credit Facility and the Credit Agreement is subject to intercreditor agreements between Lafayette Square and EWB. Silicon Valley Bank (“SVB”) Financing On January 9, 2023, the Company entered into the SVB Loan Agreement, by and among SVB, as lender, and DDH LLC, the Company, Huddled Masses, Colossus Media and Orange 142, as borrowers. The SVB Loan Agreement provided for a revolving credit facility (the “SVB Revolving Credit Facility”) in the original principal amount of $5 million, subject to a borrowing base determined based on eligible accounts, and up to an additional $2.5 million incremental revolving facility subject to the lender’s consent, which would increase the aggregate principal amount of the Credit Facility to $7.5 million. Loans under the SVB Revolving Credit Facility were to mature on September 30, 2024 unless the Credit Facility was otherwise terminated pursuant to the terms of the Loan Agreement. On March 10, 2023, the California Department of Financial Protection and Innovation closed SVB and appointed the Federal Deposit Insurance Corporation as receiver. As the Company had not yet drawn any amounts under the SVB Revolving Credit Facility, on March 13, 2023, the Company issued a notice of termination of the SVB Loan Agreement. The termination of the SVB Revolving Credit Facility became effective April 20, 2023. Prior to issuing the notice of termination, the Company received consent to terminate the SVB Revolving Credit Facility and a waiver of the terms relating to the SVB Revolving Credit Facility under its Term Loan and Security Agreement, dated as of December 3, 2021, with Lafayette Square Loan Servicing, LLC (“Lafayette Square”). The Company did not hold material cash deposits or securities at Silicon Valley Bank and did not experience any adverse impact to its liquidity or to its current and projected b usiness operations, financial condition or results of operations as a result of the SVB closure. During the six months ended June 30, 2023, the Company incurred $0.4 million of deferred financing costs. After the Company issued the notice of termination, total deferred financing costs of $0.3 million were expensed to loss on early termination of line of credit during the six months ended June 30, 2023 . U.S. Small Business Administration Loans Economic Injury Disaster Loan In 2020, the Company applied and was approved for a loan pursuant to the Economic Injury Disaster Loan (“EIDL”), administered by the U.S. Small Business Administration (“SBA”). The Company received the loan proceeds of $0.2 million on June 15, 2020. The loan bears interest at a rate of 3.75% and matures on June 15, 2050. Installment payments, including principal and interest, of less than $0.1 million began monthly on December 15, 2022. Each payment will first be applied to pay accrued interest, then the remaining balance will be used to reduce principal. The loan is secured by substantially all assets of DDH LLC. Accrued and unpaid interest expense as of June 30, 2024 and December 31, 2023 was less than $0.1 million and is included in accrued expenses on the condensed consolidated balance sheets. Overall As of June 30, 2024, future minimum payments related to long-term debt are as follows (in thousands): 2024 $ 1,109 2025 11,160 2026 25,657 2027 3 2028 3 Thereafter 139 Total 38,071 Less current portion (1,840) Less deferred financing costs (1,398) Long-term debt, net $ 34,833

Stockholders_ Deficit and Stock

Stockholders’ Deficit and Stock-Based Compensation	6 Months Ended
	Jun. 30, 2024
Stockholders' Equity and Stock-Based Compensation
Stockholders’ Deficit and Stock-Based Compensation	Note 4 — Stockholders’ Deficit and Stock-Based Compensation Stockholders’ Equity – Initial Public Offering Following the completion of the Organizational Transactions, DDH LLC’s limited liability company agreement was amended and restated to, among other things, appoint the Company as the sole managing member of DDH LLC and effectuate a recapitalization of all outstanding preferred units and common units into (i) economic nonvoting units of DDH LLC held by the Company and, through their indirect ownership of DDM, the Company's Chairman and Chief Executive Officer and President, and (ii) noneconomic voting units of DDH LLC, 100% of which are held by the Company. In August 2022 and December 2023, DDM tendered 100,000 and 410,000, respectively, of its limited liability company units to the Company in exchange for newly issued shares of Class A Common Stock of the Company on a one-for-one basis. In connection with these exchanges, an equivalent number of the holder’s shares of Class B Common Stock were cancelled. As of June 30, 2024, DDM held 10,868,000 shares of Class B Common Stock. The Company is authorized to issue 160,000,000 shares of Class A Common Stock, par value $0.001 per share, 20,000,000 shares of Class B Common Stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. On February 15, 2022, the Company completed its initial public offering of 2,800,000 units (“Units”), each consisting of (i) one share of its Class A Common Stock and (ii) one warrant entitling the holder to purchase one share of its Class A Common Stock at an exercise price of $5.50 per share. The warrants became immediately exercisable upon issuance and were exercisable for a period of five years after the issuance date. The shares of Class A Common Stock and warrants were immediately transferable separately upon issuance. At June 30, 2024, none of these warrants were outstanding. The underwriters in our initial public offering were granted a 45-day option to purchase up to an additional 420,000 shares and/or warrants, or any combination thereof, to cover over-allotments, which they initially exercised, in part, electing to purchase warrants to purchase an additional 420,000 shares of Class A Common Stock. As of June 30, 2024, none of these warrants were outstanding. In connection with the Company’s initial public offering, the Company issued to the underwriters of the offering a unit purchase option to purchase (i) an additional 140,000 Units at a per Unit exercise price of $6.60, which was equal to 120% of the public offering price per Unit sold in the initial public offering, and (ii) warrants to purchase 21,000 shares of Class A Common Stock at a per warrant exercise price of $0.012, which was equal to 120% of the public offering price per warrant sold in the offering. A group of underwriters exercised 70,000 Units and 10,500 warrants in November 2023 and exercised 70,000 Units and 10,500 warrants in February 2024. The warrants had a fair value of $0 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.94% based on the applicable U.S. Treasury bill rate, (2) expected life of 5 years, (3) expected volatility of approximately 66% based on the trading history of similar companies, and (4) zero expected dividends. On August 29, 2023, the Company filed a Tender Offer Statement on Schedule TO pursuant to which the Company offered to purchase all of its outstanding warrants for $1.20 per warrant in cash. The Tender Offer expired at one minute after 11:59 PM, Eastern Time on September 28, 2023. The Company accepted all validly tendered warrants for purchase and settlement on October 2, 2023. As a result of the Tender Offer, a total of 2,213,652 warrants were tendered and not validly withdrawn prior to the expiration of the tender offer for a total purchase price of approximately $2.7 million. On October 23, 2023, the Company distributed a notice of redemption to the registered holders of the remaining outstanding warrants announcing the redemption of those warrants for $0.35 per warrant. The redemption closed on October 30, 2023, and all remaining 1,004,148 warrants were purchased for an aggregate price of approximately $0.4 million. Noncontrolling Interest Direct Digital Holdings, Inc. is the sole managing member of DDH LLC, and consolidates the financial results of DDH LLC. Therefore, Direct Digital Holdings, Inc. reports a noncontrolling interest ("NCI") based on the common units of DDH LLC held by DDM. While Direct Digital Holdings, Inc. retains its controlling interest in DDH LLC, changes in its ownership interest in DDH LLC are accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC Units by DDM will result in a change in ownership and reduce or increase the amount recorded as noncontrolling interest and increase or decrease additional paid-in capital when DDH LLC has positive or negative net assets, respectively. Stock-Based Compensation Plans In connection with the initial public offering, the Company adopted the 2022 Omnibus Incentive Plan (“2022 Omnibus Plan”) to facilitate the grant of equity awards to the Company’s employees, consultants and non-employee directors. The Company’s board of directors reserved 1,500,000 shares of Class A Common Stock for issuance in equity awards under the 2022 Omnibus Plan. Information on activity for both the stock options and RSUs is detailed below. During the six months ended June 30, 2024 and 2023, the Company recognized $0.7 million and $0.3 million, respectively, of total stock-based compensation expense in the condensed consolidated statement of operations in compensation, tax and benefits. Stock Options Options to purchase shares of common stock vest annually on the grant date anniversary over a period of three years and expire 10 years following the date of grant. The following table summarizes the stock option activity under the 2022 Omnibus Plan as of June 30, 2024: Stock Options Shares Weighted Average Weighted Average Aggregate Outstanding at January 1, 2024 371,116 $ 2.51 8.77 $ 4,591 Granted — $ — — $ — Exercised (8,754) $ 2.62 — $ 172 Forfeited (2,383) $ 2.82 — $ 17 Outstanding at June 30, 2024 359,979 $ 2.51 8.09 $ 549 Vested and exercisable at June 30, 2024 175,405 $ 2.17 7.99 $ 327 As of June 30, 2024, unrecognized stock-based compensation of $0.3 million related to 184,574 of unvested stock options which will be recognized on a straight-line basis over a weighted-average vesting period of 1.09 years. Restricted Stock Units RSUs generally vest annually on the grant date anniversary over a period of three years. A summary of RSU activity during the six months ended June 30, 2024 and related information is as follows: Restricted Stock Units Number of Shares Weighted Average Unvested- January 1, 2024 542,396 $ 2.87 Granted 99,474 $ 16.90 Vested (358,899) $ 8.24 Forfeited (1,751) $ 3.25 Unvested- June 30, 2024 281,220 $ 2.81 The majority of vested RSUs were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for the applicable income and other employment taxes. The total shares withheld were 97,086 and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. As of June 30, 2024, there was unrecognized stock-based compensation of $0.7 million related to unvested RSUs which will be recognized on a straight-line basis over a weighted average period of 1.13 years.

Tax Receivable Agreement and In

Tax Receivable Agreement and Income Taxes	6 Months Ended
	Jun. 30, 2024
Tax Receivable Agreement and Income Taxes
Tax Receivable Agreement and Income Taxes	Note 5 — Tax Receivable Agreement and Income Taxes Tax Receivable Agreement The Company's TRA with DDH LLC and DDM (together, the “TRA Holders”) provides for payment by the Company to the TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that the Company actually realizes or is deemed to realize in certain circumstances. The Company retains the benefit of the remaining 15% of these net cash savings. The TRA liability is calculated by determining the tax basis subject to the TRA (“tax basis”) and applying a blended tax rate to the basis differences and calculating the resulting impact. The blended tax rate consists of the U.S. federal income tax rate and assumed combined state and local income tax rate driven by the apportionment factors applicable to each state. Any taxable income or loss generated by the Company will be allocated to TRA Holders in accordance with the TRA, and distributions to the owners of LLC Units in an amount sufficient to fund their tax obligations will be made. Pursuant to the Company’s election under Section 754 of the Code in 2022, the Company expects to obtain an increase in its share of the tax basis in the net assets of DDH, LLC when LLC interests are redeemed or exchanged by the members of DDH, LLC. In August 2022 and December 2023, members of DDM exchanged 100,000 and 410,000 Class B shares into Class A shares, respectively. The Company has recorded a liability related to the tax receivable agreement of $5.2 million as of June 30, 2024 and December 31, 2023. The Company has recorded a deferred tax asset primarily from the outside basis difference in the partnership interest of $6.6 million and $6.1 million as of June 30, 2024 and December 31, 2023, respectively. The deferred tax asset is net of a valuation allowance of $0.5 million as of June 30, 2024 and December 31, 2023. Payments of less than $0.1 million and $0.8 million were made during the six months ended June 30, 2024 and 2023, respectively. The payments under the TRA will not be conditional on holder of rights under the TRA having a continued ownership interest in either DDH LLC or the Company. The Company may elect to defer payments due under the TRA if the Company does not have available cash to satisfy its payment obligations under the TRA. Any such deferred payments under the TRA generally will accrue interest from the due date for such payment until the payment date. The Company accounts for any amounts payable under the TRA in accordance with ASC Topic 450, Contingencies , and recognizes subsequent period changes to the measurement of the liability from the TRA in the statement of operations as a component of income before taxes. For the six months ended June 30, 2024 and 2023, no amounts were recorded as income in other income (expense) for such change. The term of the TRA commenced upon completion of the initial public offering and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless the Company exercises its right to terminate the TRA. If the Company elects to terminate the TRA early (or it is terminated early due to changes in control), the obligations under the TRA would accelerate and the Company would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by the Company under the TRA. Income Taxes Through the Organizational Transactions completed in February 2022, the Company formed an Up-C structure which allows DDM to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership for U.S. federal income tax purposes. Under the Up-C structure, the Company is subject to corporation income tax on the variable ownership changes. The ownership was 20.45% as of January 1, 2023 and increased to 23.35% in the fourth quarter of 2023. There was no exchange of shares of Class B common stock for shares of Class A common stock in the six months ended June 30, 2024. The Company recorded a tax benefit for federal and state income tax for which the components and the effective income tax rates are as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Income tax expense (benefit) $ (274) $ 74 $ (475) $ — Effective income tax rate 8.0 % 5.8 % 6.4 % — % The effective tax rates were lower than the statutory tax rates for the three and six months ended June 30, 2024 and 2023 primarily due to the Company’s partnership loss that is not subject to federal and state taxes. As of June 30, 2024, the Company had federal net operating loss carryforwards of $ 3.3 million that can be carried forward indefinitely.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2024
Related Party Transactions [Abstract]
Related Party Transactions	Note 6 — Related Party Transactions Related Party Transactions Member Payable As of June 30, 2024 and December 31, 2023, the Company had a net receivable from members that totaled $1.7 million, which is included as a related party receivable on the condensed consolidated balance sheets. Up-C Structure In February 2022, the Company completed an initial public offering of its securities, and through the Organizational Transactions, formed an Up-C structure, which is often used by partnerships and limited liability companies and allows DDM, a Delaware limited liability company indirectly owned by Mark Walker (“Walker”) and Keith Smith (“Smith”), to retain its equity ownership in DDH LLC and to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity, for U.S. federal income tax purposes. DDM holds economic nonvoting LLC Units in DDH LLC and holds noneconomic voting equity interests in the form of the Class B Common Stock in Direct Digital Holdings (See Note 4 — Stockholders’ Deficit and Stock-Based Compensation). One of the tax benefits to DDM associated with this structure is that future taxable income of DDH LLC that is allocated to DDM will be taxed on a pass-through basis and therefore will not be subject to corporate taxes at the entity level. Additionally, DDM may, from time to time, redeem or exchange its LLC Units for shares of the Company’s Class A Common Stock on a one-for-one basis. The Up-C structure also provides DDM with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded. If the Company ever generates sufficient taxable income to utilize the tax benefits, DDH expects to benefit from the Up-C structure because, in general, the Company expects cash tax savings in amounts equal to 15% of certain tax benefits arising from such redemptions or exchanges of DDM's LLC Units for Class A Common Stock or cash and certain other tax benefits covered by the TRA. (See Note 5 — Tax Receivable Agreement and Income Taxes). The aggregate balance of tax receivable liabilities as of June 30, 2024 and December 31, 2023, is as follows (in thousands): June 30, December 31, Liability related to tax receivable agreement Short term $ 41 $ 41 Long term 5,201 5,201 Total liability related to tax receivable agreement $ 5,242 $ 5,242

Segment Information

Segment Information	6 Months Ended
	Jun. 30, 2024
Segment Reporting [Abstract]
Segment Information	Note 7 — Segment Information Revenue by business segment is as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Sell-side advertising $ 14,298 $ 23,601 $ 30,799 $ 37,384 Buy-side advertising 7,557 11,803 13,331 19,243 Total revenues $ 21,855 $ 35,404 $ 44,130 $ 56,627 Operating loss by business segment reconciled to loss before income taxes is as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Sell-side advertising $ 447 $ 2,172 $ 1,409 $ 3,450 Buy-side advertising 1,848 3,924 2,141 5,429 Corporate office expenses (4,360) (3,841) (8,423) (6,765) Total operating loss (2,065) 2,255 (4,873) 2,114 Corporate other expense (1,350) (986) (2,563) (2,253) Loss before taxes $ (3,415) $ 1,269 $ (7,436) $ (139) Total assets by business segment are as follows (in thousands): June 30, December 31, Sell-side advertising $ 15,302 $ 34,354 Buy-side advertising 22,560 22,539 Corporate office 10,614 13,779 Total assets $ 48,476 $ 70,672

Net (Loss) Income Per Share

Net (Loss) Income Per Share	6 Months Ended
	Jun. 30, 2024
Earnings Per Share [Abstract]
Net (Loss) Income Per Share	Note 8 — Net (Loss) Income Per Share The Company has two classes of common stock, Class A and Class B. Shares of the Company’s Class B Common Stock do not share in the earnings or losses attributable to Direct Digital Holdings, Inc. and are therefore not participating securities. The Company uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of warrants for the three and six months ended June 30, 2023. The following table sets forth the computation of the Company’s basic and diluted net (loss) income per share (in thousands, except per share amounts): Three Months Ended Six Months Ended 2024 2023 2024 2023 Net (loss) income attributable to Class A shareholders and participating securities $ (590) $ 192 $ (1,365) $ (22) Less: net income allocated to participating securities — 99 — — Net (loss) income allocated to Class A shareholders $ (590) $ 93 $ (1,365) $ (22) Weighted average common shares outstanding - basic 3,700,615 2,921,258 3,604,220 2,911,801 Class B Common Stock — — — — Options to purchase common stock — 51,180 — — Unvested restricted stock units — 140,751 — — Weighted average common shares outstanding - diluted 3,700,615 3,113,189 3,604,220 2,911,801 Net (loss) income per common share, basic $ (0.16) $ 0.03 $ (0.38) $ (0.01) Net (loss) income per common share, diluted $ (0.16) $ 0.03 $ (0.38) $ (0.01) The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net (loss) income per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Class B Common Stock 10,868 11,278 10,868 11,278 Warrants to purchase common stock — — — 3,218 Options to purchase common stock 360 312 364 307 Unvested restricted stock units 392 432 464 485 Total excludable from net loss per share attributable to common stockholders - diluted 11,620 12,022 11,696 15,288

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 9 — Commitments and Contingencies Litigation We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. As of the date hereof, except as set forth below, we are not a party to any material legal or administrative proceedings nor are there any proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. On May 23, 2024, an alleged stockholder, purportedly on behalf of the persons or entities who purchased or acquired publicly traded securities of the Company between April 2023 and March 2024, filed a putative class action against the Company, certain of our officers and directors, and other defendants in the U.S. District Court for the Southern District of Texas, alleging violations of federal securities laws related to alleged false or misleading disclosures made by the Company in its public filings. On July 9, 2024, another alleged stockholder filed a similar securities class action against the Company, certain of our officers and directors, also in the Southern District of Texas. The two actions have been consolidated. Each of these complaints seeks unspecified damages, plus costs, fees, and attorneys’ fees. The Company cannot make any predictions about the final outcome of this matter or the timing thereof but believes that plaintiffs’ claims lack merit and intends to vigorously defend these lawsuits. On May 10, 2024, the Company was the subject of a defamatory article / blog post. In connection with this post, one of the Company’s sell-side customers paused its connection to the Company while the allegations were investigated. This customer reconnected the Company on May 22, 2024 and sell-side volumes have resumed but not yet at the levels experienced prior to the pause in May 2024. The Company is actively working with its partners to achieve prior volume levels. On May 14, 2024, the Company filed a lawsuit against the author of the defamatory article and is vigorously pursuing its rights. The Company cannot make any predictions about the final outcome of this litigation matter or the timing thereof. Operating Leases During the six months ended June 30, 2024 and 2023, the Company incurred fixed rent expense associated with operating leases for real estate of $0.1 million. The Company did not have any finance leases, short-term leases nor variable leases over this time period. During the three and six months ended June 30, 2024 and 2023, the Company had the following cash and non-cash activities associated with leases (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow for operating leases $ 41 $ 40 $ 78 $ 80 Non-cash changes to the operating lease ROU assets and operating lease liabilities Additions and modifications to ROU asset obtained from new operating liabilities $ 200 $ — $ 200 $ — The weighted-average remaining lease term and discount rate for the Company’s operating lease is 5.0 years and 8.4%, respectively, as of June 30, 2024. The weighted-average remaining lease term and discount rate for the Company's operating leases is 6.3 years and 8.4%, respectively, as of June 30, 2023 . The future payments due under operating leases as of June 30, 2024 us as follows (in thousands): 2024 $ 128 2025 258 2026 265 2027 269 2028 167 Thereafter 200 Total undiscounted lease payments 1,287 Less effects of discounting (229) Less current lease liability (179) Total operating lease liability, net of current portion $ 879

Property, Equipment and Softwar

Property, Equipment and Software, net	6 Months Ended
	Jun. 30, 2024
Property, Plant and Equipment [Abstract]
Property, Equipment and Software, net	Note 10 — Property, Equipment and Software, net Property, equipment and software, net consists of the following (in thousands): Useful Life (Years) June 30, December 31, Furniture and fixtures 5 $ 137 $ 128 Computer equipment 3 20 20 Leasehold improvements 15 36 36 Capitalized software 3 702 702 Property, equipment and software, gross 895 886 Less: accumulated depreciation and amortization (424) (287) Total property, equipment and software, net $ 471 $ 599 The following table summarizes depreciation and amortization expense related to property, equipment and software by line item for the three and six months ended June 30, 2024 and 2023 (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Cost of revenue $ 59 $ 56 $ 120 $ 104 General and administrative 9 9 17 17 Total depreciation and amortization $ 68 $ 65 $ 137 $ 121

Intangible Assets, net

Intangible Assets, net	6 Months Ended
	Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets, net	Note 11 — Intangible Assets, net In September 2020, the Company acquired Orange142 for a purchase price of $26.2 million. The acquisition of Orange142 was recorded by allocating the total purchase consideration to the fair value of the net tangible assets acquired, including goodwill and intangible assets, in accordance with ASC 805. The purchase consideration exceeded the fair value of the net assets, resulting in goodwill of $4.1 million and intangible assets of $18.0 million. The Company records amortization expense on a straight-line basis over the life of the identifiable intangible assets. For the three months ended June 30, 2024 and 2023, amortization expense of $0.5 million and for the six months ended June 30, 2024 and 2023, amortization expense of $1.0 million, respectively, was recognized. As of June 30, 2024 and December 31, 2023, intangible assets net of accumulated amortization was $10.7 million and $11.7 million, respectively. As of June 30, 2024, intangible assets and the related accumulated amortization, weighted-average remaining life and future amortization expense are as follows: June 30, 2024 Weighted-Average Original Accumulated Net Remaining Life (Years) Amount Amortization Total Customer Lists 6.3 $ 13,028 $ (4,886) $ 8,143 Trademarks and tradenames 6.3 3,501 (1,313) 2,188 Non-compete agreements 1.3 1,504 (1,128) 376 Total intangible assets, net $ 18,034 $ (7,327) $ 10,707 December 31, 2023 Weighted-Average Original Accumulated Net Remaining Life (Years) Amount Amortization Total Customer Lists 6.8 $ 13,028 $ (4,234) $ 8,794 Trademarks and tradenames 6.8 3,501 (1,138) 2,363 Non-compete agreements 1.8 1,504 (978) 527 Total intangible assets, net $ 18,034 $ (6,350) $ 11,684 Total 2024 $ 977 2025 1,879 2026 1,653 2027 1,653 2028 1,653 Thereafter 2,892 Total future amortization expense $ 10,707

Pay vs Performance Disclosure

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net (loss) income attributable to Direct Digital Holdings, Inc.	$ (590)	$ 192	$ (1,365)	$ (22)

Insider Trading Arrangements

Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation and Con_2

Basis of Presentation and Consolidation and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2024
Accounting Policies [Abstract]
Basis of presentation and consolidation	Basis of presentation and consolidation The accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 8-03 of Regulation S-X. Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The consolidated financial statements data for the year ended December 31, 2023 included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of June 30, 2024, the results of its operations for the three and six months ended June 30, 2024 and 2023, cash flows for the six months ended June 30, 2024 and 2023, and stockholders’ deficit for the three and six months ended June 30, 2024 and 2023. The results of operations for the three and six months ended June 30, 2024, respectively, are not necessarily indicative of the results to be expected for the full year. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenues and expenses reported during the period. Actual results could differ from estimates. The accompanying condensed unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the accompanying notes for the year ended December 31, 2023, which was included in Form 10-K filed with the SEC on October 15, 2024. The condensed consolidated financial statements include the accounts of Direct Digital Holdings, Inc. and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards otherwise applicable to public companies until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The adoption dates discussed below reflect this election.
Revenue recognition	Revenue recognition The Company recognizes revenue using the following five steps: 1) identification of a contract with a customer; 2) identification of the performance obligation(s) in the contract; 3) determination of the transaction price; 4) allocation of the transaction price to the performance obligation(s) in the contract; and 5) recognition of revenue when, or as, the performance obligation(s) are satisfied. The Company’s revenues are derived primarily from two sources: sell-side advertising and buy-side advertising. Thus, the Company disaggregates the revenue earned into these two segments. For additional segment disclosures, refer to Note 7 — Segment Information of our condensed consolidated financial statements. The Company maintains agreements with its customers in the form of written service agreements, which set out the terms of the relationship, including payment terms (typically 30 to 90 days) and access to its platform. For the sell-side advertising segment, the Company generates revenue by selling advertising inventory (digital ad units) that the Company purchases from publishers to advertisers through a process of monetizing ad impressions on the Company’s proprietary sell-side programmatic platform operating under the trademarked banner Colossus SSP. For the buy-side advertising segment, the Company generates revenue from customers that enter into agreements with the Company to provide managed advertising campaigns, which include digital marketing and media services to purchase digital advertising space, data and other add-on features. In connection with the Company’s analysis of principal vs agent considerations, the Company has evaluated the specified goods or services and considered whether the Company controls the goods or services before they are provided to the customer, including the three indicators of control. Based upon this analysis and the Company’s specific facts and circumstances, the Company concluded that it is a principal for the goods or services sold through both the Company’s sell-side advertising segment and buy-side advertising segment because the Company controls the specified good or service before it is transferred to the customer and the Company is the primary obligor in the agreement with customers. Therefore, the Company reports revenue on a gross basis inclusive of all supplier costs and pays suppliers for the cost of digital media, advertising inventory, data and any add-on services or features. In the advertising industry, companies commonly experience seasonal fluctuations in revenue. For example, in our sell-side advertising segment, many advertisers allocate the largest portion of their budgets to the fourth quarter of the calendar year in order to coincide with increased holiday purchasing while, in our buy-side segment, the second and third quarters of the year reflect our highest levels of advertising activity and the first quarter reflects the lowest level of such activity. Sell-side advertising The Company partners with publishers to sell advertising inventory to the Company’s Colossus Media-curated clients and the open markets (collectively referred to as “buyers”) seeking to access the general market as well as unique multi-cultural audiences. The Company generates revenue from the delivery of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile mediums using its proprietary programmatic sell-side platform (“SSP”). The Company refers to its publishers, app developers, and channel partners collectively as its "publishers". The Company’s platform allows the Company to sell, in real time, ad impressions from publishers to buyers and provides automated inventory management and monetization tools to publishers across various device types and digital ad formats. The Company recognizes revenue at a point in time when an ad is delivered or displayed in response to a winning bid request from ad buyers. Buy-side advertising The Company purchases media based on the budget established by its customers with a focus on leveraging data services, customer branding, real-time market analysis and micro-location advertising. The Company offers its services on a fully managed basis, which is recognized over time using the output method when the performance obligation is fulfilled. An “impression” is delivered when an advertisement appears on pages viewed by users. The performance obligation is satisfied over time as the volume of impressions are delivered up to the contractual maximum. Many customers run several different campaigns throughout the year to capitalize on different seasons, special events and other happenings at their respective regions and localities. The Company provides digital advertising and media buying capabilities with a focus on generating measurable digital and financial life for its customers. Revenue arrangements are evidenced by a fully executed insertion order (“IO”) and/or a master service agreement (“MSA”) covering a combination of marketing tactics. Generally, IOs specify the number and type of advertising impressions to be delivered over a specified time at an agreed upon price and performance objectives for an ad campaign. Performance objectives are generally a measure of targeting, as defined by the parties in advance, such as number of ads displayed, consumer clicks on ads or consumer actions (which may include qualified leads, registrations, downloads, inquiries or purchases). These payment models are commonly referred to as CPM (cost per impression), CPC (cost per click) and CPA (cost per action). The majority of the Company’s contracts are flat-rate, fee-based contracts.
Goodwill	Goodwill As of June 30, 2024 and December 31, 2023, goodwill was $6.5 million, which includes $2.4 million as a result of the acquisition of Huddled Masses and Colossus Media in 2018 and $4.1 million from the acquisition of Orange 142 in 2020. The Company expects to deduct goodwill for tax purposes in future years. Goodwill is attributable to entry into new markets not previously accessible and generation of future growth opportunities. Goodwill is assessed for impairment at least annually (December 31) starting with a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in our management, strategy and primary user base. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a quantitative goodwill impairment analysis is performed. Depending upon the results of the quantitative measurement, the recorded goodwill may be written down and an impairment expense is recorded in the condensed consolidated statements of operations when the carrying amount of the reporting unit exceeds the fair value of the reporting unit. Goodwill is reviewed annually and tested for impairment upon the occurrence of a triggering event. The Company determined that there was no impairment of goodwill during the six months ended June 30, 2024 and 2023.
Intangible assets, net	Intangible assets, net Intangible assets consist of customer relationships, trademarks and non-compete agreements. Intangible assets are recorded at fair value at the time of their acquisition and are stated within the condensed consolidated balance sheets net of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives and recorded as amortization expense within general and administrative expenses in the condensed consolidated statements of operations. The Company’s intangible assets are being amortized over their estimated useful lives, using the straight-line method with non-compete agreements over 5 years and other intangibles over 10 years.
Impairment of long-lived assets	Impairment of long-lived assets The Company evaluates the recoverability of long-lived assets, including property, equipment and software costs and intangible assets if facts or circumstances indicate that any of those assets might be impaired. ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows to determine if a write-down to fair value is necessary. No impairment loss was recognized during the six months ended June 30, 2024 and 2023.
Stock-based compensation	Stock-based compensation Stock-based compensation cost for options and restricted stock units (“RSU”) awarded to employees and directors is measured at the grant date based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Contingently issued awards with a requisite service period that precedes the grant date are measured and recognized at the start of the requisite service period and remeasured each reporting period until the grant date. The Company estimates the fair value of RSU’s based on the closing price of the Company’s common stock on the date of the grant. The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the fair value of the Company’s common stock, as well as assumptions regarding the expected common stock price volatility over the term of the stock options, the expected term of the stock options, risk-free interest rates and the expected dividend yield. Given the Company's short history as a public company, the expected volatility is determined based on the trading history of several unrelated public companies within the industry that the Company considers to be comparable and the expected term is determined based on a combination of the terms of stock options and peer data. The risk-free interest rate is derived using the U.S. Treasury yield curve in effect at date of grant. Other assumptions are based on historical experience and activity. The Company considers an estimated forfeiture rate for stock options based on historical experience and the anticipated forfeiture rates during the future contract life.
Income taxes	Income taxes In February 2022, concurrent with the Organizational Transactions, the Company entered into a tax receivable agreement (“Tax Receivable Agreement” or “TRA”) with DDH LLC and Direct Digital Management, LLC (“DDM”). The TRA provides for certain income (loss) allocations between the Company and DDH LLC under the agreement. DDH LLC is a limited liability company, is treated as a partnership for federal income tax purposes and generally is not subject to any entity-level U.S. federal income tax and certain state and local income taxes. Any taxable income or loss generated by the Company is allocated to holders of LLC units (“LLC Units”) in accordance with the Second Amended and Restated Limited Liability Company Agreement (“LLC Agreement”), and distributions to the owners of LLC Units in an amount sufficient to fund their tax obligations. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss under the LLC Agreement. Pursuant to the Company’s election under Section 754 of the Internal Revenue Code (the “Code”), the Company expects to obtain an increase in its share of the tax basis in the net assets of DDH, LLC when LLC Units are redeemed or exchanged by the members of DDH, LLC. The Company made an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC interest occurred. During the six months ended June 30, 2024 and 2023, members of DDM exchanged no shares of Class B Common Stock into shares of Class A Common Stock. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that
Accounts receivable, net	Accounts receivable, net
Concentrations of customers and suppliers	Concentrations of customers and suppliers
Cash and cash equivalents	Cash and cash equivalents Cash and cash equivalents consist of funds deposited with financial institutions and highly liquid instruments with original maturities of three months or less. Such deposits may, at times, exceed federally insured limits. The risk of loss attributable to any uninsured balances is mitigated by depositing funds only in high credit quality financial institutions. The
Deferred offering costs	Deferred offering costs
Net income (loss) per share	Net income (loss) per share Basi c net income (loss) per share excludes dilution and is determined by dividing net income (loss) by the w eighted average number of common shares outstanding including participating securities during the period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock.
Recent Accounting Pronouncements	Recent Accounting Pronouncements Accounting pronouncements adopted No standards have been adopted which have had a material impact on the Company’s condensed consolidated financial statements. Accounting pronouncements not yet adopted In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures , a final standard on improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for emerging growth companies for annual periods beginning after December 15, 2025. This accounting standard is effective in the first quarter of the Company's fiscal year ending December 31, 2026. The Company is currently evaluating the impact of adoption on our financial disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures . The ASU requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the Company's chief operating decision maker ("CODM"). The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of adoption on our financial disclosures. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements.
Liquidity and capital resources	Liquidity and capital resources Going Concern The Company evaluated whether relevant conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern. Substantial doubt exists when conditions and events, considered in the aggregate, indicate it is probable that a company will not be able to meet its obligations as they become due within one year after the issuance date of its financial statements. Management’s assessment is based on the relevant conditions that are known or reasonably knowable as of the date these consolidated financial statements were issued or were available to be issued. As discussed in Note 9, one of the Company’s sell-side customers paused its connection to the Company for a couple of weeks in May 2024, which reduced sell-side sales volumes. As of the date of this report, sell-side volumes related to this customer have resumed but not yet at the levels experienced prior to the pause in May 2024 which has created significant disruption in the Company’s sell-side business. The Company is actively working with its partners to achieve prior volume levels. However, there can be no assurance that the Company will be able to achieve prior volume levels with its partners or on the timing of achieving such volume levels. Additionally, the Company (1) incurred a net loss of $6.8 million in 2023 primarily related to payments made to a few publishers of $8.8 million associated with a disputed short payment from a customer and a net loss of $7.0 million in the six months ended June 30, 2024 reflecting the impact of the sell-side disruption described above and a decrease in customer spend on the buy-side, (2) reported an accumulated deficit of $3.9 million as of June 30, 2024, (3) reported cash and cash equivalents of $1.1 million as of June 30, 2024, (4) has borrowed $9.7 million as of June 30, 2024 and the date of this report, under the Credit Agreement which matures in July 2025, (5) was notified on April 17, 2024 that the Company’s auditor had resigned and (6) was unable to timely file its 2023 annual report and quarterly reports for the first two quarters of 2024. The delay in filing the Company’s annual and quarterly reports disrupted existing capital-raising efforts and created additional audit, legal and other expenses. These factors raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months. The Company anticipates sources of liquidity to include cash on hand and cash flow from operations and has taken several actions to address liquidity concerns. These actions include (1) a plan to reduce expenses through a staff reduction, a pause on hiring and cost savings measures that were executed on July 1, 2024, (2) working with lenders to provide temporary various relief from debt covenants (see Note 3 – Long-Term Debt) while rebuilding sell-side volumes, (3) raising capital through arrangements with various providers, and (4) regaining compliance with respect to delinquent SEC filings which will allow the Company to access the capital markets as well as other financing sources. There can be no assurance that the Company’s actions will be successful or that additional financing will be available when needed or on acceptable terms. The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

Organization and Description _2

Organization and Description of Business (Tables)	6 Months Ended
	Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of Ownership In Subsidiaries	The subsidiaries of Direct Digital Holdings, Inc. are as follows: Subsidiary Current % Business Date of Formation Date of Colossus Media, LLC 100% Sell-side September 8, 2017 June 21, 2018 Orange142, LLC 100% Buy-side March 6, 2013 September 30, 2020 Huddled Masses, LLC 100% Buy-side November 13, 2012 June 21, 2018 Direct Digital Holdings, LLC (1) N/A June 21, 2018 February 15, 2022 (1) DDH owns 100% of the voting interest in Direct Digital Holding, LLC. As of June 30, 2024, DDH owns 25.8% of the economic interest in Direct Digital Holdings, LLC. See further discussion of the Up-C structure in Note 6 of our condensed consolidated financial statements.

Basis of Presentation and Con_3

Basis of Presentation and Consolidation and Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2024
Accounting Policies [Abstract]
Schedule of Accrued Liabilities	The components of accrued liabilities on the balance sheet as of June 30, 2024 and December 31, 2023 are as follows (in thousands): June 30, December 31, Accrued compensation and benefits $ 371 $ 2,789 Accrued expenses 604 631 Accrued severance 27 190 Accrued litigation settlement (1) 42 171 Accrued interest 81 36 Total accrued liabilities $ 1,125 $ 3,816

Long-Term Debt (Tables)

Long-Term Debt (Tables)	6 Months Ended
	Jun. 30, 2024
Debt Disclosure [Abstract]
Schedule of Long-Term Debt Instruments	At June 30, 2024 and December 31, 2023, long-term debt consisted of the following (in thousands): June 30, 2024 December 31, 2023 2021 Credit Facility $ 28,221 $ 28,594 Credit Agreement 9,700 3,000 Economic Injury Disaster Loan 150 150 Total long-term debt 38,071 31,744 Less: deferred financing costs (1,398) (1,688) Total long-term debt, net of deferred financing costs 36,673 30,056 Less: current portion (1,840) (1,478) Total long-term debt, net of current portion $ 34,833 $ 28,578
Schedule of Components of Interest Expense and Related Fees for Long-Term Debt	The components of interest expense and related fees for long-term debt is as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Interest expense – Lafayette Square $ 981 $ 890 $ 1,955 $ 1,769 Interest expense – East West Bank 189 — 324 — Interest expense – Other 2 2 4 4 Amortization of deferred financing costs 186 136 372 272 Total interest expense and amortization of deferred financing costs $ 1,358 $ 1,028 $ 2,655 $ 2,045
Schedule Of Financial Covenants	On October 15, 2024, with an effective date of June 30, 2024, the Company and Lafayette Square entered into the Fifth Amendment to the Term Loan and Security Agreement (the “Fifth Amendment”) which among other things, (1) defers quarterly installment payments on the Term Loan and the Delayed Draw Loan for the periods from June 30, 2024 through December 31, 2025, (2) requires that the Company pay a commitment fee of 50 basis points or an amount of $0.1 million to Lafayette Square, (3) allows proceeds from future equity raises by the Company, if any, to cure potential financial covenant noncompliance, (4) provides for one-month and three-month interest periods, (5) replaces the calculation of the consolidated total net leverage ratio with a consolidated total leverage ratio for purposes of calculating the applicable margin and the financial covenant and (6) replaces the financial covenants under the 2021 Credit Facility (effective as of June 30, 2024) with the following: As of Minimum TTM* EBITDA ($ in millions) Minimum Liquidity ($ in millions) Maximum Consolidated Total Leverage Ratio Minimum Fixed Charge Coverage Ratio June 30, 2024 n/a n/a n/a n/a September 30, 2024 $5.0 $1.5 n/a n/a December 31, 2024 $3.5 $1.5 n/a n/a March 31, 2025 $5.5 $2.0 n/a n/a June 30, 2025 $7.5 $2.0 n/a 1.50 to 1.00 September 30, 2025 n/a $2.0 4.25 to 1.00 1.50 to 1.00 December 31, 2025 n/a $2.0 4.00 to 1.00 1.50 to 1.00 March 31, 2026 n/a $2.0 3.75 to 1.00 1.50 to 1.00 June 30, 2026 n/a $2.0 3.50 to 1.00 1.50 to 1.00 September 30, 2026 n/a $2.0 3.25 to 1.00 1.50 to 1.00 * TTM = Trailing Twelve Months On October 15, 2024, with an effective date of June 30, 2024, the Company and EWB entered into the Third Amendment to the Credit Agreement (the “Third Amendment”) which, among other things, (1) provides that the Company will make prepayments of the outstanding principal balance of the Credit Agreement of $1.0 million upon execution of the Third Amendment, $1.0 million on or before January 15, 2025 and $2.0 million on or before April 15, 2025, (2) requires the Company to file a registration statement with the SEC to establish an equity line of credit offering on or before October 31, 2024 and to use commercially reasonable efforts to cause such registration statement to become effective, (3) requires the net proceeds of a potential equity line of credit to be applied to the outstanding principal balance under the Credit Agreement in an amount that would cause the ratio of the value of eligible accounts to the aggregate amount of revolving credit advances to be not less than 1.00 to 1.00, (4) requires the consent of EWB prior to the ability of the Company to make certain restricted payments, including cash dividends, (5) requires the Company to make additional prepayments in the amount by which the outstanding loans under the Credit Agreement exceed the borrowing base between the calendar months ending November 30, 2024 and April 15, 2025, and (6) replaces the financial covenants under the Credit Agreement, effective as of June 30, 2024, with the following: As of Minimum TTM (1) EBITDA ($ in millions) Minimum Liquid Assets ($ in millions) Maximum Total Funded Debt to EBITDA Leverage Ratio Minimum Fixed Charge Coverage Ratio Revolving Credit Availability (as of each month end) June 30, 2024 n/a $1.0 n/a n/a n/a September 30, 2024 $5.0 $1.5 n/a n/a n/a December 31, 2024 $3.5 $1.5 n/a n/a 1.00 to 1.00 (2) March 31, 2025 $5.5 $2.0 n/a n/a 1.50 to 1.00 (3) June 30, 2025 $7.5 $2.0 n/a 1.25 to 1.00 2.00 to 1.00 (4) (1) TTM = Trailing Twelve Months (2) Beginning November 30, 2024 (3) Beginning January 31, 2025 (4) Beginning April 15, 2025
Schedule of Future Minimum Payments Related to Long-term Debt	As of June 30, 2024, future minimum payments related to long-term debt are as follows (in thousands): 2024 $ 1,109 2025 11,160 2026 25,657 2027 3 2028 3 Thereafter 139 Total 38,071 Less current portion (1,840) Less deferred financing costs (1,398) Long-term debt, net $ 34,833

Stockholders_ Deficit and Sto_2

Stockholders’ Deficit and Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2024
Stockholders' Equity and Stock-Based Compensation
Schedule of Stock Option Activity	The following table summarizes the stock option activity under the 2022 Omnibus Plan as of June 30, 2024: Stock Options Shares Weighted Average Weighted Average Aggregate Outstanding at January 1, 2024 371,116 $ 2.51 8.77 $ 4,591 Granted — $ — — $ — Exercised (8,754) $ 2.62 — $ 172 Forfeited (2,383) $ 2.82 — $ 17 Outstanding at June 30, 2024 359,979 $ 2.51 8.09 $ 549 Vested and exercisable at June 30, 2024 175,405 $ 2.17 7.99 $ 327
Schedule of RSU Activity and Related Information	A summary of RSU activity during the six months ended June 30, 2024 and related information is as follows: Restricted Stock Units Number of Shares Weighted Average Unvested- January 1, 2024 542,396 $ 2.87 Granted 99,474 $ 16.90 Vested (358,899) $ 8.24 Forfeited (1,751) $ 3.25 Unvested- June 30, 2024 281,220 $ 2.81

Tax Receivable Agreement and _2

Tax Receivable Agreement and Income Taxes (Tables)	6 Months Ended
	Jun. 30, 2024
Tax Receivable Agreement and Income Taxes
Schedule of Expense for Income Taxes and the Effective Income Tax Rates	The Company recorded a tax benefit for federal and state income tax for which the components and the effective income tax rates are as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Income tax expense (benefit) $ (274) $ 74 $ (475) $ — Effective income tax rate 8.0 % 5.8 % 6.4 % — %

Related Party Transactions (Tab

Related Party Transactions (Tables)	6 Months Ended
	Jun. 30, 2024
Related Party Transactions [Abstract]
Schedule of Aggregate Changes in Balance of Gross Unrecognized Tax Benefits	The aggregate balance of tax receivable liabilities as of June 30, 2024 and December 31, 2023, is as follows (in thousands): June 30, December 31, Liability related to tax receivable agreement Short term $ 41 $ 41 Long term 5,201 5,201 Total liability related to tax receivable agreement $ 5,242 $ 5,242

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jun. 30, 2024
Segment Reporting [Abstract]
Schedule of Reconciliation of Revenue from Segments to Consolidated	Revenue by business segment is as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Sell-side advertising $ 14,298 $ 23,601 $ 30,799 $ 37,384 Buy-side advertising 7,557 11,803 13,331 19,243 Total revenues $ 21,855 $ 35,404 $ 44,130 $ 56,627
Schedule of Reconciliation of Operating Profit (Loss) from Segments to Consolidated	Operating loss by business segment reconciled to loss before income taxes is as follows (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Sell-side advertising $ 447 $ 2,172 $ 1,409 $ 3,450 Buy-side advertising 1,848 3,924 2,141 5,429 Corporate office expenses (4,360) (3,841) (8,423) (6,765) Total operating loss (2,065) 2,255 (4,873) 2,114 Corporate other expense (1,350) (986) (2,563) (2,253) Loss before taxes $ (3,415) $ 1,269 $ (7,436) $ (139)
Schedule of Reconciliation of Assets from Segment to Consolidated	Total assets by business segment are as follows (in thousands): June 30, December 31, Sell-side advertising $ 15,302 $ 34,354 Buy-side advertising 22,560 22,539 Corporate office 10,614 13,779 Total assets $ 48,476 $ 70,672

Net (Loss) Income Per Share (Ta

Net (Loss) Income Per Share (Tables)	6 Months Ended
	Jun. 30, 2024
Earnings Per Share [Abstract]
Schedule of Basic and Diluted Income Per Share	The Company has two classes of common stock, Class A and Class B. Shares of the Company’s Class B Common Stock do not share in the earnings or losses attributable to Direct Digital Holdings, Inc. and are therefore not participating securities. The Company uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of warrants for the three and six months ended June 30, 2023. The following table sets forth the computation of the Company’s basic and diluted net (loss) income per share (in thousands, except per share amounts): Three Months Ended Six Months Ended 2024 2023 2024 2023 Net (loss) income attributable to Class A shareholders and participating securities $ (590) $ 192 $ (1,365) $ (22) Less: net income allocated to participating securities — 99 — — Net (loss) income allocated to Class A shareholders $ (590) $ 93 $ (1,365) $ (22) Weighted average common shares outstanding - basic 3,700,615 2,921,258 3,604,220 2,911,801 Class B Common Stock — — — — Options to purchase common stock — 51,180 — — Unvested restricted stock units — 140,751 — — Weighted average common shares outstanding - diluted 3,700,615 3,113,189 3,604,220 2,911,801 Net (loss) income per common share, basic $ (0.16) $ 0.03 $ (0.38) $ (0.01) Net (loss) income per common share, diluted $ (0.16) $ 0.03 $ (0.38) $ (0.01)
Schedule of Antidilutive Securities	The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net (loss) income per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Class B Common Stock 10,868 11,278 10,868 11,278 Warrants to purchase common stock — — — 3,218 Options to purchase common stock 360 312 364 307 Unvested restricted stock units 392 432 464 485 Total excludable from net loss per share attributable to common stockholders - diluted 11,620 12,022 11,696 15,288

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Schedule of Supplemental Balance Sheet Information Related to Operating Leases	During the three and six months ended June 30, 2024 and 2023, the Company had the following cash and non-cash activities associated with leases (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow for operating leases $ 41 $ 40 $ 78 $ 80 Non-cash changes to the operating lease ROU assets and operating lease liabilities Additions and modifications to ROU asset obtained from new operating liabilities $ 200 $ — $ 200 $ —
Schedule of Maturity of Lease Liability	The future payments due under operating leases as of June 30, 2024 us as follows (in thousands): 2024 $ 128 2025 258 2026 265 2027 269 2028 167 Thereafter 200 Total undiscounted lease payments 1,287 Less effects of discounting (229) Less current lease liability (179) Total operating lease liability, net of current portion $ 879

Property, Equipment and Softw_2

Property, Equipment and Software, net (Tables)	6 Months Ended
	Jun. 30, 2024
Property, Plant and Equipment [Abstract]
Schedule of Property, Equipment and Software, Net	Property, equipment and software, net consists of the following (in thousands): Useful Life (Years) June 30, December 31, Furniture and fixtures 5 $ 137 $ 128 Computer equipment 3 20 20 Leasehold improvements 15 36 36 Capitalized software 3 702 702 Property, equipment and software, gross 895 886 Less: accumulated depreciation and amortization (424) (287) Total property, equipment and software, net $ 471 $ 599
Schedule of Depreciation and Amortization	The following table summarizes depreciation and amortization expense related to property, equipment and software by line item for the three and six months ended June 30, 2024 and 2023 (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Cost of revenue $ 59 $ 56 $ 120 $ 104 General and administrative 9 9 17 17 Total depreciation and amortization $ 68 $ 65 $ 137 $ 121

Intangible Assets, net (Tables)

Intangible Assets, net (Tables)	6 Months Ended
	Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Intangible Assets and Related Accumulated Amortization	As of June 30, 2024, intangible assets and the related accumulated amortization, weighted-average remaining life and future amortization expense are as follows: June 30, 2024 Weighted-Average Original Accumulated Net Remaining Life (Years) Amount Amortization Total Customer Lists 6.3 $ 13,028 $ (4,886) $ 8,143 Trademarks and tradenames 6.3 3,501 (1,313) 2,188 Non-compete agreements 1.3 1,504 (1,128) 376 Total intangible assets, net $ 18,034 $ (7,327) $ 10,707 December 31, 2023 Weighted-Average Original Accumulated Net Remaining Life (Years) Amount Amortization Total Customer Lists 6.8 $ 13,028 $ (4,234) $ 8,794 Trademarks and tradenames 6.8 3,501 (1,138) 2,363 Non-compete agreements 1.8 1,504 (978) 527 Total intangible assets, net $ 18,034 $ (6,350) $ 11,684
Schedule of Future Amortization Expense	Total 2024 $ 977 2025 1,879 2026 1,653 2027 1,653 2028 1,653 Thereafter 2,892 Total future amortization expense $ 10,707

Organization and Description _3

Organization and Description of Business (Details)	1 Months Ended	6 Months Ended
	Feb. 28, 2022	Jun. 30, 2024
Colossus Media, LLC | Sell-side advertising
Schedule of Organization and Description of Business [Line Items]
Percentage of ownership interest		100%
Orange 142 LLC | Buy-side advertising
Schedule of Organization and Description of Business [Line Items]
Percentage of ownership interest		100%
Huddled Masses, LLC | Buy-side advertising
Schedule of Organization and Description of Business [Line Items]
Percentage of ownership interest		100%
Direct Digital Holdings, LLC
Schedule of Organization and Description of Business [Line Items]
Percentage of voting interests	100%
Percentage of economic voting interests	19.70%	25.80%
Percentage of ownership interest		100%

Basis of Presentation and Con_4

Basis of Presentation and Consolidation and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023	Oct. 14, 2024	Sep. 30, 2020
Concentrations of credit risk
Contract liabilities	$ 700		$ 700		$ 400
Contract with customer, liability, revenue recognized			400	$ 500
Goodwill	6,520		6,520		6,520		$ 4,100
Deferred tax assets, valuation allowance	500		$ 500		500
Guaranteed recovery from insurance (as a percent)			90%
Remittance, if full amount collected (as a percent)			10%
Provision for bad debts (as a percent)			10%
Provision for credit losses net of recoveries			$ 100	100
Less: deferred financing costs	1,398		1,398		1,688
Net income (loss)	3,141	$ (1,195)	6,961	$ 139	6,800
Payments to publishers			8,800
Accumulated deficit	3,903		3,903		2,538
Cash and cash equivalents	1,069		1,069		5,116
Total long-term debt	$ 38,071		$ 38,071		31,744
Non-Compete Agreements
Concentrations of credit risk
Estimated life (in years)	5 years		5 years
Other Intangible Assets
Concentrations of credit risk
Estimated life (in years)	10 years		10 years
2021 Credit Facility | Lafayette Square
Concentrations of credit risk
Less: deferred financing costs	$ 1,400		$ 1,400		1,700
Credit Agreement | Revolving Credit Facility | Line of Credit
Concentrations of credit risk
Total long-term debt	$ 9,700		$ 9,700		$ 3,000
Credit Agreement | Revolving Credit Facility | Line of Credit | Subsequent Event
Concentrations of credit risk
Total long-term debt						$ 9,700
Three Suppliers | Accounts Payable | Supplier Concentration Risk
Concentrations of credit risk
Concentration risk (as a percent)			36%		77%
One Customer | Revenue from Contract with Customer Benchmark | Customer Concentration Risk
Concentrations of credit risk
Concentration risk (as a percent)	28%	63%	62%	62%
One Customer | Accounts Receivable | Credit Concentration Risk
Concentrations of credit risk
Concentration risk (as a percent)			64%		83%
Huddled Masses and Colossus Media LLC
Concentrations of credit risk
Goodwill	$ 2,400		$ 2,400		$ 2,400
Orange 142 LLC
Concentrations of credit risk
Goodwill	$ 4,100		$ 4,100		$ 4,100

Basis of Presentation and Con_5

Basis of Presentation and Consolidation and Summary of Significant Accounting Policies - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	1 Months Ended
	Jul. 31, 2022	Jun. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Accrued compensation and benefits		$ 371	$ 2,789
Accrued expenses		604	631
Accrued severance		27	190
Accrued litigation settlement		42	171
Accrued interest		81	36
Total accrued liabilities		$ 1,125	$ 3,816
Amount agreed to pay to vendor in settlement agreement	$ 500
Installment payment period in settlement agreement (in months)	24 months

Long-Term Debt - Schedule of Lo

Long-Term Debt - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Long-Term Debt
Total long-term debt	$ 38,071	$ 31,744
Less: deferred financing costs	(1,398)	(1,688)
Total long-term debt, net of deferred financing costs	36,673	30,056
Less: current portion	(1,840)	(1,478)
Total long-term debt, net of current portion	34,833	28,578
Line of Credit | Secured Debt | 2021 Credit Facility
Long-Term Debt
Total long-term debt	28,221	28,594
Line of Credit | Revolving Credit Facility | Credit Agreement
Long-Term Debt
Total long-term debt	9,700	3,000
Loans Payable | Economic Injury Disaster Loan
Long-Term Debt
Total long-term debt	$ 150	$ 150

Long-Term Debt - Schedule of Co

Long-Term Debt - Schedule of Components of Interest Expense and Related Fees for Long-Term Debt (Details) - 2021 Credit Facility - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Long-Term Debt
Interest expense – Other	$ 2	$ 2	$ 4	$ 4
Lafayette Square
Long-Term Debt
Interest expense	981	890	1,955	1,769
Amortization of deferred financing costs	186	136	372	272
Total interest expense and amortization of deferred financing costs	1,358	1,028	2,655	2,045
East West Bank
Long-Term Debt
Interest expense	$ 189	$ 0	$ 324	$ 0

Long-Term Debt - Lafayette Squa

Long-Term Debt - Lafayette Square (Details) $ in Thousands					6 Months Ended		24 Months Ended
	Oct. 03, 2023 USD ($)	Jun. 01, 2023	Jul. 28, 2022 USD ($)	Dec. 03, 2021 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2021
Long-Term Debt
Additional deferred financing costs					$ 0	$ 228
Deferred financing costs					1,398		$ 1,688
Accrued interest					$ 81		36
2021 Credit Facility | Line of Credit
Long-Term Debt
Debt instrument, covenant, leverage ratio					1.5
Debt instrument, covenant, pro forma liquidity, minimum					$ 15,000
Closing Date Term Loan | Line of Credit
Long-Term Debt
Installment payments					$ 300		$ 100
Delayed Draw Term Loan
Long-Term Debt
Amount of proceeds	$ 3,600
Delayed Draw Term Loan | Line of Credit
Long-Term Debt
Debt instrument quarterly installment payment (as percent)					1.25%		0.625%
Secured Debt | 2021 Credit Facility | Line of Credit
Long-Term Debt
Debt covenant compliance expected, period					1 year
Lafayette Square | Secured Overnight Financing Rate (SOFR) | Interest Period of Three Months
Long-Term Debt
Basis spread agreed (as percent)		0.15%
Lafayette Square | Secured Overnight Financing Rate (SOFR) | Interest Period of One Month
Long-Term Debt
Basis spread agreed (as percent)		0.10%
Lafayette Square | Secured Overnight Financing Rate (SOFR) | Interest Period of Six Months
Long-Term Debt
Basis spread agreed (as percent)		0.25%
Lafayette Square | 2021 Credit Facility
Long-Term Debt
Borrowing capacity				$ 32,000
Debt instrument, covenant, leverage ratio					1.50			3.50
Outstanding borrowings					$ 28,200
Additional deferred financing costs					0	$ 100
Deferred financing costs					1,400		$ 1,700
Accrued interest					$ 100		$ 100
Lafayette Square | 2021 Credit Facility | March 31, 2024 through March 31, 2025
Long-Term Debt
Debt instrument, covenant, leverage ratio					3.25
Lafayette Square | 2021 Credit Facility | March 31, 2024 through September 30, 2026
Long-Term Debt
Debt instrument, covenant, leverage ratio					3
Lafayette Square | 2021 Credit Facility | June 2026 And Thereafter
Long-Term Debt
Debt instrument, covenant, leverage ratio					2.50
Lafayette Square | 2021 Credit Facility | London Interbank Offered Rate (LIBOR) 1 | Consolidated Total Net Leverage Ratio is Less Than 2
Long-Term Debt
Spread on variable rate (as percent)				6.50%
Lafayette Square | 2021 Credit Facility | London Interbank Offered Rate (LIBOR) 1 | Minimum
Long-Term Debt
Debt instrument, covenant, leverage ratio				2
Lafayette Square | 2021 Credit Facility | London Interbank Offered Rate (LIBOR) 1 | Maximum
Long-Term Debt
Debt instrument, covenant, leverage ratio				4
Lafayette Square | 2021 Credit Facility | London Interbank Offered Rate (LIBOR) 1 | Maximum | Consolidated Total Net Leverage Ratio is Greater Than 4
Long-Term Debt
Spread on variable rate (as percent)				9%
Lafayette Square | 2021 Credit Facility | Secured Overnight Financing Rate (SOFR) | Minimum
Long-Term Debt
Spread on variable rate (as percent)				7%
Debt instrument, covenant, leverage ratio				3.50
Lafayette Square | 2021 Credit Facility | Secured Overnight Financing Rate (SOFR) | Maximum
Long-Term Debt
Spread on variable rate (as percent)				10%
Debt instrument, covenant, leverage ratio				1
Lafayette Square | Closing Date Term Loan
Long-Term Debt
Borrowing capacity				$ 22,000
Lafayette Square | Delayed Draw Term Loan
Long-Term Debt
Borrowing capacity				$ 10,000
Amount of proceeds			$ 4,300

Long-Term Debt - Lafayette Cove

Long-Term Debt - Lafayette Covenants (Details) - 2024 Credit Facility - Line of Credit - Secured Debt $ in Millions	Jun. 30, 2024 USD ($)
Long-Term Debt
Commitment fee percentage	0.50%
Commitment fee amount	$ 0.1
As of September 30, 2024
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	5
Minimum Liquidity	1.5
As of December 31, 2024
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	3.5
Minimum Liquidity	1.5
As of March 31, 2025
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	5.5
Minimum Liquidity	2
As of June 30, 2025
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	7.5
Minimum Liquidity	$ 2
Minimum Fixed Charge Coverage Ratio	1.50
As of September 30, 2025
Long-Term Debt
Minimum Liquidity	$ 2
Maximum Consolidated Total Leverage Ratio	4.25
Minimum Fixed Charge Coverage Ratio	1.50
As of December 31, 2025
Long-Term Debt
Minimum Liquidity	$ 2
Maximum Consolidated Total Leverage Ratio	4
Minimum Fixed Charge Coverage Ratio	1.50
As of March 31, 2026
Long-Term Debt
Minimum Liquidity	$ 2
Maximum Consolidated Total Leverage Ratio	3.75
Minimum Fixed Charge Coverage Ratio	1.50
As of June 30, 2026
Long-Term Debt
Minimum Liquidity	$ 2
Maximum Consolidated Total Leverage Ratio	3.50
Minimum Fixed Charge Coverage Ratio	1.50
As of September 30, 2026
Long-Term Debt
Minimum Liquidity	$ 2
Maximum Consolidated Total Leverage Ratio	3.25
Minimum Fixed Charge Coverage Ratio	1.50
Minimum
Long-Term Debt
Interest period, term	1 month
Maximum
Long-Term Debt
Interest period, term	3 months

Long-Term Debt - East West Bank

Long-Term Debt - East West Bank Covenants (Details) - Revolving Credit Facility - 2024 Credit Agreement - Line of Credit $ in Millions	Jun. 30, 2024 USD ($)
Long-Term Debt
Debt periodic payment, principal	$ 1
Ratio of eligible accounts to the aggregate amount of credit advances	1
On or Before January 15, 2025
Long-Term Debt
Debt periodic payment, principal	$ 1
On or Before April 15, 2025
Long-Term Debt
Debt periodic payment, principal	2
As of June 30, 2024
Long-Term Debt
Minimum Liquid Assets ($ in millions)	1
As of September 30, 2024
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	5
Minimum Liquid Assets ($ in millions)	1.5
As of December 31, 2024
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	3.5
Minimum Liquid Assets ($ in millions)	$ 1.5
Revolving Credit Availability (as of each month end)	1
As of March 31, 2025
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	$ 5.5
Minimum Liquid Assets ($ in millions)	$ 2
Revolving Credit Availability (as of each month end)	1.50
As of June 30, 2025
Long-Term Debt
Minimum Trailing Twelve Month EBITDA	$ 7.5
Minimum Liquid Assets ($ in millions)	$ 2
Minimum Fixed Charge Coverage Ratio	1.25
Revolving Credit Availability (as of each month end)	2

Long-Term Debt - Revolving Line

Long-Term Debt - Revolving Line of Credit (Details) - Revolving Credit Facility 2023 - USD ($)	Jun. 30, 2024	Jul. 07, 2023
Long-Term Debt
Outstanding borrowings	$ 9,700,000
Revolving Credit Facility | Line of Credit
Long-Term Debt
Amount exceeding borrowing base	500,000
Debt periodic payment, principal	$ 1,000,000
Debt covenant compliance expected, period	1 year
East West Bank
Long-Term Debt
Borrowing capacity		$ 10,000,000
Additional incremental borrowing capacity		$ 5,000,000
Spread on variable rate (as percent)		0.10%
Interest rate (as percent)		3%
Minimum loan rate to be maintained on loan effective rate (as percent)		0.50%
Percentage of interest rate added to loan rate in the event of default (as percent)		5%
Quarterly minimum fixed coverage ratio		1.25
Revolving credit availability for defining value of eligible advances to aggregate amount of all outstanding advances ratio		$ 1,000,000
Value of eligible accounts to the aggregate amount of all outstanding advances ratio		2
East West Bank | Last Day of Each Fiscal Quarter from June 30, 2023 through December 31, 2023
Long-Term Debt
Total funded Debt-to-EBITDA ratio		3.50
East West Bank | Last Day of Each Fiscal Quarter from March 31, 2024 through March 31, 2025
Long-Term Debt
Total funded Debt-to-EBITDA ratio		3.25
East West Bank | Last Day of Each Fiscal Quarter from June 30, 2025 and Thereafter
Long-Term Debt
Total funded Debt-to-EBITDA ratio		3

Long-Term Debt - Silicon Valley

Long-Term Debt - Silicon Valley Bank Financing (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jan. 09, 2023
Long-Term Debt
Additional deferred financing costs	$ 0	$ 228
Revolving Credit Facility | Silicon Valley Bank
Long-Term Debt
Borrowing capacity			$ 5,000
Additional incremental borrowing capacity			2,500
Maximum borrowing capacity			$ 7,500
Additional deferred financing costs		400
Write-off of deferred financing costs		$ 300

Long-Term Debt - U.S. Small Bus

Long-Term Debt - U.S. Small Business Administration Loans (Details) - USD ($) $ in Thousands	Dec. 15, 2022	Jun. 15, 2020	Jun. 30, 2024	Dec. 31, 2023
Long-Term Debt
Accrued interest			$ 81	$ 36
Economic Injury Disaster Loan
Long-Term Debt
Loan proceeds		$ 200
Interest rate (as percent)		3.75%
Installment payments	$ 100
Accrued interest			$ 100	$ 100

Long-Term Debt - Schedule of Fu

Long-Term Debt - Schedule of Future Minimum Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
2024	$ 1,109
2025	11,160
2026	25,657
2027	3
2028	3
Thereafter	139
Total	38,071	$ 31,744
Less current portion	(1,840)	(1,478)
Less deferred financing costs	(1,398)	$ (1,688)
Long-term debt, net	$ 34,833

Stockholders_ Deficit and Sto_3

Stockholders’ Deficit and Stock-Based Compensation - Additional Information (Details)		1 Months Ended				6 Months Ended
	Feb. 15, 2022 $ / shares shares	Feb. 29, 2024 shares	Dec. 31, 2023 $ / shares shares	Nov. 30, 2023 shares	Aug. 31, 2022 shares	Jun. 30, 2024 USD ($) yr $ / shares shares	Jun. 30, 2023 USD ($)	Oct. 30, 2023 USD ($) shares	Oct. 23, 2023 $ / shares	Oct. 02, 2023 USD ($) shares	Aug. 29, 2023 $ / shares
Subsidiary, Sale of Stock [Line Items]
Preferred stock authorized (in shares)						10,000,000
Preferred stock par value (in dollar per share) | $ / shares						$ 0.001
Warrants issued (in shares)								1,004,148
Warrants fair value | $						$ 0
Warrant price in cash (in dollars per share) | $ / shares											$ 1.20
Number of warrants tendered (in shares)										2,213,652
Purchase price of warrants | $								$ 400,000		$ 2,700,000
Redemption price per warrant (in dollars per share) | $ / shares									$ 0.35
Restricted Stock Units (RSUs)
Subsidiary, Sale of Stock [Line Items]
Vesting period (in years)						3 years
Weighted-average period over which unamortized stock-based compensation expense will recognized (in years)						1 year 1 month 17 days
Number of shares withheld (in shares)						97,086
Unrecognized stock-based compensation related to unvested RSUs | $						$ 700,000
2022 Omnibus Plan
Subsidiary, Sale of Stock [Line Items]
Number of shares reserved for issuance (in shares)						1,500,000
Stock-based compensation recognized | $						$ 700,000	$ 300,000
2022 Omnibus Plan | Stock Options
Subsidiary, Sale of Stock [Line Items]
Vesting period (in years)						3 years
Contractual period (in years)						10 years
Unrecognized stock-based compensation related to unvested stock options | $						$ 300,000
Number of shares related to unvested stock options (in shares)						184,574
Weighted-average period over which unamortized stock-based compensation expense will recognized (in years)						1 year 1 month 2 days
Measurement Input, Discount Rate
Subsidiary, Sale of Stock [Line Items]
Measurement input | yr						0.0194
Measurement Input, Expected Term
Subsidiary, Sale of Stock [Line Items]
Warrants exercisable term (in years)						5 years
Measurement Input, Price Volatility
Subsidiary, Sale of Stock [Line Items]
Measurement input | yr						0.66
Measurement Input, Expected Dividend Rate
Subsidiary, Sale of Stock [Line Items]
Measurement input | yr						0
Warrants to Purchase Common Stock
Subsidiary, Sale of Stock [Line Items]
Stock and warrants issued during period, shares, options exercised (in shares)		10,500		10,500
IPO
Subsidiary, Sale of Stock [Line Items]
Number of shares of common stock (in shares)	1
Units issued in IPO (in shares)	2,800,000
Number of warrants to purchase each share (in shares)	1
Warrants exercise price (in dollars per share) | $ / shares	$ 5.50
Warrants exercisable term (in years)	5 years
Over-Allotment Option
Subsidiary, Sale of Stock [Line Items]
Term of underwriters (in days)	45 days
Purchase option - number of additional units (in shares)	140,000
Exercise price of additional units (in dollars per share) | $ / shares	$ 6.60
Public offering price per unit sold (as percent)	120%
Stock and warrants issued during period, shares, options exercised (in shares)		70,000		70,000
Over-Allotment Option | Maximum
Subsidiary, Sale of Stock [Line Items]
Warrants issued (in shares)	420,000
Class A
Subsidiary, Sale of Stock [Line Items]
Common stock, authorized (in shares)			160,000,000			160,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.001			$ 0.001
Class A | Over-Allotment Option
Subsidiary, Sale of Stock [Line Items]
Warrants exercise price (in dollars per share) | $ / shares	$ 0.012
Warrants issued (in shares)	420,000
Purchase option - number of warrants (in shares)	21,000
Public offering price per warrant sold (as percent)	120%
Class B Common Stock
Subsidiary, Sale of Stock [Line Items]
Common stock, authorized (in shares)			20,000,000			20,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.001			$ 0.001
DDH LLC
Subsidiary, Sale of Stock [Line Items]
Noneconomic voting rights (as percent)						100%
DDM | Class A
Subsidiary, Sale of Stock [Line Items]
Number of units exchanged (in shares)			410,000		100,000
DDM | Class B Common Stock
Subsidiary, Sale of Stock [Line Items]
Number of shares of common stock (in shares)						10,868,000

Stockholders_ Deficit and Sto_4

Stockholders’ Deficit and Stock-Based Compensation - Schedule of Options Activity (Details) - 2022 Omnibus Plan - Options to purchase common stock $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024 USD ($) $ / shares shares	Dec. 31, 2023 USD ($) $ / shares shares
Shares
Balances at the beginning (in shares) | shares	371,116
Granted (in shares) | shares	0
Exercised (in shares) | shares	(8,754)
Forfeited(in shares) | shares	(2,383)
Balances at the ending (in shares) | shares	359,979	371,116
Weighted Average Exercise Price
Balances at the beginning (in dollars per share) | $ / shares	$ 2.51
Granted (in dollars per share) | $ / shares	0
Exercised (in dollars per share) | $ / shares	2.62
Forfeited (in dollars per share) | $ / shares	2.82
Balances at the ending (in dollars per share) | $ / shares	$ 2.51	$ 2.51
Weighted Average Contractual Life (in years)
Balances at the ending (in years)	8 years 1 month 2 days	8 years 9 months 7 days
Aggregate Intrinsic Value (in thousands)
Outstanding at beginning of period | $	$ 4,591
Granted | $	0
Exercised | $	172
Forfeited | $	17
Outstanding at end of period | $	$ 549	$ 4,591
Vested and exercisable at period end (in shares) | shares	175,405
Vested and exercisable at period end (in dollars per share) | $ / shares	$ 2.17
Vested and exercisable at period end (in years)	7 years 11 months 26 days
Vested and exercisable at end of period (intrinsic value) | $	$ 327

Stockholders_ Deficit and Sto_5

Stockholders’ Deficit and Stock-Based Compensation - Schedule of RSU Activity and Related Information (Details)	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Number of Shares
Unvested beginning of period (in shares) | shares	542,396
Granted (in shares) | shares	99,474
Vested (in shares) | shares	(358,899)
Forfeited (in shares) | shares	(1,751)
Unvested end of period (in shares) | shares	281,220
Weighted Average Grant Date Fair Value per Share
Unvested beginning of period (in dollars per share) | $ / shares	$ 2.87
Granted (in dollars per share) | $ / shares	16.90
Vested (in dollars per share) | $ / shares	8.24
Forfeited (in dollars per share) | $ / shares	3.25
Unvested end of period (in dollars per share) | $ / shares	$ 2.81

Tax Receivable Agreement and _3

Tax Receivable Agreement and Income Taxes - Additional Information (Details) - USD ($)		1 Months Ended		3 Months Ended	6 Months Ended		12 Months Ended
	Jan. 01, 2023	Dec. 31, 2023	Aug. 31, 2022	Dec. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Subsidiary, Sale of Stock [Line Items]
Percentage of net cash saving to be paid					85%
Percentage of net cash saving to be retained					15%
Total TRA liability recognized		$ 5,242,000		$ 5,242,000	$ 5,242,000		$ 5,242,000
Outside basis difference in partnership					6,600,000		6,100,000
Deferred tax assets, valuation allowance		500,000		$ 500,000	500,000		500,000
Aggregate payment on tax receivable agreement					100,000	$ 800,000
Corporation income tax rate (in percent)	20.45%			23.35%
Uncertain tax positions		$ 0		$ 0	0		$ 0
Domestic Tax Jurisdiction
Subsidiary, Sale of Stock [Line Items]
Operating loss carryforwards					$ 3,300,000
Class A | DDM
Subsidiary, Sale of Stock [Line Items]
Number of units exchanged (in shares)		410,000	100,000

Tax Receivable Agreement and _4

Tax Receivable Agreement and Income Taxes - Schedule of Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Provision for income taxes
Income tax expense (benefit)	$ (274)	$ 74	$ (475)	$ 0
Effective income tax rate	8%	5.80%	6.40%	0%

Related Party Transactions - Ad

Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Feb. 28, 2022	Jun. 30, 2024	Dec. 31, 2023
Related Party Transactions
Related party receivable		$ 1,737	$ 1,737
Percentage of net cash saving to be retained		15%
Related Party
Related Party Transactions
Related party receivable		$ 1,700	$ 1,700
Percentage of net cash saving to be retained	15%
Related Party | Class A
Related Party Transactions
Units of share converted (in shares)	1

Related Party Transactions - Sc

Related Party Transactions - Schedule of Aggregate Changes in Balance of Gross Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Related Party Transactions [Abstract]
Short term	$ 41	$ 41
Long term	5,201	5,201
Total liability related to tax receivable agreement	$ 5,242	$ 5,242

Segment Information - Schedule

Segment Information - Schedule of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Segment Reporting Information [Line Items]
Revenues	$ 21,855	$ 35,404	$ 44,130	$ 56,627
Total operating loss	(2,065)	2,255	(4,873)	2,114
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest	(3,415)	1,269	(7,436)	(139)
Operating Segments
Segment Reporting Information [Line Items]
Revenues	21,855	35,404	44,130	56,627
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total operating loss	(4,360)	(3,841)	(8,423)	(6,765)
Other Nonoperating Expense	(1,350)	(986)	(2,563)	(2,253)
Sell-side advertising | Operating Segments
Segment Reporting Information [Line Items]
Revenues	14,298	23,601	30,799	37,384
Total operating loss	447	2,172	1,409	3,450
Buy-side advertising | Operating Segments
Segment Reporting Information [Line Items]
Revenues	7,557	11,803	13,331	19,243
Total operating loss	$ 1,848	$ 3,924	$ 2,141	$ 5,429

Segment Information - Schedul_2

Segment Information - Schedule of Operating Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Segment Reporting Information [Line Items]
Total operating loss	$ (2,065)	$ 2,255	$ (4,873)	$ 2,114
Loss before taxes	(3,415)	1,269	(7,436)	(139)
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total operating loss	(4,360)	(3,841)	(8,423)	(6,765)
Corporate other expense	(1,350)	(986)	(2,563)	(2,253)
Sell-side advertising | Operating Segments
Segment Reporting Information [Line Items]
Total operating loss	447	2,172	1,409	3,450
Buy-side advertising | Operating Segments
Segment Reporting Information [Line Items]
Total operating loss	$ 1,848	$ 3,924	$ 2,141	$ 5,429

Segment Information - Schedul_3

Segment Information - Schedule of Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Segment Reporting Information [Line Items]
Total assets	$ 48,476	$ 70,672
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total assets	10,614	13,779
Sell-side advertising | Operating Segments
Segment Reporting Information [Line Items]
Total assets	15,302	34,354
Buy-side advertising | Operating Segments
Segment Reporting Information [Line Items]
Total assets	$ 22,560	$ 22,539

Net (Loss) Income Per Share - S

Net (Loss) Income Per Share - Schedule of Basic and Diluted Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net (loss) income attributable to Direct Digital Holdings, Inc.	$ (590)	$ 192	$ (1,365)	$ (22)
Less: net income allocated to participating securities	0	99	0	0
Less: net income allocated to participating securities	0	99	0	0
Net (loss) income allocated to Class A shareholders	(590)	93	(1,365)	(22)
Net (loss) income allocated to Class A shareholders	$ (590)	$ 93	$ (1,365)	$ (22)
Weighted average common shares outstanding - basic (in shares)	3,700,615	2,921,258	3,604,220	2,911,801
Options to purchase common stock (in shares)	0	51,180	0	0
Unvested restricted stock units (in shares)	0	140,751	0	0
Weighted average common shares outstanding - diluted (in shares)	3,700,615	3,113,189	3,604,220	2,911,801
Net loss per common share, basic (in dollars per share)	$ (0.16)	$ 0.03	$ (0.38)	$ (0.01)
Net loss per common share, diluted (in dollars per share)	$ (0.16)	$ 0.03	$ (0.38)	$ (0.01)
Class B Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Options to purchase common stock (in shares)	0	0	0	0

Net (Loss) Income Per Share -_2

Net (Loss) Income Per Share - Schedule of Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total excludable from net loss per share attributable to common stockholders - diluted (in shares)	11,620	12,022	11,696	15,288
Class B Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total excludable from net loss per share attributable to common stockholders - diluted (in shares)	10,868	11,278	10,868	11,278
Warrants to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total excludable from net loss per share attributable to common stockholders - diluted (in shares)	0	0	0	3,218
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total excludable from net loss per share attributable to common stockholders - diluted (in shares)	360	312	364	307
Unvested restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total excludable from net loss per share attributable to common stockholders - diluted (in shares)	392	432	464	485

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 0.1	$ 0.1
Operating lease, weighted-average remaining lease term (in years)	5 years	6 years 3 months 18 days
Operating lease, weighted-average discount rate (as percent)	8.40%	8.40%

Commitment and Contingencies -

Commitment and Contingencies - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow for operating leases	$ 41	$ 40	$ 78	$ 80
Non-cash changes to the operating lease ROU assets and operating lease liabilities
Additions and modifications to ROU asset obtained from new operating liabilities	$ 200	$ 0	$ 200	$ 0

Commitments and Contingencies_2

Commitments and Contingencies - Schedule of Maturity of Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Maturity of leases
2024	$ 128
2025	258
2026	265
2027	269
2028	167
Thereafter	200
Total undiscounted lease payments	1,287
Less effects of discounting	(229)
Less current lease liability	(179)	$ (126)
Total operating lease liability, net of current portion	$ 879

Property, Equipment and Softw_3

Property, Equipment and Software, net - Schedule of Components (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Property and equipment, net
Property, equipment and software, gross	$ 895	$ 886
Less: accumulated depreciation and amortization	(424)	(287)
Total property, equipment and software, net	$ 471	$ 599
Furniture and fixtures
Property and equipment, net
Useful Life (Years)	5 years	5 years
Property, equipment and software, gross	$ 137	$ 128
Computer equipment
Property and equipment, net
Useful Life (Years)	3 years	3 years
Property, equipment and software, gross	$ 20	$ 20
Leasehold improvements
Property and equipment, net
Useful Life (Years)	15 years	15 years
Property, equipment and software, gross	$ 36	$ 36
Capitalized software
Property and equipment, net
Useful Life (Years)	3 years	3 years
Property, equipment and software, gross	$ 702	$ 702

Property, Equipment and Softw_4

Property, Equipment and Software, net - Schedule of Depreciation and Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property and equipment, net
Total depreciation and amortization	$ 68	$ 65	$ 137	$ 121
Cost of revenue
Property and equipment, net
Total depreciation and amortization	59	56	120	104
General and administrative
Property and equipment, net
Total depreciation and amortization	$ 9	$ 9	$ 17	$ 17

Intangible Assets, net - Additi

Intangible Assets, net - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Intangible Assets
Goodwill	$ 4,100	$ 6,520		$ 6,520		$ 6,520
Intangible assets acquired	18,000
Amortization of intangible assets		500	$ 500	977	$ 977
Intangible assets, net		10,707		10,707		11,684
Orange 142 LLC
Intangible Assets
Purchase price	$ 26,200
Goodwill		$ 4,100		$ 4,100		$ 4,100

Intangible Assets, net - Schedu

Intangible Assets, net - Schedule of Intangible Assets and Related Accumulated Amortization (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Intangible assets
Original Amount	$ 18,034	$ 18,034
Accumulated Amortization	(7,327)	(6,350)
Total future amortization expense	$ 10,707	$ 11,684
Customer Lists
Intangible assets
Weighted-Average Remaining Life (Years)	6 years 3 months 18 days	6 years 9 months 18 days
Original Amount	$ 13,028	$ 13,028
Accumulated Amortization	(4,886)	(4,234)
Total future amortization expense	$ 8,143	$ 8,794
Trademarks and tradenames
Intangible assets
Weighted-Average Remaining Life (Years)	6 years 3 months 18 days	6 years 9 months 18 days
Original Amount	$ 3,501	$ 3,501
Accumulated Amortization	(1,313)	(1,138)
Total future amortization expense	$ 2,188	$ 2,363
Non-compete agreements
Intangible assets
Weighted-Average Remaining Life (Years)	1 year 3 months 18 days	1 year 9 months 18 days
Original Amount	$ 1,504	$ 1,504
Accumulated Amortization	(1,128)	(978)
Total future amortization expense	$ 376	$ 527

Intangible Assets, net - Sche_2

Intangible Assets, net - Schedule of Future Amortization Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Future amortization expense
2024	$ 977
2025	1,879
2026	1,653
2027	1,653
2028	1,653
Thereafter	2,892
Total future amortization expense	$ 10,707	$ 11,684