DRCT - Earnings call transcript Q1 2022 | Direct Digital Holdings, Inc.

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Operator

Welcome to the Direct Digital Holdings First Quarter 2022 Earnings Call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to your host Brett Milotte, Senior Vice President, Investor Relations, ICR. Mr. begin. may you Milotte,

Brett Milotte

ICR. made maybe question-and-answer X-K and conference SEC’s and Immediately Direct Brett call. Direct and Relations I'm are everyone, Walker, views update discussed the by and statements nature, session. release are at quarter we Investor statements replay a including earnings forward-looking that’s Executive basis Chief Milotte are Holdings XXXX and made. filed representing Officer; posted from today Investor Holdings The earnings My be Echard, Chief qualified Digital made Today's Relations during also to today's undertake webcast this its welcome are afternoon, call Digital following to Such do projections that events presentation, website. future statements. the accompanying speakers' Mark to statements Susan regarding Financial first and call, or information other On And not Good DRCT's DRCT's call name Officer. a the entirety Please being they the any statements. business and in time financial Digital accessed Holdings, assumptions they not obligation note DRCT's on website. which Direct is of will be website these the today constitute in performance by through historical and there'll the Form is been is

SEC. forecasts, differ in those risks forth to its risks subject are cause the and DRCT's filings results statements could including with DRCT's from Forward-looking the actual historical results which to set

statements place during applies for on more forward-looking undue to statements. this consider call. refer should all This information. those not You cautionary and reliance any Do carefully statement made forward-looking to

financial prepared DRCT to earnings DRCT is hand non-GAAP its Generally accordance Mark Walker, filed Officer. with reconciliation to Form not X-K comparable GAAP available Accounting in the referring measures. now in the release today. During is Chief are measures confidence Executive of recently this Principles. to the Mark? A measures I'll most non-GAAP Accepted financial measures These non-GAAP call, with over

Mark Walker

good for second a and afternoon, quarter. performance I'm public report financial the Brett, Thanks, This call is incredibly first earnings proud company. record as everyone. to And our

want those Before you into joining a through brief time. overview of a I leverages first media. I to technology Digital ROI for to the in details, clients provide Holdings go of assist company for the us Direct that driving and buying selling is

Colossus through of to underserved Our sell-side proprietary technology platform provides platform and our the market meets SSP. middle market multicultural the demands publishers access general

in Our and acquisition of will of to that with travel drive services I across quarter. begin was along XXXX, the States by through company's was our strategy our brief enables into out genesis expand the platform sell-side our media buy-side publishers media which which grow and and OrangeXXX offerings our and initial Masses buyers, technology middle market sell to programmatic that while enables business founded Huddled our to XXXX Colossus is buy-side the of Colossus platform. Masses platform end-to-end is OrangeXXX the Huddled SSP, businesses industry to the purchase to we other for and further a United and acquired education, providing business financial main develop tourism, platform call highlights ROI. overview verticals. In

reiterate will XXXX. detailed guidance share Susan I of results the who to financial Finally, it will year turn CFO our full Echard, over for will and

the seeing quarter, by opportunities. at will capitalize questions to to answer opportunities industry be inefficiencies continued market, under-optimized the significant we're first In in growth your that and primarily driven happy the customer We on time. we

to audience more targeting audiences who of including along increasing the success at market in continue our advertisers environments, report this competitive publishers The is A able is channels audiences and strategy segment go major of those multicultural will the lines, Both to XXXX publishers sides the avenues all a is grown those general attract industry. leverage engaged challenge, a and We're digital believe quarter audiences Holdings. loyal that market for are insights from has and become those media has with connect media advantage the traditionally to in platform and Digital consumers. to connect the directly multicultural As to and highly companies seeking granular. and first across go connections. advantage while general face We Direct to multicultural into same flowing adoption, multicultural opportunities programmatic in innovative media those marketing and audiences notably producing growing inventory, to new has underserved able emerging and the digital both target apparent to scale been content unique gain happy being results.

advertising quarter publishers performance. and the segment, buyers, growth is in $XX.X the increased than increase last inventory. the monthly of XX% and our We increase period served approximately and is higher year, an same XX which million first buyers, an continued period the processed saw we For billion of sell-side of over of which platform increase same XX,XXX our average quarter revenue, first the and generated by last during steady XXXX. an an impressions, over SSP XXX% XX% year's million over or This was driven $X.X accelerated impression primarily in

we over by customers the number of grew XX% XX for count year-over-year, customer increasing from roughly serve XXX the quarter. buy-side Our to

been including which recent impressions, variety by an platform has unprecedented in increase Our in of the growth. buyer-side a fueled growth our factors, has driven supply-side

the over media For quarter, the our billion bid XX,XXX properties we first X to approximately processed overall for quarter. increased requests,

For million, the you hand highlights our EBITDA going who's over to now delivered CFO, up of things adjusted through to the Susan I'll we $X.X our of walk year-over-year. Echard, quarter. strategic an XXX% some first quarter, for

Susan Echard

Thank you, Mark.

right Moving our financial into results.

of quarter doubled $XX.X million or same first of an to 'XX, $X.X revenue our stated, 'XX. million in million Mark increase the over $X.X As the the XXX% in of period

inventory. XXX% million in of and million grew increase 'XX period million the same $X.X to impression segment over advertising increase $X.X $X.X for contributed 'XX. by This and sales-side continued our the QX in the was driven Our or publishers of

contributed loss of segment million $X.X advertising increase our XX% customer $X of the million XX% quarter are addition quarter 'XX, primarily in quarter for in first million well of in margins expand to to of QX our and estimate infrastructure increase period higher certain to a of or to or customers. concentration were an revenue segment these Operating $XXX,XXX of $X.X in and buy-side to by EBITDA since new compared due quarters. higher 'XX. These of income in programmatic the and the business, the increases strategic in quarter for $X.X margin expectations approximately with 'XX the dollar of 'XX, approximately its compared around of 'XX. increase million of leverage sell-side was XX% results million of and land the insurance public the to headcount operating quarter continue This and million segment. Operating the the in being generating 'XX. the line transaction incurred in we $X.X grew company businesses sell-side With as driven our well expense in revenue the approximately to to spend results first of to first when in professional period revenue public first requirements a Due margin IPO Our of over to our as our fees. 'XX, costs Gross we the in mix as same of same by $X.X net period over addition $X million of company. same 'XX. contribution of increase is advertising the This $XX,XXX our expenses increased the added this of higher were operating as the February, increased cost invest related the the

and Adjusted build these improve quarter, costs $X.X to primarily our the $X.X for for 'XX, the Net expect compared out $X.X the increased on of for of was same loss quarter in XXX% systems to first the to quarter to loss units compared to prepare growth. million preferred redemption driven $X.X We of B period million the first the of million million, 'XX. infrastructure, in by $X.X million. continue first EBITDA our

sheet, balance with over cash million liquidity. of $X.X in million, available and with cash $X.X the the equivalents ended to Turning quarter we

we from the in the proceeds used these to our units the public. mentioned February, float, of and OrangeXXX proceeds As issuance in went million of $XX.X public well the and transaction million which owner IPO necessary earlier, from as we former represents of company costs, shares, raised XX% as X.X order take redemption by to approximately held pay public equity a for around

range the or we growth to be year of last Now $XX call, the our to XXXX revenue million expected at we on that a touch full midpoint. to in guidance. our indicated $XX XX% year-over-year our million In

we further into value. and With We look listed continue growth that our move enhancing shareholder our maintain we publicly keen on as executing growth we'll to forward year. our plan company, a to that transition a with to focus projection, revisit guidance

our our inorganic continuing and rapid infrastructure support in anticipate our organic invest we further Additionally, to and business core growth growth to strategies.

disciplined adjusted top We goal and flow. of continue EBITDA in our to we our also on positive line increasing remain focus and growth cash

back turn I'd some to Mark comments. it closing to over Now like for

Mark Walker

to the Thank and build appreciate Holding we're interest business in thank joining. Direct fast sincerely for We your and everyone you you, continuing Digital here. Susan, growing

Brett Milotte

questions. some now are We to on to going move

Operator

question Instructions] Kurnos First from comes Daniel [Operator Benchmark. from

Daniel Kurnos

of feels feels here. surprised local Obviously and there sort guys doing now nice buy-side, in out in year it is not a some the that XX%. was to like before. both to what's Maybe terms you, you obviously, actually just experiential us of going traction, start for on It on very guys right tailwind growing over QX, curious am maybe had I you well now? like and QX but the starting to

maybe driving buy-side some curious, Just out Pigeon seeing what results the of kind quarters? you're even part beyond level thoughts what's might how coming there? And perform on of is if higher just Forge, the and in that,

Mark Walker

we're different directly, regions. to we the tailwinds those Yes, space, investments the it absolutely. making destination actually drive we're are to DMOs XX our seeing seeing space Dan, regional local of of to us and relates What travel fact as we the and are in clients looking marketplace The that what work their the overall our is to because work the forward that those have in that we we're we results with QX. for seeing with some of marketing continue in vacationers tailwinds The through DMO seeing to future. marketplace thanks, helping Hey, positive with them or question. business, try with are some into continue and travel, immediate

Daniel Kurnos

that being to at mean rate, QX, some more not then, even COGS. continued nice in as And is seen far far even the impressive. I given from leverage, of how We've sell-side, as nice off growth I stay just pretty seasonality frankly, on traction, just much think, mean looking momentum, the I some terms QX and

So in to a the especially if move know there, out marketplace The think privacy. a can trying of we've for we get some around there's sense towards kind be going noise and given the just we to is new to figure of we the still kind floor I move. still entire freaking how all here. set uncertainty contextual marketplace, as momentum out

that quarter; it sort So we bounce are B, through in of conversations, benefit thoughts Susan you kind might from just saw, think called the bit how then on: flow of a and A, incremental little here? should out publisher I continue that the to just any where think momentum you and

Mark Walker

formula. Yes. have we seen focused our leadership the person year have increase regards that business the publishers, our from we year to going that strong. other buyers come around of our one, increase momentum is our from end last -- -- sell-side Number part perspective really team, the of say year who and simple is, the this would We that is I formula into that our also of very But ecosystem, leads in simple, a piece is marketplace. and QX

something our that in favorable to a transact would a us, level couple of the response and you about multicultural look the right for is the take seen concentration from publishers high the MAPS] wanting a us trust we that reasons. a buyers, One, different that the represent have of with there's X work scorecard, I working in marketplace, technology with if multicultural. fact reach that make ranked actually [media say five, [HPE top with the billion two, that And well we of continuing impressions which then well. at are advantage have general We Number where some now directly fact also our we that us. GreenLake], source a currently, different is benefit one space different ecosystem. multicultural gives into as we'll us as that as now future, market think in working and see buyers shop servers the And the fact on we're to buying of inside the stop a that number have our a the in actually we're from to that investments because competitive three, moving

So grow results we're we have that formula, business the we seen to very right excited that we've well the continue think about our as far. to and team that right the side of thus as

Daniel Kurnos

events updated about If or publisher here? probably of think how you and still on publisher I good any comment, pretty more thoughts or just hanging quickly up guys press an anything bit have you could low a a the any little area can we I track that's around just given think any there, that fruit on record timing, where

Mark Walker

we've in seen we is or marketplace, we continue the that past excited are our course publishers marketplace over we very into into thing And occur ecosystem, from more the One definitely of have publishers when year. our seen this our to new to Yes. that. add growth adding

that continue add over and into to next strategy those we're our going to year. so marketplace And publishers the maintain

Operator

from comes Partners. Aftahi question Capital ROTH next from Darren Our

Darren Aftahi

kind of I in kind that kind impact any in a the guess what going of kind And of that Has have you I quarter now, business? the of was as of of macro we're sort sub-bullet helpful. of question, line sell-side growth? I you've be unique Just growth, can speak of seen to business. is to the of kind backdrop of date year, continued? the that momentum to in of can And headwinds right your ask, seen sight? would in of of kind at that midpoint and QX of And terms more that the sort kind then to conservatism, how to just you we performance any bridge kind that XX% color think,

Mark Walker

give Yes, far, saw set but we that in and forward not out-quarters, it healthy we're thus was absolutely. to publishers that to going In we as QX, in buyers regards from model seeing up, the and adding with. work what DSPs saw we to what adding relates we're new trend QX adding guidance we've new what nice a our and new

that with us publishers We trusted, willing community we've to relationship are with are work with strong have is marketplace because publishers, the the community. the continue has in then of our to very And work directly have to that quality us. we that and multicultural wanting to because different audiences, the been the us to stack strategy. to technology able going assemble, with to fact concentration that buying are provide of buying inventory we favorable And our buyers been and

of us We We're have to think with that continued that far. going strategy we down continue it's and working with the throughout rest year. thus the

what accomplish slowest to typical we've thus far. saw usually with for benefit QX We as it what follows formula. relates quarter As the it that able seasonality, sell-side relates of been QX is it it And we and digital our our same as the marketing. trend platform, exactly most saw is to to

we're as this so is -- quarter. QX anticipating our that the that is And slowest usually well

Darren Aftahi

Just a XQ your may. know I the up couple if seasonally buy-side more I DMOs. in picks with

performance year's a curious to had I kind of general year. was any of strong in last thoughts relative You kind business? about pretty last XQ that

Mark Walker

QX, on same way and high QX. a and the really within to regions, over concentration out I representation those really level in Yes, we depends our our QX of last would the a in buy-side QX and marketplace of saw to going when look kind year we where the space way had on And really QX, could media comes on have that that buy-side in see our there. we business, you and it at we you of DMO specifically there, between QX. the spans what's the what it say relationships because on the it's business in good specific spread QX comes usually which just

from QX. for reason perspective look year, So to no holistically for that in veer it this QX at we us see And between and we XXXX.

Darren Aftahi

more. one Sorry,

So in you in inter-quarter I in step the terms public the costs in of guys went know up quarter, QX.

So two things there.

full in of step the XQ Susan, one kind to versus going half a for much plan hiring do year-to-date you of see costs terms maybe for how we as on then stand? quarter two up guys where of are kind of In basis of And normalized XQ? in a public a result and a being you

Susan Echard

Yes, We're still that. Darren. evaluating

course, hired QX of As you cost perspective, will of A for do public that We, the quite in a have hiring audit that into year. From know lot since course, quarter. which the company. of fees up still few QX, over XXXX translated year, bit prior little nicely we is, a to being legal we had a us people set for our this hiring have a results higher QX of of targets.

the So on all can as going you as now, platforms, being continue in costs. an a and we be software probably filings. in I'll right to these expect to calls through public costs and But general year invest overall professional all, similar company understand additional we higher get range the move of calls those these doing to comparison. quantify have to in and we fees just help normal it's apples-to-apples and

Operator

Instructions] no And be further at time, [Operator to questions. this there appears

Mark Walker

you and you next for forward All very look we time, to speaking right. your Thank quarter. thank Well, you. much to

Operator

call. for Thank you attending. today's concludes conference This

Direct Digital (DRCT) 14 May 222022 Q1 Earnings call transcript