Direct Digital Holdings Inc (DRCT) Q1 2025 Earnings Call Highlights: Navigating Challenges with ...

In This Article:

  • Consolidated Revenue: $8.2 million in Q1 2025, a decrease from $22.3 million in Q1 2024.

  • Buy-side Revenue: $6.1 million, a 6% increase compared to Q1 2024.

  • Sell-side Revenue: $2 million, down from $16.5 million in Q1 2024.

  • Gross Profit: $2.4 million, down from $5 million in Q1 2024.

  • Gross Margin: Increased to 29% from 22% in Q1 2024.

  • Operating Expenses: $6.3 million, a 19% reduction from $7.8 million in Q1 2024.

  • Operating Loss: $3.9 million, compared to a loss of $2.8 million in Q1 2024.

  • Net Loss: $5.9 million or $0.35 per share, compared to a net loss of $3.8 million or $0.22 per share in Q1 2024.

  • Adjusted EBITDA: Loss of $3 million, compared to a loss of $1.7 million in Q1 2024.

  • Cash and Cash Equivalents: $1.8 million at the end of Q1 2025, up from $1.4 million at the end of 2024.

  • Full Year Revenue Guidance: Maintained at $90 million to $110 million for 2025.

Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Consolidated revenue of $8.2 million in Q1 2025, with a 6% increase in buy-side revenue compared to Q1 2024.

  • Successful cost-saving initiatives led to a 19% reduction in operating expenses, saving nearly $1.5 million.

  • Unification of buy-side platforms into Orange 142 to better serve small to mid-sized clients, tapping into a significant growth opportunity.

  • Launch of Colossus Connection to optimize supply path efficiency, showing early positive results.

  • Maintained revenue guidance of $90 million to $110 million for full year 2025, supported by growth in both buy-side and sell-side segments.

Negative Points

  • Significant decrease in sell-side revenue to $2 million in Q1 2025 from $16.5 million in Q1 2024 due to decreased impression inventory.

  • Net loss of $5.9 million in Q1 2025, compared to a net loss of $3.8 million in Q1 2024.

  • Adjusted EBITDA loss of $3 million in Q1 2025, compared to a loss of $1.7 million in the same period of 2024.

  • Ongoing impact from a market-discredited blog post against the Colossus SSP, causing business disruption and reduced volumes.

  • Cash and cash equivalents only slightly increased to $1.8 million at the end of Q1 2025, indicating limited liquidity improvement.

Q & A Highlights

Q: Can you provide insight into the sell-side customer that cut back last year and the expected recovery in business levels? Also, what is the expected revenue split between buy-side and sell-side for the full year? A: Mark Walker, CEO: We are focusing on direct connections with DSP partners to grow our sell-side business. This strategy should drive additional top-line revenue and increase our margin profile. We anticipate a bullish outlook for Q3 and Q4 as these relationships come online. For the full year, we expect buy-side revenue to be around $40 million, with sell-side revenue exceeding that to meet our $90 million to $110 million guidance.