Full Year 2021 Revenue Up 206%
Year-Over-Year to $38.1 Million, with
Fourth Quarter 2021 Revenue Up 95%
HOUSTON, March 29,
2022 /PRNewswire/ -- Direct Digital Holdings, Inc.
(Nasdaq: DRCT) ("Direct Digital"), a leading advertising and
marketing technology holding group, announced financial results for
the fourth quarter and fiscal year ended December 31, 2021.
Chairman and Chief Executive Officer Mark Walker said, "2021 was an incredible year
for us, as we continued to execute on our vision of building a
world-class buy- and sell-side advertising platform for
middle-market clients. In 2021 we doubled our revenue through
organic growth and the integration of Orange142 acquired in late
2020 and expect to see continued benefits from the rapid
digitization of small- and mid-sized companies moving into
programmatic and digital advertising, the increasing localization
of programmatic advertising, and with growth of multicultural
audiences and targeted ad spend. We are excited for our new journey
as a publicly listed company, and to continue to achieve our
ambitious goals in 2022 and beyond."
Keith Smith, President, added,
"The strategic refinancing of our debt, coupled with our IPO, has
positioned us to effectively execute our operational objectives in
the coming year."
Fourth Quarter 2021 Financial
Highlights:
- Revenue increased to $12.9
million in the fourth quarter of 2021, an increase of
$6.3 million, or 95% over the
$6.6 million in the same period of
2020.
-
- Our sell-side advertising segment grew to $6.7 million and contributed $5.4 million of the increase, or 410% over the
$1.3 million in the same period of
2020.
- Our buy-side advertising segment grew to $6.2 million and contributed $0.9 million of the increase, or 17% over the
$5.3 million in the same period of
2020.
- Operating income increased to $1.3
million for the fourth quarter of 2021 compared to
approximately $40,000 in the same
period of 2020.
- Existing term loan was refinanced, and we entered into new
credit facility with Lafayette Square for up to $32.0 million consisting of a $22.0 million closing date term loan and an up to
$10.0 million delayed draw term loan
for future acquisitions.
- Net loss was $(2.1) million in
the fourth quarter of 2021, compared to $(0.5) million in the same period of 2020.
- Adjusted EBITDA(1) was $1.8
million in the fourth quarter 2021, compared to $1.0 million in the same period of 2020.
- Net operating cash generated for the quarter was $0.6 million compared to a net operating cash of
$0.4 million generated in the same
period of 2020.
Fiscal Year 2021 Financial
Highlights:
- Revenue in fiscal year 2021 increased to $38.1 million, an increase of $25.6 million, or 206%, over the $12.5 million in fiscal year 2020.
-
- Our sell-side advertising segment ended the year at
$12.0 million in revenue and
contributed $9.2 million of the
increase, or 326% over the $2.8
million of sell-side revenue in fiscal year 2020.
- Our buy-side advertising segment ended the year at $26.1 million in revenue and contributed
$16.5 million of the increase, or
171% over the $9.7 million of
buy-side revenue in fiscal year 2020. We acquired Orange142, LLC
("Orange142") in September 2020,
which contributed $15.8 million to
the increase, and the remaining growth represented $0.7 million.
- Operating income increased $5.2
million, or 619%, to $4.4
million for 2021 compared to an operating loss of
($0.8) million for 2020.
- Net loss for 2021 was $(1.5)
million, compared to $(0.9)
million in 2020.
- Adjusted EBITDA (1) for 2021 was $6.4 million, compared to $0.6 million for 2020.
- Net increase in operating cash for 2021 was $3.8 million, compared to a net operating cash
decrease of $(0.6) million for
2020.
Business Highlights
- For fiscal year 2021, we processed approximately 574 billion
impressions through our sell-side advertising segment.
- During the fourth quarter ended December
31, 2021, our sell-side advertising platform's processing of
impressions grew to an average of over 70 billion per month,
processed over 685 billion auction bid requests and served
approximately 80,000 buyers.
- Our buy-side advertising segment served over 200 customers
during 2021, compared to 150 customers during 2020.
Financial Outlook
Our guidance assumes that the U.S. economy continues to recover,
and we do not have any major COVID-19-related setbacks that may
cause economic conditions to deteriorate or otherwise significantly
reduce advertiser demand. While we plan to offer annual
guidance and update it throughout the year, we provide our initial
expectations on Q1 2022 since we are so far into the quarter.
Accordingly, we estimate the following:
- For the first quarter of 2022, we expect revenue to be in the
range of $11.0 million to
$11.5 million, or 98% year-over-year
growth at the mid-point.
- For fiscal year 2022, we expect revenue to be in the range of
$48.0 million to $52.0 million, or 31% year-over-year growth at
the mid-point.
"With our transition to a publicly listed company, we look
forward to executing our growth plan with a keen focus on enhancing
shareholder value. Additionally, we anticipate continuing to
invest in our core business and infrastructure to further support
our rapid organic growth and our inorganic growth strategies.
We continue to focus on our top-line growth, and we remain
disciplined in our goal of increasing Adjusted EBITDA and
positive cash flow." commented Mark
Walker.
Conference Call and Webcast
Details
Direct Digital will host a conference call on Tuesday, March 29, 2022 at 5:00 p.m. Eastern Time to discuss the Company's
quarterly and annual financial results. The live webcast and replay
can be accessed at
https://ir.directdigitalholdings.com/. Please access
the website at least fifteen minutes prior to the call to register,
download and install any necessary audio software. For those who
cannot access the webcast, a replay will be available at
https://ir.directdigitalholdings.com/ for a period of twelve
months.
Footnote
(1)"Adjusted EBITDA" is a non-GAAP
financial measure. The section titled "Non-GAAP Financial Measures"
below describes our usage of non-GAAP financial measures and
provides reconciliations between historical GAAP and non-GAAP
information contained in this press release.
Forward Looking
Statements
This press release may contain forward-looking statements within
the meaning of federal securities laws, including the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and which are subject
to certain risks, trends and uncertainties. As used below, "we,"
"us," and "our" refer to Direct Digital. We use words such as
"could," "would," "may," "might," "will," "expect," "likely,"
"believe," "continue," "anticipate," "estimate," "intend," "plan,"
"project" and other similar expressions to identify forward-looking
statements, but not all forward-looking statements include these
words. All statements contained in this release that do not relate
to matters of historical fact should be considered forward-looking
statements. All of our forward-looking statements involve estimates
and uncertainties that could cause actual results to differ
materially from those expressed in or implied by the
forward-looking statements. Our forward-looking statements are
based on assumptions that we have made in light of our industry
experience and our perceptions of historical trends, current
conditions, expected future developments and other factors we
believe are appropriate under the circumstances. Although we
believe that these forward-looking statements are based on
reasonable assumptions, many factors could affect our actual
operating and financial performance and cause our performance to
differ materially from the performance expressed in or implied by
the forward-looking statements, including, but not limited to: our
dependence on the overall demand for advertising, which could be
influenced by economic downturns; any slow-down or unanticipated
development in the market for programmatic advertising campaigns;
the effects of health epidemics, such as the ongoing global
COVID-19 pandemic; operational and performance issues with our
platform, whether real or perceived, including a failure to respond
to technological changes or to upgrade our technology systems; any
significant inadvertent disclosure or breach of confidential and/or
personal information we hold, or of the security of our or our
customers', suppliers' or other partners' computer systems; any
unavailability or non-performance of the non-proprietary
technology, software, products and services that we use;
unfavorable publicity and negative public perception about our
industry, particularly concerns regarding data privacy and security
relating to our industry's technology and practices, and any
perceived failure to comply with laws and industry self-regulation;
restrictions on the use of third-party "cookies," mobile device IDs
or other tracking technologies, which could diminish our platform's
effectiveness; any inability to compete in our intensely
competitive market; any significant fluctuations caused by our high
customer concentration; any violation of legal and regulatory
requirements or any misconduct by our employees, subcontractors,
agents or business partners; any strain on our resources, diversion
of our management's attention or impact on our ability to attract
and retain qualified board members as a result of being a public
company; our dependence, as a holding, of receiving distributions
from Direct Digital Holdings, LLC to pay our taxes, expenses and
dividends; and other factors and assumptions discussed in the "Risk
Factors," "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" and other sections of our
filings with the SEC that we make from time to time. Should one or
more of these risks or uncertainties materialize or should any of
these assumptions prove to be incorrect, our actual operating and
financial performance may vary in material respects from the
performance projected in these forward-looking statements. Further,
any forward-looking statement speaks only as of the date on which
it is made, and except as required by law, we undertake no
obligation to update any forward-looking statement contained in
this release to reflect events or circumstances after the date on
which it is made or to reflect the occurrence of anticipated or
unanticipated events or circumstances, and we claim the protection
of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
About Direct Digital
Holdings
Direct Digital Holdings (Nasdaq: DRCT) brings state-of-the-art
supply- and demand-side advertising platforms together under one
umbrella company. The holding group's supply-side platform Colossus
SSP offers advertisers of all sizes extensive reach within general
market and multicultural media properties. Its operating companies
Huddled Masses and Orange142 deliver significant ROI for middle
market advertisers by providing data-optimized programmatic
solutions at scale for businesses in sectors that range from energy
to healthcare and travel to financial services. Direct Digital
Holdings' buy-side solutions manages over 200 clients daily, and
the sell-side solution serves over 80,000 advertisers generating
over 70 billion impressions per month across display, CTV, in-app,
and other media channels.
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
DECEMBER
31,
|
|
|
|
|
2021
|
|
2020
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
4,684,431
|
|
$
1,611,998
|
|
Accounts receivable,
net
|
|
7,871,181
|
|
4,679,376
|
|
Prepaid expenses and
other current assets
|
|
1,225,447
|
|
223,344
|
|
|
Total current
assets
|
|
13,781,059
|
|
6,514,718
|
|
|
|
|
|
|
|
Goodwill
|
|
6,519,636
|
|
6,519,636
|
Intangible assets,
net
|
|
15,591,578
|
|
17,545,396
|
Deferred financing
costs, net
|
|
96,152
|
|
90,607
|
Other long-term
assets
|
|
11,508
|
|
25,118
|
Total assets
|
|
$
35,999,933
|
|
$
30,695,475
|
|
|
|
|
|
|
|
LIABILITIES AND
MEMBERS' EQUITY
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Accounts
payable
|
|
$
6,710,015
|
|
$
3,263,326
|
|
Accrued
liabilities
|
|
1,044,907
|
|
1,392,520
|
|
Notes payable, current
portion
|
|
550,000
|
|
1,206,750
|
|
Deferred
revenues
|
|
1,348,093
|
|
308,682
|
|
Related party
payables
|
|
70,801
|
|
70,801
|
|
Seller notes
payable
|
|
-
|
|
315,509
|
|
Seller earnout
payable
|
|
-
|
|
74,909
|
|
|
Total current
liabilities
|
|
9,723,816
|
|
6,632,497
|
|
|
|
|
|
|
|
Notes payable, net of
short-term portion and $2,091,732 and
|
|
|
|
|
$501,796
deferred financing cost, respectively
|
|
19,358,268
|
|
11,213,697
|
Mandatorily redeemable
non-participating preferred units
|
|
6,455,562
|
|
9,913,940
|
Line of
credit
|
|
400,000
|
|
407,051
|
Paycheck Protection
Program loan
|
|
287,143
|
|
10,000
|
Economic Injury
Disaster Loan
|
|
150,000
|
|
150,000
|
|
|
Total
liabilities
|
|
36,374,789
|
|
28,327,185
|
|
|
|
|
|
|
|
MEMBERS' EQUITY
(DEFICIT)
|
|
|
|
|
Units, 1,000,000 units
authorized at December 31, 2021 and 2020,
|
|
|
|
|
34,182 units issued and outstanding as of December 31,
2021
|
|
|
|
|
and
2020
|
|
4,294,241
|
|
4,294,241
|
Accumulated
deficit
|
|
(4,669,097)
|
|
(1,925,951)
|
|
|
Total members' equity
(deficit)
|
|
(374,856)
|
|
2,368,290
|
|
|
|
|
|
|
|
Total liabilities and
members' equity (deficit)
|
|
$
35,999,933
|
|
$
30,695,475
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months Ended
December 31,
(unaudited)
|
|
Year
Ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues
|
|
|
|
|
|
|
|
Buy-side advertising
|
$
6,152,552
|
|
$
5,278,457
|
|
$
26,127,787
|
|
$
9,656,165
|
Sell-side advertising
|
6,747,940
|
|
1,323,054
|
|
12,009,075
|
|
2,821,354
|
Total
revenues
|
12,900,492
|
|
6,601,511
|
|
38,136,862
|
|
12,477,519
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
Buy-side advertising
|
2,446,568
|
|
2,028,199
|
|
9,927,295
|
|
4,864,234
|
Sell-side advertising
|
5,431,686
|
|
1,090,892
|
|
9,780,442
|
|
2,440,975
|
Total cost of
revenues
|
7,878,254
|
|
3,119,091
|
|
19,707,737
|
|
7,305,209
|
|
|
|
|
|
|
|
|
Gross Profit
|
5,022,238
|
|
3,482,420
|
|
18,429,125
|
|
5,172,310
|
Operating
expenses
|
|
|
|
|
|
|
|
Compensation, taxes and benefits
|
2,387,488
|
|
2,009,864
|
|
8,519,418
|
|
3,334,060
|
General and administrative
|
1,310,878
|
|
1,247,864
|
|
5,525,107
|
|
1,848,407
|
Acquisition transaction costs
|
-
|
|
184,407
|
|
-
|
|
834,407
|
Total operating
expenses
|
3,698,366
|
|
3,442,135
|
|
14,044,525
|
|
6,016,874
|
Income (loss) from
operations
|
1,323,872
|
|
40,285
|
|
4,384,600
|
|
(844,564)
|
Other (expense)
income
|
(3,446,022)
|
|
(568,015)
|
|
(5,828,171)
|
|
(51,502)
|
Tax
expense (benefit)
|
(8,648)
|
|
30
|
|
(63,526)
|
|
(12,124)
|
Net loss
|
$(2,130,798)
|
|
$
(527,700)
|
|
$
(1,507,097)
|
|
$
(908,190)
|
|
|
|
|
|
|
|
|
Net loss per common
unit:
Basic and diluted
|
$(62.34)
|
|
$(15.44)
|
|
$(44.09)
|
|
$(30.32)
|
Weighted-average common
units
outstanding:
Basic and diluted
|
34,182
|
|
34,182
|
|
34,182
|
|
29,954
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
|
2021
|
|
2020
|
Cash Flows Provided
By (Used In) Operating Activities:
|
|
|
|
|
Net loss
|
$
(1,507,097)
|
|
$
(908,190)
|
|
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
Amortization of
deferred financing costs
|
356,442
|
|
84,629
|
|
|
|
Amortization of
intangible assets
|
1,953,818
|
|
488,454
|
|
|
|
Loss on early
extinguishment of debt
|
2,663,148
|
|
-
|
|
|
|
Forgiveness of Paycheck
Protection Program loan
|
(10,000)
|
|
(277,100)
|
|
|
|
Paid-in-kind
interest
|
269,260
|
|
97,243
|
|
|
|
Gain from revaluation
and settlement of earnout liability
|
(31,443)
|
|
(401,677)
|
|
|
|
Loss on redemption of
non-participating preferred units
|
41,622
|
|
-
|
|
|
|
Bad debt
expense
|
91,048
|
|
8,086
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(3,282,853)
|
|
737,554
|
|
|
|
|
Prepaid expenses and
other current assets
|
(1,005,159)
|
|
(7,093)
|
|
|
|
|
Accounts
payable
|
3,446,689
|
|
(516,690)
|
|
|
|
|
Accrued
liabilities
|
(273,735)
|
|
540,033
|
|
|
|
|
Deferred
revenues
|
1,039,411
|
|
(490,577)
|
|
|
|
|
Related party
payable
|
-
|
|
70,801
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
3,751,151
|
|
(574,527)
|
|
|
|
|
|
|
|
|
|
Cash Flows Used In
Investing Activities:
|
|
|
|
|
Cash paid for
acquisition of Orange142, net of cash acquired
|
-
|
|
(10,985,849)
|
|
|
|
|
|
Net cash used in
investing activities
|
-
|
|
(10,985,849)
|
|
|
|
|
|
|
|
|
|
Cash Flows Provided By
(Used In) Financing Activities:
|
|
|
|
|
Proceeds from note
payable
|
22,000,000
|
|
12,825,000
|
|
Payments of notes
payable
|
(15,672,912)
|
|
-
|
|
Payments of litigation
settlement
|
-
|
|
(210,000)
|
|
Proceeds from lines of
credit
|
400,000
|
|
1,083,051
|
|
Payments on lines of
credit
|
(407,051)
|
|
(1,403,000)
|
|
Payment of deferred
financing costs
|
(2,190,874)
|
|
(677,032)
|
|
Proceeds from Paycheck
Protection Program loan
|
287,143
|
|
287,100
|
|
Proceeds from Economic
Injury Disaster Loan
|
-
|
|
150,000
|
|
Redemption of Preferred
Shares
|
(3,500,000)
|
|
370,789
|
|
Payments on seller
notes and earnouts payable
|
(358,975)
|
|
(18,318)
|
|
Distributions to
members
|
(1,236,049)
|
|
(117,508)
|
|
|
|
|
Net cash provided by
financing activities
|
(678,718)
|
|
12,290,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
3,072,433
|
|
729,706
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of the period
|
1,611,998
|
|
882,292
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of the year
|
$
4,684,431
|
|
$
1,611,998
|
NON-GAAP FINANCIAL
MEASURES
In addition to our results determined in accordance with U.S.
generally accepted accounting principles ("GAAP"), including, in
particular operating income, net cash provided by operating
activities, and net income, we believe that earnings before
interest, taxes, depreciation and amortization ("EBITDA"), as
adjusted for acquisition transaction costs, forgiveness of Paycheck
Protection Program loans, gain from revaluation and settlement of
seller notes and earnout liability, loss on early extinguishment of
debt, and loss on early redemption of non-participating preferred
units, ("Adjusted EBITDA"), a non-GAAP measure, is useful in
evaluating our operating performance. The most directly comparable
GAAP measure to Adjusted EBITDA is net loss.
In addition to operating income and net income, we use Adjusted
EBITDA as a measure of operational efficiency. We believe that this
non-GAAP financial measure is useful to investors for
period-to-period comparisons of our business and in understanding
and evaluating our operating results for the following reasons:
- Adjusted EBITDA is widely used by investors and securities
analysts to measure a company's operating performance without
regard to items such as depreciation and amortization, interest
expense, provision for income taxes, and certain one-time items
such as acquisition transaction costs and gains from settlements or
loan forgiveness that can vary substantially from company to
company depending upon their financing, capital structures and the
method by which assets were acquired;
- Our management uses Adjusted EBITDA in conjunction with GAAP
financial measures for planning purposes, including the preparation
of our annual operating budget, as a measure of operating
performance and the effectiveness of our business strategies and in
communications with our board of directors concerning our financial
performance; and
- Adjusted EBITDA provides consistency and comparability with our
past financial performance, facilitates period-to-period
comparisons of operations, and also facilitates comparisons with
other peer companies, many of which use similar non-GAAP financial
measures to supplement their GAAP results.
Our use of this non-GAAP financial measure has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our financial results as reported
under GAAP. The following table presents a reconciliation of
Adjusted EBITDA to net loss for each of the periods presented:
NON-GAAP FINANCIAL METRICS
|
(unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net loss
|
$
(2,130,798)
|
|
$
(527,700)
|
|
$ (1,507,097)
|
|
$
(908,190)
|
|
Add back
(deduct):
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
488,454
|
|
488,455
|
|
1,953,818
|
|
488,454
|
|
Acquisition transaction costs
|
-
|
|
184,407
|
|
-
|
|
834,407
|
|
Interest expense
|
751,463
|
|
845,130
|
|
3,184,029
|
|
865,055
|
|
Loss
on early extinguishment of
Debt
|
2,663,148
|
|
-
|
|
2,663,148
|
|
-
|
|
Tax
expense
|
8,648
|
|
(30)
|
|
63,526
|
|
12,124
|
|
Forgiveness of Paycheck
Protection
Program loan
|
-
|
|
-
|
|
(10,000)
|
|
(277,100)
|
|
Gain
from revaluation and
settlement of
seller
|
|
|
|
|
|
|
notes and
earnout liability
|
-
|
|
-
|
|
(31,443)
|
|
(401,677)
|
|
Loss
on early redemption of
non-participating
|
|
|
|
|
|
|
preferred
units
|
41,622
|
|
-
|
|
41,622
|
|
-
|
|
Adjusted
EBITDA
|
$
1,822,537
|
|
$
990,262
|
|
$
6,357,603
|
|
$
613,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/direct-digital-holdings-reports-fourth-quarter--full-year-2021-financial-results-301513173.html
SOURCE Direct Digital Holdings