false
0001880613
0001880613
2023-11-09
2023-11-09
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 9, 2023
Direct Digital Holdings, Inc.
(Exact name of registrant as specified in its
charter)
Delaware |
|
001-41261 |
|
87-2306185 |
(State or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
1177 West Loop South, Suite 1310
Houston, Texas |
|
77027 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (832) 402-1051
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class |
|
Trading
Symbol(s) |
|
Name of each exchange
on which registered |
Class A common stock, par value $0.001 per share |
|
DRCT |
|
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (the “Exchange Act”) (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
Item 2.02 |
Results of Operations and Financial Condition. |
On November 9, 2023, Direct Digital Holdings, Inc. (the “Company”)
issued a press release announcing its financial results for the three months ended September 30, 2023. A copy of the press release is
furnished herewith as Exhibit 99.1 to this report and is incorporated herein by reference.
The information provided in Item 2.02 of this report, including Exhibit 99.1,
shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of
1933, as amended, except as shall be expressly set forth by specific reference.
Item 9.01 |
Financial Statements and Exhibits. |
EXHIBIT INDEX
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
November 9, 2023
(Date) |
Direct Digital Holdings, Inc.
(Registrant) |
|
|
|
/s/ Diana Diaz |
|
Diana Diaz
Chief Financial Officer |
Exhibit 99.1
Direct Digital Holdings Reports
Third Quarter 2023 Financial Results
Third Quarter 2023 Revenue Up 129% Year-Over-Year
to $59.5 Million
Company Raises Full-Year 2023 Revenue Guidance
to $170 Million - $190 Million
Houston,
November 09, 2023 -- Direct Digital Holdings, Inc. (Nasdaq: DRCT) ("Direct Digital Holdings" or the "Company"),
a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC ("Colossus SSP"),
Huddled Masses LLC ("Huddled Masses") and Orange142, LLC ("Orange142"), today announced financial results for the
third quarter ended September 30, 2023.
Mark D. Walker, Chairman and Chief Executive Officer,
commented, “In recent quarters, we have made significant investments in our technology stack, advertising platform and operational
structure. We initially expected to see the impact of these investments in 2024, however, we are pleased to report that these benefits
have arrived much earlier in 2023. Our strong technology partnerships and our overarching business strategy have enabled us to meet a
growing number of customers’ demands and further the capabilities of our sell-side technology platform. On both the sell-side and
the buy-side, increased spend from our buying partners has resulted in an associated increase in our impression count and organic growth
profile with a direct positive impact on net income and Adjusted EBITDA(1).”
Keith Smith, President, added, “The growth
seen in this quarter, as well as the past year, has been fueled by a combination of our strategic investments and partnerships, our differentiated
approach to advertising solutions, as well as a set of market dynamics which have been highly beneficial to our position in the industry.
We have capitalized on the shift in ad spend towards digital media on both the sell- and buy-side and will continue to grow our presence
in the space through our recent partnerships and advancements of our technology stack. We remain committed to executing on the same growth
and investment initiatives that led us to the strong third quarter results we are reporting today.”
Third Quarter 2023 Business Highlights
| · | For the third quarter ended September 30, 2023, Direct Digital Holdings processed over 400 billion monthly
impressions through its sell-side advertising segment, an increase of 220% over the same period of 2022. |
| · | In addition, the Company’s sell-side advertising platforms received over 34 billion monthly bid
responses in the third quarter of 2023, an increase of over 210% over the same period in 2022. Sell-side revenue per advertiser for the
third quarter of 2023 increased 241% compared to the same period of 2022. |
| · | The Company’s buy-side advertising segment served approximately 228 customers in the third quarter
of 2023 and buy-side revenue per customer increased 14% compared to the same period of 2022. |
Third Quarter 2023 Financial Highlights:
| · | Revenue was $59.5 million in the third quarter of 2023, an increase of $33.5 million, or 129% over the
$26.0 million in the same period of 2022. |
| o | Sell-side advertising segment revenue grew to $51.6 million and contributed $32.8 million of the increase,
or 174% growth over the $18.9 million of sell-side revenue in the same period of 2022. |
| o | Buy-side advertising segment revenue grew to $7.9 million and contributed $0.7 million of the increase,
or 10% growth over the $7.1 million of buy-side revenue in the same period of 2022. |
| · | Consolidated operating income in the third quarter of 2023 was $4.5 million compared to consolidated operating
income of $1.8 million in the same period of 2022, an increase of 144% year-over-year. |
| · | Net income was $3.4 million in the third quarter of 2023, compared to net income of $0.8 million in the
same period of 2022, an increase of 313% year-over-year. |
| · | Adjusted EBITDA(1) was $5.4 million in the third quarter of 2023, compared to $2.4 million
in the same period of 2022, an increase of 123% year-over-year. |
Financial Outlook
Assuming the U.S. economy does not experience
any major economic conditions that deteriorate or otherwise significantly reduce advertiser demand, we are increasing our previously issued
estimate as disclosed in our second quarter 2023 update:
| · | For fiscal year 2023, we expect revenue to be in the range of $170 million to $190 million, or 101% year-over-year
growth at the mid-point. |
“We are thrilled to announce the raising
of our fiscal year 2023 revenue guidance to $180 million at the midpoint, a 101% increase over full-year 2022 results. This increase reflects
our belief in our ability to execute on our various growth strategies, demonstrates the strength of our operating leverage and highlights
the favorable market trends that we expect to continue for the remainder of this year,” commented Diana
Diaz, Chief Financial Officer.
Conference Call and Webcast Details
Direct Digital will host a conference call on
Thursday, November 9, 2023 at 5:00 p.m. Eastern Time to discuss the Company’s third quarter 2023 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.
Footnotes
(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 the Company. 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 press 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; 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;
our limited operating history, which could result in our past results not being indicative of future operating performance; 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 company, on 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 Securities and Exchange
Commission 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 press 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), owner of operating companies Colossus SSP, Huddled Masses, and Orange 142, brings state-of-the-art sell-
and buy-side advertising platforms together under one umbrella company. Direct Digital Holdings' sell-side platform, Colossus SSP, offers
advertisers of all sizes extensive reach within general market and multicultural media properties. The Company's subsidiaries 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 to travel to financial services. Direct Digital Holdings' sell- and buy-side
solutions manage on average over 125,000 clients monthly, generating over 300 billion impressions per month across display, CTV, in-app
and other media channels.
CONSOLIDATED
BALANCE SHEETS
(unaudited)
| |
September 30, 2023 | | |
December 31, 2022 | |
ASSETS | |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash and cash equivalents | |
$ | 5,481,949 | | |
$ | 4,047,453 | |
Accounts receivable, net | |
| 54,637,634 | | |
| 26,354,114 | |
Prepaid expenses and other current assets | |
| 1,426,925 | | |
| 883,322 | |
Total current assets | |
| 61,546,508 | | |
| 31,284,889 | |
| |
| | | |
| | |
Property, equipment and software, net of accumulated depreciation and amortization of $219,386 and $34,218, respectively | |
| 625,028 | | |
| 673,218 | |
Goodwill | |
| 6,519,636 | | |
| 6,519,636 | |
Intangible assets, net | |
| 12,172,396 | | |
| 13,637,759 | |
Deferred tax asset, net | |
| 5,082,424 | | |
| 5,164,776 | |
Operating lease right-of-use assets | |
| 674,846 | | |
| 798,774 | |
Other long-term assets | |
| 127,492 | | |
| 46,987 | |
Total assets | |
$ | 86,748,330 | | |
$ | 58,126,039 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Accounts payable | |
$ | 45,021,034 | | |
$ | 17,695,404 | |
Accrued liabilities | |
| 4,071,128 | | |
| 4,777,764 | |
Liability related to tax receivable agreement, current portion | |
| 41,141 | | |
| 182,571 | |
Notes payable, current portion | |
| 1,146,250 | | |
| 655,000 | |
Deferred revenues | |
| 1,044,069 | | |
| 546,710 | |
Operating lease liabilities, current portion | |
| 49,977 | | |
| 91,989 | |
Income taxes payable | |
| 113,355 | | |
| 174,438 | |
Related party payables | |
| 1,428,093 | | |
| 1,448,333 | |
Total current liabilities | |
| 52,915,047 | | |
| 25,572,209 | |
| |
| | | |
| | |
Notes payable, net of short-term portion and deferred financing cost of $1,722,716 and $2,115,161, respectively | |
| 22,323,534 | | |
| 22,913,589 | |
Economic Injury Disaster Loan | |
| 150,000 | | |
| 150,000 | |
Liability related to tax receivable agreement, net of current portion | |
| 4,245,234 | | |
| 4,149,619 | |
Operating lease liabilities, net of current portion | |
| 717,632 | | |
| 745,340 | |
Total liabilities | |
| 80,351,447 | | |
| 53,530,757 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES (Note 9) | |
| | | |
| | |
| |
| | | |
| | |
STOCKHOLDERS’ EQUITY | |
| | | |
| | |
Class A common stock, $0.001 par value per share, 160,000,000 shares authorized, 2,991,792 and 2,900,000 shares issued and outstanding, respectively | |
| 2,992 | | |
| 2,900 | |
Class B common stock, $0.001 par value per share, 20,000,000 shares authorized, 11,278,000 shares issued and outstanding | |
| 11,278 | | |
| 11,278 | |
Additional paid-in capital | |
| 8,782,092 | | |
| 8,224,365 | |
Accumulated deficit | |
| (2,399,479 | ) | |
| (3,643,261 | ) |
Total stockholders’ equity | |
| 6,396,883 | | |
| 4,595,282 | |
Total liabilities and stockholders’ equity | |
$ | 86,748,330 | | |
$ | 58,126,039 | |
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
| |
For the Three Months Ended | | |
For the Nine Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Revenues | |
| | | |
| | | |
| | | |
| | |
Buy-side advertising | |
$ | 7,850,058 | | |
$ | 7,130,736 | | |
$ | 27,092,816 | | |
$ | 22,283,044 | |
Sell-side advertising | |
| 51,622,066 | | |
| 18,854,639 | | |
| 89,006,018 | | |
| 36,333,976 | |
Total revenues | |
| 59,472,124 | | |
| 25,985,375 | | |
| 116,098,834 | | |
| 58,617,020 | |
| |
| | | |
| | | |
| | | |
| | |
Cost of revenues | |
| | | |
| | | |
| | | |
| | |
Buy-side advertising | |
| 3,113,491 | | |
| 2,471,170 | | |
| 10,650,541 | | |
| 7,694,987 | |
Sell-side advertising | |
| 44,605,815 | | |
| 16,053,461 | | |
| 77,189,787 | | |
| 30,344,670 | |
Total cost of revenues | |
| 47,719,306 | | |
| 18,524,631 | | |
| 87,840,328 | | |
| 38,039,657 | |
Gross profit | |
| 11,752,818 | | |
| 7,460,744 | | |
| 28,258,506 | | |
| 20,577,363 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Compensation, taxes and benefits | |
| 4,747,081 | | |
| 3,845,918 | | |
| 12,934,406 | | |
| 9,895,646 | |
General and administrative | |
| 2,512,330 | | |
| 1,770,002 | | |
| 8,717,584 | | |
| 5,187,875 | |
Total operating expenses | |
| 7,259,411 | | |
| 5,615,920 | | |
| 21,651,990 | | |
| 15,083,521 | |
Income from operations | |
| 4,493,407 | | |
| 1,844,824 | | |
| 6,606,516 | | |
| 5,493,842 | |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | | |
| | |
Other income | |
| 83,331 | | |
| — | | |
| 175,472 | | |
| 47,982 | |
Forgiveness of Paycheck Protection Program loan | |
| — | | |
| — | | |
| — | | |
| 287,143 | |
Loss on redemption of non-participating preferred units | |
| — | | |
| — | | |
| — | | |
| (590,689 | ) |
Contingent loss on early termination of line of credit | |
| — | | |
| — | | |
| (299,770 | ) | |
| — | |
Interest expense | |
| (1,059,890 | ) | |
| (905,605 | ) | |
| (3,104,684 | ) | |
| (2,269,643 | ) |
Total other expense | |
| (976,559 | ) | |
| (905,605 | ) | |
| (3,228,982 | ) | |
| (2,525,207 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income before taxes | |
| 3,516,848 | | |
| 939,219 | | |
| 3,377,534 | | |
| 2,968,635 | |
Tax expense | |
| 165,994 | | |
| 128,436 | | |
| 165,658 | | |
| 215,112 | |
Net income | |
$ | 3,350,854 | | |
$ | 810,783 | | |
$ | 3,211,876 | | |
$ | 2,753,523 | |
| |
| | | |
| | | |
| | | |
| | |
Net income per common share: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.23 | | |
$ | 0.06 | | |
$ | 0.23 | | |
$ | 0.23 | |
Diluted | |
$ | 0.23 | | |
$ | 0.06 | | |
$ | 0.22 | | |
$ | 0.23 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted-average number of shares of common stock outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 14,268,168 | | |
| 14,178,000 | | |
| 14,216,211 | | |
| 11,846,601 | |
Diluted | |
| 14,827,165 | | |
| 14,545,241 | | |
| 14,817,770 | | |
| 11,996,969 | |
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
| |
For the Nine Months Ended September 30, | |
| |
2023 | | |
2022 | |
Cash Flows Provided By Operating Activities: | |
| | | |
| | |
Net income | |
$ | 3,211,876 | | |
$ | 2,753,523 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
Amortization of deferred financing costs | |
| 434,847 | | |
| 463,008 | |
Amortization of intangible assets | |
| 1,465,363 | | |
| 1,465,364 | |
Amortization of right-of-use assets | |
| 123,928 | | |
| 94,974 | |
Amortization of capitalized software | |
| 159,057 | | |
| — | |
Depreciation of property and equipment | |
| 26,112 | | |
| — | |
Stock-based compensation | |
| 545,504 | | |
| 85,437 | |
Forgiveness of Paycheck Protection Program loan | |
| — | | |
| (287,143 | ) |
Deferred income taxes | |
| 82,352 | | |
| (40,591 | ) |
Payment on tax receivable agreement | |
| (45,815 | ) | |
| — | |
Loss on redemption of non-participating preferred units | |
| — | | |
| 590,689 | |
Contingent loss on early termination of line of credit | |
| 299,770 | | |
| — | |
Bad debt expense | |
| 97,740 | | |
| 2,717 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (28,381,260 | ) | |
| (13,520,067 | ) |
Prepaid expenses and other assets | |
| (524,098 | ) | |
| 482,190 | |
Accounts payable | |
| 27,325,629 | | |
| 10,008,327 | |
Accrued liabilities | |
| (513,138 | ) | |
| 1,555,037 | |
Income taxes payable | |
| (61,083 | ) | |
| 94,440 | |
Deferred revenues | |
| 497,359 | | |
| (201,907 | ) |
Operating lease liability | |
| (69,720 | ) | |
| (75,396 | ) |
Related party payable | |
| — | | |
| (70,801 | ) |
Net cash provided by operating activities | |
| 4,674,423 | | |
| 3,399,801 | |
| |
| | | |
| | |
Cash Flows Used In Investing Activities: | |
| | | |
| | |
Cash paid for capitalized software and property and equipment | |
| (136,978 | ) | |
| — | |
Net cash used in investing activities | |
| (136,978 | ) | |
| — | |
| |
| | | |
| | |
Cash Flows Used In Financing Activities: | |
| | | |
| | |
Proceeds from note payable | |
| — | | |
| 4,260,000 | |
Payments on term loan | |
| (491,250 | ) | |
| (412,500 | ) |
Payments of litigation settlement | |
| (193,500 | ) | |
| — | |
Payments on lines of credit | |
| — | | |
| (400,000 | ) |
Payment of deferred financing costs | |
| (442,181 | ) | |
| (525,295 | ) |
Proceeds from Issuance of Class A common stock, net of transaction costs | |
| — | | |
| 11,167,043 | |
Redemption of common units | |
| — | | |
| (7,200,000 | ) |
Redemption of non-participating preferred units | |
| — | | |
| (7,046,251 | ) |
Proceeds from options exercised | |
| 215 | | |
| — | |
Proceeds from warrants exercised | |
| 12,100 | | |
| — | |
Distributions to members | |
| (1,988,333 | ) | |
| (916,433 | ) |
Net cash used in financing activities | |
| (3,102,949 | ) | |
| (1,073,436 | ) |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 1,434,496 | | |
| 2,326,365 | |
Cash and cash equivalents, beginning of the period | |
| 4,047,453 | | |
| 4,684,431 | |
Cash and cash equivalents, end of the period | |
$ | 5,481,949 | | |
$ | 7,010,796 | |
| |
| | | |
| | |
Supplemental Disclosure of Cash Flow Information: | |
| | | |
| | |
Cash paid for taxes | |
$ | 348,862 | | |
$ | 133,401 | |
Cash paid for interest | |
$ | 2,667,283 | | |
$ | 1,744,365 | |
| |
| | | |
| | |
Non-cash Financing Activities: | |
| | | |
| | |
Transaction costs related to issuances of Class A shares included in accrued liabilities | |
$ | — | | |
$ | 1,000,000 | |
Outside basis difference in partnership | |
$ | — | | |
$ | 3,234,000 | |
Tax receivable agreement payable to Direct Digital Management, LLC | |
$ | — | | |
$ | 278,900 | |
Tax benefit on tax receivable agreement | |
$ | — | | |
$ | 485,100 | |
Issuance related to vesting of restricted stock units, net of tax withholdings | |
$ | 90 | | |
$ | — | |
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 stock compensation expense, loss on early termination of line of credit, and loss on early extinguishment
of debt, and loss on early redemption of non-participating preferred units (“Adjusted EBITDA”), a non-GAAP financial measure,
is useful in evaluating our operating performance. The most directly comparable GAAP measure to Adjusted EBITDA is net income (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 income (loss) for
each of the periods presented:
NON-GAAP FINANCIAL METRICS
(unaudited)
| |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net income | |
$ | 3,350,854 | | |
$ | 810,783 | | |
$ | 3,211,876 | | |
$ | 2,753,523 | |
Add back (deduct): | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| 1,059,890 | | |
| 905,605 | | |
| 3,104,684 | | |
| 2,269,643 | |
Amortization of intangible assets | |
| 488,455 | | |
| 488,455 | | |
| 1,465,364 | | |
| 1,465,364 | |
Stock-based compensation | |
| 241,491 | | |
| 70,030 | | |
| 545,504 | | |
| 85,438 | |
Depreciation and amortization of capitalized software, property and equipment | |
| 63,689 | | |
| — | | |
| 185,169 | | |
| — | |
Contingent loss on early termination of line of credit | |
| — | | |
| — | | |
| 299,770 | | |
| — | |
Tax expense | |
| 165,994 | | |
| 128,436 | | |
| 165,658 | | |
| 215,112 | |
Forgiveness of PPP loan | |
| — | | |
| — | | |
| — | | |
| (287,163 | ) |
Loss on early redemption of non-participating preferred units | |
| — | | |
| — | | |
| — | | |
| 590,689 | |
Adjusted EBITDA | |
$ | 5,370,373 | | |
$ | 2,403,309 | | |
$ | 8,978,025 | | |
$ | 7,092,606 | |
Contacts:
Investors:
Brett Milotte, ICR
Brett.Milotte@icrinc.com
v3.23.3
Cover
|
Nov. 09, 2023 |
Cover [Abstract] |
|
Document Type |
8-K
|
Amendment Flag |
false
|
Document Period End Date |
Nov. 09, 2023
|
Entity File Number |
001-41261
|
Entity Registrant Name |
Direct Digital Holdings, Inc.
|
Entity Central Index Key |
0001880613
|
Entity Tax Identification Number |
87-2306185
|
Entity Incorporation, State or Country Code |
DE
|
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
|
Written Communications |
false
|
Soliciting Material |
false
|
Pre-commencement Tender Offer |
false
|
Pre-commencement Issuer Tender Offer |
false
|
Title of 12(b) Security |
Class A common stock, par value $0.001 per share
|
Trading Symbol |
DRCT
|
Security Exchange Name |
NASDAQ
|
Entity Emerging Growth Company |
true
|
Elected Not To Use the Extended Transition Period |
false
|
X |
- DefinitionBoolean flag that is true when the XBRL content amends previously-filed or accepted submission.
+ References
+ Details
Name: |
dei_AmendmentFlag |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
+ References
+ Details
Name: |
dei_DocumentPeriodEndDate |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:dateItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
+ References
+ Details
Name: |
dei_DocumentType |
Namespace Prefix: |
dei_ |
Data Type: |
dei:submissionTypeItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionAddress Line 1 such as Attn, Building Name, Street Name
+ References
+ Details
Name: |
dei_EntityAddressAddressLine1 |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionAddress Line 2 such as Street or Suite number
+ References
+ Details
Name: |
dei_EntityAddressAddressLine2 |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- Definition
+ References
+ Details
Name: |
dei_EntityAddressCityOrTown |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionCode for the postal or zip code
+ References
+ Details
Name: |
dei_EntityAddressPostalZipCode |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionName of the state or province.
+ References
+ Details
Name: |
dei_EntityAddressStateOrProvince |
Namespace Prefix: |
dei_ |
Data Type: |
dei:stateOrProvinceItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityCentralIndexKey |
Namespace Prefix: |
dei_ |
Data Type: |
dei:centralIndexKeyItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionIndicate if registrant meets the emerging growth company criteria.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityEmergingGrowthCompany |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
+ References
+ Details
Name: |
dei_EntityFileNumber |
Namespace Prefix: |
dei_ |
Data Type: |
dei:fileNumberItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
+ References
+ Details
Name: |
dei_EntityIncorporationStateCountryCode |
Namespace Prefix: |
dei_ |
Data Type: |
dei:edgarStateCountryItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityRegistrantName |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityTaxIdentificationNumber |
Namespace Prefix: |
dei_ |
Data Type: |
dei:employerIdItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionLocal phone number for entity.
+ References
+ Details
Name: |
dei_LocalPhoneNumber |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 13e -Subsection 4c
+ Details
Name: |
dei_PreCommencementIssuerTenderOffer |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 14d -Subsection 2b
+ Details
Name: |
dei_PreCommencementTenderOffer |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionTitle of a 12(b) registered security.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b
+ Details
Name: |
dei_Security12bTitle |
Namespace Prefix: |
dei_ |
Data Type: |
dei:securityTitleItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionName of the Exchange on which a security is registered.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection d1-1
+ Details
Name: |
dei_SecurityExchangeName |
Namespace Prefix: |
dei_ |
Data Type: |
dei:edgarExchangeCodeItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Section 14a -Number 240 -Subsection 12
+ Details
Name: |
dei_SolicitingMaterial |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
+ References
+ Details
Name: |
dei_TradingSymbol |
Namespace Prefix: |
dei_ |
Data Type: |
dei:tradingSymbolItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Securities Act -Number 230 -Section 425
+ Details
Name: |
dei_WrittenCommunications |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
Direct Digital (NASDAQ:DRCT)
Historical Stock Chart
From Sep 2024 to Oct 2024
Direct Digital (NASDAQ:DRCT)
Historical Stock Chart
From Oct 2023 to Oct 2024