DoubleVerify Reports Fourth Quarter and Full Year 2023 Financial Results

by Business Wire

Feb. 29, 2024

6:38 AM GMT+9

Increased Fourth Quarter 2023 Revenue by 29% Year-over-Year to $172.2 Million

Grew Fourth Quarter 2023 Social Measurement Revenue by 62% Year-over Year

Achieved Fourth Quarter 2023 Net Income of $33.1 Million and Adjusted EBITDA of $65.4 Million, representing a 38% Adjusted EBITDA margin

Increased 2023 Revenue by 27% Year-over-Year to $572.5 Million Driven by Global Growth in Social, CTV Measurement and Programmatic Activation

Achieved 2023 Net Income of $71.5 Million and Adjusted EBITDA of $187.1 Million, representing a 33% Adjusted EBITDA margin

NEW YORK–(BUSINESS WIRE)–DoubleVerify (“DV”) (NYSE: DV), one of the leading software platforms for digital media measurement, data and analytics, today announced financial results for the fourth quarter and full year ended December 31, 2023.

“2023 was another year of exceptional growth and profitability driven by strong execution,” said Mark Zagorski, CEO of DoubleVerify. “We measured 7 trillion media transactions, grew revenue by 27% to more than $572 million, achieved 33% adjusted EBITDA margins and generated approximately $120 million of net cash from operating activities. DV continues to significantly outpace the growth of the broader digital advertising industry as our essential protection and performance solutions scale globally. Exciting differentiated growth opportunities such as Scibids AI and our expanded social video verification suite will leverage our unparalleled global scale and connectivity and leadership in innovation to drive exceptional media performance for global brands, fueling our long-term market share growth trajectory.”

Fourth Quarter 2023 Financial Highlights:

(All comparisons are to the fourth quarter of 2022)

Total revenue of $172.2 million, an increase of 29%.
Activation revenue of $99.4 million, an increase of 32%.
Measurement revenue of $60.4 million, an increase of 30%.
- Social measurement revenue increased by 62%.
- International measurement revenue increased by 43% with EMEA growth of 45% and APAC growth of 39%.
- Media Transactions Measured (“MTM”) for CTV increased by 34%.
Supply-Side revenue of $12.4 million, an increase of 5%.
Net income of $33.1 million and adjusted EBITDA of $65.4 million, which represented a 38% adjusted EBITDA margin.

Full Year 2023 Financial Highlights:

(All comparisons are to full year 2022)

Total revenue of $572.5 million, an increase of 27%.
Media Transactions Measured (MTM) were 7 trillion, an increase of 25%.
Measured Transaction Fee (MTF) was $0.075, an increase of 3%.
Net Revenue Retention (NRR) of 124%.
Activation revenue of $328.9 million, an increase of 31%.
Measurement revenue of $198.0 million, an increase of 25%.
- Social measurement revenue increased by 48%.
- International revenue increased by 43%.
- Media Transactions Measured for CTV increased by 33%.
Supply-Side revenue of $45.6 million, an increase of 5%.
Net income of $71.5 million, an increase of 65%.
Adjusted EBITDA of $187.1 million, an increase of 32%, representing a 33% adjusted EBITDA margin.

Fourth Quarter and Recent Business Highlights:

Grew Total Advertiser revenue by 31% year-over-year in the fourth quarter primarily due to a 25% increase in MTM and a 5% increase in MTF.
Continued to achieve a Gross Revenue Retention rate of over 95% in the fourth quarter.
Grew premium-priced Authentic Brand Suitability (ABS) revenues by 45% year-over-year in the fourth quarter primarily due to volume expansion by large existing global advertisers as well as by new customer activations.
Drove global market share growth through product upsells, international expansion and new enterprise logo wins. Notable new business wins include: Haleon and Walgreens.
Launched Brand Safety and Suitability measurement on Facebook and Instagram Feeds and Reels, creating greater transparency across some of the most engaging user-generated content environments in the world.
Expanded Brand Safety and Suitability measurement capabilities to YouTube Shorts in the fourth quarter, following the launch of viewability and invalid traffic measurement across YouTube Shorts in the third quarter of 2023.
Launched a first-of-its-kind activation solution that combines DV pre-screen brand suitability technology with Scibids AI to boost advertiser protection and improve campaign efficiency and performance on Social video.
Expanded relationship with LinkedIn to provide supply-side fraud prevention and brand safety and fraud measurement solutions across Linkedin’s Audience Network.
Partnered with Criteo on the upcoming launch of an industry leading solution that measures onsite invalid traffic (IVT), brand suitability, and viewability on Criteo’s network of retail media partners, with plans to combine Criteo’s outcomes data with DV Authentic Attention data in the future, allowing advertisers to correlate attention with business outcomes.
Partnered with InMobi for fraud avoidance and viewability, brand safety and fraud measurement, a supply-side win that was driven by InMobi’s commitment to working with best-in-class partners who provide advertisers with a meaningful return-on-investment.
Expanded industry-leading Universal Attention segments to Amazon and Viant’s DSPs.
Launched new tiered brand suitability categories to address “Made For Advertising” (MFA) measurement and protection in a more nuanced and brand-specific way, providing advertisers with enhanced granularity and control to determine the level of protection that best suits their requirements.

“Once again, DV delivered a powerful combination of growth and profitability,” said Nicola Allais, CFO of DoubleVerify. “Our industry-leading 29% year-over-year revenue growth and 38% adjusted EBITDA margins in the fourth quarter are a testament to the strength of our platform and our ability to balance innovation and new business growth with strong profitability and cash flow generation. We remain focused on execution in 2024 and are excited about our solid pipeline of new and expansionary business opportunities as we continue to meaningfully outpace the digital advertising industry and gain market share.”

First Quarter and Full-Year 2024 Guidance:

DoubleVerify anticipates Revenue and Adjusted EBITDA to be in the following ranges:

First Quarter 2024:

Revenue of $136 to $140 million, a year-over-year increase of 13% at the midpoint.
Adjusted EBITDA in the range of $33 to $37 million, representing a 25% margin at the midpoint.

Full Year 2024:

Revenue of $688 to $704 million, a year-over-year increase of 22% at the midpoint.
Adjusted EBITDA in the range of $205 to $221 million, representing a 31% margin at the midpoint.

With respect to the Company’s expectations under “First Quarter and Full-Year 2024 Guidance” above, the Company has not reconciled the non-GAAP measure Adjusted EBITDA to the GAAP measure net income in this press release because the Company does not provide guidance for depreciation and amortization expense, acquisition-related costs, interest income, and income taxes on a consistent basis as the Company is unable to quantify these amounts without unreasonable efforts, which would be required to include a reconciliation of Adjusted EBITDA to GAAP net income. In addition, the Company believes such a reconciliation would imply a degree of precision that could be confusing or misleading to investors.

Conference Call, Webcast and Other Information

DoubleVerify will host a conference call and live webcast to discuss its fourth quarter 2023 financial results at 4:30 p.m. Eastern Time today, February 28, 2024. To access the conference call, dial (877) 841-2987 for the U.S. or Canada, or (215) 268-9878 for international callers. The webcast will be available live on the Investors section of the Company’s website at https://ir.doubleverify.com/. An archived webcast will be available approximately two hours after the conclusion of the live event.

In addition, DoubleVerify plans to post certain additional historical quarterly financial information on the investor relations portion of its website for easy access to investors.

Key Business Terms and Notes

Activation revenue is generated from the evaluation, verification and measurement of advertising impressions purchased through programmatic demand-side and social media platforms.

Measurement revenue is generated from the verification and measurement of advertising impressions that are directly purchased on digital media properties, including publishers and social media platforms.

Supply-Side revenue is generated from platforms and publisher partners who use DoubleVerify’s data analytics to evaluate, verify and measure their advertising inventory.

Gross Revenue Retention Rate is the total prior period revenue earned from advertiser customers, less the portion of prior period revenue attributable to lost advertiser customers, divided by the total prior period revenue from advertiser customers.

Media Transactions Measured (MTM) is the volume of media transactions that DoubleVerify’s software platform measures.

Measured Transaction Fee (MTF) is the fixed fee DoubleVerify charges per thousand Media Transactions Measured.

International Revenue Growth Rates are inclusive of foreign currency fluctuations.

DoubleVerify Holdings, Inc. CONSOLIDATED BALANCE SHEETS


	As of December 31,
(in thousands, except per share data)	2023			2022
Assets:
Current assets
Cash and cash equivalents	$	310,131		$	267,813
Trade receivables, net of allowances for doubtful accounts of $9,442 and $8,893 as of December 31, 2023 and December 31, 2022, respectively		206,941			167,122
Prepaid expenses and other current assets		15,930			10,161
Total current assets		533,002			445,096
Property, plant and equipment, net		58,020			47,034
Operating lease right-of-use assets, net		60,470			64,692
Goodwill		436,008			343,011
Intangible assets, net		140,883			135,429
Deferred tax assets		13,077			35
Other non‑current assets		1,571			1,731
Total assets	$	1,243,031		$	1,037,028
Liabilities and Stockholder’s Equity:
Current liabilities
Trade payables	$	12,932		$	6,675
Accrued expense		44,264			33,085
Operating lease liabilities, current		9,029			7,041
Income tax liabilities		5,833			11,953
Current portion of finance lease obligations		2,934			1,846
Other current liabilities		8,863			8,310
Total current liabilities		83,855			68,910
Operating lease liabilities, non-current		71,563			74,086
Finance lease obligations		2,865			779
Deferred tax liabilities		8,119			12,890
Other non‑current liabilities		2,690			3,504
Total liabilities		169,092			160,169
Commitments and contingencies (Note 16)
Stockholders’ equity
Common stock, $0.001 par value, 1,000,000 shares authorized, 171,168 shares issued and 171,146 outstanding as of December 31, 2023; 1,000,000 shares authorized, 165,448 shares issued and 165,417 outstanding as of December 31, 2022		171			165
Additional paid‑in capital		878,331			756,299
Treasury stock, at cost, 22 shares and 31 shares as of December 31, 2023 and December 31, 2022, respectively		(743	)		(796	)
Retained earnings		198,983			127,517
Accumulated other comprehensive loss, net of income taxes		(2,803	)		(6,326	)
Total stockholders’ equity		1,073,939			876,859
Total liabilities and stockholders’ equity	$	1,243,031		$	1,037,028

DoubleVerify Holdings, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

	Year Ended December 31,
(in thousands, except per share data)	2023			2022			2021
Revenue	$	572,543		$	452,418		$	332,741
Cost of revenue (exclusive of depreciation and amortization shown separately below)		106,631			77,866			54,382
Product development		125,376			95,118			62,698
Sales, marketing and customer support		125,953			107,416			77,312
General and administrative		87,971			78,666			81,380
Depreciation and amortization		40,885			34,328			30,285
Income from operations		85,727			59,024			26,684
Interest expense		1,066			905			1,172
Other income, net		(11,216	)		(1,249	)		(309	)
Income before income taxes		95,877			59,368			25,821
Income tax expense (benefit)		24,411			16,100			(3,487	)
Net income	$	71,466		$	43,268		$	29,308
Earnings per share:
Basic	$	0.43		$	0.26		$	0.20
Diluted	$	0.41		$	0.25		$	0.18
Weighted‑average common stock outstanding:
Basic		167,803			163,882			148,309
Diluted		173,435			170,755			160,264
Comprehensive income:
Net income	$	71,466		$	43,268		$	29,308
Other comprehensive income (loss):
Foreign currency cumulative translation adjustment		3,523			(5,555	)		(1,782	)
Total comprehensive income	$	74,989		$	37,713		$	27,526

DoubleVerify Holdings, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

																			Accumulated
																			Other
																			Comprehensive
	Common Stock			Preferred Stock										Additional					Loss,			Total
	Shares			Shares					Treasury Stock					Paid‑in			Retained		Net of			Stockholders’
(in thousands)	Issued	Amount		Issued		Amount			Shares		Amount			Capital			Earnings		Income Taxes			Equity
Balances as of January 1, 2021	140,222	$	140	61,006		$	610		15,146		$	(260,686	)	$	620,679		$	54,941	$	1,011		$	416,695
Foreign currency translation adjustment	—		—	—			—		—			—			—			—		(1,782	)		(1,782	)
Shares repurchased for settlement of employee tax withholdings	—		—	—			—		50			(1,802	)		—			—		—			(1,802	)
Issuance of common stock as consideration for acquisition	684		1	—			—		—			—			22,525			—		—			22,526
Stock-based compensation	—		—	—			—		—			—			21,887			—		—			21,887
Common stock issued under employee purchase plan	15		—	—			—		—			—			404			—		—			404
Common stock issued upon exercise of stock options	4,782		5	—			—		—			—			12,435			—		—			12,440
Common stock issued upon vesting of restricted stock units	366		—	—			—		—			—			—			—		—			—
Conversion of Series A preferred stock to common stock	5,190		5	(61,006	)		(610	)	(15,146	)		260,686			(260,081	)		—		—			—
Issuance of common stock upon initial public offering	9,977		10	—			—		—			—			269,380			—		—			269,390
Private placement stock issuance concurrent with initial public offering	1,111		1	—			—		—			—			29,999			—		—			30,000
Net income	—		—	—			—		—			—			—			29,308		—			29,308
Balances as of December 31, 2021	162,347	$	162	—		$	—		50		$	(1,802	)	$	717,228		$	84,249	$	(771	)	$	799,066
Foreign currency translation adjustment	—		—	—			—		—			—			—			—		(5,555	)		(5,555	)
Shares repurchased for settlement of employee tax withholdings	—		—	—			—		402			(10,244	)		—			—		—			(10,244	)
Stock-based compensation expense	—		—	—			—		—			—			42,787			—		—			42,787
Common stock issued to non-employees	4		—	—			—		—			—			—			—		—			—
Common stock issued upon exercise of stock options	1,518		2	—			—		—			—			5,801			—		—			5,803
Common stock issued upon vesting of restricted stock units	1,488		1	—			—		—			—			(1	)		—		—			—
Common stock issued under employee purchase plan	91		—	—			—		—			—			1,734			—		—			1,734
Treasury stock reissued upon settlement of equity awards	—		—	—			—		(421	)		11,250			(11,250	)		—		—			—
Net income	—		—	—			—		—			—			—			43,268		—			43,268
Balances as of December 31, 2022	165,448	$	165	—		$	—		31		$	(796	)	$	756,299		$	127,517	$	(6,326	)	$	876,859
Foreign currency translation adjustment	—		—	—			—		—			—			—			—		3,523			3,523
Shares repurchased for settlement of employee tax withholdings	—		—	—			—		142			(4,586	)		—			—		—			(4,586	)
Issuance of common stock as consideration for acquisition	1,642		2	—			—		—			—			52,935			—		—			52,937
Stock-based compensation expense	—		—	—			—		—			—			60,351			—		—			60,351
Common stock issued under employee purchase plan	105		—	—			—		—			—			2,723			—		—			2,723
Common stock issued upon exercise of stock options	2,634		3	—			—		—			—			10,663			—		—			10,666
Common stock issued upon vesting of restricted stock units	1,339		1	—			—		—			—			(1	)		—		—			—
Treasury stock reissued upon settlement of equity awards	—		—	—			—		(151	)		4,639			(4,639	)		—		—			—
Net income	—		—	—			—		—			—			—			71,466		—			71,466
Balances as of December 31, 2023	171,168	$	171	—		$	—		22		$	(743	)	$	878,331		$	198,983	$	(2,803	)	$	1,073,939

DoubleVerify Holdings, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(in thousands)	2023			2022			2021
Operating activities:
Net income	$	71,466		$	43,268		$	29,308
Adjustments to reconcile net income to net cash provided by operating activities
Bad debt expense (recovery)		10,075			5,033			(711	)
Depreciation and amortization expense		40,885			34,328			30,285
Amortization of debt issuance costs		294			294			294
Non-cash lease expense		6,727			7,339			—
Deferred taxes		(25,046	)		(19,581	)		(7,866	)
Stock-based compensation expense		59,244			42,307			21,887
Interest expense		68			107			103
Loss on disposal of fixed assets		5			1,353			—
Impairment of long-lived assets		—			1,510			—
Change in fair value of contingent consideration		(1,193	)		—			57
Offering costs		—			—			22,074
Other		492			87			733
Changes in operating assets and liabilities, net of effects of business combinations
Trade receivables		(43,691	)		(49,765	)		(22,004	)
Prepaid expenses and other assets		(5,591	)		9,094			(7,567	)
Trade payables		5,476			2,884			(49	)
Accrued expenses and other liabilities		530			16,604			16,205
Net cash provided by operating activities		119,741			94,862			82,749
Investing activities:
Purchase of property, plant and equipment		(17,009	)		(39,981	)		(9,397	)
Acquisition of businesses, net of cash acquired		(67,240	)		—			(149,217	)
Net cash used in investing activities		(84,249	)		(39,981	)		(158,614	)
Financing activities:
Payments of long-term debt		—			—			(22,000	)
Deferred payment related to Zentrick acquisition		—			—			(50	)
Proceeds from revolving credit facility		50,000			—			—
Payments to revolving credit facility		(50,000	)		—			—
Payment of contingent consideration related to Zentrick acquisition		—			(3,247	)		—
Proceeds from common stock issued upon exercise of stock options		10,666			5,803			12,440
Proceeds from common stock issued under employee purchase plan		2,723			1,734			404
Proceeds from issuance of common stock upon initial public offering		—			—			269,390
Proceeds from issuance of common stock in connection to concurrent private placement		—			—			30,000
Payments related to offering costs		—			(6	)		(22,069	)
Finance lease payments		(2,314	)		(1,924	)		(1,918	)
Shares repurchased for settlement of employee tax withholdings		(4,586	)		(10,244	)		(1,802	)
Net cash provided by (used in) financing activities		6,489			(7,884	)		264,395
Effect of exchange rate changes on cash and cash equivalents and restricted cash		338			(784	)		(200	)
Net increase in cash, cash equivalents, and restricted cash		42,319			46,213			188,330
Cash, cash equivalents, and restricted cash—Beginning of period		267,938			221,725			33,395
Cash, cash equivalents, and restricted cash—End of period	$	310,257		$	267,938		$	221,725

Cash and cash equivalents	$	310,131		$	267,813		$	221,591
Restricted cash (included in prepaid expenses and other assets on the Consolidated Balance Sheets)		126			125			134
Total cash and cash equivalents and restricted cash	$	310,257		$	267,938		$	221,725
Supplemental cash flow information:
Cash paid for taxes	$	60,883		$	12,351		$	7,698
Cash paid for interest	$	714		$	554		$	774
Non‑cash investing and financing transactions:
Right-of-use assets obtained in exchange for new operating lease liabilities, net of impairments and tenant improvement allowances	$	2,547		$	71,979		$	—
Acquisition of equipment under finance lease	$	5,479		$	—		$	1,518
Capital assets financed by accounts payable and accrued expenses	$	261		$	12		$	36
Stock-based compensation included in capitalized software development costs	$	1,103		$	480		$	—
Common stock issued in connection with acquisition	$	52,937		$	—		$	22,526
Liabilities for contingent consideration	$	1,193		$	—		$	—
Treasury stock reissued upon the conversion of Series A preferred stock for common stock	$	—		$	—		$	260,686
Offering costs included in accounts payable and accrued expense	$	—		$	—		$	5

Comparison of the Three and Twelve Months Ended December 31, 2023 and December 31, 2022

Revenue


	Three Months Ended December 31,				Change		Change		Year Ended December 31,				Change		Change
	2023		2022		$		%		2023		2022		$		%
	(In Thousands)								(In Thousands)
Revenue by customer type:
Activation	$	99,402	$	75,502	$	23,900	32	%	$	328,936	$	251,198	$	77,738	31	%
Measurement		60,387		46,324		14,063	30			198,024		157,908		40,116	25
Supply-side customer		12,442		11,810		632	5			45,583		43,312		2,271	5
Total revenue	$	172,231	$	133,636	$	38,595	29	%	$	572,543	$	452,418	$	120,125	27	%

Adjusted EBITDA

In addition to results determined in accordance with GAAP, management believes that certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin, are useful in evaluating our business. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenue. The following table presents a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable financial measure prepared in accordance with GAAP.


	Three Months Ended December 31,						Year Ended December 31,
	2023			2022			2023			2022
	(In Thousands)						(In Thousands)
Net income	$	33,105		$	18,068		$	71,466		$	43,268
Net income margin		19	%		14	%		12	%		10	%
Depreciation and amortization		11,520			8,882			40,885			34,328
Stock-based compensation		16,473			11,083			59,244			42,307
Interest expense		275			224			1,066			905
Income tax expense		8,636			11,979			24,411			16,100
M&A and restructuring (recoveries) costs (a)		(359	)		5			1,262			1,224
Offering, IPO readiness and secondary offering costs (b)		315			566			910			1,292
Other (recoveries) costs (c)		(164	)		(245	)		(964	)		3,414
Other income (d)		(4,373	)		(1,671	)		(11,216	)		(1,249	)
Adjusted EBITDA	$	65,428		$	48,891		$	187,064		$	141,589
Adjusted EBITDA margin		38	%		37	%		33	%		31	%

M&A and restructuring costs for the year ended December 31, 2023 consist of transaction costs related to the acquisition of Scibids Technology SAS (“Scibids”). M&A and restructuring costs for the year ended December 31, 2022 consist of transaction costs, integration and restructuring costs related to the acquisition of OpenSlate.
Offering, IPO readiness and secondary offering costs for the year ended December 31, 2023 consist of third-party costs incurred for underwritten secondary public offerings by certain stockholders of the Company.

Contacts

Investor Relations
Tejal Engman

DoubleVerify

[email protected]

Media Contact
Chris Harihar

Crenshaw Communications

646‑535‑9475

[email protected]

Read full story here

Business Wire: Author

Business Wire, a Berkshire Hathaway company, is the global leader in press release distribution and regulatory disclosure. Public relations, investor relations, public policy and marketing profession...
View all posts

Author: Business Wire

Cybersecurity News that Matters

Cybersecurity News that Matters

DoubleVerify Reports Fourth Quarter and Full Year 2023 Financial Results

by Business Wire

Subscription