Industry Overview - The gaming advertising market is projected to reach $11 billion by the end of 2025, highlighting a significant opportunity for brands to engage with audiences in immersive environments [2][3] - Over 3.2 billion people globally engage with gaming platforms across mobile, PC, and console, making it one of the most engaged digital channels [2] Company Insights - Orange 142, a division of Direct Digital Holdings, has released a best practices guide aimed at helping marketers effectively utilize in-game advertising [1][4] - The guide provides a comprehensive overview of in-game advertising, including emerging trends, platform dynamics, and measurement techniques [3][4] - Orange 142 emphasizes the importance of integrating advertising into gaming experiences in a way that feels native and enhances user engagement [3][4] Advertising Strategies - The guide outlines various in-game advertising formats such as rewarded video, native placements, and Twitch sponsorships, helping marketers understand how to match ad types with campaign goals and gamer behaviors [2][7] - Key strategies include leveraging powerful targeting capabilities, ensuring brand safety, and measuring engagement and attribution within gaming environments [7][8] - The incorporation of emerging technologies like VR, programmatic delivery, and generative AI is encouraged to enhance advertising effectiveness [7]

Core Viewpoint - MUSE Microscopy, Inc. has launched MUSE Veterinary Digital Pathology, LLC, a subsidiary aimed at providing same-day results for tissue biopsies in veterinary practices, enhancing diagnostic speed and precision in animal healthcare [1][2][3]. Company Overview - MUSE Microscopy specializes in digital pathology innovations, particularly through its SmartPath MUSE Technology™, which offers a slide-free direct-to-digital imaging platform for rapid diagnostic assistance [5]. Industry Impact - The formation of MUSE Veterinary Digital Pathology marks a strategic entry into the veterinary health market, focusing on point-of-care and real-time diagnostic imaging for specialty, emergency, and family veterinary practices across the U.S. [2][3]. - The initiative is expected to significantly improve clinical outcomes by reducing the wait time for biopsy results from 3-7 days to same-day diagnoses, thereby alleviating owner anxiety and enhancing medical management [4]. Leadership and Expertise - Matthew Nunez, CEO of MUSE Microscopy, will lead the new subsidiary, supported by Darin Nelson as President, who has extensive experience in scaling veterinary diagnostic companies [2][3]. - Dr. Jeffrey Edwards has been appointed as Chief Medical Officer, overseeing the anatomic pathology team and the adoption of innovative technology in veterinary practices [2]. Technological Advancements - The SmartPath platform enables rapid, non-destructive tissue imaging, allowing veterinarians to make real-time treatment decisions and perform intraoperative assessments without relying on conventional slide-based workflows [2][3][4]. - The technology aims to empower veterinarians with powerful diagnostic tools directly at the point-of-care, facilitating faster decision-making and improved patient care [4]. Future Developments - MUSE Veterinary Digital Pathology will operate independently while leveraging MUSE Microscopy's existing infrastructure and anticipates further announcements regarding pilot partnerships and distribution opportunities in the coming months [4].

Core Insights - The article emphasizes the importance of nano- and micro-influencer marketing as a high-ROI channel for brands to build trust and engage niche audiences in a crowded digital landscape [1][2][3] Industry Trends - Digital ad saturation is prompting marketers to shift towards micro-influencers, who have smaller but highly engaged followings, to enhance trust, expand reach, and increase conversions [2] - Micro-influencers can deliver up to 20x ROI for brands, significantly outperforming traditional social campaigns while being more cost-effective [3] Campaign Strategies - The guide outlines various campaign formats including product launches, affiliate promotions, and long-form brand storytelling, highlighting the role of influencers across platforms like Instagram, TikTok, YouTube, and Twitch in reshaping the conversion funnel [4] - It provides actionable best practices for marketers, such as vetting influencers for alignment and engagement, co-creating content, and prioritizing transparency and performance tracking [9] Challenges and Compliance - The guide addresses common challenges in influencer marketing, including brand safety, ROI calculation, and compliance with evolving regulations and platform algorithms [5][6] - Emerging trends such as AI-powered influencer discovery and the shift towards long-term influencer partnerships are also discussed, providing a forward-looking perspective on the industry [6] Company Overview - Orange 142, a division of Direct Digital Holdings, specializes in digital marketing for mid-market brands and aims to help marketers grow their reach and revenue through data-driven strategies [1][8] - Direct Digital Holdings combines sell-side and buy-side advertising solutions, offering customized digital marketing strategies across various platforms, including influencer marketing [11][12]

Core Insights - The article discusses the release of a guide by Orange 142, focusing on foot traffic attribution as a means to connect digital ad exposure to real-world store visits, highlighting its importance in the current marketing landscape [1][3] Industry Trends - There is a notable rebound in foot traffic across various sectors, particularly grocery and retail, with a reported 6% increase in visits to Albertsons, indicating a renewed significance of physical retail spaces post-pandemic [2] Attribution Challenges - The guide addresses the complexities of foot traffic attribution, including fragmented device data, evolving privacy regulations such as CCPA and GDPR, and the technical limitations of geofencing accuracy in busy retail environments [3] Data Compliance Practices - Orange 142 emphasizes best practices for data collection, advocating for user consent, data minimization, anonymization, and cross-device transparency to ensure compliance and maintain customer trust [4] Technological Advancements - Emerging technologies like AI, wearables, and smart devices are enhancing attribution accuracy, providing deeper insights into consumer behavior beyond traditional smartphone tracking [5] Measurement Tools - In-store kiosks and Bluetooth beacons are highlighted as tools that capture post-visit behaviors, allowing marketers to turn store visits into measurable conversion events [6] Best Practices for Implementation - The guide concludes with actionable tips for small and medium-sized businesses (SMBs) and regional advertisers to effectively implement foot traffic attribution, including localized campaigns and interactive ad formats [7][8]

Core Insights - The article discusses the release of the "Best Practices Guide to Generative Engine Optimization (GEO)" by Orange 142, aimed at helping marketers adapt to the evolving landscape of AI-powered search engines [1][3] - It highlights the urgent need for marketers to rethink their strategies as 60% of searches may soon result in zero clicks, indicating a significant shift in consumer behavior [2][4] Company Overview - Orange 142 is a division of Direct Digital Holdings, specializing in digital marketing solutions for mid-market brands, and is recognized for its innovative approaches in the digital marketing space [1][5] - The company emphasizes its commitment to helping marketers grow their reach and revenue through data-driven media strategies and custom advertising campaigns [6][11] Industry Trends - The rise of generative AI search platforms is transforming how consumers search and discover information, necessitating a new discipline called Generative Engine Optimization [3][4] - Traditional traffic and attribution models are becoming less effective as AI transforms the search experience into a seamless, zero-click journey [4][9] Key Concepts in GEO - The guide outlines how GEO differs from traditional SEO, focusing on how AI search engines interpret, synthesize, and cite content [9] - It provides tactical best practices for increasing visibility in AI-generated responses, including strategies for content structuring and authority-building [9]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's Q1 2025 financials show a significant revenue decline and widened net loss, driven by a major drop in sell-side advertising Condensed Consolidated Balance Sheet (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $6,881 | $8,535 | | **Total assets** | $23,817 | $26,006 | | **Total current liabilities** | $13,478 | $13,350 | | **Total liabilities** | $47,132 | $45,736 | | **Total stockholders' deficit** | $(23,315) | $(19,730) | Condensed Consolidated Statement of Operations (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenues** | $8,157 | $22,275 | | Sell-side advertising | $2,028 | $16,500 | | Buy-side advertising | $6,129 | $5,775 | | **Gross profit** | $2,393 | $4,998 | | **Loss from operations** | $(3,924) | $(2,807) | | **Net loss** | $(5,940) | $(3,819) | | **Net loss per share (Basic & Diluted)** | $(0.35) | $(0.22) | Condensed Consolidated Statement of Cash Flows (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(2,708) | $(5,704) | | **Net cash used in investing activities** | $(15) | $0 | | **Net cash provided by financing activities** | $3,067 | $3,922 | | **Net increase (decrease) in cash** | $344 | $(1,782) | | **Cash and cash equivalents, end of period** | $1,789 | $3,334 | [Note 1 — Organization and Description of Business](index=7&type=section&id=Note%201%20%E2%80%94%20Organization%20and%20Description%20of%20Business) The company operates an end-to-end ad-tech platform with both sell-side and buy-side segments under an Up-C corporate structure - The company provides a full-service advertising platform covering both sell-side and buy-side of the digital advertising ecosystem[19](index=19&type=chunk) - The sell-side business (Colossus Media) offers a programmatic platform (SSP) for publishers, while the buy-side business (Orange 142) provides managed advertising solutions[19](index=19&type=chunk)[20](index=20&type=chunk) [Note 2 — Basis of Presentation and Consolidation and Summary of Significant Accounting Policies](index=8&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Consolidation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Financials are prepared under GAAP, with revenue recognized on a gross basis and subject to seasonality, alongside a going concern disclosure - The company reports revenue on a **gross basis** for both sell-side and buy-side segments, acting as the principal in its agreements[27](index=27&type=chunk)[28](index=28&type=chunk) - Revenue is subject to seasonality, with **sell-side revenue highest in Q4** and **buy-side activity peaking in Q2 and Q3**[29](index=29&type=chunk)[145](index=145&type=chunk)[151](index=151&type=chunk) - For Q1 2025, **three customers accounted for 39% of revenues**, and two customers accounted for 29% of accounts receivable[44](index=44&type=chunk) [Note 3 — Long-Term Debt](index=14&type=section&id=Note%203%20%E2%80%94%20Long-Term%20Debt) The company holds $41.2 million in long-term debt and amended its agreements in late 2024 to defer payments and secure additional funds Long-Term Debt Composition (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total long-term debt | $41,212 | $41,212 | | Less: deferred financing cost & debt discount | $(4,212) | $(5,909) | | **Total long-term debt, net** | **$37,000** | **$35,303** | | Less: current portion | $(4,122) | $(3,700) | | **Long-term debt, net of current portion** | **$32,878** | **$31,603** | - In December 2024, the company secured a **new $6.0 million term loan** from Lafayette Square, using the funds to prepay other debt and fund an interest reserve[71](index=71&type=chunk) - The company was in **compliance with all financial covenants** under its amended debt facilities as of March 31, 2025[71](index=71&type=chunk)[80](index=80&type=chunk) [Note 4 — Stockholders' Deficit and Stock-Based Compensation](index=18&type=section&id=Note%204%20%E2%80%94%20Stockholders'%20Deficit%20and%20Stock-Based%20Compensation) The company is raising capital via a $20 million equity facility and recorded $0.3 million in stock-based compensation for the quarter - The company is utilizing a **$20 million Equity Reserve Facility** with New Circle to raise capital[90](index=90&type=chunk) - In Q1 2025, the company sold **1.54 million shares for $2.0 million** through the equity facility, with more sold after the quarter-end[91](index=91&type=chunk) - Stock-based compensation expense was **$0.3 million in Q1 2025**, down from $0.5 million in Q1 2024[96](index=96&type=chunk) [Note 9 — Commitments and Contingencies](index=24&type=section&id=Note%209%20%E2%80%94%20Commitments%20and%20Contingencies) The company is engaged in two major legal cases: a lawsuit it filed over a defamatory article and a defense against a class action lawsuit - A defamatory article in May 2024 caused a major sell-side customer to pause business, leading to a **significant disruption in business volumes**[111](index=111&type=chunk) - The company is the plaintiff in a lawsuit against the author of the defamatory article and is **vigorously pursuing its claims**[111](index=111&type=chunk) - The company is defending a consolidated class action lawsuit from stockholders alleging securities law violations, which it **believes lack merit**[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the severe revenue decline, a 'going concern' warning, and plans to address significant financial challenges - The company received a **delisting notice from Nasdaq** on April 17, 2025, for not meeting the minimum stockholders' equity requirement[131](index=131&type=chunk)[132](index=132&type=chunk) - Sell-side advertising revenue **decreased 88% YoY to $2.0 million** due to business disruption, while buy-side revenue increased 6% to $6.1 million[161](index=161&type=chunk)[162](index=162&type=chunk) - Operating expenses **decreased by 19% to $6.3 million**, primarily due to lower compensation costs from a staff reduction plan[168](index=168&type=chunk)[169](index=169&type=chunk) - The company's financial statements include a **'going concern' warning**, citing significant doubt about its ability to continue operations[60](index=60&type=chunk)[173](index=173&type=chunk) - Management's plan to mitigate going concern risks includes **cost reductions, raising capital**, and working with lenders on debt covenants[61](index=61&type=chunk)[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," the company is not required to provide information for this item - The company is not required to provide quantitative and qualitative disclosures about market risk because it qualifies as a **"smaller reporting company"**[194](index=194&type=chunk) [Controls and Procedures](index=39&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective due to a previously identified material weakness in accounting evaluation - The CEO and CFO concluded that the company's **disclosure controls and procedures were not effective** as of March 31, 2025[197](index=197&type=chunk) - A **material weakness in internal controls** over the technical evaluation of accounting matters, first identified in 2023, has not been fully remediated[198](index=198&type=chunk)[199](index=199&type=chunk) - Management has implemented remediation steps, but these measures have **not yet demonstrated operating effectiveness** over a sufficient period[199](index=199&type=chunk) [Part II. Other Information](index=40&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=40&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is pursuing a lawsuit over a defamatory article and defending against a separate consolidated securities class action lawsuit - The company filed a lawsuit against the author of a defamatory article published in May 2024; a **motion to dismiss by the defendant was denied** in March 2025[203](index=203&type=chunk) - The company is defending a consolidated securities class action lawsuit filed in May 2024, which it **believes the claims lack merit**[204](index=204&type=chunk) [Risk Factors](index=41&type=section&id=ITEM%201A.%20Risk%20Factors) The primary risk factor is the potential delisting of the company's stock from the Nasdaq for failing to meet equity requirements - A significant risk is the **potential delisting from the Nasdaq Capital Market** due to non-compliance with the minimum stockholders' equity requirement of $2.5 million[206](index=206&type=chunk) - The company received a **delisting determination letter from Nasdaq** on April 17, 2025, and has appealed the decision[207](index=207&type=chunk)[208](index=208&type=chunk) - Delisting could **adversely affect the ability to raise financing**, reduce stock liquidity, and result in a loss of institutional investor interest[210](index=210&type=chunk)[211](index=211&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities occurred during the period - The company reported **no unregistered sales of equity securities** or use of proceeds for the period[212](index=212&type=chunk)[213](index=213&type=chunk) [Other Information](index=42&type=section&id=ITEM%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - No director or officer adopted or terminated a **Rule 10b5-1 trading plan** during the first quarter of 2025[217](index=217&type=chunk)

Direct Digital Holdings (DRCT) Q1 2025 Earnings Call May 06, 2025 05:00 PM ET Company Participants Jennifer Belodeau - SVPMark Walker - CEO, Co-Founder & ChairmanDiana Diaz - Chief Financial OfficerMichael Kupinski - Director of Research, Managing Director, Head of Technology ResearchDaniel Kurnos - Managing Director, Internet & Media Equity Research Operator Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Direct ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2025 was $8,200,000, a decrease of $14,100,000 compared to $22,300,000 in Q1 2024 [17] - Sell side revenue was $2,000,000 in Q1 2025, down from $16,500,000 in Q1 2024, primarily due to a decrease in impression inventory [17][18] - Buy side revenue increased approximately 6% to $6,100,000 compared to Q1 2024, driven by a $1,200,000 increase in spending from new verticals [18] - Gross profit decreased to $2,400,000 in Q1 2025 from $5,000,000 in the prior year, but gross margin improved to 29% from 22% [18] - Operating expenses were $6,300,000, a decrease of 19% or $1,500,000 compared to $7,800,000 in Q1 2024 [19] - Net loss for Q1 2025 was $5,900,000, or a loss per share of $0.35, compared to a net loss of $3,800,000 or a loss of $0.22 per share in Q1 2024 [19] Business Line Data and Key Metrics Changes - The buy side segment generated $6,100,000 in revenue, reflecting a 6% increase year-over-year [6][18] - Sell side revenue remained consistent at $2,000,000 compared to $2,700,000 in the previous quarter, indicating a stable performance despite previous disruptions [7] Market Data and Key Metrics Changes - The company continues to face challenges from a market discredited blog post that disrupted its supply side platform, Colossus SSP, affecting relationships with partners and advertisers [8][18] - The company is working to restore volumes to pre-disruption levels, with expectations for improvement in the second half of 2025 [9][14] Company Strategy and Development Direction - The company is focused on scaling its buy side solution and rebuilding its sell side business to drive consolidated revenue growth [6] - Initiatives include revenue optimization efforts, cost-saving measures, and the unification of buy side platforms to better serve small to mid-sized clients [10][12] - The company maintains a revenue guidance of $90,000,000 to $110,000,000 for the full year 2025, anticipating growth from both buy side and sell side segments [14][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges significant challenges in 2024 but believes the company is well-positioned with a revitalized model and strong demand for its services [14] - The second half of 2025 is expected to deliver strong gains as new direct sell side partners come online [14][21] Other Important Information - The company reduced operating expenses by nearly $1,500,000 or approximately 19% compared to the first quarter of 2024 [10] - Cash and cash equivalents at the end of the quarter were $1,800,000, up from $1,400,000 at the end of 2024 [20] Q&A Session Summary Question: Insights on sell side customer spending recovery - Management is focusing on direct connections with DSP partners to drive revenue growth and expects reclamation of lost business in the second half of the year [26][27] Question: Cost-cutting initiatives and expected savings - Operating expenses were down 19%, with staff reductions contributing to ongoing savings [31] Question: Integration ramp-up with DSPs and market outlook - Integration timelines vary by partner, with expected impacts from these integrations anticipated in Q3 and Q4 of 2025 [39]

[Overview and Business Performance](index=1&type=section&id=Overview%20and%20Business%20Performance) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management focused on scaling the buy-side and rebuilding the sell-side while reducing operating expenses by 19% - The company's primary focus for 2025 is to scale its buy-side solution (Orange 142) while rebuilding its sell-side business (Colossus SSP)[2](index=2&type=chunk) - Operating expenses were reduced by **nearly $1.5 million**, a **19% decrease** compared to Q1 2024, due to strategic cost-saving initiatives[3](index=3&type=chunk) - The 'Colossus Connections' initiative is progressing with the addition of new partners, whose revenue impact is anticipated in the second half of 2025 after integration is complete[4](index=4&type=chunk) - The company maintains its full-year 2025 revenue guidance of **$90 million to $110 million**[5](index=5&type=chunk) **Q1 2025 Revenue Performance** | Metric | Q1 2025 | YoY Change | | :--- | :--- | :--- | | Consolidated Revenue | $8.2 million | -63% | | Buy-Side Revenue | $6.1 million | +6% | | Sell-Side Revenue | $2.0 million | -88% | [First Quarter 2025 Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Revenue fell 63% to $8.2 million and net loss widened to $5.9 million despite a 19% reduction in operating expenses **Q1 2025 Operational Metrics** | Metric | Q1 2025 | YoY Change | | :--- | :--- | :--- | | Average Monthly Impressions | ~188 billion | N/A | | Sell-side Advertisers | N/A | +13% | | Sell-side Media Properties (avg/month) | 24,000 | -8% | | Buy-side Customers | >220 | N/A | **Q1 2025 Financial Highlights vs. Q1 2024** | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $8.2M | $22.3M | -63% | | Gross Profit | $2.4M | $5.0M | -52% | | Operating Expenses | $6.3M | $7.8M | -19% | | Operating Loss | ($3.9M) | ($2.8M) | +39% | | Net Loss | ($5.9M) | ($3.8M) | +55% | | Adjusted EBITDA Loss | ($3.0M) | ($1.7M) | +82% | | Cash and Cash Equivalents | $1.8M | $3.3M | -45% | [Financial Outlook](index=2&type=section&id=Financial%20Outlook) The company reaffirms its full-year 2025 revenue guidance of $90 million to $110 million, driven by business recovery - The company maintains its full-year 2025 revenue guidance of **$90 million to $110 million**[5](index=5&type=chunk)[9](index=9&type=chunk) - This guidance anticipates growth from both enhanced buy-side activity and the ongoing recovery of the sell-side business[9](index=9&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $23.8 million while the total stockholders' deficit widened to $23.3 million **Balance Sheet Summary (in thousands)** | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,789 | $1,445 | | Total current assets | $6,881 | $8,535 | | Total assets | $23,817 | $26,006 | | Total current liabilities | $13,478 | $13,350 | | Total liabilities | $47,132 | $45,736 | | Total stockholders' deficit | ($23,315) | ($19,730) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 revenue dropped to $8.2 million, widening the operating loss to $3.9 million and net loss to $5.9 million **Statement of Operations Summary (in thousands, except per-share data)** | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Sell-side advertising revenue | $2,028 | $16,500 | | Buy-side advertising revenue | $6,129 | $5,775 | | **Total revenues** | **$8,157** | **$22,275** | | Gross profit | $2,393 | $4,998 | | Total operating expenses | $6,317 | $7,805 | | Loss from operations | ($3,924) | ($2,807) | | **Net loss** | **($5,940)** | **($3,819)** | | Net loss per share, diluted | ($0.35) | ($0.22) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations improved significantly, and financing activities resulted in a net cash increase of $0.3 million **Cash Flow Summary (in thousands)** | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,708) | ($5,704) | | Net cash used in investing activities | ($15) | $0 | | Net cash provided by financing activities | $3,067 | $3,922 | | **Net increase (decrease) in cash** | **$344** | **($1,782)** | | Cash and cash equivalents, end of period | $1,789 | $3,334 | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of Net Loss to Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) The Adjusted EBITDA loss widened to $3.0 million in Q1 2025 from a $1.7 million loss in the prior-year period - Management uses Adjusted EBITDA for planning, performance evaluation, and comparison with peer companies, as it removes the effects of financing, capital structure, and certain non-cash or one-time expenses[25](index=25&type=chunk)[26](index=26&type=chunk) **Reconciliation of Net Loss to Adjusted EBITDA (in thousands)** | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net loss** | **($5,940)** | **($3,819)** | | Interest expense | $1,846 | $1,297 | | Amortization of intangible assets | $488 | $488 | | Stock-based compensation | $316 | $504 | | Depreciation and amortization | $68 | $71 | | Expenses for Equity Reserve Facility | $198 | $0 | | Income tax benefit | $0 | ($200) | | **Adjusted EBITDA** | **($3,024)** | **($1,659)** |

Core Insights - Direct Digital Holdings reported a consolidated revenue of $8.2 million for Q1 2025, primarily driven by buy-side revenue of $6.1 million, which increased by 6% year-over-year [2][9] - The company reduced operating expenses by approximately $1.5 million, or 19%, compared to Q1 2024, as part of strategic cost-saving initiatives [3][9] - The company maintains its full-year revenue guidance of $90 million to $110 million for 2025, supported by growth in both buy-side and sell-side segments [5][10] Financial Performance - Total revenue decreased by 63% from $22.3 million in Q1 2024 to $8.2 million in Q1 2025 [9][22] - Sell-side advertising revenue fell by 88% from $16.5 million in Q1 2024 to $2.0 million in Q1 2025, primarily due to a decrease in impression inventory [9][22] - Buy-side advertising revenue increased from $5.8 million in Q1 2024 to $6.1 million in Q1 2025 [9][22] Operational Highlights - The company processed approximately 188 billion average monthly impressions through its sell-side advertising segment, with a 13% increase in sell-side advertisers compared to Q1 2024 [9] - The unification of buy-side divisions into Orange 142 is expected to enhance service to small to mid-sized partners, representing a significant growth opportunity [4] - The company served over 220 customers in the buy-side advertising segment during Q1 2025, with $1.2 million in revenue from new verticals [9] Strategic Initiatives - Direct Digital Holdings is focused on scaling its buy-side solution while rebuilding its sell-side business, with expectations of increased activity from agency, brand, and publisher partners in the second half of 2025 [2][5] - The company is exploring strategic opportunities to support key growth initiatives and drive long-term value for shareholders [6][9] - Cost-saving measures and revenue optimization efforts are being implemented to enhance operational efficiencies [3][11]