[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)

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 [16] - 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 [16] - Buy side revenue increased by approximately 6% to $6,100,000, driven by a $1,200,000 increase in spending from customers in new verticals [17] - Gross profit decreased to $2,400,000, while gross margin increased to 29% from 22% year-over-year [17] - Operating expenses were reduced by 19% to $6,300,000 compared to $7,800,000 in Q1 2024 [18] - 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 [18] Business Line Data and Key Metrics Changes - The buy side segment generated $6,100,000 in revenue, reflecting a 6% increase year-over-year [5][17] - Sell side revenue remained relatively consistent at $2,000,000 compared to $2,700,000 in the previous quarter, despite the typical seasonal strength in Q4 [6] 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, impacting revenues in both 2024 and Q1 2025 [7][17] - The company is working to rebuild relationships with partners and clients, with expectations of improved performance in the second half of 2025 [8][13] Company Strategy and Development Direction - The focus for 2025 is on scaling the buy side solution and rebuilding the sell side business to drive consolidated revenue growth [5] - Initiatives include revenue optimization efforts, diversifying the revenue base, and cost-saving measures to enhance operational efficiencies [8][11] - The unification of buy side platforms into Orange one forty two aims to better service small to mid-sized clients, a significant growth opportunity [9] Management's Comments on Operating Environment and Future Outlook - Management maintains a revenue guidance of $90,000,000 to $110,000,000 for the full year 2025, supported by growth in both buy side and sell side segments [20] - The second half of 2025 is expected to deliver strong gains as new direct sell side partners come online [13][20] - The company is optimistic about securing necessary capital to support growth initiatives [12] Other Important Information - The company ended the quarter with cash and cash equivalents of $1,800,000, compared to $1,400,000 at the end of 2024 [19] - Total cash plus accounts receivable was $6,200,000, down from $6,400,000 at year-end 2024 [19] Q&A Session Summary Question: Insights on sell side customer spending recovery - Management is focusing on direct connections with DSP partners to drive additional revenue and improve margin profiles, anticipating increased demand in the second half of the year [25][26] Question: Cost-cutting initiatives and expected savings - Operating expenses were down 19%, with staff reductions contributing to ongoing savings, primarily from fixed costs rather than variable costs [30] 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]

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]

Core Viewpoint - Direct Digital Holdings, Inc. will report its financial results for Q1 2025 on May 6, 2025, after market close [1] Group 1: Financial Reporting - The financial results for the first quarter ended March 31, 2025, will be announced on May 6, 2025 [1] - A conference call and webcast will be held on the same day at 5:00 PM ET to discuss the results [2] Group 2: Company Overview - Direct Digital Holdings operates through its subsidiaries Colossus Media, LLC and Orange 142, LLC, providing advertising and marketing technology solutions [1][3] - The company offers data-driven digital media strategies that enhance reach and performance for brands, agencies, and publishers [3] - Colossus SSP provides access to premium media properties, while Orange 142 focuses on customized digital marketing solutions for mid-market and enterprise companies [3] Group 3: Business Strategy - The company emphasizes personal relationships and tailored digital marketing solutions, ensuring dedicated support for clients of all sizes [4] - Direct Digital Holdings generates billions of monthly impressions across various media channels through advanced targeting and comprehensive data insights [4]

Core Insights - The article discusses the release of a new guide by Orange 142 aimed at helping businesses maximize their return on investments in Connected TV (CTV) advertising, highlighting the shift from traditional TV to streaming platforms [1][4] - CTV advertising spending is projected to reach $33.35 billion in 2025, emphasizing the importance for marketers to effectively leverage this channel for competitive advantage [2] - The guide provides foundational knowledge and tactical recommendations for creating impactful and measurable CTV campaigns, addressing the knowledge gap for marketers [3][4] Company Overview - Orange 142 is a division of Direct Digital Holdings, specializing in digital marketing solutions for destination marketing organizations, and is committed to educating brands on innovative digital advertising channels [1][5] - Direct Digital Holdings combines sell-side and buy-side advertising solutions, offering data-driven strategies that enhance performance for brands and agencies [7][10] Market Trends - Nearly all US households subscribe to streaming services, with over half subscribing to four different platforms, creating unprecedented opportunities for brands to connect with consumers through data-driven advertising [3] - The guide addresses emerging technologies and trends in CTV advertising, as well as data and privacy considerations, which are crucial for effective campaign evaluation [8]

At Direct Digital Holdings, we prioritize personal relationships by humanizing technology, ensuring each client receives dedicated support and tailored digital marketing solutions regardless of company size. This empowers everyone to thrive by generating billions of monthly impressions across display, CTV, in-app, and emerging media channels through advanced targeting, comprehensive data insights, and cross-platform activation. DDH is "Digital advertising built for everyone." New resource provides practical ...

Financial Data and Key Metrics Changes - For the full year 2024, the company delivered revenue in line with significantly revised guidance, despite a challenging year [8] - Fourth quarter revenue was $9.1 million, a decrease of 31.9% from $41 million in the same period of 2023 [21] - Gross margin increased from 23% in the prior year to 32% in Q4 2024 due to a higher mix of buy-side revenue [16] - Operating expenses for Q4 2024 were $7.7 million, down from $18.1 million in the same period of 2023 [24] - Adjusted EBITDA for Q4 2024 was a loss of $3.4 million compared to a loss of $6.6 million in the same period of 2023 [25] Business Line Data and Key Metrics Changes - Sell-side revenue fell to $2.7 million in Q4 2024 from $33.4 million in Q4 2023, primarily due to a major customer's suspension following a defamatory article [21][22] - Buy-side revenue decreased to $6.4 million in Q4 2024 from $7.6 million in the same period of 2023, impacted by reduced spending from certain customers [23] Market Data and Key Metrics Changes - The company is seeing sequential improvement in the first quarter of 2025 compared to November and December 2024, indicating a recovery trend [20] - Political advertising represented 50% to 60% of spending in Q4, significantly higher than the historical range of 10% to 15% [34] Company Strategy and Development Direction - The company is focused on diversifying revenue sources and optimizing its business model, including the launch of Colossus Connections to enhance direct integration with demand-side platforms [12][13] - The strategy includes targeting small- and mid-size clients who are shifting advertising budgets to digital, emphasizing a high-touch client relationship [15] - The company is pursuing opportunities in the middle market, which is seen as a growth area due to its slower transition to digital [42][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to scale both buy-side and sell-side businesses, reiterating revenue guidance of $90 million to $110 million for fiscal 2025 [19][28] - The second half of 2025 is expected to deliver strong gains as new direct sell-side partners come online [19][28] - Management noted that the company is well-positioned to capture market share and strengthen its offerings in the advertising technology space [20] Other Important Information - The company ended the year with cash and cash equivalents of $1.4 million, down from $5.1 million at the end of 2023 [26] - The company is actively pursuing funding and equity financing pathways to restore NASDAQ compliance and support growth initiatives [26] Q&A Session Summary Question: Impact of post-election malaise on Q4 and client spending recovery - Management noted that political spending was significantly higher in Q4, but December was softer than anticipated, impacting overall performance [34][35] Question: Aggressiveness on direct connections and curation strategy - The company sees opportunities in the middle market and plans to focus on expanding relationships with holdco-partners while also exploring curation opportunities [42][47] Question: Cost savings and annualized basis expectations - Management indicated potential annualized cost savings of $1.5 million to $2 million for 2025, reflecting ongoing operational optimizations [71] Question: Anticipation of positive cash flow - Management expects to return to a more normal cadence of cash flow in the third and fourth quarters of 2025 [73]

Financial Data and Key Metrics Changes - For the full year 2024, the company delivered revenue in line with significantly revised guidance, despite a challenging year [8] - Fourth quarter revenue was $9.1 million, a decrease of 31.9% from $41 million in the same period of 2023 [21] - Gross margin increased from 23% in the prior year to 32% in Q4 2024 due to a higher mix of buy-side revenue [16] - Operating expenses for Q4 2024 were $7.7 million, down from $18.1 million in the same period of 2023 [24] - Adjusted EBITDA for Q4 2024 was a loss of $3.4 million compared to a loss of $6.6 million in the same period of 2023 [25] Business Line Data and Key Metrics Changes - Sell-side revenue fell to $2.7 million in Q4 2024 from $33.4 million in Q4 2023, primarily due to a major customer's suspension following a defamatory article [21][22] - Buy-side revenue decreased to $6.4 million in Q4 2024 from $7.6 million in Q4 2023, impacted by reduced spending from certain customers [23] Market Data and Key Metrics Changes - The company is seeing sequential improvement in the first quarter of 2025 compared to November and December 2024, indicating a recovery trend [20] - Political advertising represented 50% to 60% of spending in Q4, significantly higher than the historical range of 10% to 15% [34] Company Strategy and Development Direction - The company is focused on diversifying revenue sources and optimizing its business model, including the launch of Colossus Connections to enhance direct integrations with demand-side platforms [12][13] - The strategy includes targeting small- and mid-size clients who are shifting advertising budgets to digital, emphasizing a high-touch client relationship [15] - The company is pursuing opportunities in the middle market, which is seen as a growth area due to its slower transition to digital [42][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to scale both buy-side and sell-side businesses, reiterating revenue guidance for fiscal 2025 in the range of $90 million to $110 million [19][28] - The second half of 2025 is expected to deliver strong gains as new direct sell-side partners come online [19][28] Other Important Information - The company ended the year with cash and cash equivalents of $1.4 million, down from $5.1 million at the end of 2023 [26] - The company is actively pursuing funding and equity financing pathways to restore NASDAQ compliance and support growth initiatives [26][27] Q&A Session Summary Question: Impact of post-election malaise on Q4 and client spending recovery - Management noted that political spending was significantly higher in Q4, but December was softer than expected, impacting overall performance [35][36] Question: Initiatives on direct connections and middle market opportunities - Management confirmed a focus on developing new pathways for buyers and sellers, particularly in the middle market, which is seen as a ripe opportunity for growth [42][44] Question: Cost savings and annualized impact - Management indicated that there could be an additional $1.5 million to $2 million in annualized savings for 2025 due to cost-cutting measures [71] Question: Anticipation of positive cash flow - Management expects to return to a more normal cadence of cash flow in the third and fourth quarters of 2025 as revenue initiatives take effect [73]