Direct Digital Holdings(DRCT) - 2025 Q1 - Quarterly Results

Overview and Business Performance Management Commentary 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] - Operating expenses were reduced by nearly $1.5 million, a 19% decrease compared to Q1 2024, due to strategic cost-saving initiatives[3] - 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] - The company maintains its full-year 2025 revenue guidance of $90 million to $110 million[5] 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 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 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][9] - This guidance anticipates growth from both enhanced buy-side activity and the ongoing recovery of the sell-side business[9] Financial Statements Condensed Consolidated Balance Sheets 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 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 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 Reconciliation of Net Loss to Adjusted EBITDA 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][26] 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) |