DoubleVerify(DV) - 2024 Q1 - Quarterly Report

Part I: Financial Information (Unaudited) Item 1. Condensed Consolidated Financial Statements Presents DoubleVerify's unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and explanatory notes Condensed Consolidated Balance Sheets Total assets increased to $1.26 billion, liabilities decreased, and stockholders' equity grew to $1.10 billion as of March 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $302,017 | $310,131 | | Total current assets | $550,323 | $533,002 | | Goodwill | $432,865 | $436,008 | | Total assets | $1,260,193 | $1,243,031 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $75,368 | $83,855 | | Total liabilities | $163,102 | $169,092 | | Total stockholders' equity | $1,097,091 | $1,073,939 | | Total liabilities and stockholders' equity | $1,260,193 | $1,243,031 | Condensed Consolidated Statements of Operations and Comprehensive Income Q1 2024 revenue rose to $140.8 million, but net income declined to $7.2 million due to increased operating expenses Q1 2024 vs Q1 2023 Statement of Operations (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $140,782 | $122,594 | | Income from operations | $6,895 | $15,204 | | Net income | $7,156 | $12,175 | | Diluted EPS | $0.04 | $0.07 | | Total comprehensive income | $2,531 | $13,368 | Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $31.8 million, but net cash decreased by $8.1 million due to higher investing activities in Q1 2024 Q1 2024 vs Q1 2023 Cash Flows (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $31,774 | $21,426 | | Net cash used in investing activities | ($38,604) | ($4,099) | | Net cash (used in) provided by financing activities | ($912) | $466 | | Net (decrease) increase in cash | ($8,119) | $17,924 | Notes to Condensed Consolidated Financial Statements Detailed notes cover business description, revenue recognition, goodwill, debt, income taxes, and stock-based compensation - The company operates as a media effectiveness platform, utilizing AI for digital advertising analytics and reporting as a single segment[20][23] Disaggregated Revenue by Customer Type (in thousands) | Customer Type | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Activation | $79,322 | $69,892 | | Measurement | $49,275 | $41,385 | | Supply-side customer | $12,185 | $11,317 | | Total revenue | $140,782 | $122,594 | - As of March 31, 2024, Goodwill totaled $432.9 million and net intangible assets were $132.8 million[35] - The company had no outstanding debt under its $150.0 million New Revolving Credit Facility as of March 31, 2024[51][55] - Total stock-based compensation expense significantly increased to $20.2 million in Q1 2024 from $11.8 million in Q1 2023[72] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 financial results, including 15% revenue growth, decreased net income due to higher expenses, liquidity, and Adjusted EBITDA of $38.1 million Results of Operations Q1 2024 revenue grew 15% to $140.8 million, but income from operations and net income declined significantly due to increased operating expenses Q1 2024 vs Q1 2023 Results of Operations (in thousands) | Line Item | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $140,782 | $122,594 | $18,188 | 15% | | Income from operations | $6,895 | $15,204 | ($8,309) | (55)% | | Net income | $7,156 | $12,175 | ($5,019) | (41)% | - Total Advertiser revenue increased 16%, driven by an 18% rise in Media Transactions Measured, despite a 2% decrease in Measured Transaction Fees[102] - Operating expenses rose significantly, with Sales, Marketing & Customer Support up 47% to $37.9 million and Product Development up 27% to $36.4 million, mainly due to higher personnel costs[106][107] Adjusted EBITDA Adjusted EBITDA, a non-GAAP measure, increased to $38.1 million in Q1 2024, with a margin of 27% Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $7,156 | $12,175 | | Depreciation and amortization | $10,928 | $8,983 | | Stock-based compensation | $20,241 | $11,813 | | Interest expense | $232 | $256 | | Income tax expense | $1,779 | $5,507 | | Other adjustments | ($2,203) | ($2,814) | | Adjusted EBITDA | $38,133 | $35,920 | | Adjusted EBITDA margin | 27% | 29% | Liquidity and Capital Resources The company maintains strong liquidity with $302.0 million in cash and an undrawn $150.0 million credit facility, primarily funding operations through cash generation - Primary liquidity comes from cash from operations, which increased to $31.8 million in Q1 2024 from $21.4 million in Q1 2023[122][124] - As of March 31, 2024, the company held $302.0 million in cash and cash equivalents and an undrawn $150.0 million revolving credit facility[117][119] - Cash used in investing activities totaled $38.6 million, mainly for $32.2 million in short-term investments and $6.4 million in capital expenditures[126] Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes to the company's market risk exposures have occurred since the 2023 Annual Report on Form 10-K - No material changes to market risk exposures have been reported since the 2023 Annual Report on Form 10-K[131] Item 4. Controls and Procedures Management confirmed the effectiveness of disclosure controls and procedures, with no material changes to internal control over financial reporting - The CEO and CFO affirmed the effectiveness of the company's disclosure controls and procedures as of quarter-end[131] - No material changes to internal control over financial reporting occurred during the quarter[132] Part II: Other Information Item 1. Legal Proceedings The company is not involved in any legal proceedings expected to materially adversely affect its business or financial condition - The company is not currently involved in any material legal proceedings[135] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K have been identified - No material changes to risk factors from the 2023 Annual Report on Form 10-K have been identified[136] Other Items (Items 2, 3, 4, 5, 6) Items 2-5 are not applicable, while Item 6 lists exhibits including officer certifications and XBRL data files - Items 2, 3, 4, and 5 are not applicable for this reporting period[137][138][139][140] - Item 6 details exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and XBRL data[142]