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]

Financial Data and Key Metrics Changes - The company reported a core FFO per share of $0.46 for Q1 2025, reflecting a year-over-year growth of 6.6% [7][15] - Net income attributable to common shareholders was $110 million, or $0.30 per diluted share [15] - Same home core revenue growth was 4.3% for the quarter, with core operating expense growth at 4.2%, leading to same home core NOI growth of 4.4% [10][11] Business Line Data and Key Metrics Changes - Same home average occupied days improved to 95.9%, with new lease spreads accelerating to 3.9% in April [10][12] - Renewal and blended rental rate spreads were 4.4% and 3.6% respectively [10] - The company delivered 545 homes during the quarter, with 424 homes delivered to the wholly owned portfolio at an investment cost of approximately $173 million [15][16] Market Data and Key Metrics Changes - The Midwest markets showed strong performance with new lease spreads reaching almost 9% in April, up from 5.8% in Q1 [22] - The company noted a persistent supply-demand imbalance in the U.S. housing market, with millions of quality homes still needed [8][9] - The company was recognized as the 37th largest homebuilder in the U.S., up from 39th last year [9] Company Strategy and Development Direction - The company aims to align lease expirations with peak leasing season demand through a lease expiration management initiative [11][32] - The focus remains on high-quality, well-located homes, with a commitment to maintaining a strong resident experience [9][10] - The company plans to continue its disposition program while remaining patient for attractive acquisition opportunities [13][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals of the housing sector despite recent market uncertainties [7][8] - The company maintains its 2025 guidance unchanged, citing healthy demand and strong leasing activity [18] - Management highlighted the importance of the housing necessity and the ongoing need for high-quality rental options [18] Other Important Information - The company’s net debt to adjusted EBITDA ratio was 5.3 times at the end of the quarter, with approximately $70 million in cash available [16] - S&P Global revised the company's credit rating to a positive outlook, reflecting improved balance sheet management [17] Q&A Session Summary Question: Strength in Midwest markets and future growth - Management noted strong performance in the Midwest, with new lease spreads accelerating significantly, driven by quality of life and affordability [22][23] Question: Competition in North Florida and Texas - Management acknowledged increased competition but believes it may be temporary, with signs of improved occupancy in those markets [28] Question: Adjustments to leasing strategy - Management confirmed proactive adjustments to leasing strategies, including revenue optimization initiatives [31][32] Question: Impact of tariffs on development costs - Management estimated a 2% to 3% impact from tariffs on development costs, with labor being a significant portion of overall costs [35][39] Question: Differences in performance between developed and scattered site homes - Management indicated consistent performance across both types, with expectations for improved retention as communities stabilize [102][103]

Financial Data and Key Metrics Changes - The company reported a core FFO per share growth of more than 2% for the quarter, with a 200 basis point improvement sequentially compared to the previous quarter [6][15]. - Same store occupancy gap improved from down 80 basis points at the end of December to down 30 basis points by the end of March [6]. - Revenue growth in the same store pool turned positive after two years of deceleration, while revenue growth in the non-same store pool accelerated to nearly 11% [6][14]. Business Line Data and Key Metrics Changes - Move-in volumes increased over 2%, indicating stronger customer conversion and engagement [5]. - Same store revenues turned positive after three consecutive quarters of declines, driven by higher rental rates [14]. - Same store expenses were well controlled, with only 30 basis points of growth, attributed to operational initiatives and moderated advertising spend [14]. Market Data and Key Metrics Changes - The company noted favorable industry dynamics, stating that self-storage is resilient to changing economic conditions due to its needs-based nature [9][10]. - Move-in rents have declined significantly, aligning with levels not seen since February 2013, which positions the company to benefit from rising rents and occupancy in an improving demand environment [11]. Company Strategy and Development Direction - The company is focused on digital transformation, with 85% of customer interactions now digital, and is utilizing AI to optimize staffing [7]. - The acquisition strategy is active, with $184 million in properties acquired or under contract, significantly ahead of the previous year's $35 million [8][12]. - The company is exploring international growth opportunities, exemplified by the proposal to acquire Abacus Storage King in Australia and New Zealand [8][12]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the self-storage industry, noting strong consumer trends and good payment patterns despite macroeconomic uncertainties [21][70]. - The company anticipates a 100 basis point impact on same store revenue growth due to fire-related pricing restrictions in Los Angeles, which will be back half weighted [15][48]. - Management is closely monitoring customer behavior and market conditions, indicating a cautious but optimistic outlook for the remainder of the year [70][71]. Other Important Information - The company expects retained cash flow to increase by 50% to approximately $600 million, which will be reinvested into development and acquisitions [13][108]. - The company is committed to maintaining operational efficiency through payroll optimizations and investments in solar power generation [88]. Q&A Session Summary Question: Level of conservatism in guidance - Management indicated that the guidance reflects a cautious outlook, with move-in rates down approximately 5% year-to-date, but positive trends in occupancy and move-in volumes were noted [20][22]. Question: Private capital raising environment for storage - Management acknowledged increased institutional interest in the sector, despite light transaction volumes in 2024 and early 2025 [25][26]. Question: Revenue indicators and advertising trends - Consistent positive trends in search and advertising indicators were reported, with year-over-year improvements in web visits and sales calls [31]. Question: Move-in rate strategy - Management explained that fluctuations in move-in rates are expected by market and month, with a focus on optimizing revenue [39][40]. Question: Development landscape and cost increases - The company noted a continued deceleration in national development completions, which is seen as healthy for the industry [42]. Question: Rent restrictions in LA - Management confirmed that the fire-related state of emergencies will last until early 2026, impacting revenue growth [47][48]. Question: Peak leasing season expectations - The company does not anticipate a significant uptick in peak leasing activity compared to previous years, given the current market conditions [50]. Question: ECRI program performance - The ECRI program is performing well, with stable price sensitivity and replacement costs observed [92]. Question: Business customer trends - Business customers make up approximately 15% of the portfolio, with no significant changes noted in their behavior [112][115].