Summary of Double Verify Conference Call Company Overview - **Company**: Double Verify - **Industry**: Digital Advertising Verification Key Points and Arguments 1. **Business Model**: Double Verify operates as an ad platform that ensures advertisers' digital media spend is viewable, brand safe, geographically aligned, and free from fraud. The company positions itself as an independent arbiter of digital media quality [4][5][6]. 2. **Q1 Performance**: The company reported a 17% revenue growth in Q1, a significant improvement from the previous year's growth rates of 10-15%. This growth was attributed to strong customer adoption of new solutions and scaling of existing customers [5][7][8]. 3. **Customer Adoption**: Notable new customers include KenView and Microsoft, with existing customers like Lilly and Novartis increasing their spending. The company emphasized the importance of upselling premium solutions to current customers [8][15][49]. 4. **Social Media Activation**: The launch of activation solutions on Meta in February has gained traction, with 20 new customers acquired, including major brands. The potential revenue from these new solutions is estimated to be between $40 million to $100 million over the next couple of years [10][11][12]. 5. **Market Diversification**: The company has a diversified revenue stream, with only 6% of total revenue coming from the auto industry, which is expected to be impacted by economic downturns. This diversification helps mitigate risks associated with specific sectors [24][25][49]. 6. **Advertising Spend Resilience**: Advertisers have become more performance-oriented and agile, learning from past economic shocks. This has led to a more resilient advertising spend, with less immediate reaction to market volatility [25][29]. 7. **Performance Solutions**: The company is evolving from a verification specialist to a performance and analytics provider. This includes the introduction of tools like SciBids AI and RockerBox, which help advertisers optimize their media spend and measure performance effectively [34][56]. 8. **Data Measurement**: Double Verify measures a vast amount of digital ad transactions, amounting to $8.3 trillion last year. This data is used to assess media quality and performance, providing valuable insights for advertisers [59][60]. 9. **Future Growth Potential**: The company anticipates significant growth in its social business and performance metrics, with projections of reaching $100 million in revenue from SciBids by 2028. The total addressable market (TAM) is expected to expand into billions due to these developments [66][67]. 10. **Competitive Differentiation**: Double Verify's competitive edge lies in its scale, breadth of offerings, and the ability to provide integrated solutions that enhance advertising performance. The company has established itself as a leader in the digital advertising verification space [70][71]. Other Important Content - **AI Utilization**: The company is leveraging AI to combat challenges posed by AI-generated content and fraud, while also improving operational efficiencies [73][74]. - **Innovation Day**: The upcoming innovation day is expected to highlight the company's long-term vision of becoming an essential performance platform for advertisers, along with financial insights [75][76].

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $165 million, representing a 17% year-over-year increase, exceeding expectations across all revenue lines [8][23] - Adjusted EBITDA margin was 27%, with net cash from operating activities growing by 19%, indicating strong operational efficiency [8][26] - Advertiser business grew by 16%, driven by a 20% increase in activation revenue, while supply side business saw a 35% year-over-year growth [8][24] Business Line Data and Key Metrics Changes - Activation revenue increased by 20% year-over-year, with Authentic Brand Suitability (ABS) accounting for 54% of activation revenue and growing by 16% [24] - Measurement revenue grew by 8%, supported by new customer activations on the open web and stable growth from existing customers [24][25] - Supply side revenue surged by 35%, driven by increased revenue from both existing and new platform and publisher customers [25] Market Data and Key Metrics Changes - Social media measurement and activation solutions are gaining traction, with a robust sales pipeline for Meta's activation solution and significant early results from early adopters [10][11] - CTV measurement volumes grew by nearly 43% year-over-year, with DV's filtering rate for CTV jumping 55% year-over-year [12][14] - Retail media supply side revenue grew by 35% year-over-year, indicating strong demand in this segment [18] Company Strategy and Development Direction - The company aims to build a unified platform that enables advertisers to verify, optimize, and measure media outcomes, driving broader customer adoption and deeper partner engagement [7][20] - The strategic acquisition of RockerBox is expected to enhance customer engagement and expand offerings, unlocking greater growth opportunities [10][19] - The focus remains on driving volume through multi-product adoption and upselling opportunities across the platform [23] Management's Comments on Operating Environment and Future Outlook - Management noted that business momentum remained steady through April, with no evidence of macroeconomic pressure affecting customer demand [7] - The company is confident in its long-term strategy to drive durable diversified growth, despite leaving full-year guidance unchanged due to macro uncertainty [29][30] - Management emphasized the importance of performance-driven solutions in the current economic environment, which positions the company well for resilience [33][84] Other Important Information - The company repurchased 5.2 million shares for $82 million during the quarter and ended with approximately $175 million in cash and short-term investments, maintaining zero debt [27] - The company expects second-quarter revenue to range between $169 million and $173 million, representing a 10% year-over-year growth at the midpoint [28] Q&A Session Summary Question: What contributed to revenue outperformance in the quarter? - Management indicated that new client growth and strong adoption of additional solutions from existing customers were key drivers of revenue outperformance [40][41] Question: Thoughts on expanding into direct response budgets? - Management noted the convergence of brand and performance objectives, highlighting the importance of tools like CyBids and RockerBox in driving performance [42][44] Question: Impact of customer slowing spend on social growth? - Management acknowledged a significant customer that paused spending but expressed confidence in the growth potential of social activation solutions [50][61] Question: How does increased competition in the DSP space affect DoubleVerify? - Management stated that they are widely distributed across DSPs and that pricing remains consistent, indicating limited impact from DSP competition [86][88] Question: Predictions for CTV market expansion? - Management noted that as creative tools for CTV become more accessible, the addressable market is expanding, allowing for greater customer access [92]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $165 million, representing a 17% year-over-year increase, exceeding expectations across all revenue lines [6][22] - Adjusted EBITDA margin was 27%, with net cash from operating activities growing by 19%, indicating strong operational efficiency [6][26] - Advertiser business grew by 16%, driven by a 20% increase in activation revenue, while supply side business saw a 35% year-over-year growth [6][24] Business Line Data and Key Metrics Changes - Activation revenue increased by 20% year-over-year, with Authentic Brand Suitability (ABS) accounting for 54% of activation revenue and growing by 16% [23] - Measurement revenue grew by 8%, supported by new customer activations and stable growth from existing customers [23] - Supply side revenue grew by 35%, driven by increased revenue from both existing and new platform and publisher customers [24][17] Market Data and Key Metrics Changes - Social media measurement volumes grew significantly, with a robust sales pipeline for Meta's activation solution, activating 20 customers shortly after launch [10][11] - CTV measurement volumes increased by nearly 43% year-over-year, with significant growth noted across platforms like YouTube CTV and Netflix [11][12] - Retail media supply side revenue grew by 35% year-over-year, reflecting strong demand across retail media networks [17] Company Strategy and Development Direction - The company aims to build a unified platform for advertisers to verify, optimize, and measure media outcomes, enhancing customer adoption and engagement [5][18] - The strategic acquisition of RockerBox is expected to unlock greater opportunities for customer engagement and performance measurement [9][18] - The focus remains on innovation and operational efficiency, leveraging AI to enhance product offerings and drive growth [17][19] Management's Comments on Operating Environment and Future Outlook - Management noted no evidence of macroeconomic pressure affecting customer demand, with strong growth reflecting increasing demand for DV solutions [5][34] - The company remains cautious about macroeconomic uncertainties, maintaining a full-year guidance of 10% revenue growth and 32% adjusted EBITDA margins [28][76] - Management emphasized the importance of performance-driven solutions in navigating potential economic challenges [34][77] Other Important Information - The company repurchased 5.2 million shares for $82 million, ending the quarter with approximately $175 million in cash and short-term investments, maintaining zero debt [26] - The company is focused on expanding its global retail media footprint, with measurement tags accepted across 129 key retail media networks [16] Q&A Session Summary Question: Thoughts on macro uncertainty and resilience - Management highlighted that advertisers have become more agile in response to macro uncertainties, focusing on performance and brand protection [33][34] Question: Revenue outperformance drivers - Key drivers included accelerated scaling from new clients and strong adoption of additional solutions by existing customers [39][40] Question: Direct response budgets and performance solutions - The convergence of brand and performance objectives is creating opportunities for the company to enhance its offerings in direct response advertising [41][42] Question: Social measurement growth and guidance - Management expects social growth to be stronger in activation than in measurement, with new solutions launching on platforms like Meta and TikTok [48][49] Question: International revenue weakness - Management attributed the slowdown to a large customer pulling back spend but remains optimistic about future growth in international markets [56] Question: Impact of increased competition in DSP space - The company remains indifferent to DSP competition as its solutions are widely distributed across all major DSPs, maintaining consistent pricing [80][81] Question: CTV market expansion - The addressable market for CTV is expanding as more middle-market advertisers consider CTV, driven by easier access to creative tools and self-serve buying platforms [86]