DoubleVerify(DV) - 2025 Q1 - Earnings Call Transcript

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]