DoubleVerify Holdings, Inc. Q3 FY2024 earnings call

• DoubleVerify drove robust expansion in the third quarter, scaling solutions across social, CTV, and retail media platforms, and secured large global market share wins. Revenue grew 18%, with 83% gross margin and 35% adjusted EBITDA margin. Net cash flows from operating activities grew over 50% to $55 million.
• Addressed headwinds such as brand spending softening pre-election, ad dollars shifting to walled gardens, and slower social growth due to timing of pre-bid solutions. Successfully won key clients like Pepsi, Haleon, Uber, and General Motors, and strategic partnerships with platforms like Criteo, The Trade Desk, etc.
• Accelerated growth in ABS and activation through new customer rampups and upsells. Expanded measurement and activation solutions across social, CTV, and retail media. Notable expansions include viewability and fraud measurement on LinkedIn, partnership with Roblox for 3D in-experience measurement, and launch of DoubleVerify News Accelerator.

In the third quarter, DoubleVerify achieved robust revenue growth with total revenue of approximately $170 million, an 18% year-over-year increase. All three revenue lines—activation, measurement, and supply-side—experienced double-digit growth. Activation revenue grew 18%, with ABS (Account-Based Selling) accounting for 53% of activation revenue, growing 14% year-over-year. Measurement revenue grew 14%, primarily driven by a 21% increase in social measurement revenue, which made up 48% of total measurement revenue. Supply-side revenue grew 30%, driven by growth on existing platforms like retail media and new platform partnerships.

• Q4 revenue expected to range $194-$200 million (14% midpoint growth). Adjusted EBITDA expected $73-$79 million (39% midpoint margin).
• Full-year 2024 revenue expected $660-$666 million (16% midpoint growth). Adjusted EBITDA expected $218-$224 million (33% midpoint margin).
• Anticipates moderate social measurement revenue growth in 2025 due to delayed pre-bid social solutions launch, and limited year-over-year growth from retail and CPG advertisers.

• Brand spending softened pre-election with political dollars crowding out traditional ad spend, uncertainty around post-election rebound.
• Slower ramp of measurement adoption on Meta's platforms than anticipated, as advertisers wait for pre-bid capabilities.
• Oracle exit impacted pricing dynamics, requiring competitive pricing to secure initial clients but expecting long-term upsell opportunities.

Q: Can you expand on the more gradual ramp in measurements in Q3 and Q4 and timing for Meta's pre-bid solutions?

A: Nicola Allais noted social measurement growth was 21% vs 47% in H1, due to gradual adoption of measurement on Meta's platforms as advertisers wait for pre-bid capabilities. Mark Zagorski added pre-screen solution on Meta expected to launch in Q1 2025.

Q: How does Oracle exiting the market affect long-term pricing dynamics?

A: Mark Zagorski said Oracle's exit created land and expand opportunities, allowing entry with initial solutions and upselling over time into areas like attention and social measurement.

Q: How should we think about the durability of adjusted EBITDA margin expansion?

A: Nicola Allais stated the business is scalable, with G&A flat, sales and marketing exit rate lower, and sustainable gross margins above 80%, leading to continued EBITDA margin growth.