DoubleVerify Holdings, Inc. Q1 FY2025 earnings call

• DoubleVerify started 2025 strong with momentum across the business, driven by deeper expansion with existing customers and faster scaling by newly signed enterprise clients.
• Key trends included existing customers attaching core verification solutions and SideBids AI, rapid scaling by new customers, and strong growth in the supply-side business.
• Won numerous global engagements with iconic brands and expanded relationships with existing customers like Nike and Kia.
• In social media, launched content-level pre-bid avoidance solution on Meta, activated 20 customers, and expanded viewability in IVT measurement to Instagram Reels. In CTV, grew measurement volumes by nearly 43% YOY and invested in content-level scoring. In open web, saw strong growth in activation solutions and upsold CyBids AI to over 200 customers.
• Acquired RockerBox, which unlocks greater opportunity to grow and scale customer engagement.

Total revenue for the first quarter was $165 million, an increase of 17% year over year. The advertiser business grew 16%, driven by 20% growth in activation, while the supply-side business delivered 35% year-over-year growth. Activation revenue grew 20%, with ABS (authentic brand suitability) accounting for 54% of activation revenue, growing 16% year over year. Measurement revenue grew 8%, driven by new customer activations on Open Web and stable growth from existing customers. Supply-side revenue grew 35%, primarily due to increased revenue from existing and new platform and publisher customers.

• Second-quarter revenue is expected to range between $169 million and $173 million, representing a 10% year-over-year growth at the midpoint. Adjusted EBITDA is expected to range between $48 million and $52 million, representing a 29% margin at the midpoint.
• Full-year 2025 guidance remains unchanged at 10% revenue growth and 32% adjusted EBITDA margins, reflecting a prudent view of the operating environment.

• Macro-economic pressure affecting customer demand. - Impact of a large customer pausing spend due to higher commodity costs. - Increased competition in the DSP space potentially affecting the business.

Q: Thanks, Matt, for the question. Yes, look, I think every macro uncertainty that we've had over the last few years has created advertisers that are a bit more agile but also are kind of getting used to these systematic changes. What we saw in those two years was some initial, obviously initial slowdowns, but when advertisers start focusing on things that matter, like driving performance, and protecting their brand, we've seen our stickiness really shine through. Right? And the fact that so much of our revenue now is on the activation side, which is very much performance-driven, very much programmatic, I think that that bodes well for us being resilient through any kind of challenging times that could be coming ahead. As we noted, we've not seen any real impact from some of the kind of global macro shocks yet this year. And I think that's a good sign for us. And if anything, we've seen a greater focus on our performance solutions, some faster uptake of those solutions that have driven our activation numbers. And advertisers really doubling down on the fact that this is the time where they want to lean in to protect their brands. And they want to lean into ensuring that they're using tools that are driving real ROI, and DV is one set of tools that does that.

A: Matt Swanson's question about resiliency in macro environments and how it relates to DoubleVerify's performance Q: Great. Thanks so much for taking my questions and congrats on the strong quarter here. First, could you maybe help us understand a little bit better what contributed to your revenue outperformance in the quarter sort of relative to your guidance in February? Was it driven by maybe more Moat customers coming on or anything else that was sort of one-time?

A: I think one of the main drivers was we saw some of our new clients actually grow and accelerate their scaling a little bit ahead of our expectations, which was one key thing. And I think the second also was our current customer expansion. I mean, that's always the biggest growth driver for us, is our large enterprise clients and their adoption of new tools. I mean, we had its best quarter since 2023. And we saw increasingly, you know, interest increasing interest in tools like CyBids, right, which are performance tools. So I think the combination of core client growth into new solutions and some scaling of our new onboarded big brands looks like Kenview and others, I think was the main drivers of our exceeding expectations