DoubleVerify Holdings, Inc. Q2 FY2025 earnings call

• Second quarter revenue was $189 million, up 21% year-over-year, beating raised guidance. Growth was broad-based across all revenue lines.
• Existing advertisers attaching new DV solutions and expanding usage across channels and geographies drove much of the growth. The attach, stack and scale revenue growth strategy is working.
• Recently launched Media AdVantage Platform (MAP) is resonating with the market, bringing together verification, optimization and outcomes measurement.
• Strong new client wins, with 10 recently won large advertisers featuring in the top 100 and 3 among top 15 revenue contributors. Revenue is becoming more diversified with more advertiser customers generating over $200,000 in annual revenue.
• Performance across key growth environments: social measurement grew 14% led by YouTube, TikTok and Meta; CTV measurement impressions grew 45% and activation adoption is building; programmatic saw healthy volume with ABS growing 23% and Scibids AI adoption climbing.

DoubleVerify delivered a standout second quarter with revenue up 21% year-over-year at $189 million. Growth was broad-based across all 3 revenue lines: activation, measurement and supply side. Advertiser business, accounting for 91% of total revenue, saw 21% year-over-year growth. Social measurement revenue grew 14% year-over-year in Q2 led by growth on YouTube, TikTok and Meta. CTV measurement impressions grew 45% year-over-year. Programmatic revenue saw healthy growth with activation acceleration driven by ABS growing 23% year-over-year and Scibids AI delivering strong results. Activation revenue grew 25% year-over-year, measurement revenue grew 15% year-over-year, and supply-side revenue grew 26% year-over-year.

• Raised full year 2025 revenue growth to approximately 15% year-over-year, up from prior guide of ~13%, reflecting stronger-than-expected first half performance and stronger second half momentum.
• Reaffirmed full year adjusted EBITDA margin guidance of approximately 32%.
• Q3 revenue expected to range between $188 million and $192 million, representing 12% year-over-year growth at midpoint; adjusted EBITDA expected to range between $60 million and $64 million, representing 33% margin at midpoint.
• 2025 is viewed as a transition year with social activation solutions like Meta pre-screen and DV Authentic AdVantage taking time to ramp up monetization, with more meaningful contribution beginning in 2026 and scaling into 2027.

• Actual results could differ materially from forward-looking statements due to inherent risks, uncertainties and changes in current expectations.
• Subject to risks in recent SEC filings, including Form 10-Q and Form 10-K.
• Macro-economic uncertainty and tougher year-over-year comparisons on new customer revenue growth in the second half pose risks.

Q: Congratulations on the quarter. Maybe double-clicking on something you both talked about a little bit, which was that social growth. 14% maybe doesn't sound super outlandish, but I mean that's a really big acceleration from 1% in Q1 given the large customer dynamic. So could you just dive a little bit more into that if any of the headwinds we saw in Q1 abated at all? Or just what drove a 1,300 basis point sequential increase?

A: Matt, thanks for the question. I think if we look at what drove the growth, it was almost evenly split between kind of new user expansion. So current customers like Unilever, Colgate, Pepsi, et cetera, kind of expanding their use and then some new logo wins, [ Centauri ], Chipotle, Banco do Brasil and a few others. So I think what we've seen is just increased adoption across the solutions. We saw nice growth from folks like Reddit, which are new to the platform, and TikTok continues to be a really nice accelerant. So I think it's a combination of new customers, some expansion with current customers, adding some new partners on there. And then the addition of the Meta pre-bid solution, which we launched earlier this year is now starting to attract measurement customers as well. If you remember, when we launched the Meta measurement solution, one of the gating aspects of that was people were waiting for pre-bid. Well, now that we have pre-bid, we're adding customers for both pre- and post-bid measurement. So it's helping our measurement numbers as well. So again, it's a slow and steady kind of growth trajectory across social that we're seeing, and we like it that it's based on some new solutions, some new platforms as well as some new customers.

Q: Your first question comes from Youssef Squali with Truist Securities. Mark, at Innovation Day, you guys preannounced the quarter with revenues of about 17%. You just put up a revenue by 21%. Can you maybe just speak to the drivers of the outperformance relative to that guidance what you've seen throughout July so far? Just trying to understand where the delta may have been derived from and the sustainability of that? And then Nicola, MTF down 1%, I think, is a big deal, big improvement after many, many quarters of year-on-year decline. Can you maybe unpack that a little bit and also talk about kind of how you see MTFs within the guidance that you provided for the second half?

A: For sure. Thanks for the question, Youssef. So let me talk a little bit about kind of drivers. And the first is obviously, a strong activation quarter, particularly around ABS. And we saw a 23% growth year-over-year in ABS, which shows that, that solution still has legs and is still attracting a significant amount of new activations, so folks like Kenvue and Microsoft and Charter, and still growing with current clients as well. So I think when we look at kind of what's driving growth, that's certainly the #1 driver of growth and one in which, as you noted, Innovation Day, we were still seeing momentum dollars going in there. It's not surprising considering we're at a time in which advertiser dollars are still very tentative with regard to when and how they spend and programmatic gives them that flexibility. And I think we see that in our numbers. So I think that is a key driver. It's a key thing that I think we identified back at Innovation Day. And that's why we're so focused on things are -- all of our activation solutions, including social activation, which continues to be a big opportunity for us coming down the road. So a big driver of growth, I think, across the board, even if you look at our non-ABS programmatic. So core programmatic as well as Scibids, that grew at 27%. So stuff that drives results that delivers ROI and that drives performance as well as that's in the programmatic space that allows advertisers to move dollars in and out pretty easily are things that we're seeing that are creating a much more resilient kind of start to the year than we've seen in the past.

A: Yes. And Youssef, on your question related to MTF, you're right. The decline of 1% is a relative improvement compared to what we've seen in the past few quarters. And this is not due to meaningful changes in the competitive environment or just broad pricing dynamic. It's truly just driven by product mix, which is what we've said all along. MTF is an output of what the clients are buying. And in this quarter, in particular, we had very strong upside momentum on ABS, which, as you know, is our premium priced product. That was for both existing clients using it on more and more of their volume, new logos using it and us being able to upsell new clients to the to the solution. ABS grew 23% this quarter, which is very strong. So MTF is an output. It's an output of our ability to upsell to premium priced products. This quarter, you see the meaningful impact of ABS growing. Going forward in the year, we've talked a lot about social activation ramping. That is also at a premium price point. So that should also have an impact on MTF.