DoubleVerify Holdings, Inc. Q3 FY2024 earnings

DoubleVerify reported third quarter revenue of $169.6 million, up 17.8% from the prior-year quarter. For the nine months, revenue was $466.2 million, up 16.5%. Operating income was $25.7 million in the quarter, up 41.1%, and operating margin was 15.2%, up 2.5 percentage points. Net income was $18.2 million, up 36.4%, and diluted EPS was $0.10, up $0.02. For the nine months, operating income was $43.7 million, down 9.2%, net income was $32.8 million, down 14.4%, and diluted EPS was $0.19, down $0.03. Operating margin for the nine months was 9.4%, down 2.6 percentage points. The quarter's profitability improved.

Operating cash flow was $54.6 million in the quarter, up 53.8%, and $122.3 million for the nine months, up 80.7%. Capital expenditures were $6.2 million in the quarter, up 34.4%, and $19.8 million for the nine months, up 60.8%. RPO was $29.7 million. The company repurchased 1.3 million shares for $25.0 million in the quarter, and 2.6 million shares for $50.1 million over the nine months. Subsequent to quarter-end, it repurchased an additional 1.5 million shares for $25.0 million, leaving $75.0 million available under the initial $150 million authorization as of November 6, 2024. The board authorized a new $200.0 million repurchase program, bringing total available authorization to $275 million.

Adjusted EBITDA was $60.2 million, a 35% adjusted EBITDA margin. MTM increased 22% year over year, while MTF declined 4% due to product and geographic mix. Gross revenue retention was over 95%. CTV MTM increased 59%. The company won Microsoft as a key advertiser customer and won 70% of the Oracle advertiser RFPs it participated in, securing brands such as P&G, BlackRock, Charter Communications, Inspire Brands, Kellogg Company, and Dish Network. It expanded partnerships with The Trade Desk, Magnite, PubMatic, Criteo, Teads, The New York Times, and Euronews. It announced upcoming content-level pre-bid avoidance on Facebook and Instagram Feed and Reels, expected available for all advertisers in early 2025. It introduced a Video Exclusion List solution on TikTok, expected available by the first half of 2025. It expanded measurement on TikTok, Snap, Roblox, Spotify, Instacart, LinkedIn, and Netflix. It launched the DV News Accelerator.

For the fourth quarter, guidance calls for a 14% year-over-year increase at the midpoint and adjusted EBITDA of $73 million to $79 million, a 39% margin at the midpoint. For the full year 2024, guidance calls for 16% growth at the midpoint and adjusted EBITDA of $218 million to $224 million, a 33% margin at the midpoint. Management raised adjusted EBITDA guidance to 33% at the midpoint and adjusted the full-year guidance midpoint to 16% growth, citing moderated brand spending during the U.S. election season and a more gradual ramp in social measurement adoption. Risks include competition amid technological developments and evolving industry standards, system failures, security breaches, cyberattacks, natural disasters, economic downturns, unstable market conditions, ability to collect payments, data privacy legislation and regulation, public criticism of digital advertising technology, international operations, use of open source software, limited operating history, and potential for revenues and results to fluctuate. The company also faces the 4% decline in MTF and the need to ramp social measurement adoption.