Direct Digital Holdings, Inc.

Thank you for standing by and welcome to the Direct Digital Holdings third quarter 2022 earnings conference call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr Brett Molloyt. Please go ahead.

Good afternoon, everyone, and welcome to Direct Digital Holdings' third quarter 2022 earnings conference call. My name is Brett Malott, and I'm representing Direct Digital Holdings from ICR. On today's call are Direct Digital Holdings Chairman and Chief Executive Officer, Mark Walker, and Chief Financial Officer, Susan Deckard. The information discussed today is qualified in its entirety by the Form 8K and accompanying earnings release that have been filed today by Direct Digital Holdings, which may be accessed at the SEC's website and DRCT's website. Today's call is also being webcast, and a replay will be posted to DRCT's Investor Relations website. Immediately following the speaker's presentation, there will be a question and answer session. Please note that statements made during the call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. Such statements are made on basis of DRCT's views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks which would cause DRCT's actual results to differ from its historical results and forecasts, including those risks set forth in DRCT's filings with the SEC, and you should refer and carefully consider those for more information. This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statements. During this call, DRCT will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available at the earnings-released GRCT form 8K today. I will now hand over the conference to Mark Walker, Chief Executive Officer.

Mark? Thanks, Brett, and good afternoon, everyone. This is our third earnings call as a public company, and I'm incredibly proud to report strong financial performance for the quarter and continued growth for the year. Before I go into specific details, I want to provide a brief overview for those of you joining us for the first time. Drake Digital Holdings is a company that leverages technology to assist clients in driving ROI through the buying and selling of media. Our technology platform meets the demands of the underserved middle market and provides access to general and multicultural market publishers through our proprietary sell-side platform. Our company's business was founded in 2018 through the initial acquisition of Huddle Masses and Colossus SSP, which was the genesis of our end-to-end programmatic platform. Colossus SSP is our sell-side proprietary technology that enables publishers to sell media to buyers, while Huddle Masses, along with Orange 142, is our buy-side platform, which enables middle market businesses across the United States to purchase media to drive ROI. In 2020, we acquired Orange 142 to further develop and grow our buy-side platform and to expand our industry offering into education, travel, and tourism, financial services, and other verticals. I will begin the call by providing a brief business overview and the main financial highlights for the quarter, and we'll then turn it over to Susan Eckert, our CFO, who will share detailed financial results and revise guidance for the remainder of 2022. We will then be happy to answer your questions. As you will see from our third quarter results, Direct Digital Holdings is continuing to experience strong organic growth driven by our business model. By focusing on expanding both our buy and sell side business segments, With the focus on the middle market and multicultural publishers, we have been able to deliver increased top-line revenue, net income, and consequently overall growth in our adjusted EBITDA. For the third quarter of 2022, we generated $26 million of revenue, an increase of 211% over the same period in 2021. Our net income was $810,000, up 458% over the same period in 2021, and we achieved an adjusted EBITDA of $2.4 million, up 128% over the same period in 2021. Our sell-side platform business segment saw significant growth through a combination of enhanced publisher partner engagement and monetization strategies, increasing our impression count and growing our advertising publisher base. In Q3 of 2022, our sell-side advertising platform processed approximately 125 billion monthly impressions, an increase of over 247 percent over the same period of 2021, with over 1.3 trillion bid requests for the quarter. This segment received over 11 billion bid responses, an increase of over 1,624 percent over the same period in 2021, through 129,000 advertisers for the quarter, which is 135 percent year-over-year increase. We are also continuing to see growth in our buy-side platform, which for Q3 2022 served over 200 customers, an increase of 2% compared to the same period in 2021. We had strong engagement in our current customer base, and we firmly believe that the growth in our overall customer count for our buy-side platform will continue to fuel our organic growth strategy for the foreseeable future. As we mentioned last quarter and as evidence from recent earnings reports, The industry continues to see clients experience diminishing returns and higher costs on traditional walled gardens such as Twitter, Meta, and Google. Consequently, direct digital holdings and other open market digital participants have been the beneficiary providing advertisers cost-efficient digital solutions and more efficient ROI measurement capabilities. The trend coupled with our business model and compounded by our company's comprehensive client mix which is focused on underserved middle market companies and multicultural and general market publishers, has resulted in incredible growth across both our sell and buy side advertising segments. Our sell side platform consisting of the Colossus SSP business grew to 18.9 million in revenue, up 710% over the 2.3 million in the same period of 2021. Our buy side platform consisting of the Huddle Masses and Orange 142 businesses grew to 7.1 million in revenue, up 18% over the 6 million in the same period of 2021. As it relates to overall macroeconomic trends, we view the market uncertainty and volatility as an unmatched opportunity to aggressively capture clients and market share as other companies choose to take a less aggressive approach in the marketplace. Historically, in market downturns, Brands and middle market businesses have searched for efficient media and therefore moved dollars from less efficient traditional advertising outlets towards digital media, and we believe we will continue to see that acceleration adoption throughout the year and into 2023. Furthermore, Q4 has historically been our strongest quarter, and combined with the stated factors above, we are pleased to announce that we are raising our full year 2022 revenue guidance to 85 to 90 million. I will now hand things over to Susan Eckerd, who is going to walk you through some of the financial highlights for the quarter and a further update on guidance.