Direct Digital Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to the REC Digital Holdings first quarter 2023 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 11, 2023. I would now like to turn the conference over to Brett Millett, Please go ahead.

Good afternoon, everyone, and welcome to Direct Digital Holdings' first quarter 2023 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, Stephen Eckhardt. Information discussed today qualifies in its entirety in the Form 8K and accompanying earnings release, which 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 will be posted to DRCT's Investor Relations website. Immediately following the speaker's presentation, there will also be question and answer sessions. 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. These statements are made on the basis of DRCT's views and assumptions regarding future events and business performance at the time they are made. We do not undertake any obligation to update these statements. Forward-looking statements are subject to risk, which would cause DRCT's actual results to differ from its historical results and forecasts, including those risks set forth in DRCT's filings at the SEC, and you should refer to 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-debt 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 on the earnings release of the RCT filed in its Form 8K today. I will now hand over the conference call to Mark Walker, Chief Executive Officer. Mark?

Thanks, Brent, and thank you to everyone joining our first quarter 2023 earnings call. I'm once again proud to report strong financial results and operational performance to start off 2023. While Q1 is typically our seasonally slowest quarter, we saw strong top-line growth across both our sell-side and buy-side businesses, as well as considerable increases in market share. Our open marketplace CPM platform continues to benefit as middle-market businesses look for less expensive, less restrictive, more accessible, and more representative advertising solutions. In Q1 2023, our revenue increased to $21.2 million, an increase of $9.9 million, or 87% over the $11.4 million in the same period of 2022. Adjusted EBITDA for the quarter was $0.5 million compared to $1.1 million in the same period of 2022. As Susan will explain in more detail shortly, we did see some one-time expenses this quarter driven by unusual events, as well as higher expenses year-over-year associated with being a new public company. Our revenue this quarter was driven by strong performance by both our buy side and sell side advertising segments, which saw record growth. We are pleased to report an increase in revenue growth of 149% and 28% respectively over the same period of 2022. In the first quarter, our sell side advertising segment processed approximately 207 billion monthly impressions, an increase of 130% over the same period of 2022. In addition, the company's sell-side advertising platform received over 6 billion bid responses in the first quarter of 2023, an increase of over 81% over the same period in 2022, through 153,000 advertisers for the quarter, which is a 121% increase over the same period in 2022. We saw new publisher, customer, and DSP wins, notably with the addition of publisher Gourmet Ads, which has 3.5 billion monthly requests, along with other niche publishers to grow our overall impression count. In Q1, we also expanded offerings to include audio within SSP and are testing some new DSPs currently. As mentioned on the buy side, our businesses also saw record growth, growing 28% year over year and serving approximately 231 customers, an increase of 3% compared to the same period of 2022. Orange 142 won and launched campaigns for Visit Tucson and Spokane Airport, while Huddle Masses saw its highest single revenue month ever in March. During the quarter, we saw a number of achievements, a few of which I wanted to highlight today. Operationally, starting at Q4 2022 and continuing into Q1 of 2023, we made considerable progress with our server transition to HPE GreenLake in our overall replatforming strategy, all the while maintaining business growth and capturing incremental market share. On the corporate side, we continue to fortify our personnel with a strategic board appointment. In January, advertising industry pioneer Misty Locke joined our board of directors, bringing more than 20 years of experience in digital performance and brand marketing following successful 10 years as the CMO of Dentsu Media and iProspect. Turning to the remainder of 2023, we believe the current market dynamics are favorable for direct digital holdings as we see an increase in media spend being targeted to reach growth and multicultural audiences. While simultaneously, middle market companies are moving dollars away from traditional media spend to digital. As a company, our primary focus for the year is to continue our strong growth trajectory, and we are reaffirming our estimate as disclosed in our year-end 2022 update of $118 million to $122 million in top-line revenue. I will now hand things over to Susan Eckert, who is going to walk you through some of the financial highlights in further detail.