Direct Digital Holdings, Inc.

Hello, everyone, and welcome to Direct Digital Holdings second quarter 2023 earnings call. At this time, I would like to hand the call over to Mr. Brett Malott. Please go ahead, sir.

Good afternoon, everyone, and welcome to Direct Digital Holdings second 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 Diana Diaz. Information assessed today is qualified in its entirety with the form 8K and accompanying earnings release, which has been filed today by Direct Digital Holdings, which may be accessed at the SEC's website and GRCT's website. Today's call is also being webcast and a replay will be posted to GRCT's Investor Relations website. Immediately following the speaker's presentation, there will be a question and answer session. Please note that the 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, and 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 FCC, 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-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 in the earnings release that DRCT filed in its Form 8K today. I will now hand over the conference to Mark Walker, Chief Executive Officer. Mark?

Thanks, Brett, and thank you to everyone joining our second quarter 2023 earnings call. I'm proud to report strong financial results and operational performance for the first half of 2023. Similar to Q1, Q2 is one of our typically seasonally slow quarters, and we expect to see advertising demand increase as the year progresses. This 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 Q2 of 2023, our revenue increased to $35.4 million, an increase of $14.1 million, or 67% over $21.3 million in the same period of 2022. Adjusted EBITDA for the quarter was $3.1 million compared to $3.6 million in the same period of 2022. As Diana will explain in more detail shortly, this quarter we did see some margin impact driven by our buy-side and sell-side businesses mix and some higher operating expenses. Our revenue this quarter was driven by strong performance by both our buy-side and sell-side advertising segments, which saw substantial growth. We are pleased to report increases in revenue growth by segment of 27% and 98%, respectively, over the same period of 2022. In the second quarter, our sell-side advertising segment processed approximately 300 billion monthly impressions, an increase of 205% over the same period of 2022. In addition, this quarter, the company's sell-side advertising platform received over 11.2 billion monthly bid responses. an increase of 70% over the same period in 2022 through 119,000 advertisers for the quarter, which is a 34% increase over the same period last year. On the buy side, our businesses served approximately 227 customers, a slight decrease year over year. However, revenue per customer increased 36% compared to the same period last year. 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. In addition, with our portfolio of customers, we're seeing deepened investments in digital marketing. As we have mentioned in previous quarters, we have been making investments in our infrastructure and servers. which we are starting to see the benefits of which will carry us through the remainder of the year and through 2024. This quarter, we continue to make considerable progress with our server transitions, as well as our overall re-platforming strategy, all the while maintaining business growth and capturing incremental market share. As our company reaches a certain size and scope, we're able to pull certain levers, realizing efficiencies across many aspects of our platform. In combination, we also believe that the U.S. economy will continue to move forward and our market segment will continue to outperform in the second half of the year. Consequently, we're revising our full year 2023 revenue guidance upwards to $125 million to $130 million. I will now hand things over to our CFO, Diana Diaz, who will walk through some of the financial highlights in further detail.