Direct Digital Holdings, Inc.

Thank you for standing by. My name is Karen, and I will be your conference separator today. At this time, I would like to welcome everyone to the direct digital holding second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by the number one on your telephone keypad. To withdraw your question, you may press star followed by the number one again. I will now turn the call over to John Nisbet from Investor Relations. Please go ahead.

Good afternoon, everyone, and welcome to direct digital holding second quarter 2025 earnings conference call. On today's call are direct digital holdings chairman and chief executive officer, Mark Walker, and chief financial officer, Diana Diaz. Information discussed 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 website and the company's website. Today's call is also being webcast and the replay will be posted on direct digital's Investor Relations website. Immediately following the speaker's presentation, there'll 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 direct digital'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 could cause direct digital's actual results to differ from its historical results and forecasts, including those risks set forth in direct digital's filings with the Securities and Exchange Commission, and you should refer to those for more information. This cautionary statement applies to all forward-looking statements made during the call. During this call, direct digital will be referring to non-GAAP financial measures. These non-GAAP measures are 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 direct digital filed in its form 8K today. I will now hand over the conference call to Mark Walker, Chief Executive Officer. Please go ahead, Mark.

Thanks, John, and thank you to everyone joining our call this evening. I'll start by reviewing some of the highlights of our operations and financial results during the second quarter before turning the call over to our Chief Financial Officer, Diana Diaz, for a more detailed look at our financial results. We'll conclude by opening the call for a brief Q&A. Our focus in the first half of 2025 has been on rebuilding and growing our business back to historical revenue levels and profitability. To that end, we saw encouraging progress in the quarter, underscored by sequential revenue growth of 24% and enhanced adjusted EBITDA when compared with the first quarter of 2025. Our buy-side segment demonstrated modest growth year over year, which contributed to improve gross profit margins of 35% in the quarter, and on the sell side, we continue to build back from the pause in several key sell side relationships back in May of 2024. These partners have since resumed their relationships, but it will take some time for us to restore sell side revenue to previous levels. With the disruption now behind us, we've set our sights firmly on what's ahead for our business. As I mentioned, buy-side revenue increased slightly in the quarter. Our buy-side segment has a lower cost of revenue than the sell side, which is reflected in our improved gross margins of the first half of this year. We're intent on driving enhanced growth in this segment going forward as we execute on our revenue diversification strategy. Our sell side business is showing encouraging progress as we work diligently to rebuild this part of our business. Historically, our sell side business was the key driver of our revenues and profitability. The sell side drove the double to triple digit annual consolidated revenue growth we achieved from 2018 through 2023. Looking ahead, direct connections are a key priority for our sell side segment and the main driver of our return to historical revenue levels. Colossus Connections, which we launched in third quarter of 2024 to accelerate integration efforts with leading demand side platforms is performing well. And we've added several mid and top tier DSP partners who are near completion with integration. As we stated last quarter, we expect to see the full impact on our revenues once integration is completed in the second half of 2025. While last year's disruption impacted our trajectory, we're confident that we've placed the foundational pieces to put our business back on the path to enhance growth, value and profitability. So the back half of the year should be strong driven by enhanced buy side activity through Orange 142 and the ongoing recovery of the company sell side business as it rebuilds to historical levels. We had previously laid out a revenue target range of 90 to 110, 110 million for 2025. We will grow likely substantially in the back half of the year, but it now looks unrealistic that we will meet that target. For the time being, we're going to abstain from providing specific revenue guidance given some uncertainties in the macro environment and the specific timing around integrating DSP partners via Colossus Connections. We will revisit providing revenue guidance as we get better visibility on the growth of the sell side of the business. Our cost savings initiatives remain a priority as reflected in a 25% reduction in total operating expenses in the second quarter compared to the prior year. We continue to strategically evaluate our cost structure and expenses to maximize efficiencies and support the long-term growth of our business. An unexpected benefit to our belt tightening has been increased innovation, including the use of artificial intelligence or AI to supplement our reduced staffing levels during the time of rebuilding. I will now hand the call over to Diana Diaz, our Chief Financial Officer, who will walk through some of the financial highlights in further detail.