DoubleVerify Holdings, Inc.

Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the double verified third quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After this piece of remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw a question, again, press the star one. I would now like to turn the conference over to Tejal Engman, Senior Vice President of Investor Relations. You may begin.

Good afternoon and welcome to Double Verify's third quarter 2025 earnings conference call. With us today are Mark Zagorski, CEO, and Nicola Elias, CFO. Today's press release in this call may contain forward-looking statements that are subject to inherent risks, uncertainties, and changes, and reflect our current expectations and the information currently available to us, and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including our Form 10-Q and our annual report of Form 10-K. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on our investor relations website at ir.doubleverify.com. Also, during the call today, we'll be referring to the slide deck posted on our website. With that, I'll turn it over to Mark. Thanks, Sejal.

And thank you all for joining us today. Q3 reflected disciplined execution and resilient performance across the business. Revenue grew 11% to $189 million within our guidance range and adjusted EBITDA margin reached 35%, once again, above expectations, demonstrating the scalability of our model. We're leveraging automation and AI to drive structural efficiency and profitability, proving DV's ability to deliver strong margins even in a dynamic ad market. During the quarter, market dynamics led to some retail budgets being softer, while growth in our other core verticals, including CPG, remained in line with expectations. Upsell momentum stayed strong, led by early demand for our AI-powered DV authentic advantage solution, which closed roughly $8 million in annual contract value after only its first few weeks in market, fueled by early adoption from global CPG leaders. We also maintain strong customer retention with zero churn among our top 100 customers in Q3, underscoring the stability of our largest relationships. Core customer engagement and adoption rates remain healthy, and we continue to execute with discipline. At the same time, social and CTD are adding new growth and diversifying our revenue, strengthening the foundation for 2026. To frame the quarter simply, DV's growth drivers AI-driven product innovation, margin expansion, and customer success remain firmly in our control. And on those levers, we continue to deliver. Today, I'll focus on three themes shaping our progress this quarter and beyond. First, innovation. How we're harnessing AI and automation to launch new products for the AI era, advance content classification, and drive greater efficiency at scale. Second, diversification. how growth across social, streaming TV, and programmatic is strengthening the durability of our model. And third, monetization, how we're translating that innovation and diversification into sustained revenue growth, operating leverage, and cash flow. Each of these themes builds on the next, starting with innovation. At the center of innovation is AI, the engine behind our product development, precision, and scale. AI is driving the next major transformation in digital media, fundamentally changing how content is created, distributed, and consumed. Marketers, publishers, and AI agents themselves are beginning to design advertising strategies around this new layer of engagement, and DV is already embedded within it, capturing proprietary data that reveals how this ecosystem is taking shape. Each month, we analyze nearly 2 billion automated agents, crawlers, and bots. giving us unmatched visibility into how declared assistance like chat GPT, cloud and perplexity, as well as undeclared or evasive bots and personal stopping agents shape media performance. These interactions represent an untapped opportunity for marketer to LLM engagement that DV is driving to enhance and monetize. To meet this moment, this week we launched the DV AI verification offering. a group of tools built to empower advertisers in an AI-driven world. The suite includes DV's agent ID measurement, which, in its first iteration, identifies measures and classified declared and evasive AI activity. It also features DV's AI Slop Stopper, which detects and blocks synthetic or manipulated media across the programmatic open web with expansion to social underway. Within Pinnacle, advertisers will be able to view and act on this data in real time, quantifying AI impact and eliminating waste pre-bid. Powering the AI slop stopper and our broader contextual classification capabilities is our agentic classification system, which uses generative AI to automatically build and retrain thousands of models using DV's proprietary data across programmatic and walled gardens. Rolling out this technology will enable us to double our classification volume with fewer people and should achieve a fourfold gain in productivity per classification specialist by the end of 2026. It also lets us scale labeling volume by 260% and generate results 2300 times faster than human labeling, all while maintaining human level accuracy at lower cost. Bottom line, We're leveraging AI to not only innovate, but also to expand margins, doing more faster with fewer resources, while simultaneously creating new monetization opportunities as AI agents play a larger role in digital advertising. Just as DV helped define transparency during the rise of programmatic, as well as the emergence of ad-supported CTV, we're now beginning to set the standard for trust and accountability in AI-powered media positioning DV as the independent benchmark for verifying both human and AI-mediated engagement and content. Moving to our next growth engine, diversification. Our progress in AI-powered innovation is driving customer adoption in social and CTV. Beginning with social activation, both DV Authentic Advantage and our meta pre-screen solutions are off to solid starts, underscoring the demand for transparent, performance-driven solutions in walled gardens. Social within activation is growing at 20% and remains one of our fastest growing sectors. DV Authentic Advantage, which launched on YouTube towards the end of September, is a DV exclusive solution that unifies pre-bid brand suitability, side bids AI optimization, and post-bid measurement into one seamless automated workflow. Early adoption has been strong, led by major CPG brands, including Kraft Heinz and Halion. Much like our flagship authentic brand suitability product, which was one of the most successful launches in DV's history, Authentic Advantage delivers measurable ROI right out of the gate. In early CPG tests, this solution delivered 24% to 34% lower CPMs and 26% to 50% higher impression volumes while maintaining or improving brand suitability. Continuing on social activation and turning to meta, We significantly expanded content level avoidance on Facebook and Instagram feeds and reels, nearly doubling our ability to filter out content on behalf of an advertiser's suitability preferences across categories and markets. Revenue from meta-activation solutions continues to outpace expectations, with 56 advertisers now live and in the early stages of scaling, up from 26 last quarter. 20 of our top 100 customers now leverage our Meta activation solution, up from 13 in Q2, and usage is beginning to ramp. Today, our pre-bid solution is attached to roughly 6% of our brand suitable measurement impressions on Meta, representing an upsell opportunity we expect to rise meaningfully as adoption deepens. On TikTok, we expanded our video exclusion list by 100 times, significantly enhancing advertisers' ability to proactively avoid unsuitable content and reducing their rate of unsuitable content by one-third. Together, these advancements strengthen prescreen protection on the world's largest social and video platforms and demonstrate our partners' commitment to giving advertisers the tools they need to safeguard brand equity and improve contextual relevance at scale while still driving performance. There's been some debate about whether platform-native AI optimization tools, those black box tools that automate targeting, creative, and attribution, could reduce the need for independent verification. The reality is, while those systems optimize delivery, they don't disclose where ads run or how suitability is maintained. In a sample of AI-run social campaigns, we found brand suitability rates to be roughly two points lower than in non-AI campaigns. As these closed algorithms scale, advertisers are relying even more on DD for the transparency control that platforms don't provide. In our sample, our pre-bid protection was applied more than three times as often on AI campaigns than on standard campaigns, evidence that advertisers see higher risk in these black box solutions and a greater need for safeguards. The takeaway is clear. As platform AI engines become more sophisticated, the need for an independent, trusted verification becomes even more essential to ensure performance, suitability, and accountability work together. Turning to social measurement, we continue to expand post-bid coverage across the world's largest social media environments, expanding our AI-powered brand suitability measurement to meta threads, giving advertisers independent transparency on yet another fast-growing social media platform. We also extended our brand suitability measurement on Snapchat to shows and publisher stories, adding to our existing coverage of creator stories and spotlight, and giving advertisers greater clarity across more premium inventory. Shifting to diversifying revenue through CTV growth, advertisers continue to describe the streaming landscape as fragmented and opaque. They often don't know where their ads run, the quality of the content they appear in, or even if those ads are viewable and paid attention to by a real human. In some cases, ads are intended for premium full episode TV experiences, end up in mobile gaming apps like Solitaire or other non-TV environments. This is a problem we estimate impacts roughly 15% of CTV impressions and wastes over $1 billion of media spend each quarter, eroding trust as well as ROI. At the same time, advertisers still rely on manual, time-consuming, and error-prone workflows to manage do-not-error brand suitability lists, leading to misplaced ads and misoptimizations at scale. We've said before that DV has not fully monetized its CTV exposure, and we're now addressing that opportunity head-on with three streaming TV-specific product launches this quarter and with more to come in 2026. On the measurement side, this week we announced the launch of DV Verified Streaming TV Measurement, a market-first capability that provides impression-level transparency across digital video campaigns, helping advertisers ensure that ads are delivered in high-quality, TV-like environments, not in out-stream players on blog pages or in gaming apps, which too often pass as TV inventory in reseller channels in the open market and private marketplace. We're also extending our verified streaming TV capabilities into activation, launching pre-bid verified streaming TV segments across leading programmatic platforms, such as the Trade Desk, Teads, StackAdapt, Microsoft Curate, and Index Exchange, allowing advertisers to target authentic streaming inventory in open market and PMP buys and avoid wasted delivery to rogue environments. Additionally, in activation, we've launched pre-bid do not error list for streaming TV within ABS, modernizing what was once a manual spreadsheet-based process into one that automatically enforces brand compliance policies across streaming platforms at scale. And finally, we announced a new deal with entertainment database IMDB, leveraging authoritative metadata and popularity insights licensed from IMDB to enhance show level transparency and classification for streaming TV. This partnership will help fuel agentic streaming TV contextual solutions that will be launching in early 2026. Together, these innovations strengthen both sides of our CTV business, measurement and activation, giving advertisers the visibility, precision, and performance they need as streaming becomes the centerpiece of digital media. On measurement, our adoption continues to accelerate. In Q3, our CTV measurement volumes grew 30% year over year, reflecting the growing scale of our streaming verification footprint and growing advertiser demand for transparency in CTV. Turning to programmatic, we continue to see healthy volume growth across open web environments on mobile and desktop. Approximately 65% of the open web media transactions we measure today occur on mobile devices, underscoring the increasingly app-centric nature of digital advertising. Excluding CTV, Programmatically purchased video display impressions grew at double-digit rates in the third quarter and year-to-date in 2025, reflecting sustained advertiser demand for transparent, measurable, and brand-suitable media. Programmatic display and video impression volumes continue to rise across high-quality, content-rich publishers in categories like news, lifestyle, food, and hobbies, where advertisers continue to find engaged, brand-suitable audiences. On the supply side, growth was also a standout again this quarter, up 27% year over year, driven by continued momentum in retail media, which grew 30% year over year. DV's tags are now accepted across 149 of the key global retail media networks and sites, including 18 of the top retail media platforms. We also added new platforms and publishers, including AMC, Univision, Comcast, Versant, Rumble, Wiley, Rakuten's Viber. As we look ahead, all of these innovations are creating clear catalysts for our largest monetization streams, activation and measurement. Our medium-term North Star is to grow social, streaming TV, and AI verification solutions from under 30% of total revenue today to roughly 50%, while continuing to efficiently grow our other key sectors. Achieving this revenue mix will provide a more defensible and scalable platform for growth that more closely mirrors global digital ad spend allocation. In activation, our social products are already turning adoption into revenue. DV Authentic Advantage and Meta Prebit are scaling quickly, driven by advertiser demand for transparent, performance-driven tools inside closed platforms. And just a few weeks since the launch, DV Authentic Advantage has closed nearly $8 million in expected annual contract value, while we expect meta pre-bid to generate an annualized run rate of at least $7 million by this year's end. Together, we believe these social activation solutions could represent a $120 to $160 million annual revenue opportunity over the long term. In streaming TV, we expect our pre-bid verified streaming TV segments and do not air lists within ABS to add roughly $10 million in incremental annual activation revenue once fully ramped. Across measurement, we see upside from our AI verification suite, verified streaming TV measurement, and content level transparency from partnerships like IMDB. Together, these products are expected to deliver meaningful incremental revenue as adoption scales. While the digital ad ecosystem continues to evolve, our strategy and product innovations are positioning DV for durable long-term growth. We're deepening relationships with global leaders, including Vodafone, Paramount Pictures, Kaleon, Papa John's, and Sonos, expanding partnerships across new solutions, markets, and media types. We've recently also added new enterprise customers like Tesco, Citigroup UK, Henkel, Red Bull, Under Armour, Burger King, Subway, Popeyes, Premier Inn, and Domino's that continue to strengthen our foundation for growth. Our large customer base is also becoming more diversified. The number of advertisers generating over $200,000 in annual revenue grew by 11% year-over-year to 347, reflecting broader adoption, higher product penetration, and increasing long-term value per client. Fueled by our industry-leading scale and innovation, DV continues to differentiate itself from its competitors as the only public, independent, scaled verification platform emerging as the benchmark for transparency and trust in the AI era. We've built this position through investing $210 million more in Gap R&D than our closest competitor from 2023 through 2025 to date, creating product differentiation across social and streaming TV, empowering the launch of unique proprietary offerings such as DV Authentic Advantage, DV Verified Streaming TV, DV Agent ID, DV AI Slop Stopper, and more. Additionally, Through acquisitions like Sybiz, AI, and Rockerbox, we've expanded our value proposition beyond verification into AI-powered optimization and outcomes measurements, core pillars of our media-advantaged platform strategy, which brings the full power of our data and technology to advertisers. Together, these form a broad-based, scaled solution unlike any in the market that will further distance us from the competition and provide future avenues of growth. TV is innovating and evolving with AI, enabling us to do so at increasing speed and efficiency, helping to expand margins in parallel. We are developing unique solutions that differentiate and diversify our revenue into the fast-growing sectors of social and CTV. And with new AI verification tools, we are positioning ourselves for expansive growth as the inevitability of LLM-centric advertising becomes a source of new monetization opportunities. When we kicked off 2025, we shared with you all that this would be a year of transition and evolution. We've leaned into both, weathering variable market conditions while introducing more TAM expanding solutions than at any time in our history, catalyzing future growth opportunities and delivering full-year growth ahead of our initial plans. As we move into 2026, our priorities remain clear. Execution, innovation, and sustained value creation for our customers and shareholders. We appreciate your continued support as we drive towards an exciting future for DV. With that, let me turn the call over to Nicola.