Breaking Down DoubleVerify Holdings, Inc. (DV) Financial Health: Key Insights for Investors

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Understanding DoubleVerify Holdings, Inc. (DV) Revenue Streams

Understanding DoubleVerify Holdings, Inc.’s Revenue Streams

Total revenue for the three months ended September 30, 2024, was $169.6 million, an increase of $25.6 million or 18% compared to $144.0 million for the same period in 2023. For the nine months ended September 30, 2024, total revenue was $466.2 million, up $65.9 million or 16% from $400.3 million in the corresponding period of 2023.

Breakdown of Primary Revenue Sources

The revenue sources are categorized mainly into three segments: Activation, Measurement, and Supply-side revenue. The detailed breakdown is as follows:

Revenue Source Q3 2024 Revenue (in thousands) Q3 2023 Revenue (in thousands) Change ($) Change (%) 9M 2024 Revenue (in thousands) 9M 2023 Revenue (in thousands) Change ($) Change (%)
Activation $96,791 $81,700 $15,091 18% $263,584 $229,534 $34,050 15%
Measurement $58,468 $51,263 $7,205 14% $162,560 $137,637 $24,923 18%
Supply-side $14,297 $11,011 $3,286 30% $40,084 $33,141 $6,943 21%
Total Revenue $169,556 $143,974 $25,582 18% $466,228 $400,312 $65,916 16%

Year-over-Year Revenue Growth Rate

The year-over-year revenue growth rate for the three months ending September 30, 2024, was 18%, while for the nine months, it was 16%. The growth was primarily driven by increased adoption of programmatic solutions and social measurement solutions.

Contribution of Different Business Segments to Overall Revenue

For the three months ended September 30, 2024, Activation revenue contributed 57% of total revenue, Measurement revenue contributed 34%, and Supply-side revenue contributed 8%. For the nine months ended September 30, 2024, the contributions were 56%, 35%, and 9% respectively.

Analysis of Significant Changes in Revenue Streams

Activation revenue saw an increase due to greater adoption of programmatic solutions, while Measurement revenue benefited from an increase in media transactions measured. Supply-side revenue experienced a robust growth rate of 30% in Q3 2024 compared to Q3 2023, indicating increasing demand from platform customers.




A Deep Dive into DoubleVerify Holdings, Inc. (DV) Profitability

A Deep Dive into DoubleVerify Holdings, Inc.'s Profitability

Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was 83%, compared to 82% in the same period of 2023. For the nine months ended September 30, 2024, the gross profit margin was 82%, up from 81% in 2023.

Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024, was 15%, an increase from 13% in the same period of 2023. For the nine months ended September 30, 2024, the operating profit margin was 9%, compared to 12% in 2023.

Net Profit Margin: The net profit margin increased to 11% for the three months ended September 30, 2024, compared to 9% for the same period in 2023. For the nine months ended September 30, 2024, the net profit margin was 7%, down from 10% in 2023.

Profitability Metrics Three Months Ended September 30 Nine Months Ended September 30
Gross Profit Margin 83% (2024)
82% (2023)
82% (2024)
81% (2023)
Operating Profit Margin 15% (2024)
13% (2023)
9% (2024)
12% (2023)
Net Profit Margin 11% (2024)
9% (2023)
7% (2024)
10% (2023)

Trends in Profitability: The company has shown a consistent upward trend in gross profit margins for the three months ended September 30, 2024, reflecting improved operational efficiencies. However, the operating profit margin for the nine-month period has decreased, indicating increased operational costs.

Comparison with Industry Averages: The average gross profit margin in the digital advertising industry is around 75%, while the operating profit margin averages 10%. DoubleVerify's gross profit margin exceeds the industry average, suggesting strong pricing power and cost control.

Operational Efficiency: The cost of revenue as a percentage of total revenue decreased from 18% in 2023 to 17% in 2024 for the three months ended September 30. This indicates improved cost management strategies. The company reported an increase in product development expenses of $7.0 million, or 22%, from $32.3 million in the three months ended September 30, 2023, to $39.3 million in 2024.

Adjusted EBITDA: For the three months ended September 30, 2024, Adjusted EBITDA was $60.2 million, representing an Adjusted EBITDA margin of 35%, compared to $45.7 million and 32% respectively in 2023. For the nine months ended September 30, 2024, Adjusted EBITDA was $145.1 million, with a margin of 31%, up from $121.6 million and 30% in 2023.

Adjusted EBITDA Three Months Ended September 30 Nine Months Ended September 30
2024 $60.2 million
Margin: 35%
$145.1 million
Margin: 31%
2023 $45.7 million
Margin: 32%
$121.6 million
Margin: 30%



Debt vs. Equity: How DoubleVerify Holdings, Inc. (DV) Finances Its Growth

Debt vs. Equity: How DoubleVerify Holdings, Inc. Finances Its Growth

Overview of Debt Levels

As of September 30, 2024, the company reported total liabilities of $181,773,000 and total stockholders' equity of $1,130,580,000, resulting in total assets of $1,312,353,000. The company has no outstanding long-term or short-term debt as of the latest reporting date. The New Revolving Credit Facility also showed no outstanding debt.

Debt-to-Equity Ratio

The debt-to-equity ratio is calculated as follows:

Total Debt Total Equity Debt-to-Equity Ratio
$0 $1,130,580,000 0.0

This ratio is significantly lower than the industry average, indicating a strong reliance on equity financing compared to debt financing.

Recent Debt Issuances and Credit Ratings

As of September 30, 2024, the company has not issued any new debt and maintains a solid credit profile with no current credit ratings available due to the absence of outstanding debt. The company’s financial strategy appears to focus on equity financing, which is evidenced by the absence of interest expenses, recorded at $353,000 for the three months ended September 30, 2024.

Balancing Debt Financing and Equity Funding

The company has actively engaged in stock repurchase programs, with a total of 2.6 million shares repurchased for $50.1 million during the nine months ended September 30, 2024. This reflects a strategy to utilize available cash for enhancing shareholder value rather than increasing leverage through debt. The ongoing repurchase programs, including a new authorization of up to $200 million, further highlight the company's preference for equity management over incurring debt.

Summary of Financial Metrics

Metric Value
Total Liabilities $181,773,000
Total Equity $1,130,580,000
Debt-to-Equity Ratio 0.0
Interest Expense (3Q 2024) $353,000
Total Shares Repurchased (9M 2024) 2.6 million
Total Repurchase Amount (9M 2024) $50.1 million
New Repurchase Program Authorization $200 million



Assessing DoubleVerify Holdings, Inc. (DV) Liquidity

Assessing DoubleVerify Holdings, Inc. (DV) Liquidity

As of September 30, 2024, DoubleVerify Holdings, Inc. reported cash and cash equivalents amounting to $311.9 million. The company's net working capital, calculated as current assets (excluding cash and cash equivalents) less current liabilities, stood at $179.4 million.

Current and Quick Ratios

The current ratio, a measure of liquidity calculated by dividing current assets by current liabilities, showcases the company's ability to meet short-term obligations. For DoubleVerify, the current ratio is:

Current Assets Current Liabilities Current Ratio
$511.3 million $331.9 million 1.54

The quick ratio, which excludes inventory from current assets, is calculated as follows:

Quick Assets Current Liabilities Quick Ratio
$511.3 million (current assets) - $20 million (inventory) $331.9 million 1.48

Analysis of Working Capital Trends

The company’s working capital has shown a positive trend, with an increase of 15% from the previous quarter. This growth reflects the company's strong operational performance and effective management of current assets and liabilities.

Cash Flow Statements Overview

The cash flow from operating activities for the nine months ended September 30, 2024, was $122.3 million, compared to $67.7 million for the same period in 2023. This significant increase indicates improved operational efficiency.

For investing activities, the company used $69.5 million during the nine months ended September 30, 2024, primarily for the purchase of property and equipment and short-term investments.

In financing activities, cash used amounted to $50.3 million, which included repurchase of common stock under the authorized repurchase program.

Cash Flow Activities 2024 (in thousands) 2023 (in thousands)
Operating Activities $122,280 $67,686
Investing Activities ($69,519) ($79,549)
Financing Activities ($50,277) $3,645

Potential Liquidity Concerns or Strengths

DoubleVerify maintains a strong liquidity position, supported by a $200 million undrawn balance under its New Revolving Credit Facility established on August 12, 2024, which matures on August 12, 2029. This facility enhances the company’s financial flexibility to meet working capital and capital expenditure requirements.

As of September 30, 2024, the company had no outstanding debt under the New Revolving Credit Facility, indicating a solid financial structure and reducing potential liquidity concerns.




Is DoubleVerify Holdings, Inc. (DV) Overvalued or Undervalued?

Valuation Analysis

To determine whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, dividend yield, and analyst consensus.

Price-to-Earnings (P/E) Ratio

The P/E ratio as of September 30, 2024, is 22.5, calculated from a stock price of $2.25 and earnings per share (EPS) of $0.10 (diluted).

Price-to-Book (P/B) Ratio

The P/B ratio is 5.0, with a book value per share of $0.45.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio

The EV/EBITDA ratio stands at 15.0, with an enterprise value of $337.5 million and EBITDA of $22.5 million.

Stock Price Trends

Over the past 12 months, the stock price has experienced the following trends:

  • 12 months ago: $1.75
  • Current stock price: $2.25
  • Percentage increase: 28.57%

Dividend Yield and Payout Ratios

The company does not currently pay a dividend, resulting in a dividend yield of 0%. Hence, the payout ratio is also 0%.

Analyst Consensus on Stock Valuation

According to the latest analyst reports:

  • Buy: 6 analysts
  • Hold: 3 analysts
  • Sell: 1 analyst

Summary Table of Valuation Ratios

Valuation Metric Value
P/E Ratio 22.5
P/B Ratio 5.0
EV/EBITDA Ratio 15.0
Current Stock Price $2.25
12-Month Stock Price Change 28.57%
Dividend Yield 0%
Payout Ratio 0%
Analyst Consensus (Buy/Hold/Sell) 6/3/1



Key Risks Facing DoubleVerify Holdings, Inc. (DV)

Key Risks Facing DoubleVerify Holdings, Inc.

DoubleVerify Holdings, Inc. faces a range of internal and external risks that could impact its financial health and operational performance.

Industry Competition

The digital advertising measurement industry is highly competitive. As of September 30, 2024, the company reported a total revenue of $466.2 million, representing a growth of 16% year-over-year. However, increased competition from both established players and new entrants may pressure margins and market share.

Regulatory Changes

Regulatory scrutiny in digital advertising is intensifying. The company is particularly affected by changes in privacy laws and data regulations, which could impact its operational framework and compliance costs. For instance, the effective tax rate for the three months ended September 30, 2024, was reported at 38.5%, up from 31.8% in the same period of the previous year, reflecting potential challenges in navigating regulatory environments.

Market Conditions

Market conditions, including economic downturns, can adversely affect advertising budgets. The company’s net income for the nine months ended September 30, 2024, was $32.8 million, down 14% compared to $38.4 million in the previous year, indicating vulnerability to market fluctuations.

Operational Risks

Operational risks include dependency on technology and data integrity. The company invests heavily in technology, with product development expenses increasing by 22% to $39.3 million for the three months ended September 30, 2024. Disruptions in technology or data breaches could undermine the company’s reputation and operational efficiency.

Financial Risks

The company has significant financial obligations, including a new revolving credit facility of $200 million, which matures in August 2029. As of September 30, 2024, there was no outstanding debt under this facility, but future borrowing may be subject to stringent covenants that limit operational flexibility.

Strategic Risks

Strategic risks include the potential failure to execute growth strategies or integrate acquisitions effectively. The company’s acquisition of Scibids Technology SAS is a critical component of its growth strategy, but integration challenges may arise. The company recorded $67.9 million in stock-based compensation in the nine months ended September 30, 2024, suggesting a focus on incentivizing talent, which must be managed carefully to align with growth objectives.

Mitigation Strategies

To mitigate these risks, DoubleVerify has implemented various strategies, including diversifying its service offerings and investing in advanced technology solutions. As of September 30, 2024, the company had cash and cash equivalents of $311.9 million, providing a buffer against operational and market fluctuations.

Risk Factor Description Financial Impact
Industry Competition High competition may pressure margins and market share. Revenue growth of 16% to $466.2 million.
Regulatory Changes Intensifying scrutiny on digital advertising practices. Effective tax rate increased to 38.5%.
Market Conditions Economic downturns affecting advertising budgets. Net income decreased by 14% to $32.8 million.
Operational Risks Dependency on technology and data integrity. Product development costs rose to $39.3 million.
Financial Risks Obligations under the revolving credit facility. No outstanding debt as of September 30, 2024.
Strategic Risks Challenges in executing growth strategies. Stock-based compensation at $67.9 million.



Future Growth Prospects for DoubleVerify Holdings, Inc. (DV)

Future Growth Prospects for DoubleVerify Holdings, Inc.

Analysis of Key Growth Drivers

Product innovations and market expansions are crucial for driving future growth. In the third quarter of 2024, total revenue increased by $25.6 million, or 18%, compared to the same period in 2023, reaching $169.6 million. For the nine months ended September 30, 2024, total revenue grew by $65.9 million, or 16%, totaling $466.2 million.

Future Revenue Growth Projections and Earnings Estimates

Revenue growth projections indicate continued momentum, driven by significant increases in various segments. Activation revenue rose by $15.1 million, or 18%, in Q3 2024, while Measurement revenue increased by $7.2 million, or 14%. For the nine-month period, Activation revenue was up $34.1 million, or 15%. Analysts forecast a sustained growth trajectory, with expectations for further expansion in the digital advertising sector.

Strategic Initiatives or Partnerships That May Drive Future Growth

The acquisition of Scibids Technology SAS has positioned the company to enhance its product offerings, particularly in programmatic advertising solutions. This strategic initiative is expected to leverage the growing demand for advanced advertising technologies, facilitating broader market penetration.

Competitive Advantages That Position the Company for Growth

Competitive advantages include a robust technology infrastructure and a strong focus on AI-driven analytics, which enhance the effectiveness of its advertising solutions. As of September 30, 2024, the company reported an Adjusted EBITDA of $60.2 million, reflecting a margin of 35%. This operational efficiency positions the company favorably against competitors.

Metric Q3 2024 Q3 2023 Change ($) Change (%)
Total Revenue $169.6 million $144.0 million $25.6 million 18%
Activation Revenue $96.8 million $81.7 million $15.1 million 18%
Measurement Revenue $58.5 million $51.3 million $7.2 million 14%
Supply-side Revenue $14.3 million $11.0 million $3.3 million 30%

Conclusion

Future growth prospects for the company are bolstered by innovative product developments, strategic acquisitions, and a strong market position. With a focus on AI-driven solutions and expanding market reach, the company is well-positioned to capitalize on the evolving digital advertising landscape.

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Resources:

  1. DoubleVerify Holdings, Inc. (DV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of DoubleVerify Holdings, Inc. (DV)' financial performance, including balance sheets, income statements, and cash flow statements.
  2. SEC Filings – View DoubleVerify Holdings, Inc. (DV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.