Direct Digital Holdings Reports First Quarter 2025 Financial Results

PR Newswire

HOUSTON, May 6, 2025

Enhanced Buy-Side Revenue Demonstrating Business Segment Growth as Orange 142 Scales

19% Reduction in Operating Expenses Compared with 1Q24 Driven by Strategic Cost Saving Initiatives

Entered New Strategic Partnerships to Diversify and Expand Addressable Market

HOUSTON, May 6, 2025 /PRNewswire/ -- Direct Digital Holdings, Inc. (Nasdaq: DRCT) ("Direct Digital Holdings" or the "Company"), a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC ("Colossus SSP") and Orange 142, LLC ("Orange 142"), today announced financial results for the first quarter ended March 31, 2025.

Mark D. Walker, Chairman and Chief Executive Officer, commented, "As we begin to move through 2025, we are focused on continuing to scale our buy-side solution while simultaneously rebuilding our sell-side business. During the first quarter, which is historically our weakest quarter, we recognized consolidated revenue of $8.2 million, supported primarily by buy-side revenue of $6.1 million which was up 6% compared to the prior year. Sequentially, first quarter sell-side revenue of $2.0 million is relatively comparable to fourth quarter 2024 sell-side revenue of $2.7 million, an encouraging trend given that (1) fourth quarter is typically the strongest quarter for the sell-side business based on seasonality and (2) our 2024 fourth quarter included $0.7 million of political spend. In the first quarter of 2025, we saw the continued impact of the disruption of our sell-side business in 2024, however, we are pleased by the ongoing commitment of our agency, brand and publisher partners to resume or increase activity with the Company once direct connections are fully integrated in the second half of 2025, and we are working diligently to restore this segment to previous levels.

"Our focus in 2025 is on driving growth and value for our shareholders," Mr. Walker continued. "We've launched several initiatives to drive our progress, including revenue optimization efforts to diversify our revenue base and cost saving initiatives to drive reductions in operating expenses and enhance operational efficiencies. In the first quarter of 2025, we reduced operating expenses by nearly $1.5 million, or approximately 19% when compared to the first quarter of 2024. We continue to evaluate the optimal personnel and cost structure for our business.

"At the business unit level, the unification of our two buy side divisions into Orange 142 has allowed us to better service the small to mid-sized partners who represent a significant growth opportunity for our business. Moreover, our Colossus Connections, launched in the third quarter of 2024 to accelerate direct integration efforts with leading demand-side platforms, is progressing well, and as previously reported, we signed up two of the leading marketplace partners and we recently added two additional mid-tier partners who are near completion with integration. We expect to see the impact of these new partners on our revenues in the second half of 2025 once integration has been completed, " Mr. Walker stated.

"With our current visibility, we maintain our current revenue guidance of $90 million to $110 million for the full fiscal year of 2025 supported by growth across both our buy-side and sell-side segments. There is still a great deal of work to be done in a challenging and uncertain time, but we believe that we are well positioned with a revitalized model, prudent cost management strategies, and strong demand for our products and services to drive growth and value as we navigate the business back to profitability," Mr. Walker concluded.

Keith Smith, President, commented, "We remain focused on strategically recalibrating and enhancing our business model to capitalize on new opportunities and meet the demands of our diverse partners. We faced significant challenges in 2024, and we are now emerging as a stronger, more nimble business intent on continuing to scale and expand our offerings. From a liquidity perspective, we continue to explore strategic opportunities to support key growth initiatives and drive long term value for our shareholders."

First Quarter 2025 Highlights

   -- Processed approximately 188 billion average monthly impressions through 
      the sell-side advertising segment. 
 
   -- Sell-side advertisers increased 13% compared to the first quarter of 
      2024. 
 
   -- Sell-side media properties of 24,000 average per month in the first 
      quarter of 2025 decreased 8% compared to the first quarter of 2024, 
      increased 20% over the same period in 2023, and decreased 15% 
      sequentially compared to the fourth quarter of 2024. 
 
   -- Buy-side advertising segment served over 220 customers in the first 
      quarter of 2025. 
 
   -- Buy-side advertising revenue for the first quarter of 2025 included $1.2 
      million from customers in new verticals. 
 
   -- Continued to consider strategic opportunities to support key growth 
      initiatives and drive long term value for shareholders. 

First Quarter 2025 Financial Results

   -- Revenue of $8.2 million decreased 63% compared to $22.3 million in the 
      first quarter of 2024. 
 
   -- Sell-side advertising segment revenue of $2.0 million decreased 88% 
      compared to $16.5 million in the first quarter of 2024. The decrease in 
      sell-side advertising revenue was primarily related to a decrease in 
      impression inventory when compared to the first quarter of 2024. 
 
   -- Buy-side advertising segment revenue of $6.1 million increased 6% 
      compared to $5.8 million in the same period of 2024. 
 
   -- Gross profit was $2.4 million, or 29% of revenue, compared to $5.0 
      million, or 22% of revenue, in the first quarter of 2024. 
 
   -- Operating expenses of $6.3 million decreased $1.5 million, or 19%, 
      compared with $7.8 million in the same period of 2024. The reduction in 
      operating expenses was primarily driven by decreased payroll costs 
      related to the Company's internal reorganization and cost saving measures 
      to lower certain ongoing expenses. 
 
   -- Operating loss was $3.9 million, compared to operating loss of $2.8 
      million in the prior year period. 
 
   -- Net loss was $5.9 million compared to net loss of $3.8 million in the 
      first quarter of 2024. 
 
   -- Adjusted EBITDA1 loss was $3.0 million in the first quarter of 2025 
      compared to a loss of $1.7 million in the first quarter of 2024. 
 
   -- As of March 31, 2025, the Company held cash and cash equivalents of $1.8 
      million compared to $1.4 million as of December 31, 2024. 

Financial Outlook

Based on current visibility and subject to general market factors, the Company is maintaining its full year guidance of $90 million to $110 million for full year 2025. This target is based on the expectation of consolidated revenue growth compared to full year 2024 driven by enhanced buy-side activity through Orange 142 and the ongoing recovery of the Company's sell-side business rebuilds to historical revenue levels.

Diana Diaz, Chief Financial Officer, stated, "Our focus continues to be on optimizing performance, reducing our cost structure, and driving efficiencies as we navigate the business back to profitability. With our visibility today, we believe that we are well positioned to achieve our financial goals for the fiscal year."

Conference Call and Webcast Details

Direct Digital will host a conference call today, May 6, 2025, at 5:00 p.m. Eastern Time to discuss the Company's first quarter 2025 financial results. The live webcast and replay can be accessed at https://ir.directdigitalholdings.com/. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. For those who cannot access the webcast, a replay will be available at https://ir.directdigitalholdings.com/ for a period of twelve months.

 
__________________________________ 
(1) "Adjusted EBITDA" and "Adjusted Operating Expenses" are non-GAAP financial 
measures. The section titled "Non-GAAP Financial Measures" below describes our 
usage of non-GAAP financial measures and provides reconciliations between 
historical GAAP and non-GAAP information contained in this press release. 
 

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws that are subject to certain risks, trends and uncertainties. We use words such as "could," "would," "may," "might," "will," "expect," "likely," "believe," "continue," "anticipate, " "estimate," "intend," "plan," "project" and other similar expressions to identify forward-looking statements, but not all forward-looking statements include these words. All of our forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Accordingly, any such statements are qualified in their entirety by reference to the information described under the caption "Risk Factors" and elsewhere in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "Form 10-K") and subsequent periodic and or current reports filed with the Securities and Exchange Commission (the "SEC").

The forward-looking statements contained in this press release are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions.

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