HOUSTON, Aug. 12, 2026 /PRNewswire/ -- Direct Digital Holdings, Inc. (Nasdaq: DRCT) ("Direct Digital Holdings" or the "Company"), a leading advertising and marketing technology platform operating through its companies Orange 142, LLC ("Orange 142") and Colossus Media, LLC ("Colossus SSP"), today announced financial results for the second quarter ended June 30, 2026.
Mark D. Walker, Chairman and Chief Executive Officer, commented, "The progress we're seeing in our core business reinforces the effectiveness of our growth strategy. While revenue decreased $3.8 million, or 21%, during the first six months of 2026 compared to the corresponding period in 2025, excluding the impact of business with demand side platform ("DSP") customers, revenue increased approximately $0.7 million, or 5%, during the first six months of 2026 compared to the corresponding period in 2025, reflecting strong renewal rates. Our focus on building a diversified pipeline, broadening customer relationships, and enhancing our product capabilities positions us to pursue sustainable growth and create long-term shareholder value. In fact, we are seeing strong customer and prospect interest in our AI search and generative engine optimization ("GEO") offerings as well as our AI support and web technology services which will expand our addressable market."
Keith Smith, President, commented, "Over the past several quarters, we have taken deliberate steps to streamline our operations and sharpen our focus on the areas where we believe we can create the greatest value. As a result, we are operating from a stronger foundation while retaining the flexibility to evaluate strategic partnerships and other opportunities that may complement our platform. Our priority remains disciplined execution, customer success, and the long-term growth of the business."
Second Quarter 2026 Financial Results
-- Revenue of $7.8 million decreased 23% compared to $10.1 million in the
second quarter of 2025. The decrease in revenue was driven primarily by a
$2.5 million decrease in spending by DSP customers during the second
quarter of 2026. Excluding revenue from DSP customers of $0 and $2.5
million for the second quarters of 2026 and 2025, respectively, revenue
grew $0.2 million or 3%.
-- Gross profit was $2.7 million, or 34% of revenue, compared to $3.6
million, or 35% of revenue, in the second quarter of 2025.
-- Operating expenses of $5.6 million decreased 7% compared to $6.0 million
in the second quarter of 2025.
-- Operating loss was $2.9 million, compared to $2.4 million in the second
quarter of 2025.
-- Net loss was $3.6 million compared to net loss of $4.2 million in the
second quarter of 2025.
-- Adjusted EBITDA(1) loss was $2.3 million in the second quarter of 2026
compared to Adjusted EBITDA loss of $1.5 million in the second quarter of
2025.
-- As of June 30, 2026, the Company held cash and cash equivalents of $0.5
million compared to $0.7 million as of December 31, 2025.
Six Months Ended June 30, 2026 Financial Results
-- Revenue of $14.5 million decreased 21% compared to $18.3 million in the
six months ended June 30, 2025. The decrease in revenue was driven
primarily by a $4.5 million decrease in spending by DSP customers during
the six months ended June 30, 2026. Excluding revenue from DSP customers
of less than $0.1 million and $4.5 million for the six months ended June
30, 2026 and 2025, respectively, revenue grew $0.7 million, or 5%, during
the first half of 2026.
-- Gross profit was $4.9 million, or 34% of revenue, compared to $6.0
million, or 33% of revenue, in the first half of 2025.
-- Operating expenses of $11.1 million decreased 10% compared to $12.3
million in the first half of 2025.
-- Operating loss was $6.2 million, compared to $6.4 million in the first
half of 2025.
-- Net loss was $9.2 million compared to net loss of $10.1 million in the
first half of 2025.
-- Adjusted EBITDA loss was $4.9 million in the first half of 2026 compared
to Adjusted EBITDA loss of $4.5 million in the first half of 2025.
Diana Diaz, Chief Financial Officer, commented, "We continue to manage the business with financial discipline while supporting investments that drive sustainable growth. Our streamlined cost structure and focus on liquidity position us to capitalize on future opportunities while maintaining a prudent approach to capital allocation."
As of June 30, 2026, the Company was not in compliance with certain financial covenants under its credit facility. Management is working constructively with its lender to obtain a waiver of the covenant noncompliance and believes discussions are progressing appropriately. The Company remains focused on strengthening operating performance, managing liquidity, and executing its strategic growth initiatives which we expect will expand our addressable market.
____________________ ((1) () "Adjusted EBITDA" is a non-GAAP financial measure. 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.
Conference Call and Webcast Details
Direct Digital Holdings will host a conference call today, Wednesday, August 12, 2026, at 5:00 p.m. Eastern Time to discuss the Company's second quarter 2026 financial results. The live webcast and replay can be accessed at https://ir.directdigitalholdings.com/news-events/ir-calendar. 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/.
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, 2025 (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.
Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance expressed in or implied by the forward-looking statements. We believe these factors include, but are not limited to, the following: the ability to realize the benefit of our strategic shift to focusing on driving digital marketing spend among historical buyers of managed advertising campaigns and new enterprise customers; the restrictions and covenants imposed upon us by our credit facilities; the substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing; our ability to secure additional financing to meet our capital needs; our ability to maintain compliance with the listing standards of the Nasdaq Capital Market; any significant fluctuations caused by our high customer concentration; risks related to non-payment by our clients; reputational and other harms caused by our failure to detect advertising fraud; operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems; restrictions on the use of third-party "cookies," mobile device IDs or other tracking technologies, which could diminish our platform's effectiveness; unfavorable publicity and negative public perception about our industry, particularly concerns regarding data privacy and security relating to our industry's technology and practices, and any perceived failure to comply with laws and industry self-regulation; our failure to manage our growth effectively; the difficulty in identifying and integrating any future acquisitions or strategic investments; any changes or developments in legislative, judicial, regulatory or cultural environments related to information collection, use and processing; challenges related to our clients that are destination marketing organizations and that operate as public/private partnerships; any strain on our resources or diversion of our management's attention as a result of being a public company; the intense competition of the digital advertising industry and our ability to effectively compete against current and future competitors; any significant inadvertent disclosure or breach of confidential and/or personal information we hold, or of the security of our or our customers', suppliers' or other partners'
computer systems; as a holding company, we depend on distributions from Direct Digital Holdings, LLC to pay our taxes, expenses (including payments under the Tax Receivable Agreement) and any amount of any dividends we may pay to the holders of our common stock; any failure by us to maintain or implement effective internal controls or to detect fraud; and other factors and assumptions discussed in our Form 10-K and subsequent periodic and current reports we may file with the SEC.
Should one or more of these risks or uncertainties materialize or should any of these assumptions prove to be incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this press release to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. New factors that could cause our business not to develop as we expect emerge from time to time, and it is not possible for us to predict all of them. Further, we cannot assess the impact of each currently known or new factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
About Direct Digital Holdings
Direct Digital Holdings (Nasdaq: DRCT) is an end-to-end, AI-powered advertising technology and media solutions provider. The Company combines advanced technology with award-winning media and marketing expertise to enhance reach and drive performance for brands, agencies, and publishers of all sizes. Through Orange 142, a leading digital marketing and advertising agency, the Company delivers customized, audience-focused campaigns that enable mid-market and enterprise companies to achieve measurable results across programmatic, search, social, CTV, influencer marketing, and more. The Company also provides curated access to premium digital media inventory through its proprietary media-buying platform. With expertise across high-growth sectors--including Energy, Higher Education, Travel & Tourism, and Financial Services--Direct Digital Holdings helps brands reach and engage audiences more effectively across the evolving digital media ecosystem.
DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and par value amounts)
June 30, 2026 December 31, 2025
---------------- ------------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 520 $ 728
Accounts receivable, net of provision
for credit losses of $944 2,684 3,126
Prepaid expenses and other current
assets 1,419 890
---------------- ------------------
Total current assets 4,623 4,744
---------------- ------------------
Property, equipment and software, net 99 166
Goodwill 6,520 6,520
Intangible assets, net 7,025 7,852
Operating lease right-of-use assets 607 702
Other long-term assets 47 172
---------------- ------------------
Total assets $ 18,921 $ 20,156
================ ==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 9,587 $ 7,820
Accounts payable - related party 538 --
Accrued liabilities 2,406 2,164
Accrued liabilities - related party 1,219 3,663
Liability related to tax receivable
agreement, current portion -- 41
Current maturities of long-term debt
- related party 17,335 12,003
Deferred revenues 795 513
Operating lease liabilities, current
portion 232 221
---------------- ------------------
Total current liabilities 32,112 26,425
---------------- ------------------
Long-term debt, net of current portion 144 146
Operating lease liabilities, net of
current portion 490 608
---------------- ------------------
Total liabilities 32,746 27,179
---------------- ------------------
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' DEFICIT
Series A Convertible Preferred Stock,
$0.001 par value per share, 10,000,000
shares authorized, 27,077 shares
issued and outstanding -- --
Class A Common Stock, $0.001 par value
per share, 760,000,000 shares
authorized, 740,119 and 331,076 shares
issued and outstanding, respectively 1 --
Class B Common Stock, $0.001 par value
per share, 20,000,000 shares
authorized, 42,160 shares issued and
outstanding -- --
Additional paid-in capital 27,899 25,812
Accumulated deficit (36,365) (27,720)
Noncontrolling interest (5,360) (5,115)
---------------- ------------------
Total stockholders' deficit (13,825) (7,023)
---------------- ------------------
Total liabilities and stockholders'
deficit $ 18,921 $ 20,156
================ ==================
DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ----------------------------------
2026 2025 2026 2025
---------------- ---------------- ---------------- ----------------
Revenues 7,832 10,144 $ 14,512 $ 18,301
Cost of revenues 5,169 6,583 9,587 12,347
---------------- ---------------- ---------------- ----------------
Gross profit 2,663 3,561 4,925 5,954
Operating
expenses
Compensation,
taxes and
benefits 3,215 3,639 6,236 7,303
General and
administrative 2,376 2,348 4,868 5,001
---------------- ---------------- ---------------- ----------------
Total operating
expenses 5,591 5,987 11,104 12,304
---------------- ---------------- ---------------- ----------------
Loss from
operations (2,928) (2,426) (6,179) (6,350)
Other income
(expense)
Other income 62 19 69 47
Loss on
settlement of
accounts
payable -- -- (1,247) --
Loss on debt
extinguishment -- -- (517) --
Derecognition of
tax receivable
agreement
liability 41 -- 41 --
Expenses for
Equity Reserve
Facility -- -- -- (198)
Interest expense
and
amortization of
deferred
financing cost
and debt
discount
(premium), net (764) (1,789) (1,327) (3,635)
---------------- ---------------- ---------------- ----------------
Total other
expense, net (661) (1,770) (2,981) (3,786)
---------------- ---------------- ---------------- ----------------
Loss before
income taxes (3,589) (4,196) (9,160) (10,136)
Income tax
expense -- -- -- --
---------------- ---------------- ---------------- ----------------
Net loss (3,589) (4,196) (9,160) (10,136)
---------------- ---------------- ---------------- ----------------
Net loss
attributable to
noncontrolling
interest (194) (1,947) (515) (5,532)
---------------- ---------------- ---------------- ----------------
Net loss
attributable to
Direct Digital
Holdings, Inc. $ (3,395) $ (2,249) $ (8,645) $ (4,604)
================ ================ ================ ================
Net loss per
common share
attributable to
Direct Digital
Holdings, Inc.:
Basic and
diluted $ (5.78) $ (49.79) $ (15.62) $ (121.69)
================ ================ ================ ================
Weighted-average
number of shares
of common stock
outstanding:
Basic and
diluted 709 45 643 38
DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30,
------------------------------------
2026 2025
----------------- -----------------
Cash Flows Used In Operating
Activities:
Net loss $ (9,160) $ (10,136)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Amortization of deferred financing
cost and debt discount (premium),
net 216 2,900
Amortization of intangible assets 827 977
Reduction in carrying amount of
right-of-use assets 95 90
Depreciation and amortization of
property, equipment and software 67 145
Stock-based compensation 267 705
Loss on settlement of accounts
payable 1,247 --
Loss on debt extinguishment 517 --
Derecognition of tax receivable
agreement liability (41) --
Interest paid in kind 1,100 --
Expenses for Equity Reserve Facility -- 198
Changes in operating assets and
liabilities:
Accounts receivable 442 1,082
Prepaid expenses and other assets (404) (842)
Accounts payable 2,406 (1,491)
Accrued liabilities and tax
receivable agreement payable 312 962
Income taxes payable -- 41
Deferred revenues 282 63
Operating lease liability (107) (92)
----------------- -----------------
Net cash used in operating
activities (1,934) (5,398)
Cash Flows Used In Investing
Activities:
Cash paid for capitalized software
and property and equipment -- (38)
----------------- -----------------
Net cash used in investing
activities -- (38)
Cash Flows Provided by Financing
Activities:
Payment of expenses for Equity
Reserve Facility -- (198)
Proceeds from issuance of Class A
Common Stock 1,226 5,942
Payment of deferred financing cost -- (46)
Payments on financed insurance
premiums (36) (114)
Payments on loans (2) --
Advances from related party 538 --
----------------- -----------------
Net cash provided by financing
activities 1,726 5,584
Net (decrease) increase in cash
and cash equivalents (208) 148
Cash and cash equivalents, beginning
of the period 728 1,445
----------------- -----------------
Cash and cash equivalents, end of the
period $ 520 $ 1,593
================= =================
Non-cash Financing Activities:
Reclassification of Exit Fee from
accrued liabilities to debt $ 3,608 $ --
----------------- -----------------
Settlement of accounts payable
through issuance of common stock $ 2,028 $ --
----------------- -----------------
Accrued dividends $ 1,163 $ --
----------------- -----------------
Financed insurance premiums $ 367 $ 291
----------------- -----------------
NON-GAAP FINANCIAL MEASURES
In addition to our results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), including, in particular operating income, net cash provided by operating activities, and net income, we believe that earnings before interest, taxes, depreciation and amortization, as adjusted for stock-based compensation, expenses for the Equity Reserve Facility, loss on settlement of accounts payable and loss on debt extinguishment ("Adjusted EBITDA"), a non-GAAP measure, is useful in evaluating our operating performance. The most directly comparable GAAP measure to Adjusted EBITDA is net income. The following table (in thousands) presents a reconciliation of Adjusted EBITDA to net loss for each of the periods presented (unaudited):
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ----------------------------------
2026 2025 2026 2025
---------------- ---------------- ---------------- ----------------
Net loss $ (3,589) $ (4,196) $ (9,160) $ (10,136)
Add back
(deduct):
Interest
expense and
amortization
of deferred
financing cost
and debt
discount
(premium),
net 764 1,789 1,327 3,635
Loss on
settlement of
accounts
payable -- -- 1,247 --
Loss on debt
extinguishment -- -- 517 --
Derecognition
of tax
receivable
agreement
liability (41) -- (41) --
Amortization of
intangible
assets 413 489 827 977
Stock-based
compensation 84 389 267 705
Depreciation
and
amortization
of property,
equipment and
software 34 77 67 145
Expenses for
Equity Reserve
Facility -- -- -- 198
---------------- ---------------- ---------------- ----------------
Adjusted EBITDA $ (2,335) $ (1,452) $ (4,949) $ (4,476)
================ ================ ================ ================
In addition to operating income and net income, we use Adjusted EBITDA as a measure of operational efficiency. We believe that this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons:
-- Adjusted EBITDA is widely used by investors and securities analysts to
measure a company's operating performance without regard to items such as
depreciation and amortization, interest expense, provision for income
taxes, stock-based compensation, and certain one-time items such as
acquisition transaction costs, losses from financing activities and costs
for the Equity Reserve Facility that can vary substantially from company
to company depending upon their financing, capital structures and the
method by which assets were acquired;
-- Our management uses Adjusted EBITDA in conjunction with GAAP financial
measures for planning purposes, including the preparation of our annual
operating budget, as a measure of operating performance and the
effectiveness of our business strategies and in communications with our
board of directors concerning our financial performance; and
-- Adjusted EBITDA provides consistency and comparability with our past
financial performance, facilitates period-to-period comparisons of
operations, and also facilitates comparisons with other peer companies,
many of which use similar non-GAAP financial measures to supplement their
GAAP results.
Our use of this non-GAAP financial measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP.
Contacts:
Investors:
IMS Investor Relations
Walter Frank/Jennifer Belodeau
(203) 972-9200
investors@directdigitalholdings.com
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SOURCE Direct Digital Holdings