Direct Digital Holdings, Inc. (“Direct Digital Holdings” or the “Company”), a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC (“Colossus SSP”), Orange142, LLC (“Orange 142”) and Huddled Masses LLC (“Huddled Masses”), announced financial results for the fourth quarter and fiscal year ended December 31, 2023.
Mark D. Walker, Chairman and Chief Executive Officer, commented, “2023 was another transformational year for Direct Digital Holdings, achieving remarkable year-over-year revenue growth of 76% as well as dramatic operational expansion, and impressive results for our shareholders. Although performance in the fourth quarter was not as strong as we initially expected due to proactive measures we are taking in the face of changing macro industry trends, we are confident our company is in a position to build on the successes of 2023, expand on emerging channel and inorganic growth opportunities and continue our strong revenue growth and market share gains in 2024.”
Keith Smith, President, added, “The growth we saw in 2023 was primarily driven by advancements in our technology stack, additions in our customer list and strategic investments throughout our business. We are confident that all of these initiatives position our company for continued growth throughout 2024 and strengthen our foundations as we prepare for a rapidly changing industry landscape.”
Fourth Quarter 2023 Business Highlights:
- For the fourth quarter ended December 31, 2023, Direct Digital Holdings processed approximately 400 billion average monthly impressions through its sell-side advertising segment, an increase of 201% over the same period of 2022.
- In addition, the Company’s sell-side advertising platforms processed close to 1 trillion bid requests and received over 83 billion monthly bid responses in the fourth quarter of 2023, an increase of 367% over the same period in 2022. Sell-side revenue per advertiser for the fourth quarter of 2023 increased 185% compared to the same period of 2022.
- Accelerated our transition towards a “cookie-less” advertising environment during the quarter to place the organization in a position to successfully navigate expected changes in 2024 and beyond.
- The Company’s buy-side advertising segment served approximately 234 customers in the fourth quarter of 2023, an increase of about 7% over the prior year, with buy-side revenue per customer consistent with the same period of 2022.
(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.
Fourth Quarter 2023 Financial Highlights:
- Revenue was $41.0 million in the fourth quarter of 2023, an increase of $10.3 million, or 33%, over $30.7 million in the same period of 2022, the eighth consecutive quarter of double-digital revenue growth.
- Sell-side advertising segment revenue grew to $33.4 million and contributed $9.8 million of the increase, or 41% growth, over the $23.6 million of sell-side revenue in the same period of 2022.
- Buy-side advertising segment revenue grew to $7.6 million and contributed $0.5 million of the increase, or 7% growth, over the $7.1 million of buy-side revenue in the same period of 2022.
- Operating expenses were $9.3 million in the fourth quarter of 2023, an increase of $3.0 million, or 48%, over $6.3 million in the same period of 2022. Operating expenses for the fourth quarter of 2023 increased sequentially from operating expenses for the third quarter of 2023 of $7.3 million reflecting an increase of $2.0 million, or 28%.
- Net loss was $1.2 million in the fourth quarter of 2023, compared to net income of $1.4 million in the same period of 2022, driven by lower operating income described above.
- Adjusted EBITDA(1) was $2.3 million in the fourth quarter of 2023, compared to $3.1 million in the same period of 2022.
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