DRCT

Image source: The Motley Fool. Wednesday, Aug. 12, 2026 at 5 p.m. ET Chairman and Chief Executive Officer - Mark Walker Chief Financial Officer - Diana Diaz Investor Relations - Walter Frank Operator: Good day, everyone, and welcome to the Direct Digital Holdings Second Quarter 2026 Conference Call. As a reminder, this call is being recorded. At this time, I would like to hand things over to Walter Frank, Investor Relations. Please go ahead. Walter Frank: Thank you. Good afternoon, everyone, and welcome to Direct Digital Holdings Second Quarter 2026 Earnings Conference Call. On today's call are Direct Digital Holdings Chairman and Chief Executive Officer, Mark Walker; and Chief Financial Officer, Diana Diaz. Information discussed today is qualified in its entirety with the Form 8-K and accompanying earnings release, which has been filed today by Direct Digital Holdings, which may be accessed at the SEC's website and the company's website. Today's call is also being webcast, and a replay will be posted to Direct Digital's Investor Relations website. Immediately following the speaker's presentation, there will be question and answer session. Please note that the statements made during the call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. These statements are made on the basis of Direct Digital's views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks, which could cause Direct Digital's actual results to differ from its historical results and forecasts, including those risks set forth in Direct Digital's filings with the SEC, and you should refer to those for more information. This cautionary statement applies to all forward-looking statements made during this call. During the call, Direct Digital will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings release that Direct Digital filed in its Form 8-K today. I will now hand over the conference to Mark Walker, Chief Executive Officer. Please go ahead, Mark. Mark Walker: Thanks, Walter, and thank you to everyone joining our call today. I'll start by reviewing some of the highlights of our operations and financial results during the second quarter and first half of 2026. Before turning the call over to our Chief Financial Officer, Diana Diaz, for a more detailed look at our financial results, we'll conclude by opening the call for a brief Q&A. We saw encouraging progress in our core business during the second quarter. To recap, during the first quarter of 2026, we announced a comprehensive shift in our strategy that saw us aggregate our operations to a streamlined model to sharpen our focus on the areas where we believe we can create the greatest value for both our clients and our shareholders. We believe that by diversifying our pipeline, broadening our customer relationships and enhancing our product capabilities, we're positioning ourselves to drive more consistent, scalable long-term growth. We successfully unveiled AI search and GEO offerings this past quarter and are seeing strong demand from current clients and prospective new clients as well as our AI support and web infrastructure technology services, which will both expand our addressable market. These products unlock new technology budgets and the technical upgrades we provide clients service performance multipliers that improves conversion performance and lowers cost to acquire for our new clients. We're seeing our technical expertise position us with clients as a comprehensive digital growth partner rather than just supporting the media needs and leaning into helping companies facing conversion bottlenecks. Demand is strong, but it's important to remember that we're still in the early stages of this shift. Total revenue was down in the quarter related to decreased activity from our demand-side platform customers, which is expected as we continue to shift our strategy. In fact, excluding the impact of reduced spending from DSP customers, total revenue increased approximately 5% year-to-date when compared with the first 6 months of 2025. While these numbers seem small compared to our historical results, they are trending in the right direction. Our value proposition is heightened by complete alignment across our digital supply platform. We're technology and media agnostic and our clients rely on us to provide the best opportunity their brands and businesses to achieve enhanced market reach through strategic digital advertising. Strong relationships we have built are evidenced in our client retention rate of approximately 80% among clients that represent approximately 80% of our revenue for the 6 months ended June 30, 2026. We still have a tremendous amount of work to do, but we're operating from a much stronger foundation and driving measurable results. Additionally, we have the flexibility to evaluate strategic partnerships and opportunities that complement and enhance the strength of our platform with the goal of driving shareholder value. As always, I sincerely appreciate your support of Direct Digital Holdings. I will now hand the call over to Diana Diaz, our Chief Financial Officer, who will walk through some of the financial highlights in further detail. Diana Diaz: Thank you, Mark, and good evening, everyone. I'll now provide a review of our second quarter results with some commentary on year-to-date results where relevant. Consolidated revenue in the second quarter of 2026 was $7.8 million compared to revenue of $10.1 million in the second quarter of last year. As Mark mentioned, revenue declined in the quarter related to a decrease in spending by demand-side platform customers of $2.5 million. On a year-to-date basis, revenue of $14.5 million decreased compared to $18.3 million in the first half of last year. Excluding the decrease in sales to DSP customers of $4.5 million for the first half of the year, revenue grew about $700,000 or 5% year-over-year. Gross profit was $2.7 million for the second quarter of 2026 or 34% of revenue compared with $3.6 million or 35% of revenue in the second quarter of 2025. Operating expenses in the second quarter of 2026 decreased 7% to $5.6 million compared to $6 million in the second quarter of 2025. Total operating loss for the second quarter was $2.9 million compared with an operating loss of $2.4 million in the second quarter of 2025. Net loss in the second quarter was $3.6 million compared to a net loss of $4.2 million in the second quarter of last year. And the adjusted EBITDA loss for the second quarter was $2.3 million compared with adjusted EBITDA loss of $1.5 million in the second quarter of last year. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $500,000 compared to $700,000 at the end of December 2025. Total cash plus our accounts receivable balance as of June 30, 2026, was $3.2 million compared to $3.9 million at the end of 2025. Related to our current credit facility, we were not in compliance with certain financial covenants as of the end of the quarter. We are actively engaged with our lender and have requested a waiver. Discussions have been constructive. And while the process remains ongoing, our current focus is on improving operating performance and working toward a mutually acceptable resolution. We will provide further updates when appropriate. Our focus continues to be on driving operational efficiencies and managing the business with financial discipline, and we're strategically investing in the business to capitalize on opportunities and drive sustainable long-term growth. Now I'd like to turn it back over to Mark for some closing comments. Mark Walker: Thank you, Diana, and thank you to everyone for joining. We appreciate your interest in Direct Digital Holdings and I would like to now open the call for questions. Operator, please open the line. Operator: [Operator Instructions] Everyone, there are no questions. That does conclude our conference for today. We would like to thank you all for your participation. You may now disconnect. Before you buy stock in Direct Digital, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Direct Digital wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $419,408!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,348,694!* Now, it’s worth noting Stock Advisor’s total average return is 966% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 19, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Direct Digital (DRCT) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is executing a comprehensive strategic shift initiated in Q1 2026 to streamline operations and focus on high-value client segments. The decline in total revenue was primarily driven by a planned decrease in activity from demand-side platform (DSP) customers as part of the strategic pivot. Excluding the impact of reduced DSP spending, the core business grew approximately 5% year-to-date, which management views as a positive trend toward stabilization. The company is transitioning from a media-only provider to a comprehensive digital growth partner, specifically targeting clients facing conversion bottlenecks. New AI search and GEO offerings are unlocking previously inaccessible technology budgets and serving as performance multipliers for client conversion rates. Client retention remains a core strength, with approximately 80% retention among clients that represent approximately 80% of total revenue. Management is positioning the company as technology and media agnostic to provide enhanced market reach through strategic digital advertising. The company is in the early stages of its strategic shift, with expectations that new AI support and web infrastructure services will expand the total addressable market. Management is prioritizing operational efficiencies and financial discipline to build a scalable foundation for long-term growth. The company has the flexibility to evaluate strategic partnerships and opportunities to enhance its platform and drive shareholder value. to complement the existing platform and enhance shareholder value. Future performance is dependent on the successful conversion of the current pipeline of prospective clients interested in the new AI-driven product suite. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The company was not in compliance with certain financial covenants under its current credit facility as of June 30, 2026. Management is actively engaged in constructive discussions with its lender and has formally requested a waiver for the covenant breaches. Cash and cash equivalents decreased to $500,000 at quarter-end, down from $700,000 at the end of December 2025. Operating loss widened to $2.9 million in Q2 compared to $2.4 million in the prior year period, with the operating loss widening year-over-year as the company continues its strategic shift.

This article first appeared on GuruFocus. Release Date: August 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Excluding reduced DSP spending, total revenue increased approximately 5% year-to-date, indicating underlying growth in the core business. Successfully launched AI search and geo offerings, which are seeing strong demand from both existing and prospective clients. Client retention rate is strong at approximately 80% among clients representing about 80% of revenue for the first half of 2026. Operating expenses decreased 7% year-over-year in Q2 2026, reflecting improved cost management. Net loss improved to $3.6 million in Q2 2026 from $4.2 million in Q2 2025, showing progress in reducing losses. Total revenue declined to $7.8 million in Q2 2026 from $10.1 million in Q2 2025, driven by a $2.5 million decrease in DSP customer spending. Adjusted EBITDA loss widened to $2.3 million in Q2 2026 from $1.5 million in Q2 2025. Cash and cash equivalents fell to $500,000 at June 30, 2026, from $700,000 at the end of 2025, indicating tight liquidity. The company was not in compliance with certain financial covenants under its credit facility as of the end of Q2 2026, and a waiver request is still pending. Operating loss increased to $2.9 million in Q2 2026 from $2.4 million in Q2 2025, reflecting ongoing operational challenges. Warning! GuruFocus has detected 6 Warning Signs with DRCT. Is DRCT fairly valued? Test your thesis with our free DCF calculator. Q: What were the key drivers behind the revenue decline in the second quarter of 2026, and how is the company's strategic shift impacting growth?A: Mark Walker, CEO, explained that the total revenue decline was primarily due to decreased activity from demand-side platform (DSP) customers, which was an expected outcome of the company's strategic shift announced in Q1 2026. Excluding the impact of reduced DSP spending, total revenue increased approximately 5% year-to-date compared to the first half of 2025. The company is focusing on diversifying its pipeline, broadening customer relationships, and enhancing product capabilities to drive more consistent, scalable, long-term growth. Q: Can you provide more details on the new AI search and geo offerings and their impact on the business?A: Mark Walker, CEO, stated that the company successfully unveiled AI search and geo offerings in the past quarter and is seeing strong demand from both current and prospective clients. These offerings, along with AI support and web infrastructure technology services, expand the company's addressable market. They unlock new technology budgets and provide clients with service performance multipliers that improve conversion performance and lower customer acquisition costs, positioning the company as a comprehensive digital growth partner. Q: What were the specific financial results for the second quarter of 2026?A: Diana Diaz, CFO, reported consolidated revenue of $7.8 million in Q2 2026, down from $10.1 million in Q2 2025, due to a $2.5 million decrease in DSP customer spending. Gross profit was $2.7 million (34% of revenue) compared to $3.6 million (35% of revenue) in the prior year. Operating expenses decreased 7% to $5.6 million, and the operating loss was $2.9 million. Net loss improved to $3.6 million from $4.2 million, while adjusted EBITDA loss was $2.3 million compared to $1.5 million in Q2 2025. Q: How is the company's client retention rate performing, and what does it indicate about customer relationships?A: Mark Walker, CEO, highlighted that the company's client retention rate is approximately 80% among clients that represented approximately 80% of revenue for the six months ended June 30, 2026. This strong retention rate demonstrates the solid relationships built with clients and the value proposition of the company's technology and media-agnostic approach, which helps brands achieve enhanced market reach through strategic digital advertising. Q: What is the company's current cash position, and are there any concerns regarding its credit facility?A: Diana Diaz, CFO, stated that the company ended the quarter with cash and cash equivalents of $500,000, down from $700,000 at the end of December 2025. Total cash plus accounts receivable was $3.2 million compared to $3.9 million at the end of 2025. The company was not in compliance with certain financial covenants under its current credit facility as of the end of the quarter. They are actively engaged with the lender and have requested a waiver, with discussions described as constructive and ongoing. Q: How is the company managing its operating expenses and overall financial discipline during this transition?A: Diana Diaz, CFO, noted that operating expenses decreased 7% in Q2 2026 to $5.6 million compared to $6 million in Q2 2025. The company's focus remains on driving operational efficiencies and managing the business with financial discipline while strategically investing in areas that capitalize on opportunities and drive sustainable long-term growth. Q: What is the company's outlook for the remainder of 2026, and what are the key priorities?A: Mark Walker, CEO, acknowledged that while demand for new offerings is strong, the company is still in the early stages of its strategic shift. He emphasized that the company is operating from a much stronger foundation and driving measurable results. The flexibility to evaluate strategic partnerships and opportunities that complement the platform's strength is a priority, with the goal of driving shareholder value. Q: Can you elaborate on the year-to-date revenue performance excluding DSP customers?A: Diana Diaz, CFO, explained that on a year-to-date basis, revenue was $14.5 million compared to $18.3 million in the first half of 2025. Excluding the $4.5 million decrease in sales to DSP customers, revenue grew approximately $700,000, or 5%, year over year. This indicates that the core business, excluding the expected DSP decline, is trending in the right direction. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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. 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. 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): 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 RelationsWalter Frank/Jennifer Belodeau(203) [email protected] View original content to download multimedia:https://www.prnewswire.com/news-releases/direct-digital-holdings-reports-second-quarter-2026-financial-results-302850135.html

Image source: The Motley Fool. Monday, May 11, 2026 at 11 a.m. ET Chief Executive Officer — Mark Walker Chief Financial Officer — Diana Diaz Mark Walker; and Chief Financial Officer, Diana Diaz. Information discussed today is qualified in its entirety with the Form 8-K and accompanying earnings release, which was filed on Wednesday, April 1, by Direct Digital Holdings and may be accessed at the SEC's website and the company's website. Today's call is also being webcast, and replay will be posted to Direct Digital Holdings Investor Relations website. Immediately following the speaker's presentation, there will be a question-and-answer session. Please note that the statements made during the call including financial projections or other statements that are not historical in nature may constitute forward-looking statements. These statements are made on the basis of Direct Digital's views and assumptions regarding future events and business performance at the time that they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks, which could also cause direct actual results to differ from its historical results and forecasts, including those risks set forth in Direct Digital's filings with the SEC, and you should refer to those for more information. This cautionary statement applies to all forward-looking statements made during this call. During this call, Direct Digital will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings release that Direct Digital filed in its Form 8-K last week. I will now hand the call over to Mark Walker, Chief Executive Officer. Please go ahead, Mark. Mark Walker: Thanks, Walter, and thank you to everyone joining our call this evening. I'll start by reviewing some of the highlights of our operations and financial results during the fourth quarter and full year before turning the call over to our Chief Financial Officer, Diana Diaz, for a more detailed look at our financial results. We'll conclude by opening the call for a brief Q&A. For the full year, we reported $34.7 million in sales. While we saw a decrease in our sell-side revenue during the year, we grew full year buy-side revenue, maintained strong gross margins for the year and importantly, drove considerable efficiency and cost reduction in the business. Finally, we made significant strides in improving our balance sheet. We still have a lot of work to do, but I'm encouraged that many of our strategic initiatives position us very well as we move into 2026. We're a focused, more nimble organization with a realigned structure and a clear strategy to drive returns for shareholders. Over the past 1.5 years, we've noticed a shift to the overall digital advertising market that prioritizes buy-side transactions as well as increasing demand from our customers for more accessible buy-side media. During 2025, we began to lean into this demand, resulting in increased buy-side revenue, which offered some early confirmation from what we're seeing in the market. Fast forwarding to where we are today, buy-side revenue grew 28% in the fourth quarter of 2025 compared to the fourth quarter of 2024, and has increased 10% year-over-year, supported by a combination of new and existing customers and the demand we're seeing across our verticals, including travel and tourism, higher education and energy to provide a few examples. As we move through 2026, we'll continue to increase our focus on driving more digital marketing spend among our buy-side and new enterprise customers. To this end, in March of 2026 we launched Ignition+, our AI-enabled programmatic media solution, which provides enhanced accessibility for large enterprise clients in the buy-side network. We'll also prioritize the transparency, efficiency and cost reduction through AI-driven optimization and side securation. We believe the launch of Ignition+ and our focus on driving digital marketing spend among buy-side and new enterprise customers will allow us to more nimbly address changing market dynamics and capitalize on the many emerging opportunities that we're seeing. Specifically, Ignition+ takes the sell-side intelligence data and expertise that we've collected and built over many years within our Colossus business to inform supply side access and combines it with Orange 142's end-to-end programmatic media technology stack. The result is centralized buying that enables brands to buy media instead of markup, significantly increasing the value of their marketing budget. Ignition+ is supported by a team of on-demand programmatic experts and designed to focus on solutions for mid-market enterprise brands who have traditionally been forced to choose between transparency and scale when selecting an ad tech solution. This has streamlined operating structure that enables us to more efficiently go to market and drive value creation for our shareholders. As a result of these changes, we are consolidating our operations into a single reporting segment beginning in 2026. We believe the streamlined structure, combined with the growth strategies we have put in place our restructured balance sheet, targeted operational improvements and ongoing cost discipline, positions us to return to positive platform growth and achieve breakeven or better quarterly performance by the second half of this year. Thanks to all the hard work, dedication and support from our team, we entered 2026 on full stride with the refresh and revitalized strategy that allows us to expand our market share and meet the growing demands of both current and new customers. As always, we sincerely appreciate your support of Direct Digital Holdings. We're encouraged by the many exciting opportunities ahead of us in 2026. I will now hand the call over to Diana Diaz, our Chief Financial Officer, who will walk through some of the financial highlights in further detail. Diana Diaz: Thank you, Mark, and good evening, everyone. I'll now provide a review of our fourth quarter results with some context on full year trends were relevant. Consolidated revenue in the fourth quarter of 2025 was $8.4 million compared to revenue of $9.1 million in the fourth quarter of last year. Buy-side revenue increased approximately 28% to $8.2 million compared to buy-side revenue of $6.4 million in the fourth quarter of last year. Sell-side revenue was $200,000 in the fourth quarter compared to $2.7 million in the fourth quarter of last year. The decrease in sell-side advertising revenue was primarily related to a decrease in impression inventory when compared to the fourth quarter of last year. Gross margin for the fourth quarter of 2025 was 27% compared with 32% in the fourth quarter of last year. Operating expenses in the fourth quarter of 2025 and were $6.7 million, a decrease of 12% compared with $7.7 million in the same period of last year. On an annual basis, operating expenses decreased 18% to $25.2 million for the full year of 2025, a decrease of $5.4 million compared with operating expenses of $30.6 million in the full year of 2024. Expense reduction remains a key strategic priority and we're pleased with the progress achieved in 2025. Total operating loss for the fourth quarter was $4.5 million, consistent with the fourth quarter of 2024. Net loss for the fourth quarter was $12.6 million compared to a net loss of $6.6 million in the fourth quarter of last year. This year's quarterly net loss included nonoperational financing-related costs of $7.4 million. Adjusted EBITDA for the fourth quarter of this year was a loss of $3.6 million compared with adjusted EBITDA loss of $3.4 million in the fourth quarter of last year. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $700,000 compared to $1.4 million at the end of last year. Total cash plus our accounts receivable balance as of December 31, 2025, was $3.9 million compared to $6.4 million at the end of last year. Throughout the quarter and the year, we've taken several steps to enhance our balance sheet. [Technical Difficulty] Operator: Ladies and gentlemen, please stand by while we work through our technical difficulties. Ladies and gentlemen, thank you for your patience. We are now reconnected. Ms. Diaz, you may continue. Diana Diaz: Okay. Thank you. Adjusted EBITDA for the fourth quarter was a loss of $3.6 million compared with adjusted EBITDA loss of $3.4 million in the fourth quarter of last year. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $700,000 compared to $1.4 million as of the end of last year. total cash plus our accounts receivable balance at the end of December 31, 2025, was $3.9 million compared to $6.4 million at the end of last year. Throughout the quarter and the year, we've taken several steps to enhance our balance sheet, our capital structure and our access to capital. In the third quarter of 2025, we announced the issuance of $25 million of a new series of convertible preferred stock through the conversion of a portion of existing debt into the new class of perpetual convertible preferred stock. In the fourth quarter, we issued an additional $10 million of Series A preferred stock and expanded our equity reserve facility by 50 million shares or $100 million. We raised a total of $7.3 million through the equity reserve facility in 2025. And on December 30, 2025, our Board of Directors and shareholders approved a 55:1 reverse stock split of all classes of our common stock which was implemented on January 8, 2026. With that said, earlier today, we filed an 8-K to disclose a receipt of a listing deficiency notice from Nasdaq regarding our stockholders' equity as of December 31, 2025, as reported in our Form 10-K, which we filed last week. We're working closely with our team and advisers on next steps intended to bring us back into compliance, and we will provide material updates as they become available to us. As we said before, our Nasdaq listing is a key asset that provides heightened visibility among institutional investors, which is foundational to our go-forward strategy to build and maintain a strengthened investor base. We will continue to prioritize our listing on Nasdaq and evaluate and take the necessary steps to preserve our status. And now I'd like to turn it over to Mark for some closing comments. Mark Walker: Thank you, Diana, and thank you to everyone for joining. We appreciate your interest in Direct Digital Holdings. I would like to now open the call for questions. Operator, please open the line. Operator: [Operator Instructions] And our first question comes from the line of Dan Kurnos with Benchmark, a StoneX company. Daniel Kurnos: I guess, I'll keep it quick here and just ask how should we think about the sell-side at this point, wind down, deemphasized, utilize your data? And then subsequently, on the buy-side, as you guys pivot, just curious, as you think about channel expansion, COGS was up. You mentioned kind of your key priority categories was the specific categories, travel, the primary driver? Were there some ancillary categories that added? And just how do we think about your ability to scale up from the current base level based on the Q4 results. Mark Walker: Yes. Good question. Yes, twofold. One, the way we think of the sell-side business is really is a margin capture opportunity. As we've talked about before, we have moved more towards a unified structure where we leverage as much and try to run as much as we can of the buy-side demand dollars into our sell-side platform to the benefit of our customers. So I would view it as more of a margin capture strategy, which helps us capture an extra 20% to our bottom line with more -- that flows through there. As it relates to how should we think about expansion and growth and growth accelerants, the expansion into new verticals is important to us. So as you know, Dan, since you've been following us for a while, the DMO/travel tourism space or regional and local travel tourism space is important to us, definitely a strong segment that we're continuing to see growth and opportunity there. In addition to that, the education space has been strong for us with some of the educational clients that we've brought into the fold. The third that we have had a heavy focus in is the energy sector, which is a new category that's helped us grow. We believe with the headwinds of the macroeconomic view that, that mix is a stable mix for our company and is 1 that we're going to continue to expand and lean into on a go forward. In addition, for growth strategy, we're also exploring inorganic opportunities on the demand side of the business where we feel like we have a real opportunity to add on new verticals. Daniel Kurnos: And just, I guess, as we think about new sources of revenue, obviously, right now, the space is super focused on the buy-side anyway on getting away from sort of the legacy DB Plus focused on CTV. You've got a bunch of DSPs focused on trying to drive dollars away from social and SMB is a huge talking point. You clearly have a lot of regional and smaller buyers. I understand you're not a DSP yourself, but I mean that seems to be where the buy-side is focused. I wonder if you guys can kind of tap into the trends that are going on in the space right now? Mark Walker: No. I think we've been ahead of the trend in the mid-market space. I think you're starting to see more and more players. As you know, some of the larger guys starting to move down into the mid-market space where we have a strong foothold, specifically in those Tier 2, Tier 3 media markets. So we're going to continue to expand there. We think that the opportunity we have, which allows us some flexibility as the opportunity to do that organically, which we've historically have proven that we can do. And I think we also are looking at inorganic opportunities that add different regions into our mix as well. We do believe that similar to what other people are saying, yes, we think that the fact that we're able to service social as well as programmatic is important to us, and we're going to continue to focus in on both of those. Operator: And our next question comes from the line of Michael Kupinski with NOBLE Capital Markets. Michael Kupinski: First of all, congratulations on seeing the acceleration in the buy-side revenue. That's very encouraging. I was just wondering if you can just break down the sustainability of that 28% buy-side growth in Q4? You mentioned that it was driven by new customers and expansion with existing accounts. I was just wondering if you can just share with us how much was driven by the new customers versus the existing accounts? Mark Walker: Yes. In regards to new customers, I don't have that number off the top of my head on the specific percentage. But I can say that what we are seeing is with the new mix of customers that we have brought in, specifically in the energy sector, it is helping to change our typical curve that we have seen where we used to have the tail off between 3 and 4. Now we're seeing where it's starting to maintain within quarters 3 and 4. And so we anticipate that we're going to see that same type of curve within 2026. And that's really driven mostly from new customers that we brought into the fold for us. Diana Diaz: And just to clarify, Michael, the fourth quarter included $1.7 million from customers in new verticals. And for the year, we had -- hold on to that number. But that was the fourth quarter was $1.7 million. It was about $7 million for new customers for the year. Michael Kupinski: For this year. That's terrific. And then how scalable is the current buy-side platform? And is there -- are there any bottlenecks to see some acceleration in the growth there? If I know you've main seeing some pretty decent margins there. I'm just wondering how sustainable those are? Mark Walker: Yes. So we're -- as we said before, we have actually more cost saving measures that are going to come into fold that we should see the benefit in Q2, which we're looking forward to, to help expand our margins some. We do believe that the buy-side still has more upside growth potential for us in regards to the expansion on current customers and the growth that we're seeing from them and then also new customers that we're bringing into the fold. So do we think we can maintain a trend? Yes, we think Q1 is going to be positive growth as well. And we still hold to on an annualize basis of 10% growth over year-over-year is what we're focused in on. Michael Kupinski: Got you. And then in terms of the traction or KPIs, can you kind of give us share us your thoughts about ignitions in the AI platform since its launch? If you can just give us some sense of what KPIs are you looking at there? Mark Walker: Yes. We're looking for large enterprise customers that we could bring in specifically under that program. We view it as more sizable, larger than our current average revenue per customer that we bring in on that, and we run test pilots within 2025 that we're hoping to come in fruition as full blown customers within 2026. The KPIs that we look for there are going to be larger spend ratios that come from them at a more shared margin opportunity for them due to the transparency. Michael Kupinski: Got you. And then you were speaking about inorganic growth going back to the buy-side, what kind of verticals are you looking at that would be interesting to you to add beyond the current scope of what you currently have in your verticals? Mark Walker: Health care is 1 that we're definitely have a keen eye on as well as some CPG to move us more in the retail space on those verticals as well. And then financial services, banking services is the other one. Michael Kupinski: Got you. And then you said that you're taking additional steps to reduce costs. Can you kind of just talk us through about what those additional steps might be? And if there's a dollar amount you might be able to put around that? Mark Walker: Yes. Diana, would you like to take that one? Diana Diaz: Sure. So some of the cost reductions that we're looking at had been historically on the sell-side, and we have some contracts that are winding down in that business that we think we can live without. And so that's the bulk of it, it's probably starting in the second quarter about $0.5 million a quarter reduction. Operator: And that concludes our question-and-answer session. I would like to now turn the conference back over to Mr. Mark Walker for closing remarks. Mark Walker: Thank you. That concludes our conference call for today. Thank you for participating. You may now disconnect. Operator: Ladies and gentlemen, once again, this concludes today's call. We thank you for your participation, and you may now disconnect. Before you buy stock in Direct Digital, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Direct Digital wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $463,900!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,294,401!* Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of June 1, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Direct Digital (DRCT) Q4 2025 Earnings Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. The company has consolidated its reporting into a single 'Digital Advertising' segment to reflect a streamlined operating model focused on managed advertising campaigns. Revenue decline was primarily driven by a $2 million decrease in spending from demand-side platform customers, partially offset by an 8% increase in spending from other customer categories. Management is shifting focus toward 'buy-side' and enterprise customers, supported by the March launch of Ignition Plus, a unified platform designed for programmatic efficiency. Gross profit margin improved to 34% from 29% year-over-year, attributed to efficiency initiatives and cost reduction efforts that lowered operating expenses by 13%. The go-to-market strategy now emphasizes a diversified mix of enterprise sales, inside/outside sales, and new lead generation channels to drive scalable growth. Performance attribution for the quarter highlights that cost control measures allowed the company to exceed analyst estimates despite the top-line revenue contraction. Management anticipates margin expansion over the next few quarters as the customer mix shifts and campaign management becomes more efficient. The 2026 strategy relies on a two-pronged approach for vertical expansion: organic pushes into new markets and active evaluation of inorganic M&A opportunities. Internal AI-driven tools are expected to drive future margin optimization and operational efficiency, with benefits intended to be passed down the value chain. The company maintains a bullish outlook on the Destination Marketing Organization (DMO) sector, expecting local and regional travel to remain resilient despite macroeconomic headwinds. The company is maintaining a lean cash position of $800 thousand, emphasizing capital discipline and liquidity as it navigates its next execution phase. Management explicitly noted they are in active weekly conversations regarding industry consolidation and intend to participate as an aggregator in the marketplace. A shift in advertiser behavior toward 'pencil sharpening' on ROI and performance metrics is being treated as a favorable tailwind for the company's tech-enabled services. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management stated they have seen no headwinds in the DMO marketplace; local and regional travel remains resilient as consumers trade down from air travel to driving. The company recently won new business in this sector and expects it to meet or exceed forward expectations. CEO Mark Walker confirmed the company is actively engaged in weekly M&A conversations, noting that 'sooner is always better' regarding market consolidation. The company aims to be an aggregator in a market where many assets are currently in similar positions. Margin recovery is expected to be driven by a change in the business mix and increased efficiency in campaign management over the coming quarters. Advertisers are shortening their focus toward performance-based metrics, which aligns with the company's internal metric-heavy processes.

Image source: The Motley Fool. Monday, May 11, 2026 at 11 a.m. ET Chairman and Chief Executive Officer — Mark Walker Chief Financial Officer — Diana Diaz Investor Relations — Walter Frank Need a quote from a Motley Fool analyst? Email [email protected] Operator: Hello, everyone. Thank you for joining us, and welcome to Direct Digital Holdings, Inc. First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. To withdraw your question, press 1 again. I will now hand the conference over to Walter Frank, Investor Relations. Please go ahead. Walter Frank: Good morning, everyone, and welcome to Direct Digital Holdings, Inc. First Quarter 2026 Earnings Conference Call. On today's call are Direct Digital Holdings, Inc.'s Chairman and Chief Executive Officer, Mark Walker, and Chief Financial Officer, Diana Diaz. Information discussed today is qualified in its entirety by the Form 8-K and accompanying earnings release, which have been filed today by Direct Digital Holdings, Inc. and may be accessed at the SEC's website and the company's website. Today's call is also being webcast, and a replay will be posted to Direct Digital Holdings, Inc.'s Investor Relations website. Immediately following the speakers' presentations, there will be a question and answer session. Please note that the statements made during the call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. These statements are made on the basis of Direct Digital Holdings, Inc.'s views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks which could cause Direct Digital Holdings, Inc.'s actual results to differ from its historical results and forecasts, including those risks set forth in Direct Digital Holdings, Inc.'s filings with the SEC, and you should refer to those for more information. This cautionary statement applies to all forward-looking statements made during this call. During this call, Direct Digital Holdings, Inc. will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are available in the earnings release that Direct Digital Holdings, Inc. filed in its Form 8-Ks today. I will now hand the conference over to Mark Walker, Chief Executive Officer. Please go ahead, Mark. Mark Walker: Thank you, Walter, and thank you to everyone joining our call this morning. I will start by reviewing some of the highlights of our operations and financial results during 2026 before turning the call over to our Chief Financial Officer, Diana Diaz, for a more detailed look at our financial results. We will conclude by opening the call for a brief Q&A. We remain focused on organically growing our sales pipeline by enhancing how we reach and support customers across a broader set of go-to-market channels. Alongside product innovation, initiatives such as Ignition Plus, our sales teams are seeing encouraging engagement through expanded enterprise outreach. A diversified combination of enterprise sales, inside and outside sales efforts, and new distribution and lead generation channels is broadening our reach, improving sales efficiency, and positioning us to drive more consistent, scalable growth over time. In March, we launched Ignition Plus, a unified, transparent platform for programmatic media built to maximize efficiency. With a more streamlined operating model and a clear focus on our core strengths, we believe we are positioned to thoughtfully evaluate strategic opportunities that could complement our existing platform. While our primary focus remains execution and organic growth, we continually assess potential partnerships or acquisitions that align with our long-term objectives and shareholder value creation. As always, we sincerely appreciate your support of Direct Digital Holdings, Inc. I will now hand the call over to Diana Diaz, our Chief Financial Officer, who will walk through some of the financial highlights in further detail. Diana Diaz: Thank you, Mark, and good morning, everyone. I will now provide a review of our first quarter results. Consolidated revenue in the first quarter of 2026 was $6.7 million compared to revenue of $8.2 million in the first quarter of 2025. Although revenue declined due to a decrease in spending by demand-side platform customers of $2 million, we saw an increase in spending by other customers of $500 thousand, or 8% over the prior year. As Mark stated in his remarks and as we mentioned in our fourth quarter call, we have shifted our focus to driving intentional digital marketing spend with current and future customers historically classified by the company as buy-side customers, as well as new enterprise customers accessing the digital advertising market through our recently launched Ignition Plus. As part of this shift in focus, we have reassessed our reportable segments and determined that we have one reportable segment, digital advertising. This new focus to streamline operations is expected to enhance the customer experience and better reflects the economics of our current business where revenues reflect primarily contracts for managed advertising campaigns, which may or may not access curated publisher audiences managed by the company's sell-side platform. Gross profit was $2.3 million for the first quarter of 2026, or 34% of revenue, compared with $2.4 million, or 29% of revenue, in the prior year. Operating expenses in the first quarter of 2026 decreased 13% to $5.5 million compared to $6.3 million in the first quarter of last year. Total operating loss for the first quarter was $3.3 million compared with operating loss of $3.9 million in the first quarter of 2025. Net loss for the first quarter of 2026 was $5.6 million compared to a net loss of $5.9 million in the first quarter of last year. Adjusted EBITDA for the first quarter was a loss of $2.6 million compared with adjusted EBITDA loss of $3.0 million in the first quarter of last year. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $800 thousand compared to $700 thousand as of December 2025. Total cash plus our accounts receivable balance as of 03/31/2026 was $3.6 million compared to $3.9 million at year-end 2025. Our efficiency and cost reduction initiatives drove operating results that were in line with our internal expectations and exceeded analyst estimates in the quarter, demonstrating the progress we are making as we continue to execute on our strategy and goals. We continue to manage the business with a strong emphasis on capital discipline, liquidity, and cost control as we navigate our next phase of execution. While our focus remains on operating performance and organic progress, we believe it is important to retain flexibility to evaluate strategic opportunities that align with our long-term objectives, provided they meet our financial and risk-return thresholds. Now I would like to turn it back over to Mark for some closing comments. Mark Walker: Thank you, Diana, and thank you to everyone for joining. We appreciate your interest in Direct Digital Holdings, Inc. and would like to now open the call for questions. Operator, please open the line. Operator: We will now open the call for questions. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from Daniel Kurnos from Stonix. Your line is now open. Please go ahead. Daniel Kurnos: Thanks. Good morning. Maybe a couple just fundamental questions. First, Mark, are the DMOs seeing any budgetary pressure from where gas prices are right now? It sounds like local travel is actually pretty healthy, all things considered, but I am curious what you are seeing there. And then last time we talked about some category expansion. Obviously, we are starting to rescale the buy side here and focus on the buy side. Have your thoughts changed at all on the opportunity set or your ability to penetrate new verticals to get to the growth you want to see on the buy side? Mark Walker: Good question, Daniel, and thanks for it. What we are seeing right now when it comes to the DMO marketplace and local travel is that we have not seen a reduction or any kind of headwinds in that marketplace. As a matter of fact, we are seeing it meet expectations and what we anticipate for the go-forward. So we still are pretty bullish on the DMO marketplace. We are looking at expansions in those markets, and we have been able to win new business in the DMO market space recently, so we are feeling pretty optimistic about it. What we have seen in the overall marketplace, when there have been some headwinds in the overall macroeconomic environment, is that local and regional travel and tourism actually become very resilient as people cut down on airline travel and opt for driving. That is what we are anticipating to see this year during the vacation season, and so far, it has been holding up. As it relates to your second question about category expansion, we continue to push into those new verticals, and we are starting to see some more success. As we continue to push into those new verticals, we are attaching to, as well as attacking, opportunities. The way that we are looking at strategically going after new verticals, which is our goal for 2026, is twofold. One, we are looking at organic pushes into those new verticals. Second, we are also open to strategic partnerships and inorganic growth in order to grow and expand in those marketplaces, and we are still holding to that strategy for this year as well. Daniel Kurnos: If we just take that last point and dive a little bit deeper, obviously there are a lot of assets in similar positions to yours. Somebody has to do something at some point, although PE can hold a bunch of stuff forever and eventually decides to make a move. Why are you the right aggregator? Do you have a facilitator? How are conversations going? Understanding that these are all sensitive processes and things never go as fast as you would like, anything you can share in terms of timing or thought process there? Mark Walker: In regards to timing, sooner is always better than later. It is never fast enough, especially when you talk about consolidation and strategic inorganic growth. We are actively in that marketplace. We are having active conversations literally every week, and as soon as we feel comfortable enough to announce anything, we plan on doing so. As of right now, as you said, there is a significant amount of activity in the marketplace, and we plan on being a part of it. Daniel Kurnos: Okay. Thanks, Mark. Good luck. Mark Walker: Thank you. Operator: Our next question comes from Michael Kupinski with Noble Capital Markets. Your line is now open. Please go ahead. Michael Kupinski: Yes, thank you. I have a couple of questions. Have you noticed any difference in advertising behavior? For instance, have advertisers shortened campaign duration or reduced visibility, particularly into future spending? Anything of note there? Mark Walker: Nothing that has been noticeable as a large change in tactics. We are seeing significantly more interest in campaign performance and performance marketing, where clients want to see a return on investment. However, the way that we have set up our internal processes, we have always had a mind toward metrics. We are just seeing a little bit more focus and some pencil sharpening as it relates to performance, but it is nothing that we have not been dealing with over the last few years and nothing that we cannot manage. That has probably been the biggest turn that we have seen starting at the end of last year into this year, but it has actually worked favorably for us. Michael Kupinski: Gotcha. And then, you know, obviously the buy-side business had some pretty decent margins. What are the biggest drivers preventing EBITDA margins from returning to prior levels? Mark Walker: It is really more about the mix. I think what you will also see as it relates to margin growth is that it is going to take a little more time for us to continue to expand those margins, but that has been in our growth trajectory over the next couple of quarters. We think you are going to start seeing a mix change, as well as us working to get more efficient as it relates to our campaign management, which we anticipate will start showing results in margin growth over the next few quarters. Michael Kupinski: And then how are you seeing increased advertising demand for AI-driven campaign optimization at this point? Mark Walker: I would say clients are still trying to get a better understanding and dip their toes in the water as it relates to AI, specifically in campaign management. We have internal tools that we leverage and use on a consistent basis that we have seen perform for us as we provide tech-enabled services. We think that is also an area where we are going to get more efficiency and margin optimization out of campaign performance, and we will be passing those savings on to clients, which we think will benefit the entire value chain. Michael Kupinski: Gotcha. Okay. That is all I have for now. Thank you. Mark Walker: Alright. Thank you. Operator: There are no further questions at this time. I will now turn the call back to Mark Walker for closing remarks. Mark Walker: Alright. Thank you very much for joining the call, and we look forward to speaking to you next quarter. Thank you. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Direct Digital, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Direct Digital wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!* Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Direct Digital (DRCT) Q1 2026 Earnings Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: $6.7 million in Q1 2026, down from $8.2 million in Q1 2025. Gross Profit: $2.3 million, representing 34% of revenue, compared to $2.4 million or 29% of revenue in the previous year. Operating Expenses: Decreased by 13% to $5.5 million from $6.3 million in Q1 2025. Operating Loss: $3.3 million, compared to $3.9 million in Q1 2025. Net Loss: $5.6 million, compared to a net loss of $5.9 million in the previous year. Adjusted EBITDA: Loss of $2.6 million, compared to a loss of $3 million in Q1 2025. Cash and Cash Equivalents: $800,000 at the end of Q1 2026, up from $700,000 at the end of December 2025. Total Cash and Accounts Receivable: $3.6 million as of March 31, 2026, compared to $3.9 million at year-end 2025. Warning! GuruFocus has detected 5 Warning Signs with DRCT. Is DRCT fairly valued? Test your thesis with our free DCF calculator. Release Date: May 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Direct Digital Holdings Inc (NASDAQ:DRCT) launched Ignition Plus, a unified platform for programmatic media, which has received strong initial interest from mid-market enterprise clients. The company has shifted focus to driving intentional digital marketing spend, which is expected to enhance customer experience and better reflect the economics of their current business. Operating expenses decreased by 13% in the first quarter of 2026, demonstrating effective cost management. Gross profit margin improved to 34% of revenue in the first quarter of 2026, compared to 29% in the previous year. The company is actively pursuing strategic partnerships and acquisitions to complement its existing platform and drive growth. Consolidated revenue declined to $6.7 million in the first quarter of 2026 from $8.2 million in the same period of 2025. Net loss for the first quarter of 2026 was $5.6 million, only a slight improvement from a net loss of $5.9 million in the previous year. Adjusted EBITDA was a loss of $2.6 million in the first quarter of 2026, indicating ongoing financial challenges. Cash and cash equivalents were relatively low at $800,000 at the end of the quarter. The company faces challenges in expanding EBITDA margins due to the current mix and needs more time to achieve margin growth. Q: Are Destination Marketing Organizations (DMOs) experiencing budgetary pressures due to current gas prices, and how is local travel performing? Additionally, how is the company approaching category expansion and new verticals? A: Mark Walker, CEO, stated that the DMO market is meeting expectations without significant headwinds, and local travel remains resilient. The company is optimistic about expanding in this market. For category expansion, Direct Digital Holdings is pursuing both organic growth and strategic partnerships to penetrate new verticals, maintaining their strategy for 2026. Q: Why is Direct Digital Holdings the right aggregator for potential acquisitions, and what is the timing for these strategic moves? A: Mark Walker, CEO, emphasized that the company is actively engaged in the marketplace for strategic inorganic growth and is having ongoing conversations. While timing is uncertain, they are prepared to announce developments as soon as they are finalized, aiming to be part of the significant market activity. Q: Have there been any noticeable changes in advertising behavior, such as shortened campaign durations or reduced visibility into future spending? A: Mark Walker, CEO, noted no significant changes in tactics but highlighted an increased focus on campaign performance and return on investment. The company is well-equipped to manage this shift, which has been favorable for them. Q: What are the main factors preventing EBITDA margins from returning to previous levels, and how is the company addressing this? A: Mark Walker, CEO, explained that the margin growth is influenced by the business mix and efficiency improvements in campaign management. The company expects to see margin growth over the next few quarters as they continue to optimize operations. Q: Is there increased demand for AI-driven campaign optimization, and how is the company leveraging AI in its operations? A: Mark Walker, CEO, mentioned that clients are gradually exploring AI for campaign management. Direct Digital Holdings uses internal AI tools to enhance efficiency and margin optimization, which benefits the entire value chain and provides savings to clients. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

HOUSTON, May 11, 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 first quarter ended March 31, 2026. Mark D. Walker, Chairman and Chief Executive Officer, commented, "We remain focused on organically growing our sales pipeline by enhancing how we reach and support customers across a broader set of go‑to‑market channels. Alongside product innovation initiatives such as Ignition+, our sales teams are seeing encouraging engagement through expanded enterprise outreach, diversified combination of enterprise sales, inside and outside sales efforts, and new distribution and lead‑generation channels. This multi‑channel approach is broadening our reach, improving sales efficiency, and positioning us to drive more consistent, scalable growth over time." Keith Smith, President, commented, "With a more streamlined operating model and a clearer focus on our core strengths, we believe we are positioned to thoughtfully evaluate strategic opportunities that could complement our existing platform. While our primary focus remains execution and organic growth, we continually assess potential partnerships or acquisitions that align with our long‑term objectives and shareholder value creation." First Quarter 2026 Financial Results Revenue of $6.7 million decreased 18% compared to $8.2 million in the first quarter of 2025. The decrease in revenue was driven primarily by a $2.0 million decrease in spending by demand side platform ("DSP") customers during the first quarter of 2026. Gross profit was $2.3 million, or 34% of revenue, compared to $2.4 million, or 29% of revenue, in the first quarter of 2025. Operating expenses of $5.5 million decreased 13% compared to $6.3 million in the first quarter of 2025. Operating loss was $3.3 million, compared to $3.9 million in the first quarter of 2025. Net loss was $5.6 million compared to net loss of $5.9 million in the first quarter of 2025. Adjusted EBITDA(1) loss improved to $2.6 million .in the first quarter of 2026 compared to a loss of $3.0 million in the first quarter of 2025. As of March 31, 2026, the Company held cash and cash equivalents of $0.8 million compared to $0.7 million as of December 31, 2025. Diana Diaz, Chief Financial Officer, commented, "We continue to manage the business with a strong emphasis on capital discipline, liquidity, and cost control as we navigate our next phase of execution. While our focus remains on operating performance and organic progress, we believe it is important to retain flexibility to evaluate strategic opportunities that are consistent with our long‑term objectives, provided they meet our financial and risk‑return thresholds." Conference Call and Webcast Details Direct Digital Holdings will host a conference call on Monday, May 11, 2026, at 11:00 a.m. Eastern Time to discuss the Company's first 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 ("DDH 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. 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): 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 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 [email protected] View original content to download multimedia:https://www.prnewswire.com/news-releases/direct-digital-holdings-reports-first-quarter-2026-financial-results-302767707.html