DRCT

Hello, everyone. Thank you for joining us, and welcome to Direct Digital Holdings' first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Walter Frank, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Direct Digital Holdings' first 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 speakers' 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 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 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 today. I will now hand the conference over to Mark Walker, Chief Executive Officer. Please go ahead, Mark.

Thanks, Walter. Thank you to everyone joining our call this morning. I'll start by reviewing some of the highlights of our operations and financial results during the first quarter 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 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 team 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. This multi-channel approach is broadening our reach, improving sales efficiency, and positioning us to drive more consistent, scalable growth over time.

In March, we launched Ignition+, a unified, transparent platform for programmatic media built to maximize efficiency, reduce costs, and combine AI-driven optimization with a proven team of experienced specialists. Since launching, we've seen strong initial interest from mid-market enterprise clients who value the transparency and efficiency this platform offers and its ability to maximize the value of their marketing budget without compromising on transparency or scale.

We believe that we're well-positioned to benefit from this demand as we transition the interest we're seeing into long-term partnerships. Importantly, Ignition+ combines the strengths of our business across the entire advertising ecosystem and reflects a key strategic shift in focus as we continue to rebuild in the wake of the challenges that we faced over the last couple of years.

We're executing on a new strategy to return to revenue growth by driving intentional digital marketing spend with current and future customers, as well as mid-market and large enterprise customers, and understand the value our offerings can bring to their business. We've aggregated our operations in a streamlined model that we believe position us to drive improved results as we scale.

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. 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.

Thank you, Mark, good morning, everyone. I'll 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 $500,000 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+.

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 reflect 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 last 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 million in the first quarter of last year. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $800,000 compared to $700,000 as of the end of December 2025.

Total cash plus our accounts receivable balance as of March 31st, 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're 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. I'd like to turn it back over to Mark for some closing comments.

Thank you, Diana, and thank you to everyone for joining. We appreciate your interest in Direct Digital Holdings and would like to now open the call for questions. Operator, please open the line.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Your first question with Daniel Conrath from StoneX. Your line is now open. Please go ahead.

Thanks. Good morning. Maybe a couple, just fundamental questions first, Mark, just on the Are the DMOs seeing any budgetary pressure from where gas prices are right now? I mean, it sounds like local travel is actually pretty healthy, all things considered, but just curious what you're seeing there.

Then last time we talked about some category expansion, obviously, you know, we're starting to rescale the buy side here, focus on the buy side. Have your thoughts at all changed on sort of the opportunity set, or your ability to kind of penetrate new verticals to get to the growth you want to see on the buy side?

Yeah. No, good questions, Dan, thanks for it. What we're seeing right now when it comes to the DMO marketplace and like, local travel, we haven't seen a reduction or any kind of headwinds, if you will, in that marketplace. As a matter of fact, we're seeing it meet the expectations and what we anticipated to see for the go forward. We still are pretty bullish on the DMO marketplace. We're looking at expansions in those markets. Excuse me. As well as we've been able to win new business in the DMO market space recently. We're feeling pretty optimistic about it.

What we have seen in other historical downturns in the overall marketplace, when there's been some headwinds of the overall macroeconomic market, we actually have seen the local regional travel and tourism space actually become very resilient as people cut down on airline travel and go mostly to driving. That's what we're anticipating to see for this year, during the vacation market, and, so far, it's been holding up.

As it relates to your second question about category expansion, we continue to do a push into some of those new verticals, and we're starting to see some more success, as we continue to push, into those new verticals we're attaching to as well as, attacking. The way that we're looking at strategically, going after new verticals, which is our goal for 2026, is twofold.

One, we're looking at organic pushes into those new verticals, secondly, we're also open to strategic partnerships and inorganic growth, in order to actually grow and expand in those marketplaces. We're still holding to that strategy for this year as well.

If we just take that last point, Mark, and just dive a little bit deeper into that, you know, obviously, there's a lot of assets that are in similar positions to yours. Somebody's got to do something at some point, although, you know, PE sits on a bunch of stuff forever and eventually decides to make a move. You know, why are you the right aggregator? Do you have a facilitator? How are conversations going? You know, anything- understanding that these are all sensitive processes and things never go as fast as you like, anything you can share in terms of timing or thought process there?

Yeah. Yeah, I mean, in regards to timing, sooner is always better than later, is the way that we like to think of it. It's never fast enough. Especially when you talk about consolidation and strategic inorganic growth. We're actively in that marketplace. We're having active conversations literally every week. As soon as we feel comfortable enough to announce anything, we're planning on doing so. As of right now, the way that we view it, as you said, there's a significant amount of activity in the marketplace, and we plan on being a part of it.

Okay. Thanks, Mark. Good luck.

Thank you.

Our next question comes from Michael Kupinski with Noble Capital Markets. Your line is now open. Please go ahead.

Yeah, thank you. I have a couple of questions. I was just wondering, 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?

Nothing that's been noticeable as it relates to change in tactics. We are seeing a significant amount more interest in a campaign performance and performance marketing, where clients are anticipating and wanting to see a return on investment. However, the way that we have set up our internal processes at our organization, we have always had a mind towards metrics. We're just seeing a little bit more focus and some pencil sharpening, if you will, as it relates to performance, but it's nothing that we haven't been dealing with over the last few years and nothing that we can't manage. That's probably been the biggest turn that we have seen, I would say starting at the end of last year to this year, but it's actually worked favorable for us.

Gotcha. You know, obviously, the buy-side business had some pretty decent margins, and I was just wondering, what are the biggest drivers preventing EBITDA margins from returning to prior levels?

Yeah. I think it's really more about the mix. I think what you will also see as it relates to margin growth, it's gonna take a little bit more time for us to continue to expand those margins. That has been in our growth trajectory over the next couple quarters. We think you're gonna start seeing a mix change, if you will, as well as us, working to get more efficient as it relates to our campaign management, which we anticipate, we'll start seeing the results of that margin growth over the next few quarters.

Are you seeing increased advertising demand for AI-driven campaign optimization at this point?

I would say clients are still trying to get a better understanding and step their toes in the water as it relates to AI, specifically for campaign management. We have internal tools that we leverage and use on a consistent basis that we've seen that actually performs. For us who provide the tech-enabled service, we think that that's also an area where we're gonna get more efficiency and margin optimization, if you will, out of campaign performance. We'll be passing those savings on to clients, which we think will benefit the entire value chain.

Gotcha. Okay, that's all I have for now. Thank you.

All right. Thank you.

There are no further questions at this time. I will now turn the call back over to Mark Walker for closing remarks.

All right. Thank you very much for joining the call, and we look forward to speaking to you next quarter. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Direct Digital Holdings Q4 and full year 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you. I would now like to turn the conference over to Walter Frank of IMS Investor Relations. You may begin.

Good afternoon, everyone, and welcome to the Direct Digital Holdings Q4 and full year 2025 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 was filed on Wednesday, April 1st, 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 a replay will be posted to Direct Digital Holdings' investor relations website. Immediately following the speakers' 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 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 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.

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 Q4 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 year and a half, we've noticed a shift in 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 for what we're seeing in the market. Fast-forwarding to where we are today, buy-side revenue grew 28% in the Q4 of 2025 compared to the Q4 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 site curation. 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 markups, 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 is a 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're consolidating our operations into a single reporting segment beginning in 2026.

We believe this 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 break even or better quarterly performance by the H2 of this year. Thanks to all the hard work, dedication, and support from our team, we enter 2026 in full stride with a refreshed 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, and 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.

Thank you, Mark, and good evening, everyone. I'll now provide a review of our Q4 results with some context on full-year trends where relevant. Consolidated revenue in the Q4 of 2025 was $8.4 million, compared to revenue of $9.1 million in the Q4 of last year. Buy-side revenue increased approximately 28% to $8.2 million, compared to buy-side revenue of $6.4 million in the Q4 of last year. Sell-side revenue was $200,000 in the Q4 , compared to $2.7 million in the Q4 of last year. The decrease in sell-side advertising revenue was primarily related to a decrease in impression inventory when compared to the Q4 of last year. Gross margin for the Q4 of 2025 was 27%, compared with 32% in the Q4 of last year.

Operating expenses in the Q4 of 2025 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 Q4 was $4.5 million, consistent with the Q4 of 2024. Net loss for the Q4 was $12.6 million, compared to a net loss of $6.6 million in the Q4 of last year. This year's quarterly net loss included non-operational financing related costs of $7.4 million.

Adjusted EBITDA for the Q4 of this year was a loss of $3.6 million, compared with adjusted EBITDA loss of $3.4 million in the Q4 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 31st, 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-

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.

Okay. Thank you. Adjusted EBITDA for the Q4 was a loss of $3.6 million, compared with Adjusted EBITDA loss of $3.4 million in the Q4 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 31st, 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 Q3 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 Q4 , 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. On December 30th, 2025, our board of directors and shareholders approved a 55-to-1 reverse stock split of all classes of our common stock, which was implemented on January 8th, 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 31st, 2025, as reported in our Form 10-K, which we filed last week. We're working closely with our team and advisors 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. Now I'd like to turn it over to Mark for some closing comments.

Thank you, Diana, and thank you to everyone for joining. We appreciate your interest in Direct Digital Holdings and would like to now open the call for questions. Operator, please open the line.

Thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your questions. Again, it is star one to join the queue. Our first question comes from the line of Dan Kurnos with Benchmark, a StoneX Company. Your line is open.

Hey. Afternoon, Mark, Diana. I guess I'll keep it quick here and just ask, how should we think about the sell side at this point? Wind down, de-emphasize, utilize for 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?

Yeah. Good question. Yeah, twofold. One, the way we think of the sell-side business is really as 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. 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. 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 one that we're going to continue to expand and lean into on the 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.

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 DV+, 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 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.

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 two, tier three media markets, and we're going to continue to expand there. We think that the opportunity we have, which allows us some flexibility, is the opportunity to do that organically, which we historically have proven that we can do. 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, yeah, 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.

Got it. Thanks, Mark.

Thank you.

Our next question comes from the line of Michael Kupinski with Noble Capital Markets. Your line is open.

Thank you. 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.

Yes. In regards to new customers, I don't have that number off the top of my head on the specific percentage. 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 three and four. Now we're seeing where it's starting to maintain within quarters three and four. We anticipate that we're going to see that same type of curve within 2026. That's really driven mostly from new customers that we brought into the fold for us.

Just to clarify, Michael, the Q4 included $1.7 million from customers in new verticals. For the year, I don't have that number. That was the Q, was $1.7 million. It was about $7 million from new customers for the year.

For this year. Oh, that's terrific.

So-

How scalable is the current buy-side platform? Are there any bottlenecks to see some acceleration in the growth there? Because I know you've maintained-

Yes.

Some pretty decent margins there. I was just wondering how sustainable those are.

Yeah. 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 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. Do we think we can maintain the trend? Yes. We think Q1's going to be positive growth as well. We still hold to on the annualized basis of 10% growth year-over-year is what we're focused in on.

Got you. In terms of the traction or KPIs, can you kind of share with us your thoughts about Ignition+ and the AI platform since its launch? If you can just give us some sense of what KPIs are you looking at there?

Yeah. We're looking for large enterprise customers that we can 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. We run test pilots within 2025 that we're hoping to come into 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.

Got you. 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?

Healthcare is one that we definitely have a keen eye on, as well as some CPG to move us more in the retail space on those verticals as well. Financial services, banking services is the other one.

Got you. You said that you're taking additional steps to reduce cost. Can you kind of just talk us through about what those additional steps might be and if there is a dollar amount you might be able to put around that?

Yeah. Diana, would you like to take that one?

Sure. 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. That's the bulk of it. It's probably starting in the Q2, about $500,000 a quarter reduction.

Got you. Okay. That's all I have. Thank you.

Thanks.

Thank you.

That concludes our question and answer session. I would like to now turn the conference back over to Mr. Mark Walker for closing remarks.

Thank you. That concludes our conference call for today. Thank you for participating. You may now disconnect.

Ladies and gentlemen, once again, this concludes today's call. We thank you for your participation, and you may now disconnect.