As third quarter earnings reports continue to roll in, a common thread has been limited growth amidst broader economic issues that continue to hamper expectations.
One bright spot, breaking from the pack in the world of digital advertising, is Direct Digital Holdings (Nasdaq: DRCT), holding company for buy-side and sell-side platforms Colossus SSP, Huddled Masses and Orange 142, who announced earnings on November 9.
According to the report:
- For the third quarter ended September 30, 2023, Direct Digital Holdings processed over 400 billion monthly impressions through its sell-side advertising segment, an increase of 220% over the same period of 2022.
- In addition, the Company’s sell-side advertising platforms received over 34 billion monthly bid responses in the third quarter of 2023, an increase of over 210% over the same period in 2022. Sell-side revenue per advertiser for the third quarter of 2023 increased 241% compared to the same period of 2022.
- The Company’s buy-side advertising segment served approximately 228 customers in the third quarter of 2023 and buy-side revenue per customer increased 14% compared to the same period of 2022.
This growth far exceeds what market expectations laid out for the company, who also saw revenue increase from $26 million in the same period of 2022 to $59.5 million for the third quarter of 2023. The company also said it expects revenue to be in the range of $170 million to $190 million for 2023.
Mark D. Walker, Chairman and Chief Executive Officer, said, “In recent quarters, we have made significant investments in our technology stack, advertising platform and operational structure. We initially expected to see the impact of these investments in 2024, however, we are pleased to report that these benefits have arrived much earlier in 2023. Our strong technology partnerships and our overarching business strategy have enabled us to meet a growing number of customers’ demands and further the capabilities of our sell-side technology platform.”
These partnerships include Direct Digital Holdings’ recent collaboration with Amazon Publisher Services, integrating its Colossus SSP division with Amazon’s Transparent Ad Marketplace, as well as its selection of HPE GreenLake’s edge-to-cloud platform to build a highly reliable, scalable and secure production environment. The company also recently announced a partnership with Beeswax, a FreeWheel-owned programmatic buying platform, to expand its access to buying connected TV ad inventory.
The investments and development work that the Direct Digital Holdings team has been doing seems to be paying off. With these huge third quarter results bucking industry trends, analysts have taken note. Benchmark raised its price target to $15 from $12 a share. Roth MKM raised the firm’s price target on Direct Digital Holdings to $9.50 from $4.75 and maintained a Buy rating on the shares.