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Digital media measurement and analytics provider DoubleVerify (NYSE:DV) reported Q2 CY2024 results topping analysts' expectations, with revenue up 16.6% year on year to $155.9 million. The company expects next quarter's revenue to be around $169 million, in line with analysts' estimates. It made a GAAP profit of $0.04 per share, down from its profit of $0.07 per share in the same quarter last year.
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DoubleVerify (DV) Q2 CY2024 Highlights:
- Revenue: $155.9 million vs analyst estimates of $153.7 million (1.4% beat)
- EPS: $0.04 vs analyst expectations of $0.04 (7.3% miss)
- Revenue Guidance for Q3 CY2024 is $169 million at the midpoint, roughly in line with what analysts were expecting
- The company slightly lifted its revenue guidance for the full year from $669 million to $671 million at the midpoint
- Gross Margin (GAAP): 83.3%, up from 80.4% in the same quarter last year
- Free Cash Flow of $28.72 million, up 13.1% from the previous quarter
- Market Capitalization: $3.49 billion
When Oren Netzer saw a digital ad for US-based Target (NYSE:TGT) while sitting in his Tel Aviv apartment, he knew there was an unsolved problem, so he started DoubleVerify (NYSE:DV), a provider of advertising solutions to businesses that helps with ad verification, fraud prevention, and brand safety.
Advertising SoftwareThe digital advertising market is large, growing, and becoming more diverse, both in terms of audiences and media. As a result, there is a growing need for software that enables advertisers to use data to automate and optimize ad placements.
Sales GrowthAs you can see below, DoubleVerify's revenue growth has been impressive over the last three years, growing from $76.52 million in Q2 2021 to $155.9 million this quarter.
This quarter, DoubleVerify's quarterly revenue was once again up 16.6% year on year. On top of that, its revenue increased $15.11 million quarter on quarter, a strong improvement from the $31.45 million decrease in Q1 CY2024. This is a sign of acceleration of growth and very nice to see indeed.
Next quarter's guidance suggests that DoubleVerify is expecting revenue to grow 17.4% year on year to $169 million, slowing down from the 28.3% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 18.4% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
DoubleVerify has shown robust cash profitability, driven by its attractive business model and cost-effective customer acquisition strategy that enable it to invest in new products and services rather than sales and marketing. The company's free cash flow margin averaged 21.6% over the last year, quite impressive for a software business.
DoubleVerify's free cash flow clocked in at $28.72 million in Q2, equivalent to a 18.4% margin. This quarter's result was good as its margin was 13.1 percentage points higher than in the same quarter last year, but we note it was lower than its one-year cash profitability. Nevertheless, we wouldn't put too much weight on a single quarter because investment needs can be seasonal, causing short-term swings. Long-term trends carry greater meaning.
Over the next year, analysts' consensus estimates show they're expecting DoubleVerify's free cash flow margin of 21.6% for the last 12 months to remain the same.
Key Takeaways from DoubleVerify's Q2 Results It was great to see DoubleVerify lift its full-year revenue and EBITDA guidance this quarter, especially after downgrading it last quarter due to some of its largest customers turning off its solutions. We were also happy it improved its gross margin and narrowly outperformed Wall Street's revenue estimates. Zooming out, we think this was a decent quarter, showing the company is staying on target. The stock traded up 4.1% to $22.49 immediately after reporting.
