Yahoo Finance DoubleVerify (NYSE:DV) Exceeds Q2 Expectations, Gross Margin Improves
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
“The second quarter was pivotal for DV as we re-accelerated our revenue growth momentum driven by continued success in social and CTV measurement, and bolstered by the strength of our retail media platform business,” said Mark Zagorski, CEO of DoubleVerify.
When Oren Netzer saw a digital ad for US-based Target 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 Software
The 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 Growth
As 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.
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Cash Is King
If 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.
So should you invest in DoubleVerify right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
