DoubleVerify Holdings Inc at Truist Securities Virtual Internet Growth Summit (Virtual) Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Youssef Squali - Truist Securities - Analyst : <_ALACRA_META_ABSTRACT>Yes, yes. So I'm going to assume that everyone on this call is pretty familiar with the company, but just in case and maybe to just to put things in context a little bit. Measurement and verification of digital ad traffic seems like a crucial function of the digital ad ecosystem considering just how fragmented and convoluted media buying is online maybe. Help us contextualize this market? How big is it? How fast it's growing and your role within?

Question: Youssef Squali - Truist Securities - Analyst : Okay. Excellent. And I actually omitted to mention this at the beginning, but I'm going to be asking a whole bunch of questions, but if anybody wants me to ask a question on their behalf, just e-mail me to youssefsquali@truist.com, and I'd be happy to include that -- your questions, time permitting. So digging a little deeper into the story. At a high level, there are basically two types of products in the portfolio, right? There, the post-bid measurement business, which is how you all started, and then there is the pre-bid activation. Maybe talk about the difference between the two, and kind of, again, their respective growth prospects. And do they have any material difference in margins to you guys?

Question: Youssef Squali - Truist Securities - Analyst : And where are you in terms of penetration of these? So I think the last we heard was that you're going to be testing with Meta on the pre-screen on the activation side early next year. And then with TikTok, you're already out.

Question: Youssef Squali - Truist Securities - Analyst : And I guess because of that, and correct me if I'm wrong, pricing on the activation side is higher than price on the measurement side, right? Does that mean that also margins on the activation side are higher than the margins on the measurement side or not necessarily?

Question: Youssef Squali - Truist Securities - Analyst : Yes. Okay. Moving on to just at a high level. If I look at the US economy this year, relative to expectations, it obviously proved pretty resilient. And if you look at the digital ad market, I think coming into the year, people were talking about high-single-digit growth. It ended up being low-double-digit growth. As you said, you've had some pretty impressive wins across again, social platforms like Meta, TikTok, across big brands, I think, especially recently. But some of your largest clients also had some mishaps. So I'm thinking about the half dozen CPG and retail customers that you've called out earlier this year as having a positive spend. Contextualize that a little bit for us. Last year, you grew around 27%. This year, that growth dropped to about 16%. How -- I guess arguably, that's still higher than the overall growth in the digital ad market, so that's still good, but pretty big deceleration. How much of that decel is from those customers versus maybe other things that you'd want to highlight?

Question: Youssef Squali - Truist Securities - Analyst : So how do you think that plays out not only in Q4, but also next year. I think another thing that you highlighted was -- and maybe this is more near term rather than longer term issue, is around these brand advertisers that have been kind of crowded out by political ad spend in October, especially, but also a little bit in November. How should we be thinking about that prospect going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2024 / 2:00PM, DV.N - DoubleVerify Holdings Inc at Truist Securities Virtual Internet Growth Summit (Virtual)

Question: Youssef Squali - Truist Securities - Analyst : And for 2025, around this issue of these customers that have pulled back the spend because of company-specific issues. Do you -- on the last earnings call, I think Nicola talked about still double-digit growth next year. Would that assume that these customers basically don't come back? Or is that assuming that these customers come back? What's the scenario analysis around those probable customers?

Question: Youssef Squali - Truist Securities - Analyst : Got it. Okay. You touched or you mentioned ABS. ABS is your biggest revenue product. It was growing like the way it was growing very, very fast, 20%, 30%, and it dropped into single digits in the last few quarters. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2024 / 2:00PM, DV.N - DoubleVerify Holdings Inc at Truist Securities Virtual Internet Growth Summit (Virtual) And then last quarter, it kind of inflected and grew double digit again, I think, 13% or something. Talk about that product, in particular, what's going on there? And how sustainable is the double-digit growth for that product?

Question: Youssef Squali - Truist Securities - Analyst : So if it was number two growth driver last quarter, what was number one?

Question: Youssef Squali - Truist Securities - Analyst : Let's dig a little deeper into that. So Scibids was an acquisition and a French company that you acquired about maybe 1.5 years ago or something like that. What does it do exactly? And yes, it seems to be tracking ahead of your expectations, even short term. Near term, I think at -- lower term, sorry, at Analyst Day, you have already put that $100 million (inaudible) or are you reiterating that? But maybe just explain to us in layman terms, what does it do? What's the strategic value of it to the company. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2024 / 2:00PM, DV.N - DoubleVerify Holdings Inc at Truist Securities Virtual Internet Growth Summit (Virtual)

Question: Youssef Squali - Truist Securities - Analyst : Yes. Okay. So I'm going to try to incorporate a couple of questions that came in with something that I already was going to ask you, and that's the MOAT, right? Moat was a number three player, you guys are obviously number one, but MOAT was a distant third that used to be owned by Oracle. Oracle decided to do away with it, and as a result, between you and IAS, the other competitor, you guys have been going hard trying to get all their customers. It seems like they stopped supporting their customers back in September, which basically means all these customers have already transitioned somewhere, either to you guys or to IAS. So the question is, how do you -- are we -- have you already gotten all the logos you're going to get because people -- these customers have already transitioned. And dollars-and-cents perspective, how big is this opportunity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2024 / 2:00PM, DV.N - DoubleVerify Holdings Inc at Truist Securities Virtual Internet Growth Summit (Virtual)

Question: Youssef Squali - Truist Securities - Analyst : Okay. Yes. All right. So maybe switching to margins. You guys did a great job really historically maintaining margins at 30% or low 30s, although last quarter, you popped into the mid-30s. So one, talk about the key drivers of that? And second, how sustainable are these mid-30s margins now? Is that kind of the new normal?

Question: Youssef Squali - Truist Securities - Analyst : Now this industry between you and your main competitor, margins have been really, really rich and it's been pretty impressive. I guess stepping back and looking at big picture, we've seen rise of some new channels like CTV, retail media. Audio is something that more and more players are talking about. Trade Desk has talked great deal about audio on their last earnings call. Not to even mention the evolving kind of search landscape with the advent of AI search, and how that may impact the market in general. But from where you sit today, do you think marketers will be allocating their budgets kind of any differently in 2025? And if so, how -- will that impact you in any way that we should be kind of aware of?

Question: Youssef Squali - Truist Securities - Analyst : Have you guys quantified how big maybe those new emerging channels like CTV and maybe retail media could be for you as we think, not just 2025, but just over time.

Question: Youssef Squali - Truist Securities - Analyst : Okay. All right. I think we're running out of time. So let me just ask one last question which I had, and somebody else came in with a slightly different version of it, but M&A. So I'll talk a little bit about capital allocation. So you've said earlier that, obviously, the focus is on growth. But you do have a lot of cash in the bank. You have no debt. You've been growing fast. You have a very cash-generative business. MOAT number three player is no longer around. There is more than just talk about number two player in the space being in play. How does this -- well, one, what is your appetite for M&A number? That's one. And two, how do you think the potential of the number two player being taken out by private equity, I guess, is -- or maybe strategic, we don't know. What will impact the overall environment for you guys? Is it positive? Is it neutral? Is it negative?

Question: Youssef Squali - Truist Securities - Analyst : That is a great answer to a tough question to answer, but thank you. Thank you. That's all the time we have. Thank you, guys. Thank you, everyone, for attending. Mark, as always, thank you so much.