DoubleVerify Holdings Inc Q4 2024 Earnings Call Transcript

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

Question: Matt Swanson - RBC Capital Markets - Analyst : Great, thank you guys for taking my question. Mark, on Rocker box, it's an intriguing acquisition, given the focus on attribution, performance measurement, obviously differing from kind of the core verification business. And as you mentioned, this has always been part of the long-term strategic idea of expanding wallet share. I'm getting up from that 0.5% of media spend, you talked about. So can you talk about or elaborate on kind of the strategic rationale and specifically how this is going to enhance the customer value proposition and fits in with the existing solutions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 9:30PM, DV.N - Q4 2024 DoubleVerify Holdings Inc Earnings Call

Question: Matt Swanson - RBC Capital Markets - Analyst : I appreciate that. And then, Nicola, thank you for kind of going through all the moving parts, the 2025 guide, highlighting some of those headwinds and tailwinds, but when we're thinking about some of the other things that we're excited about for this year in the story or for DoubleVerify in general, between Sybase, remote displacements, CTV, new social solutions, how are you thinking about those ramping throughout the year? Because and I guess the other way to put it would be the things that you said were headwinds feel like they might be confined to '25 and the tailwinds seem like they're just getting starting '25. So is it reasonable to think about the model accelerating in '26?

Question: Matt Swanson - RBC Capital Markets - Analyst : Thank you.

Question: Eric Sheridan - Goldman Sachs - Analyst : Thank you so much for taking the question. Maybe too if I could, Mark, there's been a lot of discussion about the opportunities and the challenges that AI is going to create for the advertising ecosystem. Maybe you could refresh on your worldview and how you're aligning the company for what you expect to be the impact broadly from AI across the advertising ecosystem as we look out over the next 12 to 18 months and then maybe. Following up on that question with respect to 2025, is there a way to go a little bit deeper in how the margin trajectory to the business builds beyond Q1 where there's specific guidance against the full year and how some of the headwinds to margin and Q1 might abate or scale to a better outcome as you get deeper into 2025 on the margin side for Nicola. Thank you so much.

Question: Youssef Squali - Truist Securities - Analyst : Great, thank you for taking the question. So I have two as well. Mark, so if I look at performance of the business over the last several quarters, it seems like it's been your growth has been pretty clouded by a number of onetime items like the six customers that you guys mentioned early last year, then the lower pricing from some of the customer wins, particularly on the measurement side than this new customer that popped up this quarter and is causing you to lower maybe growth versus what you would have expected for 2025. As you step back and look at the health of the ecosystem. Could you maybe just help opine on that? And any of this gives you pause in terms of either the TAM or in terms of the sustainability of this segment of the market continuing to grow in excess of digital advertising, which I guess is somewhere in the low teens, I think based on some numbers we've seen. And then Nicola, could you maybe just parse out the puts and takes in or your NCF comment about that being down this year? I know it's been down for the last several quarters, but how much of that is pure just product mix versus maybe other things that we need to be aware of as we look to maybe model this beyond 2025. Thank you.

Question: Youssef Squali - Truist Securities - Analyst : That's helpful. Thank you both.

Question: Maria Ripps - Canaccord Genuity - Analyst : Great, thanks so much for taking my questions. First, can you maybe share a little bit more color on the advertiser that impacted your Q4 results and outlook. I guess did that advertisers sort of scale back at Penon broadly? Or was it sort of more so for adjacent services and anything you can share kind of in terms of the vertical exposure for this advertiser just given that it sounds like it's macro-related or commodity prices related? Could we see sort of other advertisers in that vertical pulling back as well?

Question: Maria Ripps - Canaccord Genuity - Analyst : That's very helpful. And then I wanted to ask about sort of new social media, and I know you said growth there will likely be sort of moderate here? But even more broadly, can you talk about your expectations for the cadence of ramp in activation sort of relative to what you saw with measurement on matter? And are you factoring any factoring any expectations that kind of launching activation also should help accelerate measurement adoption?

Question: Maria Ripps - Canaccord Genuity - Analyst : Great. Thank you so much.

Question: Andrew Boone - JMP Securities - Analyst : Thanks so much for taking my questions. I wanted to start off in terms of Rockerbox and moving more into a smaller advertiser. As we do think about DV ability to go into maybe not the mid-market, but certainly at the larger end of kind of mid-tier advertisers. How do their needs change in terms of the solutions that DV provides, and how do you guys think about solving those problems. And then, Mark, just something that's a little bit more philosophical. If we do think about growth slowing, EBITDA margins are coming down in terms of '25. Can you just talk to us about the cost structure and how maybe the top line and EBITDA margins connect in your mind in terms of whether you have ability to invest or whether there is some sort of threshold that you want to hold in terms of kind of a margin profile. Thanks so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 9:30PM, DV.N - Q4 2024 DoubleVerify Holdings Inc Earnings Call

Question: Andrew Boone - JMP Securities - Analyst : Thank you.

Question: Brian Pitz - BMO Capital Markets - Analyst : Thanks. Two questions, please. Last quarter, you mentioned Oracle clients are mostly using the basic product. Any comments on the onboarding? And are you seeing Oracle client starting to incorporate new products and/or transition to more sophisticated offerings? And then secondly, maybe REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 9:30PM, DV.N - Q4 2024 DoubleVerify Holdings Inc Earnings Call a follow-up to Maria's question. Any specific details or updates on the CPG category, which was obviously more problematic for you last quarter? Has it gotten better? Or is it about the same?

Question: Brian Pitz - BMO Capital Markets - Analyst : Thanks for the color.

Question: Laura Martin - Needham & Company LLC - Analyst : Hi, so philosophically, I'm wondering one of the things we're hearing from a lot of ad agencies is they want to work with fewer providers. And so my guess is and I understand you've added Sybase, which is great, and you've added now Rockerbox, which is great. So you're sort of branching out. The question is, is your product set too narrow even after you add these two acquisitions? Or do you need to keep extending it to become more of a one-stop shop for services for your clients, please?

Question: Laura Martin - Needham & Company LLC - Analyst : Okay. And then my last question is about pricing. I think you've been talking for a long time about increasing prices on the CTV regimen because there's so much more value you're contributing there. And I can't find it in my notes, but I think you said the impressions from CTV doubled from 5% to 11%. So in this transition year, wouldn't this be the right time to increase the fixed cost of measuring fraud in the CTV ecosystem where the CPMs or sort of 10 times the social CPM.

Question: Laura Martin - Needham & Company LLC - Analyst : Thank you very much.

Question: Arjun Rohit Bhatia - William Blair & Company - Analyst : Perfect, thank you, Mark, one for you, if I can just follow up on something that you said in the prepared remarks around E&P and programmatic direct deals. Can you just clarify how that's impacting DV? Is that just more related to increased spend going in social? Or are there other areas there that maybe I'm missing? And what are you doing to sort of town out I'm sure you still have kind of a growing market to go after? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 9:30PM, DV.N - Q4 2024 DoubleVerify Holdings Inc Earnings Call

Question: Arjun Rohit Bhatia - William Blair & Company - Analyst : Okay. Perfect. And then the next question, just going back to Meta for SAC. Obviously, you're having you're making progress there, right, the prebilled activation capabilities are are live and up and running. I'm curious what you make of meditations and third-party tax checking. And is there any read-through of what that means for kind of their focus on brand safety and what it means for DV or are those maybe two kind of separate issues at Meta here.

Question: Andrew Murrock - Raymond James - Analyst : Hi, thanks for taking my question. Maybe one, if I could, on the announcement of the expansion of the URL level reporting, that you announced earlier this week. Just kind of how should we be thinking about that in terms of the potential lift that it can provide to metrics like retention spend per customer outcome lifts and things like that. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 9:30PM, DV.N - Q4 2024 DoubleVerify Holdings Inc Earnings Call

Question: Andrew Murrock - Raymond James - Analyst : Thank you.

Question: Frank Surace - Barclays - Analyst : This is Frank on for Raimo. I just want to check in and ask what trends you guys saw out of the existing cohort of 6 in Q4 what specifically are you assuming from those customers in the '25 guide relative to their performance in '24? Thank you.

Question: Frank Surace - Barclays - Analyst : Thank you.

Question: Arti Vula - JP Morgan - Analyst : This is Arti on for Mark Murphy. I know you guys noted some challenges from a lack of rebound in ad spend post election. Beyond that, would you call out any other macro demand factors that you saw changed over the last few months? And I assume some of that impact from the post-election would kind of focus in the U.S. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 9:30PM, DV.N - Q4 2024 DoubleVerify Holdings Inc Earnings Call Unidentified Company Representative Yeah. I think the postelection impact was really that, which was an impact in November and December, and the trends worsened based on what we were seeing in October. We called it out in the prior call saying there's still uncertainty, and the facts are that it actually worsened in November and December, we just feel very specific to Q4. We're entering 2025 with a more stable outlook. It did not feel that it was beyond the fact that it was just an unstable environment from an ad spend perspective, it was tied to political. So we're entering with a more stable view for the year. Q4 '24 was just very unpredictable.

Question: Arti Vula - JP Morgan - Analyst : Great, thank you.

Question: Alex Brondolo - Wells Fargo - Analyst : Hey, thank you so much. I wanted to ask a question on Rocker Box. I think there's kind of a lot of these nascent measurement platforms out there, North Beam Triple well. And so what were kind of the specific capabilities that Rocker Box had or the points of product synergy with your vision that led you to kind of pursue a transaction with that platform specifically.

Question: Alex Brondolo - Wells Fargo - Analyst : Thank you.

Question: Omar Dessouky - Bank of America - Analyst : Hey, thanks for taking the question. So, your supply side business has been on fire for the last three quarters. You printed 34% growth this quarter. And I just wanted to know what you think a normalized kind of growth rate for that would be kind of longer term or if we should expect these kind of growth rates beyond calendar '25 and into '26 and onwards?

Question: Omar Dessouky - Bank of America - Analyst : Okay, Thanks for answering my question. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 9:30PM, DV.N - Q4 2024 DoubleVerify Holdings Inc Earnings Call