Business Wire | Nov 9, 2021 04:06PM EST

DoubleVerify Announces Third Quarter 2021 Financial Results

Nov. 09, 2021

NEW YORK--(BUSINESS WIRE)--Nov. 09, 2021--DoubleVerify ("DV") (NYSE: DV), a leading software platform for digital media measurement, data and analytics, today announced financial results for the third quarter ended September 30, 2021.

"We are pleased to have delivered another quarter of strong revenue and EBITDA growth and excited to highlight two strategic acquisitions that significantly expand our product leadership in CTV and Social and grow our global footprint," said Mark Zagorski, CEO of DoubleVerify. "Our third quarter performance demonstrates continued organic growth and reflects the ongoing value that our products create for advertisers across all digital media platforms. Our pending acquisition of OpenSlate extends our core value proposition by combining its proven pre-campaign contextual targeting solutions with DV's granular post-campaign measurement, offering end-to-end brand safety, suitability and contextual solutions across social video and CTV environments. The recently completed acquisition of Meetrics expands our business opportunities in EMEA. We expect both of these strategic investments to fuel our long-term growth trajectory and drive better business outcomes for DV customers by expanding our ability to drive media quality and performance everywhere."

Third Quarter 2021 Financial Highlights:(All comparisons are to the third quarter of 2020)

* Total revenue of $83.1 million, an increase of 36%. * Advertiser Programmatic revenue of $41.9 million, an increase of 49%. * Advertiser Direct revenue of $34.1 million, an increase of 23%. Media Transactions Measured ("MTM") for Social increased by 83% and for CTV increased by 41%. APAC revenue increased by 96%. EMEA revenue increased by 44%. * Supply-Side revenue of $7.1 million, an increase of 32%. * Net income of $7.9 million, an increase of 37%. * Adjusted EBITDA of $26.4 million, an increase of 82%, representing a 32% EBITDA margin.

Third Quarter and Recent Business Highlights:

* Grew premium-priced Authentic Brand Suitability (ABS) revenues by approximately 64% year-over-year in the third quarter driven by increased adoption on Google's DV360 and The Trade Desk. Subsequent to quarter-end, ABS was launched on Tremor International, a leader in video and CTV advertising. * Drove global market share growth through new product upsells and logo wins including Facebook, Sony Japan, Disney Studios, TJX (TJ Maxx, Marshalls), American Family Insurance, Dropbox, Afterpay ANZ, Peloton Global, Burberry, Patek Philippe, John Lewis and HRA Pharma. * Partnered with TikTok to measure ad viewability, fraud and in-geo impressions. Via the solutions DoubleVerify expects to gain upon completing the OpenSlate acquisition, the company will be the only provider of unified brand suitability targeting, viewability and verification coverage across TikTok. * Expanded partnership with Innovid, an independent CTV advertising and measurement platform, to support the automation of DoubleVerify's DV Video OmniTag, maximizing operational efficiency for advertisers. * Uncovered and neutralized Smokescreen, a fraud scheme that hijacked CTV devices to generate fraudulent ad impressions, protecting DV customers from wasting millions of dollars of investment each month. * Launched new version of DV Pinnacle(tm), the company's unified analytics and reporting platform, offering global brands transparency into programmatic supply chain quality.

Strategic Initiatives:

* Acquired Meetrics GmbH, a leading European ad verification company, on August 31, 2021 for an aggregate net cash purchase price of $24.3 million. * Recently launched Custom Contextual targeting for DV Publisher Suite enabling premium digital publishers to effectively monetize inventory in the post-cookie era. * Announced today an agreement to acquire OpenSlate, the leading independent pre-activation and content classification platform for social video and CTV in a cash and stock transaction valued at $150 million.

"In the third quarter, we continued to deliver strong momentum with year-over-year revenue growth of 36% and adjusted EBITDA margin of 32%, driven by continued international expansion, and product successes in fast-growth sectors such as Programmatic, Social and CTV," said Nicola Allais, CFO of DoubleVerify. "In addition to delivering high growth and high profitability, we took advantage of our debt-free balance sheet and significant cash position to acquire Meetrics and support the pending acquisition of OpenSlate. We expect these strategic investments to fortify our long-term growth profile and allow us to capture a greater share of a large and growing addressable market. While our fourth quarter outlook reflects prudence due to supply chain issues that some of our customers currently face, we are reiterating our full-year 2021 guidance ranges and expect to deliver 34% full year revenue growth and a 32% EBITDA margin at the midpoints."

Fourth Quarter and Full-Year 2021 Guidance:

DoubleVerify anticipates Revenue and Adjusted EBITDA to be in the following ranges:

Fourth quarter 2021:

* Revenue of $98 to $103 million, a year-over-year increase of approximately 28% at the midpoint. * Adjusted EBITDA in the range of $34 to $36 million, a year-over-year improvement of approximately 27% at the midpoint.

Full year 2021:

* Revenue of $325 to $330 million, a year-over-year increase of 34% at the midpoint, which is unchanged from the midpoint of the previous guidance range provided on July 29, 2021. * Adjusted EBITDA in the range of $103 to $105 million, a year-over-year increase of 42% at the midpoint, unchanged from the previous guidance range provided on July 29, 2021.

With respect to the Company's expectations under "Fourth Quarter and Full Year 2021 Guidance" above, the Company has not reconciled the non-GAAP measure Adjusted EBITDA to the GAAP measure net income in this press release because the Company does not provide guidance for stock-based compensation expense, depreciation and amortization expense, acquisition-related costs, interest income, and income taxes on a consistent basis as the Company is unable to quantify these amounts without unreasonable efforts, which would be required to include a reconciliation of Adjusted EBITDA to GAAP net income. In addition, the Company believes such a reconciliation would imply a degree of precision that could be confusing or misleading to investors.

Conference Call and Webcast Information

DoubleVerify will host a conference call and live webcast to discuss its third quarter 2021 financial results at 4:30 p.m. Eastern Time today, Nov 9, 2021. To access the conference call, dial (888) 645-4404 for the U.S. or Canada, or (862) 298-0702 for international callers. The webcast will be available live on the Investors section of the Company's website at https://ir.doubleverify.com/. In addition, an archived webcast will be available approximately two hours after the conclusion of the live event.

Key Business Terms

Advertiser Direct revenue is generated from the verification and measurement of advertising impressions that are directly purchased on digital media properties, including publishers and social media platforms.

Advertiser Programmatic revenue is generated from the evaluation, verification and measurement of advertising impressions purchased through programmatic demand-side platforms.

Supply-Side revenue is generated from platforms and publisher partners who use DoubleVerify's data analytics to evaluate, verify and measure their advertising inventory.

Gross Revenue Retention Rate is the total prior period revenue earned from advertiser customers, less the portion of prior period revenue attributable to lost advertiser customers, divided by the total prior period revenue from advertiser customers.

Media Transactions Measured (MTM) is the volume of media transactions that DoubleVerify's software platform measures.

Measured Transaction Fee (MTF) is the fixed fee DoubleVerify charges per thousand Media Transactions Measured.

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of As of

(in thousands, except per share data) September December 31, 30, 2021 2020

Assets:

Current assets

Cash and cash equivalents $ 319,825 $ 33,354

Trade receivables, net of allowances for doubtfulaccounts of $5,246 and $7,049 as of September 30, 95,509 94,677 2021 and December 31, 2020 respectively

Prepaid expenses and other current assets 9,326 13,904

Total current assets 424,660 141,935

Property, plant and equipment, net 16,693 18,107

Goodwill 244,672 227,349

Intangible assets, net 117,705 121,710

Deferred tax assets 82 82

Other non-current assets 2,185 2,151

Total assets $ 805,997 $ 511,334

Liabilities and Stockholders' Equity:

Current liabilities

Trade payables $ 4,105 $ 3,495

Accrued expense 25,127 25,419

Income tax liabilities 540 1,277

Current portion of capital lease obligations 2,140 1,515

Contingent considerations current 1,717 1,198

Other current liabilities 3,986 1,116

Total current liabilities 37,615 34,020

Long-term debt - 22,000

Capital lease obligations 3,106 3,447

Deferred tax liabilities 29,732 31,418

Other non-current liabilities 2,788 3,292

Contingent considerations non-current - 462

Total liabilities $ 73,241 $ 94,639

Commitments and contingencies (Note 13)

Stockholders' equity

Common stock, $0.001 par value, 1,000,000 sharesauthorized, 158,524 shares issued and 158,474outstanding as of September 30, 2021; 700,000 159 140 shares authorized, 140,222 shares issued and125,074 shares outstanding as of December 31, 2020

Preferred stock, $0.01 par value, 100,000 sharesauthorized, zero shares issued and outstanding asof September 30, 2021; 61,006 shares authorized, - 610 issued, and outstanding as of December 31, 2020.Liquidation preference: $350,000 as of December31, 2020

Additional paid-in capital 677,588 620,679

Treasury stock, at cost, 50 shares and 15,146shares as of September 30, 2021 and December 31, (1,802 ) (260,686 )2020, respectively

Retained earnings 55,941 54,941

Accumulated other comprehensive income, net of 870 1,011 income taxes

Total stockholders' equity 732,756 416,695

Total liabilities and stockholders' equity $ 805,997 $ 511,334

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share data)

2021

2020

2021

2020

Revenue

$

83,098

$

61,037

$

227,208

$

165,276

Cost of revenue (exclusive of depreciation and amortization shown separately below)

13,435

8,998

35,929

23,963

Product development

16,359

13,087

45,658

34,324

Sales, marketing and customer support

19,539

16,728

54,653

41,880

General and administrative

14,465

10,369

58,317

29,327

Depreciation and amortization

7,492

6,087

21,989

18,167

Income from operations

11,808

5,768

10,662

17,615

Interest expense

249

858

936

2,958

Other expense, net

365

481

365

359

Income before income taxes

11,194

4,429

9,361

14,298

Income tax expense (benefit)

3,270

(1,376

)

8,361

1,975

Net income

$

7,924

$

5,805

$

1,000

$

12,323

Earnings per share:

Basic

$

0.05

$

0.04

$

0.01

$

0.09

Diluted

$

0.05

$

0.04

$

0.01

$

0.08

Weighted-average common stock outstanding:

Basic

158,045

139,841

144,305

139,779

Diluted

167,045

146,554

153,547

146,843

Comprehensive income:

Net income

$

7,924

$

5,805

$

1,000

$

12,323

Other comprehensive income:

Foreign currency cumulative translation adjustment

303

410

(141

)

488

Total comprehensive income

$

8,227

$

6,215

$

859

$

12,811

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended Nine Months Ended September 30, September 30,

(in thousands, except per 2021 2020 2021 2020share data)

Revenue $ 83,098 $ 61,037 $ 227,208 $ 165,276

Cost of revenue (exclusiveof depreciation and 13,435 8,998 35,929 23,963amortization shown separately below)

Product development 16,359 13,087 45,658 34,324

Sales, marketing and 19,539 16,728 54,653 41,880customer support

General and administrative 14,465 10,369 58,317 29,327

Depreciation and 7,492 6,087 21,989 18,167amortization

Income from operations 11,808 5,768 10,662 17,615

Interest expense 249 858 936 2,958

Other expense, net 365 481 365 359

Income before income taxes 11,194 4,429 9,361 14,298

Income tax expense 3,270 (1,376 ) 8,361 1,975(benefit)

Net income $ 7,924 $ 5,805 $ 1,000 $ 12,323

Earnings per share:

Basic $ 0.05 $ 0.04 $ 0.01 $ 0.09

Diluted $ 0.05 $ 0.04 $ 0.01 $ 0.08

Weighted-average common stock outstanding:

Basic 158,045 139,841 144,305 139,779

Diluted 167,045 146,554 153,547 146,843

Comprehensive income:

Net income $ 7,924 $ 5,805 $ 1,000 $ 12,323

Other comprehensive income:

Foreign currency cumulative 303 410 (141 ) 488translation adjustment

Total comprehensive income $ 8,227 $ 6,215 $ 859 $ 12,811

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

Accumulated

Other

Comprehensive

Additional

Income (Loss)

Total

Common Stock

Preferred Stock

Treasury Stock

Paid-in

Retained

Net of

Stockholders'

(in thousands)

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Earnings

Income Taxes

Equity

Balance as of January 1, 2021

140,222

$

140

61,006

$

610

15,146

$

(260,686

)

$

620,679

$

54,941

$

1,011

$

416,695

Foreign currency translation adjustment

-

-

-

-

-

-

-

-

(799

)

(799

)

Stock-based compensation expense

-

-

-

-

-

-

2,538

-

-

2,538

Common stock issued upon exercise of stock options

180

-

-

-

-

-

538

-

-

538

Net income

-

-

-

-

-

-

-

5,644

-

5,644

Balance as of March 31, 2021

140,402

$

140

61,006

$

610

15,146

$

(260,686

)

$

623,755

$

60,585

$

212

$

424,616

Foreign currency translation adjustment

-

-

-

-

-

-

-

-

355

355

Stock-based compensation expense

-

-

-

-

-

-

4,714

-

-

4,714

Common stock issued upon exercise of stock options

871

2

-

-

-

-

2,907

-

-

2,909

Common stock issued upon vesting of restricted stock units

217

-

-

-

-

-

-

-

-

-

Conversion of Series A preferred stock to common stock in connection with initial public offering

5,190

5

(61,006

)

(610

)

(15,146

)

260,686

(260,081

)

-

-

-

Issuance of common stock in connection with initial public offering

9,977

10

-

-

-

-

269,380

-

-

269,390

Issuance of common stock in connection with the private placement concurrent with the initial public offering

1,111

1

-

-

-

-

29,999

-

-

30,000

Net loss

-

-

-

-

-

-

-

(12,568

)

-

(12,568

)

Balance as of June 30, 2021

157,768

$

158

-

$

-

-

$

-

$

670,674

$

48,017

$

567

$

719,416

Foreign currency translation adjustment

-

-

-

-

-

-

-

-

303

303

Shares repurchased for settlement of employee tax withholdings

-

-

-

-

50

(1,802

)

-

-

-

(1,802

)

Stock-based compensation expense

-

-

-

-

-

-

4,848

-

-

4,848

Common stock issued upon exercise of stock options

651

1

-

-

-

-

2,066

-

-

2,067

Common stock issued upon vesting of restricted stock units

105

-

-

-

-

-

-

-

-

-

Net income

-

-

-

-

-

-

-

7,924

-

7,924

Balance as of September 30, 2021

158,524

$

159

-

$

-

50

$

(1,802

)

$

677,588

$

55,941

$

870

$

732,756

Balance as of January 1, 2020

139,721

$

140

-

$

-

-

$

-

$

283,457

$

34,488

$

(67

)

$

318,018

Foreign currency translation adjustment

-

-

-

-

-

-

-

-

(153

)

(153

)

Stock-based compensation expense

-

-

-

-

-

-

802

-

-

802

Common stock issued upon exercise of stock options

32

-

-

-

-

-

70

-

-

70

Net income

-

-

-

-

-

-

-

2,440

-

2,440

Balance as of March 31, 2020

139,753

$

140

-

$

-

-

$

-

$

284,329

$

36,928

$

(220

)

$

321,177

Foreign currency translation adjustment

-

-

-

-

-

-

-

-

231

231

Stock-based compensation

-

-

-

-

-

-

1,140

-

-

1,140

Common stock issued upon exercise of stock options

58

-

-

-

-

-

51

-

-

51

Net income

-

-

-

-

-

-

-

4,078

-

4,078

Balance as of June 30, 2020

139,811

$

140

-

$

-

-

$

-

$

285,520

$

41,006

$

11

$

326,677

Foreign currency translation adjustment

-

-

-

-

-

-

-

-

410

410

Stock-based compensation

-

-

-

-

-

-

1,619

-

-

1,619

Common stock issued under employee purchase plan

61

-

-

-

-

-

423

-

-

423

Common stock issued upon exercise of stock options

44

-

-

-

-

-

263

-

-

263

Common stock issued upon vesting of restricted stock units

19

-

-

-

-

-

-

-

-

-

Net income

-

-

-

-

-

-

-

5,805

-

5,805

Balance as of September 30, 2020

139,935

$

140

-

$

-

-

$

-

$

287,825

$

46,811

$

421

$

335,197

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

Accumulated

Other

Comprehensive

Additional Income (Loss) Total

Common Stock Preferred Stock Treasury Stock Paid-in Retained Net of Stockholders'

(in Shares Amount Shares Amount Shares Amount Capital Earnings Income Taxes Equitythousands)

Balance asof January 140,222 $ 140 61,006 $ 610 15,146 $ (260,686 ) $ 620,679 $ 54,941 $ 1,011 $ 416,695 1, 2021

Foreigncurrency - - - - - - - - (799 ) (799 )translationadjustment

Stock-basedcompensation - - - - - - 2,538 - - 2,538 expense

Common stockissued uponexercise of 180 - - - - - 538 - - 538 stockoptions

Net income - - - - - - - 5,644 - 5,644

Balance asof March 31, 140,402 $ 140 61,006 $ 610 15,146 $ (260,686 ) $ 623,755 $ 60,585 $ 212 $ 424,616 2021

Foreigncurrency - - - - - - - - 355 355 translationadjustment

Stock-basedcompensation - - - - - - 4,714 - - 4,714 expense

Common stockissued uponexercise of 871 2 - - - - 2,907 - - 2,909 stockoptions

Common stockissued uponvesting of 217 - - - - - - - - - restrictedstock units

Conversionof Series Apreferredstock tocommon stock 5,190 5 (61,006 ) (610 ) (15,146 ) 260,686 (260,081 ) - - - inconnectionwith initialpublicoffering

Issuance ofcommon stockinconnection 9,977 10 - - - - 269,380 - - 269,390 with initialpublicoffering

Issuance ofcommon stockinconnectionwith theprivate 1,111 1 - - - - 29,999 - - 30,000 placementconcurrentwith theinitialpublicoffering

Net loss - - - - - - - (12,568 ) - (12,568 )

Balance asof June 30, 157,768 $ 158 - $ - - $ - $ 670,674 $ 48,017 $ 567 $ 719,416 2021

Foreigncurrency - - - - - - - - 303 303 translationadjustment

Sharesrepurchasedforsettlement - - - - 50 (1,802 ) - - - (1,802 )of employeetaxwithholdings

Stock-basedcompensation - - - - - - 4,848 - - 4,848 expense

Common stockissued uponexercise of 651 1 - - - - 2,066 - - 2,067 stockoptions

Common stockissued uponvesting of 105 - - - - - - - - - restrictedstock units

Net income - - - - - - - 7,924 - 7,924

Balance asof September 158,524 $ 159 - $ - 50 $ (1,802 ) $ 677,588 $ 55,941 $ 870 $ 732,756 30, 2021



Balance asof January 139,721 $ 140 - $ - - $ - $ 283,457 $ 34,488 $ (67 ) $ 318,018 1, 2020

Foreigncurrency - - - - - - - - (153 ) (153 )translationadjustment

Stock-basedcompensation - - - - - - 802 - - 802 expense

Common stockissued uponexercise of 32 - - - - - 70 - - 70 stockoptions

Net income - - - - - - - 2,440 - 2,440

Balance asof March 31, 139,753 $ 140 - $ - - $ - $ 284,329 $ 36,928 $ (220 ) $ 321,177 2020

Foreigncurrency - - - - - - - - 231 231 translationadjustment

Stock-based - - - - - - 1,140 - - 1,140 compensation

Common stockissued uponexercise of 58 - - - - - 51 - - 51 stockoptions

Net income - - - - - - - 4,078 - 4,078

Balance asof June 30, 139,811 $ 140 - $ - - $ - $ 285,520 $ 41,006 $ 11 $ 326,677 2020

Foreigncurrency - - - - - - - - 410 410 translationadjustment

Stock-based - - - - - - 1,619 - - 1,619 compensation

Common stockissued underemployee 61 - - - - - 423 - - 423 purchaseplan

Common stockissued uponexercise of 44 - - - - - 263 - - 263 stockoptions

Common stockissued uponvesting of 19 - - - - - - - - - restrictedstock units

Net income - - - - - - - 5,805 - 5,805

Balance asof September 139,935 $ 140 - $ - - $ - $ 287,825 $ 46,811 $ 421 $ 335,197 30, 2020

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended

September 30,

(in thousands)

2021

2020

Operating activities:

Net income

$

1,000

$

12,323

Adjustments to reconcile net income to net cash provided by operating activities

Bad debt (recovery) expense

(1,186

)

3,041

Depreciation and amortization expense

21,989

18,167

Amortization of debt issuance costs

221

211

Accretion of acquisition liabilities

-

36

Deferred taxes

(4,572

)

(3,912

)

Stock-based compensation expense

12,100

3,561

Interest expense (income)

130

(36

)

Change in fair value of contingent consideration

57

(949

)

Offering costs

21,797

1,852

Other

661

742

Changes in operating assets and liabilities net of effect of business combinations

Trade receivables

690

(11,633

)

Prepaid expenses and other current assets

4,590

(3,457

)

Other non-current assets

(162

)

(9

)

Trade payables

425

1,881

Accrued expenses

(684

)

2,081

Other current liabilities

2,747

(7,143

)

Other non-current liabilities

(1,369

)

1,082

Net cash provided by operating activities

58,434

17,838

Investing activities:

Purchase of property, plant and equipment

(5,499

)

(6,545

)

Acquisition of business, net of cash acquired

(24,323

)

-

Net cash (used in) investing activities

(29,822

)

(6,545

)

Financing activities:

Payments of long-term debt

(22,000

)

(563

)

Deferred payment related to Leiki acquisition

-

(2,033

)

Deferred payment related to Zentrick acquisition

(50

)

(50

)

Payment of contingent consideration related to Zentrick acquisition

-

(601

)

Proceeds from common stock issued upon exercise of stock options

5,514

383

Proceeds from common stock issued under employee purchase plan

-

425

Proceeds from issuance of common stock upon initial public offering

269,390

-

Proceeds from issuance of common stock in connection with concurrent private placement

30,000

-

Payments related to offering costs

(21,797

)

(1,230

)

Capital lease payments

(1,222

)

(1,242

)

Shares repurchased for settlement of employee tax withholdings

(1,802

)

-

Net cash provided by (used in) financing activities

258,033

(4,911

)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(173

)

(38

)

Net increase in cash, cash equivalents, and restricted cash

286,472

6,344

Cash, cash equivalents, and restricted cash - Beginning of period

33,395

11,342

Cash, cash equivalents, and restricted cash - End of period

$

319,867

$

17,686

Cash and cash equivalents

319,825

17,289

Restricted cash (included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets)

42

397

Total cash and cash equivalents and restricted cash

$

319,867

$

17,686

Supplemental cash flow information:

Cash paid for taxes

5,586

14,901

Cash paid for interest

580

2,692

Non-cash investing and financing activities:

Conversion of Series A preferred stock to common stock in connection with the initial public offering

610

-

Treasury stock reissued upon the conversion of Series A preferred stock to common stock

260,686

-

Acquisition of equipment under capital lease

1,518

973

Capital assets financed by accounts payable

41

1,313

Offering costs included in accounts payable and accrued expense

-

772

Comparison of the Three and Nine Months Ended September 30, 2021 and September 30, 2020

Revenue

DoubleVerify Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended

September 30,

(in thousands) 2021 2020

Operating activities:

Net income $ 1,000 $ 12,323

Adjustments to reconcile net income to net cash provided by operating activities

Bad debt (recovery) expense (1,186 ) 3,041

Depreciation and amortization expense 21,989 18,167

Amortization of debt issuance costs 221 211

Accretion of acquisition liabilities - 36

Deferred taxes (4,572 ) (3,912 )

Stock-based compensation expense 12,100 3,561

Interest expense (income) 130 (36 )

Change in fair value of contingent consideration 57 (949 )

Offering costs 21,797 1,852

Other 661 742

Changes in operating assets and liabilities net of effect of business combinations

Trade receivables 690 (11,633 )

Prepaid expenses and other current assets 4,590 (3,457 )

Other non-current assets (162 ) (9 )

Trade payables 425 1,881

Accrued expenses (684 ) 2,081

Other current liabilities 2,747 (7,143 )

Other non-current liabilities (1,369 ) 1,082

Net cash provided by operating activities 58,434 17,838

Investing activities:

Purchase of property, plant and equipment (5,499 ) (6,545 )

Acquisition of business, net of cash acquired (24,323 ) -

Net cash (used in) investing activities (29,822 ) (6,545 )

Financing activities:

Payments of long-term debt (22,000 ) (563 )

Deferred payment related to Leiki acquisition - (2,033 )

Deferred payment related to Zentrick acquisition (50 ) (50 )

Payment of contingent consideration related to - (601 )Zentrick acquisition

Proceeds from common stock issued upon exercise of 5,514 383 stock options

Proceeds from common stock issued under employee - 425 purchase plan

Proceeds from issuance of common stock upon initial 269,390 - public offering

Proceeds from issuance of common stock in 30,000 - connection with concurrent private placement

Payments related to offering costs (21,797 ) (1,230 )

Capital lease payments (1,222 ) (1,242 )

Shares repurchased for settlement of employee tax (1,802 ) - withholdings

Net cash provided by (used in) financing activities 258,033 (4,911 )

Effect of exchange rate changes on cash and cash (173 ) (38 )equivalents and restricted cash

Net increase in cash, cash equivalents, and 286,472 6,344 restricted cash

Cash, cash equivalents, and restricted cash - 33,395 11,342 Beginning of period

Cash, cash equivalents, and restricted cash - End $ 319,867 $ 17,686 of period



Cash and cash equivalents 319,825 17,289

Restricted cash (included in prepaid expenses andother current assets on the Condensed Consolidated 42 397 Balance Sheets)

Total cash and cash equivalents and restricted cash $ 319,867 $ 17,686

Supplemental cash flow information:

Cash paid for taxes 5,586 14,901

Cash paid for interest 580 2,692

Non-cash investing and financing activities:

Conversion of Series A preferred stock to commonstock in connection with the initial public 610 - offering

Treasury stock reissued upon the conversion of 260,686 - Series A preferred stock to common stock

Acquisition of equipment under capital lease 1,518 973

Capital assets financed by accounts payable 41 1,313

Offering costs included in accounts payable and - 772 accrued expense

Comparison of the Three and Nine Months Ended September 30, 2021 and September 30, 2020

Revenue

Three Months Ended Change Change Nine Months Ended Change Change September 30, September 30,

2021 2020 $ % 2021 2020 $ %

(In Thousands) (In Thousands)

Revenue bycustomer type:

Advertiser - $ 34,057 $ 27,582 $ 6,475 23 % $ 93,260 $ 73,476 $ 19,784 27 %direct

Advertiser - 41,902 28,044 13,858 49 113,694 76,023 37,671 50 programmatic

Supply-side 7,139 5,411 1,728 32 20,254 15,777 4,477 28 customer

Total $ 83,098 $ 61,037 $ 22,061 36 % $ 227,208 $ 165,276 $ 61,932 37 %revenue

Adjusted EBITDA

In addition to our results determined in accordance with GAAP, we believe that certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin, are useful in evaluating our business. A metric similar to Adjusted EBITDA is used in certain calculations under our New Revolving Credit Facility. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. The following table presents a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable financial measure prepared in accordance with GAAP.

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(In Thousands) (In Thousands)

Net income $ 7,924 $ 5,805 $ 1,000 $ 12,323

Net income margin 10 % 10 % 0 % 7 %

Depreciation and amortization 7,492 6,087 21,989 18,167

Stock-based compensation 4,848 1,619 12,100 3,561

Interest expense 249 858 936 2,958

Income tax expense (benefit) 3,270 (1,376 ) 8,361 1,975

M&A costs (recoveries) (a) 1,079 (25 ) 1,128 198

Offering costs and IPO 318 768 22,465 2,995 readiness costs (b)

Other costs (c) 878 307 987 3,031

Other expense (d) 365 481 365 359

Adjusted EBITDA $ 26,423 $ 14,524 $ 69,331 $ 45,567

Adjusted EBITDA margin 32 % 24 % 31 % 28 %

(a)

M&A costs (recoveries) for the three and nine months ended September 30, 2021 consist of transaction costs related to the acquisition of Meetrics and other deferred compensation costs related to acquisitions. M&A costs for the three and nine months ended September 30, 2020 consist of deferred compensation costs related to acquisitions.

(b)

Offering costs and IPO readiness costs for the three and nine months ended September 30, 2021 and 2020 consist of third-party costs incurred in preparation and completion for our IPO and other transaction related expenses.

(c)

Other costs for the three and nine months ended September 30, 2021 consist of reimbursements paid to Providence for costs incurred prior to the IPO date and non-recurring recognition of a cease-use liability related to unoccupied leased office space. For the three and nine months ended September 30, 2020, other costs include reimbursements paid to Providence as well as costs related to the departure of our former Chief Executive Officer, and third-party costs incurred in response to investigating and remediating certain IT/cybersecurity matters that occurred in March 2020.

(d)

Other expense for the three and nine months ended September 30, 2021 and 2020 consists of changes in fair value associated with contingent considerations and the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities.

We use Adjusted EBITDA and Adjusted EBITDA Margin as measures of operational efficiency to understand and evaluate our core business operations. We believe that these non-GAAP financial measures are useful to investors for period to period comparisons of our core business and for understanding and evaluating trends in our operating results on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Some of the limitations of these measures are:

* they do not reflect changes in, or cash requirements for, our working capital needs; * Adjusted EBITDA does not reflect our capital expenditures or future requirements for capital expenditures or contractual commitments; * they do not reflect income tax expense or the cash requirements to pay income taxes; * they do not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt; and * although depreciation and amortization are non-cash charges related mainly to intangible assets, certain assets being depreciated and amortized will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

In addition, other companies in our industry may calculate these non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. You should compensate for these limitations by relying primarily on our GAAP results and using the non-GAAP financial measures only supplementally.

Total stock-based compensation expense recorded in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows:

M&A costs (recoveries) for the three and nine months ended September 30, 2021 consist of transaction costs related to the acquisition of Meetrics(a) and other deferred compensation costs related to acquisitions. M&A costs for the three and nine months ended September 30, 2020 consist of deferred compensation costs related to acquisitions.

Offering costs and IPO readiness costs for the three and nine months ended(b) September 30, 2021 and 2020 consist of third-party costs incurred in preparation and completion for our IPO and other transaction related expenses.

Other costs for the three and nine months ended September 30, 2021 consist of reimbursements paid to Providence for costs incurred prior to the IPO date and non-recurring recognition of a cease-use liability related to(c) unoccupied leased office space. For the three and nine months ended September 30, 2020, other costs include reimbursements paid to Providence as well as costs related to the departure of our former Chief Executive Officer, and third-party costs incurred in response to investigating and remediating certain IT/cybersecurity matters that occurred in March 2020.

Other expense for the three and nine months ended September 30, 2021 and(d) 2020 consists of changes in fair value associated with contingent considerations and the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities.

We use Adjusted EBITDA and Adjusted EBITDA Margin as measures of operational efficiency to understand and evaluate our core business operations. We believe that these non-GAAP financial measures are useful to investors for period to period comparisons of our core business and for understanding and evaluating trends in our operating results on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Some of the limitations of these measures are:

* they do not reflect changes in, or cash requirements for, our working capital needs; * Adjusted EBITDA does not reflect our capital expenditures or future requirements for capital expenditures or contractual commitments; * they do not reflect income tax expense or the cash requirements to pay income taxes; * they do not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt; and * although depreciation and amortization are non-cash charges related mainly to intangible assets, certain assets being depreciated and amortized will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

In addition, other companies in our industry may calculate these non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. You should compensate for these limitations by relying primarily on our GAAP results and using the non-GAAP financial measures only supplementally.

Total stock-based compensation expense recorded in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows:

Three Months Nine Months Ended Ended

September 30, September 30,

(in thousands) 2021 2020 2021 2020

Product development $ 1,239 $ 212 $ 1,953 $ 465

Sales, marketing and customer support 1,423 305 3,743 869

General and administrative 2,186 1,102 6,404 2,227

Total stock-based compensation $ 4,848 $ 1,619 $ 12,100 $ 3,561

Forward-Looking Statements

This press release includes "forward-looking statements," including with respect to the initial public offering. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

About DoubleVerify

DoubleVerify is a leading software platform for digital media measurement and analytics. Our mission is to make the digital advertising ecosystem stronger, safer and more secure, thereby preserving the fair value exchange between buyers and sellers of digital media. Hundreds of Fortune 500 advertisers employ our unbiased data and analytics to drive campaign quality and effectiveness, and to maximize return on their digital advertising investments - globally.

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CONTACT: Media Contact

CONTACT: Chris Harihar Crenshaw Communications 646-535-9475 chris@crenshawcomm.com

CONTACT: Investor Relations

CONTACT: Tejal Engman DoubleVerify IR@doubleverify.com