Houston-based advertising technology company Direct Digital Holdings (Nasdaq: DRCT) reported a solid finish to its first year as a public company, despite what CEO and co-founder Mark Walker referred to as a "volatile year for the advertising industry."
DDH finished 2022 with net income of $2.9 million, compared to a net loss of $1.5 million in 2021. Its full-year revenue was $88 million, a 131% increase from the previous year.
During an earnings call on March 24, Walker said walled gardens — or advertiser data that is only accessible to owners such as Meta (Nasdaq: META) and Google (Nasdaq: GOOGL) — experienced difficulty. This led to publishers seeking alternatives in the open market, which in turn benefited DDH’s strategy.
Walker also spoke about an untapped market for multicultural publishers, which he previously told the Houston Business Journal was one of the reasons he founded DDH. Walker cited data from the Association of National Advertisers that said while multicultural audiences make up 40% of the American population, marketers only use 5% of their spending to reach those audiences.
“If companies want to grow in the United States, they will have to reach those markets through those publishers. And therefore, we believe the overall trend of this spend dislocation can work in our favor, and we are looking to continue to see that growth for the foreseeable future,” Walker said on the March 24 call.
The company’s sell-side segment — which handles ad tech where publishers can sell and manage inventory — drove $58.7 million in revenue for the year, said DDH CFO Susan Echard, adding the Colossus SSP platform drove $15.6 million in fourth-quarter revenue alone. Echard estimated DDH’s FY 2023 revenue should range between $118 million and $122 million.
Direct Digital confirmed that it is terminating its credit facility with Silicon Valley Bank following the bank’s collapse earlier in March. According to an 8-K form filed with the Securities and Exchange Commission, the companies entered into a loan and security agreement for the revolving credit facility in January, but DDH has not used it.
DDH was co-founded by Walker and former advertising executive Keith Smith and went public in February 2022. The company emphasizes providing digital marketing services for small and midsized businesses with annual revenues ranging between $5 million and $500 million.
Direct Digital Holdings is ranked No. 1 by revenue on the Houston Business Journal’s 2023 2023 Largest Houston-Area Black-Owned Businesses List. The company is also being honored in the HBJ's 2023 Diversity in Business Awards as an Outstanding Diverse Organization.
