Direct Digital Holdings, Inc. (NASDAQ:DRCT) Q3 2023 Earnings Call Transcript

Daniel Kurnos: I would be, too, if I put up $60 million of revenue in Q3. A couple of questions — a few questions. One, I mean, I appreciate the color on incremental impression growth through tech capacity. That’s helpful. You’ve obviously had some notable partner wins. Is there any way to just kind of parse out sort of underlying organic? And it’s not really a fair question because technically, all of its organic, but just between increase? Is there a way to sort of bucket between increased spend per customer, which [indiscernible] some good metrics on. I’m talking about the sell side, by the way versus new partner wins versus just expansion of inventory impressions with the existing partner base.

Mark Walker: Yes. I would say it’s actually a combination of all three. I mean, the amount of impressions that we grew. We went from 300 million in Q2, 400 million in Q3. I think that’s one benefit, right? Second benefit that you see, if you look at our revenue per advertiser, that actually went up roughly about 200% to 260% year-over-year. And so I think that you can actually put those two pieces together and really kind of figure out that our growth is actually coming from both sides. It’s the strategy that we’ve implemented from day 1, increased level of impressions, work diligently on the buying community and the agency groups that have decided to partner with us and going deep with them by building on our relationships and honoring our commitments and operating in just.

So that’s really the — everybody asks about the secret sauce for our growth. That is the secret sauce, continue growing the impressions, continue investing in the buying communities and then they come and actually spend through your platform.

Daniel Kurnos: Well, now you’ve given the recipe, Mark, they can all figure it out. No, I’m just kidding. I do — this is — so let me just add a little bit of a follow-on to that because I’m trying to get a sense of — this market has been really tough for small platforms to get trials and expand its spends. And obviously, you have a unique angle in the inventory that you bring to the marketplace. But I’m just trying to get a sense of that spend per advertiser number, I know campaigns can be small, so you can have larger growth rates off of smaller numbers. But still, to get to your number here, I’m just trying to get a sense of like has it been like they’ve now tested with you for 12 months and they are really willing to put more dollars to work with you just because the results have been fantastic, which, by the way, it was the narrative we saw last year, too.

It just was on a smaller base. Or is there some other dynamic at play in the marketplace just given the way that inventory has evolved both in the digital space and the video space here that equates to something that is beneficial just how you run — the way that you run your strategy. So the dynamics of the marketplace are incrementally beneficial to the platform that you’ve developed.

Mark Walker: Yes. I would actually say it’s really operational excellence. I mean the teams that we’ve actually put in place. One, they come with a significant amount of experience sitting on multiple points of the value chain. So I think we have an interesting perspective that we bring to the market when we work with the different buying communities that are out in the marketplace. So I think that’s number one. Thing number two, the fact that we’ve been in business for 4 years, even though we were operating quietly behind the scenes, it really allowed us to get our processes and structure in order to where we can make money off of smaller campaigns. And that has been actually a benefit for us. Now that you’ve seen us out in the marketplace, we are starting to mature. We’ve been able to upgrade our platform. I think you’re going to start seeing on the go-forward, continued growth out of our platform and the way that we’ve structured the business.