Direct Digital Holdings, Inc. (NASDAQ:DRCT) Q4 2022 Earnings Call Transcript

Dylan Dupuis: Great. Thank you. And one more if I may. In terms of the sales guidance, should we expect a similar trajectory and cadence of last year where it’s sort of much stronger in the second half of the year and really 2Q as well with 1Q is sort of being, I mean, quite low compared to the rest of the quarters?

Mark Walker: Absolutely. We typically €“ our business typically follows the typical seasonality bend of most digital marketing where Q1 is the slowest period, Q4 is the highest. We have no reason to think that that seasonality trend is going to deviate for this year and we’re actually planning our business accordingly with Q1 being our slowest period and it builds from there.

Dylan Dupuis: Great. Thank you. That’s it for me. I’ll pass it on.

Mark Walker: Absolutely.

Operator: Our next question comes from the line of Michael Kupinski with NOBLE Capital. Please proceed.

Michael Kupinski: Thank you, and thanks for taking my questions. Can you talk a little bit more about your headcount, what is it currently, and then what are your hiring plans? I know that you said that you’d like to continue to hire to support faster revenue growth. I’m wondering if your current sales staff that you have and so forth supports the $118 million to $122 million of revenues for this year, or do you feel like you need to hire to achieve that from current levels?

Susan Echard: Hey, Michael. This is Susan. Yes. Thanks for the question. We have about 70 people right now, and the headcount that’s in place right now will support the growth in 2023. We normally hire those folks about six to eight months ahead of time because it does take a while for these boots on the ground to ramp up. And so we do have the sales team in place to deliver on that revenue and we’re currently also planning on hiring additional people in 2023 as we look to the 2024 strategies.

Michael Kupinski: Thank you. And I know that when I look at the quarter, the compensation expenses were a little higher than expected for me. I was just wondering was there €“ and I know that you might have had some management changes in one of your segments, but I’m just wondering, was that due to the hiring that you had or was that simply planned hiring? Can you just kind of give us some color on that?

Susan Echard: Yes. No, in the fourth quarter, of course, we had the higher headcount in the fourth quarter. We made some investments in people and compensation plans and so yes, that’s where we ended up for the year.

Mark Walker: And just so you’re aware, we do hiring in Q4 for us, so that we have boots on the ground ready to run, coming Q1, Q2 of the next year. So part of our Q4 planning is to strategically hire in Q4, so that we can have boots on the ground and get the benefit of those people coming on board coming Q1 and Q2 of the next year. So that’s a trend you’ll probably continue to see on the go forward.

Michael Kupinski: Perfect. And then just to ask this question because I feel like I have to. Have you noticed any fallout from the SVB from a client perspective? Anything notable there?

Susan Echard: Yes. Nothing notable. I mean, we have addressed all the concerns that our customers and vendors have had and have no exposure there. So we haven’t seen any disruption in cash coming in and we haven’t had any disruption in cash going out. So we feel we’re protected as far as any direct impact from that.

Michael Kupinski: Right. And then on the transition to the new servers, has that gone as planned? Have you noticed any issues that have developed? And then I believe you had duplicative cost in the quarter, if you can just remind me about that. And if there was duplicative cost, can you kind of outline about the dollar amount, what that might have been?