Digital media measurement and analytics provider DoubleVerify (NYSE: DV) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 17.2% year on year to $165.1 million. Guidance for next quarter’s revenue was better than expected at $171 million at the midpoint, 1.1% above analysts’ estimates. Its GAAP profit of $0.01 per share was in line with analysts’ consensus estimates.
Is now the time to buy DoubleVerify? Find out by accessing our full research report, it’s free.
DoubleVerify (DV) Q1 CY2025 Highlights:
- Revenue: $165.1 million vs analyst estimates of $153.2 million (17.2% year-on-year growth, 7.8% beat)
- EPS (GAAP): $0.01 vs analyst estimates of $0.02 (in line)
- Adjusted Operating Income: $32.27 million vs analyst estimates of $22.66 million (19.5% margin, 42.4% beat)
- Revenue Guidance for Q2 CY2025 is $171 million at the midpoint, above analyst estimates of $169.2 million
- EBITDA guidance for Q2 CY2025 is $50 million at the midpoint, in line with analyst expectations
- Operating Margin: 4.1%, in line with the same quarter last year
- Free Cash Flow Margin: 19%, up from 15.8% in the previous quarter
- Market Capitalization: $2.2 billion
“DoubleVerify is off to a strong start in 2025, with first-quarter revenue and adjusted EBITDA meaningfully ahead of expectations,” said Mark Zagorski, CEO of DoubleVerify.
Company Overview
When Oren Netzer saw a digital ad for US-based Target while sitting in his Tel Aviv apartment, he knew there was an unsolved problem, so he started DoubleVerify (NYSE: DV), a provider of advertising solutions to businesses that helps with ad verification, fraud prevention, and brand safety.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, DoubleVerify’s sales grew at a decent 23.5% compounded annual growth rate over the last three years. Its growth was slightly above the average software company and shows its offerings resonate with customers.
This quarter, DoubleVerify reported year-on-year revenue growth of 17.2%, and its $165.1 million of revenue exceeded Wall Street’s estimates by 7.8%. Company management is currently guiding for a 9.7% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 8.1% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and indicates its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
DoubleVerify is extremely efficient at acquiring new customers, and its CAC payback period checked in at 5.4 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give DoubleVerify more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from DoubleVerify’s Q1 Results
We were impressed by how significantly DoubleVerify blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock remained flat at $14.20 immediately following the results.
DoubleVerify had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
