Digital ad verification company DoubleVerify (NYSE: DV) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 11.2% year on year to $188.6 million. Next quarter’s revenue guidance of $209 million underwhelmed, coming in 0.9% below analysts’ estimates. Its non-GAAP profit of $0.22 per share was 17.4% below analysts’ consensus estimates.

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StockStory’s Take

DoubleVerify’s third quarter results prompted a significant negative market reaction, reflecting concerns about both top-line and bottom-line performance. Management attributed the underperformance to widespread softness in retail advertiser spending and tougher comparisons from last year’s strong quarter. CEO Mark Zagorski pointed out that while core verticals like consumer packaged goods remained stable, “market dynamics led to some retail budgets being softer,” ultimately weighing on revenue growth. The company also highlighted persistent customer retention among its largest clients and noted early traction for new AI-powered offerings.

Looking ahead, DoubleVerify’s guidance is shaped by adoption rates for recently launched AI-driven verification tools and new streaming TV solutions. Management believes that efficiency gains from automation and artificial intelligence will support margin expansion, even as revenue growth moderates. CFO Nicola Allais emphasized, “The upside to the base case will depend on the ramp for the adoption for those new products,” focusing on the successful scaling of social and connected TV initiatives as key to future performance. Management also flagged ongoing investments in product development and international expansion as areas of strategic priority.

Key Insights from Management’s Remarks

Management cited three major factors behind third quarter results and their outlook: AI-fueled product innovation, growing revenue diversity from social and connected TV, and resilient customer relationships.

• AI-driven product launches: The quarter saw the rollout of the DV AI Verification suite, including Agent ID Measurement and SlopStopper, which use generative AI to classify digital ad activity and detect synthetic content. Management expects these tools to double classification volume and significantly improve efficiency.
• Social and CTV diversification: DoubleVerify’s social media and connected TV (CTV) solutions gained momentum, with Authentic AdVantage and Meta pre-screen tools registering early adoption from major consumer brands. Social activation is now one of the company’s fastest-growing segments, and CTV measurement volumes rose 30% year-over-year.
• Customer retention and upsell: The company reported zero churn among its top 100 customers in the quarter, and upsell activity was strong, particularly for AI-powered solutions. Large existing clients expanded usage of new products, supporting overall stability despite sector-specific headwinds.
• Retail vertical headwinds: Retail advertising, a significant portion of DoubleVerify’s business, faced broad-based softness due to macroeconomic factors and shifting advertiser budgets. This impacted both revenue growth and quarterly guidance, with management noting the headwind was not confined to a handful of clients.
• Operational efficiency from AI: Management highlighted that automation and AI are not only powering new product capabilities but also enabling margin expansion by allowing the company to process greater volumes with fewer resources, a trend they expect to accelerate into 2026.

Drivers of Future Performance

DoubleVerify’s outlook centers on the pace of adoption for its newly launched social, CTV, and AI verification tools, as well as ongoing macroeconomic pressures in key verticals.

• Adoption of new solutions: Management believes incremental revenue growth depends on the ramp of recently launched products in AI verification, social activation, and CTV. CEO Mark Zagorski noted that Authentic AdVantage and Meta prebid solutions could represent a "$120 million to $160 million annual revenue opportunity" over time, contingent on adoption rates.
• Margin expansion through automation: CFO Nicola Allais stated that AI-driven efficiency improvements are expected to sustain or grow margins even if revenue growth moderates, with automation enabling faster classification and reduced operating costs.
• Exposure to retail and macro trends: The company’s largest vertical, retail, continues to experience unpredictable spending patterns. Management’s base-case outlook assumes no major change in the macroeconomic backdrop, but any further deterioration could weigh on results, while upside would be driven by new product traction and possible recovery in retail advertising.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the adoption trajectory and revenue contribution from new social and CTV product offerings, (2) the pace and efficiency of AI-driven automation initiatives, and (3) whether retail advertiser spending stabilizes or recovers. The scaling of international operations and further product launches targeting measurement and activation are also important indicators for the company’s medium-term growth profile.

DoubleVerify currently trades at $9.44, down from $10.96 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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