What Happened?
Shares of digital media measurement and analytics provider DoubleVerify (NYSE: DV) fell 36.9% in the afternoon session after the company reported weak fourth-quarter 2024 results, which missed analysts' expectations across all key metrics. Its revenue and EBITDA guidance for next quarter also fell short of Wall Street's estimates. DV noted the loss of a CPG customer in the quarter due to that customer's struggles with commodity price inflation. The company also continues to see headwinds from a group of 6 consumer companies that reduced spend a few quarters ago as well. Tailwinds that should be buoying the business such as social media, connected TV, and winning customers from competitor Moat are not making up for the challenges faced. We note that ad tech companies had weaker quarters in general, as both The Trade Desk and PubMatic missed on revenue and guided below for next quarter. DV wasn't spared, and the stock traded down.
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What The Market Is Telling Us
DoubleVerify’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for DoubleVerify and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock dropped 40.5% on the news that the company reported weak first quarter results. Double Verify lowered the midpoint of it's full year revenue guidance by 3.9% or $27 million, blaming large retail and CPG (consumer packaged goods) customers and their choppy spending patterns. Adjusted EBITDA guidance was also lowered. This brings up a question of customer concentration and potentially that secular volume tailwinds from social media and CTV (connected TV) are not that powerful at the moment.
Overall, the results could have been better, and after competitor Integral Ad Science (NASDAQ: IAS) warned of pricing competition in the market last quarter (which DV denied seeing), this result is certainly bad for sentiment and puts into question what short to medium-term topline projections should look like.
Following the results, Keybanc downgraded the stock's rating from Overweight (Buy) to Sector Weight (Hold).
DoubleVerify is down 27.9% since the beginning of the year, and at $13.82 per share, it is trading 64.8% below its 52-week high of $39.24 from February 2024. Investors who bought $1,000 worth of DoubleVerify’s shares at the IPO in April 2021 would now be looking at an investment worth $385.83.
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