DoubleVerify Holdings, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim Condensed Consolidated Financial Statements and related notes appearing elsewhere in this Quarterly Report and our audited financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025 and elsewhere in this Quarterly Report, including under the heading “Special Note Regarding Forward-Looking Statements.”

Company Overview

We are one of the industry’s leading media effectiveness platforms that leverages AI to drive superior outcomes for global brands. By creating more effective, transparent ad transactions, we make the digital advertising ecosystem stronger, safer and more secure, thereby preserving the fair value exchange between buyers and sellers of digital media.

Our solutions are integrated across the entire digital advertising ecosystem, including programmatic platforms, social media channels, and digital publishers. We deliver unique data analytics through our customer interface, DV Pinnacle, to provide detailed insights into our customers’ media performance on both direct and programmatic media buying platforms and across all key digital media channels, formats, and devices. In 2025, our coverage spanned 110 countries where our customers activate our solutions. Our customers include many of the largest global advertisers and digital ad platforms and publishers. We provide a consistent, cross-platform measurement standard across all major forms of digital media, making it easier for advertisers and supply-side customers to assess performance across all of their digital ads and optimize business outcomes in real-time.

We derive revenue primarily from our advertiser customers based on the volume of media transactions, or ads, that our solutions measure (“Media Transactions Measured”). Advertisers utilize the DV Authentic Ad, our definitive metric of digital media quality, to evaluate the existence of fraud, brand suitability, viewability and geography for each digital ad. Advertisers pay us an analysis fee (“Measured Transaction Fee”) per thousand impressions based on the volume of Media Transactions Measured on their behalf. The price of most of our solutions is fixed. On platforms that charge based on percent of media spend, our pricing includes caps which effectively mirror our standard fixed fees. We maintain an expansive set of direct integrations across the entire digital advertising ecosystem, including with leading programmatic, CTV, and social platforms, which enable us to deliver our metrics to the platforms where our customers buy ads. Further, our solutions are not reliant on any single source of impressions and we can service our customers as their digital advertising needs change.

We generate revenue from supply-side customers based on monthly or annual contracts with minimum guarantees and tiered pricing when guarantees are met.

Components of Our Results of Operations

We manage our business operations and report our financial results in a single segment.

Revenue

Our customers use our solutions to measure the effectiveness of their digital advertisements. We generate revenue from our advertising customers based primarily on the volume of Media Transactions Measured by our solutions, and for supply-side customers, based on contracts with minimum guarantees or contracts that have tiered pricing after minimum guarantees are achieved. Our existing customer base has remained largely stable, and our gross revenue retention rate was over 95% for the three months ended March 31, 2026. We define our gross revenue retention rate as the total prior period revenue earned from advertiser customers, less the portion of prior period revenue attributable to lost advertiser customers, divided by the total prior period revenue from advertiser customers, excluding a portion of our revenues that cannot be allocated to specific advertiser customers.

For each of the three months ended March 31, 2026 and March 31, 2025, we generated 90% of our revenue from advertiser customers. Advertisers can purchase our solutions through programmatic, social media and CTV platforms to evaluate the quality and optimize the efficiency of ad inventories before they are purchased, which we track as Activation revenue. Advertisers can also purchase our solutions to measure the quality and performance of ads after they are purchased directly or programmatically from digital properties, including publishers, social media and CTV platforms, which we track as Measurement revenue. We generate the majority of our revenue from advertisers by charging a Measured Transaction Fee based on the volume of Media Transactions Measured on behalf of our customers. We recognize revenue from advertisers in the period in which we provide our measurement and activation solutions.

For each of the three months ended March 31, 2026 and March 31, 2025, we generated 10% of our revenue from supply-side customers who use our data analytics to validate the quality of their ad inventory and provide data to their customers to facilitate targeting and purchasing of digital ads, which we refer to as Supply-side revenue. We generate revenue for certain supply-side arrangements that include minimum guaranteed fees that reset monthly and are recognized on a straight-line basis over the access period, which is usually one to two years. For contracts that contain overages, once the minimum guaranteed amount is achieved, overages are recognized as earned over time based on a tiered pricing structure.

The following table disaggregates revenue between advertiser customers, where revenue is primarily generated based on the number of ads measured and purchased for Activation or measured for Measurement, and Supply-side.

(In Thousands)

Operating Expenses

Our operating expenses consist of the following categories:

Cost of revenue. Cost of revenue consists primarily of costs from revenue-sharing arrangements with our partners, platform hosting fees, data center costs, software and other technology expenses, other costs directly associated with data infrastructure, and personnel costs, including salaries, bonuses, stock-based compensation and benefits, directly associated with the support and delivery of our customer interface, DV Pinnacle, and solutions.

Product development. Product development expenses consist primarily of personnel costs, including salaries, bonuses, stock-based compensation and benefits, third party vendors and outsourced engineering services, and allocated overhead. Overhead costs such as information technology infrastructure, rent and occupancy charges are allocated based on headcount. Product development expenses are expensed as incurred, except to the extent that such costs are associated with software development that qualifies for capitalization, which are then recorded as capitalized software development costs included in Property, plant and equipment, net on our Condensed Consolidated Balance Sheets. Capitalized software development costs are amortized to depreciation and amortization.

Sales, marketing, and customer support. Sales, marketing, and customer support expenses consist primarily of personnel costs directly associated with sales, marketing, and customer support departments, including salaries, bonuses, commissions, stock-based compensation and benefits, and allocated overhead. Overhead costs such as information technology infrastructure, rent and occupancy charges are allocated based on headcount. Sales and marketing expense also includes costs for promotional marketing activities, advertising costs, and attendance at events and trade shows. Sales commissions are expensed as incurred.

General and administrative. General and administrative expenses consist primarily of personnel expenses associated with our executive, finance, legal, human resources and other administrative employees. General and administrative expenses also include professional fees for external accounting, legal, investor relations and other consulting services, expenses to operate as a public company, including costs to comply with rules and regulations applicable to companies listed on a U.S. securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, other overhead expenses including insurance, as well as third party costs related to acquisitions.

Interest expense. Interest expense consists primarily of the amortization of debt issuance costs, commitment fees associated with the unused portion of the New Revolving Credit Facility and interest on finance leases. The New Revolving Credit Facility bears interest at either SOFR or ABR plus an applicable margin per annum. See “Liquidity and Capital Resources—Debt Obligations” and Note 9 to our Condensed Consolidated Financial Statements.

Other expense (income), net. Other expense (income), net consists primarily of interest earned on interest-bearing monetary assets and gains and losses on foreign currency transactions.

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and March 31, 2025

The following table shows our Condensed Consolidated Results of Operations:

(In Thousands)

The following table sets forth our Condensed Consolidated Results of Operations for the specified periods as a percentage of our revenue for those periods presented:

Note: Percentages may not sum due to rounding.

Revenue

Total revenue increased by $15.8 million, or 10%, from $165.1 million in the three months ended March 31, 2025 to $180.8 million in the three months ended March 31, 2026.

Total Advertiser revenue increased by $13.7 million, or 9%, in the three months ended March 31, 2026 as compared to the same period in 2025. The growth was driven primarily by an 12% increase in Media Transactions Measured, partially offset by a 4% decrease in Measured Transaction Fees.

Activation revenue increased by $5.4 million, or 6%, in the three months ended March 31, 2026, as compared to the same period in 2025. The increase was driven by greater adoption of social media solutions, Authentic Brand Suitability, and Scibids AI.

Measurement revenue increased $8.4 million, or 16%, in the three months ended March 31, 2026, as compared to the same period in 2025, driven primarily by greater adoption of social and CTV solutions, as well as the addition of Rockerbox, Inc. (“Rockerbox”).

Supply-side revenue increased $2.0 million, or 12%, in the three months ended March 31, 2026, as compared to the same period in 2025, driven primarily by growth from both existing and new platform and publisher customers.

Cost of Revenue (exclusive of depreciation and amortization shown below)

Cost of revenue increased by $2.2 million, or 7%, from $31.0 million in the three months ended March 31, 2025 to $33.2 million in the three months ended March 31, 2026. The increase was due primarily to higher data services and hosting expenses due to increased volume, as well as growth in Activation revenue which led to increased partner costs from revenue-sharing arrangements.

Product Development Expenses

Product development expenses increased by $0.7 million, or 1%, from $44.7 million in the three months ended March 31, 2025 to $45.4 million in the three months ended March 31, 2026. The increase was due primarily to an increase in personnel costs, including stock-based compensation, of $1.1 million, partially offset by lower travel and entertainment and other costs to support our product development efforts.

Sales, Marketing and Customer Support Expenses

Sales, marketing and customer support expenses increased by $1.9 million, or 4%, from $43.7 million in the three months ended March 31, 2025 to $45.6 million in the three months ended March 31, 2026. The increase was due primarily to an increase in travel and entertainment and third party professional fees to support marketing and sales activities of $1.2 million, and an increase in personnel costs, including stock-based compensation and sales commissions, of $0.7 million.

General and Administrative Expenses

General and administrative expenses decreased by $0.8 million, or 3%, from $26.5 million in the three months ended March 31, 2025 to $25.7 million in the three months ended March 31, 2026. The decrease was due primarily to a $1.2 million decrease in acquisition-related transaction costs for Rockerbox, partially offset by an increase in personnel costs, including stock-based compensation of $0.5 million.

Depreciation and Amortization

Depreciation and amortization increased by $3.0 million, or 24%, from $12.4 million in the three months ended March 31, 2025, to $15.3 million in the three months ended March 31, 2026. The increase was due primarily to higher amortization of internally developed software.

Interest Expense

Interest expense was materially unchanged at $0.4 million in each of the three months ended March 31, 2025 and March 31, 2026, respectively.

Other Expense (Income), Net

Other expense (income), net changed by $4.2 million, from income of $3.2 million in the three months ended March 31, 2025 to expense of $1.0 million in the three months ended March 31, 2026. The change was due primarily to a decrease in interest earned on interest-bearing monetary assets, and to losses from changes in foreign exchange rates.

Income Tax Expense

Income tax expense increased by $0.7 million from $7.2 million in the three months ended March 31, 2025, to $7.8 million in the three months ended March 31, 2026. The increase was due primarily to higher pre-tax earnings and unfavorable effects from certain stock compensation costs. These factors were partially offset by a more favorable estimated operating effective tax rate for the year.

Adjusted EBITDA

In addition to our results determined in accordance with GAAP, management believes that certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin, are useful in evaluating our business. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. The following table presents a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable financial measure prepared in accordance with GAAP:

(In Thousands)

(a) M&A and restructuring costs for the three months ended March 31, 2025 consist of transaction costs related to the acquisition of Rockerbox.

(b) Other recoveries for the three months ended March 31, 2026 consist of changes to accrued expenses with respect to litigation and regulatory matters outside of the ordinary course.

(c) Other expense (income) for the three months ended March 31, 2026 and March 31, 2025 consist of interest income earned on interest-bearing monetary assets, and the impact of changes in foreign currency exchange rates.

We use Adjusted EBITDA and Adjusted EBITDA Margin as measures of operational efficiency to understand and evaluate our core business operations. We believe that these non-GAAP financial measures are useful to investors for period to period comparisons of our core business and for understanding and evaluating trends in operating results on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Some of the limitations of these measures are:

• they do not reflect changes in, or cash requirements for, working capital needs;
• Adjusted EBITDA does not reflect capital expenditures or future requirements for capital expenditures or contractual commitments;
• they do not reflect income tax expense or the cash requirements to pay income taxes;
• they do not reflect interest expense or the cash requirements necessary to service interest or principal debt payments; and
• although depreciation and amortization are non-cash charges related mainly to intangible assets, certain assets being depreciated and amortized will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

In addition, other companies in our industry may calculate these non-GAAP financial measures differently, therefore limiting their usefulness as a comparative measure. You should compensate for these limitations by relying primarily on our GAAP results and using the non-GAAP financial measures only supplementally.

Liquidity and Capital Resources

Our operations are financed primarily through cash generated from operations. As of March 31, 2026, the Company had cash and cash equivalents of $173.8 million and net working capital, consisting of current assets (excluding cash and cash equivalents) less current liabilities, of $183.0 million.

We believe existing cash and cash generated from operations, together with the $200.0 million undrawn balance under the New Revolving Credit Facility as of March 31, 2026, will be sufficient to meet future working capital requirements and fund capital expenditures, share repurchase programs and acquisitions on a short-term and long-term basis.

Our total future capital requirements and the adequacy of available funds will depend on many factors, including those discussed above as well as the risks and uncertainties set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Debt Obligations

On August 12, 2024, the Company entered into the Credit Agreement providing for the New Revolving Credit Facility with available borrowings of $200.0 million, which matures on the Revolving Termination Date. Subject to certain terms and conditions, the Company is entitled to request incremental facilities (including term, revolving and/or letter of credit facilities). The New Revolving Credit Facility replaced in full the Company’s Prior Revolving Credit Facility.

All obligations under the New Revolving Credit Facility are guaranteed by the Company pursuant to the Guarantee Agreement. The New Revolving Credit Facility contains customary affirmative and negative covenants, including restrictions on, among other things: paying dividends or purchasing, redeeming or retiring capital stock applicable to the Credit Group; granting liens; incurring or guaranteeing additional debt; making investments and acquisitions; entering into transactions with affiliates; entering into any merger, consolidation or amalgamation or disposing of all or substantially all property or business; and disposing of property, including issuing capital stock.

The New Revolving Credit Facility also requires us to remain in compliance with certain financial ratios. DoubleVerify, Inc. was in compliance with all covenants under the New Revolving Credit Facility as of March 31, 2026.

As of March 31, 2026, there was no outstanding debt under the New Revolving Credit Facility.

For more information about the New Revolving Credit Facility, see Note 9 to our Condensed Consolidated Financial Statements.

Repurchase Programs

On February 18, 2026, the Company’s Board authorized the repurchase of up to $300.0 million of the Company’s outstanding common stock under the February 2026 Repurchase Program. The Company may repurchase for cash from time to time shares of its common stock through open market purchases pursuant to Rule 10b-18 and/or Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements. The February 2026 Repurchase Program does not obligate the Company to repurchase any specific number of shares, has no time limit, and may be modified, suspended, or discontinued at any time at the Company’s discretion.

In connection with the Board’s approval of the February 2026 Repurchase Program, the Board determined to discontinue the November 2024 Repurchase Program. Accordingly, going forward, any and all repurchases will be made pursuant to the February 2026 Repurchase Program.

Repurchases under the February 2026 Repurchase Program commenced in March 2026. During the three months ended March 31, 2026, the Company repurchased 7.3 million shares of its common stock for an aggregate repurchase amount of $75.1 million under the February 2026 Repurchase Program. As of March 31, 2026, $225.0 million remained available and authorized for repurchase under the February 2026 Repurchase Program.

In April 2026, the Company repurchased 2.5 million shares of its common stock for an aggregate repurchase amount of $25.0 million. As of May 6, 2026, $200.0 million remained available and authorized for repurchase under the February 2026 Repurchase Program.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

(In Thousands)

Operating Activities

Our cash flows from operating activities are influenced primarily by growth in our operations and by changes in our working capital. In particular, trade receivables increase in conjunction with our growth in sales and decrease based on timing of cash receipts from our customers. The timing of payments of trade payables also impacts our cash flows from operating activities. We typically pay suppliers in advance of collections from our customers. Our collection and payment cycles can vary from period to period.

For the three months ended March 31, 2026, cash provided by operating activities was $4.2 million, attributable to net income of $6.4 million, adjusted for non-cash charges of $45.9 million and $48.1 million use of cash from changes in operating assets and liabilities. Non-cash charges primarily consisted of $15.3 million in depreciation and amortization and $24.2 million in stock-based compensation. The main drivers of the changes in operating assets and liabilities were a $20.0 million increase in trade receivables, prepaid expenses and other assets primarily related to increases in prepayments, and a $28.1 million decrease in trade payables, accrued expenses and other liabilities primarily related to the timing of payments for accrued expenses.

For the three months ended March 31, 2025, cash provided by operating activities was $37.7 million, attributable to net income of $2.4 million, adjusted for non-cash charges of $36.0 million and $0.7 million use of cash from changes in operating assets and liabilities. Non-cash charges primarily consisted of $12.4 million in depreciation and amortization and $24.3 million in stock-based compensation, offset by $3.4 million in deferred taxes. The main drivers of the changes in operating assets and liabilities were a $4.2 million decrease in trade receivables, prepaid assets and other assets, and a $4.9 million decrease in trade payables, accrued expenses and other liabilities primarily related to the timing of payments for accrued expenses.

Investing Activities

For the three months ended March 31, 2026, cash used in investing activities of $10.5 million was attributable to purchases of property, plant and equipment, and capitalized software development costs. For the three months ended March 31, 2025, cash used in investing activities was $89.9 million, including $82.6 million attributable to the acquisition of Rockerbox and $6.3 million attributable to purchases of property, plant and equipment, and capitalized software development costs.

Financing Activities

For the three months ended March 31, 2026, cash used in financing activities of $78.1 million was due primarily to $75.1 million related to shares repurchased under the February 2026 Repurchase Program and $1.4 million related to shares repurchased for settlement of employee tax withholding. For the three months ended March 31, 2025, cash used in financing activities of $85.8 million was due primarily to $82.2 million related to shares repurchased under the repurchase programs authorized in 2024 and $3.2 million related to shares repurchased for settlement of employee tax withholding.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets and liabilities and related disclosures at the dates of the financial statements, and revenue and expenses during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. We evaluate these estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions, and any such differences may be material.

Some of the judgments that management makes in applying its accounting estimates in these areas are discussed in Note 2 to our audited Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2025. Since the date of our most recent Annual Report on Form 10-K, there have been no material changes to our critical accounting policies and estimates.

Market risks at March 31, 2026 have not materially changed from those discussed in the Annual Report on Form 10-K for the year ended December 31, 2025 under the heading “Quantitative and Qualitative Disclosures about Market Risk.”

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2026. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported as and when required, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding its required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2026.

Changes in Internal Control over Financial Reporting

Management has implemented internal controls over significant processes specific to Rockerbox that we believe are appropriate in the integration of its operations, systems, and control activities. Rockerbox will be incorporated into our annual assessment of internal controls over financial reporting for our fiscal year ending December 31, 2026.

Except as described above, there were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls and Procedures

Management recognizes that a control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goal under all potential future conditions. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

There have been no material changes to the risk factors described in the section titled “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2025.