DoubleVerify Holdings Inc – October 20, 2022

The world of online media has become a tricky place for businesses to navigate as websites built on streams of advertising and content are impacted by the proliferation of misinformation in everything from pandemics to politics to social issues. Sites that want to increase traffic and engagement also want to ensure their brands are protected by not being associated with controversial or inappropriate content.

DoubleVerify is a leading software platform for digital media measurement and analytics. Through its software platform and the metrics it provides, it helps preserve the fair value exchange between buyers and sellers of digital media. The company not only helps businesses have more control over their brands by providing more visibility and analytics, it also allows companies to maximize the value they can obtain from their advertising budgets.

Having pioneered digital ad verification over a decade ago, DoubleVerify now authenticates media quality and performance for the world’s largest brands, platforms, and publishers.

By providing tools to advertisers, brands, marketplaces, and publishers, the company’s industry-leading technology can provide key insights to detect fraud, “viewability”, and brand safety. These metrics give businesses peace of mind that the valuable advertising dollars they are paying for, are providing engagement with real people and not automated bots. In addition, the platform ensures ads are in formats that can operate correctly on a range of devices and are not running alongside inappropriate content.

Ultimately, DoubleVerify’s technology provides unbiased data analytics that enables advertisers to increase the effectiveness, quality, and return on their digital advertising investments.

With a software solution that is supported by many of the world’s largest and most well-known advertisers, including FaceBook, Ford, and Pfizer, DoubleVerify continues to capture share in a very large and growing total addressable market, supported by several tailwinds.

Founded in 2008, DoubleVerify introduced its first brand safety and suitability solution in 2010. And as the global digital advertising market has evolved, the company has continued to expand its capabilities through new product innovation and partnerships across emerging programmatic media buying platforms and digital media channels, including social and connected TV (CTV).

New solutions have included pre-bid targeting, fraud, and brand suitability tools, as well as predictive and contextual technology to boost engagement. While key integrations with programmatic partners have seen the company join forces with The Trade Desk and Google. Several social platform partnerships have also been announced over the years including Facebook, Snap, and YouTube, along with Twitter, Pinterest, and TikTok subsequently added.

Acquisitions including Leiki Oy, Zentrick, Ad-Juster Inc, Outrigger Media Inc, and Meetrics have also helped to build the company’s presence across the globe.

In April 2021, DoubleVerify was listed on the NYSE after raising close to $360 million.

Mark Zagorski currently heads up DoubleVerify as chief executive officer, responsible for oversight of global company operations, expansion into new markets, and strategic product innovation. Joining the company in 2020, Zagorski brings over two decades of digital marketing and advertising technology leadership to the role, including expertise in connected TV, data analytics, and digital advertising optimization. Prior to DoubleVerify, he served as the CEO of NYSE-listed Telaria, where he was instrumental in establishing the business as the leading video and CTV monetization platform for premium video publishers. In addition, he spearheaded the company’s successful merger with the Nasdaq-listed Rubicon Project, resulting in the industry’s largest independent sell-side advertising platform. He was also the CEO of eXelate, where he led the sale of the company to Nielsen and subsequently assumed the role of executive vice president, launching the Nielsen Marketing Cloud.

Joining Zagorski as chief product officer is Jack Smith, who is responsible for DoubleVerify’s product suite, building and delivering solutions that help advertisers and agencies optimize media investments, manage brand equity risk and increase campaign and creative performance. Smith previously served as global CPO at Group M, where he developed products and platforms that helped teams invest over $80 billion in media spending. With over 25 years of experience in executive strategy, product and technology, he also co-founded the machine learning company Solariat, which was acquired by Genesys, and holds seven patents in AI and machine learning for signal detection in natural language and the prediction of consumer media consumption.

DoubleVerify’s software platform is integrated across the entire digital advertising ecosystem, including programmatic platforms, social media channels, and digital publishers. It delivers unique data analytics to provide detailed insights into customers’ media performance on both direct and programmatic media buying platforms and across all key digital media channels, formats, and devices.

The technology enables programmatic media traders to evaluate hundreds of billions of transactions daily, ensuring that a digital ad meets the advertiser-defined quality criteria before it is purchased. It also analyses billions of transactions daily to measure whether ads are delivered in a fraud-free, brand-suitable environment and are fully viewable in the intended geography. Customers then leverage these analytics to improve the efficiency of their digital advertising investments by avoiding wasted media spending on blocked or fraudulent ads; optimizing their media strategies in real time by verifying their highest-performing ads and content.

The company’s suite of products includes:
• DV Authentic Ad – a definitive metric of digital media quality, which evaluates the existence of fraud, brand safety, suitability, viewability, and geography for each digital ad.
• DV Authentic Attention – a predictive measure of digital ad performance, by leveraging the data that is aggregated to deliver DV Authentic Ad.
• Custom Contextual – used to enhance programmatic advertising solutions. Advertisers match their ads to relevant content to maximize user engagement and drive optimal campaign performance.
• Supply-Side Solutions – software and data analytics to publishers and other supply-side customers to enable them to maximize revenue from their digital advertising inventory.

The ecosystem allows DoubleVerify to develop a significant data asset that accumulates over time, which can also be leveraged to launch new solutions that address the evolving needs of advertisers.

DoubleVerify generates revenue from its advertising customers based on the volume of media transactions that the software platform measures. This enables the company to grow as customers increase their digital ad spend and as it integrates into new channels and platforms.

DoubleVerify’s blue-chip customer base includes many of the largest global brands throughout over 20 countries including the United States, the United Kingdom, Israel, Singapore, Australia, Brazil, France, Germany, and Japan. It currently serves over 1,000 customers that are diversified across many major industry verticals, including consumer goods, financial services, telecommunications, technology, automotive, and healthcare.

DoubleVerify is a leader in a large, fast-growing, and under-penetrated market with significant tailwinds. There is strong global demand across the advertising ecosystem for independent third-party measurement and authentication of digital ads. Advertisers, programmatic platforms, social media channels, and digital publishers are placing increased emphasis on the quality and effectiveness of digital ad spending across all channels, formats, and devices.

With a best-in-class platform, DoubleVerify’s technology stack enables it to develop proprietary advertising performance metrics on each digital ad transaction. This precision sets the company apart from competitors and allows it to provide the most robust data analytics in the industry.

In addition, thanks to its broad ecosystem coverage DoubleVerify provide comprehensive performance metrics across all key digital channels and deliver them through the major platforms that provide direct, programmatic, and social advertising, including Google, Facebook, TikTok, Amazon, and The Trade Desk. And as CTV continues to become an increasingly prominent advertising channel, the company has secured agreements with multiple leading platforms, including Amazon and Roku, creating the broadest integration and partnership coverage across the industry.

As the platform allows DoubleVerify to provide large-scale data analytics to customers around the world seamlessly and cost-effectively, the company can scale its solutions efficiently and with limited incremental costs for new customers and additional solutions. While the consistent nature of revenue, significant operating leverage, and low capital intensity only add to the attractiveness of the business’s operating model.

DoubleVerify estimate that the total addressable market for its core solutions is expected to grow to approximately $20 billion by 2025 with less than 50% penetration. Furthermore, due to its current market leadership, it is well-positioned to generate significant growth across this large, underserved market. It is expected that growth will be primarily driven by the fastest-growing segments of digital ad spend, which are currently among the least penetrated solutions, including mobile in-app, programmatic, social, and CTV.

Consequently, DoubleVerify intends to continue focusing on key growth levers including increasing existing customer spending on digital advertising with the introduction of new solutions. It will also target new advertisers, programmatic platform, and digital publisher customers who have not yet adopted digital ad measurement and analytics solutions. Whilst growing its presence in international markets, and extending its capabilities to cover new and growing digital channels and devices. In addition, DoubleVerify maintains an active pipeline of potential merger and acquisition targets to bolster its current solutions suite and complement organic growth initiatives.

DoubleVerify has maintained an impressive record of growth and profitability in recent years. That trend continued in 2022 after it delivered an outstanding second quarter and surpassed expectations fueled by record Activation revenue and continued momentum on Social and CTV platforms. Total revenue for the period hit $109.8 million, representing an increase of 43% on the prior comparative, while Activation revenue increased by 60% to reach $60.5 million for the quarter.

This revenue outperformance translated into stronger-than-expected adjusted EBITDA margins, which also benefited from the faster integration of recent acquisitions and a concerted effort to ensure that operating expense growth was commensurate with expected revenue growth. As a result, adjusted EBITDA increased by 60% to $34.0 million, while net income ultimately came in at $10.3 million.

Looking ahead, management raised its midpoint full-year revenue guidance to reflect 35% growth year-over-year, bringing 2022 revenue expectations to between $448 million and $450 million, directly in line with consensus estimates. While full-year earnings per share estimates for 2022 are also forecasted to improve by almost 43% to $0.54 per share, up from $0.38 in 2021.

DoubleVerify’s primary competition is other digital ad measurement providers, including Moat and Grapeshot, which are part of the Oracle Data Cloud, and Integral Ad Science. Several companies provide point solutions that address individual aspects of digital ad measurement, such as HUMAN and Zefr, or geographically focused companies. While some of DoubleVerify’s ad platform partners also offer their own measurement solutions solely for ads placed through their ad-buying tools.

However, with major competitive factors in the market including providing a unified and consistent Media Rating Council-accredited measurement, accurate and reliable data insights, and the ability to support large, global customers with complex integrations, DoubleVerify believes it competes favorably and offers a considerable value proposition to customers.

Thanks to strong industry tailwinds and its leading position bolstered by a network effect that continues to strengthen, DoubleVerify looks well-placed to take advantage of several growth levers at its disposal. And with several markets that are underserved, the company’s robust top-line performance to date appears to show no signs of stopping.