Hello, everyone. Thank you for joining us and welcome to Direct Digital Holdings First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Walter Frank, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Direct Digital Holdings first quarter 2026 earnings conference call. On today's call are Direct Digital Holdings Chairman and Chief Executive Officer Mark Walker and Chief Financial Officer Diana Diaz. Information discussed today is qualified in its entirety with the Form 8K and accompanying earnings release, which has been filed today by Direct Digital Holdings, which may be accessed at the SEC's website and the company's website. Today's call is also being webcasts and a replay will be posted to Direct Digital's investor relations website. Immediately following the speaker's presentation, there will be a question and answer session. Please note that the statements made during the call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. These statements are made on the basis of Direct Digital's views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks which could cause Direct Digital's actual results to differ from its historical results and forecasts. including those risks set forth in Direct Digital's filings of the SEC, and you should refer to those for more information. This cautionary statement applies to all forward-looking statements made during this call. During this call, Direct Digital will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings release that Direct Digital filed in its Form 8K today. I will now hand the conference over to Mark Walker, Chief Executive Officer. Please go ahead, Mark.

Thanks, Walter. And thank you to everyone joining our call this morning. I'll start by reviewing some of the highlights of our operations and financial results during the first quarter of 2026 before turning the call over to our Chief Financial Officer, Diana Diaz, for a more detailed look at our financial results. We'll conclude by opening the call for a brief Q&A. We remain focused on organically growing our sales pipeline by enhancing how we reach and support customers across a broader set of goals. Alongside product innovation initiatives such as Ignition Plus, our sales team are seeing encouraging engagement, diversified combination of enterprise sales, inside and outside sales efforts. This multi-channel approach is broadening our reach, improving sales efficiency, and positioning us to drive more consistent, scalable growth over time. In March, we launched Ignition Plus, a unified, transparent platform for programmatic media built to maximize efficiency, reduce costs, and combine AI-driven optimization with a proven team of experienced specialists. Since launching, we've seen strong initial interest from mid-market enterprise clients who value the transparency and efficiency this platform offers and its ability to maximize the value of their marketing budget without compromising our transparency. We believe that we're well-positioned to benefit from this demand as we transition. Importantly, Mission Plus combines the strength of our business across the entire advertising ecosystem and rebuild in the wake of the challenges that we turn to revenue growth by driving intentionally...

Thank you, Mark, and good morning, everyone. I'll now provide a review of our first validated revenue in the first quarter of 2026 compared to revenue of 8.25. Although revenue declined due to a decrease in spending by demand-side platform customers of $2 million, we saw an increase in spending by other customers of $500,000 or 8% over the prior year. As Mark stated in his remarks and as we mentioned in our fourth quarter call, we have shifted our focus to driving intentional digital marketing spend with current and future customers historically classified by the company as buy-side customers, as well as new enterprise customers accessing the digital advertising market through our recently launched Ignition Plus. As part of this shift in focus, we have reassessed our reportable segments and determined that we have one reportable. The streamlined operations is expected to enhance the customer experience of our current business, primarily contracts for managed advertising campaigns which may or may not access curated publisher audiences managed by the company sells three million dollars for the first quarter of 2026 or 34 percent of revenue compared with two point four million dollars or 29 percent of revenue in the last year expenses in the first quarter of 2026 three point three million dollars compared with operating loss of $3.9 million. Net loss for the first quarter of 2026 was $5.6 million compared to a net loss of $5.9 million in the first quarter. EBITDA for the first quarter was a loss of $2.6 million compared with adjusted EBITDA loss of $3 million in the first quarter. Turning to the balance sheet we ended the quarter with cash and cash equivalents of $800,000 compared to $700,000 as of the end of December 2025 total cash plus our accounts receivable balance as of March 31st 2026 compared to 3.9 million dollars at year-end 2025 our efficiency and cost reduction initiatives drove operating results that were in line with our internal expectations as we continue to execute on our strategy and goals we continue to manage the business with a strong emphasis on capital discipline liquidity and cost control as we navigate our next phase of execution while our focus remains to evaluate strategic opportunities that align with our long-term objectives provided they meet our financial and risk return thresholds now I'd like to turn it back over to mark for some closing comments thank you Diana and thank you to everyone for joining we appreciate your interest in direct digital holdings and would like to now open the call for questions.

Operator, please open the line.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask you to pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question with Dan Kernis from Stonex. Your line is now open. Please go ahead.

Thanks. Good morning. Maybe a couple just fundamental questions. First, Mark, just on the are the GMOs seeing any budgetary pressure from where gas prices are right now? I mean, it sounds like local travel is actually pretty healthy, all things considered, but just curious what you're seeing there. And then last time we talked about some category expansion. Obviously, you know, we're starting to rescale the buy side here, focus on the buy side. Have your thoughts at all changed on sort of the opportunity set or your ability to kind of penetrate new verticals to get to the growth you want to see on the buy side?

Yeah. Oh, good question, Dan, and thanks for it. What we're seeing right now when it comes to the DMO marketplace and, like, local travel, we haven't seen a reduction or any kind of headwinds, if you will, in that marketplace. As a matter of fact, we're seeing it meet the expectations. So we still are pretty bullish on the DMO marketplace. We're looking at expansions in those markets, excuse me, and as well as we've been able to win new business in the DMO market space recently. So we're feeling pretty optimistic about it and what we have seen in other historical downturns in the overall marketplace, when there has been some headwinds of the overall macroeconomic market, we actually have seen the local regional travel and tourism. That's what we're anticipating to see the market. And as it relates to your second question about category expansion, we continue to do a push into some of those new verticals and we're starting to see their new verticals if we just take that last point mark and just dive a little bit

deeper into that you know obviously there's a lot of assets that are in similar positions to yours somebody's got to do something at some point although you know PE sits on a bunch of stuff forever and eventually decides to make a move you know why are you the right aggregator do you have a facilitator how are you how are conversations going you know anything that understanding that these are all sensitive processes and things never go as fast as you like anything you can share in terms of timing or thought process there yeah I mean in regards to timing sooner is always better than

later is the way that we like to think of it it's never fast enough especially consolidation and as of right now the way that okay thanks mark good luck thank you our next

question comes from michael kofinski with noble capital markets your line is now open please go ahead yeah thank you i have a couple of questions i was just wondering um have you noticed any difference in advertising behavior for instance of have advertisers shortened campaign duration or reduced visibility, particularly into future spending, anything of note there?

Nothing that's been noticeable as a large change in tactics. We are seeing a significant amount more interest in campaign performance and performance marketing where clients are anticipating and wanting to see a return on investment. However, the way that we have set up our internal processes at our organization, We have always had a mind towards metrics, and so we're just seeing a little bit more focus and some pencil sharpening, if you will, as it relates to performance. But it's nothing that we haven't been dealing with over the last few years and nothing that we can't manage. That's probably been the biggest turn that we have seen, I would say, starting at the end of last year to this year, but it's actually worked favorable for us.

Gotcha. And then, you know, obviously, the buy-side business had some pretty decent margins, and I was just wondering, what are the biggest drivers preventing EBITDA margins from returning to prior levels? Yeah.

I think it's really more about the mix, and I think what you will also see as it relates to margin growth, it's going to take a little bit more time for us to continue to expand those margins, but that has been in our growth trajectory over the next couple quarters. So we think you're going to start seeing a mixed change, if you will, as well as us working to get more efficient as it relates to our campaign management, which we anticipate we'll start seeing the results.

And then are you seeing increased advertising demand for AI-driven campaign optimization at this point?

I would say people, clients are still trying to get a better understanding and step their toes in the water as it relates to AI specifically for campaign management. We have internal tools that we leverage and use on a consistent basis that we've seen that actually performs for us who provide the tech-enabled service. We think that that's also an area where we're going to get more efficiency and margin and optimization, if you will, out of campaign performance. And so, we'll be passing those savings on to clients, which we think will benefit the entire value chain.

Okay, that's all I have for now.

All right, thank you.

There are no further questions at this time.

I will now turn the call back over to Mark Walker for closing remarks.

Thank you very much for joining the call. We look forward to speaking to you next quarter. Thank you.

This concludes today's call.

Thank you for attending. You may now disconnect.