DoubleVerify Holdings, Inc 10-Q for FY2021 Q3

DoubleVerify Holdings, Inc. (DV)

10-Q 2021-11-09 For: 2021-09-30

Added on April 04, 2026

About this 10-Q

DoubleVerify Holdings, Inc filed this 10-Q on November 9, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $83.1M; up 36.1% from $61.04M a year earlier
Net income: $7.92M; up 36.5% from net income of $5.81M a year earlier
Diluted EPS: $0.05; up 25.0% from $0.04 a year earlier

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Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.001 per share	DV	New York Stock Exchange




Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☒

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Part I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	4

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2021 and 2020	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

Item 4.	Controls and Procedures	33

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

Signatures		38


	As of		As of
(in thousands, except per share data)	September 30, 2021		December 31, 2020
Assets:
Current assets
Cash and cash equivalents	$	319,825	$	33,354
Trade receivables, net of allowances for doubtful accounts of $5,246 and $7,049 as of September 30, 2021 and December 31, 2020 respectively		95,509		94,677
Prepaid expenses and other current assets		9,326		13,904
Total current assets		424,660		141,935
Property, plant and equipment, net		16,693		18,107
Goodwill		244,672		227,349
Intangible assets, net		117,705		121,710
Deferred tax assets		82		82
Other non-current assets		2,185		2,151
Total assets	$	805,997	$	511,334
Liabilities and Stockholders' Equity:
Current liabilities
Trade payables	$	4,105	$	3,495
Accrued expense		25,127		25,419
Income tax liabilities		540		1,277
Current portion of capital lease obligations		2,140		1,515
Contingent considerations current		1,717		1,198
Other current liabilities		3,986		1,116
Total current liabilities		37,615		34,020
Long-term debt		—		22,000
Capital lease obligations		3,106		3,447
Deferred tax liabilities		29,732		31,418
Other non-current liabilities		2,788		3,292
Contingent considerations non-current		—		462
Total liabilities	$	73,241	$	94,639
Commitments and contingencies (Note 13)
Stockholders’ equity
Common stock, $0.001 par value, 1,000,000 shares authorized, 158,524 shares issued and 158,474 outstanding as of September 30, 2021; 700,000 shares authorized, 140,222 shares issued and 125,074 shares outstanding as of December 31, 2020		159		140
Preferred stock, $0.01 par value, 100,000 shares authorized, zero shares issued and outstanding as of September 30, 2021; 61,006 shares authorized, issued, and outstanding as of December 31, 2020. Liquidation preference: $350,000 as of December 31, 2020		—		610
Additional paid-in capital		677,588		620,679
Treasury stock, at cost, 50 shares and 15,146 shares as of September 30, 2021 and December 31, 2020, respectively		(1,802)		(260,686)
Retained earnings		55,941		54,941
Accumulated other comprehensive income, net of income taxes		870		1,011
Total stockholders’ equity		732,756		416,695
Total liabilities and stockholders' equity	$	805,997	$	511,334


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2021		2020		2021		2020
Revenue	$	83,098	$	61,037	$	227,208	$	165,276
Cost of revenue (exclusive of depreciation and amortization shown separately below)		13,435		8,998		35,929		23,963
Product development		16,359		13,087		45,658		34,324
Sales, marketing and customer support		19,539		16,728		54,653		41,880
General and administrative		14,465		10,369		58,317		29,327
Depreciation and amortization		7,492		6,087		21,989		18,167
Income from operations		11,808		5,768		10,662		17,615
Interest expense		249		858		936		2,958
Other expense, net		365		481		365		359
Income before income taxes		11,194		4,429		9,361		14,298
Income tax expense (benefit)		3,270		(1,376)		8,361		1,975
Net income	$	7,924	$	5,805	$	1,000	$	12,323
Earnings per share:
Basic	$	0.05	$	0.04	$	0.01	$	0.09
Diluted	$	0.05	$	0.04	$	0.01	$	0.08
Weighted-average common stock outstanding:
Basic		158,045		139,841		144,305		139,779
Diluted		167,045		146,554		153,547		146,843
Comprehensive income:
Net income	$	7,924	$	5,805	$	1,000	$	12,323
Other comprehensive income:
Foreign currency cumulative translation adjustment		303		410		(141)		488
Total comprehensive income	$	8,227	$	6,215	$	859	$	12,811


														Accumulated
														Other
														Comprehensive
										Additional				Income (Loss)		Total
	Common Stock			Preferred Stock			Treasury Stock			Paid-in		Retained		Net of		Stockholders’
(in thousands)	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Earnings		Income Taxes		Equity
Balance as of January 1, 2021	140,222	$	140	61,006	$	610	15,146	$	(260,686)	$	620,679	$	54,941	$	1,011	$	416,695
Foreign currency translation adjustment	—		—	—		—	—		—		—		—		(799)		(799)
Stock-based compensation expense	—		—	—		—	—		—		2,538		—		—		2,538
Common stock issued upon exercise of stock options	180		—	—		—	—		—		538		—		—		538
Net income	—		—	—		—	—		—		—		5,644		—		5,644
Balance as of March 31, 2021	140,402	$	140	61,006	$	610	15,146	$	(260,686)	$	623,755	$	60,585	$	212	$	424,616
Foreign currency translation adjustment	—		—	—		—	—		—		—		—		355		355
Stock-based compensation expense	—		—	—		—	—		—		4,714		—		—		4,714
Common stock issued upon exercise of stock options	871		2	—		—	—		—		2,907		—		—		2,909
Common stock issued upon vesting of restricted stock units	217		—	—		—	—		—		—		—		—		—
Conversion of Series A preferred stock to common stock in connection with initial public offering	5,190		5	(61,006)		(610)	(15,146)		260,686		(260,081)		—		—		—
Issuance of common stock in connection with initial public offering	9,977		10	—		—	—		—		269,380		—		—		269,390
Issuance of common stock in connection with the private placement concurrent with the initial public offering	1,111		1	—		—	—		—		29,999		—		—		30,000
Net loss	—		—	—		—	—		—		—		(12,568)		—		(12,568)
Balance as of June 30, 2021	157,768	$	158	—	$	—	—	$	—	$	670,674	$	48,017	$	567	$	719,416
Foreign currency translation adjustment	—		—	—		—	—		—		—		—		303		303
Shares repurchased for settlement of employee tax withholdings	—		—	—		—	50		(1,802)		—		—		—		(1,802)
Stock-based compensation expense	—		—	—		—	—		—		4,848		—		—		4,848
Common stock issued upon exercise of stock options	651		1	—		—	—		—		2,066		—		—		2,067
Common stock issued upon vesting of restricted stock units	105		—	—		—	—		—		—		—		—		—
Net income	—		—	—		—	—		—		—		7,924		—		7,924
Balance as of September 30, 2021	158,524	$	159	—	$	—	50	$	(1,802)	$	677,588	$	55,941	$	870	$	732,756

Balance as of January 1, 2020	139,721	$	140	—	$	—	—	$	—	$	283,457	$	34,488	$	(67)	$	318,018
Foreign currency translation adjustment	—		—	—		—	—		—		—		—		(153)		(153)
Stock-based compensation expense	—		—	—		—	—		—		802		—		—		802
Common stock issued upon exercise of stock options	32		—	—		—	—		—		70		—		—		70
Net income	—		—	—		—	—		—		—		2,440		—		2,440
Balance as of March 31, 2020	139,753	$	140	—	$	—	—	$	—	$	284,329	$	36,928	$	(220)	$	321,177
Foreign currency translation adjustment	—		—	—		—	—		—		—		—		231		231
Stock-based compensation	—		—	—		—	—		—		1,140		—		—		1,140
Common stock issued upon exercise of stock options	58		—	—		—	—		—		51		—		—		51
Net income	—		—	—		—	—		—		—		4,078		—		4,078
Balance as of June 30, 2020	139,811	$	140	—	$	—	—	$	—	$	285,520	$	41,006	$	11	$	326,677
Foreign currency translation adjustment	—		—	—		—	—		—		—		—		410		410
Stock-based compensation	—		—	—		—	—		—		1,619		—		—		1,619
Common stock issued under employee purchase plan	61		—	—		—	—		—		423		—		—		423
Common stock issued upon exercise of stock options	44		—	—		—	—		—		263		—		—		263
Common stock issued upon vesting of restricted stock units	19		—	—		—	—		—		—		—		—		—
Net income	—		—	—		—	—		—		—		5,805		—		5,805
Balance as of September 30, 2020	139,935	$	140	—	$	—	—	$	—	$	287,825	$	46,811	$	421	$	335,197


	Nine Months Ended
	September 30,
(in thousands)	2021		2020
Operating activities:
Net income	$	1,000	$	12,323
Adjustments to reconcile net income to net cash provided by operating activities
Bad debt (recovery) expense		(1,186)		3,041
Depreciation and amortization expense		21,989		18,167
Amortization of debt issuance costs		221		211
Accretion of acquisition liabilities		—		36
Deferred taxes		(4,572)		(3,912)
Stock-based compensation expense		12,100		3,561
Interest expense (income)		130		(36)
Change in fair value of contingent consideration		57		(949)
Offering costs		21,797		1,852
Other		661		742
Changes in operating assets and liabilities net of effect of business combinations
Trade receivables		690		(11,633)
Prepaid expenses and other current assets		4,590		(3,457)
Other non-current assets		(162)		(9)
Trade payables		425		1,881
Accrued expenses		(684)		2,081
Other current liabilities		2,747		(7,143)
Other non-current liabilities		(1,369)		1,082
Net cash provided by operating activities		58,434		17,838
Investing activities:
Purchase of property, plant and equipment		(5,499)		(6,545)
Acquisition of business, net of cash acquired		(24,323)		—
Net cash (used in) investing activities		(29,822)		(6,545)
Financing activities:
Payments of long-term debt		(22,000)		(563)
Deferred payment related to Leiki acquisition		—		(2,033)
Deferred payment related to Zentrick acquisition		(50)		(50)
Payment of contingent consideration related to Zentrick acquisition		—		(601)
Proceeds from common stock issued upon exercise of stock options		5,514		383
Proceeds from common stock issued under employee purchase plan		—		425
Proceeds from issuance of common stock upon initial public offering		269,390		—
Proceeds from issuance of common stock in connection with concurrent private placement		30,000		—
Payments related to offering costs		(21,797)		(1,230)
Capital lease payments		(1,222)		(1,242)
Shares repurchased for settlement of employee tax withholdings		(1,802)		—
Net cash provided by (used in) financing activities		258,033		(4,911)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(173)		(38)
Net increase in cash, cash equivalents, and restricted cash		286,472		6,344
Cash, cash equivalents, and restricted cash - Beginning of period		33,395		11,342
Cash, cash equivalents, and restricted cash - End of period	$	319,867	$	17,686

Cash and cash equivalents		319,825		17,289
Restricted cash (included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets)		42		397
Total cash and cash equivalents and restricted cash	$	319,867	$	17,686
Supplemental cash flow information:
Cash paid for taxes		5,586		14,901
Cash paid for interest		580		2,692
Non-cash investing and financing activities:
Conversion of Series A preferred stock to common stock in connection with the initial public offering		610		—
Treasury stock reissued upon the conversion of Series A preferred stock to common stock		260,686		—
Acquisition of equipment under capital lease		1,518		973
Capital assets financed by accounts payable		41		1,313
Offering costs included in accounts payable and accrued expense		—		772


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2021		2020		2021		2020
Advertiser - direct	$	34,057	$	27,582	$	93,260	$	73,476
Advertiser - programmatic		41,902		28,044		113,694		76,023
Supply-side customer		7,139		5,411		20,254		15,777
Total revenue	$	83,098	$	61,037	$	227,208	$	165,276


(in thousands)	Acquisition Date
Assets:
Cash and cash equivalents	$	1,007
Trade receivables		948
Other assets		96
Property, plant and equipment		27
Intangible assets:
Technology		2,245
Customer relationships		7,208
Trademarks		47
Non-compete agreements		71
Total intangible assets		9,571
Goodwill		17,057
Total assets acquired	$	28,706

Liabilities:
Trade payables	$	145
Other current liabilities		345
Deferred tax liability		2,886
Total liabilities assumed		3,376
Total purchase consideration	$	25,330
Cash acquired		(1,007)
Net cash purchase price		24,323


(in thousands)
2021	$	4,755
2022		19,001
2023		18,929
2024		17,303
2025		15,146
2026		10,283
Thereafter		32,288
Total	$	117,705


		(In years)
Trademarks and brands		11
Customer relationships		8
Developed technology		4
Non-compete agreements		2


	As of September 30, 2021
	Quoted Market
	Prices in Active				Significant
(in thousands)	Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs		Total Fair Value
	(Level 1)		(Level 2)		(Level 3)		Measurements
Assets:
Cash equivalents	$	11,725		—		—		11,725
Liabilities:
Contingent consideration current		—		—		1,717		1,717
Contingent consideration non-current		—		—		—		—
Total contingent consideration	$	—	$	—	$	1,717	$	1,717


	As of December 31, 2020
	Quoted Market
	Prices in Active				Significant
(in thousands)	Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs		Tota1 Fair Value
	(Level 1)		(Level 2)		(Level 3)		Measurements
Assets:
Cash equivalents	$	2,474	$	—	$	—	$	2,474
Liabilities:
Contingent consideration current		—		—		1,198		1,198
Contingent consideration non-current		—		—		462		462
Total contingent consideration	$	—	$	—	$	1,660	$	1,660


(in thousands)
Balance at January 1, 2021	$	1,660
Fair value adjustments		57
Payments during the year		—
Balance at September 30, 2021	$	1,717


	Stock Option
				Weighted Average
				Remaining
	Number of	Weighted Average		Contractual Life		Aggregate
	Options	Exercise Price		(Years)		Intrinsic Value
Outstanding as of December 31, 2020	14,713	$	4.47	7.79	$	181,914
Options granted	1,707		30.95	—		—
Options exercised	(1,710)		3.28	—		—
Options forfeited	(271)		7.15	—		—
Outstanding as of September 30, 2021	14,439	$	7.70	7.41	$	383,974
Options expected to vest as of September 30, 2021	4,136	$	16.20	8.90	$	75,637
Options exercisable as of September 30, 2021	6,404	$	3.68	6.70	$	195,205


		2021
Risk - free interest rate (percentage)		0.6. - 1.1
Expected term (years)		5.9 - 6.1
Expected dividend yield (percentage)		—
Expected volatility (percentage)		42.1 - 43.6


	Year Ending
(in thousands)	December 31,
2021(for remaining three months)	$	1,550
2022		5,347
2023		4,880
2024		1,015
2025		981
2026		368
Thereafter		76
	$	14,217


	Year Ending
(in thousands)	December 31,
2021 (for remaining three months)	$	674
2022		2,144
2023		1,937
2024		598
2025		170
Total		5,523
Less: Amount representing interest		(277)
Present Value of net minimum capital lease payments	$	5,246

Capital leases short term	$	2,140
Capital leases long term		3,106
Total	$	5,246


Exhibit No.		Description

31.1†		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2†		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1†*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2†*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS†		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH†		XBRL Taxonomy Extension Schema Document

101.CAL†		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†		XBRL Taxonomy Extension Label Linkbase Document

101.PRE†		XBRL Taxonomy Extension Presentation Linkbase Document
104†		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


	Restricted Stock
	Number of	Weighted Average
	Shares	Grant Date Fair Value
Outstanding as of December 31, 2020	1,261	$	7.74
Granted	1,720		30.88
Vested	(322)		8.97
Forfeited	(4)		35.54
Outstanding as of September 30, 2021	2,655	$	22.54
Expected to vest as of September 30, 2021	2,330


	Three Months Ended September 30,				Change		Change		Nine Months Ended September 30,				Change		Change
	2021		2020		$		%		2021		2020		$		%

	(In Thousands)								(In Thousands)
Revenue by customer type:
Advertiser - direct	$	34,057	$	27,582	$	6,475	23	%	$	93,260	$	73,476	$	19,784	27	%
Advertiser - programmatic		41,902		28,044		13,858	49			113,694		76,023		37,671	50
Supply-side customer		7,139		5,411		1,728	32			20,254		15,777		4,477	28
Total revenue	$	83,098	$	61,037	$	22,061	36	%	$	227,208	$	165,276	$	61,932	37	%


	DOUBLEVERIFY HOLDINGS, INC.

	By:	/s/ Mark Zagorski
	Name:	Mark Zagorski
	Title:	Chief Executive Officer and Director
		(Principal Executive Officer)

	By:	/s/ Nicola Allais
	Name:	Nicola Allais
	Title:	Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)