Earnings Call Transcript - DV Q1 2026

Operator, Operator

Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the DoubleVerify First Quarter 2026 Earnings Conference Call. I will now turn the call over to Brinlea Johnson, Investor Relations. Please go ahead.

Brinlea Johnson, Head of Investor Relations

Good afternoon, and welcome to DoubleVerify's First Quarter 2026 Earnings Conference Call. With us today are Mark Zagorski, CEO; and Nicola Allais, CFO. Today's press release with this call may contain forward-looking statements that are subject to inherent risks, uncertainties and changes and reflect our current expectations and information currently available to us, and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including our Form 10-Q and Form 10-K. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for our GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations website at ir.doubleverify.com. Also, during the call today, we'll be referring to the slide deck posted on our website. With that, I'll turn it over to Mark.

Mark Zagorski, CEO

Thanks, Brinlea, and good afternoon, everyone. We delivered strong Q1 results as we continued our solid execution on our product innovation, strategic and financial road maps. In Q1, we achieved 10% year-over-year revenue growth, led by accelerating growth of our social verification and optimization solutions, and we delivered a 31% EBITDA margin, which exceeded expectations, largely due to AI-fueled operational efficiencies. Advertiser growth was positive across all key industry verticals in the quarter as we continue to benefit from our focus on further diversification of customer engagements and ad spend across various client types. We also repurchased $100 million worth of shares year-to-date, reflecting confidence in our business and our commitment to returning capital to shareholders as a core element of our long-term value creation strategy. We expect to deliver a strong 2026 as we successfully execute on our strategic plan to verify the quality, optimize the investment and prove the impact of digital ad impressions across any platform, media or market or advertiser spend. The solid results this quarter were fueled by our core growth catalysts, social activation and measurement products, streaming TV verification and our dynamic suite of solutions that empower advertisers to better navigate the evolving ecosystem of AI advertising platforms and Gen AI content. Across all of these sectors, our incredibly durable value proposition remains tantamount. DV is the independent essential trust layer that marketers rely on to ensure their ad spend is protected from fraud in unsuitable contexts and, most importantly, delivers the highest possible return on investment. And this essential role in the ecosystem continues to expand as new product innovations power our growth flywheel. Let me share a few recent stats that underscore the impact of these investments. Driven by continued success on Meta, social measurement grew 23% year-over-year, a significant acceleration from Q4. Social activation, our fastest-growing solution set, grew 92% year-over-year in Q1, up from 62% in the fourth quarter. Authentic Advantage on YouTube, which combines Scibids AI optimization with prebid filtering and post-bid measurement launched in Q3 last year and is also expanding rapidly. It is now on track to deliver $10 million of expected ACV in 2026. CTV measurement impression volumes also grew, up 28% in the quarter. And our ABS-enabled streaming TV prebid Do-Not-Air List entered general availability in January, with three top 15 customers representing hundreds of millions in CTV spend implementing these DV-only streaming TV controls. DV continues to break new ground in the drive towards greater transparency in streaming TV. AI measurement tools like Slop Stopper, which is now available on YouTube, and AI agent ID are showing meaningful engagement rates. Our AI Slop Stopper measurement solution for mobile and online video and display is already applied to over 40% of measured impressions, and the prebid tool is being tested by six of our largest advertisers. Our midterm goal remains to increase the contribution of social, streaming TV and AI-driven solutions from under 30% of total revenue today to approximately 50%. As we drive this evolution, our mobile and online video and display business remained stable in Q1 with approximately two-thirds of impressions that we engage with delivered on mobile, in-app and mobile web environments. We remain focused on creating a revenue mix that closely aligns with the fastest-growing global digital ad sectors. TV continues to drive new revenue opportunities, distance ourselves from competition and create meaningful margin expansion through AI efficiencies and product innovation. AI solutions, social activation tools and streaming TV quality solutions are positively impacting our customers' ad performance and building a foundation for TAM and market share expansion for DoubleVerify. Shifting focus to the role that AI is playing in the ongoing expansion of our product-led growth cycle, we continue to lean into AI to operate more efficiently, launch products faster and improve margins. And as the emerging AI advertising universe evolves, it is creating new revenue opportunities that expand our TAM as we extend our essential role in this burgeoning environment. Regarding this new environment, we've identified three main areas where DV has the largest AI growth opportunities and which we are already seeing traction with customers. First, the agentic buying and selling of media, where we are building new products, connecting with and leading the development of the numerous protocols that will help advertisers lean into AI-based buying. Second, we are empowering advertisers to navigate the dynamic AI-impacted advertising landscape as AI cyber fraud and AI content slop becomes prolific. And third, we are digging into the massive potential ad market on LLM chatbots where many of our current advertisers are beginning to deploy their marketing dollars; LLMs had little in the way of transparency and independent measurement. Let me talk briefly about each one of these opportunities. First, we are focused on establishing security and trust in the agentic advertising ecosystem. Trust has always been essential in our industry, and we recently joined the Ad Context Protocol, AdCP, a coalition of ad tech companies established by Agentic Advertising organization to define standards for ad buying and selling by AI agents. According to eMarketer, about two-thirds of ad buyers plan to focus more time on agentic ad buying this year. While in early days, we are actively engaged to make sure DV is at the forefront of establishing standards that will continue to preserve trust and transparency for its advertisers wherever they choose to deploy their advertising investments. As with all of our engagements, we remain independent and agnostic and the way we operate in the agentic advertising world will be the same with the ability to plug into any agentic protocol from the IAB framework to platform-specific systems that are important to our customers. Second, we are expanding tools to protect ad investments from AI-fueled challenges. We continue to enhance our market-leading suite of AI tools that combat the increasing challenges of navigating AI Slop and avoiding AI cyber fraud. With the launch of DV AI Slop Stopper for Social, we've expanded our capability for advertisers to avoid low-quality AI-generated content on YouTube and will broaden our coverage to other walled gardens in the coming quarters. Fueled by malicious AI, cyber fraud continues to become more sophisticated, threatening to challenge the ROI and efficiency gains driven by the positive use of AI. In Q1 2026, DV's fraud team continued to harness AI to fight fraud as AI-powered fraud schemes proliferated at a record pace and became even more sophisticated. AI-powered bot schemes continue to evolve faster than ever with 140% more bot scheme variants emerging in Q1 2026 compared to Q1 2025. In parallel, app-based fraud continues to accelerate dramatically, especially across mobile and CTV, where we have classified over 1,300 apps as fraudulent since the beginning of 2026. Finally, we are focused on capitalizing on the massive potential ad market that AI chatbot marketing will represent. According to eMarketer, ad spend on LLMs is forecasted to grow by over $25 billion by 2029, with ad spend expected to cannibalize over 14% of search spend, a $400 billion market that DV has historically not been able to access. OpenAI recently shared that they expect to generate $100 billion in advertising revenue by 2030, underscoring just how the market may be moving even more rapidly than analysts are predicting. As has been the case for the open web, mobile, streaming and social environments, unbiased independent measurement will play a key role in engendering the advertiser trust needed for this new ecosystem to thrive. While AI platform ad models continue to evolve, advertiser demands remain the same, ensuring ad transactions are trusted and transparent and ads are viewable, brand suitable and delivered to legitimate traffic within authentic content environments. Our enterprise customers and agency platforms have made it clear to us that expanding beyond test budgets in AI environments will require even greater transparency and trust than is present today. We are confident that, as we have shown on social and streaming platforms, our role as an essential trust layer will extend to this new ecosystem, and we are engaged in discussions with several LLMs who are leaning into ad-supported models. As AI drives digital advertising to become more automated, agentic and opaque and as AI Slop becomes the must-avoid content category for advertisers, the need for independent verification, protection and performance measurement has never been greater. Regardless of platform, buying mode or message, DV will be an integral trusted part of the ad equation. Moving to social verification. The social sector remains our fastest-growing business segment and is a core driver of our next phase of growth. No other verification or measurement provider has more innovative solutions for advertisers seeking to protect their spend on social platforms and ensure it performs. Social activation accelerated meaningfully to over 90% year-over-year growth in the first quarter, up from around 60% growth in Q4. This acceleration was driven by continued scaling of our social prebid solutions, elevated by enhanced product capabilities on Meta as well as expanded capabilities across TikTok and YouTube. Eighty-seven advertisers have now utilized Meta activation since launch, up from 68 in the fourth quarter with 31 of these customers coming from our top 100 clients. As of the end of the first quarter, our Meta activation product was already at a $12 million annualized run rate. On YouTube, DV Authentic Advantage has seen strong customer adoption. Some of our largest CPG customers have started scaling on the solution, driven by the significant ROI improvements that it delivers. Through the combination of Scibids AI optimization with social prebid filtering and post-bid measurement, DV Authentic Advantage customers have seen their media CPMs decline by as much as 36%, while reach has expanded by 64% and brand suitability integrity remains strong. As with DV's Meta prebid solution, we are just starting to scratch the surface with the impact that Authentic Advantage can have on our customers' business and our growth profile, and we're excited about the significant opportunities ahead for both products. As mentioned previously, our social suite of tools are ramping, and we recently announced the expansion of DV AI verification to include DV's AI Slop Stopper for social. This new industry-leading offering is designed to help advertisers navigate the growing challenges posed by low-quality AI-generated content and safeguard brand reputation across social and video-centric environments, starting with YouTube. DV's AI Slop Stopper for social is another DV tool that empowers advertisers to ensure their brand investment is protected wherever they spend while driving stronger media outcomes. Additionally, in the quarter, we expanded brand suitability coverage across Snapchat's Discover feed format, enabling our advertisers to have complete coverage across Snap Discover Tiles placements. And we recently announced that we achieved Media Rating Council or MRC accreditation for TikTok video viewability, becoming the first measurement vendor to receive the accreditation. As advertising investment continues to grow across video-centric social platforms like TikTok, independent verification plays a critical role in ensuring transparency and accountability. And with accredited measurement informed by tens of trillions of historical ad transactions, advertisers can now evaluate campaign effectiveness with greater confidence and ensure their media investments deliver real value. This milestone underscores our commitment to delivering the highest standards of measurement accuracy and transparency and further demonstrates the company's alignment with the MRC accreditation process as a critical layer of accountability in digital advertising. Turning to streaming TV. We continue to deliver product innovation to address advertiser demand for independent transparency and increasing fraud in streaming environments. Our continued product innovations helped grow CTV measurement volumes by 28% year-over-year this quarter. We've already begun to see solid adoption of ABS Do-Not-Air list from eight of our largest advertisers as well as strong interest in our authentic streaming TV solution. And in this quarter, we announced that Spectrum Reach became the first partner to join DV's certified transparent streaming program, reinforcing its commitment to secure program level transparency across streaming TV inventory. Spectrum Reach will share key show-level data across their programming, including news and live sports, spanning both direct IO and programmatic buying. These insights will be available directly within DV Authentic Streaming TV reporting, giving advertisers verified post-bid visibility into the specific programs their ads ran alongside. By combining real, not implied or aggregated show-level transparency in a privacy-focused way with DV's performance analytics and optimization capabilities, advertisers can now better understand how contextual relevance drives outcomes and make smarter decisions to optimize future streaming investments. This is just the start of our drive to deliver granular unaggregated show-level transparency across all streaming environments, and we are seeing momentum from additional platforms to join our certified transparent streaming program. The results of our innovation leadership are clear. We are growing client engagements and winning deals with new solutions where there aren't any competitors. We work with over 340 advertisers now generating more than $200,000 annually. And our unique solution underscored a 77% greenfield win ratio in Q1, meaning that we're winning deals with solutions in new areas in which there are no competitive incumbents to displace. Investment in innovation continues to be DV's secret sauce to get stickier with our customers, win new deals and gain market share. And AI is enabling us to innovate more efficiently than ever as we continue to expand margins while launching and expanding the tools that cement our role as the essential trust layer for buyers and sellers of digital media. With strong execution in the first quarter, we're leaning hard into AI-powered innovation that will continue to extend our leadership position. Looking ahead to the rest of the year, we remain focused on product development acceleration, partner expansion and market share growth and continued strong margins and cash flow. With that, let me turn the call over to Nicola.

Nicola Allais, CFO

Thanks, Mark, and good afternoon, everyone. For the first quarter, we achieved 10% year-over-year revenue growth and 31% EBITDA margins. Off the strong start to the year, we are reiterating guidance for the full year. For the first quarter, total revenue was $181 million, representing 10% year-over-year growth. Total advertiser revenue, which includes activation and measurement, represented 90% of total revenue and grew 9% year-over-year, driven by 12% growth in volume or MTM, partially offset by a 4% decline in fees or MTF. Activation revenue grew 6% with ABS representing 53% of activation revenue in the quarter. As of quarter end, over 75% of our top 500 clients were using ABS. Measurement revenue grew 16% year-over-year with social measurement revenue increasing 23% and representing 49% of measurement revenue and international revenue increasing 18% and representing 27% of measurement revenue. Supply side revenue represented 10% of total revenue in the quarter and grew 12% year-over-year. We're driving growth by adding new CTV and digital platform partnerships and by continuing to expand DV solutions on retail media networks. Moving to expenses. In the first quarter, we delivered 82% revenue less cost of sales. Our continued investments and use of AI capabilities are allowing us to scale at a consistently efficient rate even as we measure increasing levels of volume. We delivered $55 million of adjusted EBITDA, representing a 31% margin as compared to 27% margin in Q1 of 2025. Total expenses for product development, sales and marketing and G&A increased 2% as compared to 10% revenue growth. We are showing early signs of the benefit of using AI capabilities to grow through improved productivity across the organization and increased software capitalization related to product development. We are scaling the business more efficiently, which results in increasing EBITDA margins. Stock-based compensation was $24 million in the first quarter, flat to prior year. For the second quarter, we expect stock-based compensation of approximately $25 million to $27 million and weighted average fully diluted shares outstanding of approximately 157 million shares. For the full year, we continue to expect stock-based compensation to range between $102 million to $107 million, a decline year-over-year, reflecting the impact of our updated equity incentive plan that reduced the annual value of equity grants in 2026 by over 40% as compared to 2025. Turning to cash. Year-to-date, we have repurchased 9.8 million shares for $100 million, of which 7.3 million shares were repurchased in the first quarter for approximately $75 million and 2.5 million shares were repurchased in April for approximately $25 million. Year-to-date, the 9.8 million shares we repurchased represent approximately 6% of fiscal year-end 2025 outstanding shares. Net cash from operating activities in the first quarter was $4 million and was impacted by timing of collections and payments at the end of the quarter. For the full year, we expect free cash flow conversion of approximately 60%. We ended the first quarter with approximately $174 million in cash and no long-term debt. Now turning to guidance. For the second quarter of 2026, we expect revenue to range between $199 million and $205 million, representing a year-over-year increase of approximately 7% at the midpoint. As a reminder, we're lapping our 21% growth rate in Q2 of 2025. And we expect adjusted EBITDA to range between $63 million to $67 million, representing a 32% adjusted EBITDA margin at the midpoint. For the full year 2026, we are reiterating our prior guidance. We expect revenue to range between $810 million and $826 million, representing an 8% to 10% year-over-year increase and expect adjusted EBITDA margins of approximately 34%. As discussed on our prior call, incremental growth in 2026 will be driven by three product-led growth engines. First, continued adoption of our solutions across social and streaming TV; second, growth from existing enterprise clients scaling our product offering; and third, continued new customer acquisition driven by DV's differentiated products. Our first quarter results demonstrate progress on each growth driver with increasing social activation revenue growth, increased adoption and scaling of new products and a consistently high win rate. Our first quarter results show solid execution. With a clear focus on durable growth and expanding profitability, we're well positioned to continue to deliver long-term shareholder value. And with that, we will open up the line for questions. Operator, please go ahead.

Operator, Operator

Your first question comes from the line of Matt Swanson with RBC Capital Markets.

Matthew Swanson, Analyst (RBC Capital Markets)

Congrats on a solid start to the year. I think I'll pick up right where Nicola left off there. It was a great quarter for social measurement. But really focusing on that growth opportunity in social activation — any time you have something with over a 90% growth rate, we should probably start there. Can you give us an update on how things are trending and how the rollout has been going relative to your expectations with your customers, especially on Meta?

Mark Zagorski, CEO

Thanks for the question, Matt. We're really pleased with the scale and speed of scaling on social activation, which is being driven by all three prongs. First, Meta activation and the new Meta prebid tools we have there. Second, growth in YouTube through our Authentic Advantage solution. And third, through TikTok as well, which continues to grow at a really nice pace on the pre-bid side. Our social activation business is running on all cylinders. This demonstrates that our solutions are playing an essential role in the walled gardens. There were questions about whether DV is as powerful or as needed in the walled gardens as it is in the open web; this growth is proving that out. It also underscores the power of the prebid and post-bid engine where we can launch prebid solutions where we already have measurement in place, and we see a nice catalyst for growth. Meta, in particular, now has over 80 clients engaged with it. Some of our biggest advertisers are now engaged there. We mentioned on the last call that we wanted to get to a $15 million ARR by the end of 2026, and we're already at $12 million. So this is growing well and scaling well. The social activation 90% growth number is supported by our innovations in TikTok and YouTube as well.

Matthew Swanson, Analyst (RBC Capital Markets)

Great. And then, Nicola, just thinking more on the guidance side. I know over the last couple of years, you've become less exposed to CPG and retail sectors. Is there anything from a macro standpoint that you would point out to us? And any update on the advertiser who went through the agency change last quarter?

Nicola Allais, CFO

I'll start by saying from a vertical perspective, we spoke a lot about retail and the impact it had on our business at the end of the year. That has normalized as we had expected. We already spoke about it on our last call. Overall, all of our key verticals showed growth in the first quarter of 2026. We haven't seen material changes across the verticals. If anything, we've been able to diversify further into healthcare and technology, which allows us to be less reliant on retail and CPG. It feels more normalized, and we continue to diversify in a way that's going to help create a more predictable business for us. In terms of macro, if you look at verticals, the two verticals that I generally mentioned in terms of uncertainty, auto and travel, are fairly small verticals for us, so we're not as exposed to those. And just a general comment: we're not assuming strong tailwinds, but we're assuming an environment that's going to remain fairly stable.

Operator, Operator

Your next question comes from the line of Brian Pitz with BMO Capital Markets.

Brian Pitz, Analyst (BMO Capital Markets)

Mark, since I know Slop Stopper is one of your favorite topics, could you give us your latest expectation around penetration rate and thoughts on future opportunities around this product? And more broadly, as AI content continues to proliferate across the internet, what are you hearing from advertisers in terms of how they're adapting to this changing environment? Are they starting to get more comfortable? Any additional insight would be helpful.

Mark Zagorski, CEO

Thanks, Brian. Yes, Slop Stopper is being applied on the measurement side to about 40% of all of our impressions. That's one of our fastest scaling attach rates that we've seen. On the measurement side, it's being picked up quickly, and that shows advertisers are still figuring out how to navigate AI content. Slop Stopper is built to avoid low-quality, questionable AI content. Not all AI content is bad, but there's certainly content advertisers want to avoid, and Slop Stopper helps them do that. Next steps: we launched a prebid Slop Stopper solution on YouTube and we will expand it to additional social platforms over the next few quarters. Video-centric social platforms are particularly challenging for advertisers to determine where to advertise, so we see this as a catalyst for higher attach rates and another reason for advertisers to lean into working with DV, even if they weren't previously. The problems advertisers saw in the open web are evolving inside walled gardens. Our solutions address all of those environments.

Operator, Operator

Your next question comes from Maria Ripps with Canaccord.

Maria Ripps, Analyst (Canaccord)

Mark, you said you were in discussions with several LLMs regarding verifying ads on their platforms. Is this the same brand safety stack you offer today, or will the agentic ad environment require a fundamentally different product? And how are you thinking about structuring pricing models for agentic ads?

Mark Zagorski, CEO

Great question. On ad-supported LLMs, we've seen announcements where OpenAI is embracing third-party ad solutions for demand, buying and creative optimization. The next step for them is measurement and verification, and we're leaning into discussions with many LLMs on that front. The fundamental role we'd play is the same as in social, streaming and display: acting as the trust and transparency layer. That includes ensuring ads are viewable by real humans and that content context aligns with brand expectations. So the application of our solutions in that environment is similar to what we do today. On business models, we employ different models with platforms, but almost all of them are advertiser-paid and based on volume of engagement. Our assumption is that model will extend into LLMs as well — volume-based and advertiser-paid, tied to scale and engagement levels.

Maria Ripps, Analyst (Canaccord)

Got it. That's helpful. Following up on Slop Stopper — do you view it primarily as a retention tool bundled into existing relationships, or is it a product that can be priced and sold independently? Now that it's launched on YouTube and coming to other platforms, what's the realistic time frame for this product to move the needle on revenue directly or indirectly?

Mark Zagorski, CEO

I view Slop Stopper as having two positive impacts. First, retention: it creates greater value in our engagements by giving advertisers another category of content transparency, making relationships stickier and helpful during renegotiations and pricing discussions. Second, attach rate: it helps advertisers who weren't using our prebid solutions adopt them because they can avoid AI slop. So it helps retain and grow current customers and drives attach rates with new customers. Third, it's a market differentiator that our competitors don't have, allowing us to win deals more effectively. We're already seeing the impact: measurement grew 16% and social activation, which includes Slop Stopper, grew 92%. Those numbers are fueled by features like this that drive attach and create new customer engagements.

Operator, Operator

Your next question comes from the line of Andrew Marok with Raymond James.

Andrew Marok, Analyst (Raymond James)

On chatbot ad offerings, we've seen OpenAI evolve from a CPM to a CPC over time. From the architecture of chatbot ad offerings, is there anything they could do that would be more or less advantageous for you to partner with? Are there structures you hope they might lean toward?

Mark Zagorski, CEO

Great points, Andrew. The model is evolving quickly as advertisers and LLMs experiment. The current structures actually play to our strengths because we analyze text-based content and context at scale. Consumer engagements with chatbots fit what DV has done for the last 15 years: analyzing advertising in contextual or text environments. Our experience with walled gardens and real-time feeds gives us a strong legacy to analyze ads in these environments. We are flexible — we've built for many systems from video to short-form and text-based open web. The current setup of ChatGPT or similar platforms is relatively easy to engage with our current classification systems. We're ready and have built for challenging, real-time environments before, so this shouldn't be a significant lift.

Operator, Operator

Your next question comes from the line of Matthew Condon with Citizens.

Matthew Condon (via Briana), Analyst (Citizens)

This is Briana on for Matthew Condon. You've raised Authentic Advantage on YouTube ACV to $10 million from $8 million last quarter and Meta activation to $12 million versus $8 million prior. Can you help us understand the incremental growth you're seeing within these two products? How much is from new advertisers versus existing advertisers ramping spend?

Mark Zagorski, CEO

It's a combination of both. Current DV advertisers have been upsold to these solutions and previous advertisers are now scaling. We moved from high 60s to over 80 engagements for Meta, so new customers are scaling Meta Prebid. Authentic Advantage is seeing similar scaling on YouTube. Once advertisers get engaged, they tend to stay sticky and scale with us over time. The 90% social activation growth is fueled by new customers and current customers scaling their spend.

Matthew Condon (via Briana), Analyst (Citizens)

Got it. And just on the social side, activation grew 92%, but activation revenue slowed to 6% from the 4Q number. Can you help unpack what's going on within that line item?

Nicola Allais, CFO

Activation for the quarter was up 6%, which is consistent with the growth we had in the fourth quarter. The social activation growth is a high percentage but on a smaller base. The rest of the business remained fairly steady in the first quarter, and the majority of that business is driven by mobile and online video and display. We are focused on verifying where advertisers are spending, and tied to social activation growth is social measurement growth of 23%. Those are the vectors we're focused on to verify wherever advertisers spend.

Operator, Operator

Your next question comes from the line of Mark Murphy with JPMorgan.

Mark Murphy, Analyst (JPMorgan)

Congrats. Regarding the group of six or seven large retail and CPG companies that started to drag on growth rates about 1.5 years ago — with the understanding you've lapped that slowdown — is there any signaling from those companies about their internals, like coping with commodity prices or consumer spending trends? Any different behavior you're seeing?

Nicola Allais, CFO

We're not seeing different behavior than the overall vertical for CPG and retail. Retail spend patterns normalized after the end of last year, which is positive. Across verticals, all key verticals showed growth in Q1. We're diversifying away from CPG and retail by signing larger brands in different verticals like healthcare and technology, which helps the business. So what we saw in Q1 is a more normalized pattern of spend for CPG and retail.

Mark Zagorski, CEO

Mark, to add: advertisers have been clear that to scale budgets in LLMs and other emerging platforms they will require third-party measurement, more transparency and verification, so demand is being driven by our partners and brands. We saw ChatGPT and OpenAI open their ad platform to numerous third parties for buying and creative optimization, indicating they're embracing the marketplace. If you look at projections like $100 billion by 2030 in ad revenue, platforms will need partners to build that business. We're bullish on the opportunity. It hasn't materialized yet, but history from social and streaming suggests this could be a great long-term opportunity for DV.

Operator, Operator

Your next question comes from the line of Tim Nollen with SSR.

Tim Nollen, Analyst (SSR)

Could I switch to CTV? You've had a couple announcements during the quarter. What are you bringing to TV measurement or CTV that is new and different versus what has existed thus far? The TV market is much more complicated these days. What's the opportunity for DV? Also, you mentioned MTMs for CTV were up 28% — could you put that in context and where that might trend for the rest of the year?

Mark Zagorski, CEO

We have three pillars for growth: social, AI and streaming. Streaming impression growth was up 28% last quarter, driven by higher attach rates for new solutions. The launch of verified streaming TV gives advertisers the ability to measure and ensure ads are delivered on a high-quality full episode player, not an outstream or embedded video. That is gaining traction and driving attach rates on post-bid measurement. Our automated Do-Not-Air list lets advertisers create dynamic exclusion lists of programming; attach rate has almost tripled across our prebid solutions on specific DSPs. When prebid attach grows, post-bid measurement grows too. Advertisers have been demanding more transparency on CTV — they often get less granular verification data on CTV than on social or short-form video — so our solutions are touching a nerve and increasing impressions we measure across streaming TV. Attach rates mean more usage of our solutions and more revenue opportunity.

Nicola Allais, CFO

On volume of impressions, CTV grew 28% in the first quarter, and we expect that to continue to outpace overall revenue growth of the company because it's an area that is growing. We do expect that trend to continue.

Tim Nollen, Analyst (SSR)

When you talk about streaming and CTV, are you specifying this from video that you've been measuring in other areas like social?

Mark Zagorski, CEO

CTV is content that ends up on a large player in a living room. Streaming TV includes CTV but also high-quality branded entertainment that may end up on mobile or a tablet — think Hulu, Paramount — not short-form social video or reels. Streaming TV includes all high-quality TV; CTV refers to big-screen living-room experiences.

Operator, Operator

Your next question comes from the line of Youssef Squali with Truist.

Robert Zeller (on behalf of Youssef Squali), Analyst (Truist)

This is Rob on for Youssef. On the gross margin expansion due to AI, could you unpack that? Is this the new norm for 2026, or are you still targeting around 80%? Also, curious on the drivers behind sequential trends in large advertising customers and ARPU.

Nicola Allais, CFO

We achieved 82% gross margin in the quarter. We're able to do that by using AI tools to verify and classify content much more efficiently. We expect that even as impression volumes grow, we'll maintain healthy gross margins. Whether it's 80% or 82% will depend on volume mix and the new verification required for AI platforms. 80% is a safe, healthy benchmark. On large advertisers and ARPU, the average dollars per client for the top 100 is continuing to grow year-over-year. We look at that on an annual basis, but large advertisers are being upsold to new solutions, especially on social, contributing to ARPU growth.

Operator, Operator

Your final question comes from the line of Justin Patterson with KeyBanc Capital Markets.

Jacob Armstrong (on behalf of Justin Patterson), Analyst (KeyBanc Capital Markets)

This is Jacob on for Justin. Regarding internal AI for classification, can you describe areas where DoubleVerify is using AI internally to ramp engineering productivity and how you're managing token costs while expanding adoption of these tools?

Mark Zagorski, CEO

We use AI in two major buckets: internal execution to improve efficiency and client engagement, and AI product development. Internally, we focus on agentic development and using agents to create code. We've seen 40% faster software development and faster triage of IT tickets, allowing us to maintain headcount efficiency. We always evaluate token costs from an ROI perspective when leaning into AI. On core classification, AI has increased our productivity by 4x and sped labeling by about 2,000x. We're reducing contractor labeling headcount by over 100 by year-end. These efficiencies are improving margins, accelerating product time-to-market and enabling more efficient client interactions. We're also moving toward natural language interfaces to improve client interactions with less client service overhead.

Operator, Operator

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

Mark Zagorski, CEO

Thank you all for joining us this evening. As we look ahead, we remain confident in the performance of our business and our priorities are clear: deepen adoption of the core products with core customers, accelerate the growth of our solutions for social, streaming TV and AI and drive industry-leading margins by leveraging the power of AI. We appreciate your continued support and look forward to connecting with many of you at upcoming conferences.

Operator, Operator

Ladies and gentlemen, that concludes today's conference call. Thank you all for joining. You may now disconnect.