DoubleVerify Holdings, Inc 10-Q for FY2023 Q3

DoubleVerify Holdings, Inc. (DV)

10-Q 2023-11-09 For: 2023-09-30

Added on April 04, 2026

About this 10-Q

DoubleVerify Holdings, Inc filed this 10-Q on November 9, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $143.97M; up 28.3% from $112.25M a year earlier
Net income: $13.35M; up 29.2% from net income of $10.33M a year earlier
Diluted EPS: $0.08; up 33.3% from $0.06 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 (Unaudited)

		Page

Item 1.	Condensed Consolidated Financial Statements	4

	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

Part II OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

Signatures		34


	As of		As of
(in thousands, except per share data)	September 30, 2023		December 31, 2022
Assets:
Current assets
Cash and cash equivalents	$	259,212	$	267,813
Trade receivables, net of allowances for doubtful accounts of $10,397 and $8,893 as of September 30, 2023 and December 31, 2022, respectively		190,673		167,122
Prepaid expenses and other current assets		19,473		10,161
Total current assets		469,358		445,096
Property, plant and equipment, net		55,764		47,034
Operating lease right-of-use assets, net		61,480		64,692
Goodwill		431,307		343,011
Intangible assets, net		147,306		135,429
Deferred tax assets		7,983		35
Other non-current assets		1,981		1,731
Total assets	$	1,175,179	$	1,037,028
Liabilities and Stockholders' Equity:
Current liabilities
Trade payables	$	9,638	$	6,675
Accrued expenses		41,751		33,085
Operating lease liabilities, current		9,080		7,041
Income tax liabilities		—		11,953
Current portion of finance lease obligations		3,101		1,846
Contingent consideration		1,193		—
Other current liabilities		9,987		8,310
Total current liabilities		74,750		68,910
Operating lease liabilities, non-current		72,802		74,086
Finance lease obligations		3,406		779
Deferred tax liabilities		9,334		12,890
Other non-current liabilities		3,602		3,504
Total liabilities		163,894		160,169
Commitments and contingencies (Note 14)
Stockholders’ equity
Common stock, $0.001 par value, 1,000,000 shares authorized, 169,918 shares issued and 169,905 outstanding as of September 30, 2023; 1,000,000 shares authorized, 165,448 shares issued and 165,417 outstanding as of December 31, 2022		170		165
Additional paid-in capital		857,561		756,299
Treasury stock, at cost, 13 shares and 31 shares as of September 30, 2023 and December 31, 2022, respectively		(397)		(796)
Retained earnings		165,878		127,517
Accumulated other comprehensive loss, net of income taxes		(11,927)		(6,326)
Total stockholders’ equity		1,011,285		876,859
Total liabilities and stockholders' equity	$	1,175,179	$	1,037,028


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Revenue	$	143,974	$	112,254	$	400,312	$	318,782
Cost of revenue (exclusive of depreciation and amortization shown separately below)		26,466		19,323		76,609		55,036
Product development		32,315		23,932		92,811		68,742
Sales, marketing and customer support		32,971		27,118		90,220		78,535
General and administrative		23,280		19,395		63,223		60,599
Depreciation and amortization		10,706		8,089		29,365		25,446
Income from operations		18,236		14,397		48,084		30,424
Interest expense		288		226		791		681
Other (income) expense, net		(1,633)		231		(6,843)		422
Income before income taxes		19,581		13,940		54,136		29,321
Income tax expense		6,234		3,609		15,775		4,121
Net income	$	13,347	$	10,331	$	38,361	$	25,200
Earnings per share:
Basic	$	0.08	$	0.06	$	0.23	$	0.15
Diluted	$	0.08	$	0.06	$	0.22	$	0.15
Weighted-average common stock outstanding:
Basic		168,606		164,297		166,937		163,512
Diluted		173,980		170,876		172,812		170,558
Comprehensive income:
Net income	$	13,347	$	10,331	$	38,361	$	25,200
Other comprehensive loss:
Foreign currency cumulative translation adjustment		(6,417)		(4,630)		(5,601)		(11,834)
Total comprehensive income	$	6,930	$	5,701	$	32,760	$	13,366


											Accumulated
											Other
											Comprehensive
							Additional				Income (Loss)		Total
	Common Stock			Treasury Stock			Paid-in		Retained		Net of		Stockholders’
(in thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Income Taxes		Equity
Balance as of January 1, 2023	165,448	$	165	31	$	(796)	$	756,299	$	127,517	$	(6,326)	$	876,859
Foreign currency translation adjustment	—		—	—		—		—		—		1,193		1,193
Shares repurchased for settlement of employee tax withholdings	—		—	30		(787)		—		—		—		(787)
Stock-based compensation expense	—		—	—		—		11,992		—		—		11,992
Common stock issued upon exercise of stock options	527		1	—		—		1,765		—		—		1,766
Common stock issued upon vesting of restricted stock units	182		—	—		—		—		—		—		—
Treasury stock reissued upon settlement of equity awards	—		—	(35)		914		(914)		—		—		—
Net income	—		—	—		—		—		12,175		—		12,175
Balance as of March 31, 2023	166,157	$	166	26	$	(669)	$	769,142	$	139,692	$	(5,133)	$	903,198
Foreign currency translation adjustment	—		—	—		—		—		—		(377)		(377)
Shares repurchased for settlement of employee tax withholdings	—		—	57		(1,966)		—		—		—		(1,966)
Stock-based compensation expense	—		—	—		—		15,399		—		—		15,399
Common stock issued under employee purchase plan	49		—	—		—		1,138		—		—		1,138
Common stock issued upon exercise of stock options	711		1	—		—		3,990		—		—		3,991
Common stock issued upon vesting of restricted stock units	333		—	—		—		—		—		—		—
Treasury stock reissued upon settlement of equity awards	—		—	(67)		2,107		(2,107)		—		—		—
Net income	—		—	—		—		—		12,839		—		12,839
Balance as of June 30, 2023	167,250	$	167	16	$	(528)	$	787,562	$	152,531	$	(5,510)	$	934,222
Foreign currency translation adjustment	—		—	—		—		—		—		(6,417)		(6,417)
Shares repurchased for settlement of employee tax withholdings	—		—	28		(945)		—		—		—		(945)
Issuance of common stock as consideration for acquisition	1,642		2	—		—		52,935		—		—		52,937
Stock-based compensation expense	—		—	—		—		16,088		—		—		16,088
Common stock issued upon exercise of stock options	653		1	—		—		2,052		—		—		2,053
Common stock issued upon vesting of restricted stock units	373		—	—		—		—		—		—		—
Treasury stock reissued upon settlement of equity awards	—		—	(31)		1,076		(1,076)		—		—		—
Net income	—		—	—		—		—		13,347		—		13,347
Balance as of September 30, 2023	169,918	$	170	13	$	(397)	$	857,561	$	165,878	$	(11,927)	$	1,011,285

Balance as of January 1, 2022	162,347	$	162	50	$	(1,802)	$	717,228	$	84,249	$	(771)	$	799,066
Foreign currency translation adjustment	—		—	—		—		—		—		(1,570)		(1,570)
Shares repurchased for settlement of employee tax withholdings	—		—	41		(1,058)		—		—		—		(1,058)
Stock-based compensation expense	—		—	—		—		10,994		—		—		10,994
Common stock issued to non-employees	4		—	—		—		—		—		—		—
Common stock issued upon exercise of stock options	572		1	—		—		1,677		—		—		1,678
Common stock issued upon vesting of restricted stock units	195		—	—		—		—		—		—		—
Net income	—		—	—		—		—		4,579		—		4,579
Balance as of March 31, 2022	163,118	$	163	91	$	(2,860)	$	729,899	$	88,828	$	(2,341)	$	813,689
Foreign currency translation adjustment	—		—	—		—		—		—		(5,634)		(5,634)
Shares repurchased for settlement of employee tax withholdings	—		—	320		(8,133)		—		—		—		(8,133)
Stock-based compensation expense	—		—	—		—		9,517		—		—		9,517
Common stock issued under employee purchase plan	41		—	—		—		768		—		—		768
Common stock issued upon exercise of stock options	176		—	—		—		838		—		—		838
Common stock issued upon vesting of restricted stock units	798		1	—		—		(1)		—		—		—
Treasury stock reissued upon settlement of equity awards	—		—	(128)		3,447		(3,447)		—		—		—
Net income	—		—	—		—		—		10,290		—		10,290
Balance as of June 30, 2022	164,133	$	164	283	$	(7,546)	$	737,574	$	99,118	$	(7,975)	$	821,335
Foreign currency translation adjustment	—		—	—		—		—		—		(4,630)		(4,630)
Shares repurchased for settlement of employee tax withholdings	—		—	19		(492)		—		—		—		(492)
Stock-based compensation expense	—		—	—		—		11,080		—		—		11,080
Common stock issued upon exercise of stock options	490		1	—		—		2,390		—		—		2,391
Common stock issued upon vesting of restricted stock units	110		—	—		—		—		—		—		—
Treasury stock reissued upon settlement of equity awards	—		—	(265)		7,036		(7,036)		—		—		—
Net income	—		—	—		—		—		10,331		—		10,331
Balance as of September 30, 2022	164,733	$	165	37	$	(1,002)	$	744,008	$	109,449	$	(12,605)	$	840,015


	Nine Months Ended
	September 30,
(in thousands)	2023		2022
Operating activities:
Net income	$	38,361	$	25,200
Adjustments to reconcile net income to net cash provided by operating activities
Bad debt expense		6,901		3,629
Depreciation and amortization expense		29,365		25,446
Amortization of debt issuance costs		221		221
Non-cash lease expense		4,899		5,534
Deferred taxes		(19,721)		(5,974)
Stock-based compensation expense		42,771		31,224
Interest expense		176		7
Loss on disposal of fixed assets		5		1,353
Impairment of long-lived assets		—		1,510
Other		874		318
Changes in operating assets and liabilities, net of effects of business combinations
Trade receivables		(25,787)		(23,842)
Prepaid expenses and other assets		(9,370)		(2,110)
Trade payables		2,475		3,452
Accrued expenses and other liabilities		(3,484)		(7,607)
Net cash provided by operating activities		67,686		58,361
Investing activities:
Purchase of property, plant and equipment		(12,309)		(27,719)
Acquisition of businesses, net of cash acquired		(67,240)		—
Net cash (used in) investing activities		(79,549)		(27,719)
Financing activities:
Proceeds from revolving credit facility		50,000		—
Payments to revolving credit facility		(50,000)		—
Payment of contingent consideration related to Zentrick acquisition		—		(3,247)
Proceeds from common stock issued upon exercise of stock options		7,810		4,907
Proceeds from common stock issued under employee purchase plan		1,138		768
Payments related to offering costs		—		(6)
Finance lease payments		(1,605)		(1,286)
Shares repurchased for settlement of employee tax withholdings		(3,698)		(9,683)
Net cash provided by (used in) financing activities		3,645		(8,547)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(389)		(1,015)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(8,607)		21,080
Cash, cash equivalents, and restricted cash - Beginning of period		267,938		221,725
Cash, cash equivalents, and restricted cash - End of period	$	259,331	$	242,805

Cash and cash equivalents	$	259,212	$	242,687
Restricted cash (included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets)		119		118
Total cash and cash equivalents and restricted cash	$	259,331	$	242,805
Supplemental cash flow information:
Cash paid for taxes	$	52,738	$	10,210
Cash paid for interest	$	427	$	519
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities, net of impairments and tenant improvement allowances	$	2,017	$	80,060
Acquisition of equipment under finance lease	$	5,479	$	—
Capital assets financed by accounts payable and accrued expenses	$	—	$	5,305
Stock-based compensation included in capitalized software development costs	$	708	$	367
Common stock issued in connection with acquisition	$	52,937	$	—
Liabilities for contingent consideration	$	1,193	$	—


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Activation	$	81,700	$	62,170	$	229,534	$	175,696
Measurement		51,263		38,847		137,637		111,584
Supply-side customer		11,011		11,237		33,141		31,502
Total revenue	$	143,974	$	112,254	$	400,312	$	318,782


(in thousands)
Cash, net of cash acquired	$	67,240
Common stock issued in connection with the acquisition		52,937
Fair value of contingent consideration		1,193
Total	$	121,370


(in thousands)	Acquisition Date
Assets:
Cash and cash equivalents	$	1,705
Trade receivables		5,197
Prepaid expenses		50
Other assets		1,382
Intangible assets:
Technology		18,000
Customer relationships		15,000
Total intangible assets		33,000
Goodwill		92,053
Total assets acquired	$	133,387
Liabilities:
Trade payables	$	530
Other liabilities		1,259
Deferred tax liability		8,523
Total liabilities assumed		10,312
Total purchase consideration	$	123,075
Cash acquired		(1,705)
Purchase consideration, net of cash acquired	$	121,370


(in thousands)
Goodwill at December 31, 2022	$	343,011
Business combinations (Scibids)		92,053
Foreign exchange impact		(3,757)
Goodwill at September 30, 2023	$	431,307


(in thousands)
2023 (for remaining three months)	$	7,951
2024		28,565
2025		26,618
2026		21,865
2027		17,984
2028		14,888
Thereafter		29,435
Total	$	147,306


		(In years)
Trademarks and brands		9
Customer relationships		7
Developed technology		2


	September 30, 2023
(in thousands)	Operating Leases		Finance Leases
2023 (for remaining three months)	$	2,674	$	1,415
2024		8,826		2,584
2025		8,061		2,150
2026		6,840		819
2027		6,651		—
2028		6,746		—
Thereafter		74,037		—
Total lease payments		113,835		6,968
Less amount representing interest		(31,953)		(461)
Present value of total lease payments	$	81,882	$	6,507


	As of September 30, 2023
	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	$	60,651	$	—	$	—	$	60,651
Liabilities:
Contingent consideration	$	—	$	—	$	1,193	$	1,193


(in thousands)	September 30, 2023						December 31, 2022
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Trademarks and brands	$	11,732	$	(4,927)	$	6,805	$	11,733	$	(4,294)	$	7,439
Customer relationships		160,239		(59,326)		100,913		145,834		(49,587)		96,247
Developed technology		93,921		(54,333)		39,588		76,677		(44,956)		31,721
Non-compete agreements		63		(63)		—		64		(42)		22
Total intangible assets	$	265,955	$	(118,649)	$	147,306	$	234,308	$	(98,879)	$	135,429


	Stock Option
				Weighted Average
				Remaining
	Number of	Weighted Average		Contractual Life		Aggregate
	Options	Exercise Price		(Years)		Intrinsic Value
Outstanding as of December 31, 2022	11,861	$	13.43	7.17	$	129,323
Options granted	861		25.24
Options exercised	(1,942)		3.97
Options forfeited	(64)		25.86
Outstanding as of September 30, 2023	10,716	$	16.02	6.96	$	138,907
Options expected to vest as of September 30, 2023	3,642	$	24.17	8.34	$	19,273
Options exercisable as of September 30, 2023	6,842	$	11.33	6.15	$	119,013


		2023
Risk - free interest rate (percentage)		3.6
Expected term (years)		6.1
Expected dividend yield (percentage)		—
Expected volatility (percentage)		46.5


	Restricted Stock Units
	Number of	Weighted Average
	Shares	Grant Date Fair Value
Outstanding as of December 31, 2022	3,154	$	27.07
Granted	2,485		26.55
Vested	(972)		25.88
Forfeited	(144)		27.32
Outstanding as of September 30, 2023	4,523	$	27.04


(in thousands)
Balance at January 1, 2023	$	—
Fair value at date of acquisition		1,193
Fair value adjustments		—
Payments		—
Balance at September 30, 2023	$	1,193


	Three Months Ended September 30,				Change		Change		Nine Months Ended September 30,				Change		Change
	2023		2022		$		%		2023		2022		$		%

	(In Thousands)								(In Thousands)
Revenue by customer type:
Activation	$	81,700	$	62,170	$	19,530	31	%	$	229,534	$	175,696	$	53,838	31	%
Measurement		51,263		38,847		12,416	32			137,637		111,584		26,053	23
Supply-side customer		11,011		11,237		(226)	(2)			33,141		31,502		1,639	5
Total revenue	$	143,974	$	112,254	$	31,720	28	%	$	400,312	$	318,782	$	81,530	26	%


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)


	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)

Date:	November 9, 2023	/s/ Mark Zagorski
		Mark Zagorski
		Chief Executive Officer
		(Principal Executive Officer)