DoubleVerify Holdings, Inc 10-Q for FY2021 Q1

DoubleVerify Holdings, Inc. (DV)

10-Q 2021-05-26 For: 2021-03-31

Added on April 04, 2026

About this 10-Q

DoubleVerify Holdings, Inc filed this 10-Q on May 26, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $67.59M; up 32.0% from $51.22M a year earlier
Net income: $5.64M; up 131.3% from net income of $2.44M a year earlier
Diluted EPS: $0.04; up 100.0% from $0.02 a year earlier

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Title of Each Class	Trading symbol	Name of Exchange on which registered
Ordinary Shares, 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 March 31, 2021 and December 31, 2020	4

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2021 and 2020	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020	6

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 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	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	27

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

Signatures		32


	As of		As of
(in thousands, except per share data)	March 31, 2021		December 31, 2020
Assets:
Current assets
Cash and cash equivalents	$	49,815	$	33,354
Trade receivables, net of allowances for doubtful accounts of $6,412 and $7,049 as of March 31, 2021 and December 31, 2020 respectively		86,798		94,677
Prepaid expenses and other current assets		12,068		13,904
Total current assets		148,681		141,935
Property, plant and equipment, net		18,948		18,107
Goodwill		227,349		227,349
Intangible assets, net		117,245		121,710
Deferred tax assets		82		82
Other non-current assets		2,089		2,151
Total assets	$	514,394	$	511,334
Liabilities and Stockholders' Equity:
Current liabilities
Trade payables	$	3,567	$	3,495
Accrued expense		20,213		25,419
Income tax liabilities		1,107		1,277
Current portion of capital lease obligations		2,140		1,515
Contingent considerations current		1,660		1,198
Other current liabilities		1,993		1,116
Total current liabilities		30,680		34,020
Long-term debt		22,000		22,000
Capital lease obligations		4,112		3,447
Deferred tax liabilities		30,090		31,418
Other non-current liabilities		2,896		3,292
Contingent considerations non-current		—		462
Total liabilities	$	89,778	$	94,639
Commitments and Contingencies (Note 11)
Stockholders’ equity
Common stock, $0.001 par value, 700,000 shares authorized, 140,402 shares issued and 125,256 shares outstanding as of March 31, 2021; 140,222 shares issued and 125,074 shares outstanding as of December 31, 2020		140		140
Preferred stock, $0.01 par value, 61,006 shares authorized, issued, and outstanding as of March 31, 2021 and December 31, 2020. Liquidation preference: $350,000 as of March 31, 2021 and December 31, 2020		610		610
Additional paid-in capital		623,755		620,679
Treasury stock, at cost, 15,146 shares as of March 31, 2021 and December 31, 2020		(260,686)		(260,686)
Retained earnings		60,585		54,941
Accumulated other comprehensive income, net of income taxes		212		1,011
Total stockholders’ equity		424,616		416,695
Total liabilities and stockholders' equity	$	514,394	$	511,334


	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
Revenue	$	67,586	$	51,219
Cost of revenue (exclusive of depreciation and amortization shown separately below)		10,203		7,310
Product development		14,179		10,331
Sales, marketing and customer support		15,534		12,319
General and administrative		11,835		10,696
Depreciation and amortization		7,057		5,934
Income from operations		8,778		4,629
Interest expense		390		1,164
Other (income), net		(49)		(320)
Income before income taxes		8,437		3,785
Income tax expense		2,793		1,345
Net income	$	5,644	$	2,440
Earnings per share:
Basic	$	0.05	$	0.02
Diluted	$	0.04	$	0.02
Weighted-average common stock outstanding:
Basic		125,112		139,741
Diluted		133,578		147,233
Comprehensive income:
Net income	$	5,644	$	2,440
Other comprehensive (loss):
Foreign currency cumulative translation adjustment		(799)		(153)
Total comprehensive income	$	4,845	$	2,287


														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

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


	Three Months Ended
	March 31,
(in thousands)	2021		2020
Operating activities:
Net income	$	5,644	$	2,440
Adjustments to reconcile net income to net cash provided by operating activities
Bad debt (recovery) expense		(390)		709
Depreciation and amortization expense		7,057		5,934
Amortization of debt issuance costs		74		72
Accretion of acquisition liabilities		—		21
Deferred taxes		(1,328)		(1,624)
Stock-based compensation expense		2,538		802
Interest expense (income)		66		(29)
Change in fair value of contingent consideration		—		(979)
Offering costs		3,073		870
Other		(68)		621
Changes in operating assets and liabilities net of effect of business combinations
Trade receivables		7,803		4,098
Prepaid expenses and other current assets		1,754		811
Other non-current assets		(12)		(44)
Trade payables and other liabilities		(524)		1,291
Accrued expenses		(6,469)		(3,854)
Other current liabilities		1,102		1,093
Other non-current liabilities		(856)		470
Net cash provided by operating activities		19,464		12,702
Investing activities:
Purchase of property, plant and equipment		(1,915)		(3,049)
Net cash (used in) investing activities		(1,915)		(3,049)
Financing activities:
Payments of long-term debt		—		(188)
Payments related to offering costs		(1,181)		(676)
Payment of contingent consideration related to Zentrick acquisition		—		(601)
Proceeds from common stock issued upon exercise of stock options		538		70
Capital lease payments		(235)		(418)
Net cash (used in) financing activities		(878)		(1,813)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(209)		(143)
Net increase in cash, cash equivalents, and restricted cash		16,462		7,697
Cash, cash equivalents, and restricted cash - Beginning of period		33,395		11,342
Cash, cash equivalents, and restricted cash - End of period	$	49,857	$	19,039

Cash and cash equivalents		49,815		18,730
Restricted cash (included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets)		42		309
Total cash and cash equivalents and restricted cash	$	49,857	$	19,039
Supplemental cash flow information:
Cash paid for taxes		1,045		541
Cash paid for interest		147		1,069
Non-cash investing and financing activities:
Acquisition of equipment under capital lease		1,518		973
Capital assets financed by accounts payable		—		16
Offering costs included in accounts payable and accrued expense		1,889		306


(in thousands)
2021	$	13,395
2022		17,860
2023		17,825
2024		16,205
2025		14,273
2026		9,777
Thereafter		27,910
Total	$	117,245


		(In years)
Trademarks and brands		11
Customer relationships		9
Developed technology		4


	As of March 31, 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:	$	2,474	$	—	$	—	$	2,474
Liabilities:
Contingent consideration current		—		—		1,660		1,660
Contingent consideration non-current		—		—		—		—
Total contingent consideration	$	—	$	—	$	1,660	$	1,660


	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


	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	436		20.10	—		—
Options exercised	(180)		3.25	—		—
Options forfeited	(117)		5.84	—		—
Outstanding as of March 31, 2021	14,852	$	4.94	7.61	$	244,811
Options expected to vest as of March 31, 2021	4,945	$	8.60	—	$	63,365
Options exercisable as of March 31, 2021	5,952	$	2.65	—	$	111,718


		2021
Risk - free interest rate (percentage)		0.6. - 0.8
Expected term (years)		6.1
Expected dividend yield (percentage)		—
Expected volatility (percentage)		43.4 - 43.6


	Restricted Stock
	Number of	Weighted Average
	Shares	Grant Date Fair Value
Outstanding as of December 31, 2020	1,261	$	7.74
Granted	484		19.44
Vested	—
Forfeited	—
Outstanding as of March 31, 2021	1,745	$	10.99
Expected to vest as of March 31, 2021	1,578


	Year Ending
(in thousands)	December 31,
2021	$	4,211
2022		4,250
2023		3,631
2024		277
	$	12,369


(in thousands)	March 31, 2021						December 31, 2020
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Trademarks and brands		11,690		(2,773)		8,917		11,690		(2,562)		9,128
Customer relationships		102,220		(29,863)		72,357		102,220		(27,720)		74,500
Developed technology		63,196		(27,225)		35,971		63,210		(25,128)		38,082
Total intangible assets	$	177,106	$	(59,861)	$	117,245	$	177,120	$	(55,410)	$	121,710


	Three Months Ended March 31,				Change		Change
	2021		2020		$		%

	(In Thousands)
Revenue by customer type:
Advertiser - direct	$	27,541	$	22,187	$	5,354	24	%
Advertiser - programmatic		33,912		23,851		10,061	42
Supply-side customer		6,133		5,181		952	18
Total revenue	$	67,586	$	51,219	$	16,367	32	%


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)