DoubleVerify Holdings, Inc 10-Q for FY2022 Q1

DoubleVerify Holdings, Inc. (DV)

10-Q 2022-05-10 For: 2022-03-31

Added on April 04, 2026

About this 10-Q

DoubleVerify Holdings, Inc filed this 10-Q on May 10, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $96.72M; up 43.1% from $67.59M a year earlier
Net income: $4.58M; down 18.9% from net income of $5.64M a year earlier
Diluted EPS: $0.03; down 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 March 31, 2022 and December 31, 2021	4

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2022 and 2021	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	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	32

Item 4.	Controls and Procedures	32

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	35

Signatures		36


	As of		As of
(in thousands, except per share data)	March 31, 2022		December 31, 2021
Assets:
Current assets
Cash and cash equivalents	$	211,600	$	221,591
Trade receivables, net of allowances for doubtful accounts of $7,315 and $6,527 as of March 31, 2022 and December 31, 2021, respectively		134,030		122,938
Prepaid expenses and other current assets		24,979		23,295
Total current assets		370,609		367,824
Property, plant and equipment, net		19,152		17,575
Operating lease right-of-use assets, net		76,825		—
Goodwill		342,666		350,560
Intangible assets, net		154,512		153,395
Deferred tax assets		60		60
Other non-current assets		1,859		2,780
Total assets	$	965,683	$	892,194
Liabilities and Stockholders' Equity:
Current liabilities
Trade payables	$	3,821	$	3,853
Accrued expense		26,190		41,456
Operating lease liabilities, current		4,909		—
Income tax liabilities		996		1,321
Current portion of finance lease obligations		2,027		1,970
Contingent considerations, current		—		1,717
Other current liabilities		6,745		6,716
Total current liabilities		44,688		57,033
Operating lease liabilities, non-current		74,334		—
Finance lease obligations		2,043		2,579
Deferred tax liabilities		28,291		30,307
Other non-current liabilities		2,638		3,209
Total liabilities	$	151,994	$	93,128
Commitments and contingencies (Note 13)
Stockholders’ equity
Common stock, $0.001 par value, 1,000,000 shares authorized, 163,118 shares issued and 163,027 outstanding as of March 31, 2022; 1,000,000 shares authorized, 162,347 shares issued and 162,297 shares outstanding as of December 31, 2021		163		162
Additional paid-in capital		729,899		717,228
Treasury stock, at cost, 91 shares and 50 shares as of March 31, 2022 and December 31, 2021, respectively		(2,860)		(1,802)
Retained earnings		88,828		84,249
Accumulated other comprehensive loss, net of income taxes		(2,341)		(771)
Total stockholders’ equity		813,689		799,066
Total liabilities and stockholders' equity	$	965,683	$	892,194


	Three Months Ended March 31,
(in thousands, except per share data)	2022		2021
Revenue	$	96,723	$	67,586
Cost of revenue (exclusive of depreciation and amortization shown separately below)		16,877		10,203
Product development		21,588		14,179
Sales, marketing and customer support		26,684		15,534
General and administrative		19,675		11,835
Depreciation and amortization		9,040		7,057
Income from operations		2,859		8,778
Interest expense		232		390
Other expense (income), net		46		(49)
Income before income taxes		2,581		8,437
Income tax (benefit) expense		(1,998)		2,793
Net income	$	4,579	$	5,644
Earnings per share:
Basic	$	0.03	$	0.05
Diluted	$	0.03	$	0.04
Weighted-average common stock outstanding:
Basic		162,612		125,112
Diluted		170,439		133,578
Comprehensive income:
Net income	$	4,579	$	5,644
Other comprehensive income:
Foreign currency cumulative translation adjustment		(1,570)		(799)
Total comprehensive income	$	3,009	$	4,845


														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, 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

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


	Three Months Ended
	March 31,
(in thousands)	2022		2021
Operating activities:
Net income	$	4,579	$	5,644
Adjustments to reconcile net income to net cash provided by operating activities
Bad debt expense (recovery)		1,079		(390)
Depreciation and amortization expense		9,040		7,057
Amortization of debt issuance costs		74		74
Non-cash lease expense		2,002		—
Deferred taxes		(2,016)		(1,328)
Stock-based compensation expense		10,994		2,538
Interest (income) expense		(14)		66
Loss on disposal of fixed assets		471		—
Offering costs		—		3,073
Other		(150)		(68)
Changes in operating assets and liabilities net of effect of business combinations
Trade receivables		(12,224)		7,803
Prepaid expenses and other assets		(2,332)		1,742
Trade payables		2		(524)
Accrued expenses and other liabilities		(13,754)		(6,223)
Net cash (used in) provided by operating activities		(2,249)		19,464
Investing activities:
Purchase of property, plant and equipment		(4,759)		(1,915)
Net cash (used in) investing activities		(4,759)		(1,915)
Financing activities:
Payment of contingent consideration related to Zentrick acquisition		(3,247)		—
Proceeds from common stock issued upon exercise of stock options		1,678		538
Payments related to offering costs		(6)		(1,181)
Finance lease payments		(480)		(235)
Shares repurchased for settlement of employee tax withholdings		(1,058)		—
Net cash (used in) financing activities		(3,113)		(878)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		131		(209)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(9,990)		16,462
Cash, cash equivalents, and restricted cash - Beginning of period		221,725		33,395
Cash, cash equivalents, and restricted cash - End of period	$	211,735	$	49,857

Cash and cash equivalents		211,600		49,815
Restricted cash (included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets)		135		42
Total cash and cash equivalents and restricted cash	$	211,735	$	49,857
Supplemental cash flow information:
Cash paid for taxes		948		1,045
Cash paid for interest		244		147
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities		79,563		—
Acquisition of equipment under finance lease		—		1,518
Offering costs included in accounts payable and accrued expense		—		1,889


(in thousands)
Goodwill at December 31, 2021	$	350,560
Measurement period adjustments		(6,915)
Foreign exchange impact		(979)
Goodwill at March 31, 2022	$	342,666


(in thousands)
2022 (for remaining nine months)	$	18,725
2023		24,901
2024		23,341
2025		21,199
2026		16,094
2027		13,884
Thereafter		36,368
Total	$	154,512


		(In years)
Trademarks and brands		10
Customer relationships		8
Developed technology		4
Non-compete agreements		1


(in thousands)	December 31, 2021		Adjustments due to ASC 842		January 1, 2022
Prepaid expenses and other current assets	$	23,295	$	(229)	$	23,066
Other non-current assets	$	2,780	$	(496)	$	2,284
Operating lease right-of-use assets, net	$	—	$	78,827	$	78,827
Operating lease liabilities, current	$	—	$	4,885	$	4,885
Operating lease liabilities, non-current	$	—	$	74,677	$	74,677
Other current liabilities	$	6,716	$	(614)	$	6,102
Other non-current liabilities	$	3,209	$	(847)	$	2,362


	March 31, 2022
(in thousands)	Operating Leases		Finance Leases
2022	$	3,863	$	1,541
2023		5,856		1,938
2024		6,671		598
2025		6,516		169
2026		6,463		—
2027		6,337		—
2028 and thereafter		80,610		—
Total lease payments		116,316		4,246
Less amount representing interest		(37,073)		(176)
Present value of total lease payments	$	79,243	$	4,070


	Year Ending
(in thousands)	December 31,
2022	$	5,463
2023		4,381
2024		681
2025		439
2026		294
Thereafter		76
	$	11,334


	As of March 31, 2022
	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	$	6,792	$	—	$	—	$	6,792
Liabilities:
Contingent consideration current		—		—		—		—
Contingent consideration non-current		—		—		—		—
Total contingent consideration	$	—	$	—	$	—	$	—


	As of December 31, 2021
	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	$	12,324	$	—	$	—	$	12,324
Liabilities:
Contingent consideration current		—		—		1,717		1,717
Contingent consideration non-current		—		—		—		—
Total contingent consideration	$	—	$	—	$	1,717	$	1,717


(in thousands)	March 31, 2022						December 31, 2021
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Trademarks and brands	$	11,734	$	(3,644)	$	8,090	$	11,735	$	(3,422)	$	8,313
Customer relationships		146,093		(40,044)		106,049		143,728		(36,831)		106,897
Developed technology		77,071		(36,746)		40,325		72,065		(33,937)		38,128
Non-compete agreements		67		(19)		48		68		(11)		57
Total intangible assets	$	234,965	$	(80,453)	$	154,512	$	227,596	$	(74,201)	$	153,395


	Stock Option
				Weighted Average
				Remaining
	Number of	Weighted Average		Contractual Life		Aggregate
	Options	Exercise Price		(Years)		Intrinsic Value
Outstanding as of December 31, 2021	12,117	$	10.84	7.53	$	274,684
Options granted	289		29.10
Options exercised	(574)		2.96
Options forfeited	(48)		13.93
Outstanding as of March 31, 2022	11,784	$	11.66	7.53	$	177,919
Options expected to vest as of March 31, 2022	4,595	$	20.50	8.80	$	37,025
Options exercisable as of March 31, 2022	6,884	$	5.04	6.59	$	139,802


		2022
Risk - free interest rate (percentage)		2.0
Expected term (years)		6.1
Expected dividend yield (percentage)		—
Expected volatility (percentage)		42.8


	Restricted Stock Units
	Number of	Weighted Average
	Shares	Grant Date Fair Value
Outstanding as of December 31, 2021	3,250	$	24.20
Granted	379		29.07
Vested	(195)		25.72
Forfeited	(59)		21.51
Outstanding as of March 31, 2022	3,375	$	24.70


	Three Months Ended March 31,				Change		Change
	2022		2021		$		%

	(In Thousands)
Revenue by customer type:
Measurement (f/k/a Advertiser - direct)	$	33,834	$	27,541	$	6,293	23	%
Activation (f/k/a Advertiser - programmatic)		53,031		33,912		19,119	56
Supply-side customer		9,858		6,133		3,725	61
Total revenue	$	96,723	$	67,586	$	29,137	43	%


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:	May 10, 2022	/s/ Mark Zagorski
		Mark Zagorski
		Chief Executive Officer
		(Principal Executive Officer)