DoubleVerify outlines goal to reach 50% revenue from social, streaming TV, and AI solutions by 2026 as AI product adoption accelerates

Earnings Call Insights: DoubleVerify Holdings, Inc. (DV) Q3 2025

MANAGEMENT VIEW

* CEO Mark Zagorski reported, "Q3 reflected disciplined execution and resilient performance across the business. Revenue grew 11% to $189 million within our guidance range and adjusted EBITDA margin reached 35%, once again above expectations, demonstrating the scalability of our model." He highlighted the launch of the DV AI Verification offering, the rapid adoption of the DV Authentic AdVantage solution, and zero churn among the top 100 customers in Q3 as evidence of business strength.
* Zagorski detailed three main themes: innovation driven by AI and automation, diversification through social and CTV growth, and monetization of these advancements. He stated, "Each month, we analyze nearly 2 billion automated agents, crawlers and bots, giving us unmatched visibility into how declared assistants like ChatGPT, Claude and Perplexity as well as undeclared or evasive bots...shape media performance."
* The CEO pointed to the rollout of DV's Agent ID Measurement, AI SlopStopper, and Meta pre-screen solutions, emphasizing their role in driving customer adoption, especially among global CPG brands. He mentioned, "Social within activation is growing at 20% and remains one of our fastest-growing sectors."
* CFO Nicola Allais stated, "We delivered approximately $189 million in total revenue in the third quarter, up 11% year-over-year and within our guidance range. Adjusted EBITDA was $66 million, representing a 35% margin and above the high end of our guidance range, driven by cost discipline, operating leverage and AI-driven efficiency gains across the organization."

OUTLOOK

* Allais provided updated guidance: "We expect revenue to range between $207 million and $211 million, representing 10% growth at the midpoint. We expect adjusted EBITDA to range between $77 million and $81 million, representing a 38% margin at the midpoint and continued strong operating leverage."
* For the full year 2025, Allais projected, "approximately 14% year-over-year growth at the midpoint and are raising our adjusted EBITDA margin guidance from approximately 32% to approximately 33%."
* Allais stated, "We also expect a full year 2025 margins of approximately 33% to be a base case for full year 2026, supported by continued cost discipline, AI-driven efficiency gains and the inherent operating leverage in our model."
* The company aims to grow social, streaming TV, and AI Verification solutions from under 30% of total revenue today to roughly 50%.

FINANCIAL RESULTS

* DoubleVerify reported $189 million in total revenue for Q3 2025, with adjusted EBITDA of $66 million and a 35% margin. Media transactions measured increased 12% year-over-year.
* Activation revenue grew 10% year-over-year, with ABS accounting for 54% of activation revenue and growing 12%. Non-ABS activation revenue rose 8%. Measurement revenue increased 9% year-over-year, and supply-side revenue grew 27%.
* The company generated $51 million in net cash from operations in the quarter and ended Q3 with $201 million in cash and cash equivalents. Capital expenditures were $12 million for the quarter.
* Share repurchases totaled $50 million for 3.3 million shares, with $90 million remaining authorized.

Q&A

* Maria Ripps, Canaccord: Asked about growth drivers for next year and incremental profitability. Allais replied, "We're looking at a base case scenario of a 10% growth, which is basically where the second half of '25 is coming out...The upside will come from all the new solutions that we're putting in market for social, for CTV...and now for AI solutions."
* Mark Murphy, JPMorgan: Inquired about retail softness and macro impacts. Allais responded, "The softness is across the vertical. And as you know, retail is a large vertical for us...It has been a disruptive year with both tariffs and other factors in the market."
* Youssef Squali, Truist: Asked about the 10% base case growth for 2026 and Kenvue's status post-acquisition. Allais said, "The idea around a base case of 10% is what we're seeing in the second half of 2025...it's 10% in the second half, which is what we were expecting all the time." Zagorski added that Kenvue remains a growing client and Kimberly-Clark is not a current customer.
* Laura Martin, Needham: Queried on SMB opportunities and AI verification. Zagorski explained, "As more buyers come into the CTV universe and they're buying through platforms, we think there's an opportunity in the same manner where they can apply DV, for example, Verified Streaming TV segments to our buy."
* Justin Patterson, KeyBanc: Sought details on international strategy. Zagorski noted, "We have put in together a strategy that will enable us to continue to scale there better...The way we've done that is look at different pricing models."

SENTIMENT ANALYSIS

* Analysts expressed concerns primarily about macroeconomic headwinds, retail softness, and the scaling of new solutions, with a neutral to slightly negative tone on retail and growth pacing.
* Management maintained a confident tone in prepared remarks and the Q&A, repeatedly emphasizing disciplined execution, efficiency from AI, and resilience in customer relationships. Phrases such as "we feel good about that," "we are confident," and "we're looking at a base case scenario" reflected steadiness, while references to macro uncertainty were managed with assurances of ongoing discipline and future upside.
* The overall sentiment was more cautious compared to the previous quarter, with more focus from both analysts and management on macro volatility and the need for new product adoption to drive future growth.

QUARTER-OVER-QUARTER COMPARISON

* Revenue growth decelerated from 21% in Q2 to 11% in Q3, and media transactions measured grew 12% versus 19% in the prior quarter. Adjusted EBITDA margin increased from 30% to 35%.
* Guidance for Q4 reflects persistent retail sector softness, whereas last quarter's outlook anticipated stronger momentum from existing advertiser base and new product ramps.
* Management's tone shifted from describing "standout" and "strong" growth in Q2 to characterizing Q3 as a period of "disciplined execution" and "resilient performance."
* Analysts' focus moved from upside drivers and new product momentum in Q2 to questions about macro impacts, retail softness, and adoption pacing in Q3.
* Strategic focus remains on AI-enabled product expansion, but with increased emphasis on operational efficiency and margin stability as growth moderates.

RISKS AND CONCERNS

* Management identified continued retail sector softness as a headwind, noting, "Q3 revenue was essentially flat on a sequential basis, driven primarily by tougher year-over-year comps as we lapped our strongest quarter of 2024 and further driven by softer retail spend" (CFO Allais).
* Macro uncertainty and tariffs were cited as disruptive factors impacting retail and the broader ad market.
* Analysts raised concerns about the scalability and adoption pace of new products, the durability of macro headwinds, and the competitive landscape as industry peers shift strategies or leave the public market.
* Management is implementing an updated equity incentive plan to reduce annual stock-based compensation cost by 20% and emphasized ongoing cost discipline, AI-driven efficiency, and diversified growth streams as mitigation strategies.

FINAL TAKEAWAY

DoubleVerify's Q3 2025 call highlighted a transition toward AI-powered innovation and diversified revenue streams, amid ongoing macro and retail sector headwinds. Management reiterated a strategy of leveraging automation and new product launches to drive margin expansion and long-term growth, with a clear objective to increase the share of revenue from social, streaming TV, and AI solutions to 50% over the medium term. Operational discipline, customer retention, and a robust balance sheet remain central to navigating near-term challenges and capitalizing on evolving opportunities in digital advertising.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/dv/earnings/transcripts]

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