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DATE
Monday, May 11, 2026 at 11 a.m. ET
CALL PARTICIPANTS
- Chairman and Chief Executive Officer — Mark Walker
- Chief Financial Officer — Diana Diaz
- Investor Relations — Walter Frank
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TAKEAWAYS
- Revenue -- $6.7 million, a decline from $8.2 million due to a $2 million reduction in demand-side platform customer spend, partially offset by an $0.5 million, or 8%, increase from other customers.
- Gross Profit -- $2.3 million, representing 34% of revenue versus last year's $2.4 million, or 29% of revenue.
- Operating Expenses -- $5.5 million, reflecting a 13% decrease from $6.3 million in the prior period.
- Operating Loss -- $3.3 million, improving from an operating loss of $3.9 million.
- Net Loss -- $5.6 million compared to $5.9 million in the previous year.
- Non-GAAP Adjusted EBITDA -- Loss of $2.6 million versus loss of $3.0 million previously.
- Cash and Cash Equivalents -- $800 thousand at quarter-end, up from $700 thousand at December 2025.
- Total Cash Plus Accounts Receivable -- $3.6 million versus $3.9 million as of year-end 2025.
- Reportable Segment Change -- Management reclassified to a single reportable segment, digital advertising, reflecting a shift in operational focus.
- Ignition Plus Launch -- New unified platform for programmatic media introduced, targeting improved efficiency.
- Cost Initiatives -- Stated cost reductions and efficiency measures led to results "in line with our internal expectations and exceeded analyst estimates."
- Strategic Flexibility -- Management reiterated ongoing evaluation of partnership and acquisition opportunities to supplement organic growth.
- Market Focus -- Renewed emphasis on buy-side customers and new enterprise acquisitions as a driver for future growth.
SUMMARY
Management confirmed active consolidation discussions, with Mark Walker stating, "We are actively in that marketplace. We are having active conversations literally every week, and as soon as we feel comfortable enough to announce anything, we plan on doing so." The company reported continued resilience and new business wins in the Destination Marketing Organization (DMO) segment, observing that local and regional travel advertising remains stable. Leaders clarified there has been no noticeable shift in advertiser campaign duration or visibility, though increased client focus on performance marketing and campaign return on investment was noted. Internal deployment of AI tools for campaign optimization is expected to drive incremental efficiency and margin improvements over the coming periods.
- Walker highlighted a two-pronged approach to vertical expansion in 2026, stating the strategy is "organic pushes into those new verticals" alongside openness to "strategic partnerships and inorganic growth."
- Margin trajectory is positioned to benefit from changing business mix and greater campaign management efficiency, with anticipated margin improvement "over the next few quarters."
- Walker underscored that performance-focused client demands are not disruptive and align with established company processes.
INDUSTRY GLOSSARY
- Demand-side platform (DSP): A technology platform enabling advertisers to purchase digital ad inventory programmatically across multiple exchanges.
- Destination Marketing Organization (DMO): Entities that promote travel to specific locations, often partnering with advertising agencies for campaign execution.
- Programmatic media: Automated, data-driven buying and placement of digital advertising through technology platforms.
Full Conference Call Transcript
Operator: Hello, everyone. Thank you for joining us, and welcome to Direct Digital Holdings, Inc. First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. To withdraw your question, press 1 again. I will now hand the conference over to Walter Frank, Investor Relations. Please go ahead.
Walter Frank: Good morning, everyone, and welcome to Direct Digital Holdings, Inc. First Quarter 2026 Earnings Conference Call. On today's call are Direct Digital Holdings, Inc.'s Chairman and Chief Executive Officer, Mark Walker, and Chief Financial Officer, Diana Diaz. Information discussed today is qualified in its entirety by the Form 8-K and accompanying earnings release, which have been filed today by Direct Digital Holdings, Inc. and may be accessed at the SEC's website and the company's website. Today's call is also being webcast, and a replay will be posted to Direct Digital Holdings, Inc.'s Investor Relations website. Immediately following the speakers' presentations, there will be a question and answer session.
Please note that the statements made during the call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. These statements are made on the basis of Direct Digital Holdings, Inc.'s views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks which could cause Direct Digital Holdings, Inc.'s actual results to differ from its historical results and forecasts, including those risks set forth in Direct Digital Holdings, Inc.'s filings with the SEC, and you should refer to those for more information.
This cautionary statement applies to all forward-looking statements made during this call. During this call, Direct Digital Holdings, Inc. will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are available in the earnings release that Direct Digital Holdings, Inc. filed in its Form 8-Ks today. I will now hand the conference over to Mark Walker, Chief Executive Officer. Please go ahead, Mark.
Mark Walker: Thank you, Walter, and thank you to everyone joining our call this morning. I will start by reviewing some of the highlights of our operations and financial results during 2026 before turning the call over to our Chief Financial Officer, Diana Diaz, for a more detailed look at our financial results. We will conclude by opening the call for a brief Q&A. We remain focused on organically growing our sales pipeline by enhancing how we reach and support customers across a broader set of go-to-market channels. Alongside product innovation, initiatives such as Ignition Plus, our sales teams are seeing encouraging engagement through expanded enterprise outreach.
A diversified combination of enterprise sales, inside and outside sales efforts, and new distribution and lead generation channels is broadening our reach, improving sales efficiency, and positioning us to drive more consistent, scalable growth over time. In March, we launched Ignition Plus, a unified, transparent platform for programmatic media built to maximize efficiency. With a more streamlined operating model and a clear focus on our core strengths, we believe we are positioned to thoughtfully evaluate strategic opportunities that could complement our existing platform. While our primary focus remains execution and organic growth, we continually assess potential partnerships or acquisitions that align with our long-term objectives and shareholder value creation.
As always, we sincerely appreciate your support of Direct Digital Holdings, Inc. I will now hand the call over to Diana Diaz, our Chief Financial Officer, who will walk through some of the financial highlights in further detail.
Diana Diaz: Thank you, Mark, and good morning, everyone. I will now provide a review of our first quarter results. Consolidated revenue in the first quarter of 2026 was $6.7 million compared to revenue of $8.2 million in the first quarter of 2025. Although revenue declined due to a decrease in spending by demand-side platform customers of $2 million, we saw an increase in spending by other customers of $500 thousand, or 8% over the prior year.
As Mark stated in his remarks and as we mentioned in our fourth quarter call, we have shifted our focus to driving intentional digital marketing spend with current and future customers historically classified by the company as buy-side customers, as well as new enterprise customers accessing the digital advertising market through our recently launched Ignition Plus. As part of this shift in focus, we have reassessed our reportable segments and determined that we have one reportable segment, digital advertising.
This new focus to streamline operations is expected to enhance the customer experience and better reflects the economics of our current business where revenues reflect primarily contracts for managed advertising campaigns, which may or may not access curated publisher audiences managed by the company's sell-side platform. Gross profit was $2.3 million for the first quarter of 2026, or 34% of revenue, compared with $2.4 million, or 29% of revenue, in the prior year. Operating expenses in the first quarter of 2026 decreased 13% to $5.5 million compared to $6.3 million in the first quarter of last year. Total operating loss for the first quarter was $3.3 million compared with operating loss of $3.9 million in the first quarter of 2025.
Net loss for the first quarter of 2026 was $5.6 million compared to a net loss of $5.9 million in the first quarter of last year. Adjusted EBITDA for the first quarter was a loss of $2.6 million compared with adjusted EBITDA loss of $3.0 million in the first quarter of last year. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $800 thousand compared to $700 thousand as of December 2025. Total cash plus our accounts receivable balance as of 03/31/2026 was $3.6 million compared to $3.9 million at year-end 2025.
Our efficiency and cost reduction initiatives drove operating results that were in line with our internal expectations and exceeded analyst estimates in the quarter, demonstrating the progress we are making as we continue to execute on our strategy and goals. We continue to manage the business with a strong emphasis on capital discipline, liquidity, and cost control as we navigate our next phase of execution. While our focus remains on operating performance and organic progress, we believe it is important to retain flexibility to evaluate strategic opportunities that align with our long-term objectives, provided they meet our financial and risk-return thresholds. Now I would like to turn it back over to Mark for some closing comments.
Mark Walker: Thank you, Diana, and thank you to everyone for joining. We appreciate your interest in Direct Digital Holdings, Inc. and would like to now open the call for questions. Operator, please open the line.
Operator: We will now open the call for questions. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from Daniel Kurnos from Stonix. Your line is now open. Please go ahead.
Daniel Kurnos: Thanks. Good morning. Maybe a couple just fundamental questions. First, Mark, are the DMOs seeing any budgetary pressure from where gas prices are right now? It sounds like local travel is actually pretty healthy, all things considered, but I am curious what you are seeing there. And then last time we talked about some category expansion. Obviously, we are starting to rescale the buy side here and focus on the buy side. Have your thoughts changed at all on the opportunity set or your ability to penetrate new verticals to get to the growth you want to see on the buy side?
Mark Walker: Good question, Daniel, and thanks for it. What we are seeing right now when it comes to the DMO marketplace and local travel is that we have not seen a reduction or any kind of headwinds in that marketplace. As a matter of fact, we are seeing it meet expectations and what we anticipate for the go-forward. So we still are pretty bullish on the DMO marketplace. We are looking at expansions in those markets, and we have been able to win new business in the DMO market space recently, so we are feeling pretty optimistic about it.
What we have seen in the overall marketplace, when there have been some headwinds in the overall macroeconomic environment, is that local and regional travel and tourism actually become very resilient as people cut down on airline travel and opt for driving. That is what we are anticipating to see this year during the vacation season, and so far, it has been holding up. As it relates to your second question about category expansion, we continue to push into those new verticals, and we are starting to see some more success. As we continue to push into those new verticals, we are attaching to, as well as attacking, opportunities.
The way that we are looking at strategically going after new verticals, which is our goal for 2026, is twofold. One, we are looking at organic pushes into those new verticals. Second, we are also open to strategic partnerships and inorganic growth in order to grow and expand in those marketplaces, and we are still holding to that strategy for this year as well.
Daniel Kurnos: If we just take that last point and dive a little bit deeper, obviously there are a lot of assets in similar positions to yours. Somebody has to do something at some point, although PE can hold a bunch of stuff forever and eventually decides to make a move. Why are you the right aggregator? Do you have a facilitator? How are conversations going? Understanding that these are all sensitive processes and things never go as fast as you would like, anything you can share in terms of timing or thought process there?
Mark Walker: In regards to timing, sooner is always better than later. It is never fast enough, especially when you talk about consolidation and strategic inorganic growth. We are actively in that marketplace. We are having active conversations literally every week, and as soon as we feel comfortable enough to announce anything, we plan on doing so. As of right now, as you said, there is a significant amount of activity in the marketplace, and we plan on being a part of it.
Daniel Kurnos: Okay. Thanks, Mark. Good luck.
Mark Walker: Thank you.
Operator: Our next question comes from Michael Kupinski with Noble Capital Markets. Your line is now open. Please go ahead.
Michael Kupinski: Yes, thank you. I have a couple of questions. Have you noticed any difference in advertising behavior? For instance, have advertisers shortened campaign duration or reduced visibility, particularly into future spending? Anything of note there?
Mark Walker: Nothing that has been noticeable as a large change in tactics. We are seeing significantly more interest in campaign performance and performance marketing, where clients want to see a return on investment. However, the way that we have set up our internal processes, we have always had a mind toward metrics. We are just seeing a little bit more focus and some pencil sharpening as it relates to performance, but it is nothing that we have not been dealing with over the last few years and nothing that we cannot manage. That has probably been the biggest turn that we have seen starting at the end of last year into this year, but it has actually worked favorably for us.
Michael Kupinski: Gotcha. And then, you know, obviously the buy-side business had some pretty decent margins. What are the biggest drivers preventing EBITDA margins from returning to prior levels?
Mark Walker: It is really more about the mix. I think what you will also see as it relates to margin growth is that it is going to take a little more time for us to continue to expand those margins, but that has been in our growth trajectory over the next couple of quarters. We think you are going to start seeing a mix change, as well as us working to get more efficient as it relates to our campaign management, which we anticipate will start showing results in margin growth over the next few quarters.
Michael Kupinski: And then how are you seeing increased advertising demand for AI-driven campaign optimization at this point?
Mark Walker: I would say clients are still trying to get a better understanding and dip their toes in the water as it relates to AI, specifically in campaign management. We have internal tools that we leverage and use on a consistent basis that we have seen perform for us as we provide tech-enabled services. We think that is also an area where we are going to get more efficiency and margin optimization out of campaign performance, and we will be passing those savings on to clients, which we think will benefit the entire value chain.
Michael Kupinski: Gotcha. Okay. That is all I have for now. Thank you.
Mark Walker: Alright. Thank you.
Operator: There are no further questions at this time. I will now turn the call back to Mark Walker for closing remarks.
Mark Walker: Alright. Thank you very much for joining the call, and we look forward to speaking to you next quarter. Thank you.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
