Direct Digital Holdings, Inc. reported significant declines in financial performance for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Total revenues for Q3 2024 were $9.1 million, an 85% decrease from $59.5 million in Q3 2023. For the nine months, revenues fell 54% to $53.2 million from $116.1 million. The sharp decline in revenue was primarily attributed to a substantial drop in sell-side advertising, which decreased by 96% in Q3 and 63% for the nine months, largely due to a customer pausing its connection with the company.

Gross profit also saw a significant reduction, with Q3 2024 gross profit at $3.5 million, down 70% from $11.8 million in Q3 2023. For the nine-month period, gross profit decreased to $14.4 million from $28.3 million. The company reported a loss from operations of $3.7 million for Q3 2024, compared to an operating income of $4.5 million in Q3 2023. The nine-month operating loss was $8.5 million, down from an operating income of $6.6 million in the prior year.

Net loss for Q3 2024 was $6.4 million, a stark contrast to a net income of $3.4 million in Q3 2023. For the nine months, the net loss totaled $13.3 million, compared to a net income of $3.2 million in the same period last year. The basic net loss per share for Q3 2024 was $(0.71), compared to earnings of $0.09 per share in Q3 2023.

The company’s financial position has also deteriorated, with total assets dropping to $31.3 million as of September 30, 2024, from $70.7 million at the end of 2023. Current liabilities increased to $45.3 million, leading to a stockholders’ deficit of $(15.0 million) compared to $(3.7 million) at the end of 2023. Cash and cash equivalents decreased to $4.1 million from $5.1 million.

In response to liquidity concerns, Direct Digital Holdings implemented cost-saving measures, including staff reductions and a hiring freeze, effective July 1, 2024. The company is also pursuing a capital raising program through an equity reserve facility and has entered into a Share Purchase Agreement with New Circle Principal Investments LLC to purchase up to $20 million of Class A Common Stock.

The company faced additional challenges, including a notification from Nasdaq regarding non-compliance with minimum stockholders' equity requirements and ongoing class action lawsuits related to alleged misleading disclosures. Despite these setbacks, management is actively working to regain compliance and improve financial stability.