Direct Digital Holdings, Inc. reported a significant decline in its financial performance for the fiscal year ended December 31, 2024, with total revenues of $62.3 million, a decrease of 60% from $157.1 million in 2023. The company's sell-side advertising revenue fell by 71% to $35.7 million, while buy-side advertising revenue decreased by 23% to $26.6 million. This downturn was primarily attributed to a pause in service from a major sell-side customer, which occurred while the company addressed allegations stemming from a defamatory article. Although this customer resumed business on May 22, 2024, revenue levels have not yet returned to previous highs.
The company's gross profit also decreased, falling to $17.4 million in 2024 from $37.6 million in the prior year. The gross margin improved slightly to 28% from 24%, reflecting a shift in revenue mix between the sell-side and buy-side segments. Operating expenses were reduced by 23% to $30.6 million, largely due to cost-saving measures implemented in response to the revenue decline, including staff reductions and a hiring freeze. However, the company still reported an operating loss of $13.2 million, compared to a loss of $2.2 million in 2023.
In terms of operational metrics, Direct Digital Holdings processed approximately 1.1 billion average monthly impressions in 2024, a 74% decrease from the previous year. The company served around 168,000 buyers per month, an increase from 115,000 in 2023, indicating a growing customer base despite the overall revenue decline. The company also reported a total of 79 employees as of December 31, 2024, down from previous levels as part of its restructuring efforts.
Looking ahead, Direct Digital Holdings faces substantial challenges, including a significant accumulated deficit of $8.8 million and a cash balance of $1.4 million as of year-end. The company is actively working to regain compliance with Nasdaq's minimum stockholders' equity requirement after receiving a deficiency letter in October 2024. To address liquidity concerns, the company has implemented a plan to reduce expenses and is exploring additional financing options, including a $20 million equity reserve facility with New Circle Principal Investments LLC. However, there is no assurance that these efforts will be successful, and the company has expressed substantial doubt about its ability to continue as a going concern over the next twelve months.
About Direct Digital Holdings, Inc.
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