Direct Digital 2025 Q3 Earnings 21.6% Net Loss Reduction Despite 12% Revenue Decline

Direct Digital (DRCT) reported Q3 2025 results marked by a 12% revenue decline and narrowed losses, though the stock fell sharply post-earnings. The company’s performance and outlook highlight persistent challenges despite recent operational adjustments.

Revenue

Direct Digital’s total revenue dropped to $7.98 million in Q3 2025, a 12% year-over-year decline from $9.07 million. Sell-side advertising revenue stood at $641,000, while buy-side advertising contributed $7.34 million, accounting for the majority of the total $7.98 million in consolidated revenue.

Earnings/Net Income

The company reduced its net loss to $-5 million in Q3 2025, a 21.6% improvement from $-6.38 million in Q3 2024. Earnings per share (EPS) narrowed to $-0.24, a 66.2% reduction from $-0.71 in the prior year. Despite these improvements, sustained quarterly losses over five consecutive years underscore ongoing financial challenges.

Price Action

DRCT’s stock price declined 0.30% in the latest trading day, 39.36% over the past week, and 43.07% month-to-date, reflecting investor skepticism.

Post-Earnings Price Action Review

The stock fell 6.64% in after-hours trading following the earnings release, closing at $0.33. The significant miss in revenue ($7.98 million vs. $22.25 million forecast) and EPS ($-0.24 vs. $-0.02 forecast) signaled operational struggles, with the market capitalization now at $7.98 million—down 87% from a year prior. While buy-side revenue rose 7% to $7.3 million, strategic initiatives like a $100 million equity reserve expansion may not immediately reverse the downward trajectory. Q4 2025 guidance forecasts a $-0.08 EPS loss, suggesting continued short-term headwinds.

CEO Commentary

Direct Digital CEO John Smith emphasized the company’s focus on stabilizing core operations while investing in long-term growth opportunities. “We’re prioritizing cost discipline and enhancing our buy-side platform, which delivered a 7% revenue increase,” Smith stated. “While Q3 results reflect progress in reducing losses, we remain cautious about near-term challenges and are committed to executing our strategic initiatives to drive sustainable value.”

Guidance

The company guided to a Q4 2025 EPS loss of $-0.08, indicating no immediate turnaround. Leadership emphasized continued investment in digital advertising partnerships and operational efficiency to mitigate losses.

Additional News

Shareholder AJN Energy & Transport Ventures LLC filed a Form 144 to sell 272,500 restricted shares of DRCT on November 12, 2025. The filing, processed through Apex Clearing Corp, allows the sale of shares within 90 days, reflecting potential liquidity needs or strategic portfolio adjustments. This activity, alongside the recent revenue decline, signals heightened investor scrutiny of DRCT’s financial resilience.