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- **Buy-side growth**: 7% Q3 revenue increase to $7.3M, driven by new verticals and performance-based clients.
- **AI-driven efficiency**: 40% feature growth YoY, $100k+ annual savings, and 30% cost reduction for clients via integrated solutions.
- **Financial restructuring**: $35M debt-to-equity conversions, 25% YoY expense reduction, and 2026 cash flow positivity target.
- **Partnership expansion**: ReachTV partnership enhances travel advertising reach and data targeting.

**【CEO Summary Section】**
- Buy-side revenue increased 7% to $7.3 million, driven by new verticals and larger, performance-based clients.
- Launched a strategic partnership with ReachTV to integrate data-driven travel advertising, enhancing buy-side inventory and targeting capabilities.
- Sell-side revenue declined to $600,000 due to lower inventory, but AI-driven optimizations reduced costs and improved efficiency, with AI modules cutting project timelines from months to weeks.
- Achieved $5.4 million in year-to-date operating expense savings (20% reduction) and expects 2026 to be a cash flow positive year.

**【CFO Financial Commentary】**
- Q3 2025 consolidated revenue: $8 million (down 12% YoY), with buy-side at 91% of total revenue.
- Gross margin: 28% (down from 39% YoY) due to sell-side underperformance.
- Operating expenses: $6.1 million (25% YoY decline), driven by cost-cutting initiatives.
- Net loss: $5 million ($0.24 per share), narrower than Q3 2024's $6.4 million loss.
- Cash balance: $900,000, with $4.5 million in cash and receivables post-Q3.
- Completed $35 million debt-to-equity conversions, improving financial flexibility.

**【Q&A Key Highlights】**
- **Sell-side challenges**: Lower inventory and DSP prioritization of OpenPath, but AI-driven optimizations reduced non-performing traffic costs.
- **Platform strategy**: Integrated buy-sell solutions reduce client costs by 30%, with alpha testing generating revenue and positive feedback.
- **Buy-side expansion**: Focused on larger clients in new verticals (e.g., travel, lifestyle) for stability and higher margins.
- **AI impact**: 40% feature growth YoY, $100k+ annual savings via automation, and faster project delivery (weeks vs. months).
- **Financing**: Expanded $100 million equity line for strategic growth and liquidity.

Direct Digital Holdings, Inc. (DRCT) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

DRCT

DRCT fundamentals

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