Direct Digital Holdings (DRCT) investor relations material

Executive summary

• Revenue for Q1 2026 was $6.7 million, down 18% year-over-year, mainly due to lower demand-side platform customer spending and loss of certain clients, partially offset by growth in new verticals.

• Gross profit margin improved to 34% from 29% in Q1 2025 despite lower revenue, reflecting improved cost management.

• Net loss for Q1 2026 was $5.6 million, a 6% improvement from Q1 2025, driven by cost reductions and lower interest expense.

• The company shifted to a single reportable segment focused on consolidated digital advertising operations, streamlining its business model and improving customer experience.

• Significant disruption from customer pauses, ongoing litigation, and reputational risks impacted business volumes and financial results.

Financial highlights

• Operating expenses decreased 13% to $5.5 million, with compensation and benefits down 18% and G&A down 6%.

• Operating loss narrowed to $3.3 million from $3.9 million year-over-year.

• Adjusted EBITDA loss improved to $2.6 million from $3.0 million year-over-year.

• Cash and cash equivalents at quarter-end were $0.8 million, up from $0.7 million at December 2025; total cash plus receivables was $3.6 million.

• Net cash used in operating activities was $1.1 million for Q1 2026, compared to $2.7 million in Q1 2025.

Outlook and guidance

• Management is focused on driving digital marketing spend with existing and new enterprise customers, leveraging Ignition+ for growth and a return to profitability.

• Expects margin growth over the next few quarters as mix shifts and campaign management efficiency improves.

• Plans to pursue both organic and inorganic growth, including potential partnerships and acquisitions.

• There is substantial doubt about the company's ability to continue as a going concern over the next twelve months.