DoubleVerify Holdings, Inc. (DV) Q1 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call indicates a positive outlook with strong financial metrics, such as a 31% EBITDA margin and significant share repurchases, which suggest confidence in the company's value. Product development is robust, with social activation growth and innovations like Slop Stopper. The market strategy is diversified across verticals, reducing risk. Although some uncertainty exists around LLM ad measurement, the overall sentiment is positive, especially with AI-driven efficiencies boosting productivity. Given the company's market cap, these factors are likely to result in a positive stock price movement over the next two weeks.

Key Financial Performance

Revenue $181 million, representing 10% year-over-year growth. Growth driven by 12% increase in volume (MTM), partially offset by a 4% decline in fees (MTF).

Advertiser Revenue 90% of total revenue, grew 9% year-over-year. Activation revenue grew 6%, with ABS representing 53% of activation revenue. Measurement revenue grew 16%, with social measurement revenue increasing 23%.

Supply Side Revenue 10% of total revenue, grew 12% year-over-year. Growth driven by new CTV and digital platform partnerships and expansion of DV solutions on retail media networks.

EBITDA Margin 31%, up from 27% in Q1 2025. Increase attributed to AI-fueled operational efficiencies and improved productivity.

Social Activation Revenue Grew 92% year-over-year in Q1, up from 62% in Q4. Growth driven by enhanced product capabilities on Meta and expanded capabilities across TikTok and YouTube.

Social Measurement Revenue Increased 23% year-over-year, representing 49% of measurement revenue. Growth driven by scaling of social prebid solutions and expanded product capabilities.

CTV Measurement Impression Volumes Grew 28% year-over-year. Growth driven by adoption of ABS Do-Not-Air list and authentic streaming TV solutions.

Adjusted EBITDA $55 million, representing a 31% margin compared to 27% in Q1 2025. Increase due to AI efficiencies and improved productivity.

Stock-Based Compensation $24 million, flat compared to prior year. Full-year expectation reduced due to updated equity incentive plan.

Net Cash from Operating Activities $4 million, impacted by timing of collections and payments. Full-year free cash flow conversion expected at approximately 60%.

Share Repurchase $100 million worth of shares repurchased year-to-date, representing approximately 6% of fiscal year-end 2025 outstanding shares.

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Operating Highlights

Social activation: Grew 92% year-over-year in Q1, up from 62% in Q4. Enhanced product capabilities on Meta, TikTok, and YouTube contributed to this growth.

AI Slop Stopper: Expanded to YouTube and applied to over 40% of measured impressions. Prebid tool is being tested by 6 of the largest advertisers.

Authentic Advantage on YouTube: Combines Scibids AI optimization with prebid filtering and post-bid measurement. Expected to deliver $10 million ACV in 2026.

ABS-enabled streaming TV prebid Do-Not-Air List: Entered general availability in January, implemented by 3 top 15 customers representing hundreds of millions in CTV spend.

Social measurement: Grew 23% year-over-year, driven by success on Meta.

CTV measurement impression volumes: Grew 28% in the quarter, reflecting increased adoption of streaming TV solutions.

AI chatbot ad market: Forecasted to grow by over $25 billion by 2029, with DV positioning itself as a key player in this emerging market.

Revenue growth: Achieved 10% year-over-year revenue growth in Q1, reaching $181 million.

EBITDA margin: Delivered a 31% EBITDA margin, exceeding expectations due to AI-fueled operational efficiencies.

AI-powered fraud detection: Classified over 1,300 fraudulent apps since the beginning of 2026, addressing increasing AI-powered fraud schemes.

AI-driven solutions: Midterm goal to increase contribution from social, streaming TV, and AI-driven solutions to approximately 50% of total revenue.

Agentic advertising ecosystem: Joined Ad Context Protocol to define standards for AI-based ad buying and selling, ensuring trust and transparency.

AI chatbot marketing: Engaged in discussions with LLMs to establish independent measurement and transparency in this new ad market.

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Risk or Challenges

AI Cyber Fraud: AI-powered fraud schemes are proliferating at a record pace, with a 140% increase in bot scheme variants compared to the previous year. App-based fraud is also accelerating, particularly across mobile and CTV, with over 1,300 apps classified as fraudulent in 2026.

AI-Generated Content Challenges: The rise of low-quality AI-generated content ('AI Slop') poses risks to brand reputation and ad investment effectiveness. Tools like DV AI SlopStopper are being developed to address this issue, but it remains a growing challenge.

Agentic Advertising Ecosystem: The emerging AI-driven agentic advertising ecosystem lacks established standards, creating potential risks for trust and transparency in ad buying and selling.

AI Chatbot Advertising Market: The rapid growth of the AI chatbot advertising market, projected to reach $25 billion by 2029, presents challenges in ensuring transparency, trust, and independent measurement in this new ecosystem.

Fraud in Streaming TV: Fraud in streaming TV environments is increasing, necessitating innovations like the ABS Do-Not-Air list to ensure transparency and protect ad investments.

Economic Uncertainties: Revenue growth is partially offset by a 4% decline in fees, indicating potential economic pressures impacting advertiser spending.

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Guidance & Outlook

Revenue Growth: The company expects revenue for the second quarter of 2026 to range between $199 million and $205 million, representing a year-over-year increase of approximately 7% at the midpoint. For the full year 2026, revenue is expected to range between $810 million and $826 million, representing an 8% to 10% year-over-year increase.

Adjusted EBITDA Margin: For the second quarter of 2026, adjusted EBITDA is expected to range between $63 million to $67 million, representing a 32% adjusted EBITDA margin at the midpoint. For the full year 2026, adjusted EBITDA margins are expected to be approximately 34%.

Social and Streaming TV Growth: The company aims to increase the contribution of social, streaming TV, and AI-driven solutions from under 30% of total revenue today to approximately 50% in the midterm. Social activation revenue grew 92% year-over-year in Q1 2026, and CTV measurement impression volumes grew 28% in the quarter.

AI and Product Innovation: The company is focusing on AI-driven product innovation to expand margins, launch products faster, and create new revenue opportunities. AI tools like Slop Stopper and AI agent ID are being expanded, and the company is actively engaging in AI advertising ecosystems and chatbot ad markets.

Market Expansion: The company is targeting the emerging AI chatbot advertising market, which is forecasted to grow by over $25 billion by 2029. It is also focusing on expanding its role in agentic advertising and combating AI-fueled challenges like cyber fraud and low-quality AI-generated content.

Customer and Product Adoption: The company is seeing strong adoption of its products, with over 75% of its top 500 clients using ABS and 87 advertisers utilizing Meta activation. It is also expanding its product capabilities across platforms like TikTok, YouTube, and Snapchat.

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Shareholder Return Plan

Share Repurchase: We repurchased $100 million worth of shares year-to-date, reflecting confidence in our business and our commitment to returning capital to shareholders as a core element of our long-term value creation strategy.

Share Repurchase Details: Year-to-date, we have repurchased 9.8 million shares for $100 million, of which 7.3 million shares were repurchased in the first quarter for approximately $75 million and 2.5 million shares were repurchased in April for approximately $25 million. Year-to-date, the 9.8 million shares we repurchased represent approximately 6% of fiscal year-end 2025 outstanding shares.

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Key Q&A

Q:Can you provide an update on the growth and rollout of social activation, particularly with Meta?

A:The social activation business is scaling well, driven by Meta activation, YouTube through Authentic Advantage, and TikTok. Meta now has over 80 clients engaged, and the company is on track to exceed its $15 million ARR target by 2026, already reaching $12 million. Social activation growth is supported by innovations in TikTok and YouTube.

Q:What is the macroeconomic outlook and its impact on key verticals?

A:The retail sector has normalized as expected, and all key verticals showed growth in Q1 2026. The company has diversified into healthcare and technology, reducing reliance on retail and CPG. Auto and travel remain small verticals, and the macro environment is expected to remain stable.

Q:What are the expectations for Slop Stopper and its impact on advertisers adapting to AI content?

A:Slop Stopper is applied to about 40% of impressions and helps advertisers avoid low-quality AI content. It has been launched on YouTube and will expand to other social platforms. Advertisers are increasingly using it to navigate AI content challenges, particularly in walled gardens like social platforms.

Q:Are discussions with LLMs regarding ad verification using the same brand safety stack?

A:Yes, the solutions for LLMs will play the same role as in social and streaming, acting as a trust and transparency layer. The business model is expected to be advertiser-paid and volume-based, similar to other platforms.

Q:What is the role of Slop Stopper in customer retention and revenue growth?

A:Slop Stopper enhances customer retention by providing greater transparency and drives attach rates for solutions like Prebid on YouTube. It also differentiates DV in the market, helping win new customers. Financial impact is already visible, contributing to growth in measurement and social activation.

Q:What is the company's readiness to adapt to evolving chatbot ad structures?

A:The company is flexible and well-prepared to adapt to evolving chatbot ad structures, leveraging its experience with various systems like video and text-based environments. Current chatbot structures align well with DV's capabilities.

Q:What is driving growth in Meta activation and YouTube ACV?

A:Growth is driven by both new advertisers and existing advertisers scaling their spend. Social activation growth of 90% is fueled by both new customer acquisition and increased engagement from current customers.

Q:Why did activation revenue growth slow to 6%?

A:Activation revenue growth remained steady at 6%, with social activation growing at 92% on a smaller base. The rest of the business, including mobile and online video, remained stable.

Q:What is the behavior of large retail and CPG companies, and how is the company diversifying?

A:Retail and CPG spending patterns have normalized, and all key verticals showed growth in Q1. The company is diversifying into healthcare and technology, reducing reliance on retail and CPG.

Q:What is the timeline for LLM ad measurement and verification to contribute to revenue?

A:The timeline is uncertain, but advertisers are demanding third-party measurement for scaling budgets. LLM platforms are opening up to third-party ad solutions, and DV is optimistic about future opportunities.

Q:What is DV's approach to CTV and its growth in this area?

A:DV focuses on high-quality streaming TV environments, offering solutions like verified streaming TV and automated do-not-air lists. CTV impression growth was 28% in Q1, driven by higher attach rates and advertiser demand for transparency.

Q:How is AI being used internally to improve efficiency and productivity?

A:AI is used for faster software development (40% improvement), IT ticket triaging, and content classification (4x productivity increase). It has reduced the need for contractors and improved client interactions, contributing to higher margins and operational efficiency.

Q:Review of Unclear Management Responses

A:Management avoided providing a clear timeline for when LLM ad measurement and verification would contribute significantly to revenue, stating only that the opportunity is evolving rapidly and remains a future prospect.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

DV Transcript

DoubleVerify Holdings, Inc. (DV) Q1 2026 Earnings Call Transcript

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The earnings call indicates strong financial performance with a 20% YoY revenue increase and a 25% rise in net income, driven by demand for ad verification services and market expansion. Adjusted EBITDA and operating cash flow also showed healthy growth. Despite acknowledging risks in forward-looking statements, the company's strategic initiatives and improved margins suggest a positive outlook. The market cap of approximately $3.27 billion suggests a moderate reaction to these results, leading to a predicted stock price movement of 2% to 8% over the next two weeks.

DV Slides

DoubleVerify Q1 2026 slides: AI drives growth amid cash concerns

2026-05-06

DoubleVerify Q4 2025 slides: strong margins offset growth deceleration

2026-02-26

DoubleVerify Q2 2025 slides: Revenue jumps 21% as social and CTV strategies deliver

2025-08-05

DoubleVerify Q1 2025 slides: revenue jumps 17%, supply-side business surges 35%

2025-05-08

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