Digital media measurement and analytics provider DoubleVerify (NYSE:DV) reported results ahead of analyst expectations in the Q4 FY2021 quarter, with revenue up 34.1% year on year to $105.5 million. The company expects that next quarter's revenue would be around $90 million, which is the midpoint of the guidance range. That was in roughly line with analyst expectations. DoubleVerify made a GAAP profit of $28.3 million, improving on its profit of $8.13 million, in the same quarter last year.
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DoubleVerify (DV) Q4 FY2021 Highlights:
- Revenue: $105.5 million vs analyst estimates of $100.9 million (4.54% beat)
- EPS (GAAP): $0.18
- Revenue guidance for Q1 2022 is $90 million at the midpoint, above analyst estimates of $89.2 million
- Management's revenue guidance for upcoming financial year 2022 is $433 million at the midpoint, in line with analyst expectations and predicting 30.1% growth (vs 36.6% in FY2021)
- Free cash flow of $20.4 million, up 43.5% from previous quarter
- Gross Margin (GAAP): 82.5%, down from 85% same quarter last year
“2021 was a year of exceptionally strong execution and performance,” said Mark Zagorski, CEO of DoubleVerify.
When Oren Netzer saw a digital ad for US-based Target while sitting in his Tel Aviv apartment, he knew there was an unsolved problem, so he started DoubleVerify (NYSE: DV), a provider of advertising solutions to businesses that helps with ad verification, fraud prevention, and brand safety.
The digital advertising market is large, growing and becoming more diverse, both in terms of audiences and media. This as a result drives a growing need for a software that enables advertisers to use data to automate and optimize ad placements.
As you can see below, DoubleVerify's revenue growth has been very strong over the last year, growing from quarterly revenue of $78.6 million, to $105.5 million.
And unsurprisingly, this was another great quarter for DoubleVerify with revenue up 34.1% year on year. On top of that, revenue increased $22.4 million quarter on quarter, a very strong improvement on the $6.57 million increase in Q3 2021, and a sign of acceleration of growth.
Guidance for the next quarter indicates DoubleVerify is expecting revenue to grow 33.1% year on year to $90 million, in line with the 31.9% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $433 million at the midpoint, growing 30.1% compared to 36.6% increase in FY2021.
There are others doing even better than DoubleVerify. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.
What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. DoubleVerify's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 82.5% in Q4.
That means that for every $1 in revenue the company had $0.82 left to spend on developing new products, marketing & sales and the general administrative overhead. Despite it going down over the last year, this is still a great gross margin, that allows companies like DoubleVerify to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.
Key Takeaways from DoubleVerify's Q4 Results
With a market capitalization of $3.75 billion DoubleVerify is among smaller companies, but its more than $221.5 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.
It was good to see DoubleVerify deliver strong revenue growth this quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is flat on the results and currently trades at $23.62 per share.
Should you invest in DoubleVerify right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.
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The author has no position in any of the stocks mentioned.