Direct Digital Holdings — Second Quarter 2026 Earnings Summary

Financial Performance

• Q2 2026 revenue was $7.8 million, a 23% decrease from $10.1 million in Q2 2025; excluding $2.5 million in DSP customer revenue, revenue grew 3% year-over-year.
• Six months ended June 30, 2026 revenue was $14.5 million, a 21% decrease from $18.3 million in the same period in 2025; excluding DSP customer revenue, revenue grew 5% year-over-year.
• Q2 2026 gross profit was $2.7 million (34% margin), compared to $3.6 million (35% margin) in Q2 2025.
• Six months ended June 30, 2026 gross profit was $4.9 million (34% margin), compared to $6.0 million (33% margin) in the prior year period.
• Q2 2026 operating expenses were $5.6 million, a 7% decrease from $6.0 million in Q2 2025.
• Six months ended June 30, 2026 operating expenses were $11.1 million, a 10% decrease from $12.3 million in the prior year period.
• Q2 2026 operating loss was $2.9 million, compared to $2.4 million in Q2 2025.
• Six months ended June 30, 2026 operating loss was $6.2 million, compared to $6.4 million in the prior year period.
• Q2 2026 net loss was $3.6 million, compared to $4.2 million in Q2 2025.
• Six months ended June 30, 2026 net loss was $9.2 million, compared to $10.1 million in the prior year period.
• Q2 2026 Adjusted EBITDA loss was $2.3 million, compared to $1.5 million in Q2 2025.
• Six months ended June 30, 2026 Adjusted EBITDA loss was $4.9 million, compared to $4.5 million in the prior year period.
• Cash and cash equivalents were $0.5 million as of June 30, 2026, down from $0.7 million as of December 31, 2025.
• Total current liabilities increased to $32.1 million as of June 30, 2026, from $26.4 million as of December 31, 2025.
• Current maturities of long-term debt related to a party increased to $17.3 million as of June 30, 2026, from $12.0 million as of December 31, 2025.
• Deferred revenue increased to $0.8 million as of June 30, 2026, from $0.5 million as of December 31, 2025.
• Net cash used in operating activities for the six months ended June 30, 2026 was $1.9 million, compared to $5.4 million in the prior year period.

Guidance and Future Outlook

• Management expects to capitalize on future opportunities while maintaining a prudent approach to capital allocation.
• The Company anticipates that strategic growth initiatives will expand its addressable market.
• Management is focused on strengthening operating performance and managing liquidity.

Business Segments and Product Lines

• Revenue decline in Q2 2026 was driven primarily by a $2.5 million decrease in spending by demand side platform (DSP) customers.
• Revenue decline for the six months ended June 30, 2026 was driven primarily by a $4.5 million decrease in spending by DSP customers.
• The Company reports strong renewal rates for non-DSP customers.
• Management notes strong customer and prospect interest in AI search and generative engine optimization (GEO) offerings.
• Management notes strong interest in AI support and web technology services.
• The Company is operating with a streamlined cost structure and focus on customer success.

Market and Competitive Landscape

• The Company is broadening customer relationships and building a diversified pipeline.
• The Company is evaluating strategic partnerships and other opportunities to complement its platform.

Risks and Challenges

• As of June 30, 2026, the Company was not in compliance with certain financial covenants under its credit facility.
• Management is working with its lender to obtain a waiver of the covenant noncompliance.
• The press release cites substantial doubt about the ability to continue as a going concern, which may hinder the ability to obtain future financing.
• Risks include the inability to secure additional financing to meet capital needs and the potential failure to maintain compliance with Nasdaq Capital Market listing standards.
• Risks include high customer concentration, non-payment by clients, and potential advertising fraud.
• Risks include restrictions on third-party cookies, mobile device IDs, or other tracking technologies.
• Risks include data privacy and security concerns, operational issues with the platform, and the difficulty of integrating future acquisitions.

Management Commentary and Tone

• Mark D. Walker, Chairman and CEO, stated that progress in the core business reinforces the effectiveness of the growth strategy.
• Walker noted that excluding DSP customers, revenue growth reflects strong renewal rates and positions the Company for sustainable growth.
• Keith Smith, President, commented that deliberate steps to streamline operations have created a stronger foundation while retaining flexibility for strategic partnerships.
• Smith emphasized that priority remains on disciplined execution, customer success, and long-term growth.
• Diana Diaz, CFO, stated the Company continues to manage with financial discipline while supporting investments that drive sustainable growth.

Other Key Points

• The Company was not in compliance with certain financial covenants under its credit facility as of June 30, 2026.
• Non-cash financing activities for the six months ended June 30, 2026 included a reclassification of an exit fee from accrued liabilities to debt ($3.6 million) and the settlement of accounts payable through the issuance of common stock ($2.0 million).
• Accrued dividends totaled $1.2 million as of June 30, 2026.
• The Company issued Class A Common Stock for proceeds of $1.2 million during the six months ended June 30, 2026.
• A conference call to discuss results was scheduled for August 12, 2026, at 5:00 p.m. Eastern Time.