HOUSTON - Direct Digital Holdings, Inc. (NASDAQ: DRCT), has received a second delinquency notice from the Nasdaq Stock Market due to the delayed filing of its second-quarter financial report, the company announced Tuesday. The notice, dated August 21, 2024, indicates the company's non-compliance with Nasdaq's Listing Rule 5250(c)(1), which mandates timely submission of periodic financial reports to the U.S. Securities and Exchange Commission (SEC).
Previously, on April 17 and May 21, 2024, Direct Digital Holdings had received notifications from Nasdaq regarding delays in filing its Annual Report for the fiscal year ended December 31, 2023, and its first-quarter report for 2024. The company had submitted a plan to regain compliance, approved by Nasdaq, with a deadline of October 14, 2024, for submitting the overdue reports.
In light of the additional notice, Nasdaq has requested an update to the compliance plan, particularly concerning the filing of the second-quarter report. Direct Digital Holdings intends to provide the updated plan by September 5, 2024. Despite the notices, the company's securities will continue to be listed and traded on the Nasdaq Capital Market under the ticker symbol "DRCT."
Direct Digital Holdings operates through its subsidiaries, including Colossus SSP, Huddled Masses, and Orange 142, offering advanced advertising platforms for both sellers and buyers. The company's sell-side platform, Colossus SSP, provides access to diverse media properties, while Huddled Masses and Orange142 offer programmatic solutions that deliver return on investment for middle-market advertisers across various sectors.
The press release also contained forward-looking statements subject to risks, trends, and uncertainties. These statements are not guarantees of future performance and are based on current assumptions and industry experience. The company has acknowledged the presence of risks and uncertainties that could materially affect its actual operating and financial performance.
The information regarding Direct Digital Holdings' receipt of the additional delinquency notice and its ongoing efforts to regain Nasdaq compliance is based on a press release statement.
In other recent news, Direct Digital Holdings has seen some significant developments. The company reported a 76% increase in total revenue for 2023, hitting $157.1 million, and projects a revenue increase to between $170 million and $190 million for fiscal year 2024. In a strategic move, Direct Digital Holdings appointed BDO USA, P.C., a top global accounting organization, as its new independent registered public accounting firm. This change from the previous auditor, Marcum LLP, is expected to enhance the company's financial reporting.
Furthermore, Direct Digital Holdings has been granted an extension by Nasdaq to meet its financial reporting obligations. The company was initially given a deadline to submit a plan to regain compliance with Nasdaq's Listing Rule, which mandates timely filing of required periodic financial reports. Now, Nasdaq staff has provided the company with an extension to file the overdue reports and regain compliance.
Analysts from Roth/MKM and Benchmark have maintained a Buy rating for the company, despite reducing the price target due to the company's recent fourth-quarter results. These are some of the recent developments in the company.
InvestingPro Insights
As Direct Digital Holdings, Inc. (NASDAQ: DRCT) navigates through its compliance challenges with Nasdaq, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, Direct Digital Holdings has a market capitalization of approximately $45.77 million, with a notable revenue growth of 75.82% over the last twelve months as of Q4 2023. This growth is a key indicator of the company's ability to expand its operations and increase its market reach.
Despite the current compliance issues, the company's stock trades with high price volatility, which could present opportunities for investors with a high-risk tolerance. An InvestingPro Tip also highlights that Direct Digital Holdings is trading at a low revenue valuation multiple, which may suggest the stock is undervalued relative to its revenue generation. This could be of interest to value investors seeking to capitalize on potential market inefficiencies.
InvestingPro users have access to additional insights, with over 10 InvestingPro Tips available, including analysis on the company's profitability and liquidity. For example, Direct Digital Holdings has been profitable over the last twelve months, and its liquid assets exceed short-term obligations, providing a cushion against financial stress.
For investors considering Direct Digital Holdings as part of their portfolio, these metrics and tips can offer a deeper understanding of the company's financial position and market dynamics. Additional InvestingPro Tips can be found on the platform, offering a comprehensive analysis to aid in making informed investment decisions.
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