Direct Digital Holdings, a player in the digital advertising space, has seen its stock price surge following a robust third-quarter earnings report that outstripped analysts' expectations. The company reported on Thursday that its Q3 earnings reached $3.4 million, or 23 cents per share, significantly surpassing the FactSet forecast of $800,000 or 5 cents per share. This performance is attributed to the early benefits from investments in their technology stack and advertising platform, as well as improvements in their operational structure.
On Friday, buoyed by the positive earnings report, Direct Digital's stock experienced a dramatic 55% increase, closing the trading session at a high. It was today trading 29% higher at $5.19. Over the past year, this marks a more than 45% rise in the company's stock value. In response to this surge and the strong financials, Benchmark has raised its price target for Direct Digital from $12 to $15 while maintaining a 'Buy' rating.
The company's third-quarter revenue was also a highlight, coming in at $59.5 million—a substantial jump from the $26 million reported in the same period last year and well above the expected $34.5 million. This impressive revenue growth prompted Direct Digital to update its fiscal 2023 revenue guidance to between $170 million and $190 million, up from the previous estimate of $125 million to $130 million. This new guidance notably exceeds analysts' projections of $163 million.
Looking ahead, Direct Digital anticipates that the full impact of its strategic investments will materialize by 2024, suggesting continued growth potential for the company and its stakeholders.
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