Digital Media Solutions, Inc. Announces Q1 2024 Financial Results

• First-quarter net revenue of $70.7 million
• First-quarter gross margin of 20.2% and Variable Marketing Margin (VMM) of 23.7%

DMS serves over 315 scaled enterprise customers and approximately 4,550 small and medium-sized businesses across the Property and Casualty (P&C) Insurance, Health Insurance, Ecommerce, Career and Education and Consumer Finance verticals with digital performance marketing solutions.

“Our first quarter results again reflected improving conditions in the Property and Casualty vertical, building on the trend we saw at the end of last year. We are optimistic that P&C has hit an inflection point in its recovery, which should help drive growth for DMS in 2024. We are continuing to deliver on our operational initiatives and – with a strong foundation and blue-chip client base – we are poised to capitalize on the opportunities ahead as P&C and other markets rebound,” said Joe Marinucci, CEO of DMS.

“Our Marketplace Solutions segment revenue grew in the first quarter compared to the same quarter in prior year, reflecting the early recovery in our P&C vertical and the meaningful growth opportunities ahead for DMS. Additionally, we decreased our operating expenses by approximately 20% and meaningfully improved margins in our Technology Solutions vertical, underscoring our commitment to streamline operations and enhance efficiency. As we move ahead, we remain focused on operating efficiently and continuing to grow our sales pipeline to deliver better business results for more clients,” added Vanessa Guzmán-Clark, CFO of DMS.

First Quarter 2024 Performance:

(All comparisons are relative to the first quarter of 2023)

• Net revenue of $70.7 million, down 21.7%
• Gross profit margin (defined as the percentage of net revenue less cost of revenue) of 20.2%, a decrease of 4.5 PPTS
• Variable Marketing Margin of 23.7%, a decrease of 6.1 PPTS
• Operating expenses (comprised of Salaries and related costs, General and administrative expenses, Depreciation and amortization, Acquisition costs, and Change in fair value of contingent liabilities), totaled $26.1 million, a decrease of $6.5 million
• Net loss of $26.3 million compared to Net loss of $20.7 million
• Adjusted EBITDA of $(4.3) million compared to $3.4 million
• EPS of $(5.96) compared to $(4.67); and adjusted EPS of $(3.50) compared to $(0.78)
• Ended the quarter with $14.2 million in cash and cash equivalents, and total debt of $301.9 million

First Quarter 2024 Segment Performance (including intercompany revenue):

(All comparisons are relative to the first quarter of 2023)

• Marketplace Solutions generated revenue of $38.8 million, up 4.1%. Gross margin was 18.2%, down from 21.3%.
• Brand Direct Solutions generated revenue of $42.0 million, down 24.1%. Gross margin was 13.6%, down from 22.7%.
• Technology Solutions generated revenue of $1.8 million, down 23.4%. Gross margin was 85.6%, up from 74.2%.

Variable Marketing Margin (VMM) and Adjusted EBITDA, as well as certain other measures in this release, are non-GAAP financial measures. See "Non-GAAP Financial Measures" and “Variable Marketing Margin” for how we define these measures, together with the financial tables that accompany this release for reconciliations of these measures to the closest comparable GAAP measures.

Forward-Looking Statements:

This press release includes forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “assume,” “likely,” “predicts,” “potential,” “continue,” and similar expressions. These forward-looking statements include, without limitation, our expectations with respect to our future performance and ability to implement our strategy, and are based on the beliefs and expectations of our management team from the information available at the time such statements are made. These forward-looking statements involve a number of judgments, risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside our control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) financial and business performance, including our business metrics and potential liquidity; (2) changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans, including related to the strategic review process as required under the agreements governing our Credit Facility (as defined below) and the potential sale of all or part of our business; (3) ability to attain the expected financial benefits from the ClickDealer transaction; (4) any impacts to the ClickDealer business from our acquisition thereof; (5) ability to successfully recover should DMS experience a disaster or other business continuity problem from a hurricane, flood, earthquake, terrorist attack, pandemic, security breach, cyber-attack, data breach, power loss, telecommunications failure or other natural or man-made event; (6) ability to manage our international expansion as a result of the ClickDealer acquisition, including operations in the Ukraine; (7) the Company’s exposure to potential criminal sanctions or civil penalties for noncompliance with foreign and U.S. laws and regulations that are applicable in the domestic and international jurisdictions in which it operates, including sanctions laws relating to countries such as Iran, Russia, Sudan, Syria and Venezuela, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010, and local laws prohibiting corrupt payments to government officials, as well as import and export restrictions; (8) changes in client demand for our services and our ability to adapt to such changes; (9) the entry of new competitors in the market; (10) the ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions; (11) the ability to maintain, grow and protect the data DMS obtains from consumers and advertisers, and to ensure compliance with data privacy regulations in newly entered markets; (12) the performance of DMS’s technology infrastructure; (13) ability to protect DMS’s intellectual property rights; (14) ability to successfully source, complete and integrate acquisitions; (15) ability to improve and maintain adequate internal controls over financial and management systems, and remediate material weaknesses therein, including relating to revenue and the impairment of goodwill and intangible assets; (16) the continuously evolving laws and regulations applicable to our business in the United States and around the world and our ability to maintain compliance therewith; (17) our substantial levels of indebtedness; (18) our ability to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows, including our ability to service our debt obligations under our senior secured credit facility, entered into on May 25, 2021 (as amended from time to time, the “Credit Facility”); (19) our ability to comply with the covenants in our Credit Facility and our obligations to the holders of our Series A convertible redeemable Preferred Stock and Series B convertible redeemable Preferred Stock; (20) volatility in the trading price of our common stock and our public warrants and fluctuations in value of our private placement warrants and preferred warrants; and (21) other risks and uncertainties indicated from time to time in DMS’s filings with the U.S. Securities and Exchange Commission (“SEC”), including those under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year 2023 (as may be amended) and in DMS’s subsequent filing with the SEC.

There may be additional risks that we consider immaterial or which are unknown, and it is not possible to predict or identify all such risks.

We caution that the foregoing list of factors is not exclusive. In addition, we caution readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. For the avoidance of doubt, there can be no assurance that the strategic review process will result in any strategic alternative being consummated (including the sale of all or part of the Company), or any assurance as to the review process’s outcome, timing or ultimate potential value to our equity holders and other stakeholders. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. These forward-looking statements are based on information available as of the date hereof, and current expectations, forecasts and assumptions. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or similar transactions, including related to our strategic review process.

About DMS:

Digital Media Solutions, Inc. (DMS) drives better business results by connecting high-intent consumers with advertisers across our core verticals; Insurance (auto, home, health), Education and Consumer/E-Commerce. Our innovative solutions help consumers shop and save, while helping our advertisers achieve above average return on ad spend. Learn more at https://digitalmediasolutions.com. 

Investor Relations
investors@dmsgroup.com 

For inquiries related to media, contact marketing@dmsgroup.com

For the full press release, please visit https://investors.digitalmediasolutions.com/news/default.aspx