DoubleVerify Stock Delivering Profitability & Double-Digit Revenue Growth

Digital Transformation to Power DV Stock

Stocks staged their best one-day performance since 2020 on November 10. On that day, some technology stocks jumped by well over 10%. This reflects what could happen when the risk-on trade resurfaces and holds.

The previous selling of technology stocks has resulted in opportunities. DoubleVerify Holdings Inc (NYSE:DV), a developer of digital technology solutions, saw its share price jump by 13.3% on November 10. DoubleVerify stock is down by 21% this year, which is better than the 28% drop by the Nasdaq.

DoubleVerify provides a cloud-based platform for digital media data measurement and analytics. Hundreds of Fortune 500 advertisers use the company’s solutions to analyze and maximize their returns from digital advertising. DoubleVerify has a business footprint in the U.S., Europe, and Asia. (Source: “FORM-10K,” DoubleVerify Holdings Inc, March 8, 2022.)

Back in June 2021, DV stock was trading at $48.42. As of this writing, it’s down by 46% from there to a level where I see the stock as a contrarian opportunity.

Advertisement

Chart courtesy of StockCharts.com

DoubleVerify Holdings Inc Has Strong Fundamentals

DoubleVerify’s four-year revenue picture shows growth of 220% from $104.3 million in 2018 to a record $332.7 million in 2021. This included three straight years of double-digit revenue growth, generating a compound annual growth rate (CAGR) of 47.4%.

Things continue to look bright for the company. For the 12 months to September, DoubleVerify Holdings Inc recorded revenues of $395.2 million.

Analysts estimate that the company’s revenues will rise by 35.8% to $452.0 million in 2022, followed by 23.8% to $559.6 million in 2023. (Source: “DoubleVerify Holdings, Inc. (DV),” Yahoo! Finance, last accessed November 17, 2022.)

Fiscal YearRevenues (Millions)Growth
2018$104.3N/A
2019$182.775.1%
2020$243.933.5%
2021$333.736.4%

(Source: “DoubleVerify Holdings Inc.,” MarketWatch, last accessed November 17, 2022.)

DoubleVerify has also managed to deliver positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in its past four fiscal years.

Fiscal YearEBITDA (Millions)Growth
2018$24.2N/A
2019$62.5158.5%
2020$46.1-26.3%
2021$83.480.7%

(Source: Ibid.)

The company has also been reporting generally accepted accounting principles (GAAP) diluted earnings per share (EPS).

Analysts estimate that DoubleVerify Holdings Inc will ramp up its earnings to $0.27 per share in 2022 and $0.38 per share in 2023. (Source: Yahoo! Finance, op. cit.)

Fiscal YearGAAP Diluted EPSGrowth
2018$0.02N/A
2019$0.15633.0%
2020$0.13-12.3%
2021$0.1838.4%

(Source: MarketWatch, op. cit.)

DoubleVerify Holdings Inc has also been churning out positive free cash flow (FCF). In 2021, its FCF came in at a four-year high of $73.4 million, up by 573.7% compared to 2020.

Fiscal YearFCF (Millions)Growth
2018$10.4N/A
2019$23.5125.5%
2020$10.9-53.7%
2021$73.4573.7%

(Source: MarketWatch, op. cit.)

Furthermore, DoubleVerify Holdings Inc has solid working capital, manageable debt of $84.4 million, and cash of $242.7 million. (Source: Yahoo! Finance, op. cit.)

Analyst Take

Institutional ownership of DoubleVerify stock is significant, with 222 institutions holding a 99.9% stake in the company’s outstanding shares. (Source: Yahoo! Finance, op. cit.)

My view is that DoubleVerify Holdings Inc should benefit from the ongoing shift to digital advertising. The demand for the company’s data solutions will likely rise, which could lead the value of DV stock to also rise.