Direct Digital Q1 Revenue Drops 18% to $6.7M; Gross Margin Hits 34%
Direct Digital reported first quarter revenue of $6.7 million, down 18% from $8.2 million last year, while gross margin rose to 34% from 29%. Operating expenses fell 13% to $5.5 million, narrowing net loss to $5.6 million and reducing adjusted EBITDA loss, with cash reserves of $0.8 million at quarter-end.
1. First Quarter Financial Performance
Direct Digital generated $6.7 million in Q1 revenue, an 18% decrease from $8.2 million in Q1 2025, primarily driven by a $2.0 million reduction in DSP customer spending. Gross profit reached $2.3 million, lifting the gross margin to 34% compared to 29% a year earlier.
2. Margin and Expense Analysis
Operating expenses declined 13% to $5.5 million due to streamlined operations and cost-control initiatives, reducing the operating loss to $3.3 million from $3.9 million in the prior year. Adjusted EBITDA loss improved to $2.6 million from $3.0 million in Q1 2025.
3. Liquidity and Strategic Outlook
The company held $0.8 million in cash and equivalents as of March 31, underscoring a focus on capital discipline. Management plans to maintain flexibility for strategic partnerships or acquisitions that enhance its advertising platform while prioritizing organic growth.