CLEARWATER, Fla.--(BUSINESS WIRE)--Digital Media Solutions, Inc. (NYSE: DMS), a leading provider of technology and digital performance advertising solutions leveraging innovative, performance-driven brand-direct and marketplace solutions to connect consumers and advertisers, today announced record financial results for the fourth quarter and full year that ended December 31, 2020.
“2020 was a key year of growth for us,” said Joe Marinucci, co-founder and Chief Executive Officer of DMS. “As we look at the four quarters of 2020, we demonstrated the ability to continue to grow in each of the first three quarters, with that growth accelerating in the fourth quarter. We were able to execute on all key initiatives during the fourth quarter, which resulted in record revenue, profit and EBITDA.
“The current quarter has started off strongly, with insurance again being a key driver. We are happy to share with you that DMS is currently comfortable that we will meet or exceed Consensus first quarter and full year 2021 estimates for revenue and EBITDA,” concluded Marinucci.
Fourth Quarter and Full Year 2020 Revenues and Expenses:
- In fourth quarter 2020, we generated record quarterly revenue of $102.6 million, and record Adjusted Revenue of $104.7 million, up 23.9% and 23.0% sequentially from the third quarter revenue, respectively, and 57.5% and 56.5% year over year from the fourth quarter 2019 (fourth quarter 2019 includes only two months of UE results and does not include SmarterChaos, which was acquired in 2020).
- The sequential increase in our revenue was driven primarily by growth within the insurance vertical and growth in consumer brands across both the Brand-Direct Solutions and Marketplace Solutions segments, in addition to the mid-third quarter 2020 SmarterChaos acquisition.
- For full year 2020, revenue was $333.4 million, up 39.9% year over year.
Revenue by Segment:3
- Brand-Direct Solutions revenue in the fourth quarter was $62.1 million, up 26.3% sequentially and 53.0% year over year. Full year revenue was $197.5 million, up 13.0% over 2019 fiscal year.
- Marketplace Solutions revenue of $47.6 million increased 20.4% from the third quarter primarily due to the growth in the insurance sector revenue. Full year revenue was $156.5 million, an increase of 113.2% from last year. Marketplace Solutions revenue increased 81.1% from fourth quarter 2019, propelled by growth in the insurance business.
- Other Solutions revenue, was $4.0 million in the fourth quarter, up 38.5% from the third quarter, and up 235% year over year. Total for the year was $9.5 million, an increase of 69.3% over 2019.
- For the fourth quarter, reported gross profit was $28.4 million or 27.7% gross margin, versus $25.1 million or 30.2% in the third quarter, and compared to 31.7% for the same quarter in 2019.
- For 2020, gross profit was $98.8 million or 29.6% gross margin, an increase of $22.1 million, or 28.8% increase year over year.
Gross Profit/Margin by Segment:
- Fourth quarter Brand-Direct Solution gross margin was 22.2%, down slightly from 23.1% in the third quarter 2020, and down slightly from 25.5% the same quarter last year (the margin was influenced by substantial diversification in distribution channels as we continue to scale growth). Brand-Direct Solutions 2020 gross profit was $46.0 million, or a 23.3% margin versus $44.3 million, or a 25.4% margin in 2019.
- Fourth quarter Marketplace Solutionsgross margin was 27%, down from 30% in the third quarter 2020, and down from 34.3% in the year ago period. The segment is heavily weighted by our rapid growth in the insurance market, which carries gross profit of 28.8%. Marketplace Solutions 2020 gross profit was $46.6 million or 29.8% margin, an increase of $19.9 million, or 74.1% from last year.
- We remain focused on improving the leverage in our business while balancing our investments for growth. Our total operating expenses were $22.3 million in the fourth quarter, an increase of $1.1 million or 5.0% from the third quarter 2020 and up 15.8% year over year, exclusive of the lease reserve of $3.2 million, $0.9 million in stock compensation and $0.4 million in loss on disposal of assets, in the quarter.
- As a percentage of revenue, reported total operating expense was 26.0% in the fourth quarter, down slightly from 26.8% in the third quarter 2020.
- Exclusive of lease termination costs, stock compensation expenses and the loss on disposal of assets, fourth quarter operating expenses represent 21.7% of revenues, down sequentially from prior quarter of 25.6%.
- For 2020, operating expenses totaled $83.8 million, up 9.0% from 2019.
- Salaries and related costs in the fourth quarter were $9.7 million, an increase of 30.0% year over year, and 23.4% from the third quarter 2020, which is inclusive of approximately $0.9 million in stock-based compensation (exclusive of stock compensation, the fourth quarter salaries and related costs increased 12.3% sequentially.
- For the full year, salaries and related costs totaled $33.8 million, an increase of 21.0% from 2019 due to full year headcount from corporate acquisitions.
- We ended the year with a total headcount of approximately 400 FTEs.
Fourth Quarter 2020 Profitability, Balance Sheet and Liquidity:
- Net loss in the fourth quarter was $2.9 million, up 33.7% from the third quarter. For 2020 net loss was $2.2 million, an improvement of 80.4% from 2019 net loss of $11.2 million.
- Adjusted EBITDA in the fourth quarter was $15.4 million, or an Adjusted EBITDA margin of approximately 15.0%.
- This represents an increase of 9.6% from the third quarter, and 33.1% increase from the fourth quarter 2019.
- Net loss per share for the fourth quarter was $0.05, and for the full year was $0.01. Adjusted EPS for the fourth quarter was $0.04 and for the full year was $0.17.
Balance Sheet and Liquidity:
- We ended the year with $31.1 million in cash, cash equivalents and marketable securities, up by $6.6 million from the end of the third quarter.
- Our total debt, net of issuance costs was $200.5 million.
- As of December 31, 2020, our net leverage ratio was 3.14x., down from 3.88x at December 31, 2019.
- As of December 31, 2020, we also had an available balance on our revolving credit facility of $11.0 million.
First Quarter and Full Year 2021 Guidance:
Current first quarter and full year 2021 consensus estimates are $95.3 million for revenue and $15.4 million for EBITDA. Full Year 2021 consensus revenue is $416.7 million with an EBITDA estimate of $70.8 million. DMS currently believes that first quarter and full year 2021 Adjusted Revenue and Adjusted EBITDA will meet or exceed these estimates.
Adjusted Revenue and Adjusted EBITDA are non-GAAP financial measures. Management believes that Adjusted Revenue and Adjusted EBITDA provide useful information to investors and help explain and isolate the core operating performance of the business without regard to accounting treatments—refer to the “Non-GAAP Financial Measures” section below. The company is not providing a quantitative reconciliation of these forward-looking measures in reliance on the “unreasonable efforts” exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense.
About Digital Media Solutions, Inc.
Digital Media Solutions, Inc. (NYSE: DMS) is an innovative global solutions provider of digital performance advertising and a connection point between digital advertising clients and their prospective customers. The DMS first-party data asset, proprietary advertising technology, significant proprietary media distribution and data-driven processes help digital advertising clients de-risk their advertising spend while scaling their customer bases. Learn more at https://digitalmediasolutions.com.