Shares of Direct Digital Holdings dropped 7.9% following Q1 results, driven by significant revenue decline and cautious outlook implied by continued losses despite modest margin improvement and cost controls.

• Revenue fell to $6.7 million, down from $8.2 million a year ago, primarily due to a $2 million reduction in demand-side platform customer spending.
• Gross margin improved to 34% from 29% last year, reflecting some efficiency gains despite lower revenue.
• Operating expenses decreased 13% to $5.5 million, yet the company still reported an operating loss of $3.3 million and a net loss of $5.6 million.
• Adjusted EBITDA loss narrowed slightly to $2.6 million but remains significant relative to scale.
• Cash and cash equivalents modestly increased to $800,000, with total liquidity (cash plus receivables) down slightly from year-end, highlighting ongoing tight capital conditions.