Shares of advertising-technology company DoubleVerify (DV -1.11%) dropped on Thursday after the company reported results for the fourth quarter of 2023. Its report was pretty good, but management is guiding for its slowest top-line growth as a publicly traded company, which is why the market isn't happy. As of 1 p.m. ET today, DoubleVerify stock was down 17%.
A good year for DoubleVerify
DoubleVerify is an adtech that makes sure that money is being spent as the advertisers intended. Business has been good: The company enjoyed year-over-year revenue growth of 29% in the fourth quarter, which was what management expected. For the year, the company generated revenue of $573 million, a 27% improvement from 2022.
Profitability was also better than expected. Management had predicted fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $61 million, at best, but the company surprised with adjusted EBITDA of over $65 million.
Still, DoubleVerify guided for just 13% year-over-year revenue growth in the upcoming first quarter of 2024. With the stock trading at over 13 times sales prior to today's report, the market apparently thought that its valuation was too pricey considering its slowing growth.
Still a lot to like
In my opinion, the valuation for DoubleVerify stock is far more reasonable now. The company expects slow growth in the first quarter, but it also is forecasting it to accelerate later in the year, bringing its full-year gain up to 22%.
Moreover, it is guiding for full-year 2024 adjusted EBITDA of $205 million to $221 million, which is a big jump from its adjusted EBITDA of $187 million in 2023.
The trends are in DoubleVerify's favor as more advertising goes digital. If the company can keep growing and remain profitable, then I expect its stock price to climb higher as well over the long term. And its reset valuation offers investors a more attractive starting point.
