Direct Digital (NASDAQ:DRCT) reported lower second-quarter revenue as spending from demand-side platform customers declined, while management pointed to early progress in a strategic shift toward broader digital growth and technology services.
Revenue for the second quarter of 2026 was $7.8 million, compared with $10.1 million in the prior-year quarter. Chief Financial Officer Diana Diaz said the decline was tied to a $2.5 million decrease in spending by demand-side platform, or DSP, customers.
Strategic Shift Focuses on Technology Services
Chairman and Chief Executive Officer Mark Walker said the company continued to execute on the strategic shift announced during the first quarter, when it consolidated operations into a streamlined model aimed at focusing resources on areas it believes can deliver more consistent and scalable growth.
During the quarter, Direct Digital introduced artificial intelligence search and geo offerings. Walker said the company has seen strong demand from existing and prospective clients for those products, as well as for its AI support and web infrastructure technology services.
He said the expanded offerings are intended to increase the company’s addressable market and access new technology budgets. The technical upgrades offered to clients are designed to improve conversion performance and lower customer-acquisition costs, Walker said.
“We’re seeing our technical expertise position us with clients as a comprehensive digital growth partner rather than just supporting the media needs,” Walker said, adding that the company is working with businesses facing conversion bottlenecks.
Walker said demand has been strong but acknowledged that the company remains in the early stages of the transition. The company’s client retention rate was approximately 80% among customers representing roughly 80% of revenue in the six months ended June 30.
Margins and Operating Loss
Second-quarter gross profit was $2.7 million, representing 34% of revenue, compared with $3.6 million, or 35% of revenue, in the second quarter of 2025.
Operating expenses decreased 7% year over year to $5.6 million from $6 million. Despite the lower expense base, the company’s operating loss widened to $2.9 million from $2.4 million in the prior-year quarter.
- Net loss was $3.6 million, compared with a net loss of $4.2 million in the second quarter of 2025.
- Adjusted EBITDA loss was $2.3 million, compared with an adjusted EBITDA loss of $1.5 million a year earlier.
- Cash and cash equivalents were $500,000 at June 30, compared with $700,000 at the end of December 2025.
- Total cash and accounts receivable were $3.2 million at the end of the quarter, compared with $3.9 million at year-end 2025.
Credit Facility Discussions Continue
Diaz said Direct Digital was not in compliance with certain financial covenants under its current credit facility as of the end of the quarter. The company has requested a waiver and is engaged in discussions with its lender.
“Discussions have been constructive and while the process remains ongoing, our current focus is on improving operating performance and working toward a mutually acceptable resolution,” Diaz said.
Management said it remains focused on operational efficiencies, financial discipline and strategic investments intended to support sustainable long-term growth. Walker also said the company has flexibility to evaluate strategic partnerships and opportunities that could complement its platform and support shareholder value.
About Direct Digital (NASDAQ:DRCT)
Direct Digital Holdings, Inc (NASDAQ: DRCT) is a provider of cloud-based marketing software and services tailored to mortgage lenders and real estate professionals. The company’s integrated platform is designed to help its clients generate, nurture and convert leads through customer relationship management (CRM), automated marketing campaigns, customizable websites and digital content delivery. By combining proprietary tools with expert support, Direct Digital enables users to streamline workflows, improve customer engagement and drive growth in competitive markets.
The company’s flagship offerings include a CRM system that centralizes prospect and client data, marketing automation that triggers timely email and digital campaigns, and website solutions that are optimized for lead capture and search-engine visibility.
