Diverse Customer Base
In an interview with AlphaStreet, DMS chief executive officer Joe Marinucci said the brand-direct and marketplace solutions being offered by the company are both vertical agnostic and channel-agnostic. “DMS currently works with advertising clients across a multitude of verticals including insurance, home services, and education, with a goal of helping these advertising clients to scale their customer bases while simultaneously de-risking their media spends.”
Like many other tech firms, DMS has been quite resilient to the coronavirus pandemic so far, which the company expects to continue during the remainder of the year. The company looks to leverage the ongoing shift to digital marketing from conventional marketing even as the COVID-driven digital transformation picks up momentum. It is estimated that customers would use their deferred budgets for online marketing going forward, probably beyond this year and 2021.
In the current scenario, with the business world transitioning into the new normal, the company’s solutions assume significance for the reliability and transparency they offer. The software licensing business, which has registered double-digit growth since the last quarter, is a promising area where DMS executives see cross-selling opportunities with the potential to drive revenue growth. The proprietary software solutions that are integrated into clients’ marketing systems also pave the way for a long-term relationship with customers that translates into recurring revenues.
Also Read: Digital Media Solutions Q2 2020 Earnings Transcript
Unique Model
The differentiated business model, which is based on direct consumer engagement rather than clicks and impressions, gives the company an edge over large advertisers like Alphabet’s Google (NYSE: GOOG) and Facebook (NASDAQ: FB).
“We leverage the largest media platforms for our clients, and as these platforms continue to grow, we believe our value proposition will continue to resonate as the need to de-risk ad spend will continue to grow,” he told AlphaStreet.
The company has been successful in growing its business through strategic acquisitions, with the latest being the addition of digital marketing and performance management agency SmarterChaos. In the past four years, as many as 12 business entities joined the DMS fold. While continuing to pursue M&A deals for business expansion, there will also be stress on organic growth. The management believes the current liquidity position is sufficient to meet the targets.
Upbeat Start
As a newly public company, DMS reported a 30% growth in June-quarter revenues to $75.2 million. It generated a net profit of $2.13 million or $0.05 per share for the quarter, which marked an improvement from the prior-year period when the bottom-line was breakeven. The results particularly benefited from an uptick in the insurance business, despite the ongoing macroeconomic uncertainties.
DMS’ stock had a muted debut and traded lower following the July IPO. Though they made strong gains later, the shares lost momentum in recent weeks amid continued volatility. This week, the stock traded pretty close to its IPO price.
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