Ecommerce

Digital Media Solutions, Inc. Announces 2021 Financial Results

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e business
  • Record fourth quarter revenue of $119 million, up 17% year over year; Full year 2021 revenue of $428 million, up 29% year over year
  • Record adjusted revenue in the fourth quarter totaled $122 million, up 17% year over year; Full year 2021 adjusted revenue of $442 million, up 30% year over year
  • Fourth quarter net income and adjusted EBITDA of $(4) million and $15 million, with adjusted EBITDA flat year over year; Full year 2021 net income and adjusted EBITDA of $6 million and $58 million, with adjusted EBITDA up 7% year over year.
  • Fourth quarter gross margin of 30% and variable marketing margin (VMM) of 36%, respectively; Full year 2021 gross margin of 30% and VMM of 35%
  • Announced first quarter 2022 revenue guidance of $102 – $107 million and adjusted EBITDA guidance of $10 – $12 million.
  • Announced FY 2022 revenue guidance of $465 – $475 million and adjusted EBITDA guidance of $55 – $60 million.

Digital Media Solutions, Inc. (NYSE: DMS), a leading provider of technology-enabled digital performance advertising solutions connecting consumers and advertisers, today announced record financial results for the fourth quarter and full year ended December 31, 2021.

“In the fourth quarter, we generated more revenues than in any other quarter in DMS history, and did so while maintaining strong cash generation,” said Joe Marinucci, CEO of DMS. “We demonstrated the power of our data driven, vertical-agnostic / channel-agnostic model that, time and time again, has been the fuel helping our business continue its positive growth momentum.”

Dynamic diversification, a consistent go-to-market strategy for DMS, allowed the company to pivot quickly to meet consumer and advertiser needs in the fourth quarter. As a result, both of the primary DMS business segments — Brand-Direct and Marketplace Solutions — grew in Q4 2021, up 17% and 25% respectively year over year, driven by strength in health insurance, especially during the open enrollment periods, and ecommerce.

On a sector-basis, during the quarter, 28% of DMS revenues came from auto insurance, 23% from health insurance, 20% from ecommerce, 10% from career and education and 8% from consumer finance. Each of these sectors is supported by both Brand-Direct and Marketplace Solutions. Similarly, in aggregate across all of the DMS business segments, no individual media channel or publisher represented more than one-quarter of the total supply for DMS.

Insurance revenues, 58% of our total revenues in Q4, grew 13% year over year, even as auto insurance advertising bid prices remained low due to carrier loss-ratio challenges. Health insurance, now a major business for DMS, grew 35% organically over the prior year. As a result, auto insurance revenues accounted for 49% of DMS insurance revenues in Q4 2021, compared to approximately 3/4 in the same quarter of 2020.

Dynamic diversification within the ecommerce vertical allowed DMS to shift in parallel with consumer demand, away from holiday spending, which was marginalized by macro supply chain issues, to the robust health and wellness category. DMS ecommerce increased 36% year over year.

In addition to dynamic diversification, scaled client spend and the DMS data flywheel supported growth momentum in the fourth quarter. The company noted a 100% retention rate for its top 20 clients, which generated 31% year-over-year revenue growth.

Fourth Quarter 2021 Performance:

  • Record revenue of $119 million, up 17% over the same quarter last year.
  • Record adjusted revenue of $122 million, up 17% over Q4 2020.
  • Gross profit margin of 30%, compared to 27% in the year-ago quarter.
  • Variable marketing margin of 36%, up from 32% in Q4 2020.
  • Operating expenses totaled $39 million, a decrease of $6.4 million year over year.
  • Net income of $(4) million versus $(18) million in the same quarter last year.
  • Adjusted EBITDA of $15 million, flat year over year.
  • EPS came in at $(0.11) compared to $(0.32) in Q4 2020.
  • We ended the quarter with $26 million in cash, cash equivalents and marketable securities and total debt of $220 million, or a net leverage of approximately 3.3x.

Fourth Quarter 2021 Segment Performance (excluding intracompany revenue):

  • Brand-Direct Solutions generated revenue of $73 million, up 17% over the same quarter last year. Gross margin was 24%, up from 22% in the prior year.
  • Marketplace Solutions generated revenue of $59 million, up 25% over the same quarter last year. Gross margin was 28%, up from 26% in the prior year.
  • Other Solutions generated revenue of $4 million, down 6% compared to Q4 2020. Gross margin was 38%, down from 44% in the prior year.

Full Year 2021 Performance:

  • Record revenue of $428 million, up 29% year over year.
  • Record adjusted revenue of $442 million, up 30% over FY2020.
  • Gross profit margin was 30%, flat from FY2020.
  • Variable marketing margin was 35%, up from 34% in 2020.
  • Operating expenses totaled $122 million, up $10 million from 2020.
  • Net income of $6 million, compared to a $14 million loss in the prior year.
  • Adjusted EBITDA of $58 million, up 7% year over year.
  • EPS came in at $0.06 compared to $(0.23) in 2020.

Full Year 2021 Segment Performance (excluding intracompany revenue):

  • Brand-Direct revenue was $254 million, up 28% over FY2020. Gross margin was 24% versus a 24% margin in 2020.
  • Marketplace revenue of $224 million, up 45% from last year. Gross margin of 27% versus a 29% margin in 2020.
  • Other Solutions generated revenue of $10 million, up 3% over 2020. Gross margin of 63% versus a 64% margin in 2020.

First Quarter and Full Year 2022 Guidance:

Thanks to the combination of scaled spend, our data flywheel and dynamic diversification, the Company believes it is well positioned for 2022. DMS currently anticipates revenue, gross margin, variable marketing margin and adjusted EBITDA ranges as follows:

First Quarter 2022:

  • Revenue: $102-$107 million
  • Gross Margin: 28%-31%
  • Variable Marketing Margin: 32-36%.
  • Adjusted EBITDA: $10-$12 million

Full Year 2022:

  • Revenue: $465-$475 million
  • Gross Margin: 28%-31%
  • Variable Marketing Margin: 32-36%
  • Adjusted EBITDA: $55-$60 million

Adjusted revenue, Adjusted EBITDA and Variable Marketing Margin are non-GAAP financial measures. Management believes that Adjusted revenue, Adjusted EBITDA and Variable Marketing Margin provide useful information to investors and help explain and isolate the core operating performance of the business — refer to the “Non-GAAP Financial Measures” section below. For guidance purposes, the company is not providing a quantitative reconciliation of these non-GAAP 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.

Conference Call and Webcast Information:

The U.S. toll free dial-in for the conference call is 1-844-200-6205, and the international dial-in number is 1-646-904-5544. The access code is 220107. A live webcast of the conference call will be available on the investor relations page of the company’s website at https://investors.digitalmediasolutions.com.

A replay will be available after the conclusion of the call on March 14, 2022 through March 21, 2022. The U.S. toll-free replay dial-in number is 1-866-813-9403, and the international replay dial-in number is 1-929-458-6194. The replay access code is 689733.

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