What Happened:

Shares of digital media measurement and analytics provider DoubleVerify (NYSE:DV) fell 9.21% in the morning session after the company reported second-quarter revenue that narrowly beat analysts' estimates and roughly came in the middle of the company's previous guidance range. It is usually a negative for a fast-growing and high-valuation company not to beat. 

To add salt to the wound, next quarter's revenue guidance came in slightly below analysts' expectations, and the full-year revenue guidance also slightly missed Wall Street's expectations. Also, the company announced an agreement to acquire Scibids, a global leader in AI-powered digital campaign optimization, in a cash and stock transaction valued at $125 million. While some may cheer the seemingly on-trend acquisition, the news of the deal was overshadowed by a weak quarter featuring disappointing guidance.

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What is the market telling us:

DoubleVerify's shares are quite volatile and over the last year have had 17 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was three months ago, when the stock gained 5.92% on the news that the company reported a "beat and raise" quarter. First quarter results exceeded analysts' revenue, adjusted EBITDA, and earnings per share estimates. Outperformance was driven by strength in measurement revenue which was well ahead of expectations and was a result of customer expansions on social as well as new enterprise customers signed in FY22. Revenue and EBITDA guidance for the next quarter were in line with Consensus. Additionally, the full-year revenue guidance was lifted and came in ahead of estimates. Overall, the Q1 results and guidance were impressive, considering the uncertain macro called out by some peers.

DoubleVerify is up 68% since the beginning of the year, but at $36.55 per share it is still trading 13.2% below its 52-week high of $42.10 from July 2023. Investors who bought $1,000 worth of DoubleVerify's shares at the IPO in April 2021 would now be looking at an investment worth $1,020.

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