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HOUSTON - Direct Digital Holdings, Inc. (NASDAQ:DRCT), whose stock has declined over 86% in the past year according to InvestingPro data, announced Monday it has raised $25 million through the issuance of Series A Convertible Preferred Stock at a conversion price of $2.50 per share of Class A Common Stock.
The advertising technology company completed the transaction by converting a portion of its existing debt into the new perpetual convertible preferred stock. With total debt of approximately $39 million as of the latest quarter and a concerning current ratio of 0.49, this restructuring comes at a critical time. The preferred shares are redeemable at the company’s discretion, vote on an as-converted basis with Class A common stock, and carry a 10% cumulative annual dividend payable when declared by the board.
This financial restructuring transforms Direct Digital’s balance sheet, moving from a $24.6 million stockholders’ equity deficit as of June 30 to an estimated positive equity position of approximately $0.4 million. The company also expects to reduce its ongoing debt service by more than $3.5 million and decrease debt obligations maturing in December 2026.
"This investment bolsters our balance sheet, provides financial flexibility to support our growth strategy, and significantly closes the gap on the shareholders’ equity needed to regain compliance with Nasdaq’s listing requirement," said Mark Walker, CEO of Direct Digital Holdings, in the press release statement.
The company noted it continues to pursue additional funding and strategic opportunities.
Direct Digital Holdings operates through its subsidiaries Colossus Media, LLC and Orange 142, LLC, providing advertising and marketing technology solutions for brands, agencies, and publishers.
Further details about the preferred stock terms were disclosed in the company’s Current Report on Form 8-K filed with the SEC.
In other recent news, Direct Digital Holdings reported its Q2 2025 earnings, revealing a net loss of $4.2 million, or $0.23 per share, with revenue amounting to $10.1 million. The company experienced a notable decline in sell-side revenue compared to the previous year. However, there was an increase in gross margin and a reduction in operating expenses, which provided some positive aspects to their financial performance. These developments are part of the company’s recent updates.
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