Digital Media Solutions, Inc.

Q2 2023 net revenue was $82.6 million, down 9.5% year over year. Gross profit was $19.2 million, with gross margin of 23.3% versus 25.7% in Q2 2022; variable marketing margin was 27.4% versus 35.5% a year ago. Adjusted EBITDA was $902,000, down from $3 million last year, and net loss was $47.5 million versus $11.9 million a year ago. On the balance sheet, cash and cash equivalents were $25.2 million and total debt was $266.4 million. For Q3 2023, guidance calls for net revenue of $70 million to $72 million, adjusted EBITDA of $500,000 to $1 million, gross margin of 23% to 26%, and variable marketing margin of 29% to 34%. Management said Q4 and full-year 2023 guidance will be provided with Q3 earnings in November.

Joe Marinucci said the quarter reflected continued market challenges, especially in insurance, but emphasized that DMS is focusing on areas it can control and building for durable, scalable growth across marketplace and brand-direct solutions. He highlighted positive trends in P&C during Q3, expected recovery in 2024, seasonal strength from holiday e-commerce, and health insurance open enrollment in Q4. His tone was cautious but constructive, with repeated emphasis on long-term positioning, customer relationships, and diversification.

Vanessa Guzmán-Clark walked through the quarter’s financial pressure points: insurance revenue was down 62%, gross profit margin fell to 23.3% from 25.7%, and variable marketing margin declined to 27.4% from 35.5%. She noted operating expenses were $71.6 million, but excluding non-cash items they were $24.3 million, down $1.7 million year over year due to cost reduction and business optimization. She also said DMS ended Q2 with $25.2 million in cash and $266.4 million in debt, and that the company expects to file its 10-Q and finalize the credit agreement amendment by August 21, 2023.

Analysts pressed on whether Q3’s early improvement in P&C could translate into a broader Q4 or 2024 recovery, and management said the best view is that the recovery is more likely a 2024 event, with Q4 supported by e-commerce seasonality and health open enrollment. Questions on the health vertical focused on competitor exits; Joe Marinucci said DMS expects at least last year’s open enrollment spend and sees possible upside, but the exits were mostly in premium commission/policy-writing businesses, not DMS’s marketing model. On auto, management said agent counts are still depressed but stable, with more reactivations as rate increases and market reopenings occur. On ClickDealer, Joe said the deal was primarily growth-oriented rather than a cost-takeout play, though integration and efficiency efforts are underway.