Direct Digital Holdings - DRCT

Is delaying an earnings release a bad sign?

In Tuesdays “quick take” on Direct Digital Holdings (DRCT) I noted that earnings for Q4 2023 were due on Thursday, which was yesterday. Instead we got a press release that:

“…announced that the earnings call originally scheduled for March 21, 2024 at 5:00 PM ET will be postponed to March 26, 2024 at 5:00 PM ET to provide additional time to complete the audit of its financial statements.”

Now, a 5 day delay may or may not turn out to be a big deal. Were this to have happened sometime early or in the middle of the quarter, I wouldn’t place much stock in it. But we’re bumping up on the slow company filing deadline and have yet to hear anything about their Q4 results.

While coordinating an earnings release with a 10K release is a nice touch, it’s not a mandatory exercise. There are plenty of examples out there of companies that announce (or at least pre-announce) numbers early and file the necessary reports at the deadline.

Looking at last year, however, it’s not clear that that is the case here. Last year they announced results on March 23rd, filed an NT-10K at the March 31st deadline, and then filed their 10K on April 17th, the last possible day to do so before getting into some trouble.

In my experience delays are typically bad signs, though perhaps their Q4 produced such stellar results that auditor Marcum wanted to double check all of their math prior to signing off. It may also be taking this long because Marcum has found some deficiencies which they are all furiously trying to address prior to the filing. While it makes my spidey-senses tingle, I just don’t know.

On the bright side, Q1 will basically be in the bag, so if they don’t have a good feel for how that went, then you know something is off with their financial team and this blame it on the auditors stuff is just nonsense.

Either way, Tuesday’s release should make for an interesting announcement.