• Record quarterly revenue of $107.4 million and also record adjusted revenue of $111.8 million

• Revenue growth of 30% and organic revenue growth of 11% from the year-ago period

• Net income of $5.4 million and adjusted EBITDA of $11 million

• Variable marketing margin (VMM) of $37.9 million, or 35%

• Reiterating prior 2021 guidance on revenues, EBITDA, gross margins and VMM margins

Digital Media Solutions, Inc. ,a leading provider of technology-enabled digital performance advertising solutions connecting consumers and advertisers, announced record third quarter revenue of $107.4 million and adjusted revenue of $111.8 million.

“We are pleased to have reported a record revenue quarter for DMS,” stated Joe Marinucci, CEO of DMS. “And, I’m happy to say that diversification helped us continue to deliver top-line growth in this quarter, especially in our largest sector of insurance. In fact, total revenue was up 30% on a reported basis over the year-ago quarter.”

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“I’m happy to say that diversification helped us continue to deliver top-line growth in this quarter, especially in our largest sector of insurance,” said DMS CEO Joe Marinucci.

Q3 2021 Performance:

Total revenue was $107.4 million, up 30% over the same quarter last year. Adjusted revenue was $111.8 million, an increase of 31% year over year. Gross profit was $31 million, with a 29% margin, compared to 32% in Q2 and 30% in the year-ago quarter. VMM of 35% in Q3, compares to 38% in Q2 2021 and 35% in Q3 2020.

Operating expenses totaled $26 million in the third quarter, a decrease of $3 million from Q2 2021 and an increase of $2 million year over year. Net income was $5.4 million, up from $4.1 million in the same quarter last year. EPS came in at $0.10 as compared to $0.09 in Q3 of the prior year.

On a segment basis, excluding intracompany revenue, Brand-Direct Solutions generated revenue of $65 million, up 32% over the same quarter last year. Gross margin was 23%, down from 26% in Q2 2021, and flat versus the same quarter last year.

Marketplace Solutions generated Q3 revenue of $58 million, up 47% over the same quarter last year. Gross margin was 25%, down from 29% in Q2 2021, and down from 30% in the year ago quarter.

The Other Solutions segment generated revenue of $2 million, down 22% compared to Q3 2020. Gross margin was 72%, compared to 76% in the prior quarter and 64% in Q3 of the prior year.

We ended the quarter with $18.7 million in cash, cash equivalents and marketable securities, flat from the end of Q2, reflecting normal shifts in working capital. Our total debt at quarter end was $224 million, and net of issuance costs, it was $218 million, and we had an available balance on our revolving credit facility of $50 million. Lastly, Q3 ended with a total headcount of 600 FTEs.

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Fourth Quarter and Full-Year 2021 Guidance:

Thanks to the diversification, vertical integration and culture of continuous innovation, the Company believes it is well positioned for Q4. DMS currently anticipates revenue, adjusted revenue, gross margin, variable marketing margin, and adjusted EBITDA ranges as follows:

Fourth Quarter 2021:

• Revenue: $112-$122 million
• Adjusted Revenue: $116-$126 million
• Gross Margin: 28-31%
• Variable Marketing Margin: 32-36%.
• Adjusted EBITDA: $16.5-$19.5 million

Full-Year 2021:

• Revenue: $421 – $431 million
• Adjusted Revenue: $437 – $447 million
• Adjusted EBITDA: $60 – $63 million

Third-Quarter Earnings Call Details

The Company will hold a conference call to discuss these results at 8:30 a.m. (Eastern Time) , November 9, 2021.

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