Advertising firm announces CFO change

Direct Digital Holdings has announced that CFO Susan Echard has been let go. Diana Diaz has been appointed interim CFO while the Board searches for a permanent replacement.

[Update 10-16-23 Ms. Diaz has been appointed the permanent CFO with a base salary of $350,000].

Direct Digital is based in the Galleria and provides digital advertising solutions to small and middle market clients. The company went public in February 2022 through a $15 million IPO. The company now has a market capitalization of $45 million.

Ms. Echard was appointed CFO in May 2021. She had a salary of $272,500 and will receive severance equal to twelve months of base salary.

Ms. Diaz previously worked at Sharps Compliance for a total of 13 years. She was CFO for over 10 years before becoming Chief Accounting Officer. Sharps was taken private in August 2022 by Aurora Capital and Ms. Diaz left earlier this year.

Direct Digital originally went public to dig itself out of a hole caused by a disastrous acquisition in 2020. It paid $26 million for a business in Austin using a combination of equity, bridging loans at 15% interest and effectively deferred consideration. Immediately after the sale, one of the biggest customers of the acquired business took their spend in-house and revenues plunged. The company used the IPO proceeds to pay the deferred consideration to the seller and refinance some of the debt.

The company has done well to grow revenues since then and revenues are now $100 million. However, one customer accounts for over half their revenues. The company still has $25 million of debt with interest rates north of 10%.

During the course of preparing its annual report for 2022, the company found that, effective August 1, 2022, billing practices on one customer had been modified. As a result, $394,000 of invoices were not sent to the customer when they should have been. That resulted in a revision of the third quarter report for 2022 and a material weakness disclosure in the annual report. There was no word from the company whether this issue contributed to the departure of the CFO.

SEC filing – 8-K – Digital Direct CFO

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