Direct Digital Holdings Plans Nasdaq Delisting, Expects It to Take Effect on November 12
Key Facts
Direct Digital Holdings announced plans to voluntarily delist its Class A common shares from Nasdaq and deregister them with the U.S. Securities and Exchange Commission, according to an announcement posted on the company's investor relations page. The board approved the withdrawal from listing and registration on October 20, 2026, following an earlier Nasdaq decision to delist the company's securities. Among the reasons considered by the board were the costs the company incurs to remain registered and comply with SEC reporting requirements. The company described these burdens in its announcement as "significant direct and indirect costs." The shares are already quoted over the counter in the Pink "Limited Information" tier, according to the company. Direct Digital Holdings expects its shares to continue to be quoted in that market after the delisting and deregistration are completed. However, it warned in an earlier SEC filing that shareholders could face "greater difficulty buying or selling their shares" in the over-the-counter market.
The voluntary withdrawal announcement followed the company's failure to meet Nasdaq's stockholders' equity standard for continued listing, according to its SEC filing. The standard requires the company to maintain minimum stockholders' equity of $2.5 million. However, the noncompliance notice was based on a stockholders' deficit of $7.0 million reported in the previous annual report, according to the regulatory filing. The stockholders' equity position underlying the notice was therefore a deficit, against the exchange's requirement for a positive minimum to maintain the listing. The company was unable to meet the requirement within the additional time it was granted, a failure that preceded Nasdaq's delisting decision. The exchange's decision set the suspension of trading in the company's securities for the opening of the session on October 5, 2026, placing the board's move toward a voluntary withdrawal after Nasdaq's scheduled trading suspension.
On the business front, Direct Digital Holdings' results for the second quarter of 2026 showed revenue falling to $7.8 million, according to the company's earnings release. The decline was 23% compared with revenue of $10.1 million in the second quarter of 2025. The company attributed the decline primarily to "lower spending by demand-side platform clients," identifying the source of pressure on revenue for the period. Meanwhile, the net loss narrowed to $3.6 million, compared with a loss of $4.2 million in the second quarter of 2025. The quarter's net result remained a loss despite narrowing from the comparison period, alongside the year-on-year revenue decline reported by the company. Direct Digital Holdings also disclosed in the earnings release that it was not in compliance with certain financial covenants under its credit facility. It said it was working with the lender to obtain a waiver of those covenants, adding a credit issue to the backdrop of noncompliance with stockholders' equity and continued listing requirements.
According to the company's announced timetable for the next steps, it intends to file the delisting form with the SEC on or about November 2, 2026. It expects the delisting of its shares from Nasdaq to take effect on or about November 12, 2026, with those dates remaining its projections for completing the regulatory steps. The company expects the termination of the shares' registration associated with the exchange listing to occur on or about January 31, 2027. After the delisting form takes effect, it intends to file Form 15 to terminate the shares' remaining SEC registration. That subsequent step also seeks to suspend the company's periodic reporting obligations, according to its announcement. Its announced plan thus includes a delisting procedure, termination of the associated registration, and then the filing of a form to terminate the remaining registration and suspend reporting obligations, as part of the withdrawal approved by the board.