Direct Digital Holdings announced on August 11, 2025, the issuance of $25 million of a new series of Series A Convertible Preferred Stock. This investment was made through the conversion of a portion of existing debt into the new class of perpetual convertible preferred stock.
The preferred stock has a premium conversion price of $2.50 per share of Class A Common Stock, votes on an as-converted basis, and carries a 10% cumulative annual dividend. This transaction results in a $25 million increase in the company's stockholders' equity, moving it from a deficit of $24.6 million at June 30, 2025, to an estimated positive shareholders' equity of approximately $0.4 million.
CEO Mark Walker stated that this investment bolsters the balance sheet, provides financial flexibility to support the growth strategy, and significantly closes the gap on the shareholders' equity needed to regain compliance with Nasdaq's minimum stockholders' equity listing requirement. It also reduces the company's ongoing debt service by more than $3.5 million and significantly reduces maturing debt obligations in December 2026.
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