United States securities and exchange commission logo





                             October 8, 2021

       Mark Walker
       Chief Executive Officer
       Direct Digital Holdings, Inc.
       1233 West Loop South, Suite 1170
       Houston, TX 77027

                                                        Re: Direct Digital
Holdings, Inc.
                                                            Draft Registration
Statement on Form S-1
                                                            Submitted September
10, 2021
                                                            CIK 0001880613

       Dear Mr. Walker:

              We have reviewed your draft registration statement and have the
following comments. In
       some of our comments, we may ask you to provide us with information so
we may better
       understand your disclosure.

              Please respond to this letter by providing the requested
information and either submitting
       an amended draft registration statement or publicly filing your
registration statement on
       EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
       believe an amendment is appropriate, please tell us why in your
response.

             After reviewing the information you provide in response to these
comments and your
       amended draft registration statement or filed registration statement, we
may have additional
       comments.

       Draft Registration Statement on Form S-1 Submitted September 10, 2021

       Prospectus Summary, page 1

   1.                                                   Please balance your
disclosure of revenue growth in 2019 and 2020 with disclosure of
                                                        your net income (loss)
for each of those periods.
   2.                                                   Please disclose how you
define small and mid-sized clients.
   3.                                                   Please clarify whether
there is a distinction between clients and customers. For example,
                                                        you state on page 5
that you had 150 direct customers on the buy-size but served 27,800
                                                        clients on the
sell-side.
 Mark Walker
FirstName  LastNameMark
Direct Digital Holdings, Inc.Walker
Comapany
October    NameDirect Digital Holdings, Inc.
        8, 2021
October
Page 2 8, 2021 Page 2
FirstName LastName
Our Industry and Trends, page 3

4.       Please use the same scale for the four graphs that present information
about ad spending.
Our Competitive Strengths, page 6

5.       Refer to your disclosure of Growing and Profitable Business Model on
page 7. Please
         expand the disclosure to present the most directly comparable GAAP
measure along with
         your disclosure of Non-GAAP Adjusted EBITDA. Please expand your
disclosure of
         Adjusted EBITDA on page 91 accordingly. Refer to Item 10(e)(1)(i)(A)
of Regulation S-
         K and Non-GAAP CD&I Question 102.10 for guidance.
Unaudited Pro Forma Consolidated Financial Information
Unaudited Pro Forma Consolidated Balance Sheet, page 67

6.       In light of the LLC Unit redemption right, please tell us how you
considered ASC 480-10-
         S99-3 in determining that the Units should be presented as pro forma
permanent equity.
         In your response please address who makes the decision to redeem in
cash rather than
         Class A shares and tell us how this is within control of the Company.
In this regard, we
         note on page 46 that you are considered a    controlled company.
Management Discussion and Analysis of Financial Condition and Results of
Operations , page
68

7.       We note your disclosure that you have a 90% retention rate among the
customers that
         contribute to 80% of your revenue. Please disclose the time period you
used to calculate
         this measure. If this retention rate is for 2020, balance this
disclosure by noting that your
         top two customers accounted for 41% of your total revenue and that
your top ten
         customers account for 75% of your revenue.
8.       Please describe and provide any related key metrics used for
monitoring your ability to
         retain customers, acquire new customers and expand sales to existing
customers. For
         example, we note that you highlight in your prospectus graphics the
amount of revenue
         per customer and average customer tenure for 2020. Tell us your
consideration of
         disclosing these or other metrics for each period presented and any
related trends that
         affect your revenues or results of operations. We refer you to Item
303(a) of Regulation S-
         K and SEC Release No. 33-10751.
Components of Our Results of Operations, page 72

9.       Please expand your disclosure to clarify how you generate revenues
from each of your
         segments. For example, discuss the types of fee arrangements with
buy-side clients and
         the transactions that generate revenues for you in connection with
your sell-side
         operations.
 Mark Walker
FirstName  LastNameMark
Direct Digital Holdings, Inc.Walker
Comapany
October    NameDirect Digital Holdings, Inc.
        8, 2021
October
Page 3 8, 2021 Page 3
FirstName LastName
Results of Operations, page 73

10.      We note on page 24 that your success is dependent on regularly adding
new customers
         and increasing your customers' usage of your platform. We also note on
page 74 that the
         increase in sell-side advertising revenue was the result of bringing
on more DSP
         customers, as well as an overall increase in advertising spend by your
customers. Please
         expand your discussion of buy-side and sell-side revenues to quantify
the changes in
         revenue from period to period due to new and existing customers.
11.      We note on page 70 that clients often transition to your managed
services delivery model,
         which in turn drives higher profitability. Please expand your
discussion of revenues from
         period to period to include any trends in revenues between
self-service and managed
         service for the segment revenues and the impact of such changes on
profitability.
Principal Stockholders, page 109

12.      Please disclose the natural persons who have voting or investment
power over the Class A
         and Class B shares to be held by USDM Holdings, Inc.
Financial Statements - Orange142, LLC, page F-45

13.      Please provide unaudited financial statements for the corresponding
interim period of the
         preceding year pursuant to Rule 8-04 of Regulation S-X.
General

14.      In the prospectus graphics following the prospectus cover page, you
indicate that on the
         buy-side, customer tenure averages 5.2 years based on the top 20 buy
side customers by
         2020 revenues. To provide context, disclose the percentage of total
revenues attributable
         to these top 20 customers. In addition, you indicate that the total
number of clients for
         Direct Digital Holdings as of June 30, 2021 was 27,950. Please revise
to also disclose the
         number of clients attributable to the buy-side versus the sell-side.
Lastly, please balance
         your presentation of revenue and revenue growth with the corresponding
net income
         (loss).
15.      Please supplementally provide us with copies of all written
communications, as defined in
         Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
         present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
         not they retain copies of the communications.
 Mark Walker
FirstName  LastNameMark
Direct Digital Holdings, Inc.Walker
Comapany
October    NameDirect Digital Holdings, Inc.
        8, 2021
October
Page 4 8, 2021 Page 4
FirstName LastName
        You may contact Claire DeLabar, Senior Staff Accountant, at (202)
551-3349 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact Austin
Pattan, Law
Clerk, at (202) 215-1319 or Kathleen Krebs, Special Counsel, at (202) 551-3350
with any other
questions.



                                                          Sincerely,

                                                          Division of
Corporation Finance
                                                          Office of Technology
cc:      Rakesh Gopalan