Note 8 — Net Loss Per Share
The Company has two classes of common stock, Class A and Class B, and one class of preferred stock, Series A Convertible Preferred Stock. The holders of Series A Convertible Preferred Stock are contractually entitled to receive a cumulative dividend, whether or not declared. In calculating the net loss attributable to Class A shareholders, the numerator for basic and diluted EPS is adjusted for the impact of the contractual amount of dividends payable to holders of Series A Convertible Preferred Stock. Neither shares of the Company’s Class B Common Stock nor the Company's Class A Convertible Preferred Stock share in the earnings or losses attributable to Direct Digital Holdings, Inc. and are therefore not participating securities. The following table sets forth the computation of the Company’s basic and diluted net loss per share (in thousands, except per share amounts):
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| Year Ended December 31, |
| 2025 | | 2024 |
| Net loss attributable to Class A shareholders and Series A preferred stockholders | $ | (18,946) | | | $ | (6,236) |
| Less: Series A preferred stockholders cumulative and deemed dividends | 4,411 | | — |
| Net loss allocated to Class A shareholders | $ | (23,357) | | | $ | (6,236) |
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| Weighted average common shares outstanding - basic and diluted | 308 | | 68 |
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| Net loss per common share, basic and diluted | $ | (75.79) | | | $ | (91.26) |
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The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| Series A convertible preferred stock | 81 | | — |
| Class B Common Stock | 188 | | 198 |
| Options to purchase common stock | 14 | | 6 |
| Restricted stock units | 16 | | 7 |
| Total excludable from net loss per share attributable to common stockholders - diluted | 299 | | 211 |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.