Viant Technology Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Viant operates Adelphic, a demand-side platform for planning, buying, and measuring programmatic advertising. The quarter included the February 12 IPO and corporate reorganization; Viant Technology LLC remains the operating business, with 80.5% of its economic interests reported as noncontrolling interests.
Financial performance
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $40.1 million | $38.2 million | +5.2% |
| Gross profit | $15.8 million | $14.6 million | +8.5% |
| Gross margin | 39.4% | 38.1% | +1.3 percentage points |
| Revenue ex-TAC (non-GAAP) | $26.7 million | $23.3 million | +14.6% |
| Operating income (loss) | $(14.7) million | $0.6 million | — |
| Consolidated net income (loss) | $(14.9) million | $0.3 million | — |
| Net income (loss) attributable to Viant | $(3.1) million | $0.3 million | — |
| Adjusted EBITDA (non-GAAP) | $4.9 million | $3.2 million | +51.5% |
| Adjusted EBITDA / revenue ex-TAC | 18% | 14% | +4 percentage points |
| Operating cash flow | $14.8 million | $3.5 million | +$11.3 million |
GAAP diluted loss per Class A share was $0.27. Non-GAAP net income was $2.2 million and non-GAAP diluted earnings per share was $0.01; these measures exclude stock-based compensation and should be considered alongside GAAP results.
Operating expenses rose to $54.8 million from $37.5 million. The largest driver was $17.1 million of stock-based compensation, with additional increases in sales and marketing, technology and development, and general and administrative costs. Management attributed higher G&A costs in part to IPO-related insurance and accounting expenses.
Liquidity, debt, and cash flows
- Cash was $246.6 million at March 31, 2021, compared with $9.6 million at year-end 2020. The increase largely reflects $232.5 million of net IPO proceeds.
- Working capital was $253.3 million. Total debt was $23.5 million: $17.5 million drawn on a $40 million revolving facility and $6.0 million under the Paycheck Protection Program loan. The company reported compliance with credit-facility covenants.
- Investing cash outflow was $2.1 million, primarily for capitalized software development. Financing cash inflow was $224.3 million, after IPO proceeds, offering costs, and member tax distributions.
- Management said cash, operating cash flow, and undrawn credit availability should cover working-capital needs for at least the next 12 months.
Material changes and operating trends
- Platform spend increased 8.8% year over year. Average revenue ex-TAC per Active Customer for the trailing 12 months was $428,000, up 7.0% from the comparable prior-year period; Active Customers were 266, down 1.1%.
- Revenue growth accompanied a 10% decline in traffic acquisition costs, while other platform operations costs increased 25%. Management cited increased stock compensation and lower cloud costs from infrastructure efficiencies.
- The IPO raised $250 million gross; the company received $232.5 million net of underwriting discounts. Class B holders retained 80.5% of combined voting power and 80.5% of Viant Technology LLC’s economic interests at quarter-end.
- Viant granted 6.2 million restricted stock units in connection with the IPO. Unrecognized compensation expense was approximately $134.8 million, expected to be recognized over a weighted-average 2.2 years.
Outlook, risks, and contingencies
- No specific revenue or earnings guidance was provided. Management expects operating expenses to increase significantly as it invests in platform capabilities, identity resolution, new channels, and sales and marketing; it cautioned these investments may weigh on near-term profitability.
- Management described advertising seasonality, typically with the strongest activity in the fourth quarter and lower activity in the first quarter. COVID-19’s duration and effects on advertising demand remained uncertain.
- Customer concentration increased: two individual customers represented 17.2% and 11.1% of Q1 revenue; one advertising agency holding company represented 13.5%. One customer accounted for 14.6% of receivables at quarter-end.
- The company had a full valuation allowance against deferred tax assets and recorded no Tax Receivable Agreement liability; it disclosed an estimated unrecorded TRA liability of approximately $9.1 million. Certain exchanges or a change of control could trigger payments or accelerate obligations under the TRA.
- Viant applied for forgiveness of the full $6.0 million PPP loan on April 12, 2021; the SBA had not yet made a determination. Management reported no litigation expected to have a material effect and no material changes to previously disclosed risk factors.
Key facts for investors to verify
- How much of the reported loss reflects recurring operating costs versus IPO-related stock compensation, and how will the $134.8 million unrecognized RSU expense affect future results and dilution?
- Whether revenue growth, platform-spend trends, customer retention, and customer concentration evolve as expected.
- The timing and outcome of PPP loan forgiveness and the potential future cash cost of the TRA.
- Whether the IPO-funded cash balance and operating cash generation remain sufficient as planned investment and expenses increase.
- Comparability of Q1 2021 and Q1 2020 per-share results: the periods reflect different pre- and post-IPO ownership and reporting structures.