Viant Technology Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022; comparisons are with the same 2021 periods. Viant operates Adelphic, a demand-side platform for planning, buying and measuring programmatic advertising. Financial amounts below are in millions unless otherwise noted.
Key financial results
| Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 |
|---|---|---|---|---|
| Revenue | $51.2 | $50.4 | $93.8 | $90.6 |
| Gross profit | $20.3 | $18.7 | $36.7 | $34.5 |
| Gross margin | 39.6% | 37.1% | 39.1% | 38.1% |
| Operating loss | $(13.8) | $(24.0) | $(27.2) | $(38.7) |
| Net loss | $(14.1) | $(18.1) | $(27.7) | $(33.0) |
| Net loss attributable to Viant Inc. | $(3.4) | $(3.7) | $(6.6) | $(6.8) |
| GAAP loss per Class A share | $(0.24) | $(0.32) | $(0.47) | $(0.59) |
| Adjusted EBITDA (non-GAAP) | $(3.1) | $8.3 | $(7.0) | $13.2 |
| Operating cash flow | Not stated quarterly | $(8.5) | $23.6 |
- Q2 revenue grew 1.6% (reported as 2% rounded in MD&A); H1 revenue grew 3.6%. Advertiser spend, a company-defined operating metric, increased 31.9% in Q2 and 37.1% in H1.
- Contribution ex-TAC, a non-GAAP measure, was $31.7 million in Q2, down 1.4%; H1 was $59.3 million, up 0.6%. Active customers rose 16.7% to 336, while average contribution ex-TAC per active customer declined 4% to $422.
- Cash was $207.2 million at June 30, down from $238.5 million at year-end 2021. Working capital was $232.9 million. Total assets were $359.9 million and total liabilities were $89.7 million.
- Viant repaid its $17.5 million revolving-credit balance in May. No debt was outstanding at quarter-end; $40 million of the $40 million facility was undrawn. The facility matures October 2024, is secured by substantially all assets, and the company reported covenant compliance.
Changes and drivers
- Despite modest revenue growth, gross profit increased 8.3% in Q2 and 6.3% in H1. Lower operating expenses and higher gross profit improved GAAP operating and net losses.
- Reported operating expenses fell 13% in Q2 and 6% in H1, largely because stock-based compensation declined from elevated 2021 IPO-related awards. Stock-based compensation was $7.8 million in Q2 and $14.1 million in H1, versus $29.7 million and $46.8 million, respectively, in 2021.
- Non-GAAP profitability weakened: adjusted EBITDA turned negative, and non-GAAP net loss was $5.9 million in Q2 and $12.7 million in H1, compared with non-GAAP net income in the prior-year periods. Q2 also benefited in the comparison from a $6.1 million PPP-loan forgiveness gain in 2021; no comparable gain occurred in 2022.
- Operating cash flow swung to an $8.5 million use in H1 from $23.6 million provided a year earlier. The company cited working-capital movements and a customer agreement modification involving a $6.2 million cash settlement in exchange for terminating certain deferred revenue liabilities.
Outlook, commentary and risks
- No numerical revenue or earnings guidance is provided in the supplied filing text. Management expects continued investment in platform operations, technology and development, and sales and marketing; it cautions these investments may weigh on near-term profitability.
- Management believes cash, operating cash flows and undrawn credit availability will be sufficient for requirements over the next 12 months. Longer-term needs may depend on operating cash generation and access to capital markets.
- Management attributed growth outside automotive and consumer products to increased revenue from certain marketers, while those two verticals together declined 41% in Q2 and approximately 39% in H1. The filing cites COVID-19 effects, inflation, rising interest rates, tighter credit markets and geopolitical and macroeconomic uncertainty as factors behind reduced or paused advertiser spending.
- Other risks include advertising-market and programmatic-adoption trends, customer retention and expansion, access to advertising inventory and people-based data, seasonality, and COVID-19 uncertainty. Management reported no material changes to the risk factors in its 2021 Form 10-K.
- Lease liabilities were $21.0 million at June 30, 2022; office leases have a weighted-average remaining term of about eight years. The balance-sheet increase reflects adoption of new lease accounting in 2022, so prior-year balance-sheet figures are not directly comparable.
- The company recorded no income-tax benefit for the periods and maintained a full valuation allowance against deferred tax assets. It disclosed an unrecorded estimated Tax Receivable Agreement liability of approximately $10.3 million. Management said ordinary-course legal matters were not expected to have a material effect.
Important facts for investors to verify
- Whether strong advertiser-spend growth converts into revenue and contribution ex-TAC growth, particularly given weakness in automotive and consumer products.
- Whether operating cash flow improves after the H1 cash use and customer settlement, and how the timing of customer collections and supplier payments affects liquidity.
- Whether adjusted EBITDA and non-GAAP net results recover; review the company’s definitions and reconciliations alongside GAAP results.
- Potential dilution and compensation expense: 4.8 million RSUs and 3.9 million options were outstanding at June 30; 47.1 million Class B units represented 76.8% of LLC ownership, while Viant Inc. held 23.2%.
- Customer and supplier concentration: one customer represented 12.0% of accounts receivable, and one supplier represented 19.9% of accounts payable and accrued liabilities at quarter-end.