Viant Technology Inc. — Q1 2024 Form 10-Q
Business context and reporting period. Viant operates a cloud-based demand-side advertising platform for programmatic ad buying across connected TV, linear TV, mobile, desktop, in-game, streaming audio and digital billboards. This unaudited report covers the three months ended March 31, 2024; comparisons are with Q1 2023. Figures below are in U.S. dollars; “million” amounts are rounded.
Key financial results
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $53.4 million | $41.7 million | +28.0% |
| Gross profit | $23.5 million | $18.4 million | +27.9% |
| Gross margin | 44.0% | 44.1% | Broadly stable |
| Operating loss | $5.7 million | $11.1 million | Loss narrowed |
| Net loss | $3.2 million | $9.4 million | Loss narrowed 65.7% |
| Net loss attributable to Viant Technology Inc. | $0.9 million | $2.5 million | Loss narrowed |
| Class A GAAP loss per share | $0.06 | $0.17 | Improved |
| Adjusted EBITDA (non-GAAP) | $3.1 million | $(0.4) million | Improved |
| Contribution ex-TAC (non-GAAP) | $34.1 million | $28.0 million | +21.9% |
| Operating cash flow | $3.8 million provided | $0.6 million used | Improved |
Revenue growth was attributed primarily to a 79% increase in revenue from public services, retail, financial services and travel, partly offset by a 7% decline across other industry verticals. Traffic acquisition costs rose 40% to $19.3 million, broadly in line with revenue growth. Contribution ex-TAC and adjusted EBITDA are non-GAAP measures and should be considered alongside GAAP results.
Balance sheet, cash flow and liquidity
- Cash and cash equivalents were $206.1 million at March 31, 2024, down from $216.5 million at year-end 2023. Working capital was $226.5 million, versus $231.6 million.
- Operating cash flow was $3.8 million; investing cash outflow was $4.1 million, including $3.5 million of capitalized software development; financing cash outflow was $10.2 million, primarily $5.5 million for equity-award tax withholding repurchases and $4.7 million of member tax distributions. Cash declined $10.4 million during the quarter.
- No borrowings were outstanding on the $75 million senior secured revolving facility, which matures April 4, 2028; reported undrawn availability was up to $74.1 million. The company reported covenant compliance.
- Operating lease liabilities totaled $27.3 million. The filing reports hosting commitments of approximately $4.5 million for the remainder of 2024, $5.9 million in 2025 and $1.5 million in 2026.
Changes, outlook and material considerations
- Operating expenses increased 12% to $59.1 million, slower than revenue growth. Sales and marketing rose 6%; technology and development declined 11%; general and administrative declined 3%. Operating expenses were 111% of revenue versus 127% in Q1 2023.
- Management said it plans to continue investing in platform operations, technology and development, and sales and marketing to support long-term growth, while noting these investments may weigh on near-term profitability. The filing provides no quantified financial guidance. Management believes cash, operating cash flows and available revolver capacity will meet cash requirements for the next 12 months.
- Management identifies advertising-spend seasonality, with Q4 historically strongest and Q1 typically slower; election-related political advertising may also cause fluctuations. Macroeconomic uncertainty, customer spending, customer and supplier payment timing, competition, inventory access, privacy regulation, data availability, cookie changes, cybersecurity and platform reliability are key risks.
- The board approved a discretionary share repurchase authorization of up to $50 million on April 23, 2024, with no stated time limit or obligation to repurchase. A shelf registration statement became effective April 23, allowing the company to offer up to $100 million of securities and certain holders to sell up to 10 million Class A shares; sales by those holders would not provide proceeds to Viant.
- The company recorded a full valuation allowance against deferred tax assets and reported approximately $10.3 million of potential Tax Receivable Agreement liability as unrecorded because realization and payment were not considered probable. Management said ordinary-course legal proceedings are not expected to have a material effect.
- One customer represented 19.9% of accounts receivable at quarter-end. Two suppliers represented 15.3% and 14.5% of accounts payable and accrued liabilities. The company also relies on a limited number of advertising agency relationships and third-party data and hosting providers.
Important facts for investors to verify
- Whether revenue growth and customer adoption persist, and how pricing-option and channel mix affect revenue, TAC and contribution ex-TAC.
- Whether improving GAAP losses and operating cash flow continue after working-capital timing effects and non-cash compensation adjustments.
- How the $50 million repurchase authorization is used and whether it competes with software investment, liquidity needs or other capital uses.
- Potential dilution and selling pressure from equity awards, Class B unit exchanges and the effective shelf registration statement.
- Customer and supplier concentration, collection and payment timing, and exposure to advertising-spend cyclicality and privacy, data, cookie and cybersecurity changes.
- The future realizability of deferred tax assets and whether the unrecorded Tax Receivable Agreement liability becomes payable.