Viant Technology Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023; compared with the same 2022 periods. Amounts below are in millions of dollars unless stated otherwise. Viant operates a cloud-based demand-side platform for programmatic advertising across digital and other media channels.
Financial performance
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $59.6 | $48.8 | $158.5 | $142.7 |
| Gross profit | $28.6 | $21.3 | $70.7 | $58.0 |
| Gross margin | 48.0% | 43.6% | 44.6% | 40.7% |
| Operating loss | $(2.8) | $(12.9) | $(19.2) | $(40.1) |
| Consolidated net loss | $(0.7) | $(12.4) | $(13.3) | $(40.1) |
| Net loss attributable to Viant Inc. | $(0.5) | $(3.1) | $(4.1) | $(9.7) |
| GAAP loss per Class A share | $(0.03) | $(0.22) | $(0.27) | $(0.69) |
| Adjusted EBITDA (non-GAAP) | $9.7 | $(1.8) | $16.1 | $(8.8) |
| Contribution ex-TAC (non-GAAP) | $39.1 | $32.1 | $100.8 | $91.4 |
| Non-GAAP net income (loss) | $7.6 | $(4.4) | $10.8 | $(17.2) |
Q3 revenue rose 22%; gross profit rose 34%. Management attributed growth mainly to retail, consumer goods and travel verticals, with revenue from retail, consumer goods and travel up 42%. Nine-month revenue increased 11%, primarily reflecting 44% growth in retail. Approximately 86% of Q3 and 90% of nine-month revenue came from customers that were customers in the corresponding 2022 periods.
Operating expenses were $62.4 million in Q3, up 1%, and $177.7 million for nine months, down 3%. Sales and marketing expense fell 17% in Q3 and 21% year to date, while technology and development expense rose 10% and 17%, respectively. Traffic acquisition costs were $20.5 million in Q3 and $57.7 million for nine months. Interest income helped reduce reported losses: net interest income was $2.3 million in Q3 and $6.2 million year to date.
Cash, liquidity and obligations
- Cash and cash equivalents were $203.0 million at September 30, 2023, versus $206.6 million at December 31, 2022. Working capital was $226.8 million, compared with $227.7 million.
- For the first nine months, operating cash flow was positive $14.5 million, versus cash used of $13.3 million in 2022. Investing cash outflow was $9.7 million, including $8.9 million of capitalized software development; financing cash outflow was $8.4 million. Cash declined by $3.6 million.
- No debt was outstanding. The amended senior secured revolving facility provides up to $75.0 million, with $74.1 million available at quarter-end and maturity in April 2028. It is secured by substantially all assets; Viant reported compliance with covenants.
- Operating lease liabilities totaled $26.3 million. Hosting commitments were estimated at $17.1 million through 2026. Management believes cash, operating cash flows and undrawn facility availability will meet requirements over the next 12 months.
Outlook, risks and notable items
- The filing provides no quantified revenue or earnings guidance. Management expects continued investment in platform operations, technology and development, and sales and marketing, while noting such spending may weigh on near-term profitability. It also reported slowing further sales and marketing investment amid macroeconomic uncertainty.
- Management described advertising demand as stabilizing in 2023 after customers reduced budgets in the second half of 2022. It cited seasonal patterns, with activity historically strongest in Q4 and weaker in Q1; political advertising can add volatility.
- Active customers declined 10% year over year, to 301 from 334. Management said the decline reflected customers with limited capacity to scale platform spending. Advertiser spend per active customer increased 11% in Q3.
- Customer and receivable concentration warrants monitoring: one customer represented 20.3% of Q3 revenue; one advertising agency holding company represented 11.5%. Two customers accounted for 13.3% and 13.0% of accounts receivable at quarter-end.
- Viant recorded a $0.2 million income tax expense and maintained a full valuation allowance against deferred tax assets. It reported approximately $10.3 million of unrecorded potential Tax Receivable Agreement liability, concluding payment was not probable based on estimated future taxable income.
- Management said ordinary-course legal matters were not expected to have a material effect. The company’s principal disclosed risks include advertising-market and macroeconomic weakness, customer and agency concentration, competition, privacy and data regulation, cookie and platform-policy changes, cybersecurity and reliance on third-party cloud and inventory providers.
- Disclosure controls and procedures were considered effective; no material change in internal control over financial reporting was reported for the quarter.
Key facts for investors to verify
- Whether revenue and gross-margin growth persist, and how much reflects customer spend, vertical mix and pricing mix.
- Whether active-customer attrition stabilizes and the larger spend per active customer can be sustained.
- Cash conversion and working-capital timing, particularly customer collections versus payments to media and data suppliers.
- The contribution of non-GAAP adjustments, especially stock-based compensation, to adjusted EBITDA and non-GAAP net income; GAAP results remained loss-making.
- Customer, agency and receivable concentration, as well as exposure to privacy, data availability and cybersecurity developments.
- Potential future tax consequences, including realization of deferred tax assets and any eventual Tax Receivable Agreement liability.