Viant Technology Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021; comparisons are to the corresponding 2020 periods. Viant operates Adelphic, a demand-side advertising platform serving marketers and agencies across digital and traditional channels. The company completed its IPO and related reorganization in February 2021, so ownership structure and per-share comparisons differ from prior periods.
Financial performance
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $50.4 million | $30.4 million | $90.6 million | $68.6 million |
| Gross profit | $18.7 million | $11.8 million | $34.5 million | $26.4 million |
| Gross margin | 37.1% | 38.9% | 38.1% | 38.5% |
| Operating income (loss) | $(24.0) million | $0.2 million | $(38.7) million | $0.8 million |
| Consolidated net income (loss) | $(18.1) million | $(0.03) million | $(33.0) million | $0.3 million |
| Net income (loss) attributable to Viant Inc. | $(3.7) million | $(0.03) million | $(6.8) million | $0.3 million |
| GAAP diluted EPS | $(0.32) | $(0.08) | $(0.59) | $0.30 |
- Q2 revenue rose 65.7% and six-month revenue increased 32.0%. Platform spend grew 58.4% in Q2 and 31.8% year to date. Management attributed growth to higher customer platform use, particularly percentage-of-spend pricing, and demand for people-based advertising products.
- Contribution ex-TAC, a company-defined non-GAAP measure, was $32.2 million in Q2 (up 60.6%) and $58.9 million for six months (up 35.9%). Adjusted EBITDA was $8.3 million in Q2 (up 203%) and $13.2 million for six months (up 121%); adjusted EBITDA was 26% of contribution ex-TAC in Q2, versus 14%.
- Non-GAAP net income was $5.2 million in Q2 and $7.4 million for six months. These measures exclude stock-based compensation and the PPP loan forgiveness gain, among other adjustments; they are not substitutes for GAAP results.
- Operating expenses increased substantially: Q2 sales and marketing was $20.6 million, technology and development $8.0 million, and general and administrative $14.1 million. Six-month stock-based compensation totaled $46.8 million, including $29.7 million in Q2, following IPO-related equity awards. The filing reports $100.4 million of unrecognized RSU compensation expected to be recognized over a weighted-average 2.4 years.
Cash, debt, and liquidity
- Cash was $252.3 million at June 30, 2021, compared with $9.6 million at December 31, 2020. Working capital was $264.4 million.
- For the first six months, operating cash flow was $23.6 million, investing cash flow was $(4.0) million, and financing cash flow was $223.1 million. Financing included $232.5 million of net IPO proceeds, offset in part by offering costs and member tax distributions.
- Debt was $17.5 million, all under a senior secured revolving credit facility with a $40 million stated limit and an October 2024 maturity. The company reported covenant compliance. The filing does not specify borrowing-base availability; management said cash, operating cash flow, and undrawn facility availability should cover needs for at least 12 months.
- The approximately $6.1 million PPP loan and accrued interest were forgiven in June 2021 and recorded as a gain on extinguishment of debt.
Material changes, outlook, and risks
- The February IPO generated $232.5 million of net proceeds. At June 30, Viant Inc. held a 19.5% economic interest in Viant Technology LLC; continuing members held 80.5% through exchangeable Class B units. This structure affects attribution of results and potential future dilution.
- Management expects operating expenses to increase significantly as it invests in platform operations, technology, identity resolution, additional channels, and sales and marketing. The filing provides no specific revenue, earnings, or cash-flow guidance and cautions that growth investments may weigh on near-term profitability.
- Management cited the potential shift away from third-party cookies as an opportunity, but warned that the shift may be slower than expected or may not benefit Viant. Google delayed its planned cookie phase-out to 2023; changes by browsers, mobile platforms, regulators, or competitors could affect data availability, advertising budgets, and platform performance.
- Other risks include COVID-19 and macroeconomic uncertainty, advertising-market seasonality (historically strongest in Q4), and customer/supplier concentration. For Q2, two advertising agency holding companies accounted for 14.7% and 10.0% of revenue; one supplier represented 16.4% of accounts payable and accrued liabilities.
- The company recorded no income tax expense for the first half, citing a full valuation allowance against deferred tax assets. It disclosed approximately $9.1 million of unrecorded potential Tax Receivable Agreement liability; future qualifying exchanges may require payments to holders equal to 85% of realized or deemed tax benefits.
- Management said ordinary-course legal matters were not expected to have a material effect. Subsequent to quarter-end, 2.1 million RSUs vested on August 9; the company paid $13.7 million to repurchase 0.8 million shares for employee tax withholding. Disclosure controls were assessed as effective at a reasonable-assurance level.
Important facts for investors to verify
- Whether revenue and platform-spend growth continue, and how much reflects durable customer expansion versus pricing mix or market conditions.
- GAAP profitability and cash generation after accounting for substantial stock-based compensation; evaluate non-GAAP adjustments alongside GAAP results.
- Future share dilution from RSUs, Class B unit exchanges, and share repurchases for tax withholding.
- Available borrowing capacity and compliance with facility terms, as well as the cash needs of the operating LLC and holding company.
- Whether cookie, privacy, browser, and mobile-platform changes affect customer targeting, measurement, and advertising demand.
- Potential realization of deferred tax assets and the timing and amount of any Tax Receivable Agreement payments.