Viant Technology Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Viant operates Adelphic, a demand-side advertising platform serving marketers and agencies across digital and traditional media channels. The company completed its IPO and corporate reorganization in February 2021; comparisons with 2020 therefore reflect a different ownership and reporting structure.
Financial performance
Amounts below are in millions of dollars except percentages and per-share data.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $50.9 | $40.2 | $141.4 | $108.8 |
| Gross profit | $21.9 | $20.1 | $56.4 | $46.5 |
| Gross margin | 43.0% | 50.0% | 39.9% | 42.7% |
| Operating income (loss) | $(11.8) | $7.8 | $(50.5) | $8.6 |
| Consolidated net income (loss) | $(12.2) | $7.5 | $(45.1) | $7.8 |
| Net income (loss) attributable to Viant Technology Inc. | $(2.5) | $7.5 | $(9.3) | $7.8 |
| Adjusted EBITDA (non-GAAP) | $6.5 | $10.2 | $19.7 | $16.2 |
| Non-GAAP net income | $3.1 | $7.5 | $10.5 | $7.8 |
- Q3 revenue rose 26.5% year over year; nine-month revenue increased 30.0%. Platform spend grew 28% in Q3 and 30% for the nine months.
- Q3 contribution ex-TAC, a company-defined non-GAAP measure, was $34.1 million, up 21.7%; nine-month contribution ex-TAC was $93.0 million, up 30.3%.
- Q3 Adjusted EBITDA fell 37.0% and its ratio to contribution ex-TAC declined to 19% from 37%. Nine-month Adjusted EBITDA rose 21.3%, while the comparable ratio eased to 21% from 23%.
- GAAP results included stock-based compensation of $15.4 million in Q3 and $62.2 million for the first nine months, versus none in the 2020 comparative periods. The company attributed much of the expense growth to IPO-related equity awards and investment in staff and operations.
Cash, debt and liquidity
- At September 30, cash was $242.6 million, current assets $316.4 million, current liabilities $61.6 million, and working capital $254.8 million. Long-term debt was $17.5 million, leaving cash substantially above reported debt.
- For the first nine months, operating cash flow was $30.1 million, investing cash outflow $6.0 million, and financing cash inflow $208.9 million. Financing included $232.5 million of net IPO proceeds, partly offset by offering costs, member tax distributions and taxes on equity awards.
- The $40 million secured revolving facility had $17.5 million outstanding, a 2024 maturity, and a 3.61% weighted-average rate for the period. The company reported covenant compliance. An October 2021 amendment reduced applicable borrowing margins.
- The approximately $6.0 million PPP loan and accrued interest were forgiven in June, producing a $6.1 million noncash gain included in nine-month results.
Changes, outlook and risks
- Operating expenses increased substantially year over year: Q3 total operating expenses were $62.7 million versus $32.5 million. Sales and marketing, technology and development, and general and administrative costs rose alongside platform operations costs.
- Management said it expects operating expenses to increase significantly in the foreseeable future as it invests in platform capabilities, identity resolution, new advertising channels, and sales and marketing. It cautioned that these investments may weigh on near-term profitability. The filing provides no specific financial guidance.
- Management cited ongoing uncertainty from COVID-19 and macroeconomic conditions, advertising-market adoption and growth, customer retention and expansion, and advertising seasonality; historically, activity has tended to be highest in Q4.
- The company reported 305 active customers, up 18% year over year, and trailing-twelve-month contribution ex-TAC per active customer of $433,000, up 7%. Agency holding companies included a customer representing 16.3% of Q3 revenue; supplier concentration included one supplier at 16.5% of accounts payable and accrued liabilities.
- Viant Technology Inc. owned 22.2% of Viant Technology LLC at quarter-end; continuing members held the remaining 77.8% as noncontrolling interests. A full valuation allowance was recorded against deferred tax assets. The estimated unrecorded TRA liability increased to $10.2 million; future payments depend on tax benefits realized and other factors.
- Future minimum operating lease payments totaled $30.7 million. The Irvine headquarters lease was extended through May 2031, with approximately $26.5 million of future minimum payments associated with it. Management said ordinary-course legal matters were not expected to have a material effect.
Key facts for investors to verify
- Whether revenue and platform-spend growth can continue while gross margin and Q3 Adjusted EBITDA conversion recover or stabilize.
- The recurring and future income-statement impact of equity compensation, including potential dilution from outstanding awards and Class B units.
- Cash generation, working-capital timing, revolving-credit availability and compliance with facility covenants.
- Customer and agency concentration, advertising seasonality, and the effects of COVID-19 and broader advertising-market conditions.
- Potential tax benefits and payment obligations under the TRA, given the valuation allowance and the reported unrecorded liability.