Viant Technology Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; quarterly figures below compare the fourth quarter with Q4 2021. Viant operates Adelphic, a programmatic advertising demand-side platform serving marketers and agencies across digital channels.
Financial and operating performance
| Metric | FY 2022 | FY 2021 | Change |
|---|---|---|---|
| Revenue | $197.2 million | $224.1 million | -12.0% |
| Gross profit | $80.4 million | $94.5 million | -14.9% |
| Gross margin | 40.8% | 42.2% | -1.4 percentage points |
| Operating loss | $49.3 million | $42.8 million | Loss widened |
| Net loss | $48.1 million | $37.6 million | Loss widened |
| Adjusted EBITDA (non-GAAP) | $(6.1) million | $37.1 million | Turned negative |
| Contribution ex-TAC (non-GAAP) | $124.7 million | $141.5 million | -11.9% |
| Operating cash flow | $(3.5) million | $28.7 million | Turned negative |
For Q4 2022, revenue was $54.5 million versus $82.7 million in Q4 2021. Net loss was $8.0 million, compared with net income of $7.5 million; adjusted EBITDA was $2.6 million versus $17.4 million. Q4 2022 gross profit was $22.5 million, or about 41.2% of revenue.
At year-end, cash and cash equivalents were $206.6 million and working capital was $227.7 million. The company had no outstanding debt and reported $39.6 million of undrawn availability on its $40 million revolving facility. Cash used in investing activities was $8.8 million, including $8.1 million of capitalized software development; financing activities used $19.6 million.
Material changes and unusual items
- Revenue declined despite a 15% increase in advertiser spend and active customers rising 6% to 326. Management attributed the decline to customers in jobs, entertainment, retail, automotive and consumer products reducing or pausing spend; revenue across those verticals fell a combined 32%.
- Average contribution ex-TAC per active customer decreased 16% to $383,000. Approximately 84% of 2022 revenue came from customers that were customers in 2021.
- In Q4, Viant announced a workforce reduction of about 13%. It recorded $1.4 million in restructuring charges, primarily severance and related costs.
- Viant paid a customer approximately $6.2 million under an agreement terminating certain deferred revenue liabilities. Deferred revenue fell from $6.6 million to $0.1 million.
- FY 2021 included a $6.1 million gain from forgiveness of the PPP loan, a prior-year item that did not recur in 2022. Stock-based compensation also declined substantially year over year, partly because IPO-related restricted stock units had vested in the prior year.
- Adoption of lease accounting guidance in 2022 added operating lease assets and liabilities to the balance sheet; the auditor stated the income statement and cash-flow effects were not material.
Outlook, risks and contingencies
The filing provides no specific numerical revenue or earnings guidance. Management said it expects to continue investing in platform operations, technology and development, and customer growth, while monitoring uncertain market conditions; it also slowed further sales and marketing investment and began cost reductions. Management believes cash, operating cash generation and available borrowing capacity will cover requirements for the next 12 months.
- Management cited macroeconomic uncertainty, including inflation, higher interest rates and recession risks, as a cause of reduced advertising budgets and more difficult forecasting. It observed spending deceleration in the second half of 2022.
- Viant sees potential benefit from a shift away from third-party cookies, but notes that the timing is uncertain and competitors may develop alternatives. Privacy laws, platform policy changes, and reduced access to data or advertising inventory could impair the business.
- Customer and agency concentration, short and terminable customer agreements, sequential-liability payment terms, and the timing mismatch between customer collections and supplier payments pose revenue and working-capital risks. One advertising agency holding company represented 13.5% of 2022 revenue.
- Data privacy and cybersecurity are significant exposures. The filing describes the continuing FTC consent order concerning Myspace privacy practices, which runs through August 2032, and a historical 2016 Myspace data breach.
- The $40 million revolving credit facility is secured by substantially all assets and includes covenants. Viant reported covenant compliance and no borrowings at year-end. The company also disclosed $6.7 million of hosting commitments due by Q1 2024 and an unrecorded Tax Receivable Agreement liability of approximately $10.3 million; it currently does not expect TRA payments based on its taxable-income estimates.
- Viant is controlled by the Vanderhook parties, who held 71.5% of voting power at year-end. The company qualifies for controlled-company governance exemptions.
- Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2022. The auditor issued an unqualified opinion on the financial statements; it did not attest to internal-control effectiveness.
Investor facts to verify
- Whether advertising spend and revenue stabilize in the affected verticals, and whether customer growth translates into higher spend per customer.
- How much of revenue and contribution ex-TAC depends on major agency groups, and whether sequential-liability receivables are collected on time.
- Whether cost reductions deliver recurring savings without impairing sales capacity, product development or customer support.
- Cash-flow conversion, capitalized software spending, and the availability and covenant terms of the revolving facility.
- Whether privacy-law, cookie-policy, cybersecurity or Myspace-related developments create material costs, restrictions, claims or liabilities.
- The potential timing and amount of future Tax Receivable Agreement payments and the effect of the dual-class structure on public shareholders.
Contribution ex-TAC and adjusted EBITDA are non-GAAP measures; consider them alongside GAAP results and cash flows.