Viant(DSP) - 2023 Q3 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section cautions that forward-looking statements are based on current expectations and subject to substantial risks - Forward-looking statements are identified by words such as "may," "will," "should," "intend," or "expect" and relate to future financial performance, business measures, and market trends[10] - Actual results may differ materially from expectations due to various political, economic, competitive, and regulatory factors, as detailed in the "Risk Factors" section[11] - The company uses its "Investor Relations" website and executive LinkedIn accounts as primary channels for distributing material information[12] PART I. FINANCIAL INFORMATION Item 1. Financial Statements A. Condensed Consolidated Statements of Operations The statements show a significant improvement in net loss driven by increased revenue and reduced operating losses | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (%) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $59,585 | $48,830 | 22.0% | $158,528 | $142,659 | 11.1% | | Loss from operations | $(2,819) | $(12,875) | 78.1% | $(19,178) | $(40,054) | 52.1% | | Net loss | $(672) | $(12,426) | 94.6% | $(13,251) | $(40,081) | 66.9% | | Net loss attributable to Viant Technology Inc. | $(526) | $(3,126) | 83.2% | $(4,070) | $(9,719) | 58.1% | | Basic Loss per share | $(0.03) | $(0.22) | 86.4% | $(0.27) | $(0.69) | 60.9% | | Diluted Loss per share | $(0.03) | $(0.22) | 86.4% | $(0.27) | $(0.69) | 60.9% | B. Condensed Consolidated Balance Sheets The balance sheet shows a slight increase in total assets and equity, while total liabilities decreased | Metric (in thousands) | As of Sep 30, 2023 | As of Dec 31, 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total assets | $378,488 | $377,883 | $605 | 0.2% | | Total liabilities | $109,800 | $112,115 | $(2,315) | -2.1% | | Total equity | $268,688 | $265,768 | $2,920 | 1.1% | | Cash and cash equivalents | $203,007 | $206,573 | $(3,566) | -1.7% | C. Condensed Consolidated Statements of Equity Equity changes were primarily driven by stock-based compensation, net loss, and noncontrolling interest adjustments | Metric (in thousands) | Balance as of Dec 31, 2022 | Balance as of Sep 30, 2023 | Change ($) | | :--- | :--- | :--- | :--- | | Total Equity | $265,768 | $268,688 | $2,920 | | Additional Paid-In Capital | $95,922 | $108,858 | $12,936 | | Accumulated Deficit | $(36,261) | $(42,993) | $(6,732) | | Noncontrolling Interests | $206,520 | $203,983 | $(2,537) | - Stock-based compensation contributed $24.7 million to additional paid-in capital for the nine months ended September 30, 2023[21] D. Condensed Consolidated Statements of Cash Flows Cash flow from operations improved significantly, while investing and financing activities continued to use cash | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $14,503 | $(13,314) | $27,817 | 209.0% | | Net cash used in investing activities | $(9,660) | $(6,425) | $(3,235) | 50.3% | | Net cash used in financing activities | $(8,409) | $(19,076) | $10,667 | 55.9% | | Net decrease in cash and cash equivalents | $(3,566) | $(38,815) | $35,249 | 90.8% | E. Notes to the Condensed Consolidated Financial Statements Note 1 Nature of Operations The company operates a demand-side platform for programmatic advertising and functions as a holding company - Viant Technology Inc. operates a cloud-based demand-side platform (DSP) enabling marketers and agencies to centralize planning, buying, and measurement of advertising across various channels[29] - The company completed its IPO on February 12, 2021, and underwent a corporate reorganization, resulting in Class A and Class B common stock[30][32] - Viant Technology Inc. consolidates Viant Technology LLC and records a noncontrolling interest related to Class B units held by Class B stockholders[32] Note 2 Basis of Presentation and Summary of Significant Accounting Policies Financial statements are GAAP-compliant, consolidating Viant Technology LLC and using significant management estimates - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and consolidate Viant Technology LLC, with all intercompany balances and transactions eliminated[33] - Management's estimates, particularly for revenue recognition, stock-based compensation, and income taxes, are subject to increased judgment due to macroeconomic and geopolitical uncertainties[36][37][40] - The company adopted ASU No. 2016-13, Financial Instruments—Credit Losses, at the beginning of fiscal 2023, which did not have a material impact[50] Allowance for Doubtful Accounts (in thousands) | Period | Balance as of | Provision for doubtful accounts | Write-offs, net of recoveries | Balance as of | | :--- | :--- | :--- | :--- | :--- | | Dec 31, 2022 | $1,015 | - | - | - | | Mar 31, 2023 | $1,162 | $22 | $(84) | $1,162 | | Jun 30, 2023 | $1,135 | $27 | $(54) | $1,135 | | Sep 30, 2023 | $1,149 | $14 | - | $1,149 | Note 3 Revenue Revenue is primarily recognized at a point-in-time, with most contracts having a duration of less than one year - The majority of the company's contracts have an original expected duration of less than one year[51] Revenue Disaggregation (in thousands) | Revenue Type | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Over-time revenue | $1,019 | $133 | $2,188 | $494 | | Point-in-time revenue | $58,566 | $48,697 | $156,340 | $142,165 | | Total revenue | $59,585 | $48,830 | $158,528 | $142,659 | Note 4 Property, Equipment, and Software, Net Net property, equipment, and software increased due to investments in capitalized software development costs Property, Equipment, and Software, Net (in thousands) | Asset Class | As of Sep 30, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | Capitalized software development costs | $86,617 | $72,988 | | Total property, equipment, and software, net | $27,180 | $23,106 | Depreciation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Platform operations | $3,147 | $2,510 | $8,769 | $7,219 | | Total Depreciation | $3,678 | $3,089 | $10,367 | $8,905 | Note 5 Leases The company holds operating leases for office space with total lease costs increasing year-over-year - As of September 30, 2023, operating leases had a weighted-average remaining lease term of approximately seven years and a weighted-average incremental borrowing rate of 3.5%[55] Total Lease Cost (in thousands) | Period | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total lease cost | $1,502 | $1,279 | $4,273 | $3,700 | Future Minimum Lease Payments (in thousands) | Year | As of Sep 30, 2023 | | :--- | :--- | | Remainder of 2023 | $1,260 | | 2024 | $4,481 | | 2025 | $4,359 | | 2026 | $4,291 | | 2027 | $4,216 | | Thereafter | $10,934 | | Total undiscounted future lease payments | $29,541 | Note 6 Intangible Assets, Net Net intangible assets decreased due to ongoing amortization of customer relationships and trademarks Intangible Assets, Net (in thousands) | Asset Class | As of Sep 30, 2023 (Net Carrying Amount) | As of Dec 31, 2022 (Net Carrying Amount) | | :--- | :--- | :--- | | Developed technology | $0 | $58 | | Customer relationships | $110 | $356 | | Trademarks/tradenames | $193 | $253 | | Total | $303 | $667 | Amortization of Intangible Assets (in thousands) | Period | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total | $102 | $277 | $364 | $841 | Estimated Future Amortization of Intangible Assets (in thousands) | Year | As of Sep 30, 2023 | | :--- | :--- | | Remainder of 2023 | $103 | | 2024 | $107 | | 2025 | $80 | | 2026 | $13 | | Total | $303 | Note 7 Accrued Liabilities Total accrued liabilities remained stable, with accrued traffic acquisition costs as the largest component Accrued Liabilities (in thousands) | Accrued Liability | As of Sep 30, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | Accrued traffic acquisition costs | $29,332 | $29,631 | | Other accrued liabilities | $5,837 | $5,432 | | Total accrued liabilities | $35,169 | $35,063 | Note 8 Revolving Credit Facility The company increased its revolving credit facility to $75 million and extended its maturity to April 2028 - On April 4, 2023, the company amended its Loan Agreement, increasing the revolving credit facility borrowing capacity from $40.0 million to $75.0 million and extending the maturity date to April 4, 2028[62] - As of September 30, 2023, there was no outstanding balance under the Amended Loan Agreement, and the company was in compliance with all covenants[64][65] Note 9 Stock-Based Compensation Stock-based compensation expense increased, with significant unrecognized compensation to be recognized over two years - As of September 30, 2023, unrecognized stock-based compensation for RSUs was approximately $23.0 million, and for nonqualified stock options was approximately $12.8 million, both expected to be recognized over a weighted-average period of 2.0 years[69][71] Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Platform operations | $1,171 | $1,233 | $3,187 | $3,622 | | Sales and marketing | $2,588 | $2,324 | $7,620 | $6,929 | | Technology and development | $1,529 | $1,430 | $4,363 | $4,024 | | General and administrative | $3,446 | $2,724 | $9,565 | $7,280 | | Total | $8,734 | $7,711 | $24,735 | $21,855 | Nonqualified Stock Option Valuation Assumptions | Assumption | Three and Nine Months Ended Sep 30, 2023 | Three and Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Risk free interest rate | 3.8% - 4.3% | 1.4% - 2.0% | | Expected volatility | 75.8% - 81.5% | 61.5% - 62.7% | | Expected term (in years) | 6.0 - 6.1 | 5.9 - 6.0 | Note 10 Income Taxes and Tax Receivable Agreement The company recognized a minimal income tax expense and maintains a full valuation allowance against deferred tax assets - The company recognized an income tax expense of $0.2 million for the three and nine months ended September 30, 2023, with effective tax rates of (36.9)% and (1.4)% respectively[78] - A full valuation allowance has been established against deferred tax assets as of September 30, 2023, as realization was not more likely than not[79] - No liability related to the Tax Receivable Agreement (TRA) has been recorded, with a total unrecorded TRA liability of approximately $10.3 million as of September 30, 2023[80] Note 11 Loss Per Share Net loss per share for Class A common stock improved significantly, with several equity instruments being anti-dilutive - Anti-dilutive shares excluded from diluted loss per share calculation for the nine months ended September 30, 2023, included 3,944 thousand restricted stock units, 5,775 thousand nonqualified stock options, and 47,082 thousand shares of Class B common stock[84] Loss Per Share of Class A Common Stock | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Basic Loss per share | $(0.03) | $(0.22) | $(0.27) | $(0.69) | | Diluted Loss per share | $(0.03) | $(0.22) | $(0.27) | $(0.69) | Note 12 Noncontrolling Interests The company consolidates Viant Technology LLC and reports a 75.2% noncontrolling interest as of September 30, 2023 - Changes in the company's ownership interest in Viant Technology LLC, while retaining control, are accounted for as equity transactions[85] Ownership of Viant Technology LLC | Owner | Units Owned (Sep 30, 2023) | Ownership Percentage (Sep 30, 2023) | Units Owned (Dec 31, 2022) | Ownership Percentage (Dec 31, 2022) | | :--- | :--- | :--- | :--- | :--- | | Viant Technology Inc. | 15,541,093 | 24.8% | 14,643,798 | 23.7% | | Noncontrolling interests | 47,082,260 | 75.2% | 47,082,260 | 76.3% | | Total | 62,623,353 | 100.0% | 61,726,058 | 100.0% | Note 13 Commitments and Contingencies The company has non-cancelable lease and hosting commitments and is subject to ordinary course legal proceedings - As of September 30, 2023, non-cancelable operating lease commitments for office space were recorded as operating lease liabilities[88] - The company is subject to various legal proceedings and claims, but management believes none will have a material effect on its business or financial condition[90] Estimated Hosting Commitments (in thousands) | Year | Estimated Obligation | | :--- | :--- | | Remainder of 2023 | $3,100 | | 2024 | $7,000 | | 2025 | $5,700 | | 2026 | $1,300 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes financial performance, highlighting revenue growth, improved profitability, and key business factors Overview The company operates a cloud-based DSP, generating revenue from platform fees, with recent results showing strong growth - Viant operates a cloud-based demand-side platform (DSP) that enables programmatic advertising across channels like desktop, mobile, and connected TV[93][94] - The DSP offers self-service options, customized audience segments, and advanced reporting to improve return on advertising spend (ROAS)[95] - Revenue is generated through platform fees (percentage of spend or fixed CPM) and service fees[96][97] Key Financial Highlights (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (%) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $59,585 | $48,830 | 22.0% | $158,528 | $142,659 | 11.1% | | Gross profit | $28,620 | $21,300 | 34.4% | $70,703 | $57,985 | 21.9% | | Contribution ex-TAC | $39,102 | $32,071 | 21.9% | $100,781 | $91,350 | 10.3% | | Net loss | $(672) | $(12,426) | 94.6% | $(13,251) | $(40,081) | 66.9% | | Adjusted EBITDA | $9,668 | $(1,804) | 635.9% | $16,094 | $(8,762) | 283.7% | Factors Affecting Our Performance Performance is driven by customer acquisition, platform investment, macroeconomic conditions, and market seasonality - Future growth depends on retaining existing customers, increasing their platform usage, and adding new customers[100] - Revenue grew 22% and advertiser spend per active customer increased 11% for the three months ended September 30, 2023, compared to the prior year[101] - Active customer count was 301 for the twelve months ended September 30, 2023, a decline from 334 in the prior year[101] - Macroeconomic uncertainties led to a cost reduction plan in Q4 2022, including a 13% reduction in employee headcount[103][104] - The advertising industry experiences seasonal fluctuations, with the fourth quarter historically showing the highest activity[106] Results of Operations Revenue grew significantly, driven by key industry verticals, while operating expenses showed mixed results - Revenue increase for the three months was primarily due to a 42% increase from retail, consumer goods, and travel, and 7% from other verticals[113][122] - Sales and marketing expense decreased by $2.8 million (17%) for the three months and $10.0 million (21%) for the nine months, primarily due to reduced personnel and advertising costs[115][124] - Total other income increased significantly due to higher interest income on cash and cash equivalents[119][128] Revenue Performance (in thousands) | Period | Sep 30, 2023 | Sep 30, 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended | $59,585 | $48,830 | $10,755 | 22% | | Nine Months Ended | $158,528 | $142,659 | $15,869 | 11% | Operating Expenses (in thousands) | Expense Category | 3M Sep 30, 2023 | 3M Sep 30, 2022 | Change (%) | 9M Sep 30, 2023 | 9M Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Platform operations | $30,965 | $27,530 | 12% | $87,825 | $84,674 | 4% | | Sales and marketing | $14,146 | $16,949 | (17)% | $38,006 | $47,991 | (21)% | | Technology and development | $6,151 | $5,576 | 10% | $18,217 | $15,590 | 17% | | General and administrative | $11,142 | $11,650 | (4)% | $33,658 | $34,458 | (2)% | | Total other expense (income), net | $(2,328) | $(449) | 418% | $(6,108) | $27 | NM | | Provision for income taxes | $181 | $0 | NM | $181 | $0 | NM | Key Operating and Financial Performance Measures This section defines and reconciles key non-GAAP measures used by management to evaluate core operations - Contribution ex-TAC is a key profitability measure, calculated as revenue less platform operations expense plus other platform operations expense[134][136] - Active customers are defined as those with at least $5,000 in total aggregate contribution ex-TAC over the previous twelve months; the count decreased from 334 to 301 YoY[137] - Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation, and certain other non-core items[142] Key Operating and Financial Performance Measures (in thousands, except per share data) | Metric | 3M Sep 30, 2023 | 3M Sep 30, 2022 | Change (%) | 9M Sep 30, 2023 | 9M Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross profit | $28,620 | $21,300 | 34% | $70,703 | $57,985 | 22% | | Contribution ex-TAC | $39,102 | $32,071 | 22% | $100,781 | $91,350 | 10% | | Net loss | $(672) | $(12,426) | 95% | $(13,251) | $(40,081) | 67% | | Adjusted EBITDA | $9,668 | $(1,804) | 636% | $16,094 | $(8,762) | 284% | | Non-GAAP net income (loss) | $7,609 | $(4,434) | 272% | $10,824 | $(17,154) | 163% | | Non-GAAP earnings (loss) per share—basic | $0.08 | $(0.06) | 233% | $0.11 | $(0.24) | 146% | | Active customers | 301 | 334 | (10)% | 301 | 334 | (10)% | Liquidity and Capital Resources The company maintains a strong liquidity position with sufficient cash and an undrawn credit facility for short-term needs - The company's primary sources of cash are revenues and existing cash, with a $75.0 million senior secured revolving credit facility available, of which $74.1 million was undrawn as of September 30, 2023[161][169] - Material cash requirements include operating lease commitments ($29.5 million total undiscounted) and hosting commitments ($17.1 million total) through 2026[163][58][89] - No liability related to the Tax Receivable Agreement (TRA) has been recorded, with an unrecorded liability of approximately $10.3 million[164] Liquidity Position (in thousands) | Metric | As of Sep 30, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $203,007 | $206,573 | | Working capital | $226,810 | $227,745 | Cash Flows Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Operating activities | $14,503 | $(13,314) | | Investing activities | $(9,660) | $(6,425) | | Financing activities | $(8,409) | $(19,076) | | Net decrease in cash | $(3,566) | $(38,815) | Critical Accounting Policies and Estimates Critical accounting policies involve significant judgment, particularly in revenue recognition and stock-based compensation - Critical accounting policies and estimates include revenue recognition (net versus gross assessment), valuation models for stock-based compensation, and internal use software[182] - There have been no material changes to critical accounting policies and estimates since the Annual Report on Form 10-K for the year ended December 31, 2022[183] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in the company's market risk exposure during the reporting period - No material changes in market risk exposure occurred during the nine months ended September 30, 2023[184] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the end of the reporting period - Management concluded that disclosure controls and procedures were effective as of September 30, 2023, providing reasonable assurance that required information is reported timely[186] - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[187] - Management acknowledges that control systems have inherent limitations and can only provide reasonable, not absolute, assurance against errors and fraud[188] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is subject to ordinary course legal proceedings not expected to have a material adverse effect - The company is subject to various legal proceedings and claims arising in the ordinary course of business[191] - Management does not believe that any current proceedings or claims will have a material adverse effect on the company's business or financial condition[191] Item 1A. Risk Factors This section details risks related to business operations, data privacy, IP, capital structure, and stock ownership RISK FACTOR SUMMARY This summary outlines principal risks including customer dependence, industry shifts, competition, and data privacy - Success and revenue growth depend on adding new customers and increasing platform usage[194] - The company may not realize expected benefits from an industry shift away from cookie-based consumer tracking[194] - Failure to innovate and make correct investment decisions in offerings and platform could lead to loss of customers and declining revenue[194] - The evolving programmatic advertising market, if it develops slower or differently than expected, could adversely affect the business[194] - Significant revenue concentration from select advertising agency holding companies poses a risk if these relationships are lost[194] - Macroeconomic conditions and geopolitical events have had and could continue to have an adverse impact on the business[194] - Diminished access to advertising inventory or people-based data could decrease platform effectiveness and revenue[194] - Stringent and changing data privacy and security obligations could lead to regulatory actions, litigation, fines, and reputational harm[194] Risks Related to Our Business and Operations This section details risks from customer dependency, market evolution, macroeconomic pressures, and operational challenges - The company's success relies on attracting new customers, increasing existing customer usage, and continuous platform enhancement[195][197] - The shift away from cookie-based consumer tracking may not occur as rapidly as expected, or competitors may develop alternative solutions[196] - The programmatic advertising market is evolving, especially in channels like connected TV and streaming audio; slower development could adversely affect growth[200][201] - A significant amount of revenue comes from advertising agencies; loss of these relationships could harm the business[202][203][204] - Long sales cycles make it difficult to project new customer acquisition and revenue generation[206] - Macroeconomic conditions (inflation, rising interest rates) can cause customers to decrease advertising budgets, impacting revenue[207][208] - The company faces payment-related risks, including sequential liability arrangements with agencies, potentially impacting working capital[213][214][215] - Dependence on third-party hosting services like Google Cloud Platform and Amazon Web Services means operational issues could harm the business[232][233][234] - The company faces liabilities from its ownership and operation of Myspace.com, including potential claims for content and privacy practices[244][245][246][247] - The market is intensely competitive, with large competitors having more resources and greater brand recognition[250][251][252] Risks Related to Data Privacy and Artificial Intelligence The company faces evolving risks from data privacy regulations, technology platform changes, and the use of AI - The company processes personal information subject to complex and evolving laws like CCPA, CPRA, and GDPR[254][255][256][257][258] - Non-compliance with data privacy obligations could result in regulatory investigations, litigation, fines, and reputational harm[255][265][267] - Changes by technology companies (e.g., browser providers restricting third-party cookies) can fundamentally alter the ability to operate the platform[268][269][270][271][272] - The use of generative AI technologies introduces new privacy compliance risks and potential regulatory scrutiny[263][284] - Cyber-attacks and security breaches targeting IT systems and confidential data pose significant risks[273][274][279][282] Risks Related to Our Intellectual Property Success depends on protecting intellectual property, though enforcement is difficult and infringement claims are a risk - Protecting proprietary methods and technologies is crucial, but enforcement can be difficult, and third parties may copy or design around the technology[285][287] - The patent prosecution process is expensive and time-consuming, and issued patents may not be broad enough or may be invalidated[286] - The company is subject to third-party claims for alleged infringement of proprietary rights, which can result in significant defense costs[288][289] - Advertising content distributed through the platform can lead to litigation related to copyright or trademark infringement[290] Risks Related to Our Capital Structure and Related Tax Matters As a holding company, it relies on distributions from its subsidiary to meet tax and TRA obligations - Viant Technology Inc. is a holding company dependent on distributions from Viant Technology LLC to pay income taxes and obligations under the Tax Receivable Agreement (TRA)[291] - The IRS might challenge tax basis step-ups and other tax benefits, potentially reducing anticipated tax savings[292][293] - The company is required to pay continuing members of Viant Technology LLC 85% of net cash tax savings from tax basis step-ups under the TRA, and these payments may be substantial[294][295][296][297][299][300] - Viant Technology LLC is required to make tax distributions to its members, which may be substantial and could exceed the actual tax liability for many members[301][302][303] - There is a risk that Viant Technology LLC could become a publicly traded partnership taxable as a corporation, leading to significant tax inefficiencies[304][305] Risks Related to Our Financial Position and Capital Requirements Operating results fluctuate, and sustained growth requires additional capital and management of restrictive debt covenants - Operating results may fluctuate due to changes in pricing mix, seasonality, and market demand, making future results difficult to predict[306][307][308] - Future growth may require additional capital through equity or debt financings, which may not be available on favorable terms[309] - Continued business growth will lead to substantial financial and resource requirements, potentially increasing costs without sufficient revenue[310][311][313][314] - The amended revolving credit agreement contains covenants that may restrict operations and affect the ability to execute business strategies[315] - Seasonal fluctuations in advertising activity, with higher spending in Q4 and lower in Q1, can materially impact revenue and cash flow[317] Risks Related to Ownership of Our Class A Common Stock Class A common stock price is volatile, with insider control and 'controlled company' status impacting governance - The market price of Class A common stock has been highly volatile, ranging from $3.15 to $68.31, and may continue to fluctuate[318] - Sales of substantial blocks of Class A common stock by insiders could cause the market price to decline[320] - The company is a "controlled company" under Nasdaq standards, allowing it to rely on exemptions from certain corporate governance requirements[321] - Insiders control approximately 71% of the voting power, limiting other stockholders' ability to influence key decisions[322] - Charter documents and Delaware law include provisions that could delay or prevent a change in control[323][324][325] - An exclusive forum clause in the certificate of incorporation could limit stockholders' ability to obtain a favorable judicial forum for disputes[326][327][328] General Risk Factors The company faces risks from evolving regulations and its status as an emerging growth company - The business is subject to a wide range of evolving laws and regulations, with non-compliance potentially leading to investigations and fines[329][330][332][333][334] - As an emerging growth company (EGC), the company benefits from reduced reporting requirements, which might make its stock less attractive to some investors[335][336][337] - Failure to maintain effective internal controls could lead to inaccurate financial reporting and a material adverse effect on the business and stock price[338][339][340][341] - The trading market for Class A common stock depends on research from securities analysts; unfavorable or ceased coverage could cause the share price to decline[342][343] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities No unregistered sales of equity securities or issuer repurchases occurred during the quarter - No unregistered sales of equity securities occurred during the quarter ended September 30, 2023[344] - Neither the company nor any affiliated purchasers repurchased any shares of Class A common stock during the quarter ended September 30, 2023[345] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[346] Item 4. Mine Safety Disclosures This item is not applicable - This item is not applicable[347] Item 5. Other Information No other information was required to be reported under this item - No other information was reported[348] Item 6. Exhibits This section lists all exhibits filed as part of the report, including certifications and XBRL files - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents[349] Signatures The report is duly signed by the CEO and CFO in compliance with Securities Exchange Act requirements - The report is signed by Tim Vanderhook, Chief Executive Officer and Chairman, and Larry Madden, Chief Financial Officer, on November 6, 2023[354]