Viant(DSP) - 2024 Q1 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section highlights forward-looking statements, subject to risks and uncertainties that may cause actual results to differ materially - Forward-looking statements cover topics such as future financial performance, market trends, growth strategy, product strategy, security and privacy efforts, impact of macroeconomic/geopolitical events, customer acquisition/retention, expense management, environmental commitments, and accounting pronouncements[12] - Actual results may differ materially due to changes in global, regional, or local political, economic, business, competitive, market, regulatory, and other factors, many of which are beyond the company's control[13] - The company uses its 'Investor Relations' website and LinkedIn accounts of the company and its CEO as distribution channels for material information[14] PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Viant Technology Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q1 2024 and 2023 Condensed Consolidated Statements of Operations These statements show Viant Technology Inc.'s financial performance for Q1 2024 vs. 2023, highlighting revenue growth and reduced net loss Condensed Consolidated Statements of Operations (Three Months Ended March 31) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :--------- | :--------- | | Revenue | $53,393 | $41,720 | $11,673 | 28.0% | | Total operating expenses | $59,085 | $52,828 | $6,257 | 11.8% | | Loss from operations | $(5,692) | $(11,108) | $5,416 | -48.8% | | Net loss | $(3,214) | $(9,376) | $6,162 | -65.7% | | Net loss attributable to Viant Technology Inc. | $(947) | $(2,480) | $1,533 | -61.8% | | Basic EPS (Class A common stock) | $(0.06) | $(0.17) | $0.11 | -64.7% | | Diluted EPS (Class A common stock) | $(0.06) | $(0.17) | $0.11 | -64.7% | Condensed Consolidated Balance Sheets These balance sheets provide a snapshot of Viant Technology Inc.'s financial position as of March 31, 2024, compared to December 31, 2023 Condensed Consolidated Balance Sheets (As of) | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :---------------------------------- | :----------------------------------- | :--------- | :--------- | | Cash and cash equivalents | $206,057 | $216,458 | $(10,401) | -4.8% | | Total current assets | $327,543 | $340,417 | $(12,874) | -3.8% | | Total assets | $395,041 | $404,911 | $(9,870) | -2.4% | | Total current liabilities | $101,028 | $108,850 | $(7,822) | -7.2% | | Total liabilities | $124,585 | $130,522 | $(5,937) | -4.5% | | Total equity | $270,456 | $274,389 | $(3,933) | -1.4% | Condensed Consolidated Statements of Equity These statements detail changes in stockholders' equity for Viant Technology Inc. for Q1 2024 and 2023, reflecting movements in capital and deficit Condensed Consolidated Statements of Equity (As of) | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | Change ($) | | :--------------------------------- | :---------------------------------- | :----------------------------------- | :--------- | | Class A Common Stock (Amount) | $17 | $16 | $1 | | Class B Common Stock (Amount) | $47 | $47 | $0 | | Additional Paid-In Capital | $116,571 | $112,830 | $3,741 | | Accumulated Deficit | $(45,589) | $(43,509) | $(2,080) | | Treasury Stock (Amount) | $(5,458) | $(1,127) | $(4,331) | | Total Stockholders' Equity attributable to Viant Technology Inc. | $65,588 | $68,257 | $(2,669) | | Noncontrolling Interests | $204,868 | $206,132 | $(1,264) | | Total Equity | $270,456 | $274,389 | $(3,933) | - Key changes in equity for Q1 2024 include: issuance of Class A common stock from RSU vesting (987 shares, $1k), exercise of stock options (8 shares), exchange of Class B for Class A common stock (47 shares), repurchase of treasury stock for taxes ($5.5M), reissuance of treasury stock ($1.2M), allocation of equity to noncontrolling interests (decrease of $1.0M), accrued member tax distributions (decrease of $0.2M), stock-based compensation ($4.9M), and net loss ($0.9M)[23] Condensed Consolidated Statements of Cash Flows These statements detail cash flows from operating, investing, and financing activities for Q1 2024 vs. 2023, showing a net decrease in cash Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | | :--------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :--------- | | Net cash provided by (used in) operating activities | $3,838 | $(565) | $4,403 | | Net cash used in investing activities | $(4,062) | $(2,673) | $(1,389) | | Net cash used in financing activities | $(10,177) | $(1,593) | $(8,584) | | Net decrease in cash and cash equivalents | $(10,401) | $(4,831) | $(5,570) | | Cash and cash equivalents at end of period | $206,057 | $201,742 | $4,315 | - Operating activities shifted from a net cash outflow of $0.6 million in Q1 2023 to a net cash inflow of $3.8 million in Q1 2024, primarily due to a reduced net loss and changes in working capital[26] - Financing activities saw a significant increase in cash used, from $1.6 million in Q1 2023 to $10.2 million in Q1 2024, mainly driven by higher treasury stock repurchases and member tax distributions[26] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, offering crucial context and additional financial details Note 1 Nature of Operations Viant operates a cloud-based demand-side platform (DSP) for planning, buying, and measuring advertising across digital channels - Viant Technology Inc. was incorporated in Delaware on October 9, 2020, and operates a cloud-based demand side platform (DSP)[29] - The DSP centralizes planning, buying, and measurement of advertising across channels like connected TV, mobile, desktop, in-game, streaming audio, and digital billboards[29] Note 2 Basis of Presentation and Summary of Significant Accounting Policies This note outlines basis of presentation, accounting policies, emerging growth company status, and recent accounting pronouncements - The financial statements are prepared in accordance with GAAP for interim financial information and consolidate Viant Technology LLC, where the Company is the primary beneficiary[31] - The Company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised accounting standards, remaining an EGC until December 31, 2026, or sooner if it no longer qualifies[47][48] - Recently issued ASUs include 2023-06 (Disclosure Improvements), 2023-07 (Segment Reporting), and 2023-09 (Income Taxes), with the company currently evaluating their impact[49][50][51] - ASU 2016-13 (Financial Instruments—Credit Losses) was adopted at the beginning of fiscal 2023 with no material impact[52] Note 3 Revenue This note disaggregates revenue into 'over-time' and 'point-in-time' categories for Q1 2024 and 2023, showing increases Revenue Disaggregation (Three Months Ended March 31) | Revenue Type | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | Change (%) | | :--------------- | :------------------------------------------------ | :------------------------------------------------ | :--------- | :--------- | | Over-time revenue | $958 | $386 | $572 | 148.2% | | Point-in-time revenue | $52,435 | $41,334 | $11,101 | 26.9% | | Total revenue | $53,393 | $41,720 | $11,673 | 28.0% | Note 4 Property, Equipment, and Software, Net This note details property, equipment, and software, net, as of March 31, 2024, and December 31, 2023, and depreciation expense Property, Equipment, and Software, Net (As of) | Asset Class | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | Change ($) | | :-------------------------------- | :---------------------------------- | :----------------------------------- | :--------- | | Capitalized software development costs | $89,681 | $90,803 | $(1,122) | | Computer equipment | $1,548 | $1,449 | $99 | | Purchased software | $32 | $32 | $0 | | Furniture, fixtures and office equipment | $1,022 | $977 | $45 | | Leasehold improvements | $3,636 | $2,823 | $813 | | Total property, equipment, and software | $95,919 | $96,084 | $(165) | | Less: Accumulated depreciation | $(66,563) | $(67,823) | $1,260 | | Total property, equipment, and software, net | $29,356 | $28,261 | $1,095 | Depreciation Expense by Operating Expense Category (Three Months Ended March 31) | Operating Expense Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | | :------------------------- | :------------------------------------------------ | :------------------------------------------------ | :--------- | | Platform operations | $3,526 | $2,712 | $814 | | Technology and development | $431 | $393 | $38 | | General and administrative | $141 | $147 | $(6) | | Total Depreciation | $4,098 | $3,252 | $846 | Note 5 Leases This note provides information on operating leases, including terms, borrowing rates, cash paid, lease costs, and future minimum payments - As of March 31, 2024, operating leases had a weighted-average remaining lease term of approximately six years and a weighted-average incremental borrowing rate of 4.0%[58] Lease Cost Components (Three Months Ended March 31) | Lease Cost Component | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | | :--------------------- | :------------------------------------------------ | :------------------------------------------------ | :--------- | | Operating lease cost | $1,253 | $1,209 | $44 | | Short-term lease cost | $40 | $260 | $(220) | | Variable lease cost | $0 | $21 | $(21) | | Total lease cost | $1,293 | $1,490 | $(197) | Future Minimum Lease Payments (As of March 31, 2024) | Year | Future Minimum Lease Payments (As of March 31, 2024, in thousands) | | :------------------ | :---------------------------------------------------------------- | | Remainder of 2024 | $3,471 | | 2025 | $5,041 | | 2026 | $4,948 | | 2027 | $4,985 | | 2028 | $4,117 | | Thereafter | $8,181 | | Total undiscounted future lease payments | $30,743 | | Less: Imputed interest | $(3,438) | | Present value of operating lease liabilities | $27,305 | | Less: Operating lease liabilities, current | $(3,748) | | Operating lease liabilities, noncurrent | $23,557 | Note 6 Intangible Assets, Net This note presents intangible assets, accumulated amortization, amortization expense, and estimated future amortization Intangible Assets, Net (As of March 31, 2024) | Intangible Asset | Remaining Weighted Average Useful Life (years) | Gross Amount (As of March 31, 2024, in thousands) | Accumulated Amortization (As of March 31, 2024, in thousands) | Net Carrying Amount (As of March 31, 2024, in thousands) | | :----------------- | :--------------------------------------------- | :------------------------------------------------ | :---------------------------------------------------------- | :------------------------------------------------------- | | Developed technology | 0.0 | $4,927 | $(4,927) | $0 | | Customer relationships | 0.0 | $2,300 | $(2,300) | $0 | | Trademarks/tradenames | 1.9 | $1,400 | $(1,247) | $153 | | Total | | $8,627 | $(8,474) | $153 | Amortization Expense by Operating Expense Category (Three Months Ended March 31) | Operating Expense Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | | :------------------------- | :------------------------------------------------ | :------------------------------------------------ | :--------- | | Platform operations | $0 | $58 | $(58) | | General and administrative | $48 | $102 | $(54) | | Total Amortization | $48 | $160 | $(112) | Estimated Future Amortization (As of March 31, 2024) | Year | Estimated Future Amortization (As of March 31, 2024, in thousands) | | :------------------ | :---------------------------------------------------------------- | | Remainder of 2024 | $60 | | 2025 | $80 | | 2026 | $13 | | Total | $153 | Note 7 Accrued Liabilities This note details the components of accrued liabilities, primarily traffic acquisition costs and other accrued liabilities, as of March 31, 2024, and December 31, 2023 Accrued Liabilities (As of) | Accrued Liability Type | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | Change ($) | | :----------------------- | :---------------------------------- | :----------------------------------- | :--------- | | Accrued traffic acquisition costs | $29,837 | $34,085 | $(4,248) | | Other accrued liabilities | $6,151 | $5,178 | $973 | | Total accrued liabilities | $35,988 | $39,263 | $(3,275) | Note 8 Revolving Credit Facility This note describes the $75.0 million senior secured revolving credit facility, outlining interest rates, collateral, and covenants, with no outstanding balance as of March 31, 2024 - The Amended Loan Agreement, effective April 4, 2023, increased borrowing capacity to $75.0 million and extended the maturity date to April 4, 2028[64] - Advances bear variable interest rates based on Domestic Rate Loans (Alternate Base Rate + margin) or Term SOFR Rate Loans (Term SOFR Rate + SOFR Adjustment + margin)[65] - Applicable margins range from 1.00% to 1.25% for Domestic Rate Loans and 2.00% to 2.25% for Term SOFR Rate Loans[66] - The company was in compliance with all covenants, including a minimum Fixed Charge Coverage Ratio of 1.40 to 1.00 when undrawn availability is less than 25%, and had no outstanding balance as of March 31, 2024[67][68] Note 9 Stock-Based Compensation This note details stock-based compensation under the 2021 LTIP, including expense breakdown, RSU and NQSO activity, and valuation assumptions Stock-Based Compensation Expense by Operating Expense Category (Three Months Ended March 31) | Operating Expense Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | | :------------------------- | :------------------------------------------------ | :------------------------------------------------ | :--------- | | Platform operations | $406 | $892 | $(486) | | Sales and marketing | $755 | $2,512 | $(1,757) | | Technology and development | $500 | $1,327 | $(827) | | General and administrative | $2,779 | $2,741 | $38 | | Total Stock-Based Compensation | $4,440 | $7,472 | $(3,032) | Restricted Stock Unit (RSU) Activity (in thousands) | RSU Activity | Number of Shares (in thousands) | Weighted Average Grant Date Fair Value | | :-------------------------- | :------------------------------ | :------------------------------------- | | RSUs outstanding as of Dec 31, 2023 | 3,647 | $6.03 | | Granted | 2,312 | $9.24 | | Vested | (1,138) | $5.88 | | Canceled/forfeited | (137) | $9.22 | | RSUs outstanding as of Mar 31, 2024 | 4,684 | $7.56 | Nonqualified Stock Option (NQSO) Activity (in thousands) | NQSO Activity | Number of Options (in thousands) | Weighted Average Exercise Price | | :-------------------------- | :------------------------------- | :------------------------------ | | Outstanding as of Dec 31, 2023 | 5,736 | $5.41 | | Granted | 516 | $9.92 | | Exercised | (17) | $6.04 | | Canceled | (97) | $5.62 | | Expired | (3) | $13.70 | | Outstanding as of Mar 31, 2024 | 6,135 | $5.78 | Note 10 Income Taxes and Tax Receivable Agreement This note explains income tax benefit, valuation allowance against deferred tax assets, and the Tax Receivable Agreement (TRA) accounting - The company recognized an income tax benefit of $0.1 million for Q1 2024, resulting in an effective tax rate of 3.0%, compared to no benefit/expense and 0.0% effective tax rate in the prior year[78][80] - A full valuation allowance has been established against deferred tax assets as of March 31, 2024, as management determined it was not more likely than not that sufficient taxable income would be generated to realize these assets[81] - No liability related to the Tax Receivable Agreement (TRA) was recorded as of March 31, 2024, because it was concluded that the deferred tax assets subject to the TRA were not more likely than not to be realized, with an unrecorded TRA liability of approximately $10.3 million[82] Note 11 Loss Per Share This note details the calculation of basic and diluted net loss per share for Class A common stock, including anti-dilutive shares Loss Per Share (Three Months Ended March 31) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss attributable to Viant Technology Inc. (in thousands) | $(947) | $(2,480) | | Weighted-average shares of Class A common stock outstanding—basic (in thousands) | 15,949 | 14,748 | | Weighted-average shares of Class A common stock outstanding—diluted (in thousands) | 15,949 | 14,748 | | Loss per share of Class A common stock—basic | $(0.06) | $(0.17) | | Loss per share of Class A common stock—diluted | $(0.06) | $(0.17) | - Anti-dilutive shares excluded from diluted EPS for both periods include Restricted Stock Units (4,684k in 2024, 4,496k in 2023), Nonqualified Stock Options (6,135k in 2024, 5,755k in 2023), and Class B common stock (46,985k in 2024, 47,082k in 2023)[84] Note 12 Noncontrolling Interests This note explains the consolidation of Viant Technology LLC, reporting of noncontrolling interests, and the effect of ownership changes on equity - Viant Technology Inc. is the sole managing member of Viant Technology LLC and consolidates its financial results, reporting noncontrolling interests for other members' economic interests[85][86] Ownership Structure of Viant Technology LLC (As of) | Owner | Units Owned (As of March 31, 2024) | Ownership Percentage (As of March 31, 2024) | Units Owned (As of December 31, 2023) | Ownership Percentage (As of December 31, 2023) | | :---------------------- | :--------------------------------- | :------------------------------------------ | :------------------------------------ | :------------------------------------------- | | Viant Technology Inc. | 16,440,946 | 25.9% | 15,783,941 | 25.1% | | Noncontrolling interests | 46,984,825 | 74.1% | 47,032,260 | 74.9% | | Total | 63,425,771 | 100.0% | 62,816,201 | 100.0% | - During Q1 2024, noncontrolling interests exchanged 47,435 Class B shares of Viant Technology LLC for an equal number of the Company's Class A common stock, resulting in a decrease in additional paid-in capital of $1.0 million[87][88] Note 13 Commitments and Contingencies This note outlines material contractual obligations, including operating lease and hosting commitments, and addresses legal matters, guarantees, and indemnities Contractual Obligations (in thousands) | Commitment Type | Remainder of 2024 (in thousands) | 2025 (in thousands) | 2026 (in thousands) | 2027 (in thousands) | 2028 (in thousands) | Thereafter (in thousands) | | :---------------------- | :------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------------ | | Operating lease commitments | $3,471 | $5,041 | $4,948 | $4,985 | $4,117 | $8,181 | | Hosting commitments | $4,500 | $5,900 | $1,500 | $0 | $0 | $0 | - The company is subject to various legal proceedings and claims in the ordinary course of business, but management does not believe any will have a material effect on its business, financial condition, results of operations, or cash flows[91] - The company provides indemnifications to customers, vendors, lessors, business partners, and directors/officers, but is not aware of any claims that could materially affect its financial statements as of March 31, 2024[92][94] Note 14 Subsequent Events This note discloses the board's approval of a stock repurchase program on April 23, 2024, authorizing up to $50 million in stock or units - On April 23, 2024, the board approved a stock repurchase program for up to $50 million in Class A common stock or Class B units of Viant Technology LLC[95] - Repurchases may occur through open market purchases, block trades, privately negotiated transactions, accelerated share repurchases, or Rule 10b5-1 plans, with timing and volume at the company's discretion[95] - The program has no time limit, does not obligate the company to repurchase any specific amount, and will be funded from existing cash, short-term investments, and/or future cash flows[95] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Viant's financial condition and results of operations for Q1 2024 vs. 2023 Overview Viant Technology Inc. operates a cloud-based demand-side platform (DSP) for programmatic advertising, generating revenue through platform and service fees - Viant operates a cloud-based demand side platform (DSP) for programmatic advertising, enabling centralized planning, buying, and measurement across connected TV, mobile, desktop, in-game, streaming audio, and digital billboards[98][99] - The DSP offers self-service capabilities, transparency, control, customized audience segments, and leverages household ID and strategic partner data for targeted reach and ROAS measurement[100] - Revenue is generated from platform fees (percentage of spend or fixed CPM) and additional service fees for data management, media execution, and advanced reporting[101][102] Financial Highlights (Three Months Ended March 31) | Metric | 2024 (in millions) | 2023 (in millions) | Change (%) | | :--------------------------------- | :----------------- | :----------------- | :--------- | | Revenue | $53.4 | $41.7 | 28.0% | | Gross profit | $23.5 | $18.4 | 27.9% | | Contribution ex-TAC (non-GAAP) | $34.1 | $28.0 | 21.9% | | Net loss | $(3.2) | $(9.4) | -65.7% | | Non-GAAP net income (loss) | $1.3 | $(1.8) | 174.3% | | Adjusted EBITDA (non-GAAP) | $3.1 | $(0.4) | 888.5% | Factors Affecting Our Performance Viant's performance is influenced by platform enhancements, customer acquisition, long-term investments, macroeconomic conditions, and seasonality - Future growth depends on enhancing the platform, increasing customer usage, and attracting new customers, leveraging AI and machine learning for campaign efficiency[105] - The company plans long-term investments in platform operations, technology, and sales/marketing, which may negatively impact near-term profitability but are expected to drive growth[107] - Macroeconomic and geopolitical uncertainties continue to impact the business, customers, and the broader economy, with effects potentially realized in future periods[108] - The advertising industry experiences seasonality, with the fourth quarter historically showing the highest activity and the first quarter being slower[110] Results of Operations This section provides a detailed comparison of Viant's consolidated statements of operations for Q1 2024 and 2023, analyzing changes in revenue and expenses Consolidated Statements of Operations Data (Three Months Ended March 31) | Metric | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Revenue | $53,393 | $41,720 | $11,673 | 28% | | Platform operations | $29,880 | $23,337 | $6,543 | 28% | | Sales and marketing | $12,899 | $12,169 | $730 | 6% | | Technology and development | $5,232 | $5,894 | $(662) | -11% | | General and administrative | $11,074 | $11,428 | $(354) | -3% | | Total operating expenses | $59,085 | $52,828 | $6,257 | 12% | | Loss from operations | $(5,692) | $(11,108) | $5,416 | -49% | | Total other expense (income), net | $(2,379) | $(1,732) | $(647) | 37% | | Loss before income taxes | $(3,313) | $(9,376) | $6,063 | -65% | | Benefit from income taxes | $(99) | $0 | $(99) | NM | | Net loss | $(3,214) | $(9,376) | $6,162 | -66% | | Net loss attributable to Viant Technology Inc. | $(947) | $(2,480) | $1,533 | -62% | - Revenue increased by $11.7 million (28%) due to a 79% increase from marketers in public services, retail, financial services, and travel industry verticals[113] - Platform operations expense increased by $6.5 million (28%), driven by a $5.5 million increase in traffic acquisition costs (TAC) and a $1.0 million increase in other platform operations[115] - Sales and marketing expense increased by $0.7 million (6%), primarily due to higher advertising, personnel, and travel expenses, partially offset by a $1.8 million decrease in stock-based compensation[116] - Technology and development expense decreased by $0.7 million (11%), mainly due to an $0.8 million decrease in stock-based compensation, partially offset by increased software license costs[117] - General and administrative expense decreased by $0.4 million (3%), driven by lower business insurance, tax/accounting/legal/consulting, and recruiting/travel expenses, partially offset by a $0.4 million increase in personnel costs[118] - Total other income, net, increased by $0.6 million (37%) due to higher interest income on cash and cash equivalents, driven by higher interest rates[119] Key Operating and Financial Performance Measures This section discusses Viant's key operating and non-GAAP financial measures, highlighting significant improvements in profitability metrics Operating and Financial Performance Measures (Three Months Ended March 31) | Metric | 2024 (in thousands) | 2023 (in thousands) | Change (%) | | :------------------------------------------ | :------------------ | :------------------ | :--------- | | Gross profit | $23,513 | $18,383 | 28% | | Contribution ex-TAC | $34,121 | $27,991 | 22% | | Total operating expenses | $59,085 | $52,828 | 12% | | Non-GAAP operating expenses | $31,046 | $28,381 | 9% | | Net loss | $(3,214) | $(9,376) | 66% | | Adjusted EBITDA | $3,075 | $(390) | 888% | | Net loss as a percentage of gross profit | (14)% | (51)% | NM | | Adjusted EBITDA as a percentage of contribution ex-TAC | 9% | (1)% | NM | | Non-GAAP net income (loss) | $1,348 | $(1,814) | 174% | | Earnings (loss) per share—basic | $(0.06) | $(0.17) | 65% | | Earnings (loss) per share—diluted | $(0.06) | $(0.17) | 65% | | Non-GAAP earnings (loss) per share—basic | $0.02 | $(0.03) | 167% | | Non-GAAP earnings (loss) per share—diluted | $0.02 | $(0.03) | 167% | - Contribution ex-TAC, a key profitability measure, increased by 22% to $34.1 million in Q1 2024, reflecting improved operating performance[125][126] - Adjusted EBITDA significantly improved from a loss of $(0.4) million in Q1 2023 to a profit of $3.1 million in Q1 2024, representing an 888% improvement[125][133] - Non-GAAP net income (loss) improved by 174% to $1.3 million in Q1 2024, compared to a loss of $(1.8) million in Q1 2023[125][139] Liquidity and Capital Resources This section assesses Viant's liquidity and capital resources, highlighting cash, working capital, and primary sources and uses of cash Liquidity and Capital Resources (in millions) | Metric | As of March 31, 2024 (in millions) | As of December 31, 2023 (in millions) | Change ($) | | :---------------------- | :--------------------------------- | :------------------------------------ | :--------- | | Cash and cash equivalents | $206.1 | $216.5 | $(10.4) | | Working capital | $226.5 | $231.6 | $(5.1) | - Primary cash sources include revenues from programmatic advertising and existing cash[150] - Liquidity needs may be met by the $75.0 million revolving credit facility (undrawn availability of $74.1 million as of March 31, 2024) or additional debt/equity financing[152][159] - Primary cash uses include capital expenditures for technology development, property/equipment purchases, debt obligations, and operating lease payments[151] - The company also approved a $50 million stock repurchase program in April 2024[158] - The company does not expect to make payments under the Tax Receivable Agreement as of March 31, 2024, due to the unlikelihood of realizing deferred tax assets, with an unrecorded liability of approximately $10.3 million[155][156] Critical Accounting Policies and Estimates This section identifies Viant's critical accounting policies and estimates, which involve significant management judgment and assumptions, with no material changes since the last annual report - Critical accounting policies and estimates include revenue recognition (especially net versus gross assessment), assumptions for valuing common stock and stock-based compensation, and internal use software[173] - These estimates are based on historical data, experience, and reasonable assumptions, but actual results may differ under different conditions[172] - No material changes to critical accounting policies and estimates have occurred since the Annual Report on Form 10-K for the year ended December 31, 2023[174] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states no material changes in market risk exposure occurred during Q1 2024, referring readers to the Annual Report on Form 10-K - No material changes in market risk exposure occurred during the three months ended March 31, 2024[176] - For a detailed discussion of market risk, refer to Part II, Item 7A of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[176] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures as of March 31, 2024, with no material changes in internal control over financial reporting - As of March 31, 2024, disclosure controls and procedures were evaluated and deemed effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[178] - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2024[179] - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations such as human error, circumvention, and management override[180] PART II. OTHER INFORMATION Item 1. Legal Proceedings Viant is occasionally involved in legal proceedings but does not believe any current litigation would have a material adverse effect on its business or financial condition - The company is not currently a party to any litigation believed to have a material adverse effect on its business, operating results, cash flows, or financial condition[183] - Legal proceedings are costly and can divert management resources, with uncertain outcomes that could negatively impact the company[183] Item 1A. Risk Factors This section outlines significant risks associated with investing in Viant's Class A common stock, covering various aspects of its business, operations, and financial position RISK FACTOR SUMMARY This summary provides a high-level overview of the principal risks and uncertainties facing Viant Technology Inc., categorized into key areas - Key risks include dependence on platform enhancement and customer education, uncertainty of the shift away from cookie-based tracking, failure to innovate, evolving programmatic advertising market, reliance on advertising agency holding companies, long sales cycles, macroeconomic/geopolitical impacts, diminished access to advertising inventory or household ID data, stringent data privacy and security obligations, and technology changes affecting the advertising industry[186] - Additional risks cover IT system breaches, difficulty enforcing proprietary rights, stock price volatility, climate change/ESG matters, and the company's status as a 'controlled company' under Nasdaq listing standards[186] Risks Related to Our Business and Operations This section details risks related to Viant's core business and operational activities, including platform dependence, market evolution, and macroeconomic impacts - Success depends on continuous platform enhancement, effective customer education, and adapting to technological advancements like AI to attract and retain customers[187][189] - The programmatic advertising market is evolving, especially in emerging channels like connected TV; slower-than-expected development or failure to secure inventory could adversely affect growth[192][193][208][209] - Significant revenue comes from advertising agency holding companies; loss of these relationships or agencies could harm the business[194][195][196] - Payment-related risks include sequential liability and the need to pay suppliers regardless of customer payment[205][206] - Macroeconomic conditions (inflation, high interest rates) and geopolitical events can reduce advertising budgets and impact financial results[198][199][200] - Long sales cycles make revenue projection difficult[199] - The company faces liabilities from its ownership and operation of Myspace.com, including past FTC investigations, cybersecurity incidents, and potential claims related to content[236][237][239] Risks Related to Data Privacy and Artificial Intelligence This section addresses significant and evolving risks related to data privacy, security, technology policy changes, and increasing scrutiny on AI usage - The company processes personal information and sensitive data, subject to complex and evolving federal, state, local, and foreign laws (e.g., CCPA, MHMD, GDPR), industry standards, and internal policies[246][247][249][254] - Changes by technology companies (e.g., Google's Chrome, Apple's iOS) restricting third-party cookies and mobile device identifiers could fundamentally alter the ability to operate the platform or collect data, causing instability in the advertising industry[266][267][268] - A significant breach of IT Systems or disclosure of Confidential Data, or of third-party systems, could result from cyber-attacks, malicious activity, or human error, leading to operational disruption, litigation, fines, reputational harm, and decreased revenue[272][273][279][282] - Increasing use of generative AI by employees and evolving regulations around AI could lead to additional compliance costs, regulatory investigations, and consumer lawsuits[260] Risks Related to Our Intellectual Property This section highlights risks concerning Viant's intellectual property, including enforcement difficulties, potential infringement claims, and liabilities from advertising content - Difficulty in enforcing proprietary rights (patents, trademarks, copyrights, trade secrets) could allow competitors to copy or use technology without compensation, eroding competitive advantages[287][289] - The company faces claims for alleged infringement of third parties' intellectual property rights, which can be costly to settle or defend, divert management attention, and potentially require developing alternative technology or paying royalties[290] - Potential liability and harm to the business can arise from the nature of advertising content on the platform, including claims for copyright/trademark infringement, even with client indemnification[291][292] Risks Related to Our Capital Structure and Related Tax Matters This section addresses risks related to Viant's capital structure and tax matters, particularly its dependence on distributions from Viant Technology LLC and obligations under the Tax Receivable Agreement (TRA) - Viant Technology Inc. is a holding company dependent on distributions from Viant Technology LLC to pay dividends, taxes, and expenses, including payments under the Tax Receivable Agreement (TRA)[293][294] - The TRA requires payments to continuing members of Viant Technology LLC for 85% of net cash tax savings from tax basis step-ups, which could be substantial and may need to be financed by debt if distributions are insufficient[296][297] - TRA payments may be accelerated or significantly exceed actual tax benefits under certain conditions, potentially having a substantial negative effect on financial condition and liquidity[299][300] - If Viant Technology LLC becomes a publicly traded partnership taxable as a corporation, it could lead to significant tax inefficiencies and an inability to recover TRA payments, even if tax benefits are disallowed[306][307] Risks Related to Our Financial Position and Capital Requirements This section outlines risks related to Viant's financial position and capital requirements, including fluctuating operating results, financing needs, growth management, and restrictive covenants - Operating results may fluctuate due to varying pricing and service options chosen by customers, making future results difficult to predict and potentially falling below expectations[309] - The company may need additional capital for growth, platform development, and acquisitions, and may not be able to secure financing on favorable terms, leading to dilution or restrictive debt covenants[312] - Effective management of growth is crucial; failure to train new personnel, coordinate across the organization, or maintain infrastructure quality could adversely impact efficiency, productivity, and financial condition[315] - The revolving credit agreement contains covenants that restrict operations and requires maintaining a minimum fixed charge coverage ratio, potentially limiting business flexibility[316] - Seasonal fluctuations in advertising activity, with higher spend in Q4 and lower in Q1, can materially impact revenue, cash flow, and operating results[318] Risks Related to Ownership of Our Class A Common Stock This section addresses risks specific to owning Viant's Class A common stock, including market price volatility, potential decline from stock sales, and limited corporate governance due to 'controlled company' status - The market price of Class A common stock has been and may continue to be volatile, influenced by industry trends, company performance, and broader market fluctuations, potentially leading to securities class action litigation[319] - Sales of substantial blocks of Class A common stock, especially by insiders or through the universal shelf registration statement, could cause the market price to decline[320] - As a 'controlled company,' Viant relies on exemptions from certain Nasdaq corporate governance requirements, which may limit stockholder protections[321] - Insiders (Vanderhook Parties) control approximately 70% of voting power, limiting other stockholders' influence on key decisions, including change of control transactions[322] - Charter documents and Delaware law contain provisions that could delay or prevent takeover attempts and other corporate governance changes[324][325] General Risk Factors This section covers broad risks affecting Viant, including compliance with evolving laws and regulations, ESG matters, reduced reporting requirements, and internal controls - The business is subject to a wide range of evolving federal, state, local, and foreign laws and regulations, with non-compliance potentially leading to investigations, fines, and contract termination[331] - Increasing attention to ESG matters may lead to increased costs, enhanced compliance/disclosure obligations, reputational damage, and potential litigation[332][333][335][336] - As an 'emerging growth company' and 'smaller reporting company,' Viant benefits from reduced reporting and disclosure requirements, which could make its Class A common stock less attractive to investors[337][338][339] - Failure to maintain or implement effective internal controls could lead to inaccurate or untimely financial reporting, fraud, and a negative impact on the stock price and Nasdaq listing status[340][342][344] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities and details the repurchase of Class A common stock for taxes related to RSU vesting - No unregistered sales of equity securities occurred during the three months ended March 31, 2024[347] Class A Common Stock Repurchases (March 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :---------------- | :------------------------------- | :--------------------------- | | 3/1/24 to 3/31/24 | 165,068 | $10.13 | - In March 2024, 165,068 shares of Class A common stock were repurchased at an average price of $10.13 per share to satisfy estimated taxes incidental to the vesting of restricted stock units[348][349] - In April 2024, the board approved a stock repurchase program authorizing up to $50.0 million in Class A common stock or Class B units of Viant Technology LLC[350] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred during the period[351] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to Viant Technology Inc.'s operations - Mine safety disclosures are not applicable to the company[352] Item 5. Other Information This section reports that no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2024 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024[357] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, compensation policies, certifications, and XBRL-related documents - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Non-Employee Director Compensation Policy, Section 302 and 906 Certifications, and Inline XBRL documents[356] Signatures This section contains the signatures of Viant Technology Inc.'s Chief Executive Officer and Chief Financial Officer, certifying the filing of the Quarterly Report on Form 10-Q - The report was signed on April 30, 2024, by Tim Vanderhook, Chief Executive Officer and Chairman, and Larry Madden, Chief Financial Officer[360]