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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| | | | | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2024
OR
| | | | | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from_______to_______
Commission File Number: 001-40015
______________________________________________________________________________________________________________________________________________________
Viant Technology Inc.
(Exact name of registrant as specified in its charter)
______________________________________________________________________________________________________________________________________________________
| | | | | | | | |
Delaware | | 85-3447553 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
2722 Michelson Drive, Suite 100 Irvine, CA 92612 |
(Address of principal executive offices and zip code) |
(949) 861-8888
(Registrant’s telephone number, including area code)
______________________________________________________________________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Class A common stock, par value $0.001 per share | | DSP | | The Nasdaq Stock Market LLC (Nasdaq Global Select Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | x | Smaller reporting company | x |
Emerging growth company | x | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
As of November 8, 2024, there were 16,047,982 shares and 46,803,841 shares of the registrant’s Class A and Class B common stock, respectively, $0.001 par value per share, outstanding.
TABLE OF CONTENTS
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties.
In some cases, you can identify forward-looking statements by words such as “may,” “will,” “should,” “could,” “intend,” “consider,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict” or “continue” or the negative or plural of these words or other similar terms or expressions. All statements other than statements of historical fact are forward-looking statements, which speak only as of the date they are made and are not guarantees of future performance. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about: our future financial performance, including our revenue, cost of revenue, gross profit, contribution excluding traffic acquisition costs (“contribution ex-TAC”), adjusted EBITDA, and operating expenses; trends in our key business measures; the sufficiency of our cash and cash equivalents and cash provided by sales of our products and services to meet our liquidity needs; market trends; our market position and opportunity; our growth strategy and business aspirations for our demand side platform in enabling the programmatic purchase of advertising in the digital advertising industry; our product strategy, including our use of artificial intelligence; our efforts to enhance the security and privacy of our platform; the impact of information and data privacy trends and regulations on our business and competitors; the potential impacts of macroeconomic and geopolitical events on our business and the business of our customers, suppliers and channel partners, and the economy; our ability to attract new customers and retain existing customers; our ability to successfully expand into our existing markets and into new markets; our ability to effectively manage our growth and future expenses; our environmental and sustainability initiatives; and the impact of recent accounting pronouncements on our unaudited condensed consolidated financial statements.
The forward-looking statements contained in this Quarterly Report are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control, as well as the other factors described in the section entitled “Risk Factors” in this Quarterly Report. Additional factors or events that could cause our actual results to differ may also emerge from time to time, and it is not possible for us to predict all of them. Should one or more of these risks or uncertainties materialize or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and we caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this Quarterly Report speaks only as of the date on which we make it. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
We may use the "Investor Relations" section of our website, our LinkedIn account, the LinkedIn account of our Chief Executive Officer, Tim Vanderhook, the LinkedIn account of our Chief Operating Officer, Chris Vanderhook, our X (formerly known as Twitter) account (@viant_tech), and Chris Vanderhook's X account (@cvanderhook) as a distribution channel for material information about the Company. Financial and other important information regarding the Company is routinely posted on and accessible through the "Investor Relations" section of our website at investors.viantinc.com and the foregoing LinkedIn and X pages. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the "Email Alerts" option under the IR Resources menu of the Investor Relations section of our website at investors.viantinc.com.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
VIANT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Revenue | $ | 79,922 | | | $ | 59,585 | | | $ | 199,181 | | | $ | 158,528 | |
Operating expenses: | | | | | | | |
Platform operations | 44,598 | | | 30,965 | | | 109,600 | | | 87,825 | |
Sales and marketing | 13,007 | | | 14,146 | | | 38,994 | | | 38,006 | |
Technology and development | 5,631 | | | 6,151 | | | 16,678 | | | 18,217 | |
General and administrative | 12,648 | | | 11,142 | | | 36,334 | | | 33,658 | |
Total operating expenses | 75,884 | | | 62,404 | | | 201,606 | | | 177,706 | |
Income (loss) from operations | 4,038 | | | (2,819) | | | (2,425) | | | (19,178) | |
Other expense (income), net: | | | | | | | |
Interest income, net | (2,407) | | | (2,329) | | | (7,147) | | | (6,197) | |
Other expense, net | 1 | | | 1 | | | 4 | | | 89 | |
Total other expense (income), net | (2,406) | | | (2,328) | | | (7,143) | | | (6,108) | |
Income (loss) before income taxes | 6,444 | | | (491) | | | 4,718 | | | (13,070) | |
Provision for (benefit from) income taxes | (14) | | | 181 | | | (14) | | | 181 | |
Net income (loss) | 6,458 | | | (672) | | | 4,732 | | | (13,251) | |
Less: Net income (loss) attributable to noncontrolling interests | 4,951 | | | (146) | | | 4,117 | | | (9,181) | |
Net income (loss) attributable to Viant Technology Inc. | $ | 1,507 | | | $ | (526) | | | $ | 615 | | | $ | (4,070) | |
Earnings (loss) per share of Class A common stock: | | | | | | | |
Basic | $ | 0.09 | | | $ | (0.03) | | | $ | 0.04 | | | $ | (0.27) | |
Diluted | $ | 0.09 | | | $ | (0.03) | | | $ | 0.04 | | | $ | (0.27) | |
Weighted-average shares of Class A common stock outstanding: | | | | | | | |
Basic | 16,290 | | 15,388 | | 16,240 | | 15,093 |
Diluted | 19,993 | | 15,388 | | 16,240 | | 15,093 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
VIANT TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except share and per share data)
| | | | | | | | | | | |
| As of September 30, | | As of December 31, |
| 2024 | | 2023 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 214,632 | | | $ | 216,458 | |
Accounts receivable, net of allowances | 135,647 | | | 117,473 | |
Prepaid expenses and other current assets | 10,131 | | | 6,486 | |
Total current assets | 360,410 | | | 340,417 | |
Property, equipment, and software, net | 31,152 | | | 28,261 | |
Operating lease assets | 24,643 | | | 22,995 | |
Intangible assets, net | 113 | | | 201 | |
Goodwill | 12,422 | | | 12,422 | |
Other assets | 1,001 | | | 615 | |
Total assets | $ | 429,741 | | | $ | 404,911 | |
Liabilities and stockholders’ equity | | | |
Liabilities | | | |
Current liabilities: | | | |
Accounts payable | $ | 65,974 | | | $ | 47,342 | |
Accrued liabilities | 45,064 | | | 39,263 | |
Accrued compensation | 10,440 | | | 10,925 | |
Deferred revenue | 345 | | | 316 | |
Current portion of operating lease liabilities | 4,548 | | | 3,762 | |
Other current liabilities | 3,829 | | | 7,242 | |
Total current liabilities | 130,200 | | | 108,850 | |
Long-term debt | — | | | — | |
| | | |
Long-term portion of operating lease liabilities | 22,317 | | | 21,672 | |
| | | |
Total liabilities | 152,517 | | | 130,522 | |
Commitments and contingencies (Note 13) | | | |
Stockholders’ equity | | | |
Preferred stock, $0.001 par value | | | |
Authorized shares — 10,000,000 | | | |
Issued and outstanding — none | — | | | — | |
Class A common stock, $0.001 par value | | | |
Authorized shares — 450,000,000 | | | |
Issued — 17,423,015 and 15,937,816 | 17 | | | 16 | |
Outstanding — 16,224,237 and 15,783,941 | | | |
Class B common stock, $0.001 par value | | | |
Authorized shares — 150,000,000 | | | |
Issued and outstanding — 46,850,054 and 47,032,260 | 47 | | | 47 | |
Additional paid-in capital | 121,597 | | | 112,830 | |
Accumulated deficit | (50,049) | | | (43,509) | |
Treasury stock, at cost; 1,198,778 and 153,875 shares held | (12,191) | | | (1,127) | |
Total stockholders’ equity attributable to Viant Technology Inc. | 59,421 | | | 68,257 | |
Noncontrolling interests | 217,803 | | | 206,132 | |
Total equity | 277,224 | | | 274,389 | |
Total liabilities and stockholders’ equity | $ | 429,741 | | | $ | 404,911 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
VIANT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A Common Stock | | Class B Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Treasury Stock | | Noncontrolling Interests | | Total Equity |
| Shares | | Amount | | Shares | | Amount | | | | Shares | | Amount | | |
Balance as of June 30, 2024 | 17,170 | | $ | 17 | | | 46,985 | | $ | 47 | | | $ | 119,740 | | | $ | (49,162) | | | (795) | | | $ | (7,578) | | | $ | 208,878 | | | $ | 271,942 | |
Issuance of Class A common stock related to vesting of restricted stock units | 118 | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Exchange of Class B common stock for Class A common stock | 135 | | — | | | (135) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Repurchase of treasury stock related to tax withholdings on vested equity awards | — | | — | | | — | | — | | | — | | | — | | | (118) | | | (1,185) | | | — | | | (1,185) | |
Repurchase of treasury stock related to the stock repurchase program | — | | — | | | — | | — | | | — | | | — | | | (564) | | | (6,119) | | | — | | | (6,119) | |
Reissuance of treasury stock | — | | — | | | — | | — | | | — | | | (2,394) | | | 278 | | | 2,691 | | | — | | | 297 | |
Allocation of equity to noncontrolling interests | — | | — | | | — | | — | | | (3,974) | | | — | | | — | | | — | | | 3,974 | | | — | |
Accrued member tax distributions | — | | — | | | — | | — | | | (137) | | | — | | | — | | | — | | | — | | | (137) | |
Stock-based compensation | — | | — | | | — | | — | | | 5,968 | | | — | | | — | | | — | | | — | | | 5,968 | |
Net income | — | | — | | | — | | — | | | — | | | 1,507 | | | — | | | — | | | 4,951 | | | 6,458 | |
Balance as of September 30, 2024 | 17,423 | | $ | 17 | | | 46,850 | | $ | 47 | | | $ | 121,597 | | | $ | (50,049) | | | (1,199) | | | $ | (12,191) | | | $ | 217,803 | | | $ | 277,224 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A Common Stock | | Class B Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Treasury Stock | | Noncontrolling Interests | | Total Equity |
| Shares | | Amount | | Shares | | Amount | | | | Shares | | Amount | | |
Balance as of June 30, 2023 | 15,598 | | $ | 16 | | | 47,082 | | $ | 47 | | | $ | 102,885 | | | $ | (41,636) | | | (256) | | | $ | (1,074) | | | $ | 203,817 | | | $ | 264,055 | |
Issuance of Class A common stock related to vesting of restricted stock units | 148 | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Exchange of Class B common stock for Class A common stock | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Repurchase of treasury stock related to tax withholdings on vested equity awards | — | | — | | | — | | — | | | — | | | — | | | (148) | | | (980) | | | — | | | (980) | |
Reissuance of treasury stock | — | | — | | | — | | — | | | — | | | (831) | | | 199 | | | 831 | | | — | | | — | |
Allocation of equity to noncontrolling interests | — | | — | | | — | | — | | | (312) | | | — | | | — | | | — | | | 312 | | | — | |
Accrued member tax distributions | — | | — | | | — | | — | | | (3,851) | | | — | | | — | | | — | | | — | | | (3,851) | |
Stock-based compensation | — | | — | | | — | | — | | | 10,136 | | | — | | | — | | | — | | | — | | | 10,136 | |
Net loss | — | | — | | | — | | — | | | — | | | (526) | | | — | | | — | | | (146) | | | (672) | |
Balance as of September 30, 2023 | 15,746 | | $ | 16 | | | 47,082 | | $ | 47 | | | $ | 108,858 | | | $ | (42,993) | | | (205) | | | $ | (1,223) | | | $ | 203,983 | | | $ | 268,688 | |
VIANT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A Common Stock | | Class B Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Treasury Stock | | Noncontrolling Interests | | Total Equity |
| Shares | | Amount | | Shares | | Amount | | | | Shares | | Amount | | |
Balance as of December 31, 2023 | 15,938 | | $ | 16 | | | 47,032 | | $ | 47 | | | $ | 112,830 | | | $ | (43,509) | | | (154) | | $ | (1,127) | | | $ | 206,132 | | | $ | 274,389 | |
Issuance of Class A common stock related to vesting of restricted stock units | 1,295 | | 1 | | | — | | — | | | (1) | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | 8 | | — | | | — | | — | | | 40 | | | — | | | — | | | — | | | — | | | 40 | |
Exchange of Class B common stock for Class A common stock | 182 | | — | | | (182) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Repurchase of treasury stock related to tax withholdings on vested equity awards | — | | — | | | — | | — | | | — | | | — | | | (854) | | | (8,484) | | | — | | | (8,484) | |
Repurchase of treasury stock related to the stock repurchase program | — | | — | | | — | | — | | | — | | | — | | | (1,137) | | | (11,599) | | | — | | | (11,599) | |
Reissuance of treasury stock | — | | — | | | — | | — | | | — | | | (7,155) | | | 946 | | | 9,019 | | | — | | | 1,864 | |
Allocation of equity to noncontrolling interests | — | | — | | | — | | — | | | (7,554) | | | — | | | — | | | — | | | 7,554 | | | — | |
Accrued member tax distributions | — | | — | | | — | | — | | | (765) | | | — | | | — | | | — | | | — | | | (765) | |
Stock-based compensation | — | | — | | | — | | — | | | 17,047 | | | — | | | — | | | — | | | — | | | 17,047 | |
Net income | — | | — | | | — | | — | | | — | | | 615 | | | — | | | — | | | 4,117 | | | 4,732 | |
Balance as of September 30, 2024 | 17,423 | | $ | 17 | | | 46,850 | | $ | 47 | | | $ | 121,597 | | | $ | (50,049) | | | (1,199) | | | $ | (12,191) | | | $ | 217,803 | | | $ | 277,224 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A Common Stock | | Class B Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Treasury Stock | | Noncontrolling Interests | | Total Equity |
| Shares | | Amount | | Shares | | Amount | | | | Shares | | Amount | | |
Balance as of December 31, 2022 | 14,784 | | $ | 15 | | | 47,082 | | $ | 47 | | | $ | 95,922 | | | $ | (36,261) | | | (140) | | $ | (475) | | | $ | 206,520 | | | $ | 265,768 | |
Cumulative impact of ASU 2016-13 adoption (CECL) | — | | — | | | — | | — | | | — | | | (209) | | | — | | | — | | | — | | | (209) | |
Balance as of January 1, 2023 | 14,784 | | $ | 15 | | | 47,082 | | $ | 47 | | | $ | 95,922 | | | $ | (36,470) | | | (140) | | $ | (475) | | | $ | 206,520 | | | $ | 265,559 | |
Issuance of Class A common stock related to vesting of restricted stock units | 962 | | 1 | | | — | | — | | | (1) | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Exchange of Class B common stock for Class A common stock | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Repurchase of treasury stock related to tax withholdings on vested equity awards | — | | — | | | — | | — | | | — | | | — | | | (681) | | | (3,202) | | | — | | | (3,202) | |
Reissuance of treasury stock | — | | — | | | — | | — | | | — | | | (2,454) | | | 616 | | | 2,454 | | | — | | | — | |
Allocation of equity to noncontrolling interests | — | | — | | | — | | — | | | (6,645) | | | — | | | — | | | — | | | 6,645 | | | — | |
Accrued member tax distributions | — | | — | | | — | | — | | | (9,476) | | | — | | | — | | | — | | | — | | | (9,476) | |
Stock-based compensation | — | | — | | | — | | — | | | 29,058 | | | — | | | — | | | — | | | — | | | 29,058 | |
Net loss | — | | — | | | — | | — | | | — | | | (4,069) | | | — | | | — | | | (9,182) | | | (13,251) | |
Balance as of September 30, 2023 | 15,746 | | $ | 16 | | | 47,082 | | $ | 47 | | | $ | 108,858 | | | $ | (42,993) | | | (205) | | | $ | (1,223) | | | $ | 203,983 | | | $ | 268,688 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
VIANT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2024 | | 2023 |
Cash flows from operating activities: | | | |
Net income (loss) | $ | 4,732 | | | $ | (13,251) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
Depreciation and amortization | 12,351 | | | 10,731 | |
Stock-based compensation | 15,306 | | | 24,735 | |
Provision for doubtful accounts | 876 | | | 63 | |
Loss on disposal of assets | 21 | | | 118 | |
Noncash lease expense | 2,983 | | | 2,941 | |
Changes in operating assets and liabilities: | | | |
Accounts receivable | (19,050) | | | (4,653) | |
Prepaid expenses and other assets | (3,705) | | | 1,350 | |
Accounts payable | 18,750 | | | (5,639) | |
Accrued liabilities | 5,757 | | | 151 | |
Accrued compensation | (705) | | | (781) | |
Deferred revenue | 29 | | | 1,179 | |
Operating lease liabilities | (3,199) | | | (2,736) | |
Other liabilities | 1,130 | | | 295 | |
Net cash provided by operating activities | 35,276 | | | 14,503 | |
Cash flows from investing activities: | | | |
Purchases of property and equipment | (2,280) | | | (719) | |
Capitalized software development costs | (11,141) | | | (8,941) | |
Net cash used in investing activities | (13,421) | | | (9,660) | |
Cash flows from financing activities: | | | |
Repurchase of treasury stock related to tax withholdings on vested equity awards | (8,484) | | | (3,202) | |
Repurchase of treasury stock related to the stock repurchase program | (11,468) | | | — | |
Payment of member tax distributions | (5,306) | | | (5,207) | |
Proceeds from the exercise of stock options | 1,903 | | | — | |
Payment of offering costs | (326) | | | — | |
Net cash used in financing activities | (23,681) | | | (8,409) | |
Net decrease in cash and cash equivalents | (1,826) | | | (3,566) | |
Cash and cash equivalents at beginning of period | 216,458 | | | 206,573 | |
Cash and cash equivalents at end of period | $ | 214,632 | | | $ | 203,007 | |
Supplemental disclosure of cash flow information: | | | |
Cash paid for interest | $ | 211 | | | $ | 145 | |
Supplemental disclosure of non-cash investing and financing activities: | | | |
Stock-based compensation included in capitalized software development costs | 1,741 | | | 4,323 | |
Operating lease assets obtained in exchange for operating lease liabilities | 4,630 | | | 371 | |
Capitalized assets financed by accounts payable and accrued liabilities | 1,157 | | | 1,078 | |
Accrued member tax distributions | — | | | 4,269 | |
| | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
1. Nature of Operations
Viant Technology Inc. (the “Company,” “we,” “us,” “our” or “Viant”) was incorporated in the State of Delaware on October 9, 2020. The Company operates a cloud-based demand side platform (“DSP”) that is used by marketers and their advertising agencies to centralize the planning, buying and measurement of their advertising across most channels, including connected TV, mobile, desktop, in-game, streaming audio and digital billboards.
Our headquarters are located in Irvine, California with other leased office spaces across the United States.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information which are unaudited and include the operations of the Company, Viant Technology LLC and its wholly owned subsidiaries. Viant Technology LLC is considered a variable interest entity (“VIE”). The Company is the primary beneficiary and sole managing member of Viant Technology LLC and has decision-making authority that significantly affects the economic performance of the entity. As a result, the Company consolidates Viant Technology LLC. All intercompany balances and transactions have been eliminated in consolidation.
Management believes that the accompanying condensed consolidated financial statements reflect the adjustments necessary for the fair statement of its condensed consolidated balance sheets, statements of operations, and cash flows included in this Quarterly Report on Form 10-Q. The condensed consolidated balance sheet as of December 31, 2023 was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Certain information and disclosures normally included in the Company's consolidated financial statements prepared in accordance with GAAP have been omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2023.
The condensed consolidated statements of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 (“fiscal 2024”), or for any other future annual or interim period.
There have been no material changes to the significant accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
period. On an ongoing basis, management evaluates its estimates, primarily those related to revenue recognition, stock-based compensation, income taxes, allowances for doubtful accounts, the useful lives of capitalized software development costs and other property, equipment, and software and assumptions used in the impairment analyses of long-lived assets and goodwill. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The impact of widespread macroeconomic and geopolitical uncertainties, including the impact of bank failures, high interest rates, inflationary pressures, labor shortages, shortages of goods and services, supply chain constraints, pandemics, political election cycles, international conflicts and acts of terrorism on our business continues to evolve. Many of our estimates and assumptions consider these macroeconomic and geopolitical factors in the market, which require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available on the potential impact on our business of global economic and business events, our estimates may change materially in future periods as a result.
Comprehensive Income (Loss)
For the periods presented, net income (loss) is equal to comprehensive income (loss).
Cash and Cash Equivalents
For purposes of balance sheet presentation and reporting of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are comprised of cash in bank accounts and money market funds for which the carrying value approximates fair value due to their short-term nature. Cash equivalents are valued based on Level 1 inputs which consist of quoted prices in active markets. As of September 30, 2024, cash equivalents included money market funds of $195.4 million.
Accounts Receivable, Net of Allowances
The following table presents changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2024:
| | | | | |
| (in thousands) |
Balance as of December 31, 2023 | $ | 1,197 | |
Provision for doubtful accounts | (87) | |
Write-offs, net of recoveries | — | |
Balance as of March 31, 2024 | 1,110 | |
Provision for doubtful accounts | 55 | |
Write-offs, net of recoveries | — | |
Balance as of June 30, 2024 | 1,165 | |
Provision for doubtful accounts | 908 | |
Write-offs, net of recoveries | (4) | |
Balance as of September 30, 2024 | $ | 2,069 | |
Concentration of Risk
Financial instruments that potentially subject the Company to concentration of risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains its cash with financial institutions and its cash levels exceed the Federal Deposit Insurance Corporation’s federally insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. Accounts receivable include amounts due from customers with principal operations primarily in the United States.
As of September 30, 2024, one individual customer accounted for 15.2% of consolidated accounts receivable. As of December 31, 2023, one individual customer accounted for 17.9% of consolidated accounts receivable.
As of September 30, 2024, three individual suppliers accounted for 17.4%, 14.4% and 11.1%, respectively, of consolidated accounts payable and accrued liabilities. As of December 31, 2023, three individual suppliers accounted for 16.1%, 14.4% and 11.6%, respectively, of consolidated accounts payable and accrued liabilities.
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
The following table provides the Company's concentrations of credit risk with respect to advertising agency holding companies and individual customers as a percentage of the Company's total revenues for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Advertising Agency Holding Company | | | | | | | |
A | <10.0% | | <10.0% | | 10.8 | % | | <10.0% |
| | | | | | | |
B | <10.0% | | 11.5 | % | | <10.0% | | <10.0% |
Individual Customer | | | | | | | |
C | 12.5 | % | | <10.0% | | <10.0% | | <10.0% |
D | <10.0% | | 20.3 | % | | <10.0% | | 15.2 | % |
| | | | | | | |
JOBS Act Election as an Emerging Growth Company
On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” the Company may, under Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. An “emerging growth company” is one with less than $1.235 billion in annual gross revenues, has issued less than $1 billion of non-convertible debt over a three-year period and is not deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission (“SEC”). The Company will remain an emerging growth company until December 31, 2026, or sooner if it no longer qualifies. The Company may take advantage of this extended transition period until the first to occur of the date that it (i) is no longer an “emerging growth company” or (ii) affirmatively and irrevocably opts out of this extended transition period.
The Company has elected to take advantage of the benefits of this extended transition period. Until the date that the Company is no longer an “emerging growth company” or affirmatively and irrevocably opts out of the exemption provided by Securities Act Section 7(a)(2)(B), upon issuance of a new or revised accounting standard that applies to its condensed consolidated financial statements and that has a different effective date for public and private companies, the Company will disclose the date on which it will adopt the recently issued accounting standard.
Recently Issued Accounting Pronouncements
Disclosure Improvements
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. ASU 2023-06 includes a number of amendments to clarify or improve disclosure and presentation requirements of a variety of topics in order to allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements and to align the requirements in the FASB accounting standard codification with the SEC's regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. This ASU is not expected to have a material impact on the Company's condensed consolidated financial statements.
Segment Reporting
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires companies with a single reportable segment to provide all existing segment disclosures in Topic 280, as well as new incremental segment information required by this standard on an annual and interim basis. The guidance is effective for fiscal years beginning after December 15, 2023 on a retrospective basis, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU is not expected to have a material impact on the Company's condensed consolidated financial statements.
Income Taxes
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring consistent categories and greater disaggregation of information in the rate reconciliation as well as income taxes paid disaggregated by jurisdiction. The effective date for this ASU is for
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
the fiscal year beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of these amendments.
Recently Adopted Accounting Pronouncements
Financial Instruments—Credit Losses
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments—Credit Losses (Topic 326). ASU 2016-13 revises the impairment model to utilize an expected loss methodology in place of the incurred loss methodology, which results in more timely recognition of losses on financial instruments. We adopted this standard at the beginning of the fiscal year ended December 31, 2023 ("fiscal 2023"). As a result, we revised the impairment model to utilize an expected loss methodology in place of an incurred loss methodology related to our allowance for credit losses. We evaluate our allowance for credit losses based on historical bad debt experience, our assessment of the financial condition of companies with which we do business, current macroeconomic conditions and reasonable and supportable forecasts of future macroeconomic conditions. The adoption did not have a material impact on the Company's condensed consolidated financial statements.
3. Revenue
The disaggregation of revenue was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Over-time revenue | $ | 1,438 | | | $ | 1,019 | | | $ | 3,865 | | | $ | 2,188 | |
Point-in-time revenue | 78,484 | | | 58,566 | | | 195,316 | | | 156,340 | |
Total revenue | $ | 79,922 | | | $ | 59,585 | | | $ | 199,181 | | | $ | 158,528 | |
Revenue for unsatisfied performance obligations expected to be recognized in the future for contracts with an original expected duration of greater than one year was $0.9 million as of September 30, 2024 and $0.2 million as of December 31, 2023. These amounts do not include contracts with an original expected duration of less than one year, which is the majority of the Company’s contracts.
Remaining deferred revenue that is anticipated to be recognized during the succeeding 12 month period is recorded in the current portion of deferred revenue within the condensed consolidated balance sheets.
4. Property, Equipment, and Software, Net
Major classes of property, equipment, and software were as follows:
| | | | | | | | | | | |
| As of September 30, | | As of December 31, |
| 2024 | | 2023 |
Capitalized software development costs | $ | 98,060 | | | $ | 90,803 | |
Computer equipment | 1,729 | | | 1,449 | |
Purchased software | 18 | | | 32 | |
Furniture, fixtures and office equipment | 1,090 | | | 977 | |
Leasehold improvements | 4,534 | | | 2,823 | |
Total property, equipment, and software | 105,431 | | | 96,084 | |
Less: Accumulated depreciation | (74,279) | | | (67,823) | |
Total property, equipment, and software, net | $ | 31,152 | | | $ | 28,261 | |
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
Depreciation recorded in the condensed consolidated statements of operations was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Platform operations | $ | 3,383 | | | $ | 3,147 | | | $ | 10,440 | | | $ | 8,769 | |
Sales and marketing | — | | | — | | | — | | | — | |
Technology and development | 432 | | | 386 | | | 1,303 | | | 1,162 | |
General and administrative | 203 | | | 145 | | | 520 | | | 436 | |
Total | $ | 4,018 | | | $ | 3,678 | | | $ | 12,263 | | | $ | 10,367 | |
5. Leases
Lessee Arrangements
The Company has operating leases for its office space, which have remaining lease terms of up to seven years. The Company does not have finance leases.
Some of these leases include renewal options to extend the leases for up to five years and/or termination options to terminate the leases within one year. If it is reasonably certain that a renewal or termination option will be exercised, the exercise of the option is considered in calculating the term of the lease.
As of September 30, 2024, the Company's operating leases had a weighted-average remaining lease term of approximately six years and a weighted-average incremental borrowing rate of 4.1%.
Cash paid for amounts included in the operating lease liabilities was $1.4 million and $3.8 million for the three and nine months ended September 30, 2024, respectively, and $1.3 and $3.5 million for the three and nine months ended September 30, 2023, respectively.
The components of lease cost were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Operating lease cost | $ | 1,030 | | | $ | 1,234 | | | $ | 3,486 | | | $ | 3,655 | |
Short-term lease cost | 325 | | | 268 | | | 373 | | | 609 | |
Variable lease cost | — | | | — | | | — | | | 9 | |
Total lease cost | $ | 1,355 | | | $ | 1,502 | | | $ | 3,859 | | | $ | 4,273 | |
As of September 30, 2024, the Company had a remaining contractual obligation of $1.8 million related to a short-term lease to be paid over the following three years. The effective term of this lease is based on the cumulative days available for use throughout the contractual term, which is less than one year. The cost for this lease is included in the disclosure of short-term lease cost. This lease and other of our short-term leases are not recorded on the Company's condensed consolidated balance sheet due to our accounting policy election for short-term leases.
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
Future minimum lease payments are as follows:
| | | | | |
| As of September 30, |
Year | 2024 |
Remainder of 2024 | $ | 1,254 | |
2025 | 5,550 | |
2026 | 5,399 | |
2027 | 5,449 | |
2028 | 4,117 | |
Thereafter | 8,181 | |
Total undiscounted future lease payments | 29,950 | |
Less: Imputed interest | (3,085) | |
Present value of operating lease liabilities | 26,865 | |
Less: Operating lease liabilities, current | (4,548) | |
Operating lease liabilities, noncurrent | $ | 22,317 | |
6. Intangible Assets, Net
The balances of intangible assets and accumulated amortization are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2024 |
| Remaining Weighted-Average Useful Life (years) | | Gross Amount | | Accumulated Amortization | | Net Carrying Amount |
Developed technology | 0.0 | | $ | 4,927 | | | $ | (4,927) | | | $ | — | |
Customer relationships | 0.0 | | 2,300 | | | (2,300) | | | — | |
Trademarks/tradenames | 1.4 | | 1,400 | | | (1,287) | | | 113 | |
Total | | | $ | 8,627 | | | $ | (8,514) | | | $ | 113 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 2023 |
| Remaining Weighted- Average Useful Life (years) | | Gross Amount | | Accumulated Amortization | | Net Carrying Amount |
Developed technology | 0.0 | | $ | 4,927 | | | $ | (4,927) | | | $ | — | |
Customer relationships | 0.1 | | 2,300 | | | (2,272) | | | 28 | |
Trademarks/tradenames | 2.2 | | 1,400 | | | (1,227) | | | 173 | |
Total | | | $ | 8,627 | | | $ | (8,426) | | | $ | 201 | |
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
Amortization of intangible assets recorded in the condensed consolidated statements of operations was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Platform operations | $ | — | | | $ | — | | | $ | — | | | $ | 58 | |
Sales and marketing | — | | | — | | | — | | | — | |
Technology and development | — | | | — | | | — | | | — | |
General and administrative | 20 | | | 102 | | | 88 | | | 306 | |
Total | $ | 20 | | | $ | 102 | | | $ | 88 | | | $ | 364 | |
Estimated future amortization of intangible assets is as follows:
| | | | | |
| As of September 30, |
Year | 2024 |
Remainder of 2024 | $ | 20 | |
2025 | 80 | |
2026 | 13 | |
2027 | — | |
2028 | — | |
Thereafter | — | |
Total | $ | 113 | |
7. Accrued Liabilities
The Company’s accrued liabilities consisted of the following:
| | | | | | | | | | | |
| As of September 30, | | As of December 31, |
| 2024 | | 2023 |
Accrued traffic acquisition costs | $ | 41,754 | | | $ | 34,085 | |
Other accrued liabilities | 3,310 | | | 5,178 | |
Total accrued liabilities | $ | 45,064 | | | $ | 39,263 | |
As of September 30, 2024 and December 31, 2023, the Company had a balance of $0.1 million and $0.3 million, respectively, payable to related parties for expenses such related parties incurred on the Company's behalf, which was recorded within accrued liabilities on the condensed consolidated balance sheets. The related expense incurred by the Company was $0.2 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, and $0.2 million and $0.5 million for the three and nine months ended September 30, 2023, respectively.
8. Revolving Credit Facility
On October 31, 2019, the Company entered into an asset-based revolving credit and security agreement (the "Loan Agreement") with PNC Bank, National Association (“PNC Bank”) that originally provided a senior secured revolving credit facility with borrowing capacity of up to $40.0 million and a maturity date of October 31, 2024. On April 4, 2023, the Company entered into an amendment to the Loan Agreement (as so amended, the "Amended Loan Agreement") that increased the borrowing capacity under the revolving credit facility to $75.0 million, extended the maturity date to April 4, 2028, and changed the rates at which advances will bear interest. The Amended Loan Agreement is collateralized by security interests in substantially all of the Company's assets.
Advances under the Amended Loan Agreement bear interest through maturity at a variable rate based upon the selection of either a Domestic Rate Loan or a Term SOFR Rate Loan (each, as defined in the Amended Loan Agreement). For Domestic Rate Loans, borrowings bear interest at the Alternate Base Rate plus an applicable margin. The Alternate Base Rate is defined as a fluctuating interest rate equal to the greater of (1) the base commercial lending rate of PNC Bank, (2) the overnight federal funds rate plus 0.50% and (3) the Daily Simple SOFR plus 1.00%. For Term SOFR Rate Loans, borrowings bear interest at the Term SOFR Rate
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
(as defined in the Amended Loan Agreement) plus the SOFR Adjustment of 0.10% plus an applicable margin. The applicable margin is between 1.00% to 1.25% for Domestic Rate Loans and between 2.00% and 2.25% for Term SOFR Rate Loans based on the average undrawn availability under the revolving credit facility. The applicable margin as of September 30, 2024 was equal to 1.00% for Domestic Rate Loans and 2.00% for Term SOFR Rate Loans. The facility fee for undrawn amounts under the Amended Loan Agreement is 0.375% per annum; additionally, the Company pays customary letter of credit fees, as applicable.
The Amended Loan Agreement contains customary conditions to borrowings, events of default and covenants, including covenants that restrict the Company's ability to sell assets, make changes to the nature of the business, engage in mergers or acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay dividends, issue equity instruments, make distributions or redeem or repurchase capital stock or make other investments, and engage in transactions with affiliates. The Amended Loan Agreement also requires that the Company maintain compliance with a minimum Fixed Charge Coverage Ratio (as defined in the Amended Loan Agreement) of 1.40 to 1.00 at any time undrawn availability is less than 25%. As of September 30, 2024, the Company was in compliance with all applicable covenants under the Amended Loan Agreement.
The Company did not have an outstanding balance under the revolving credit facility as of September 30, 2024.
9. Stockholders' Equity
Stock-based Compensation
The Company is authorized to grant restricted stock units ("RSUs"), incentive stock options, nonqualified stock options ("NQSOs"), stock appreciation rights, restricted stock awards, and performance stock awards under its 2021 Long Term Incentive Plan (the “LTIP”). As of September 30, 2024, the Company had only granted RSUs and NQSOs under the LTIP. Under the LTIP, 5.9 million shares of Class A common stock remained available for grant as of September 30, 2024.
Stock-based compensation recorded in the condensed consolidated statements of operations was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Platform operations | $ | 553 | | | $ | 1,171 | | | $ | 1,513 | | | $ | 3,187 | |
Sales and marketing | 1,180 | | | 2,588 | | | 3,074 | | | 7,620 | |
Technology and development | 693 | | | 1,529 | | | 1,844 | | | 4,363 | |
General and administrative | 2,903 | | | 3,446 | | | 8,875 | | | 9,565 | |
Total | $ | 5,329 | | | $ | 8,734 | | | $ | 15,306 | | | $ | 24,735 | |
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
RSUs
The following summarizes RSU activity:
| | | | | | | | | | | |
| Number of Shares (in thousands) | | Weighted-Average Grant Date Fair Value |
RSUs outstanding as of December 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 March 31, 2024 | 4,684 | | | 7.56 | |
Granted | 203 | | | 9.42 | |
Vested | (419) | | | 8.42 | |
Canceled/forfeited | (50) | | | 7.46 | |
RSUs outstanding as of June 30, 2024 | 4,418 | | 7.56 | |
Granted | 32 | | 10.38 | |
Vested | (337) | | | 9.42 | |
Canceled/forfeited | (41) | | | 8.25 | |
RSUs outstanding as of September 30, 2024 | 4,072 | | $ | 7.43 | |
As of September 30, 2024, the Company had unrecognized stock-based compensation relating to RSUs of approximately $26.1 million, which is expected to be recognized over a weighted-average period of 1.9 years.
Nonqualified Stock Options
The following summarizes nonqualified stock option activity:
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of Options (in thousands) | | Weighted-Average Exercise Price | | Weighted-Average Remaining Contractual Term (years) | | Aggregate Intrinsic Value (in thousands) |
Outstanding as of December 31, 2023 | 5,736 | | | $ | 5.41 | | | 8.6 | | $ | 8,807 | |
Granted | 516 | | | 9.92 | | | | | |
Exercised | (17) | | | 6.04 | | | | | |
Canceled | (97) | | | 5.62 | | | | | |
Expired | (3) | | | 13.70 | | | | | |
Outstanding as of March 31, 2024 | 6,135 | | | 5.78 | | | 8.3 | | 30,031 | |
Granted | — | | — | | | | | |
Exercised | (278) | | 5.41 | | | | | |
Canceled | (13) | | 5.46 | | | | | |
Expired | (4) | | 11.95 | | | | | |
Outstanding as of June 30, 2024 | 5,840 | | 5.79 | | | 8.1 | | 23,942 | |
Granted | — | | — | | | | | |
Exercised | (59) | | | 4.98 | | | | | |
Canceled | — | | — | | | | | |
Expired | — | | — | | | | | |
Outstanding as of September 30, 2024 | 5,781 | | 5.80 | | | 7.9 | | $ | 30,529 | |
| | | | | | | |
Vested and exercisable | 3,476 | | | 5.47 | | | 7.8 | | $ | 19,516 | |
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
There were no nonqualified stock options granted during the three months ended September 30, 2024. The weighted-average grant date fair value of the nonqualified stock options granted during the nine months ended September 30, 2024 was $6.67. As of September 30, 2024, the Company had unrecognized stock-based compensation relating to unvested nonqualified stock options of approximately $8.8 million, which is expected to be recognized over a weighted-average period of 1.5 years.
The assumptions used in the Black-Scholes model to determine the fair value of nonqualified stock options were as follows:
| | | | | | | | | | | |
| Three and Nine Months Ended September 30, |
| 2024 | | 2023 |
Risk-free interest rate | 4.1% | | 3.8% - 4.3% |
Expected volatility | 74.4% | | 75.8% - 81.5% |
Expected term (in years) | 5.8 | | 6.0 - 6.1 |
Expected dividend yield | 0.0% | | 0.0% |
Risk-Free Interest Rate. The Company bases the risk-free interest rate assumption for equity awards on the rates for U.S. Treasury securities with maturities similar to those of the expected term of the award being valued.
Expected Volatility. Due to the limited trading history of the Company’s Class A common stock, the expected volatility assumption is based on both the volatility of a peer group of similar companies whose share prices are publicly available as well as the historical volatility of the Company's daily stock prices. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of the Company’s own stock price becomes available.
Expected Term. Given the insufficient historical data relating to nonqualified stock option exercises, the expected term assumption is based on the simplified method, which uses the midpoint of the weighted-average vesting period and the contractual term. The Company will continue to apply this process until a sufficient amount of historical information regarding the Company’s nonqualified stock option exercises becomes available.
Expected Dividend Yield. The Company’s expected dividend yield assumption is zero as it has never paid dividends and has no present intention to do so in the future.
Stock Repurchase Program
On April 23, 2024, the Company's board of directors approved a stock repurchase program with authorization to purchase up to $50 million in shares of the Company's Class A common stock or Class B units of Viant Technology LLC. As of September 30, 2024, $38.5 million remained available under the stock repurchase program.
The Company may make repurchases under the program, from time to time, through open market purchases, block trades, in privately negotiated transactions, accelerated stock repurchase transactions, or by other means. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under this authorization. The volume, timing, and manner of any repurchases will be determined at the Company's discretion, subject to general market conditions, as well as the Company's management of capital, general business conditions, other investment opportunities, regulatory requirements and other factors. The stock repurchase program does not obligate the Company to repurchase any specific number of shares of Class A common stock or Class B units, has no time limit, and may be modified, suspended, or discontinued at any time without notice, at the discretion of the board of directors. The Company expects to fund repurchases from existing cash and cash equivalents, short-term investments and/or future cash flows.
Shares of Class A common stock and Class B units repurchased by the Company under the stock repurchase program were as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2024 | | Nine Months Ended September 30, 2024 |
| Shares(1) | | Amount(2) | | Shares(1) | | Amount(2) |
Class A common stock repurchases | 564 | | | $ | 6,119 | | | 1,137 | | | $ | 11,599 | |
Class B unit repurchases | — | | | — | | | — | | | — | |
Total repurchases | 564 | | | $ | 6,119 | | | 1,137 | | | $ | 11,599 | |
(1)Shares repurchased include unsettled repurchases as of September 30, 2024.
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
(2)Amount includes costs associated with the repurchase such as commissions and excise taxes.
Issuance of Shares
Upon vesting of shares under the LTIP, the Company will issue treasury stock. If treasury stock is not available, newly issued stock will be issued.
10. Income Taxes and Tax Receivable Agreement
The provision for income taxes differs from the amount of income tax computed by applying the applicable U.S. statutory federal income tax rate of 21% to income before provision of income taxes due to Viant Technology LLC’s pass-through structure for U.S. income tax purposes and the valuation allowance against the deferred tax asset in the current and prior-year periods. The Company recognized an income tax benefit that was de minimis for the three months ended September 30, 2024 and effective tax rates of (0.2)% and (0.3)% for the three and nine months ended September 30, 2024, respectively. The Company recognized an income tax expense of $0.2 million for the three and nine months ended September 30, 2023, due to federal and state taxes payable, which resulted in an effective tax rate of (36.9)% and (1.4)%, respectively.
As of September 30, 2024, management determined based on applicable accounting standards and the weight of all available evidence, it was not more likely than not (“MLTN”) that the Company will generate sufficient taxable income to realize its deferred tax assets including the difference in tax basis in excess of the financial reporting value for its investment in Viant Technology LLC. Consequently, the Company has established a full valuation allowance against its deferred tax assets as of September 30, 2024. In the event that management subsequently determines that it is MLTN that the Company will realize its deferred tax assets in the future over the recorded amount, a decrease to the valuation allowance will be made, which will reduce the provision for income taxes.
The Company has concluded based on applicable accounting standards and the weight of all available evidence, that it was MLTN that its deferred tax assets subject to the Tax Receivable Agreement ("TRA") entered into with Viant Technology LLC, continuing members of Viant Technology LLC and the TRA Representative (as defined in the TRA) on February 9, 2021 would not be realized as of September 30, 2024. Therefore, the Company has not recorded a liability related to the remaining tax savings it may realize from utilization of such deferred tax assets. As of September 30, 2024, the total unrecorded TRA liability is approximately $10.8 million. If utilization of the deferred tax assets subject to the TRA becomes MLTN in the future, the Company will record a liability related to the TRA, to the extent probable at that time, which will be recognized as an expense within its condensed consolidated statements of operations.
11. Earnings (Loss) Per Share
For the three and nine months ended September 30, 2024 and 2023, basic earnings (loss) per share has been calculated by dividing net income (loss) attributable to Class A common stockholders by the weighted-average number of shares of Class A common stock outstanding for the same period. Shares of Class A common stock are weighted for the portion of the period in which the shares were outstanding. Diluted earnings (loss) per share has been calculated in a manner consistent with that of basic earnings (loss) per share while considering all potentially dilutive shares of Class A common stock outstanding during the period.
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
The following table presents the calculation of basic and diluted earnings (loss) per share for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Numerator | | | | | | | |
Net income (loss) | $ | 6,458 | | | $ | (672) | | | $ | 4,732 | | | $ | (13,251) | |
Less: Net income (loss) attributable to noncontrolling interests | 4,951 | | | (146) | | | 4,117 | | | (9,181) | |
Net income (loss) attributable to Viant Technology Inc.—basic | $ | 1,507 | | | $ | (526) | | | $ | 615 | | | $ | (4,070) | |
Add back: Reallocation of net income (loss) attributable to noncontrolling interest from the assumed exchange of dilutive securities for Class A common stock | 272 | | | — | | | — | | | — | |
Income tax benefit (expense) from the assumed exchange of dilutive securities for Class A common stock | (64) | | | — | | | — | | | — | |
Net income (loss) attributable to Viant Technology, Inc.—diluted | $ | 1,715 | | | $ | (526) | | | $ | 615 | | | $ | (4,070) | |
Denominator | | | | | | | |
Weighted-average shares of Class A common stock outstanding—basic | 16,290 | | 15,388 | | 16,240 | | 15,093 |
Effect of dilutive securities: | | | | | | | |
Restricted stock units | 1,696 | | — | | — | | — |
Nonqualified stock options | 2,007 | | — | | — | | — |
Weighted-average shares of Class A common stock outstanding—diluted | 19,993 | | 15,388 | | 16,240 | | 15,093 |
| | | | | | | |
Earnings (loss) per share of Class A common stock—basic | $ | 0.09 | | | $ | (0.03) | | | $ | 0.04 | | | $ | (0.27) | |
Earnings (loss) per share of Class A common stock—diluted | $ | 0.09 | | | $ | (0.03) | | | $ | 0.04 | | | $ | (0.27) | |
| | | | | | | |
Anti-dilutive shares excluded from earnings (loss) per share of Class A common stock—diluted: | | | | | | | |
Restricted stock units | — | | 3,944 | | 4,072 | | 3,944 |
Nonqualified stock options | — | | 5,775 | | 5,781 | | 5,775 |
Shares of Class B common stock | 46,850 | | 47,082 | | 46,850 | | 47,082 |
Total shares excluded from earnings (loss) per share of Class A common stock—diluted | 46,850 | | 56,801 | | 56,703 | | 56,801 |
12. Noncontrolling Interests
Viant Technology Inc. is the sole managing member of Viant Technology LLC and, as a result, consolidates the financial results of Viant Technology LLC. We report noncontrolling interests representing the economic interests in Viant Technology LLC held by the other members of Viant Technology LLC. The limited liability company agreement of Viant Technology LLC, as amended and restated (the “Viant Technology LLC Agreement”) classifies the interests acquired by the Company as Class A units, reclassified the interests held by the continuing members of Viant Technology LLC as Class B units and permits the continuing members of Viant Technology LLC to exchange Class B units for shares of Class A common stock on a one-for-one basis or, at the election of Viant Technology Inc., for cash at the current fair value on the date of the exchange. Changes in the Company’s ownership interest in Viant Technology LLC while retaining control of Viant Technology LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of Class B units in Viant Technology LLC by the other members and future issuances of Class A common stock under the LTIP will result in a change in ownership, where the Company will rebalance the noncontrolling interest, offset by a change in additional-paid-in-capital.
VIANT TECHNOLOGY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in thousands, except per share data)
The following table summarizes the ownership of Viant Technology LLC:
| | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2024 | | As of December 31, 2023 |
Owner | Units Owned | | Ownership Percentage | | Units Owned | | Ownership Percentage |
Viant Technology Inc. | 16,224,237 | | 25.7 | % | | 15,783,941 | | 25.1 | % |
Noncontrolling interests | 46,850,054 | | 74.3 | % | | 47,032,260 | | 74.9 | % |
Total | 63,074,291 | | 100.0 | % | | 62,816,201 | | 100.0 | % |
During the three and nine months ended September 30, 2024, noncontrolling interests exchanged 134,613 and 182,206 Class B shares of Viant Technology LLC, respectively, for 134,613 and 182,206 shares of the Company’s Class A common stock, respectively, which also resulted in the cancellation of 134,613 and 182,206 Class B shares, respectively, that were previously held by noncontrolling interests with no additional consideration provided.
The following table presents the effect of changes in the Company’s ownership interest in Viant Technology LLC on the Company’s equity for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended |