Q2 2021 Viant Technology Inc Earnings Call
C. G D, 105% in Q2 and represented 41% of total contribution ex Tac during the quarter.
We also saw solid growth across all other channels in the quarter, including streaming audio digital out of home in linear television.
In total contribution ex Tac from channels other than CTV grew 40% during the quarter.
We expect CTV to continue to be a strong contributor to our growth going forward as our advertising software continues to gain market share across this growing and important channel.
In terms of AD formats video grew 67% in Q2 and represented 69% of total contribution ex Tac in the quarter.
With respect to our customer verticals as I said, we began to see a recovery in Q2 across certain COVID-19 impacted verticals contribution ex Tac across our retail travel and automotive verticals grew 48% in Q2, driven by growth across our travel and retail verticals with automotive still experienced.
They are still experiencing weakness as a result of the global chip shortage.
Retail travel and auto represented 27% of contribution ex Tac in Q2.
Non COVID-19 impacted verticals also continued to perform well during the quarter with contribution ex Tac, increasing 66% during the quarter and representing 73% of total contribution ex Tac.
Our CPG healthcare and entertainment verticals in particular continued to perform exceptionally well during the quarter.
In Q2 growth across our percent percentage of spend pricing model also continued to outpace growth across our fixed price and subscription pricing offerings, which highlights <unk> continued strength with its agency customers.
On the customer front, the number of active customers and the average contribution ex Tac per active customer saw strong momentum in the quarter at the end of Q2, we had 288 active customers compared to 266 at the end of Q1, representing an increase of 8% during the period.
Average contribution ex Tac per active customer at the end of Q2 totaled 438000.
Versus 428000 at the end of Q1.2021.
As we continue to ramp our sales and technology investment in 'twenty, one 2021 and beyond we expect further momentum around new customer acquisitions, which ultimately will serve as another engine to fuel growth going forward.
Turning now briefly to operating expenses, given the significant stock based compensation expense flowing through our numbers beginning in Q1 of this year I will be discussing operating expenses on a non-GAAP basis, excluding the impact of stock based compensation.
Total operating expenses, excluding stock based compensation totaled $44.7 million in the quarter, an increase of 48% versus the prior year and 18% higher than Q1.
We continue to invest in our people and technology to drive growth in the quarters ahead.
The end of the second quarter, we had increased our total head count by over 21% in the past 12 months.
<unk> a competitive labor market, we continue to attract extremely qualified candidates at.
At the same time, we continue to invest aggressively in automation to further drive operational efficiencies throughout the company.
We believe our focused approach on balancing our investment and growth while also driving operational efficiencies in the business will ultimately drive profitability and revenue growth for many years to come.
Adjusted EBITDA for the quarter was $8.3 million compared to $2.8 million in Q2 of last year, representing a year over year increase of 203%.
Our adjusted EBITDA margin as a percentage of contribution ex Tac was 26% in the quarter compared to 14% in the same period in 2020 as we continue to scale the business our mid to long term targeted adjusted EBITDA margin as a percentage of X contribution ex Tac remains at 35%.
We also use the metric of non-GAAP net income, which represents net income excluding stock based comp and for Q2 of 2021. It also excludes a non operating gain of $6.1 million relating to the forgiveness of our PTT loan from 2020.
For the quarter non-GAAP net income totaled $5.2 million versus a de minimis loss of 30000 last year.
Non-GAAP earnings per diluted share of class a common stock totaled six cents for the quarter.
From a cash flow perspective, we generated $8.8 million of net cash from operating activities for the quarter compared to $8 million in Q2 of last year, and we ended the quarter with $252.3 million in cash.
We believe that our growth profile and healthy balance sheet positions us extremely well to take advantage of the rapidly growing market opportunity in front of us.
In terms of share count, we expect class a common share count to increase to approximately $13.5 million by the end of Q3 and $14 million by the end of the year, primarily as a result of our Skus best thing in the second half of 2021.
And finally, I'll now turn to our outlook for the remainder of 2021.
As Tim discussed we feel great about our strong positioning in the market and we are in the very early stages of capitalizing on the market opportunity for programmatic advertising.
As we think about guidance, we are taking a pragmatic approach for the second half of 2021 given the increasing uncertainty associated with the significant recent uptick in Covid cases throughout the U S that being said we are increasing our full year guidance for 2021 based on what we know today.
For the third quarter of 2021, we expect GAAP revenue in the range of $48 million to $50 million, which represents year over year growth of approximately 19% to 24%.
Contribution ex Tac in the range of 32, 5% to $33.5 million, which represents a year over year growth of approximately 16% to 20% and adjusted EBITDA in the range of $4 million to $5 million or a margin as a percentage of contribution ex tac of 12% to 15%.
And for the full year 2021, we now expect GAAP revenue in the range of $205 million to $210 million, which represents year over year growth of approximately 24% to 27% contribution ex Tac in the range of $137 million to $142 million, which represents year over year growth of approximately 24% to 28%.
And adjusted EBITDA in the range of $29 million to $32 million or a margin as a percentage of contribution ex tac of 21% to 23%.
Excluding U S political spend that we benefit benefited from in 2020, our projected growth rates in 2021 for both revenue and contribution ex Tac would be approximately 50 basis points higher for Q3, 2% higher for Q4, and 1% higher for the full year 2020 on a year over year basis.
With that I will now turn the call over to Chris.
Thanks, Larry our approach to building the business has not changed we remain focused on revenue growth and we will continue to invest aggressively in our technology and go to market plans given the enormous opportunity we see ahead of us.
This brings me to our significant software release called Ww SEC or world without cookies, Let me first provide some context advertisers and agencies are continuing to have a difficult time forecasting buying and measuring their advertising in channels like connected TV streaming audio and mobile phones, where cookies don't exist.
We're only exists a small percentage of the time.
We believe a world without cookies release solves for these important and emerging trends.
We announced our private beta testing program to customers in June which provided early access to our new digital experience across our Delta DSP.
WWE <unk> enables advertisers to pull the plug on third party cookies completely and provides a number of substantial advantages for the customers using it right now.
I'd like to take the time to highlight some of those advantages number one onboarding with this release, we've grown our leadership position and Onboarding customer first party data.
Ww's SEC provides customers with even more ways to utilize their first party data, including Onboarding physical addresses directly into the DSP.
This is in addition to the already available options of Onboarding customer E mail addresses or other digital identifiers that we've had enabled for years number two user experience.
We've unified our household Ids throughout our software from Onboarding to audience planning inventory forecasting frequency capping reporting and attribution.
We've received a lot of positive feedback from our clients on the new user experience and have also received valuable feedback on areas to drive further enhancements I do want to just take this moment to thank our customers who participated in the private beta for all of their great feedback.
Number three scale, our household ideas already available across nearly 80% of all available AD opportunities managed by our software.
This means that marketers can immediately reached more than $115 million addressable U S households that make up more than 250 million addressable consumers and cookie less environments.
Our ideas empowering customers with improved precision and control over the reach and frequency of their advertising campaigns.
Gone are the days of showing the same CTV ad over and over to consumers.
Number four measurement.
We believe Ww's SEC is delivering incredible and superior results for marketers.
During a private beta period are clients on average increase of new customer acquisitions by over 200%.
In addition clients told us that they were they were able to better plan and control the frequency of their ads, which led to less waste and ultimately allocate more money to reaching new potential customers.
We saw on average a 40% increase in total reach with beta clients, who are utilizing our household IV versus the cookie.
We are very encouraged by these initial results and our clients are now able to readily see the benefits of operating in a world without cookies.
All of that said Ww SEC is really about delivering a better experience for consumers right now.
If we can help content owners better manage frequency and cookie less environments like connected television and we are creating a better consumer experience when streaming the content that they love.
On the back of this we can enable brands to be relevant while driving their business outcomes.
Given the success of the Ww SEC private beta this week, we moved to our open beta phase of the release, which will allow more customers to adopt our new user experience and ultimately drive better advertising performance.
We're also planning a customer event in September to release more exciting details on our Ww SEC software release more to come on that later.
We believe that the continued improvement of our people based software and increased investment in sales and marketing will continue to propel new customer wins and increased revenues in the quarters and years ahead.
Thank you very much Chris the digital AD market is booming vine is winning in connected TV and we're executing ahead of our plan and we expect a strong second half of the year I want to thank you for your attention today and your interest in <unk>.
Okay.
And at this time I would like to remind everyone to please use the raise hand function located bottom of your screen to ask a question. Once you get them permission to speak please on mute to ask your question.
And our first question will come from.
Maria risks.
With Canaccord.
Okay.
Yeah.
Alright. Thank you so much for taking my questions I just wanted to ask you about your customer additions. This quarter. It seems like you had way more customers that we expected at least can you just talk about what type of customers. You added are those customers from larger agencies mid market agencies climb direct et cetera.
And then I have a quick follow up.
Yes, just a little bit on that we had a great quarter in customer additions no doubt planned.
If I had to characterize where they came from predominantly agencies.
Did have some client direct ones in there who don't use agencies, but predominantly those where agencies.
And those were most of those were net new customers that haven't been on the platform.
Got it and is there anything to highlight in terms of specific verticals for this new cohort of clients and then secondly, do you expect average spend per customer for this cohort to be maybe on par with your prior cohorts over time.
Just on the second part I will say, we do expect them to trend similarly, the longer they're on platform. We expect their contribution ex Tac to look similar to clients have been on for.
A longer period of time, so we expect them to trend in that same direction. What was the first part of your question again Maria verticals of Newcastle Larry do you have any data on that.
Uh huh.
Yes, let me just add in general just said most of those being their agencies.
I would expect that they that they followed the similar trends that we highlighted earlier.
The way the customers broke out in terms of the percentage of contribution et cetera.
Alright. Thank you so much I'll get back in the queue.
And again, everyone. Please use and locate the raise your hand feature at the bottom of your screen to indicate you have a question, we'll now move on to Laura Martin with Needham.
Okay, Hey, great numbers, you guys, another beat and raise quarter. So congratulations.
So.
I'm going to ask Larry a hard one, but I'm going to start with on the CTV do you find that the customers you're adding are coming to you because of CTV because youre CTV growth is like nearly three times. Your non CTV growth is that the kind of customer you're attracting or is it youre seeing existing customers.
Adding more CTV and Theyre waiting of revenue for you clearly you guys.
I'll start and if anyone else wants to add.
Customers come to us for Cookie less environment CTV has to happens to be the most exciting cookie less environment.
Certainly where there's competitive DSP on the.
That advertisers vendor list, we see them sticking with that cookie based ESP in the mobile and desktop channel and they're testing the cookie lift solutions and the connected TV channel, we continued to benefit from that in attracting new customers and I'll leave the rest for Larry.
Okay. My second question on for Larry is Okay, I don't get it so I have 40% of the revenue growing at a 100% and 60% of the revenue growing at 40% yet.
Yet your guidance for next quarter is 20% so.
What is it that's slowing down at the speed of light right now four weeks into this current quarter.
But the momentum is stopping.
It's a great question Laura Thank you.
So we certainly are encouraged by what we saw in Q2.
Especially with our retail and travel customers coming back.
As I mentioned automotive is still being impacted pretty heavily.
That being said, we're certainly keeping a close eye on what is happening today in the U S is the Delta variant continues to surge I would say that our guidance takes into consideration what we know today, while we've increased guidance, we have taken a somewhat conservative view due to the uncertainty caused by the horizon rising Covid cases.
It's not the other thing I would point out is certainly Q2 of this year in terms of growth rates had an easy comp relative to Q2 of last year, but.
But we feel really good about the second half we are being cautious relative to what's going on with Covid right now.
And certainly we'll do our best to beat these numbers, but in terms of what we're comfortable with putting out today.
You saw it you saw the percentages.
Thanks, very much great results you guys.
Thank you.
And as a reminder to everyone. Once again, please raise your hand to let US know that you have a question, we'll move on to Andrew Boone with JMP.
Okay.
Hi, guys. Thanks for taking the question just given the strength in CTV can you talk about moving customers onto other AD formats like it seems to me like that's the tip. The spear in terms of bringing customers on and very differentiated but how do you guys get spend more broadly across more budgets is.
Is that the right way to think about that.
Absolutely the business model and our sense is you need to increase the investment on the client and the way you do that is by getting more and more channels onboard.
We've obviously invested in we believe worm and more channels than any of the competitive platforms.
But our easy area right now is to hit a CTV and we're definitely hitting in that area as you can see.
We started to have a bit of a rebalancing in terms of getting more clients into multiple channels and I think you saw that with the bounce back in mobile.
Mobile and desktop I think that will continue I also think that.
Digital out of home is another exciting area audio is as well and I think that those are going to continue.
To grow so.
The other piece I'll say is measurement drives a lot of this we are driving great results right now for our clients or I should say, they're seeing great results by way of our measurement solutions in CTV and other calculus areas. So I think it's just naturally they're going to diversify their spending.
And two more and more of these channels I would just add to that Andrew I think it's.
Customer comfort with the platform there is lots of dollars at stake and customer acquisition strategies that they're running through cookie based DSP and I think it is just getting to that comfort level that they can operate in these cookie less environments in the same way with the same precision and measurement capabilities to have before.
That makes total sense and then just.
Ww's SEC now out and kind of customers testing it lives.
Can you just talk about the competitive set in terms of just the differentiation between you and other DSP or on the market.
How far apart do you feel like that is from a product. So I think a lot of the industry participants have moved to closer to where buying is today, what we invented in 2015 and brought to market was people base not everyone calls at that but if you look at the identifiers there using almost all of the industry has coalesced that these people based identifiers or the way.
Forward I think we have a wide gap, where our competitors are launching onboarding for the first time in their platform, we've expanded and grown our moat and onboarding from one type of identifier to many so we added physical address onboarding all through a self service unit user interface for our customers. So I think at this point where are.
Competitors are trying to fix.
Fixed problems that they have in their software we're trying to expand our lead on the features and functionalities, we're bringing those same marketers and also just one other point Andrew is around measurement I think we do extremely well with clients that are attracted to our platform because of the measurement capabilities that we've long offered.
Things like in store sales as opposed to just e-commerce sales.
Being able to link that to add exposure is huge it's something we've done for many years, our integrations in that area in terms of amount of companies, we're integrated with two.
To enable brands to be able to bring those those sales receipts in.
That also creates another big mode. So we feel we feel great. We've always felt great about our positioning but we know we have a long product cycle lead there.
Great. Thank you.
And there are no further questions, Tim Chris or Larry do you have any closing comments.
No I just do want to thank the <unk> team for a great quarter of execution for all of you. We appreciate you so much and thank you to our customers who continue to work with us and challenge us and bringing forward new solutions to their problems. Thanks, very much and we'll see you next quarter.
And again that does conclude today's earnings call you may now disconnect.
And again that does conclude today's earnings call you may now disconnect.