S-1/A
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As filed with the Securities and Exchange Commission on February 8, 2021.

Registration No. 333-252117

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Amendment No. 3

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Viant Technology Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   7370  

85-3447553

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

2722 Michelson Drive, Suite 100

Irvine, CA 92612

(949) 861-8888

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Tim Vanderhook

Chief Executive Officer

Viant Technology Inc.

2722 Michelson Drive, Suite 100

Irvine, CA 92612

(949) 861-8888

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

 

John M. Williams III

Stewart L. McDowell

Gibson, Dunn & Crutcher LLP

3161 Michelson Drive

Irvine, CA 92612

(949) 451-3800

 

Sarah K. Solum

Pamela L. Marcogliese

Freshfields Bruckhaus Deringer US LLP

2710 Sand Hill Road
Menlo Park, CA 94025

(650) 618-9250

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

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. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

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 7(a)(2)(B) of the Securities Act.  ☐

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities To Be Registered

 

Shares to be

Registered(1)

 

Proposed

Maximum

Offering Price

Per Share(2)

 

Proposed

Maximum

Aggregate

Offering Price(1)(2)

 

Amount of

Registration Fee(3)

Class A common stock, par value $0.001 per share

  9,775,000   $24   $234,600,000   $25,595

 

 

(1)

Includes 1,275,000 shares subject to the underwriters’ option to purchase additional shares.

(2)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.

(3)

$19,761 previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

 

 

 


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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Subject to Completion

Preliminary Prospectus dated February 8, 2021

PROSPECTUS

8,500,000 Shares

 

 

LOGO

Class A Common Stock

 

 

This is Viant Technology Inc.’s initial public offering. We are selling 8,500,000 shares of our Class A common stock.

We expect the public offering price to be between $22.00 and $24.00 per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares of our Class A common stock will trade on the Nasdaq Global Market (“Nasdaq”) under the symbol “DSP.”

Each share of Class A common stock and Class B common stock will entitle the holder to one vote. The Class B stockholders will hold 85.2% of the combined voting power of our common stock immediately after this offering, assuming no exercise by the underwriters of the option described below. See “Organizational Structure.” Following this offering, the Vanderhook Parties and the Equity Plan LLC will hold all of our issued and outstanding Class B common stock and will control a majority of the combined voting power of our common stock.

We will be a “controlled company” under the corporate governance listing standards of Nasdaq following the completion of this offering. See “Management—Controlled Company Exemption.”

We are an “emerging growth company” as defined under the U.S. federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements for this and future filings. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”

Investing in our Class  A common stock involves risks that are described in the “Risk Factors” section beginning on page 21 of this prospectus.

 

 

 

    

Per Share

      

Total

 

Initial public offering price

   $          $    

Underwriting discount

   $          $    

Proceeds, before expenses

   $          $    

The underwriters may also exercise an option to purchase up to an additional 1,275,000 shares of our Class A common stock from the selling stockholders identified in this prospectus, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. We will not receive any proceeds from any sale of shares by the selling stockholders.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares of Class A common stock will be ready for delivery on or about                , 2021.

 

 

 

BofA Securities   UBS Investment Bank
Canaccord Genuity   JMP Securities   Needham & Company   Raymond James

 

 

The date of this prospectus is                 , 2021.


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LOGO

MISSION OUR SOFTWARE, ADELPHIC®, AUTOMATES THE PLANNING, BUYING AND MEASUREMENT OF ADVERTISING ACROSS CHANNELS


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LOGO

ADVERTISING HAS BECOME MORE DATA DRIVEN AND MARKETERS NEED TO REACH THEIR AUDIENCES IN COOKIELESS ENVIRONMENTS Increased privacy concerns and changing requirements of browser providers including Google™ and Apple® are causing marketers to reduce their reliance on software platforms that primarily utilize cookies for device identification. THERE IS A DRIVING INDUSTRY SHIFT AWAY FROM COOKIE-BASED DSPs TO PEOPLE-BASED DSPs


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LOGO

* Represents revenue growth for the nine months ended September 30, 2020 CONNECTED TV GROWTH 75%* PERCENTAGE OF REVENUE 34% MARKETERS RELY ON ADELPHIC® TO REACH AUDIENCES IN COOKIELESS ENVIRONMENTS LIKE CONNECTED TV


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LOGO

ENTERPRISE API ADVANCED REPORTING REACH & FREQUENCY FOOT TRAFFIC ATTRIBUTION TV REPORTING SUITE MULTI-TOUCH ATTRIBUTION DIGITAL BILLBOARD REPORTING SUITE BRAND SURVEYS CROSS-CHANNEL SUITE OMNICHANNEL EXECUTION CONNECTED TV STREAMING AUDIO DIGITAL BILLBOARDS LINEAR TV MOBILE & DESKTOP AUDIENCE SEGMENTATION FIRST-PARTY DATA ONBOARDING LOOKALIKE MODELING IDENTITY DIRECT MATCH PRIVACY & SECURITY PLANNING BUYING MEASUREMENT INTEGRATED SOFTWARE PLATFORM


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LOGO

“We love Adelphic for their platform, for their ease of use, for access. We love Adelphic for their data and their inventory, but overall we love Adelphic because they’re helping us get results for our clients.” NATALIE PANCIERA MEDIA SUPERVISOR “Not only do we have a singular view of the customer throughout display, native, CTV, audio, digital out-of-home, but also, we’re able to manage frequency at a universal level. So, we’re able to tell a consistent message creatively over time as well.” CLAIRE RUSSELL HEAD OF MEDIA “We have great match counts with Viant. And if you look at any consumer identifier that could be supplied, the vast majority of them will be matched in the Viant platform.” RICK ERWIN CEO “The integration that Adelphic has with Acxiom enables us to not only create audience segments from custom CRM data, but to then directly port those over to the Adelphic DSP for immediate activation. That saves us time, that saves us money, and that saves us operational efficiencies.” ADAM GILBERT HEAD OF PARTNERSHIPS AND PERFORMANCE “Viant’s Total Graph allows us to work in a world without cookies or device IDs. The methodology around collection of data and the number of different data points at your fingertips gives us a huge opportunity to work outside of a cookie environment as we go into ‘21, ‘22, and onwards.” ANDREW GOODE EVP, HEAD OF BIDDABLE MEDIA, NORTH AMERICA HEAR FROM OUR CUSTOMERS


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TABLE OF CONTENTS

 

 

 

    

Page

 

PROSPECTUS SUMMARY

     1  

RISK FACTORS

     21  

FORWARD-LOOKING STATEMENTS

     59  

ORGANIZATIONAL STRUCTURE

     61  

USE OF PROCEEDS

     70  

DIVIDEND POLICY

     71  

CAPITALIZATION

     72  

DILUTION

     74  

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

     76  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

     85  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     88  

BUSINESS

     116  

MANAGEMENT

     127  

EXECUTIVE COMPENSATION

     132  

PRINCIPAL AND SELLING STOCKHOLDERS

     140  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     143  

DESCRIPTION OF CAPITAL STOCK

     152  

SHARES ELIGIBLE FOR FUTURE SALE

     158  

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK

     160  

UNDERWRITING

     164  

LEGAL MATTERS

     174  

EXPERTS

     174  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     174  

INDEX TO FINANCIAL STATEMENTS

     F-1  

SIGNATURES

     II-5  

 

 

Neither we nor the underwriters have authorized anyone to provide you with information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters are offering to sell, and seeking offers to buy, Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or of any sale of shares of our Class A common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside of the United States: We have not, and the underwriters have not, done anything that would permit this offering, or possession or distribution of this prospectus, in any jurisdiction where action for that purpose is required, other than the United States. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our Class A common stock and the distribution of this prospectus outside of the United States.

 

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GENERAL INFORMATION

Unless otherwise indicated or the context otherwise requires, references in this prospectus to (i) “Viant Technology Inc.” refer to Viant Technology Inc., a Delaware corporation, the company conducting the offering made pursuant to this prospectus and not to any of its subsidiaries, (ii) the “Company,” “we,” “us,” “our” and “Viant” refer to Viant Technology Inc. and its consolidated subsidiaries, and (iii) the “Vanderhook Parties” refer to Tim Vanderhook, Chris Vanderhook and Four Brothers 2 LLC, the principal equityholders of Viant Technology LLC prior to the offering and of Viant Technology Inc. after the consummation our initial public offering. Viant Technology Inc. was incorporated as a Delaware corporation on October 9, 2020 and, prior to the consummation of the Reorganization described herein and our initial public offering, did not conduct any activities other than those incidental to our formation and our initial public offering.

Basis of Presentation

This prospectus includes certain historical combined and consolidated financial and other data for Viant Technology LLC, a Delaware limited liability company. Following this offering, Viant Technology LLC will be the predecessor of Viant Technology Inc. for financial reporting purposes. Immediately following this offering, Viant Technology Inc. will be a holding company, and its sole material asset will be a controlling equity interest in Viant Technology LLC. As the sole managing member of Viant Technology LLC, Viant Technology Inc. will operate and control all of the business and affairs of Viant Technology LLC and, through Viant Technology LLC and its subsidiaries, conduct our business. The Reorganization will be accounted for as a reorganization of entities under common control. As a result, the consolidated financial statements of Viant Technology Inc. will recognize the assets and liabilities received in the reorganization at their historical carrying amounts, as reflected in the historical financial statements of Viant Technology LLC. Viant Technology Inc. will consolidate Viant Technology LLC on its consolidated financial statements and record a noncontrolling interest related to the Class B units held by the Class B stockholders on its consolidated balance sheet and statement of operations. See “Organizational Structure.”

The financial statements of Viant Technology Inc. have been omitted because this entity is a business combination related shell company, as defined in Rule 405 under the Securities Act, and has only nominal assets, has not commenced operations and has not engaged in any business or other activities except in connection with its formation. Viant Technology Inc. does not have any contingent liabilities or commitments.

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Market and Industry Data

Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on reports from various sources. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

Because this information involves a number of assumptions and limitations, you are cautioned not to give undue weight to such information. We have not independently verified market data and industry forecasts provided by any of these or any other third-party sources referred to in this prospectus.

In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section captioned “Risk Factors” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us.

 

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Trademarks

We own or have the rights to use various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not, imply a relationship with, or endorsement or sponsorship by, us. Solely for convenience, the trademarks, service marks and trade names presented in this prospectus may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks and trade names.

 

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PROSPECTUS SUMMARY

This summary highlights selected information discussed in this prospectus. The summary is not complete and does not contain all of the information you should consider before investing in our Class A common stock. Therefore, you should read this entire prospectus carefully, including the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and the related notes included elsewhere in this prospectus, before making a decision to purchase shares of our Class A common stock. Some of the statements in this summary constitute forward-looking statements. See “Forward-Looking Statements.

Overview

Our Company

We are an advertising software company. Our software enables the programmatic purchase of advertising, which is the electronification of the advertising buying process. Programmatic advertising is rapidly taking market share from traditional ad sales channels, which require more staffing, offer less transparency and involve higher costs to buyers.

Our demand side platform (“DSP”), Adelphic, is an enterprise software platform that is used by marketers and their advertising agencies to centralize the planning, buying and measurement of their advertising across most channels. Through our technology, a marketer can easily buy ads on desktop, mobile, connected TV, linear TV, streaming audio and digital billboards.

Our software is designed to make our customers’ lives easier by enabling marketers and their advertising agencies to plan, buy and measure advertising campaigns in a highly automated fashion. We offer an easy-to-use self-service platform that provides customers with transparency and control over their advertising campaigns. Our platform offers customers unique visibility across inventory, allowing them to create customized audience segments and leverage our people-based and strategic partner data to reach target audiences at scale. We offer advanced forecasting and reporting that empowers our customers with functionality designed to ensure they can accurately measure and improve their return-on-advertising spend (“ROAS”) across channels.

Marketers use our software to deliver advertising campaigns to their desired target audience across channels and formats including desktop, mobile, connected TV, linear TV, streaming audio and digital billboards. Our platform supports a full range of transaction types including real-time bidding, private marketplace and programmatic guaranteed, allowing customers to easily source and integrate ad inventory directly from publishers and private marketplaces. Our deep data access and matching of people-based identifiers enables us to be the nexus point with more than 70 data partners, providing customers with deep access to people-based data across market verticals such as automotive, entertainment, business to business, retail, consumer packaged goods, travel and tourism and healthcare.

Our customers are advertising buyers including large advertising holding companies, independent advertising agencies, mid-market advertising service organizations as well as marketers that rely on our self-service software platform for their programmatic ad buying needs.

Our platform is built on people-based data. Using our identity resolution capabilities and identity graph, marketers and their advertising agencies can identify targeted consumers using real-world identifiers rather than relying primarily on cookies to track users. We believe the industry is shifting to a people-based framework to replace the cookie in delivering personalized advertising, particularly for identification. People-based data allows marketers to deliver personalized advertising while being able to accurately link ad impressions across multiple



 

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devices to customer sales, letting them know what they get in return for their advertising dollars. In addition, people-based data allows consumers to know who is collecting their data and what it is being used for, and also gives them the right to delete or stop their use of data for personalized advertising. Market movement away from cookies has created an increase in demand by marketers actively looking for platforms like ours that offer an alternative to cookie-based tracking, which we believe is strengthening our strategic position.

The U.S. programmatic advertising market is expected to grow from $65 billion in 2018 to $140 billion in 2022, a 21% CAGR, according to eMarketer, a market research company that provides insights and trends related to digital marketing, media, and commerce. We focus on ad buyers and believe that our solutions will accelerate the shift of advertising budgets to programmatic advertising.

Our total revenue was $108.4 million and $164.9 million for the fiscal years ended December 31, 2018 and 2019, respectively, representing an increase of 52%. We recorded a net loss of $25.5 million and Adjusted EBITDA loss of $7.5 million for the fiscal year ended December 31, 2018 compared with net income of $9.9 million and Adjusted EBITDA of $24.7 million for the fiscal year ended December 31, 2019. Our total revenue was $112.9 million and $108.8 million for the nine months ended September 30, 2019 and 2020, respectively, representing a decrease of 4%. We recorded net income of $4.5 million and Adjusted EBITDA of $15.3 million for the nine months ended September 30, 2019 compared with net income of $7.8 million and Adjusted EBITDA of $16.2 million for the nine months ended September 30, 2020.

Adjusted EBITDA is a financial measure not presented in accordance with generally accepted accounting principles, or GAAP. For a definition of Adjusted EBITDA, an explanation of our management’s use of this measure and a reconciliation of Adjusted EBITDA to our net income or net loss, see “Management’s Discussion and Analysis of Financial Condition and Results of OperationsKey Operating and Financial Performance MetricsUse of Non-GAAP Financial Measures.

Our Industry

We believe the key industry trends shaping the advertising market include:

Advertising dollars shifting towards programmatic advertising: We believe the advertising industry is still in the early stages of a shift to programmatic advertising. The ability to transact through real-time-bidding platforms has evolved beyond banner advertising to be used across a wide range of advertising channels and formats, including desktop, mobile, connected TV, linear TV, streaming audio and digital billboards. U.S. programmatic advertising is experiencing a rapid increase in adoption and, according to eMarketer, is expected to grow at a 21% CAGR from 2018 to 2022, reaching $94 billion in 2020, $118 billion in 2021 and $140 billion by 2022, and is forecasted to represent 48% of total U.S. media spend by 2022. The TV industry is undergoing significant disruptions as Internet-enabled connected TV has become a preferred vehicle for streaming video content. Marketers are increasingly investing in connected TV advertising as more inventory becomes available.

Strong marketer demand for Return-On-Advertising-Spend measurement across all channels: Marketers are looking for a centralized view of their customers, while connecting online and offline purchases to accurately measure ROAS, a critical metric for marketing campaigns. We believe people-based platforms are able to provide a more accurate measurement of ROAS as compared to cookie-based platforms.

Demand for scaled people-based platforms: Advertising has become more data driven and marketers need to be able to target audiences at the individual and household level while respecting consumer privacy. Increased privacy concerns and changing requirements of browser providers including Google (Chrome) and Apple (Safari) are causing marketers to reduce their reliance on vendors and software platforms that primarily utilize cookies for device identification. This is driving an industry shift away from cookie-based DSPs to scaled people-based DSPs.



 

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Brands directly selecting advertising software solutions: Marketers are increasingly becoming directly involved in the selection of their advertising software solutions as they seek to reduce costs, better leverage their customer data and gain more control over their advertising. These factors have also led to an increase in marketers moving programmatic ad buying functions in-house. According to a recent survey by IAB in 2019, 18% of U.S. brands have completely moved programmatic ad buying in-house, and 51% of U.S. brands have moved a portion of their programmatic ad buying in-house.

Our Market Opportunity

We believe that over the long term, our total addressable market is the total global advertising market which, according to eMarketer, is forecasted to grow from $614 billion in 2020 to $846 billion in 2024, an 8% CAGR. Currently, our focus is primarily on the U.S. market, and according to eMarketer, desktop, mobile, connected TV, linear TV, streaming audio and digital billboard channels are forecasted to grow from $205 billion in 2020 to $314 billion in 2024 in the U.S., an 11% CAGR, including:

Mobile and Desktop: forecasted to grow to $218.2 billion in 2024, a 14% CAGR.

Connected TV: forecasted to grow to $18.3 billion in 2024, a 23% CAGR.

Linear TV: forecasted to grow to $67.5 billion in 2024, a 3% CAGR.

Streaming Audio: forecasted to grow to $6.3 billion in 2024, a 9% CAGR.

Digital Billboards: forecasted to grow to $3.6 billion in 2024, a 14% CAGR.

The forecasts above include both programmatic and non-programmatic digital advertising. In recent years, programmatic advertising has represented an increasing portion of total U.S. media spend. According to eMarketer, the U.S. advertising market, as represented by desktop, mobile, connected TV, linear TV, streaming audio and digital billboard channels, is forecasted to grow from $205 billion in 2020 to $241 billion in 2021 and $269 million in 2022.

Our Solution

We provide a software platform that enables marketers and their advertising agencies to plan, buy and measure their advertising across channels. Integrated with our people-based capabilities, we provide our customers with a full suite of forecasting, reporting and automation functionality to make informed decisions around their advertising investments.

Cloud-Based, Self-Service Portal: Our software is available in a self-service interface, providing customers with transparency and control over their advertising campaigns and underlying data infrastructure.

Omnichannel Demand Side Platform: We are a demand side platform for ad buyers. Marketers and their agencies can use our integrated software platform to efficiently manage omnichannel campaigns and access metrics from each channel to inform decisions in other channels.

Advanced Reporting and Measurement: We invest heavily in our measurement capabilities, as we believe this will increase our customers’ usage of our software. Our software and self-service data lake empower customers with differentiated insights, including foot-traffic data reports, multi-touch attribution and ROAS analytics.

People-Based Identification for Advertising: Our identity resolution capabilities and identity graph reduce or eliminate the need for cookies by enabling matching of people-based identifiers, and allow marketers to reach targeted consumers in a privacy-conscious manner, irrespective of device or channel.



 

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Onboarding: We enable marketers to onboard their first-party data to gain a view into their customers’ top attributes, create targeting segments and easily activate these customer segments. Our data integrations provide marketers with high match rates, which leads to meaningful audience insights for segmentation and targeting.

Our Strengths

We believe the following attributes and capabilities provide us with long-term competitive advantages:

Scalable Self-Service Platform: We offer a self-service platform that enables customers to operate their ad campaigns without extensive involvement of our staff in a manner that grows our revenue at a faster pace than our personnel costs.

Centralized Platform: We believe our software platform enables our customers to plan, buy and measure advertising across more channels than our competitors and to centralize the purchase of each type of programmatic media on a single platform.

Proprietary Technology: We leverage a robust suite of proprietary tools and products in order to enable our customers to utilize our platform and services. As of September 30, 2020, we have 26 issued patents and 9 additional pending patent applications, which cover many of our proprietary products.

Machine Learning Capabilities: We enable the use of machine learning, workflow automation, automated reporting and other functionalities that allow our customers to update and make thousands of changes automatically to help achieve their desired business outcomes.

Advanced Reporting and Measurement: We invest heavily in our measurement capabilities, as we believe this will increase our customers’ usage of our software. Our platform measures ROAS across all channels and empowers our customers with real-time insights leveraging people-based data, including foot-traffic reports and multi-touch attribution analytics.

Differentiated People-Based Capabilities: Our software is built on a people-based framework, integrated with over 70 data partners using people-based identifiers. Our platform is built on a foundation of user consent with advanced consumer opt-out capabilities to keep privacy and security on the forefront.

Experienced Management Team: Our management team has deep and extensive experience in the advertising technology sector, which we believe provides us with a competitive advantage.

Profitable Business Model: Because we are a self-service platform, as we add new customers and as customers increase the use of our software, we are able to demonstrate strong operating leverage. During the year ended December 31, 2019, revenue was $164.9 million, representing a 52% increase from 2018. During the year ended December 31, 2019, our net income was $9.9 million and our Adjusted EBITDA was $24.7 million. During the nine months ended September 30, 2020, revenue was $108.8 million, representing a 4% decrease from 2019. During the nine months ended September 30, 2020, our net income was $7.8 million and our Adjusted EBITDA was $16.2 million.

Our Growth Strategy

The key elements of our long-term growth strategy to capitalize on the secular shift toward programmatic advertising include:

 

   

Continuing to invest in our customers’ success;



 

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Adding new customers and increasing our customers’ usage of our platform;

 

   

Continuing to strengthen our omnichannel partnerships;

 

   

Expanding our sales and marketing investment;

 

   

Extending our leadership position in people-based advertising; and

 

   

Investing in growth through acquisitions.

Recent Developments

Preliminary Estimated Unaudited Financial Results for the Year Ended December 31, 2020 and the Three Months Ended December 31, 2020

Our preliminary estimated unaudited revenue, net income, gross profit, revenue ex-TAC (traffic acquisition costs) and Adjusted EBITDA for the year ended December 31, 2020 and the three months ended December 31, 2020 are set forth below. We have provided a range for these preliminary financial results because our closing procedures for our fiscal year ended December 31, 2020 and the three months ended December 31, 2020 are not yet complete. Our preliminary estimates of the financial results set forth below are based solely on information available to us as of the date of this prospectus and are inherently uncertain and subject to change. Our preliminary estimates contained in this prospectus are forward-looking statements. Our actual results remain subject to the completion of management’s final review and our other closing procedures, as well as the completion of the audit of our annual financial statements. These preliminary estimates are not a comprehensive statement of our financial results for the year ended December 31, 2020 or for the three months ended December 31, 2020, and should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. In addition, these preliminary estimates for the year ended December 31, 2020 and the three months ended December 31, 2020 are not necessarily indicative of the results to be achieved in any future period. While we currently expect that our actual results will be within the ranges described below, it is possible that our actual results may not be within the ranges we currently estimate. Accordingly, you should not place undue reliance on these preliminary financial results. See “Risk Factors,” “Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of certain factors that could result in differences between the preliminary estimated unaudited financial results reported below and the actual results. Our actual audited financial statements and related notes as of and for the year ended December 31, 2020 are not expected to be filed with the SEC until after this offering is completed.

The preliminary estimated unaudited financial results included in this prospectus have been prepared by, and are the responsibility of, our management. Our independent registered public accounting firm, Deloitte & Touche LLP, has not audited, reviewed, compiled or performed any procedures with respect to the preliminary financial results. Accordingly, Deloitte & Touche LLP does not express an opinion or any other form of assurance with respect thereto.

For the year ended December 31, 2020, we estimate that our revenue will range from $163 million to $165 million, roughly flat in growth when compared with revenue of $164.9 million for the year ended December 31, 2019. We estimate that platform usage, our metric of customer engagement represented by aggregate spend on the platform, increased by 17% in the comparative periods. For the three months ended December 31, 2020, we estimate that our revenue will range from $54 million to $56 million, an increase of 6%, using the mid-point of the estimated revenues range when compared with revenue of $52.0 million for the three months ended December 31, 2019. The increase in revenue was primarily due to continued growth in the percentage of spend pricing option in the 2020 period as compared to the same period in 2019. We estimate that platform usage, our metric of customer engagement represented by aggregate spend on the platform, increased by 36% in the comparative three month periods. We estimate that we had 264 Active Customers as of December 31, 2020. We define an Active Customer as a customer that had total aggregate revenue ex-TAC of at least $5,000 through our platform during the previous twelve months.



 

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For the year ended December 31, 2020, we estimate that our gross profit will range from $76 million to $77 million, an increase of 8%, using the mid-point of the estimated range when compared with gross profit of $70.8 million for the year ended December 31, 2019. The increase in gross profit was primarily due to continued growth in platform usage coupled with improved operating leverage related to platform operations. For the three months ended December 31, 2020, we estimate that our gross profit will range from $29 million to $30 million, an increase of 28%, using the mid-point of the estimated range when compared with gross profit of $23.2 million for the three months ended December 31, 2019. The increase in gross profit was primarily due to continued growth in platform usage coupled with improved operating leverage related to platform operations.

For the year ended December 31, 2020, we estimate that our net income will range from $20 million to $21 million, an increase of 107%, using the mid-point of the estimated range when compared with net income of $9.9 million for the year ended December 31, 2019. The increase in net income was primarily due to continued growth in platform usage coupled with improved operating leverage. For the three months ended December 31, 2020, we estimate that our net income will range from $12 million to $13 million, an increase of 131%, using the mid-point of the estimated range when compared with net income of $5.4 million for the three months ended December 31, 2019. The increase in net income was primarily due to continued growth in platform usage coupled with improved operating leverage.

For the year ended December 31, 2020, we estimate that our revenue ex-TAC will range from $109 million to $110 million, an increase of 5%, using the mid-point of the estimated range when compared with revenue ex-TAC of $104.4 million for the year ended December 31, 2019. The change in revenue ex-TAC was related to continued growth in the percentage of spend pricing option. For the three months ended December 31, 2020, we estimate that our revenue ex-TAC will range from $38 million to $39 million, an increase of 17%, using the mid-point of the estimated range when compared with revenue ex-TAC of $32.8 million for the three months ended December 31, 2019. The change in revenue ex-TAC was related to continued growth in the percentage of spend pricing option.

For the year ended December 31, 2020, we estimate that our Adjusted EBITDA will range from $30 million to $31 million, an increase of 25%, using the midpoint of the estimated range when compared with our Adjusted EBITDA of $24.7 million for the year ended December 31, 2019. The increase in Adjusted EBITDA was related to continued growth in platform usage coupled with improved operating leverage. For the three months ended December 31, 2020, we estimate that our Adjusted EBITDA will range from $14 million to $15 million, an increase of 55%, using the midpoint of the estimated range when compared with our Adjusted EBITDA of $9.4 million for the three months ended December 31, 2019. The increase in Adjusted EBITDA was related to continued growth in platform usage coupled with improved operating leverage.

Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA

Revenue ex-TAC and Adjusted EBITDA are non-GAAP financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a discussion of how we define revenue ex-TAC and Adjusted EBITDA and why we believe these measures are important.



 

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The following tables reconcile estimated gross profit to estimated revenue ex-TAC and estimated net income to estimated Adjusted EBITDA for the year ended December 31, 2020:

 

     Estimated      Actual  
     Year Ended
December 31, 2020
     Year Ended
December 31, 2019
 
     Low      High         
     (unaudited)         
     (in millions)  

Revenue

   $ 163      $ 165      $ 164.9  

Less:

        

Platform operations

     (87      (88      (94.1
  

 

 

    

 

 

    

 

 

 

Gross profit

     76        77        70.8  

Add back:

        

Other platform operations

     33        33        33.6  
  

 

 

    

 

 

    

 

 

 

Revenue ex-TAC

   $ 109      $ 110      $ 104.4  
  

 

 

    

 

 

    

 

 

 
     Estimated      Actual  
     Year Ended
December 31, 2020
     Year Ended
December 31, 2019
 
     Low      High         
     (unaudited)         
     (in millions)  

Net income (loss)

   $ 20      $ 21      $ 9.9  

Add back:

        

Interest expense, net

     1        1        3.9  

Depreciation and amortization expense

     9        9        10.2  

Unit-based compensation expense

     —          —          1.1  

Restructuring expense

     —          —          —    

2019 Former Holdco transaction expense

     —          —          0.5  

UK subsidiary closure

     —          —          (0.9
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 30      $ 31      $ 24.7  
  

 

 

    

 

 

    

 

 

 


 

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The following tables reconcile estimated gross profit to estimated revenue ex-TAC and estimated net income to estimated Adjusted EBITDA for the three months ended December 31, 2020:

 

     Estimated      Actual  
     Three Months Ended
December 31, 2020
     Three Months
Ended
December 31, 2019
 
     Low      High         
     (unaudited)  
     (in millions)  

Revenue

   $ 54      $ 56      $ 52.0  

Less:

        

Platform operations

     (25      (26      (28.7
  

 

 

    

 

 

    

 

 

 

Gross profit

     29        30        23.2  

Add back:

        

Other platform operations

     9        9        9.6  
  

 

 

    

 

 

    

 

 

 

Revenue ex-TAC

   $ 38      $ 39      $ 32.8  
  

 

 

    

 

 

    

 

 

 
     Estimated      Actual  
     Three Months Ended
December 31, 2020
     Three Months
Ended
December 31, 2019
 
     Low      High         
     (unaudited)  
     (in millions)  

Net income (loss)

   $ 12      $ 13      $ 5.4  

Add back:

        

Interest expense, net

     0        0        0.6  

Depreciation and amortization expense

     2        2        2.6  

Unit-based compensation expense

     —          —          0.6  

Restructuring expense

     —          —          —    

2019 Former Holdco transaction expense

     —          —          0.4  

UK subsidiary closure

     —          —          (0.2
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 14      $ 15      $ 9.4  
  

 

 

    

 

 

    

 

 

 

Corporate Information

Viant Technology Inc. was incorporated in Delaware on October 9, 2020. It had no business operations prior to this offering. In connection with the consummation of this offering, Viant Technology Inc. will become the sole managing member of Viant Technology LLC, pursuant to the Reorganization described under “Organizational Structure—The Reorganization.” Our principal executive offices are located at 2722 Michelson Drive, Suite 100, Irvine, CA 92612 and our telephone number is (949) 861-8888. Our website address is www.viantinc.com. Information contained on our website or linked therein or otherwise connected thereto does not constitute part of and is not incorporated by reference into this prospectus or the registration statement of which this prospectus forms a part. We have included our website address in this prospectus solely as an inactive textual reference.



 

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Risks Affecting Our Business

Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors” immediately following this prospectus summary. These risks include, but are not limited to, the following:

 

   

our ability to add new customers, effectively educate and train our existing customers on how to make full use of our platform and increase the usage of our platform by our customers;

 

   

failure to realize the expected benefits of an industry shift away from cookie-based consumer tracking;

 

   

the impact of the COVID-19 pandemic and other sustained adverse market events on our and our customers’ business operations;

 

   

our ability to innovate, effectively manage our growth and make the right investment decisions;

 

   

the relatively new and evolving market for programmatic buying for advertising campaigns;

 

   

the loss of a significant amount of revenue from select advertising agencies as customers;

 

   

fluctuations in our operating results and the varying nature, in terms of mix, of our different pricing options;

 

   

our lengthy sales cycle and payment-related risks;

 

   

diminishment of, or failure to grow, our access to advertising inventory;

 

   

the intensely competitive nature of the market in which we participate; and

 

   

the impact on our business of data privacy regulation or data privacy breaches.

You should carefully consider all of the information set forth in this prospectus and, in particular, the information in the section entitled “Risk Factors” beginning on page 21 of this prospectus prior to making an investment in our common stock. These risks could, among other things, prevent us from successfully executing our strategies and could have a material adverse effect on our business, financial condition and results of operations.

History of the Company

Viant was founded in 1999 by Tim, Chris and Russ Vanderhook who continue to lead our company today. Viant has been at the forefront of digital advertising technology since its inception and has demonstrated its ability to grow, thrive, and innovate as competitors have come and gone. In 2011, Viant acquired the social network website Myspace.com. In 2011, Tim and Chris Vanderhook started Xumo, a connected TV streaming service, which was acquired by Comcast Corp. in 2020. In 2015, Viant completed its first people-based integration. Viant remained independent until 2016, when Time Inc. acquired a 60% interest in Viant through its subsidiary, Viant Technology Holding Inc. (the “Former Holdco”). That interest was later acquired by Meredith Corporation when it acquired Time Inc. in 2018. In 2017, the Company purchased Adelphic, a DSP. Since the Adelphic acquisition, the Company has materially transformed from a full-service provider of digital advertising solutions into a leading DSP that enables marketers and their advertising agencies to centralize the planning,



 

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buying and measurement of their media investments using a people-based framework. Viant has grown from a business operating from a home office to a company with nearly 300 employees in 11 offices throughout the U.S. In 2019, Viant entered into an agreement that resulted in the retirement of the Former Holdco’s interest in Viant and the Vanderhook Parties acquired that 60% interest in the Company (the “2019 Former Holdco transaction”), allowing it to once again become an independent company.

Organizational Structure

In connection with this offering, we will undertake certain transactions as part of a corporate reorganization (the “Reorganization”) described under “Organizational Structure” below. The Reorganization will be conducted through what is commonly referred to as an “UP-C” structure, which is often used by partnerships and limited liability companies undertaking an initial public offering. The UP-C approach provides the existing members of Viant Technology LLC with the tax advantage of continuing to own interests in a pass-through structure and provides potential future tax benefits for the public company and economic benefits for the existing members of Viant Technology LLC when they ultimately exchange their pass-through interests and corresponding shares of Class B common stock for shares of Class A common stock. Following the Reorganization and this offering, Viant Technology Inc. will be a holding company and its sole asset will be ownership of Class A units of Viant Technology LLC, of which it will be the managing member. The members of Viant Technology LLC holding preferred and common units prior to this offering will exchange their membership units for Class B units of Viant Technology LLC and will also own an equal number of shares of Class B common stock of Viant Technology Inc. upon completion of this offering.

Viant Technology Inc. will enter into the Tax Receivable Agreement (the “Tax Receivable Agreement”) for the benefit of the continuing members of Viant Technology LLC (not including Viant Technology Inc.), pursuant to which Viant Technology Inc. will pay them 85% of the amount of the net cash tax savings, if any, that Viant Technology Inc. realizes (or, under certain circumstances, is deemed to realize) as a result of increases in tax basis (and certain other tax benefits) resulting from (i) Viant Technology Inc.’s acquisition of Viant Technology LLC units from pre-IPO members of Viant Technology LLC in connection with this offering and in future exchanges and (ii) any payments Viant Technology Inc. makes under the Tax Receivable Agreement. See “Organizational Structure” and “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”



 

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The diagram below depicts our organizational structure following the consummation of the Reorganization and this offering (assuming no exercise of the underwriters’ option to purchase additional shares).

 

LOGO

Amounts may not sum to total due to rounding.

(1)

At the closing of this offering, the members of Viant Technology LLC other than Viant Technology Inc. will be the Vanderhook Parties and Viant Technology Equity Plan LLC (the “Equity Plan LLC”), all of whom owned preferred or common units of Viant Technology LLC prior to the completion of this offering, and all of whom, in the aggregate, will own 48,935,559 Class B units of Viant Technology LLC and 48,935,559 shares of Class B common stock of Viant Technology Inc. after this offering assuming no exercise of the underwriters’ option to purchase additional shares and 47,660,559 Class B units of Viant Technology LLC and 47,660,559 shares of Class B common stock of Viant Technology Inc. if the underwriters exercise their option to purchase additional shares in full.

(2)

Each share of Class A common stock will be entitled to one vote and will vote together with the Class B common stock as a single class, except as provided in our amended and restated certificate of incorporation or required by law. See “Organizational Structure—Voting Rights of Class A Common Stock and Class B Common Stock.

(3)

Each share of Class B common stock is entitled to one vote and will vote together with the Class A common stock as a single class, except as provided in our amended and restated certificate of incorporation or required by law. The Class B common stock will not have any economic rights in Viant Technology Inc.

(4)

Viant Technology Inc. will own all of the Class A units of Viant Technology LLC after the Reorganization, which upon the completion of this offering will represent the right to receive approximately 14.8% of the distributions made by Viant Technology LLC assuming no exercise of the underwriters’ option to purchase additional shares and approximately 17.0% of the distributions made by Viant Technology LLC if the



 

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  underwriters exercise their option to purchase additional shares in full. While this interest represents a minority of economic interests in Viant Technology LLC, it represents 100% of the voting interests, and Viant Technology Inc. will act as the managing member of Viant Technology LLC. As a result, Viant Technology Inc. will operate and control all of Viant Technology LLC’s business and affairs and will be able to consolidate its financial results into Viant Technology Inc.’s financial statements.
(5)

The Class B stockholders will collectively hold all Class B common stock of Viant Technology Inc. outstanding after this offering. They also will collectively hold all Class B units of Viant Technology LLC, which upon the completion of this offering will represent the right to receive approximately 85.2% of the distributions made by Viant Technology LLC assuming no exercise of the underwriters’ option to purchase additional shares and approximately 83.0% of the distributions made by Viant Technology LLC if the underwriters exercise their option to purchase additional shares in full. The Class B stockholders will have no voting rights in Viant Technology LLC on account of the Class B units, except for the right to approve amendments to the Viant Technology LLC Agreement that adversely affect their rights as holders of Class B units. However, through their ownership of shares of Class B common stock, the Class B stockholders will control a majority of the voting power of the common stock of Viant Technology Inc., the managing member of Viant Technology LLC, and will therefore have indirect control over Viant Technology LLC. Class B units may be exchanged for shares of our Class A common stock or, at our election, for cash, subject to certain restrictions pursuant to the Viant Technology LLC Agreement described in “Organizational Structure—Viant Technology LLC Agreement.” When a Class B stockholder exchanges Class B units for the corresponding number of shares of our Class A common stock or, at our election, for cash, it will result in the automatic cancellation of the corresponding number of shares of our Class B common stock and, therefore, will decrease the aggregate voting power of our Class B stockholders. Any beneficial holder exchanging Class B units must ensure that the applicable corresponding number of shares of Class B common stock are delivered to us for retirement as a condition of exercising its right to exchange Class B units for shares of our Class A common stock or, at our election, for cash.

Implications of Being an Emerging Growth Company

As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For so long as we remain an EGC, we are permitted and have elected to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not EGCs. These exemptions include:

 

   

being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

 

   

not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;

 

   

not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

 

   

reduced disclosure obligations regarding executive compensation; and

 

   

exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.



 

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We may take advantage of these provisions for up to five years or such earlier time when we are no longer an EGC. We will cease to be an EGC if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of some reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you may hold stock.

The JOBS Act provides that an EGC may take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption is required for private companies. As part of this election, we are delaying the adoption of accounting guidance related to leases and implementation costs incurred in cloud computing arrangements that currently applies to public companies. We are assessing the impact this guidance will have on our financial statements. See Note 2 to our audited consolidated financial statements included elsewhere in this prospectus for additional information.



 

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THE OFFERING

 

Issuer

Viant Technology Inc.

 

Class A common stock offered by Viant Technology Inc.


8,500,000 shares

 

Underwriters’ option to purchase additional shares of Class A common stock from selling stockholders


1,275,000 shares

 

Class A common stock outstanding immediately after this offering


8,500,000 shares of Class A common stock (or 9,775,000 shares of Class A common stock if the underwriters exercise their option to purchase additional shares of Class A common stock in full).

 

Class B common stock outstanding immediately after this offering


48,935,559 shares of Class B common stock (or 47,660,559 shares of Class B common stock if the underwriters exercise their option to purchase additional shares of Class A common stock in full). Class B common stock will be issued to holders of Class B units in Viant Technology LLC.

 

Use of proceeds

We estimate that our net proceeds from this offering, based on an assumed initial public offering price of $23.00 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), after deducting estimated underwriting discounts and commissions but before deducting expenses of this offering and the Reorganization payable by us, will be approximately $181.8 million. We will not receive any proceeds from any sale of shares by the selling stockholders in the event the underwriters exercise their option to purchase additional shares of Class A common stock.

 

  We intend to use the net proceeds from this offering to purchase newly issued Viant Technology LLC units, at a per-unit price equal to the per-share price paid by the underwriters for shares of our Class A common stock in this offering.

 

  We intend to cause Viant Technology LLC to use the remaining net proceeds to pay the expenses incurred by us in connection with this offering and the Reorganization, and for working capital and other general corporate purposes, including the potential future acquisition of, or investment in, technologies or businesses that complement our business. We have no present commitments or agreements to enter into any such acquisitions or make any such investments. See “Use of Proceeds” for a more complete description of the intended use of proceeds from this offering.

 

Dividend policy

We have no present intention to pay cash dividends on our common stock. Any determination to pay dividends to holders of our common



 

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stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, restrictions in our existing and any future debt agreements and other factors that our board of directors deems relevant. Holders of our Class B common stock will not be entitled to dividends from Viant Technology Inc.

Following the Reorganization and this offering, Viant Technology Inc. will be a holding company and its sole asset will be ownership of the Class A units of Viant Technology LLC, of which it will be the managing member. Subject to funds being legally available for distribution, we intend to cause Viant Technology LLC to make distributions to each of its members, including Viant Technology Inc., in an amount intended to enable each member to pay all applicable taxes on taxable income allocable to each member and to allow Viant Technology Inc. to make payments under the Tax Receivable Agreement. If the amount of tax distributions to be made exceeds the amount of funds available for distribution, Viant Technology Inc. shall receive the full amount of its tax distribution before the other members receive any distribution and the balance, if any, of funds available for distribution shall be distributed to the other members pro rata in accordance with their assumed tax liabilities. See “Dividend Policy.”

 

Voting rights

We have two classes of authorized common stock: Class A common stock and Class B common stock. Each share of Class A common stock and Class B common stock will entitle the holder to one vote.

Holders of our Class A common stock and Class B common stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise provided in our amended and restated certificate of incorporation or as required by applicable law. See “Description of Capital Stock.” When a Class B stockholder exchanges Class B units for the corresponding number of shares of our Class A common stock or, at our election, for cash, it will result in the automatic cancellation of the corresponding number of shares of our Class B common stock and, therefore, will decrease the aggregate voting power of our Class B stockholders. See “Organizational Structure—Voting Rights of Class A Common Stock and Class B Common Stock.

 

Exchange of Class B units

We have reserved for issuance 48,935,559 shares of our Class A common stock (or 47,660,559 shares of our Class A common stock if the underwriters exercise their option to purchase additional shares of our Class A common stock in full), which is the aggregate number of shares of our Class A common stock expected to be issued over time upon the exchanges by the Class B unitholders. See “Organizational Structure.”


 

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Viant Technology LLC Agreement

The Viant Technology LLC Agreement will entitle certain of its members (and certain permitted transferees thereof) to exchange their Class B units, together with an equal number of shares of Class B common stock, for shares of Class A common stock on a one-for-one basis or, at our election, for cash. When a Class B unit is exchanged, the corresponding share of our Class B common stock will automatically be retired. See “Organizational Structure—Viant Technology LLC Agreement” and “Certain Relationships and Related Person Transactions—Viant Technology LLC Agreement.”

 

Tax Receivable Agreement

Viant Technology Inc. will enter into the Tax Receivable Agreement for the benefit of the continuing members of Viant Technology LLC (not including Viant Technology Inc.), pursuant to which Viant Technology Inc. will pay them 85% of the amount of the net cash tax savings, if any, that Viant Technology Inc. realizes (or, under certain circumstances, is deemed to realize) as a result of increases in tax basis (and certain other tax benefits) resulting from (i) Viant Technology Inc.’s acquisition of Viant Technology LLC units from pre-IPO members of Viant Technology LLC in connection with this offering and in future exchanges and (ii) any payments Viant Technology Inc. makes under the Tax Receivable Agreement. See “Organizational Structure” and “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

 

Risk factors

You should carefully read and consider the information set forth in the section entitled “Risk Factors” beginning on page 21, together with all of the other information set forth in this prospectus, before deciding whether to invest in our Class A common stock.

 

Reserved Share Program

At our request, an affiliate of BofA Securities, Inc., a participating underwriter, has reserved for sale, at the initial public offering price, up to 7.5% of the shares of Class A common stock offered by this prospectus for sale to certain individuals. If these persons purchase reserved shares of Class A commons stock, it will reduce the number of shares of Class A common stock available for sale to the general public. Any reserved shares of Class A common stock that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares of Class A common stock offered by this prospectus.

 

Symbol

“DSP”

Unless otherwise noted, Class A common stock outstanding after the offering and other information based thereon in this prospectus does not reflect any of the following:

 

   

1,275,000 shares of Class A common stock that would be outstanding upon exercise of the underwriters’ option to purchase additional shares of Class A common stock from the selling stockholders;



 

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11,487,112 shares of Class A common stock issuable under our 2021 Long Term Incentive Plan (the “2021 LTIP”), including:

 

  (i)

6,151,357 shares of Class A common stock underlying restricted stock units or other awards to be granted to certain employees pursuant to the 2021 LTIP immediately after the closing of this offering in connection with our Phantom Unit Plan, of which 2,171,546 will vest upon expiration of the 180 day lock-up period referred to under the heading “Shares Eligible for Future Sale—Lock-Up Agreements” and the remainder of which will vest over time. This number of shares is based on an offering price of $23.00 per share and the final numbers will be calculated based on the final offering price. For example, each $1.00 increase or decrease in the assumed initial public offering price of $23.00 per share would increase or decrease this number of shares by approximately 0.4%; and

 

  (ii)

5,335,755 additional shares of Class A common stock to be reserved for future issuance of awards under the 2021 LTIP, of which 26,088 are expected to be granted to certain non-employee directors upon consummation of this offering; and

 

   

48,935,559 shares of Class A common stock reserved for issuance upon exchange of the Class B units of Viant Technology LLC (or 47,660,559 shares if the underwriters exercise their option to purchase additional shares of Class A common stock in full) (and corresponding shares of Class B common stock) that will be outstanding immediately after this offering.

Unless otherwise indicated in this prospectus, all information in this prospectus assumes the completion of the Reorganization and that shares of our Class A common stock will be sold in this offering at $23.00 per share (the midpoint of the price range set forth on the cover page of this prospectus).

Throughout this prospectus, we present performance metrics and financial information regarding the business of Viant Technology LLC. This information is generally presented on an enterprise-wide basis. The new public stockholders will be entitled to receive a pro rata portion of the economics of Viant Technology LLC’s operations through their ownership of our Class A common stock. Viant Technology Inc.’s ownership of Class A units initially will represent a minority share of Viant Technology LLC. The existing members of Viant Technology LLC initially will continue to hold a majority of the economic interest in its operations as non-controlling interest holders, primarily through direct and indirect ownership of Class B units of Viant Technology LLC. Prospective investors should be aware that the owners of the Class A common stock initially will be entitled only to a minority economic position, and therefore should evaluate performance metrics and financial information in this prospectus accordingly. As Class B units are exchanged for Class A common stock over time, the percentage of the economic interest in Viant Technology LLC’s operations to which Viant Technology Inc. and the public stockholders are entitled will increase proportionately.



 

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth certain summary financial information and other data of Viant Technology LLC on a historical basis. Viant Technology LLC is considered our predecessor for accounting purposes and its consolidated financial statements will be our historical financial statements following this offering. The following summary historical consolidated statements of operations data for the years ended December 31, 2018 and 2019 and the summary historical consolidated balance sheet data as of December 31, 2018 and 2019 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated statements of operations data for the nine months ended September 30, 2019 and 2020, and the selected consolidated balance sheet data as of September 30, 2020, have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited consolidated financial statements on the same basis as the audited consolidated financial statements and have included all adjustments, consisting only of normal recurring adjustments, which in our opinion are necessary to present fairly the financial information set forth in those statements. The summary historical consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. Our historical results and growth rates are not necessarily indicative of the results or growth rates to be expected in future periods, and the results and growth rates for the nine months ended September 30, 2020 are not necessarily indicative of the results or growth rates to be expected for the full year or any other period.

 

    

Year Ended
December 31,

   

Nine Months Ended
September 30,

 
    

2018

   

2019

   

2019

   

2020

 
    

(in thousands, except per
unit data and number of
customers)

 

Consolidated Statements of Operations Data:

        

Revenue

   $ 108,355     $ 164,892     $ 112,938     $ 108,790  

Operating expenses(1):

        

Platform operations

     74,344       94,060       65,350       62,316  

Sales and marketing

     26,766       29,027       20,750       19,393  

Technology and development

     9,585       9,240       6,655       6,080  

General and administrative

     18,326       19,770       13,173       12,408  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     129,021       152,097       105,928       100,197  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (20,666     12,795       7,010       8,593  

Total other expense, net

     4,869       2,871       2,496       816  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (25,535   $ 9,924     $ 4,514     $ 7,777  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per unit—basic(2)

   $ (137.28   $ 31.31     $ 5.38     $ 7.78  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per unit—diluted(2)

   $ (137.28   $ 27.37     $ 4.51     $ 7.78  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Key Operating and Financial Performance Metrics(3)

        

Revenue ex-TAC

   $ 64,526     $  104,440     $ 71,597     $ 71,381  

Adjusted EBITDA

   $ (7,534 )     $ 24,655     $ 15,287     $ 16,220  

Net income as a percentage of gross profit

     N/A       14     9     17

Adjusted EBITDA as a percentage of revenue ex-TAC

     N/A       24     21     23

Number of Active Customers(4)

     267       277       278       258  

Average revenue ex-TAC per Active Customer(4)

   $ 242     $ 377     $ 328     $ 404  


 

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     As of
December 31,
     As of
September 30,
 
    

2018

    

2019

    

2020

 
     (in thousands)  

Consolidated Balance Sheet Data:

 

     

Cash

   $ 2,655      $ 4,815      $ 13,546  

Accounts receivable, net

     48,497        68,083        61,633  

Total assets

     86,662        106,857        108,757  

Accounts payable

     17,752        20,480        22,259  

Total debt(5)

     65,955        17,500        23,535  

Total liabilities

     124,859        84,152        81,477  

Convertible preferred units(6)

     45,000        7,500        7,500  

Total members’ equity (deficit)

     (83,197      15,205        19,780  

 

(1)

Unit-based compensation expense, depreciation expense and amortization expense included above were as follows:

 

    

Year Ended
December 31,

    

Nine Months Ended
September 30,

 
    

2018

    

2019

    

2019

    

2020

 
    

(in thousands)

 

Unit-based compensation expense:

           

Platform operations

   $ 25      $ 42      $ 18      $ —    

Sales and marketing

     26        44        19        —    

Technology and development

     49        82        35        —    

General and administrative

     547        922        394        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total unit-based compensation expense

   $ 647      $ 1,090      $ 466      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

    

Year Ended
December 31,

    

Nine Months Ended
September 30,

 
    

2018

    

2019

    

2019

    

2020

 
     (in thousands)  

Depreciation and amortization expense:

           

Platform operations

   $ 8,067      $ 7,535      $ 5,656      $ 5,584  

Sales and marketing

     —          —          —          —    

Technology and development

     1,314        1,537        1,138        1,206  

General and administrative

     1,247        1,083        809        864  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total depreciation and amortization expense

   $ 10,628      $ 10,155      $ 7,603      $ 7,654  
  

 

 

    

 

 

    

 

 

    

 

 

 

See Note 4, Note 5 and Note 9 to our consolidated financial statements included elsewhere in this prospectus for more information regarding depreciation expense, amortization expense and unit-based compensation expense, respectively.

 

(2)

See Note 2 to our consolidated financial statements for a description of the earnings (loss) per unit—basic and diluted computations. Our pro forma basic and diluted earnings per share, after giving effect to the Reorganization and this offering, are $0.09 per share for the year ended December 31, 2019 and $0.11 per share for the nine months ended September 30, 2020. See “Unaudited Pro Forma Consolidated Financial Information and Other Data.”

 

(3)

For a detailed discussion of our key operating and financial performance metrics and a reconciliation of revenue ex-TAC (traffic acquisition costs) and Adjusted EBITDA to the most directly comparable financial



 

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  measures calculated in accordance with GAAP, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Key Operating and Financial Performance Metrics—Use of Non-GAAP Financial Measures.

 

(4) 

We define an Active Customer as a customer that had total aggregate revenue ex-TAC of at least $5,000 through our platform during the previous twelve months. We define average revenue ex-TAC per Active Customer as revenue ex-TAC for the trailing twelve month period presented divided by Active Customers. For a detailed discussion of average revenue ex-TAC per Active Customer and Active Customers, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Key Operating and Financial Performance Metrics—Number of Active Customers and Average Revenue ex-TAC per Active Customer.

 

(5)

Total debt as of December 31, 2018 consisted of Viant Technology LLC’s previously outstanding long-term promissory note that was owed to the Former Holdco. The Former Holdco’s outstanding units of Viant Technology LLC were retired in conjunction with Viant Technology LLC’s settlement of the promissory note on October 31, 2019, in accordance with the Unit Repurchase Agreement between Viant Technology LLC, the Former Holdco and other parties thereto. As of December 31, 2019, no outstanding amounts remained under the promissory note, and the Former Holdco was no longer a related party of Viant Technology LLC. See Note 7 and Note 13 to our consolidated financial statements included elsewhere in this prospectus for further information.

 

(6) 

We refer to our 2016 convertible preferred units held by the Former Holdco and our 2019 convertible preferred units held by Four Brothers 2 LLC collectively as “convertible preferred units” in this prospectus.



 

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RISK FACTORS

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the following risks and uncertainties described below, together with all other information contained in this prospectus, including our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our Class A common stock. The occurrence of any of the following risks, as well as any risks or uncertainties not currently known to us or that we currently do not believe to be material, could materially and adversely affect our business, prospects, financial condition, results of operations and cash flow, in which case, the trading price of our Class A common stock could decline and you could lose all or part of your investment.

Risks Related to Our Business

Our success and revenue growth is dependent on adding new customers, effectively educating and training our existing customers on how to make full use of our platform and increasing usage of our platform by our customers.

Our success is dependent on regularly adding new customers and increasing our customers’ usage of our platform. Our contracts and relationships with customers generally do not include long-term or exclusive obligations requiring them to use our platform or maintain or increase their use of our platform. Our customers typically have relationships with numerous providers and can use both our platform and those of our competitors without incurring significant costs or disruption. Our customers may also choose to decrease their overall advertising spend for any reason, including if they do not believe they are receiving a sufficient return on their advertising spend. Accordingly, we must continually work to win new customers and retain existing customers, increase their usage of our platform and capture a larger share of their advertising spend. We may not be successful at educating and training customers, particularly our newer customers, on how to use our platform, in particular our advanced reporting tools, in order for our customers to get the most benefit from our platform and increase their usage. If these efforts are unsuccessful or customers decide not to continue to maintain or increase their usage of our platform for any other reason, or if we fail to attract new customers, our revenue could fail to grow or decline, which would materially and adversely harm our business, operating results and financial condition. We cannot assure you that our customers will continue to use and increase their spend on our platform or that we will be able to attract a sufficient number of new customers to continue to grow our business and revenue. If customers representing a significant portion of our business decide to materially reduce their use of our platform or cease using our platform altogether, our revenue could be significantly reduced, which could have a material adverse effect on our business, operating results and financial condition. We may not be able to replace customers who decrease or cease their usage of our platform with new customers that will use our platform to the same extent.

We may not realize the expected benefits of an industry shift away from cookie-based consumer tracking as such shift may not occur as rapidly as we expect or may not be realized at all.

We expect to benefit as compared to others in our industry from marketers reducing their reliance on vendors and software platforms that utilize third-party cookies for tracking. However, we cannot assure you that the shift away from cookie-based consumer tracking will happen as rapidly as we expect or that such shift will occur at all. Additionally, even if the shift away from cookie-based consumer tracking does occur, we may not be as successful in growing our business and increasing our revenue as we expect. For example, marketers may not shift their business away from our competitors if our competitors are successful in developing alternative products or services that are not significantly reliant on the cookie-based framework.

The effects of the ongoing COVID-19 pandemic and other sustained adverse market events have had, and could in the future have, an adverse impact on our business, operating results and financial condition.

Our business and operations have been and could in the future be adversely affected by health epidemics, such as the global COVID-19 pandemic. The COVID-19 pandemic and efforts to control its spread

 

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have curtailed the movement of people, goods and services worldwide, including in the regions in which we and our customers and partners operate, and are significantly impacting economic activity and financial markets. Many marketers, particularly those in the travel, retail and automotive industries, have decreased or paused their advertising spending as a response to the economic uncertainty, decline in business activity, and other COVID-19-related impacts, which has negatively impacted, and may continue to negatively impact, our revenue and results of operations, the extent and duration of which we may not be able to accurately predict. The spread of an infectious disease may also result in, and, in the case of the COVID-19 pandemic has resulted in, regional quarantines, labor shortages or stoppages, changes in consumer purchasing patterns, disruptions to service providers’ ability to deliver data on a timely basis, or at all, and overall economic instability.

A recession, depression or other sustained adverse market events resulting from the spread of COVID-19 could materially and adversely affect our business and that of our customers or potential customers. Our customers’ and potential customers’ businesses or cash flows have been and may continue to be negatively impacted by the COVID-19 pandemic, which has led and may continue to lead them to reduce their advertising spending and delay their advertising initiatives or technology spending, or attempt to renegotiate contracts and obtain concessions, which may materially and negatively impact our business, operating results and financial condition. Our customers may also seek adjustments to their payment terms, delay making payments or default on their payables, any of which may impact the timely receipt and/or collectability of our receivables. Typically, we are contractually required to pay advertising inventory and data suppliers within a negotiated period of time, regardless of whether our customers pay us on time, or at all, and we may not be able to renegotiate better terms. As a result, our financial condition and results of operations may be adversely impacted if the business or financial condition of our customers and marketers is negatively affected by the pandemic.

Our operations are subject to a range of external factors related to the COVID-19 pandemic that are not within our control. We have taken precautionary measures intended to minimize the risk of the spread of the virus to our employees, partners and customers, and the communities in which we operate. A wide range of governmental restrictions has also been imposed on our employees’, customers’ and partners’ physical movement to limit the spread of COVID-19. There can be no assurance that precautionary measures, whether adopted by us or imposed by others, will be effective, and such measures could negatively affect our sales, marketing, and customer service efforts, delay and lengthen our sales cycles, decrease our employees’ or customers’ or partners’ productivity, or create operational or other challenges, any of which could harm our business, operating results and financial condition.

The economic uncertainty caused by the COVID-19 pandemic has made and may continue to make it difficult for us to forecast revenue and operating results and to make decisions regarding operational cost structures and investments. Our business depends on the overall demand for advertising and on the economic health of our customers that benefit from our platform. Economic downturns or unstable market conditions may cause our customers to decrease their advertising budgets, which could reduce usage of our platform and adversely affect our business, operating results and financial condition. We have committed, and we plan to continue to commit, resources to grow our business, including to expand our employee base and develop our platform and systems, and such investments may not yield anticipated returns, particularly if worldwide business activity continues to be impacted by the COVID-19 pandemic. The duration and extent of the impact from the COVID-19 pandemic depend on future developments that cannot be accurately predicted at this time, and if we are not able to respond to and manage the impact of such events effectively, our business may be harmed. Such future developments may include, among others, the duration and spread of the outbreak, new information that may emerge concerning the severity of COVID-19 and government actions to contain COVID-19 or treat its impact, the level of relief efforts designed to help businesses and consumers, including any declines in such levels, impact on our customers and our sales cycles, impact on our customer, industry or employee events, and effect on our advertising inventory partners.

Our results may also fluctuate unpredictably as and to the extent there is a recovery from the pandemic and a return to non-pandemic business conditions. We cannot predict the impact of a post-pandemic recovery on

 

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the economy, our customers or consumer media consumption patterns or the degree to which certain trends, such as the growth in demand for our connected TV offering, will continue.

If we fail to innovate and make the right investment decisions in our offerings and platform, we may not attract and retain customers and our revenue and results of operations may decline.

Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction by our competitors of new and enhanced offerings. We must regularly make investment decisions regarding offerings and technology to maintain the technological competitiveness of our products and services and meet customer demand and evolving industry standards. The complexity and uncertainty regarding the development of new technologies and the extent and timing of market acceptance of innovative products and services create difficulties in maintaining this competitiveness. The success of any enhancement or new solution depends on many factors, including timely completion, adequate quality testing, appropriate introduction and market acceptance. Without the timely introduction of new products, services and enhancements, our offerings could become technologically or commercially obsolete over time, in which case our revenue and operating results would suffer. If new or existing competitors have more attractive offerings, we may lose customers or customers may decrease their use of our platform. New customer demands, superior competitive offerings or new industry standards could require us to make unanticipated and costly changes to our platform or business model. If we fail to enhance our current products and services or fail to develop new products to adapt to our rapidly changing industry or to evolving customer needs, demand for our platform could decrease and our business, operating results and financial condition may be adversely affected.

The market for programmatic buying for advertising campaigns is relatively new and evolving. If this market develops slower or differently than we expect, our business, operating results and financial condition would be adversely affected.

We derive revenue from the programmatic purchase of advertising on our platform. We expect that programmatic ad buying will continue to be our primary source of revenue for the foreseeable future, and that our revenue growth will largely depend on increasing our customers’ usage of our platform. While the market for programmatic ad buying for desktop and mobile display ads is relatively established, the market in other channels is still emerging, and our current and potential customers may not shift quickly enough to programmatic ad buying from other buying methods, which would reduce our growth potential. If the market for programmatic ad buying deteriorates or develops more slowly than we expect, it could reduce demand for our platform, and our business, growth prospects and financial condition would be adversely affected.

In particular, the market for programmatic buying for advertising campaigns across multiple advertising channels, including connected TV, linear TV, streaming audio and digital billboard channels is an emerging market. Our ability to provide capabilities across multiple advertising channels, which we refer to as omnichannel, may be constrained if we are not be able to maintain or grow advertising inventory for such channels, and some of our omnichannel offerings may not gain market acceptance. We may not be able to accurately predict changes in overall industry demand for the channels in which we operate and cannot assure you that our investment in channel development will correspond to any such changes. For example, we cannot predict whether the growth in demand for our connected TV offering will continue. Furthermore, if our channel mix changes due to a shift in customer demand, such as customers shifting their usage more quickly or more extensively than expected to channels in which we have relatively less functionality, features, or inventory, such as linear TV, then demand for our platform could decrease, and our business, financial condition, and results of operations could be adversely affected.

We receive a significant amount of revenue from a select number of advertising agency holding companies, owning various advertising agencies, and the loss of advertising agencies as customers could harm our business, operating results and financial condition.

A significant amount of our revenue comes from advertising agencies. We had 277 Active Customers for the year ended December 31, 2019 and 258 Active Customers for the twelve month period ended

 

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September 30, 2020, in each case consisting primarily of advertising agencies. Many of these agencies are owned by advertising agency holding companies, where decision making is generally highly decentralized such that purchasing decisions are made, and relationships with marketers are located, at the agency, local branch or division level. If all of our individual customer contractual relationships were aggregated at the holding company level, two advertising agency holding companies would represent 17% and 13%, respectively, of our revenue for 2019 and three advertising agency holding companies would represent 15%, 10% and 10% of our revenue for the nine months ended September 30, 2020, respectively. Due to the highly decentralized operations and decision-making at the agencies owned by each of these advertising agency holding companies, we consider the individual agencies rather than the holding company to be our customers.

Often, we enter into separate contracts and billing relationships with the individual agencies and account for them as separate customers. However, some holding companies for these agencies may choose to exert control over the individual agencies in the future. If so, any loss of relationships with such holding companies and, consequently, of their agencies, local branches or divisions, as customers could significantly harm our business, operating results and financial condition.

We do not have exclusive relationships with advertising agencies and we depend on agencies to work with us as they embark on advertising campaigns for their clients. The loss of such agencies could significantly harm our business, operating results and financial condition. If we fail to maintain satisfactory relationships with an advertising agency, we risk losing business from the marketers represented by that agency.

Marketers may change advertising agencies. If a marketer switches from an agency that utilizes our platform to one that does not, we could lose revenue from that marketer. In addition, some advertising agencies have strong relationships with competing DSPs or other platforms and may direct their marketers to such other platforms.

We may experience fluctuations in our operating results, which could make our future operating results difficult to predict or cause our operating results to fall below securities analysts’ and investors’ expectations.

Our quarterly and annual operating results have fluctuated in the past and we expect our future operating results to fluctuate due to a variety of factors, many of which are beyond our control. In particular, we offer our customers a choice of three different pricing options: a percentage of spend option, a subscription option and a fixed cost per mille (“CPM”) pricing option. We also offer our customers the ability to use our services to aid them in data management, media execution and advanced reporting. Our revenue and revenue ex-TAC vary across these different pricing and service options, and therefore our results may vary based on the mix of pricing and service options chosen by customers in any given period. The varying nature of our pricing mix between periods therefore may make it more difficult for us to forecast our future operating results. Further, variation in our pricing mix may make it more difficult to make comparisons between prior, current and future periods. Period-to-period comparisons of our operating results should not be relied upon as an indication of our future performance. Fluctuations in our operating results could cause our performance to fall below the expectations of securities analysts and investors, and adversely affect the price of our Class A common stock. Because our business is changing and evolving rapidly, and the macroeconomic environment continues to evolve as a result of the COVID-19 pandemic, our historical operating results may not be necessarily indicative of our future operating results. It is also difficult to predict the impact of a post-pandemic recovery on our business and operating results. In addition to changes in terms of mix of our different pricing options, factors that may cause our operating results to fluctuate include the following:

 

   

changes in demand for our platform, including those related to the seasonal nature of our customers’ spending on digital advertising campaigns;

 

   

changes in our pricing policies, the pricing policies of our competitors and the pricing or availability of inventory, data or other third-party services;

 

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changes in our customer base and platform offerings;

 

   

the addition or loss of advertising agencies and marketers as customers;

 

   

changes in advertising budget allocations, agency affiliations or marketing strategies;

 

   

changes to our channel mix (including, for example, changes in demand for connected TV);

 

   

changes and uncertainty in the regulatory and business environment for us or customers (for example, when Apple or Google change policies for their browsers and operating systems);

 

   

changes in the economic prospects of marketers or the economy generally (due to COVID-19, or otherwise), which could alter marketers’ spending priorities, or could increase the time or costs required to complete advertising inventory sales;

 

   

changes in the availability of advertising inventory or in the cost of reaching end consumers through digital advertising;

 

   

disruptions or outages on our platform;

 

   

the introduction of new technologies or offerings by our competitors;

 

   

changes in our capital expenditures as we acquire the hardware, equipment and other assets required to support our business;

 

   

timing differences between our payments for advertising inventory and our collection of related advertising revenue;

 

   

the length and unpredictability of our sales cycle;

 

   

costs related to acquisitions of businesses or technologies, or employee recruiting; and

 

   

shifting views and behaviors of consumers concerning use of data.

Based upon the factors above and others beyond our control, we have a limited ability to forecast our future revenue, costs and expenses, and, as a result, our operating results may, from time to time, fall below our estimates or the expectations of securities analysts and investors.

We often have long sales cycles, which can result in significant time between initial contact with a prospect and execution of a customer agreement, making it difficult to project when, if at all, we will obtain new customers and when we will generate revenue from those customers.

Our sales cycle, from initial contact to contract execution and implementation, can take significant time. As part of our sales cycle, we may incur significant expenses before we generate any revenue from a prospective customer. We have no assurance that the substantial time and money spent on our sales efforts will generate significant revenue. If conditions in the marketplace, generally or with a specific prospective customer, change negatively, it is possible that we will be unable to recover any of these expenses. Our sales efforts involve educating our customers about the use, technical capabilities and benefits of our platform. Some of our customers undertake an evaluation process that frequently involves not only our platform but also the offerings of our competitors. As a result, it is difficult to predict when we will obtain new customers and begin generating revenue from these new customers. Even if our sales efforts result in obtaining a new customer, the customer controls when and to what extent it uses our platform and therefore the amount of revenue we generate, and it may not sufficiently justify the expenses incurred to acquire the customer and the related training support. As a result, we may not be able to add customers, or generate revenue, as quickly as we may expect, which could harm our growth prospects.

 

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Customers have the option to use our platform on a self-service basis, which requires us to commit substantial time and expenses towards training potential customers on how to make full use of our platform. If we fail to offer sufficient customer training and support for our platform, we may not be able to attract new customers or maintain our current customers.

Because we operate a platform that has many powerful tools and that customers can choose to use on a self-service basis, we are often required to spend a substantial amount of time and effort educating and training current customers and potential customers on how to make full use of our platform. Because potential customers may already be trained to use our competitors’ platforms, we are also required to spend a significant amount of time cultivating relationships with those potential customers to ensure they understand the potential benefits of our platform and this relationship building process can take many months and may not result in us winning an opportunity with any given potential customer. As a result, customer training and support is critical for the successful and continued use of our platform and for maintaining and increasing spend through our platform from existing and new customers.

Providing this training and support requires that our platform operations personnel have specific domain knowledge and expertise, making it more difficult for us to hire qualified personnel and to scale up our support operations due to the extensive training required. The importance of high-quality customer service will increase as we expand our business and pursue new customers. If we are not responsive and proactive regarding our customers’ advertising needs, or do not provide effective support for our customers’ advertising campaigns, our ability to retain our existing customers would suffer and our reputation with existing or potential customers would be harmed, which would negatively impact our business.

We are subject to payment-related risks and if our customers do not pay, or dispute their invoices, our business, operating results and financial condition may be adversely affected.

Many of our contracts with advertising agencies provide that if the marketer does not pay the agency, the agency is not liable to us, and we must seek payment solely from the marketer, a type of arrangement called sequential liability. The credit risk associated with these arrangements may vary depending on the nature of an advertising agency’s aggregated marketer base and the credit risk of the agency itself. We may also be involved in disputes with agencies and their marketers over the operation of our platform, the terms of our agreements or our billings for purchases made by them through our platform. When we are unable to collect or make adjustments to our bills to customers, we incur write-offs for bad debt, which could have a material adverse effect on our results of operations for the periods in which the write-offs occur. In the future, bad debt may exceed reserves for such contingencies and our bad debt exposure may increase over time. Any increase in write-offs for bad debt could have a materially negative effect on our business, operating results and financial condition.

Furthermore, we are generally contractually required to pay suppliers of advertising inventory and data within a negotiated period of time, regardless of whether our customers pay us on time, or at all. While we attempt to negotiate long payment periods with our suppliers and shorter periods from our customers, we are not always successful. As a result, our accounts payable are often due on shorter cycles than our accounts receivables, requiring us to remit payments from our own funds, and accept the risk of bad debt.

This payment process will increasingly consume working capital if we continue to be successful in growing our business. In addition, like many companies in our industry, we often experience slow payment by advertising agencies. In this regard, we had average days sales outstanding, or DSO, of 93 days, and average days payable outstanding, or DPO, of 76 days for the year ended December 31, 2019 and DSO of 85 days and DPO of 72 days for the twelve months ended September 30, 2020. We compute our average DSO as of a given month end based on a weighted average of outstanding accounts receivable. Specifically, the DSO is calculated by multiplying the percentage of accounts receivable outstanding for each monthly billing period by the number of days outstanding related to each billing period and then summing the weighted days outstanding. We compute

 

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our DPO as of a given month end by dividing our trade payables (including accrued liabilities) by the average daily cost of media, data, other direct costs and certain operating expenses over the last four months. Historically, our DSOs have fluctuated over time. If our DSOs increase significantly, and we are unable to borrow against these receivables on commercially acceptable terms, our working capital availability could be reduced, and as a consequence our results of operations and financial condition would be adversely impacted.

Due to this imbalance in our DSOs and DPOs, we may rely on our credit facility to partially or completely fund our working capital requirements. We cannot assure you that as we continue to grow, our business will generate sufficient cash flow from operations or that future borrowings will be available to us under the credit facility in an amount sufficient to fund our working capital needs. If our cash flows and credit facility borrowings are insufficient to fund our working capital requirements, we may not be able to grow at the rate we currently expect or at all. In addition, in the absence of sufficient cash flows from operations, we might be unable to meet our obligations under our credit facility and we may therefore be at risk of default thereunder. We cannot assure you that we would be able to access additional financing or increase our borrowing or borrowing capacity under our current or any future credit facility on commercially reasonable terms or at all.

If our access to advertising inventory is diminished or fails to grow, our revenue could decline and our growth could be impeded.

We must maintain a consistent supply of ad inventory. Our success depends on our ability to secure inventory on reasonable terms across a broad range of advertising inventory partners in various verticals and formats. The amount, quality and cost of inventory available to us can change at any time. If our relationships with any of our significant suppliers were to cease, or if the material terms of these relationships were to change unfavorably, our business would be negatively impacted. Our suppliers are generally not bound by long-term contracts. As a result, there is no guarantee that we will have access to a consistent supply of inventory on favorable terms. Inventory suppliers control the sales process for the inventory they supply, and their processes may not always work in our favor. For example, suppliers may place restrictions on the use of their inventory, including prohibiting the placement of advertisements on behalf of specific marketers.

As new types of inventory, such as digital advertising for television, become more readily available, we will need to expend significant resources to ensure we have access to such new inventory. Although television advertising is a large market, only a relatively small percentage of it is currently purchased programmatically. We are investing heavily in our programmatic television offering, including by increasing our workforce and by adding new features, functions and integrations to our platform. If the digital television advertising market does not grow as we anticipate or we fail to successfully serve such a market, our growth prospects could be harmed.

Our success depends on consistently adding valued inventory in a cost-effective manner. If we are unable to maintain a consistent supply of inventory for any reason, customer retention and loyalty, and our operating results and financial condition could be harmed.

If our access to people-based data is diminished, the effectiveness of our platform would be decreased, which could harm our operating results and financial condition.

Much of the data that we use is obtained through integrations with third-party data suppliers. We are dependent upon our ability to obtain necessary data licenses on commercially reasonable terms. We could suffer material adverse consequences if we were unable to obtain data through our integrations with data suppliers. Our ability to serve particular customers is also enhanced when such customers upload their own first-party data. Our operation of our platform and access to data could be negatively affected if, due to legal, contractual, privacy, market optics, competition or other economic concerns, third parties cease entering into data integration agreements with us or customers cease uploading their data to our platform. Additionally, we could terminate relationships with our data suppliers if they fail to adhere to our data quality and privacy standards.

 

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Furthermore, digital advertising and in-app advertising are largely dependent on established technology companies and their operation of the most commonly used Internet browsers (Chrome, Firefox, Internet Explorer and Safari), devices and operating systems (Android and iOS). These companies may change the operations or policies of their browsers, devices and operating systems in a manner that fundamentally changes our ability to operate our platform or use or collect data. Users of these browsers, devices or operating systems may also adjust their behaviors and use of technology in ways that change our ability to collect data. Digital advertising and in-app advertising are also dependent, in part, on internet protocols and the practices of internet service providers, including IP address allocation. Changes that these providers make to their practices, or adoption of new internet protocols, may materially limit or alter the availability of data. A limitation or alteration of the availability of data in any of these or other instances may have a material impact on the advertising technology industry, which could decrease advertising budgets and subsequently reduce our revenue and adversely affect our business, operating results and financial condition.

If we were to lose access to significant amounts of the data that enables our people-based framework, our ability to provide products and services to our customers could be materially and adversely impacted, which could be materially adverse to our business, operating results and financial condition.

If we do not effectively grow and train our sales and support teams, we may be unable to add new customers or increase usage of our platform by our existing customers and our business will be adversely affected.

We are substantially dependent on our sales and support teams to obtain new customers and to increase usage of our platform by our existing customers. We believe that there is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve revenue growth will depend, in large part, on our success in recruiting, training, integrating and retaining sufficient numbers of sales personnel to support our growth. Due to the complexity of our platform, a significant time lag exists between the hiring date of sales and support personnel and the time when they become fully productive. Our recent and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. If we are unable to hire and train sufficient numbers of effective sales personnel, or the sales personnel are not successful in obtaining new customers or increasing our existing customers’ spend with us, our business will be adversely affected.

As our costs increase, we may not be able to generate sufficient revenue to sustain profitability.

We have expended significant resources to grow our business in recent years by increasing the offerings of our platform and growing our number of employees and expanding our number of offices in the United States. We anticipate continued growth that could require substantial financial and other resources to, among other things:

 

   

develop our platform, including by investing in our engineering team, creating, acquiring or licensing new products or features, and improving the functionality, availability and security of our platform;

 

   

improve our technology infrastructure, including investing in internal technology development and acquiring outside technologies;

 

   

cover general and administrative expenses, including legal, accounting and other expenses necessary to support a larger organization;

 

   

cover sales and marketing expenses, including a significant expansion of our direct sales organization;

 

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cover expenses relating to data collection and consumer privacy compliance, including additional infrastructure, automation and personnel; and

 

   

explore strategic acquisitions.

Investing in the foregoing, however, may not yield anticipated returns. Consequently, as our costs increase, we may not be able to generate sufficient revenue to achieve or sustain profitability.

A significant inadvertent disclosure or breach of confidential and/or personal information we hold, or of the security of our or our customers’, suppliers’, or other partners’ computer systems could be detrimental to our business, reputation and results of operations.

Our business requires the storage, transmission and utilization of data, including personal information, much of which must be maintained on a confidential basis. These activities have made, and may in the future make, us a target of cyber-attacks by third parties seeking unauthorized access to the data we maintain, including our customer data, or to disrupt our ability to provide service. As a result of the types and volume of personal data on our systems, we believe that we are a particularly attractive target for such breaches and attacks. For example, in 2016, we discovered a breach of information from our Myspace databases resulting in the unauthorized access and offer for sale of approximately 360 million Myspace user account email addresses, usernames, and hashed passwords. See “—We face liabilities arising out of our ownership and operation of Myspace.com.

In recent years, the frequency, severity and sophistication of cyber-attacks, computer malware, viruses, social engineering, and other intentional misconduct by computer hackers has significantly increased, and government agencies and security experts have warned about the growing risks of hackers, cyber criminals and other potential attackers targeting information technology systems. Such third parties could attempt to gain entry to our systems for the purpose of stealing data or disrupting the systems. In addition, our security measures may also be breached due to employee error, malfeasance, system errors or vulnerabilities, including vulnerabilities of our vendors, suppliers, their products, or otherwise. Third parties may also attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information to gain access to our customers’ data or our data, including intellectual property and other confidential business information.

We currently serve the majority of our platform functions from third-party data center hosting facilities operated by Google Cloud Platform and Amazon Web Services. While we and our third-party cloud providers have implemented security measures designed to protect against security breaches, these measures could fail or may be insufficient, particularly as techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until launched against a target, resulting in the unauthorized disclosure, modification, misuse, destruction, or loss of our or our customers’ data or other sensitive information. Any failure to prevent or mitigate security breaches and improper access to or disclosure of the data we maintain, including personal information, could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business.

We believe we have taken appropriate measures to protect our systems from intrusion, but we cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities in our systems and attempts to exploit those vulnerabilities, physical system or facility break-ins and data thefts or other developments will not compromise or breach the technology protecting our systems and the information we possess.

We may incur significant costs in protecting against or remediating cyber-attacks. Any security breach could result in operational disruptions that impair our ability to meet our customers’ requirements, which could result in decreased revenue. Also, whether there is an actual or a perceived breach of our security, our reputation

 

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could suffer irreparable harm, causing our current and prospective customers to reject our products and services in the future, deterring data suppliers from supplying us data or customers from uploading their data on our platform, or changing consumer behaviors and use of our technology. Further, we could be forced to expend significant resources in response to a security breach, including those expended in notifying individuals and providing mitigating services, repairing system damage, increasing cyber security protection costs by deploying additional personnel and protection technologies, and litigating and resolving legal claims or governmental inquiries and investigations, all of which could divert the attention of our management and key personnel away from our business operations. Federal, state and foreign governments continue to consider and implement laws and regulations addressing data privacy, cybersecurity, and data protection laws, which include provisions relating to breaches. For example, statutory damages may be available to users through a private right of action for certain data breaches under the California Consumer Privacy Act (the “CCPA”), and potentially other states’ laws. In any event, a significant security breach could materially harm our business, operating results and financial condition. See “Risks Related to Data Privacy.

Our customers, suppliers and other partners are primarily responsible for the security of their information technology environments, and we rely heavily on them and other third parties to supply clean data content and/or to utilize our products and services in a secure manner. Each of these third parties may face risks relating to cyber security, which could disrupt their businesses and therefore materially impact ours. While we provide guidance and specific requirements in some cases, we do not directly control any of such parties’ cyber security operations, or the amount of investment they place in guarding against cyber security threats. Accordingly, we are subject to any flaw in or breaches of their systems, which could materially impact our business, operating results and financial results.

We allow our customers and suppliers to utilize application programming interfaces, or APIs, with our platform, which could result in outages or security breaches and negatively impact our business, operating results and financial condition.

The use of application programming interfaces, or APIs, by our customers and suppliers has significantly increased in recent years. Our APIs allow customers and suppliers to build their own media buying and data management interface by using our APIs to develop custom integration of their business with our platform. The increased use of APIs increases security and operational risks to our systems, including the risk for intrusion attacks, data theft, or denial of service attacks. Furthermore, while APIs allow customers and suppliers greater ease and power in accessing our platform, they also increase the risk of overusing our systems, potentially causing outages. We have experienced system slowdowns due to customer or supplier overuse of our systems through our APIs. While we have taken measures intended to decrease security and outage risks associated with the use of APIs, we cannot guarantee that such measures will be successful. Our failure to prevent outages or security breaches resulting from API use could result in government enforcement actions against us, claims for damages by consumers and other affected individuals, costs associated with investigation, notification, mitigation, and remediation, damage to our reputation and loss of goodwill, any of which could have a material adverse impact on our business, operating results and financial condition.

Operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems, may adversely affect our business, operating results and financial condition.

We depend upon the sustained and uninterrupted performance of our platform to manage our inventory supply; acquire inventory for each campaign; collect, process and interpret data; and optimize campaign performance in real time and provide billing information to our financial systems. If our platform cannot scale to meet demand, if there are errors in our execution of any of these functions on our platform, or if we experience outages, then our business may be harmed.

Our platform is complex and multifaceted, and operational and performance issues could arise both from the platform itself or from outside factors, such as cyberattacks or other third party attacks. Errors, failures,

 

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vulnerabilities or bugs have been found in the past, and may be found in the future. Our platform also relies on third-party technology and systems to perform properly, and our platform is often used in connection with computing environments utilizing different operating systems, system management software, equipment and networking configurations, which may cause errors in, or failures of, our platform or such other computing environments. Operational and performance issues with our platform could include the failure of our user interface, outages, errors during upgrades or patches, discrepancies in costs billed versus costs paid, unanticipated volume overwhelming our databases, server failure, or catastrophic events affecting one or more server facilities. While we have built redundancies in our systems, full redundancies do not exist. Some failures will shut our platform down completely, others only partially. We provide service level agreements to some of our customers, and if our platform is not available for specified amounts of time, we may be required to provide credits or other financial compensation to our customers.

As we grow our business, we expect to continue to invest in technology services and equipment. Without these improvements, our operations might suffer from unanticipated system disruptions, slow transaction processing, unreliable service levels, impaired quality or delays in reporting accurate information regarding transactions in our platform, any of which could negatively affect our reputation and ability to attract and retain customers. In addition, the expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance our business will grow. If we fail to respond to technological change or to adequately maintain, expand, upgrade and develop our systems and infrastructure in a timely fashion, our growth prospects and results of operations could be adversely affected.

Operational and performance issues with our platform could also result in negative publicity, damage to our brand and reputation, loss of or delay in market acceptance of our platform, increased costs or loss of revenue, loss of the ability to access our platform, loss of competitive position or claims by customers for losses sustained by them. Alleviating problems resulting from such issues could require significant expenditures of capital and other resources and could cause interruptions, delays or the cessation of our business, any of which may adversely affect our operating results and financial condition.

We are dependent on the continued availability of third-party hosting and transmission services. Operational issues with, or changes to the costs of, our third-party data center providers could harm our business, reputation or results of operations.

We currently serve the majority of our platform functions from third-party data center hosting facilities operated by Google Cloud Platform and Amazon Web Services, and we primarily use shared servers in such facilities. We are dependent on these third parties to provide continuous power, cooling, Internet connectivity and physical and technological security for our servers, and our operations depend, in part, on their ability to protect these facilities against any damage or interruption from natural disasters, such as earthquakes and hurricanes, power or telecommunication failures, criminal acts and similar events. In the event that any of our third-party facilities arrangements is terminated, or if there is a lapse of service or damage to a facility, we could experience interruptions in our platform as well as delays and additional expenses in arranging new facilities and services.

Any damage to, or failure of, the systems of our third-party providers could result in interruptions to our platform. Despite precautions taken at our data centers, the occurrence of spikes in usage volume, a natural disaster, such as earthquakes or hurricane, an act of terrorism, vandalism or sabotage, a decision to close a facility without adequate notice, or other unanticipated problems at a facility could result in lengthy interruptions in the availability of our platform. Even with current and planned disaster recovery arrangements, our business could be harmed. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause customers to stop using our platform, any of which could materially and adversely affect our business.

We incur significant costs with our third-party data hosting services. If the costs for such services increase due to vendor consolidation, regulation, contract renegotiation, or otherwise, we may not be able to

 

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increase the fees for our products and services to cover the changes. As a result, our operating results may be significantly worse than forecasted.

If the non-proprietary technology, software, products and services that we use are unavailable, have future terms we cannot agree to, or do not perform as we expect, our business, operating results and financial condition could be harmed.

We depend on various technology, software, products and services from third parties or available as open source, including for critical features and functionality of our platform and API technology, payment processing, payroll and other professional services. Identifying, negotiating, complying with and integrating with third-party terms and technology are complex, costly and time-consuming matters. Failure by third-party providers to maintain, support or secure their technology either generally or for our accounts specifically, or downtime, errors or defects in their products or services, could materially and adversely impact our platform, our administrative obligations or other areas of our business. Having to replace any third-party providers or their technology, products or services could result in outages or difficulties in our ability to provide our services.

Our failure to meet content and inventory standards and provide services that our customers and inventory suppliers trust, could harm our brand and reputation and negatively impact our business, operating results and financial condition.

We do not provide or control the content of the advertisements we serve or that of the websites providing the inventory. Our customers provide the advertising content and inventory suppliers provide the inventory. Both customers and inventory suppliers are concerned about being associated with content they consider inappropriate, competitive or inconsistent with their brands, or illegal, and they are hesitant to spend money without guaranteed brand security. For example, our customers expect that ad placements will not be misrepresented, such as auto-play in banner placements marketed as pre-roll inventory. Consequently, our reputation depends in part on providing services that our customers and inventory suppliers trust, and we have contractual obligations to meet content and inventory standards. We contractually prohibit the misuse of our platform by agencies (and their marketer customers) and inventory suppliers. Additionally, we use our proprietary technology and third-party services to, and we participate in industry co-ops that work to, detect malware and other content issues as well as click fraud (whether by humans or software known as “bots”) and to block fraudulent inventory. Despite such efforts, our customers may inadvertently purchase inventory that proves to be unacceptable for their campaigns, in which case we may not be able to recoup the amounts paid to inventory suppliers. Preventing and combating fraud is an industry-wide issue that requires constant vigilance, as well as a balancing of cost effectiveness and risk, and we cannot guarantee that we will be fully successful in our efforts to combat fraud. We may provide access to inventory that is objectionable to our customers or we may serve advertising that contains malware or objectionable content to our inventory suppliers, which could harm our or our customers’ brand and reputation, cause customers to decrease or terminate their relationship with us or otherwise negatively impact our business, operating results and financial condition.

We face potential liability and harm to our business based on the human factor of inputting information into our platform.

We or our customers set up campaigns on our platform using a number of available variables. While our platform includes several checks and balances, it is possible for human error to result in significant over-spending. We offer a number of protections such as daily or overall spending caps, but despite these protections, the ability for overspend exists. For example, campaigns which last for a period of time can be set to pace evenly or as quickly as possible. If a customer with a high credit limit enters an incorrect daily cap with a campaign set to a rapid pace, it is possible for a campaign to accidently go significantly over budget. Our potential liability for such errors may be higher when they occur in situations in which we are executing purchases on behalf of a customer rather than the customer using the self-service feature of our platform. While our customer contracts state that customers are responsible for media purchased through our platform, we are ultimately responsible for paying the inventory providers and we may be unable to collect when such issues occur.

 

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We face liabilities arising out of our ownership and operation of Myspace.com.

In 2011, we acquired Myspace LLC, which owns Myspace.com. We have faced and may continue to face claims or lawsuits or incur liability as a result of content published or made available on Myspace.com, including claims for defamation, intellectual property rights, including copyright infringement, rights of publicity and privacy, illegal content, misinformation, content regulation and personal injury torts. The laws relating to the liability of providers of online products or services for activities of the people who use them remain somewhat unsettled, both within the United States and internationally. This risk is enhanced in certain jurisdictions outside the United States where our protection from liability for third-party actions may be unclear or where we may be less protected under local laws than we are in the United States. For example, in April 2019, the European Union passed a directive expanding online platform liability for copyright infringement and regulating certain uses of news content online, which member states must implement by June 2021. In addition, there have been various Congressional efforts, executive actions, and civil litigation efforts to restrict the scope of the protections available to online platforms under Section 230 of the Communications Decency Act, and our current protections from liability for third-party content in the United States could decrease or change. We could incur significant costs investigating and defending claims related to content published or made available on Myspace.com and, if we are found liable, could face significant damages.

In 2011, Myspace LLC was the subject of an investigation by the Federal Trade Commission (“FTC”) relating to its privacy practices. In connection with its settlement of this matter with the FTC in 2012, Myspace LLC agreed to a settlement order that bars Myspace LLC from misrepresenting the extent to which it protects the privacy of users’ personal information or the extent to which it belongs to or complies with any privacy, security or other compliance program. The order also requires that Myspace LLC establish a comprehensive privacy program designed to protect consumers’ information, and to obtain biennial assessments of its privacy program by independent, third-party auditors for 20 years. The order terminates in August 2032. If Myspace LLC fails to comply with the mandates of the FTC consent order, or if Myspace LLC is found to be in violation of the consent order or other requirements, we may be subject to regulatory or governmental investigations or lawsuits, which may result in significant monetary fines, judgments, or other penalties, and we may also be required to make additional changes to our business practices.

Myspace.com has been and may in the future be a source of cybersecurity incidents or data breaches. In 2016, we announced our discovery of a third-party cyber-attack in which Myspace.com usernames, passwords and email addresses were stolen from the old Myspace platform prior to June 11, 2013, when the site was relaunched with significant steps to strengthen account security. While we took steps to remediate the attack, including notifying and invalidating the passwords of known affected users, any further failure to prevent or mitigate security breaches and improper access to or disclosure of the data on the Myspace.com site could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business. Myspace.com may also face operational or performance issues. For example, as a result of a server migration project in 2019, older photo, video or audio files of some users were lost.

Myspace.com has in the past been, and may in the future be, the subject of unfavorable publicity regarding, for example, its privacy practices, site quality and site operational matters. Myspace.com may also face negative publicity relating to content or information that is published or made available on the platform, including defamation, dissemination of misinformation or news hoaxes, discrimination, violations of intellectual property rights, violations of rights of publicity and privacy, hate speech or other types of content. Any such negative publicity could damage our reputation and the reputation of our primary business, which could adversely affect our business and financial results.

 

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The market growth forecasts included in this prospectus may prove to be inaccurate and, even if the market in which we compete achieves forecasted growth, we cannot assure you our business will grow at similar rates, if at all.

Market growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. The forecasts in this prospectus relating to expected growth in the digital advertising and programmatic ad markets may prove to be inaccurate. Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors including our success in implementing our business strategy, which is subject to many risks and uncertainties.

Risks Related to Data Privacy

Changes in legislative, judicial, regulatory, or cultural environments relating to information collection, use and processing may limit our ability to collect, use and process data. Such developments could cause revenue to decline, increase the cost of data, reduce the availability of data and adversely affect the demand for our products and services.

We receive, store and process personal information and other data from and about consumers in addition to personal information and other data from and about our customers, employees, and services providers. Our handling of this data is subject to a wide variety of federal, state, and foreign laws and regulations and is subject to regulation by various government authorities and consumer actions. Our data handling is also subject to contractual obligations and may be deemed to be subject to industry standards.

The U.S. federal and various state and foreign governments have adopted or proposed laws relating to the collection, disclosure, processing, use, storage and security of data relating to individuals and households, including the use of contact information and other data for marketing, advertising and other communications with individuals and businesses. In the U.S., various laws and regulations apply to the collection, disclosure, processing, use, storage and security of certain types of data. Additionally, the FTC, many state attorneys general, and many courts are interpreting federal and state consumer protection laws as imposing standards for the collection, disclosure, process, use, storage and security of data. The regulatory framework for data privacy issues worldwide is complex, continually evolving and often conflicting, and is likely to remain uncertain for the foreseeable future. The occurrence of unanticipated events often rapidly drives the adoption of legislation or regulation affecting the use, collection or other processing of data and manner in which we conduct our business. As a result, further restrictions could be placed upon the collection, disclosure, processing, use, storage and security of information, which could result in a material increase in the cost of obtaining certain kinds of data and could limit the ways in which we may collect, disclose, process, use, store or secure information.

U.S. federal and state legislatures, along with federal regulatory authorities, have recently increased their focus on matters concerning the collection and use of consumer data, including relating to interest-based advertising, or the use of data to draw inferences about a user’s interests and deliver relevant advertising to that user, and similar or related practices, such as cross-device data collection and aggregation, and steps taken to de-identify personal data and to use and distribute the resulting data, including for purposes of personalization and the targeting of advertisements. In the U.S., non-sensitive consumer data generally may be used under current rules and regulations, subject to certain restrictions, including relating to transparency and affirmative “opt-out” rights of the collection or use of such data in certain instances. To the extent additional opt-out rights are made available in the U.S., additional regulations are imposed, or if an “opt-in” model were to be adopted, less data would be available, the cost of data and compliance would be higher, or we could be required to modify our data processing practices and policies. For example, California recently enacted legislation, the CCPA, that became operative on January 1, 2020 and came under California Attorney General (“AG”) enforcement on July 1, 2020. The CCPA requires covered companies to, among other things, provide new disclosures to California consumers and grant such consumers a new right to opt-out of “sales” of personal information, a

 

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concept that is defined broadly. The CCPA is also subject to regulations issued by the California AG, which were finalized and became effective in August 2020. The California Privacy Rights and Enforcement Act (“CPRA”), which was passed as a ballot initiative in November 2020 and comes into effect on January 1, 2023, expands upon the CCPA and, among other things, creates new categories of personal information with additional protections, creates new data subject rights such as a right of correction, creates a new state rulemaking and enforcement agency for the CPRA, expands potential liability for violations and gives consumers rights to opt out of additional forms of data sharing with third parties. It remains unclear how aspects of the CCPA (as amended by the CPRA) or its implementing regulations will be interpreted. We cannot yet fully predict the impact of these laws on our business or operations, but it or future regulations (particularly any regulations using an “opt-in” model), could require us or our customers to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Decreased availability and increased costs of information and costs of compliance could adversely affect our ability to meet our customers’ expectations and requirements and could result in decreased revenue.

While our platform and people-based framework operates primarily in the United States, some of our operations, including our owned website Myspace.com, may subject us to data privacy laws outside the United States. In the European Union (“EU”), the European General Data Protection Regulation (“GDPR”) took effect on May 25, 2018 and applies to our processing related to products and services that we provide to individuals who are in the European Union. The GDPR includes significant penalties for noncompliance of up to the greater of €20 million or 4% of an enterprise’s global turnover (or revenue) for the preceding fiscal year and each European Union Member State may provide for other penalties applicable to such noncompliance.

We are subject to evolving laws and regulations that dictate whether, how, and under what circumstances we, or our data processors, may transfer, process and/or receive certain data, including data shared between countries or regions in which we operate and data shared among our products and services. For example, ongoing legal uncertainty in Europe regarding the transfer of data to the United States could result in further limitations, including in light of the recent Schrems II ruling from the Court of Justice of the European Union dated July 16, 2020. This ruling effectively invalidated the EU-U.S. Privacy Shield framework, and while it upheld the Standard Contractual Clauses (“SCCs”) as an alternative mechanism, it requires the parties to the SCCs to ensure that the level of protection required by European Union law is respected, potentially by yet-to-be-clarified supplementary measures. Similarly, legal uncertainty could result in further limitations regarding the United Kingdom which exited the European Union on January 31, 2020 (transition period for certain matters scheduled to run through December 31, 2020), in particular in relation to data transfers to and from the United Kingdom. Certain countries outside of the EEA have also passed (e.g. Russia, China) or are considering passing laws requiring local data residency or otherwise impeding the transfer of data across borders. If one or more of the legal bases for transferring data to the U.S. is invalidated, if we are unable to transfer or receive data between and among countries and regions in which we operate, or if we are prohibited from sharing data among our products and services, it could affect the manner in which we provide our services or adversely affect our financial results.

Similarly, there are a number of European legislative proposals that could also significantly affect our business. For example, the proposal for a Regulation concerning the respect for private life and the protection of personal data in electronic communications and repealing European Union Directive 2002/58/EC, could impose new obligations or limitations in areas affecting our business, notably with respect to the use of cookies.

In addition to government regulation, self-regulatory standards and other industry standards may legally or contractually apply to us or be argued to apply to us, or we may elect to comply with such standards or to facilitate our customers’ compliance with such standards. Because privacy, data protection, and information security are competitive factors in our industry, we may make statements on our website, in marketing materials, or in other settings about our data security measures and our compliance with, or our ability to facilitate our customers’ compliance with, these standards. We are members of self-regulatory bodies that impose additional requirements related to the collection, use, and disclosure of consumer data. Under the requirements of these self-regulatory

 

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bodies, in addition to other compliance obligations, we are obligated to provide all consumers with notice about our use of cookies and other technologies to execute the collection of consumer data and of our collection and use of consumer data for certain purposes, and to provide consumers with certain choices relating to the use of consumer data. Some of these self-regulatory bodies have the ability to discipline members or participants, which could result in fines, penalties, and/or public censure (which could in turn cause reputational harm). Additionally, some of these self-regulatory bodies might refer violations of their requirements to the Federal Trade Commission or other regulatory bodies.

Regulatory investigations and enforcement actions could also impact us. In the U.S., the FTC uses its enforcement powers under Section 5 of the Federal Trade Commission Act (which prohibits “unfair” and “deceptive” trade practices) to investigate companies engaging in online tracking and the processing of consumer personal information more generally. This is the basis on which the FTC investigated Myspace LLC. See “—We face liabilities arising out of our ownership and operation of Myspace.com.” Advocacy organizations have also filed complaints with data protection authorities against advertising technology companies, arguing that certain of these companies’ practices do not comply with the GDPR. It is possible that investigations or enforcement actions will involve our practices or practices similar to ours.

Our legal risk depends in part on our customers’ or other third parties’ adherence to privacy laws and regulations and their use of our services in ways consistent with end user expectations. We rely on representations made to us by customers and data suppliers that they will comply with all applicable laws, including all relevant privacy and data protection regulations. Although we make reasonable efforts to enforce such representations and contractual requirements, we do not fully audit our customers’ or data suppliers’ compliance with our recommended disclosures or their adherence to privacy laws and regulations. If our customers or data suppliers fail to adhere to our expectations or contracts in this regard, we and our customers or data suppliers could be subject to adverse publicity, damages, and related possible investigation or other regulatory activity.

Because the interpretation and application of privacy and data protection laws, regulations and standards are uncertain, it is possible that these laws, regulations and standards may be interpreted and applied in manners that are, or are asserted to be, inconsistent with our data management practices or the technological features of our products and services. If so, in addition to the possibility of fines, investigations, lawsuits and other claims and proceedings, it may be necessary or desirable for us to fundamentally change our business activities and practices or modify our products and services, which could have an adverse effect on our business. We may be unable to make such changes or modifications in a commercially reasonable manner or at all. Any inability to adequately address privacy concerns, even if unfounded, or any actual or perceived failure to comply with applicable privacy or data protection laws, regulations, standards or policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and harm our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, standards and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our platform. Privacy concerns, whether valid or not valid, may inhibit market adoption of our platform particularly in certain industries and foreign countries.

Adapting our business to the CCPA and its implementing regulations and to the enhanced and evolving privacy obligations in the EU and elsewhere could continue to involve substantial expense and may cause us to divert resources from other aspects of our operations, all of which may adversely affect our business. Further, adaptation of the digital advertising marketplace requires increasingly significant collaboration between participants in the market, such as publishers and marketers. Failure of the industry to adapt to changes required for operating under laws including the CCPA and the GDPR and user response to such changes could negatively impact inventory, data, and demand. We cannot control or predict the pace or effectiveness of such adaptation, and we cannot currently predict the impact such changes may have on our business.

 

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Our business or ability to operate our platform could be impacted by changes in the technology industry by established technology companies or government regulation. Such developments, including the restriction of “third-party cookies,” could cause instability in the advertising technology industry.

Digital advertising and in-app advertising are largely dependent on established technology companies and their operation of the most commonly used Internet browsers (Chrome, Firefox, Internet Explorer and Safari), devices and their operating systems (Android and iOS). These companies may change the operations or policies of their browsers, devices and operating systems in a manner that fundamentally changes our ability to operate our platform or collect data. Users of these browsers, devices or operating systems may also adjust their behaviors and use of technology in ways that change our ability to collect data. Digital advertising and in-app advertising are also dependent, in part, on internet protocols and the practices of internet service providers, including IP address allocation. Changes that these providers make to their practices, or adoption of new internet protocols, may materially limit or alter the availability of data. A limitation or alteration of the availability of data in any of these or other instances may have a material impact on the advertising technology industry, which could decrease advertising budgets and subsequently reduce our revenue and adversely affect our business, operating results and financial condition.

For example, browser providers have recently enacted changes restricting the use of third-party cookies in their browsers, which may cause instability in the digital advertising market. Execution of digital advertising relies to a significant extent on the use of cookies, pixels and other similar technology, including mobile device identifiers that are provided by mobile operating systems for advertising purposes, which we refer to collectively as cookies, to collect data about users and devices. Although our business is less reliant on cookies than some of our competitors because we do not need cookies for marketers and their advertising agencies to identify consumers with our identity resolution capabilities and identity graph, we do use third-party cookies. Third-party cookies are cookies owned and used by parties other than the owners of the website visited by the Internet user, in connection with our business for execution of obtaining information about consumers, and for delivering digital advertising. In January 2020, Google publicly stated it intends for Chrome to block third-party cookies at some point in the following 24 months. Google has also introduced ad blocking software in its Chrome web browser that will block certain ads based on quality standards established under a multi-stakeholder coalition. Additionally, the Safari browser currently blocks third-party cookies by default and has recently added controls that algorithmically block or limit some cookies. Other browsers have added similar controls. These actions will have significant impacts on the digital advertising and marketing ecosystems in which we operate, which could cause changes in advertising budget allocations and thereby could negatively impact our business.

For in-app advertising, data regarding interactions between users and devices are tracked mostly through stable, pseudonymous mobile device identifiers that are built into the device operating system with privacy controls that allow users to express a preference with respect to data collection for advertising, including to disable the identifier. These identifiers and privacy controls are defined by the developers of the mobile platforms and could be changed by the mobile platforms in a way that may negatively impact our business. Privacy aspects of other channels for programmatic advertising, such as connected TVs or over-the-top video, are still developing. Technical or policy changes, including regulation or industry self-regulation, could harm our growth in those channels.

Digital advertising is also subject to government regulation which may impact our ability to collect and use data. As the collection and use of data for digital advertising has received ongoing media attention over the past several years, some government regulators, such as the FTC, and privacy advocates have raised significant concerns around observed data. There has been an array of ‘do-not-track’ efforts, suggestions and technologies introduced to address these concerns. However, the potential regulatory and self-regulatory landscape is inherently uncertain, and there is no consensus definition of tracking, nor agreement on what would be covered by ‘do-not-track’ functionality. There is activity by the major Internet browsers to default set on ‘do-not-track’ functionality, including by Safari and Firefox. It is not clear if other Internet browsers will follow.

 

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Limitations on our or our customers’ ability to collect and use data for advertising, whether imposed by established technology companies or U.S. legislation, or otherwise, may impact the performance of our platform.

Uncertainty caused by lack of uniformity among laws to which we are or may become subject and instability in the global legal landscape may cause us to incur additional or unexpected costs and legal risk, increase our risk of reputational harm, or cause us to change our platform or business model.

We cannot predict the future of the regulatory landscape regarding the protection of personal information. U.S. (state and federal) and foreign governments are considering enacting additional legislation related to privacy and data protection and we expect to see an increase in, or changes to, legislation and regulation in this area. For example, in the U.S., a federal privacy law is the subject of active discussion and several bills have been introduced. Additionally, industry groups in the U.S. and their international counterparts have self-regulatory guidelines that are subject to periodic updates to which we have agreed to adhere. High profile incidents involving breaches of personal information or misuse of consumer information may increase the likelihood of new U.S. federal, state, or international laws or regulations in addition to those set out above, and such laws and regulations may be inconsistent across jurisdictions.

In addition to laws regulating the processing of personal information, we are also subject to regulation with respect to political advertising activities, which are governed by various federal and state laws in the U.S., and national and provincial laws worldwide. Online political advertising laws are rapidly evolving, and in certain jurisdictions have varying transparency and disclosure requirements. We have already seen publishers impose varying prohibitions and restrictions on the types of political advertising and breadth of targeted advertising allowed on their platforms with respect to advertisements for the 2020 U.S. presidential election in response to political advertising scandals in prior election cycles. The lack of uniformity and increasing requirements on transparency and disclosure could adversely impact the inventory made available for political advertising and the demand for such inventory on our platform, and otherwise increase our operating and compliance costs. Concerns about political advertising, whether or not valid and whether or not driven by applicable laws and regulations, industry standards, customer or inventory provider expectations, or public perception, may harm our reputation, result in loss of goodwill, and inhibit use of our platform by current and future customers.

Additionally, as the advertising industry evolves, and new ways of collecting, combining and using data are created, governments may enact legislation in response to technological advancements and changes that could result in our having to re-design features or functions of our platform, therefore incurring unexpected compliance costs.

These laws and other obligations may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our platform. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our products, which could have an adverse effect on our business. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products and features could be limited. All of this could impair our or our customers’ ability to collect, use, or disclose information relating to consumers, which could decrease demand for our platform, increase our costs, and impair our ability to maintain and grow our customer base and increase our revenue.

Commitments to advertising technology industry self-regulation may subject us to investigation by government or self-regulatory bodies, government or private litigation, and operational costs or harm to reputation or brand.

In addition to our legal obligations, we have committed to comply, and generally require our customers and partners to comply, with applicable self-regulatory principles, such as the Network Advertising Initiative’s Code of Conduct and the Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising in the U.S., and similar self-regulatory principles in Europe and Canada adopted by the local Digital Advertising Alliance.

 

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Trade associations and industry self-regulatory groups have also promulgated best practices and other industry standards relating to targeted advertising. Our efforts to comply with these self-regulatory principles include offering Internet users notice and choice when advertising is served to them based, in part, on their interests. If we or our customers or partners make mistakes in the implementation of these principles, or if self-regulatory bodies expand these guidelines or government authorities issue different guidelines regarding Internet-based advertising, or opt out mechanisms fail to work as designed, or if Internet users misunderstand our technology or our commitments with respect to these principles, we may, as a result, be subject to negative publicity, government investigation, government or private litigation, or investigation by self-regulatory bodies or other accountability groups. Any such action against us, or investigations, even if meritless, could be costly and time consuming, require us to change our business practices, cause us to divert management’s attention and our resources, and be damaging to our brand, reputation, and business. In addition, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us. We cannot yet determine the impact such future standards may have on our business.

Unfavorable publicity and negative public perception about our industry, particularly concerns regarding data privacy and security relating to our industry’s technology and practices, and perceived failure to comply with laws and industry self-regulation, could adversely affect our business and operating results.

With the growth of digital advertising and e-commerce, there is increasing awareness and concern among the general public, privacy advocates, mainstream media, governmental bodies and others regarding marketing, advertising, and data privacy matters, particularly as they relate to individual privacy interests and the global reach of the online marketplace. Concerns about industry practices with regard to the collection, use, and disclosure of personal information, whether or not valid and whether driven by applicable laws and regulations, industry standards, customer or inventory provider expectations, or the broader public, may harm our reputation, result in loss of goodwill, and inhibit use of our platform by current and future customers. Any unfavorable publicity or negative public perception about us, our industry, including our competitors, or even other data focused industries can affect our business and results of operations, and may lead to digital publishers or our customers changing their business practices or additional regulatory scrutiny or lawmaking that affects us or our industry. For example, in recent years, consumer advocates, mainstream media and elected officials have increasingly and publicly criticized the data and marketing industry for its collection, storage and use of personal data. Additional public scrutiny may lead to general distrust of our industry, consumer reluctance to share and permit use of personal data, increased consumer opt-out rates or increased private class actions, any of which could negatively influence, change or reduce our current and prospective customers’ demand for our products and services, subject us to liability and adversely affect our business and operating results.

Risks Related to Our Intellectual Property

Our proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and harming our business.

Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop or otherwise acquire, so that we can prevent others from using our inventions and proprietary information. If we fail to protect our intellectual property rights adequately, our competitors might gain access to our technology and our business might be adversely affected. We rely upon a combination of patent, trademark, copyright and trade secret laws, as well as third-party confidentiality and non-disclosure agreements, to establish and protect our proprietary rights. Establishing trade secret, copyright, trademark, domain name, and patent protection can be difficult and expensive, and the laws, procedures and restrictions may provide only limited protection. It may be possible for unauthorized third parties to copy or reverse engineer aspects of our technology or otherwise obtain and use information that we regard as proprietary, or to develop technologies similar or superior to our technology or design around our proprietary rights, despite the steps we have taken to protect our proprietary rights. Our contracts with our employees and contractors that relate to intellectual property issues generally restrict the use of our confidential information solely in connection with our services. However, the theft or misuse of our proprietary information could occur by employees or contractors who have access to our technology.

 

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While we have issued patents and patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications or such patent protection may not be obtained quickly enough to meet our business needs. Furthermore, the patent prosecution process is expensive, time-consuming, and complex, and we may not be able to prepare, file, prosecute, maintain, and enforce all necessary or desirable patent applications at a reasonable cost or in a timely manner. The scope of patent protection also can be reinterpreted after issuance and issued patents may be invalidated. Even if our patent applications do issue as patents, they may not issue in a form that is sufficiently broad to protect our technology, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage.

Policing unauthorized use of our technology is difficult. In addition, the laws of some foreign countries may not be as protective of intellectual property rights as those of the United States, and mechanisms for enforcement of our proprietary rights in such countries may be inadequate. If we are unable to protect our proprietary rights (including in particular, the proprietary aspects of our platform) we may find ourselves at a competitive disadvantage to others who have not incurred the same level of expense, time and effort to create and protect their intellectual property.

We are subject to third party claims for alleged infringement of their proprietary rights, which would result in additional expense and potential damages.

There is significant patent and other intellectual property development activity in the digital advertising industry. Third-party intellectual property rights may cover significant aspects of our technologies or business methods or block us from expanding our offerings. Our success depends on the continual development of our platform. From time to time, we receive claims from third parties that our platform and underlying technology infringe or violate such third parties’ intellectual property rights. To the extent we gain greater public recognition, we may face a higher risk of being the subject of intellectual property claims. The cost of defending against such claims, whether or not the claims have merit, is significant, regardless of whether we are successful in our defense, and could divert the attention of management, technical personnel and other employees from our business operations. Litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters. Additionally, we may be obligated to indemnify our customers or inventory and data suppliers in connection with any such litigation. If we are found to infringe these rights, we could potentially be required to cease utilizing portions of our platform. We may also be required to develop alternative non-infringing technology, which could require significant time and expense. Alternatively, we could be required to pay royalty payments, either as a one-time fee or ongoing, as well as damages for past use that was deemed to be infringing. If we cannot license or develop technology for any allegedly infringing aspect of our business, we would be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business.

We face potential liability and harm to our business based on the nature of our business and the content on our platform.

Advertising often results in litigation relating to copyright or trademark infringement, public performance royalties or other claims based on the nature and content of advertising that is distributed through our platform. Though we contractually require agencies to represent to us that they have the rights necessary to serve advertisements through our platform, we do not independently verify whether we are permitted to deliver, or review the content of, such advertisements. If any of these representations are untrue, we may be exposed to potential liability and our reputation may be damaged. While our customers are typically obligated to indemnify us, such indemnification may not fully cover us, or we may not be able to collect. In addition to settlement costs, we may be responsible for our own litigation costs, which can be extensive.

 

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Risks Relating to Governmental Regulation and Tax Matters

Our business is subject to a wide range of laws and regulations, many of which are evolving, and failure to comply with such laws and regulations could harm our business, financial condition, and results of operations.

Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, consumer protection laws, anti-bribery laws, import and export controls, federal securities laws, and tax laws and regulations. These laws and regulations impose added costs on our business and could require us to make changes to our business or platform. Noncompliance with applicable regulations or requirements could subject us to investigations, enforcement actions, sanctions, fines, damages, penalties, injunctions or termination of contracts. Any such matters could have a material adverse effect on our business, results of operations and financial condition.

Viant Technology Inc. will depend on distributions from Viant Technology LLC to pay any dividends, if declared, taxes and other expenses, including payments under the Tax Receivable Agreement.

Viant Technology Inc. will be a holding company and, following this offering, its only business will be to act as the managing member of Viant Technology LLC, and its only material assets will be Class A units representing approximately 14.8% of the membership interests of Viant Technology LLC (or 17.0% if the underwriters exercise their option to purchase additional shares of Class A common stock in full). Viant Technology Inc. does not have any independent means of generating revenue. We anticipate that Viant Technology LLC will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, taxable income will be allocated to the members of Viant Technology LLC. Accordingly, Viant Technology Inc. will be required to pay income taxes on its allocable share of any net taxable income of Viant Technology LLC. We intend to cause Viant Technology LLC to make distributions to each of its members, including Viant Technology Inc., in an amount intended to enable each member to pay all applicable taxes on taxable income allocable to such member and to allow Viant Technology Inc. to make payments under the Tax Receivable Agreement. In addition, Viant Technology LLC will reimburse Viant Technology Inc. for corporate and other overhead expenses. If the amount of tax distributions to be made exceeds the amount of funds available for distribution, Viant Technology Inc. shall receive the full amount of its tax distribution before the other members receive any distribution and the balance, if any, of funds available for distribution shall be distributed to the other members pro rata in accordance with their assumed tax liabilities. To the extent that Viant Technology Inc. needs funds, and Viant Technology LLC is restricted from making such distributions under applicable laws or regulations, or is otherwise unable to provide such funds, it could materially and adversely affect Viant Technology Inc.’s ability to pay dividends and taxes and other expenses, including payments under the Tax Receivable Agreement, and affect our liquidity and financial condition.

The Internal Revenue Service (“IRS”) might challenge the tax basis step-ups and other tax benefits we receive in connection with this offering and the related transactions and in connection with future acquisitions of Viant Technology LLC units.

The Viant Technology LLC units held directly by the members of Viant Technology LLC other than Viant Technology Inc., including the Vanderhook Parties, may in the future be exchanged for shares of our Class A common stock or, at our election, cash. Those exchanges may result in increases in the tax basis of the assets of Viant Technology LLC that otherwise would not have been available. These increases in tax basis are expected to increase (for tax purposes) Viant Technology Inc.’s depreciation and amortization and, together with other tax benefits, reduce the amount of tax that Viant Technology Inc. would otherwise be required to pay, although it is possible that the IRS might challenge all or part of these tax basis increases or other tax benefits, and a court might sustain such a challenge. Viant Technology Inc.’s ability to achieve benefits from any tax basis increases or other tax benefits will depend upon a number of factors, as discussed below, including the timing and amount of our future income.

 

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We will not be reimbursed for any payments previously made under the Tax Receivable Agreement if the basis increases or other tax benefits described above are successfully challenged by the IRS or another taxing authority. As a result, in certain circumstances, payments could be made under the Tax Receivable Agreement in excess of our ultimate cash tax savings.

Viant Technology Inc. will be required to pay over to continuing members of Viant Technology LLC most of the tax benefits Viant Technology Inc. receives from tax basis step-ups (and certain other tax benefits) attributable to its acquisition of units of Viant Technology LLC in connection with this offering and in the future, and the amount of those payments are expected to be substantial.

Viant Technology Inc. will enter into a Tax Receivable Agreement with Viant Technology LLC, continuing members of Viant Technology LLC (not including Viant Technology Inc.) and the representative of such continuing members of Viant Technology LLC (the “TRA Representative”). The Tax Receivable Agreement will provide for payment by Viant Technology Inc. to continuing members of Viant Technology LLC (not including Viant Technology Inc.) of 85% of the amount of the net cash tax savings, if any, that Viant Technology Inc. realizes (or, under certain circumstances, is deemed to realize) as a result of increases in tax basis (and utilization of certain other tax benefits) resulting from (i) Viant Technology Inc.’s acquisition of Viant Technology LLC units from pre-IPO members of Viant Technology LLC in connection with this offering and in future exchanges and (ii) any payments Viant Technology Inc. makes under the Tax Receivable Agreement (including tax benefits related to imputed interest). Viant Technology Inc. will retain the benefit of the remaining 15% of these net cash tax savings.

The term of the Tax Receivable Agreement will commence upon the completion of this offering and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or have expired, unless we exercise our right to terminate the Tax Receivable Agreement (or it is terminated due to a change in control or our breach of a material obligation thereunder), in which case, Viant Technology Inc. will be required to make the termination payment specified in the Tax Receivable Agreement. In addition, payments we make under the Tax Receivable Agreement will be increased by any interest accrued from the due date (without extensions) of the corresponding tax return. If all of the continuing members of Viant Technology LLC were to exchange their Viant Technology LLC units, we would recognize a deferred tax asset of approximately $350.0 million and a liability of approximately $297.5 million, assuming (i) that the continuing members redeemed or exchanged all of their Viant Technology LLC units immediately after the completion of this offering at an assumed initial public offering price of $23.00 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), (ii) no material changes in relevant tax law, (iii) a constant combined effective income tax rate of 25.0% and (iv) that we have sufficient taxable income in each year to realize on a current basis the increased depreciation, amortization and other tax benefits that are the subject of the Tax Receivable Agreement. The actual future payments to the continuing members of Viant Technology LLC will vary based on the factors discussed below, and estimating the amount and timing of payments that may be made under the Tax Receivable Agreement is by its nature imprecise, as the calculation of amounts payable depends on a variety of factors and future events. We expect to receive distributions from Viant Technology LLC in order to make any required payments under the Tax Receivable Agreement. However, we may need to incur debt to finance payments under the Tax Receivable Agreement to the extent such distributions or our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise.

The actual increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending on a number of factors, including the price of our Class A common stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of Viant Technology Inc.’s income; the U.S. federal, state and local tax rates then applicable; the amount of each exchanging unitholder’s tax basis in its units at the time of the relevant exchange; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that Viant Technology Inc. may have made under the Tax Receivable Agreement and the portion of Viant Technology Inc.’s payments under the Tax Receivable Agreement that constitute imputed interest or give rise to depreciable or amortizable tax

 

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basis. We expect that, as a result of the increases in the tax basis of the tangible and intangible assets of Viant Technology LLC attributable to the exchanged Viant Technology LLC interests, and certain other tax benefits, the payments that Viant Technology Inc. will be required to make to the holders of rights under the Tax Receivable Agreement will be substantial. There may be a material negative effect on our financial condition and liquidity if, as described below, the payments under the Tax Receivable Agreement exceed the actual benefits Viant Technology Inc. receives in respect of the tax attributes subject to the Tax Receivable Agreement and/or distributions to Viant Technology Inc. by Viant Technology LLC are not sufficient to permit Viant Technology Inc. to make payments under the Tax Receivable Agreement.

In certain circumstances, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual tax benefits, if any, that Viant Technology Inc. actually realizes.

The Tax Receivable Agreement will provide that if (i) Viant Technology Inc. exercises its right to early termination of the Tax Receivable Agreement in whole (that is, with respect to all benefits due to all beneficiaries under the Tax Receivable Agreement) or in part (that is, with respect to some benefits due to all beneficiaries under the Tax Receivable Agreement), (ii) Viant Technology Inc. experiences certain changes in control, (iii) the Tax Receivable Agreement is rejected in certain bankruptcy proceedings, (iv) Viant Technology Inc. fails (subject to certain exceptions) to make a payment under the Tax Receivable Agreement within 180 days after the due date or (v) Viant Technology Inc. materially breaches its obligations under the Tax Receivable Agreement, Viant Technology Inc. will be obligated to make an early termination payment to holders of rights under the Tax Receivable Agreement equal to the present value of all payments that would be required to be paid by Viant Technology Inc. under the Tax Receivable Agreement. The amount of such payments will be determined on the basis of certain assumptions in the Tax Receivable Agreement, including (i) the assumption that Viant Technology Inc. would have enough taxable income in the future to fully utilize the tax benefit resulting from the tax assets that are the subject of the Tax Receivable Agreement, (ii) the assumption that any item of loss deduction or credit generated by a basis adjustment or imputed interest arising in a taxable year preceding the taxable year that includes an early termination will be used by Viant Technology Inc. ratably from such taxable year through the earlier of (x) the scheduled expiration of such tax item or (y) 15 years; (iii) the assumption that any non-amortizable assets are deemed to be disposed of in a fully taxable transaction on the fifteenth anniversary of the earlier of the basis adjustment and the early termination date; (iv) the assumption that U.S. federal, state and local tax rates will be the same as in effect on the early termination date, unless scheduled to change; and (v) the assumption that any units of Viant Technology LLC (other than those held by Viant Technology Inc.) outstanding on the termination date are deemed to be exchanged for an amount equal to the market value of the corresponding number of shares of Class A common stock on the termination date. Any early termination payment may be made significantly in advance of the actual realization, if any, of the future tax benefits to which the termination payment relates. The amount of the early termination payment is determined by discounting the present value of all payments that would be required to be paid by Viant Technology Inc. under the Tax Receivable Agreement at a rate equal to the lesser of (a) 6.5% and (b) the Secured Overnight Financing Rate, as reported by the Wall Street Journal (“SOFR”) plus 400 basis points.

Moreover, as a result of an elective early termination, a change in control or Viant Technology Inc.’s material breach of its obligations under the Tax Receivable Agreement, Viant Technology Inc. could be required to make payments under the Tax Receivable Agreement that exceed its actual cash savings under the Tax Receivable Agreement. Thus, Viant Technology Inc.’s obligations under the Tax Receivable Agreement could have a substantial negative effect on its financial condition and liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or changes of control. We cannot assure you that we will be able to finance any early termination payment. It is also possible that the actual benefits ultimately realized by us may be significantly less than were projected in the computation of the early termination payment. We will not be reimbursed if the actual benefits ultimately realized by us are less than were projected in the computation of the early termination payment.

Payments under the Tax Receivable Agreement will be based on the tax reporting positions that we will determine and the IRS or another tax authority may challenge all or part of the tax basis increases, as well as

 

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other related tax positions we take, and a court could sustain such challenge. If any tax benefits that have given rise to payments under the Tax Receivable Agreement are subsequently disallowed, Viant Technology Inc. would be entitled to reduce future amounts otherwise payable to a holder of rights under the Tax Receivable Agreement to the extent the holder has received excess payments. However, the required final and binding determination that a holder of rights under the Tax Receivable Agreement has received excess payments may not be made for a number of years following commencement of any challenge, and Viant Technology Inc. will not be permitted to reduce its payments under the Tax Receivable Agreement until there has been a final and binding determination, by which time sufficient subsequent payments under the Tax Receivable Agreement may not be available to offset prior payments for disallowed benefits. Viant Technology Inc. will not be reimbursed for any payments previously made under the Tax Receivable Agreement if the basis increases described above are successfully challenged by the IRS or another taxing authority. As a result, in certain circumstances, payments could be made under the Tax Receivable Agreement that are significantly in excess of the benefit that Viant Technology Inc. actually realizes in respect of the increases in tax basis (and utilization of certain other tax benefits) and Viant Technology Inc. may not be able to recoup those payments, which could adversely affect Viant Technology Inc.’s financial condition and liquidity.

In certain circumstances, Viant Technology LLC will be required to make distributions to us and the existing members of Viant Technology LLC, and the distributions that Viant Technology LLC will be required to make may be substantial.

Viant Technology LLC is expected to continue to be treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax. Instead, taxable income will be allocated to members, including Viant Technology Inc. Pursuant to the Viant Technology LLC Operating Agreement, Viant Technology LLC will make tax distributions to its members, including Viant Technology Inc., which generally will be pro rata based on the ownership of Viant Technology LLC units, calculated using an assumed tax rate, to help each of the members to pay taxes on that member’s allocable share of Viant Technology LLC’s net taxable income. Under applicable tax rules, Viant Technology LLC is required to allocate net taxable income disproportionately to its members in certain circumstances. Because tax distributions will be determined based on the member who is allocated the largest amount of taxable income on a per unit basis and on an assumed tax rate that is the highest possible rate applicable to any member, but will be made pro rata based on ownership of Viant Technology LLC units, Viant Technology LLC will be required to make tax distributions that, in the aggregate, will likely exceed the aggregate amount of taxes payable by its members with respect to the allocation of Viant Technology LLC income.

Funds used by Viant Technology LLC to satisfy its tax distribution obligations will not be available for reinvestment in our business. Moreover, the tax distributions Viant Technology LLC will be required to make may be substantial, and may significantly exceed (as a percentage of Viant Technology LLC’s income) the overall effective tax rate applicable to a similarly situated corporate taxpayer. In addition, because these payments will be calculated with reference to an assumed tax rate, and because of the disproportionate allocation of net taxable income, these payments likely will significantly exceed the actual tax liability for many of the existing members of Viant Technology LLC.

As a result of potential differences in the amount of net taxable income allocable to us and to the existing members of Viant Technology LLC, as well as the use of an assumed tax rate in calculating Viant Technology LLC’s distribution obligations, we may receive distributions significantly in excess of our tax liabilities and obligations to make payments under the Tax Receivable Agreement. We may choose to manage these excess distributions through a number of different approaches, including by applying them to general corporate purposes.

 

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Pursuant to recently proposed regulations issued under Section 162(m) of the Code, Viant Technology Inc. may not be permitted to deduct its distributive share of compensation expense to the extent that the compensation was paid by Viant Technology LLC to certain of Viant Technology Inc.’s covered employees, potentially resulting in additional U.S. federal income tax liability for Viant Technology Inc. and reducing cash available for distribution to Viant Technology Inc.’s stockholders and/or for the payment of other expenses and obligations of Viant Technology Inc.

Section 162(m) of the Code disallows the deduction by any publicly held corporation of applicable employee compensation paid with respect to any covered employee to the extent that such compensation for the taxable year exceeds $1,000,000. A “covered employee” means any employee of the taxpayer if the employee (a) is the principal executive officer (“PEO”) or principal financial officer (“PFO”) of the taxpayer at any time during the taxable year, or was an individual acting in such a capacity, (b) was among the three highest compensated officers for the taxable year (other than the PEO and PFO) required to be disclosed in the proxy statement, or (c) was a covered employee of the taxpayer (or any predecessor) for any preceding taxable year beginning after December 31, 2016. Pursuant to a Notice of Proposed Rulemaking with respect to Section 162(m) of the Code issued by the IRS on December 20, 2019 (the “Proposed Regulations”), Viant Technology Inc. will not be permitted to deduct its distributive share of compensation expense allocated to it, to the extent that such distributive share plus the amount of any compensation paid directly by Viant Technology Inc. exceeds $1,000,000 with respect to a covered employee, even if Viant Technology LLC, rather than Viant Technology Inc., pays the compensation to Viant Technology Inc.’s covered employees. The Proposed Regulations will be effective upon publication of final regulations in the Federal Register and propose that the rule with respect to compensation paid by a partnership will apply to any deduction for compensation that is otherwise allowable for a taxable year ending on or after December 20, 2019. However, the Proposed Regulations will not apply to compensation paid pursuant to a written binding contract in effect on December 20, 2019 that is not materially modified after that date. Accordingly, to the extent that Viant Technology Inc. is disallowed a deduction for its distributive share of compensation expense under Section 162(m) of the Code, it may result in additional U.S. federal income tax liability for Viant Technology Inc. and/or reduce cash available for distribution to Viant Technology Inc.’s stockholders or for the payment of other expenses and obligations of Viant Technology Inc.

Future changes to tax laws or our effective tax rate could materially and adversely affect our company and reduce net returns to our stockholders.

Our tax treatment is subject to the enactment of, or changes in, tax laws, regulations and treaties, or the interpretation thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities in various jurisdictions, including those related to the Base Erosion and Profit Shifting Project of the Organisation for Economic Co-Operation and Development (“OECD”), the European Commission’s state aid investigations and other initiatives. Such changes may include (but are not limited to) the taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends paid, or the taxation of partnerships and other passthrough entities. In addition, the Group of Twenty, the OECD, the U.S. Congress and Treasury Department and other government agencies in jurisdictions where we and our affiliates do business have focused on issues related to the taxation of multinational corporations, including, but not limited to, transfer pricing, country-by-country reporting and base erosion. As a result, the tax laws in the United States and in jurisdictions which we do business could change on a prospective or retroactive basis, and any such changes could have an adverse effect on our worldwide tax liabilities, business, financial condition and results of operations. We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have on our business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect our financial position and overall or effective tax rates in the future in countries where we have operations, reduce post-tax returns to our stockholders, and increase the complexity, burden and cost of tax compliance.

 

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Our businesses are subject to income taxation in the United States. Tax rates may be subject to significant change. If our effective tax rate increases, our operating results and cash flow could be adversely affected. Our effective income tax rate can vary significantly between periods due to a number of complex factors including, but not limited to, projected levels of taxable income in each jurisdiction, tax audits conducted and settled by various tax authorities, and adjustments to income taxes upon finalization of income tax returns.

We may be required to pay additional taxes because of the U.S. federal partnership audit rules and potentially also state and local tax rules.

Under the U.S. federal partnership audit rules, subject to certain exceptions, audit adjustments to items of income, gain, loss, deduction, or credit of an entity (and any holder’s share thereof) is determined, and taxes, interest, and penalties attributable thereto, are assessed and collected, at the entity level. Viant Technology LLC (or any of its applicable subsidiaries or other entities in which Viant Technology LLC directly or indirectly invests that are treated as partnerships for U.S. federal income tax purposes) may be required to pay additional taxes, interest and penalties as a result of an audit adjustment, and Viant Technology Inc., as a member of Viant Technology LLC (or such other entities), could be required to indirectly bear the economic burden of those taxes, interest, and penalties even though we may not otherwise have been required to pay additional corporate-level taxes as a result of the related audit adjustment. Audit adjustments for state or local tax purposes could similarly result in Viant Technology LLC (or any of its applicable subsidiaries or other entities in which Viant Technology LLC directly or indirectly invests) being required to pay or indirectly bear the economic burden of state or local taxes and associated interest, and penalties.

Under certain circumstances, Viant Technology LLC or an entity in which Viant Technology LLC directly or indirectly invests may be eligible to make an election to cause members of Viant Technology LLC (or such other entity) to take into account the amount of any understatement, including any interest and penalties, in accordance with such member’s share in Viant Technology LLC in the year under audit. We will decide whether or not to cause Viant Technology LLC to make this election; however, there are circumstances in which the election may not be available and, in the case of an entity in which Viant Technology LLC directly or indirectly invests, such decision may be outside of our control. If Viant Technology LLC or an entity in which Viant Technology LLC directly or indirectly invests does not make this election, the then-current members of Viant Technology LLC (including Viant Technology Inc.) could economically bear the burden of the understatement.

If Viant Technology LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, Viant Technology Inc. and Viant Technology LLC might be subject to potentially significant tax inefficiencies, and Viant Technology Inc. would not be able to recover payments previously made by it under the Tax Receivable Agreement, even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.

We intend to operate such that Viant Technology LLC does not become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. A “publicly traded partnership” is an entity that otherwise would be treated as a partnership for U.S. federal income tax purposes, the interests of which are traded on an established securities market or readily tradable on a secondary market or the substantial equivalent thereof. Under certain circumstances, exchanges of Viant Technology LLC units pursuant to the Viant Technology LLC Operating Agreement or other transfers of Viant Technology LLC units could cause Viant Technology LLC to be treated like a publicly traded partnership. From time to time the U.S. Congress has considered legislation to change the tax treatment of partnerships and there can be no assurance that any such legislation will not be enacted or if enacted will not be adverse to us.

If Viant Technology LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for Viant Technology Inc. and Viant Technology LLC, including as a result of Viant Technology Inc.’s inability to file a consolidated U.S. federal income tax return with Viant Technology LLC. In addition, Viant Technology Inc. may not be able to realize tax benefits covered under the Tax Receivable Agreement and would not be able to recover any payments previously

 

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made by it under the Tax Receivable Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of Viant Technology LLC’s assets) were subsequently determined to have been unavailable.

Risks Related to this Offering and Ownership of Our Common Stock

The market price of our Class A common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

The market price of equity securities of technology companies has historically experienced high levels of volatility. If you purchase shares of our Class A common stock in our initial public offering, you may not be able to resell those shares at or above the initial public offering price. Following the completion of our initial public offering, the market price of our Class A common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control and may not be related to our operating performance, including:

 

   

announcements of new offerings, products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;

 

   

price and volume fluctuations in the overall stock market from time to time;

 

   

significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular;

 

   

fluctuations in the trading volume of our shares or the size of our public float;

 

   

actual or anticipated changes or fluctuations in our operating results;

 

   

whether our operating results meet the expectations of securities analysts or investors;

 

   

actual or anticipated changes in the expectations of investors or securities analysts;

 

   

litigation involving us, our industry, or both;

 

   

regulatory developments in the United States, foreign countries, or both;

 

   

general economic conditions and trends;

 

   

major catastrophic events;

 

   

lockup releases or sales of large blocks of our Class A common stock;

 

   

departures of key employees; or

 

   

an adverse impact on the company from any of the other risks cited in this prospectus.

In addition, if the stock market for technology companies, or the stock market generally, experiences a loss of investor confidence, the trading price of our Class A common stock could decline for reasons unrelated to our business, operating results or financial condition. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. The trading price of our Class A common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

 

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Sales of substantial blocks of our Class A common stock into the public market after this offering, including when “lock-up” or “market standoff” periods end, or the perception that such sales might occur, could cause the market price of our Class A common stock to decline.

Sales of substantial blocks of our Class A common stock into the public market after this offering, including when “lock-up” or “market standoff” periods end, or the perception that such sales might occur, could cause the market price of our Class A common stock to decline and may make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate. Upon completion of this offering, we will have 8,500,000 shares of Class A common stock outstanding (assuming no exercise of the underwriters’ option to purchase additional shares from the selling stockholders). All of the shares of Class A common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by our “affiliates” as defined in Rule 144 under the Securities Act.

Subject to exceptions described under the caption “Underwriting,” we, all of our directors and officers and all of the other holders of our capital stock and securities convertible into, or exchangeable for, our capital stock have agreed not to offer, sell or agree to sell, directly or indirectly, any shares of Class A common stock without the permission of BofA Securities for a period of 180 days from the date of this prospectus. When the applicable lock-up period expires, we, our directors and officers and locked-up equityholders will be able to sell shares into the public market.

The underwriters may, in their sole discretion, permit our directors and officers and locked-up equityholders to sell shares prior to the expiration of the restrictive provisions contained in the “lock-up” agreements with the underwriters.

Pursuant to the Registration Rights Agreement, and subject to the lock-up agreements described above, holders of our Class B common stock will have rights to require us to file registration statements covering the sale of shares of Class A common stock issuable upon exchange of Class B common stock or to include such shares in registration statements that we may file for ourselves or other stockholders. See “Organizational Structure—Registration Rights Agreement.” We also intend to register the offer and sale of all shares of common stock that we may issue under our equity compensation plans.

The market price of our Class A common stock could decline as a result of the sale of substantial blocks of our Class A common stock into the public market after this offering, or the perception that such sales might occur.

We are a “controlled company” within the meaning of the Nasdaq listing standards and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

After this offering, the Vanderhook Parties will continue to control a majority of the voting power of our outstanding common stock. As a result, we will qualify as a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, a listed company of which more than 50% of the voting power with respect to the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that (i) a majority of our board of directors consist of independent directors, (ii) director nominees be selected or recommended to the board entirely by independent directors and (iii) the compensation committee be composed entirely of independent directors.

Following this offering, we intend to rely on some or all of these exemptions. We also intend to rely on the transition period with respect to the composition of the audit committee available under the Nasdaq rules. As a result, at least initially, we will not have a majority of independent directors, our audit committee and our compensation committee will not consist entirely of independent directors and our directors may not be

 

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nominated or selected entirely by independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Insiders will continue to have substantial control over our company after this offering, which could limit your ability to influence the outcome of key decisions, including a change of control.

Following this offering, through their ownership of Class B common stock, the Vanderhook Parties will continue to control more than 79.3% of the voting power of our common stock in the election of directors (or 77.2% if the underwriters exercise their option to purchase additional shares in full). This control will limit or preclude your ability to influence corporate matters for the foreseeable future. These stockholders will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. Their interests may differ from yours and they may vote in a manner that is adverse to your interests. This control may deter, delay or prevent a change of control of our company, deprive our stockholders of an opportunity to receive a premium for their Class A common stock as part of a sale of our company and may ultimately affect the market price of our Class A common stock.

We cannot assure you that an active trading market for our Class A common stock will develop or, if developed, that any such market will be sustained, and we cannot predict the market price at which our Class A common stock will trade in the future.

We cannot assure you that an active trading market for our Class A common stock will develop or, if developed, that any such market will be sustained. The initial public offering price of our Class A common stock will be determined by negotiations with the underwriters and may not bear any relationship to the market price at which our Class A common stock will trade after this offering or to any other established criteria of the value of our business. We cannot predict the market price at which our Class A common stock will trade in the future.

We have broad discretion in the use of net proceeds that we receive in this offering and we may not use them effectively.

After giving effect to the use of proceeds described in “Use of Proceeds” and the Reorganization, we expect to have remaining net proceeds, which we currently intend to use for working capital and other general corporate purposes, including potential future acquisition of, or investment in, technologies or businesses that complement our business. We have no present commitments or agreements to enter into any acquisitions or make any investments. Our management will have broad discretion in the application of the net proceeds, including possible acquisitions of, or investments in, businesses or technologies. The failure by our management to apply these funds effectively could harm our business, operating results and financial condition.

We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.

We do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors and the terms of our current and future debt arrangements. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

The requirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will be required to comply with the applicable requirements of the

 

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Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and operating results and maintain effective disclosure controls and procedures and internal controls over financial reporting. Significant resources and management oversight will be required to maintain and, if required, improve our disclosure controls and procedures and internal controls over financial reporting to meet this standard. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire even more employees in the future, which will increase our costs and expenses.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

Reduced reporting and disclosure requirements applicable to us as an emerging growth company could make our Class A common stock less attractive to investors.

We are an EGC and, for as long as we continue to be an EGC, we may choose to continue to take advantage of exemptions from various reporting requirements applicable to other public companies. Consequently, we are not required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, and we are subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of the dates such pronouncements are effective for public companies. We could be an EGC for up to five years following the completion of this offering. We will cease to be an EGC upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of this offering, (ii) the first fiscal year after our annual gross revenue is $1.07 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in nonconvertible debt securities or (iv) the end of any fiscal year in which the market value of our Class A common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict whether investors will find our Class A common stock less attractive if we choose to rely on these exemptions. If some investors find our Class A common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our Class A common stock, and the price of our Class A common stock may be more volatile.

If we fail to maintain or implement effective internal controls, we may not be able to report financial results accurately or on a timely basis, or to detect fraud, which could have a material adverse effect on our business and the per share price of our Class A common stock.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We are also continuing to improve our internal control over financial reporting. We have expended, and anticipate that we will continue to expend, significant resources in order to

 

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maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. In connection with the audit of our 2018 and 2019 consolidated financial statements, we identified a material weakness in our internal controls caused by the misapplication of accounting principles related to the timing of depreciation of software development costs capitalized and unrecorded disposals of decommissioned software projects. We have remediated this material weakness, which we believe has addressed the underlying causes of this issue. We implemented additional controls around identifying and determining the appropriate timing for which capitalized software development costs should be reclassified from work-in-process to placed-in-service and begin depreciation and ultimately decommissioned, if applicable. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our Class A common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.

We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.

Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results, and cause a decline in the market price of our Class A common stock.

If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research reports about our business, our share price and trading volume could decline.

The trading market for our Class A common stock will partially depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us should downgrade our shares or change their opinion of our business prospects, our share price would likely decline. If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

Our charter documents and Delaware law could discourage takeover attempts and other corporate governance changes.

Our certificate of incorporation and bylaws in effect upon completion of this offering contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for

 

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stockholders to elect directors that are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include the following provisions that:

 

   

provide that our board of directors will be classified into three classes with staggered, three-year terms and that directors may only be removed for cause after a Triggering Event (as defined herein);

 

   

permit the board of directors to establish the number of directors and fill any vacancies and newly created directorships;

 

   

provide that, after a Triggering Event, vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

 

   

prohibit cumulative voting in the election of directors;

 

   

require super-majority voting to amend our certificate of incorporation and bylaws;

 

   

authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

 

   

eliminate the ability of our stockholders to call special meetings of stockholders;

 

   

specify that special meetings of our stockholders can be called only by our board of directors, the chairman of our board of directors, or our chief executive officer with the concurrence of a majority of our board of directors;

 

   

prohibit stockholder action by written consent after a Triggering Event, which requires all stockholder actions to be taken at a meeting of our stockholders;

 

   

restrict the forum for certain litigation against us to Delaware or federal courts;

 

   

permit our board of directors to alter our bylaws without obtaining stockholder approval;

 

   

reflect the dual class structure of our common stock, as discussed above; and

 

   

establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a period of time. In addition, our credit facility includes, and other debt instruments we may enter into in the future may include, provisions entitling the lenders to demand immediate repayment of all borrowings upon the occurrence of certain change of control events relating to our company, which also could discourage, delay or prevent a business combination transaction.

Our amended and restated certificate of incorporation will include an exclusive forum clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any complaint asserting any internal corporate

 

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claims, including claims in the right of the Company that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery. In addition, our amended and restated certificate of incorporation will provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. This forum selection provision will not apply to claims brought to enforce a duty or liability created by the Exchange Act.

This choice of forum provision may limit a stockholder’s ability to bring a claim in other judicial forums for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees in jurisdictions other than Delaware, or federal courts, in the case of claims arising under the Securities Act. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the foregoing provisions. The exclusive forum clause may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. See the section entitled “Description of Capital Stock—Exclusive Forum Clause.”

General Risk Factors

The market in which we participate is intensely competitive, and we may not be able to compete successfully with our current or future competitors.

We operate in a highly competitive and rapidly changing industry that is subject to changing technology and customer demands and that includes many companies providing competing solutions. With the introduction of new technologies and the influx of new entrants into the market, we expect competition to persist and intensify in the future, which could harm our ability to increase revenue and maintain profitability. New technologies and methods of buying advertising present a dynamic competitive challenge, as market participants offer multiple new products and services aimed at capturing advertising spend.

We compete with smaller, privately-held companies, with public companies such as The Trade Desk, and with divisions of large, well-established companies such as Google. Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we have, allowing them to devote greater resources to the development, promotion, sale and support of their products and services. They may also have more extensive customer bases and broader supplier relationships than we have. As a result, these competitors may be better able to respond quickly to new technologies, develop deeper marketer relationships or offer services at lower prices. Increased competition may result in reduced pricing for our platform, increased sales and marketing expense, longer sales cycles or a decrease of our market share, any of which could negatively affect our revenue and future operating results and our ability to grow our business. These companies may also have greater brand recognition and longer histories than we have and may actively seek to serve our market and have the power to significantly change the nature of the marketplace to their advantage. Some of our larger competitors, particularly those that are divisions of large companies, have substantially broader product offerings and may leverage their relationships based on other products or incorporate functionality into existing products to gain business in a manner that may discourage customers from using our platform, including through selling at zero or negative margins or product bundling with other services they provide at reduced prices. Customers may prefer to purchase advertising from social medial platforms or other closed platforms, which they

 

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cannot acquire through our platform. Potential customers may also prefer to purchase from their existing platform rather than a new platform regardless of product performance or features. These larger competitors often have broader product lines and market focus and may therefore not be as susceptible to downturns in a particular market. We may also experience negative market perception as a result of being a smaller company than our larger competitors.

In addition, we derive a significant portion of our revenue from advertising in the desktop and mobile and connected TV channels, which are rapidly evolving, highly competitive, complex and fragmented. We face significant competition in these markets which we expect will intensify in the future. While fewer of our competitors currently have capability in other channels such as linear TV, streaming audio and digital billboard channels, we also expect to face additional competition in those channels in the future.

Our future success depends on the continuing efforts of our key employees, including Tim Vanderhook and Chris Vanderhook, and our ability to attract, hire, retain and motivate highly skilled employees in the future.

We are a founder-led business and our future success depends on the continuing efforts of our executive officers and other key employees, including Tim Vanderhook, our chief executive officer, and Chris Vanderhook, our chief operating officer. We rely on the leadership, knowledge and experience that our executive officers provide. They foster our corporate culture, which has been instrumental to our ability to attract and retain new talent. We also rely on employees in our engineering, technical, product development, support and sales teams to attract and retain key customers.

The market for talent in our key areas of operations, including California, is intensely competitive, which could increase our costs to attract and retain talented employees. As a result, we may incur significant costs to attract and retain employees, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them. We have at times experienced employee turnover. Because of the complexity of our platform, new employees often require significant training and, in many cases, take significant time before they achieve full productivity. Our account managers, for instance, need to be trained quickly on the features of our platform since failure to offer high-quality support may adversely affect our relationships with our customers.

Employee turnover, including changes in our management team, could disrupt our business. None of our founders or other key employees has an employment agreement for a specific term, and any of our employees may terminate his or her employment with us at any time. The loss of one or more of our executive officers, especially our two founders, or our inability to attract and retain highly skilled employees could have an adverse effect on our business, operating results and financial condition.

Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our business, operating results and financial condition.

We have experienced significant growth in a short period of time. To manage our growth effectively, we must continually evaluate and evolve our organization. We must also manage our employees, operations, finances, technology and development and capital investments efficiently. Our efficiency, productivity and the quality of our platform and customer service may be adversely impacted if we do not train our new personnel, particularly our sales and support personnel, quickly and effectively, or if we fail to appropriately coordinate across our organization. Additionally, our rapid growth may place a strain on our resources, infrastructure and ability to maintain the quality of our platform. You should not consider our revenue growth and levels of profitability in recent periods as indicative of future performance. In future periods, our revenue or profitability could decline or grow more slowly than we expect. Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our operating results and financial condition.

 

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Seasonal fluctuations in advertising activity could have a material impact on our revenue, cash flow and operating results.

Our revenue, cash flow, operating results and other key operating and performance metrics may vary from quarter to quarter due to the seasonal nature of our customers’ spending on advertising campaigns. For example, in prior years, customers tended to devote more of their advertising budgets to the fourth calendar quarter to coincide with consumer holiday spending. In contrast, the first quarter of the calendar year has typically been the slowest in terms of advertising spend. These patterns may or may not hold true during the COVID-19 pandemic. Political advertising could also cause our revenue to increase during election cycles and decrease during other periods, making it difficult to predict our revenue, cash flow, and operating results, all of which could fall below our expectations.

You will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future.

We expect the initial public offering price of our Class A common stock will be substantially higher than the pro forma net tangible book value per share of our Class A common stock, after giving effect to the exchange of all outstanding Class B units for shares of our Class A common stock. Therefore, investors purchasing shares of Class A common stock in this offering will pay a price per share that substantially exceeds our pro forma net tangible book value per share after this offering. As a result, investors will:

 

   

incur immediate dilution of $19.70 per share; and

 

   

contribute the total amount invested to date to fund Viant Technology Inc., but will own only approximately 14.8% of the shares of our Class A common stock outstanding (or 17.0% if the underwriters exercise their option to purchase additional shares of Class A common stock from the selling stockholders in full), after giving effect to the exchange of all Class B units outstanding immediately after the Reorganization and this offering for shares of our Class A common stock. See “Dilution.

Investors in this offering will experience further dilution upon the issuance of shares underlying awards made pursuant to any equity incentive plans, including the 2021 LTIP. See “Organizational Structure—The Viant Technology LLC Agreement—Classes of Viant Technology LLC Units.”

Future acquisitions, strategic investments or alliances could disrupt our business and harm our business, operating results and financial condition.

We have engaged in acquisitions to grow our business. To the extent we find suitable and attractive acquisition candidates and business opportunities in the future, we may continue to acquire other complementary businesses, products and technologies and enter into joint ventures or similar strategic relationships. We have no present commitments or agreements to enter into any such acquisitions or make any such investments. However, if we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, product quality or architecture, regulatory compliance practices, revenue recognition or other accounting practices, tax liabilities, privacy or cybersecurity issues or employee or customer issues. There is no certainty that we will be able to integrate successfully the services, products and personnel of any acquired business into our operations. In addition, any future acquisitions, joint ventures or similar relationships may cause a disruption in our ongoing business and distract our management. Further, we may be unable to realize the revenue improvements, cost savings and other intended benefits of any such transaction. Acquisitions involve numerous other risks, any of which could harm our business, including:

 

   

regulatory hurdles;

 

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failure of anticipated benefits to materialize;

 

   

diversion of management time and focus from operating our business to addressing acquisition integration challenges;

 

   

retention of employees from the acquired company;

 

   

cultural challenges associated with integrating employees from the acquired company into our organization;

 

   

integration of the acquired company’s accounting, management information, human resources and other administrative systems;

 

   

the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;

 

   

coordination of product development and sales and marketing functions;

 

   

liability for activities of the acquired company before the acquisition, including known and unknown liabilities; and

 

   

litigation or other claims in connection with the acquired company, including claims from terminated employees, users, former stockholders or other third parties.

Failure to appropriately mitigate these risks or other issues related to such strategic investments and acquisitions could result in reducing or completely eliminating any anticipated benefits of transactions, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the impairment of goodwill, any of which could harm our business, operating results and financial condition.

Our management team has limited experience managing a public company.

Most members of our management team have limited or no experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. There are significant obligations we will now be subject to relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage our transition to being a public company. These new obligations and added scrutiny will require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, operating results and financial condition.

Our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business, operating results and financial condition could be harmed.

We have experienced and may continue to experience rapid expansion of our employee ranks. We had 282 employees in the United States as of September 30, 2020. We believe our corporate culture has been critical to our success and we have invested substantial time and resources in building our team within our company culture. However, as our organization grows, it may be difficult to maintain our culture, which could reduce our ability to innovate and operate effectively and proactively focus on and pursue our corporate objectives. The failure to maintain the key aspects of our culture as our organization grows could result in decreased employee satisfaction, increased difficulty in attracting top talent, increased turnover and degraded quality of customer service, all of which are important to our success and to the effective execution of our business strategy. In the event we are unable to maintain our corporate culture as we grow to scale, our business, operating results and financial condition could be harmed.

 

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We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs, which may in turn impair our growth.

We intend to continue to grow our business, which may require additional capital to develop new features or enhance our platform, improve our operating infrastructure, finance working capital requirements or acquire complementary businesses and technologies. Accordingly, we may need to engage in additional equity or debt financings to secure additional capital. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Class A common stock. Any debt financing that we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. If we are unable to secure additional funding on favorable terms, or at all, when we require it, our ability to continue to grow our business to react to market conditions could be impaired and our business may be harmed.

We are a party to a revolving credit agreement, which contains a number of covenants that may restrict our current and future operations and could adversely affect our ability to execute business needs.

Our credit agreement with PNC Bank, National Association (the “Loan Agreement”) contains a number of covenants that limit our ability and our subsidiaries’ ability to, among other things, incur indebtedness, create liens, make investments, merge with other companies, dispose of our assets, prepay other indebtedness and make dividends and other distributions. The terms of our Loan Agreement may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs or to execute business strategies in the means or manner desired. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy, invest in our growth strategy and compete against companies who are not subject to such restrictions. The Loan Agreement also contains a financial covenant that requires us to maintain a minimum fixed charge coverage ratio of 1.40 to 1 when undrawn availability under the Loan Agreement is less than 25%. We may not be able to generate sufficient cash flow or sales to meet the financial covenant or pay the principal or interest under the Loan Agreement.

If we are unable to comply with our payment requirements, our lender may accelerate our obligations under our Loan Agreement and foreclose upon the collateral, or we may be forced to sell assets, restructure our indebtedness or seek additional equity capital, which would dilute our stockholders’ interests. If we fail to comply with our covenants under the Loan Agreement, it could result in an event of default under the agreement and our lender could make the entire debt immediately due and payable. If this occurs, we might not be able to repay our debt or borrow sufficient funds to refinance it. Even if new financing is available, it may not be on terms that are acceptable to us.

Interest rates under our Loan Agreement are based partly on LIBOR, the London interbank offered rate, which is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. LIBOR is currently expected to phase out by the end of 2021, though the ICE Benchmark Administration, the administrator of LIBOR, recently announced plans to consult on ceasing publication for certain tenors of U.S. dollar LIBOR on June 30, 2023. It is therefore unclear at what time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021 or 2023. The U.S. Federal Reserve has begun publishing a Secured Overnight Funding Rate which is currently intended to serve as an alternative reference rate to LIBOR. If the method for calculation of LIBOR changes, if LIBOR is no longer available, or if lenders have increased costs due to changes in LIBOR, we may suffer from potential increases in interest rates on our borrowings. Further, we may need to renegotiate our Loan Agreement or any other borrowings that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established.

 

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There is no guarantee that our PPP Loan will be forgiven in whole or in part, and we could be subject to audit or enforcement action related to the PPP Loan.

In April 2020, we received loan proceeds in the amount of approximately $6.035 million (the “PPP Loan”) from PNC Bank, as lender, under the Paycheck Protection Program (“PPP”), established as part of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, which provides economic relief to businesses in response to the COVID-19 pandemic. We used the proceeds to support payroll costs, rent and utilities in accordance with the relevant terms and conditions of the CARES Act. The PPP Loan bears interest at an annual rate of 1.0% and matures on April 11, 2022. Under the terms of the CARES Act, all or a portion of the principal of the PPP Loan may be forgiven. Such forgiveness will be determined, subject to limitations, based on the use of the PPP Loan proceeds for payroll costs, mortgage interest payments, lease payments or utility payments. We expect to apply for forgiveness of the PPP Loan, but we cannot provide any assurance that we will be eligible for loan forgiveness or that any amount of the PPP Loan will ultimately be forgiven.

No interest or principal will be due during the first fifteen months after April 11, 2020, although interest will continue to accrue over this fifteen-month deferral period. In the event that any amounts are not forgiven, such unforgiven amounts shall be payable in equal monthly installments over the remaining term of the facility. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or other provisions of the promissory note. The occurrence of an event of default may trigger the immediate repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining a judgment against the Company.

The PPP Loan is subject to the terms and conditions applicable to loans administered by the Small Business Administration (the “SBA”) under the CARES Act, which is subject to revisions and changes by the SBA and Congress. Given that we received more than $2.0 million under our PPP Loan, we will be subject to an audit by the SBA. We believe that we satisfied all eligibility criteria for the PPP Loan, and that our receipt of the PPP Loan was consistent with the broad objectives of the PPP of the CARES Act. The certification regarding necessity described above did not at the time contain any objective criteria and continues to be subject to interpretation. If, despite our good-faith belief that we satisfied all eligibility requirements for the PPP Loan, we are later determined to have violated any of the laws or governmental regulations that apply to us in connection with the PPP Loan or it is otherwise determined that we were ineligible to receive the PPP Loan, we could be subject to civil, criminal and administrative penalties or adverse publicity. Any such events could consume significant financial and management resources and could have a material adverse effect on our business, results of operations and financial condition.

 

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FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements.” All statements, other than statements of historical fact included in this prospectus, including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for our future operations, are forward-looking statements. These statements include declarations regarding our management’s beliefs and current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “intend,” “consider,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict” or “continue” or the negative of such terms or other comparable terminology. Such statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from expected results. As a result, you should not put undue reliance on any forward-looking statement.

These forward-looking statements are included throughout this prospectus, including in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Certain Relationships and Related Person Transactions.” Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the risk factors discussed in the “Risk Factors” section of this prospectus and the following:

 

   

our ability to add new customers, effectively educate and train our existing customers on how to make full use of our platform and increase the usage of our platform by our customers;

 

   

failure to realize the expected benefits of an industry shift away from cookie-based consumer tracking;

 

   

the impact of the COVID-19 pandemic and other sustained adverse market events on our and our customers’ business operations;

 

   

our ability to innovate, effectively manage our growth and make the right investment decisions;

 

   

the relatively new and evolving market for programmatic buying for advertising campaigns;

 

   

the loss of a significant amount of revenue from select advertising agencies as customers;

 

   

fluctuations in our operating results and the varying nature, in terms of mix, of our different pricing options;

 

   

our lengthy sales cycle and payment-related risks;

 

   

diminishment of, or failure to grow, our access to advertising inventory;

 

   

the intensely competitive nature of the market in which we participate;

 

   

our inability to effectively recruit, onboard and train, our sales, support and technology employees to make full use of our platform;

 

   

our ability to timely and effectively adapt our existing technology and to maintain and increase the reliability, integrity, redundancy and security of our platform;

 

   

our ability to maintain, protect and enhance our brand and intellectual property;

 

   

the impact on our business of data privacy regulation or data privacy breaches;

 

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failure of an active public market for our common stock to develop;

 

   

volatility in the price of our common stock;

 

   

our inability to effectively implement or maintain a system of internal control over financial reporting;

 

   

our reliance on exemptions from certain corporate governance requirements in connection to us being a “controlled company” within the meaning of the Nasdaq rules;

 

   

future sales of our common stock, or the perception in the public markets that these sales may occur;

 

   

the fact that we have no expectation to pay any cash dividends for the foreseeable future;

 

   

securities or industry analysts not publishing research or publishing inaccurate or unfavorable research about us or our business;

 

   

provisions in our organizational documents that may impede or discourage a takeover;

 

   

the provision of our certificate of incorporation requiring exclusive forum in the state courts in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers;

 

   

any increases in our costs and or disruption of the regular operations of our business as a result of becoming a public company; and

 

   

other risks, uncertainties and factors set forth in this prospectus, including those set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”

The forward-looking statements contained in this prospectus 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.” 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 caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this prospectus 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.

 

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ORGANIZATIONAL STRUCTURE

On October 9, 2020, Viant Technology Inc. was incorporated as a Delaware corporation. Prior to this offering, Viant Technology Inc. has had no business operations. Our business is currently conducted through Viant Technology LLC and its consolidated subsidiaries.

Historical Ownership Structure

Viant Technology LLC is owned by the persons identified below, each of whom will own Class B units. Immediately before the Reorganization described below, the members of Viant Technology LLC consist of:

 

   

Tim Vanderhook and Chris Vanderhook, holding common units representing a 33% economic interest on a fully-diluted basis;

 

   

Four Brothers 2 LLC, holding the 2019 convertible preferred units representing a 60% economic interest on a fully-diluted basis; and

 

   

The Equity Plan LLC, holding common units representing a 7% economic interest on a fully-diluted basis.

The Reorganization

The following actions will be taken in connection with the closing of this offering:

 

   

Viant Technology Inc. will amend and restate its certificate of incorporation to, among other things, provide for Class A common stock and Class B common stock. See “Description of Capital Stock.”

 

   

Viant Technology Inc. will sell to the underwriters in this offering 8,500,000 shares of our Class A common stock.

 

   

We will amend and restate the limited liability company agreement of Viant Technology LLC (as amended and restated, the “Viant Technology LLC Agreement”) to, among other things, provide for Class A units and Class B units and appoint Viant Technology Inc. as the sole managing member of Viant Technology LLC. See “—The Viant Technology LLC Agreement.”

 

   

Viant Technology Inc. will use approximately $181.8 million of the net proceeds of this offering to acquire 8,500,000 newly issued Class A units of Viant Technology LLC at a per-unit price equal to the per-share price paid by the underwriters for shares of our Class A common stock in this offering.

 

   

The Viant Technology LLC Agreement will classify the interests acquired by Viant Technology Inc. as Class A units and reclassify the interests held by the continuing members of Viant Technology LLC as Class B units, and will permit 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 our election, for cash. Any beneficial holder exchanging Class B units must ensure that the applicable corresponding number of shares of Class B common stock are delivered to us for cancellation as a condition of exercising its right to exchange Class B units for shares of our Class A common stock or, at our election, for cash.

 

   

In the event that the underwriters exercise their option to purchase additional shares from the selling stockholders, the selling stockholders will exchange a comparable number of shares of Class B units and Class B common stock for shares of Class A common stock to be sold pursuant to such exercise.

 

   

Viant Technology Inc. will enter into the Tax Receivable Agreement for the benefit of the continuing members of Viant Technology LLC (not including Viant Technology Inc.), pursuant to

 

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which Viant Technology Inc. will pay them 85% of the amount of the net cash tax savings, if any, that Viant Technology Inc. realizes (or, under certain circumstances, is deemed to realize) as a result of increases in tax basis (and certain other tax benefits) resulting from (i) Viant Technology Inc.’s acquisition of Viant Technology LLC units in this offering and in future exchanges and (ii) any payments Viant Technology Inc. makes under the Tax Receivable Agreement. See “—Tax Receivable Agreement.”

 

   

We will enter into a Registration Rights Agreement with the Class B stockholders to provide for certain rights and restrictions after the offering. See “—Registration Rights Agreement.”

Our Class B Common Stock

For each membership unit of Viant Technology LLC that is reclassified as a Class B unit in the Reorganization, we will issue to the Class B stockholder one corresponding share of our Class B common stock. Immediately following the Reorganization, we will have outstanding 48,935,559 shares of Class B common stock held of record by four stockholders assuming no exercise of the underwriters’ option to purchase additional shares and 47,660,559 shares of Class B common stock held of record by four stockholders if the underwriters exercise their option to purchase additional shares in full. Each share of our Class B common stock will entitle its holder to one vote. See “—Voting Rights of Class A Common Stock and Class B Common Stock.”

The Class B stockholders will initially have 85.2% of the combined voting power of our common stock (or 83.0% if the underwriters exercise their option to purchase additional shares of Class A common stock from the selling stockholders in full). When a Class B unit is exchanged for a share of our Class A common stock, the corresponding share of our Class B common stock will automatically be retired. We will not issue any further Class B units or shares of Class B common stock after the completion of the Reorganization, except to holders of Class B units in a number necessary to maintain a one-to-one ratio between the number of Class B units and the number of shares of Class B common stock outstanding.

Our Class A Common Stock

We expect 8,500,000 shares of our Class A common stock to be outstanding after this offering (or 9,775,000 shares if the underwriters exercise their option to purchase additional shares in full), all of which will be sold pursuant to this offering.

The Class A common stock outstanding will represent 100% of the rights of the holders of all classes of our outstanding common stock to share in distributions from Viant Technology Inc., except for the right of Class B stockholders to receive the par value of the Class B common stock upon our liquidation, dissolution or winding up or an exchange of Class B units.

Registration Rights

Pursuant to a Registration Rights Agreement that we will enter into with the Class B stockholders, we will grant these holders the right to require us to file registration statements in order to register the resales of the shares of our Class A common stock that are issuable upon exchange of their Class B units. See “—Registration Rights Agreement” for a description of the timing and manner of sale limitations on resales of these shares.

Post-Offering Holding Company Structure

This offering is being conducted through what is commonly referred to as an “UP-C” structure, which is often used by partnerships and limited liability companies undertaking an initial public offering. The UP-C approach provides the existing partners with the tax advantage of continuing to own interests in a pass-through structure and provides potential future tax benefits for the public company and economic benefits for the existing partners when they ultimately exchange their pass-through interests and corresponding shares of Class B common stock for shares of Class A common stock. See “—Tax Receivable Agreement.”

 

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Viant Technology Inc. will be a holding company and, following this offering, its only business will be to act as the managing member of Viant Technology LLC, and its only material assets will be Class A units representing approximately 14.8% of Viant Technology LLC units (or 17.0% if the underwriters exercise their option to purchase additional shares of Class A common stock from the selling stockholders in full). In its capacity as the managing member, Viant Technology Inc. will operate and control all of Viant Technology LLC’s business and affairs. We will consolidate the financial results of Viant Technology LLC and will report non-controlling interests (“NCI”) related to the interests held by the continuing members of Viant Technology LLC in our consolidated financial statements. The membership interests of Viant Technology LLC owned by us will be classified as Class A units and the remaining approximately 14.8% of Viant Technology LLC units (or 17.0% if the underwriters exercise their option to purchase additional shares of Class A common stock from the selling stockholders in full), which will continue to be held by the current members of Viant Technology LLC, including the Vanderhook Parties and the Equity Plan LLC, will be classified as Class B units. Viant Technology Inc. consolidates Viant Technology LLC due to Viant Technology Inc.’s power to control Viant Technology LLC, making it the primary beneficiary and sole managing member of the variable interest entity.

Pursuant to the Viant Technology LLC Agreement, each Class B unit will be exchangeable for one share of Viant Technology Inc.’s Class A common stock or, at Viant Technology Inc.’s election, for cash. The exchange ratio is subject to appropriate adjustment by Viant Technology Inc. in the event Class A units are issued to Viant Technology Inc. without issuance of a corresponding number of shares of Class A common stock or in the event of certain reclassifications, reorganizations, recapitalizations or similar transactions. Any beneficial holder exchanging Class B units must ensure that the applicable corresponding number of shares of Class B common stock are delivered to us for retirement as a condition of exercising its right to exchange Class B units for shares of our Class A common stock or, at our election, for cash. The diagram below illustrates our structure and anticipated ownership immediately after the Reorganization and this offering (assuming no exercise of the underwriters’ option to purchase additional shares) and does not reflect the issuances of awards pursuant to the 2021 LTIP.

 

LOGO

 

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Amounts may not sum to total due to rounding.

 

(1)

At the closing of this offering, the members of Viant Technology LLC other than Viant Technology Inc. will be the Vanderhook Parties and the Equity Plan LLC, all of whom owned preferred or common units of Viant Technology LLC prior to the completion of this offering, and all of whom, in the aggregate, will own 48,935,559 Class B units of Viant Technology LLC and 48,935,559 shares of Class B common stock of Viant Technology Inc. after this offering assuming no exercise of the underwriters’ option to purchase additional shares and 47,660,559 Class B units of Viant Technology Inc. and 47,660,559 shares of Class B common stock if the underwriters exercise their option to purchase additional shares in full.

(2)

Each share of Class A common stock will be entitled to one vote and will vote together with the Class B common stock as a single class, except as provided in our amended and restated certificate of incorporation or as required by law. See “—Voting Rights of Class A Common Stock and Class B Common Stock.”

(3)

Each share of Class B common stock is entitled to one vote and will vote together with the Class A common stock as a single class, except as provided in our amended and restated certificate of incorporation or as required by law. The Class B common stock will not have any economic rights in Viant Technology Inc.

(4)

Viant Technology Inc. will own all of the Class A units of Viant Technology LLC after the Reorganization, which upon the completion of this offering will represent the right to receive approximately 14.8% of the distributions made by Viant Technology LLC assuming no exercise of the underwriters’ option to purchase additional shares and approximately 17.0% of the distributions made by Viant Technology LLC if the underwriters exercise their option to purchase additional shares in full. While this interest represents a minority of economic interests in Viant Technology LLC, it represents 100% of the voting interests, and Viant Technology Inc. will act as the managing member of Viant Technology LLC. As a result, Viant Technology Inc. will operate and control all of Viant Technology LLC’s business and affairs and will be able to consolidate its financial results into Viant Technology Inc.’s financial statements.

(5)

The Class B stockholders will collectively hold all Class B common stock of Viant Technology Inc. outstanding after this offering. They also will collectively hold all Class B units of Viant Technology LLC, which upon the completion of this offering will represent the right to receive approximately 85.2% of the distributions made by Viant Technology LLC assuming no exercise of the underwriters’ option to purchase additional shares and approximately 83.0% of the distributions made by Viant Technology LLC if the underwriters exercise their option to purchase additional shares in full. The Class B stockholders will have no voting rights in Viant Technology LLC on account of the Class B units, except for the right to approve amendments to the Viant Technology LLC Agreement that adversely affect their rights as holders of Class B units. However, through their ownership of shares of Class B common stock, the Class B stockholders will control a majority of the voting power of the common stock of Viant Technology Inc., the managing member of Viant Technology LLC, and will therefore have indirect control over Viant Technology LLC. Class B units may be exchanged for shares of our Class A common stock or, at our election, for cash, subject to certain restrictions pursuant to the Viant Technology LLC Agreement described in “Viant Technology LLC Agreement.” When a Class B stockholder exchanges Class B units for the corresponding number of shares of our Class A common stock or, at our election, for cash, it will result in the automatic cancellation of the corresponding number of shares of our Class B common stock and, therefore, will decrease the aggregate voting power of our Class B stockholders. Any beneficial holder exchanging Class B units must ensure that the applicable corresponding number of shares of Class B common stock are delivered to us for retirement as a condition of exercising its right to exchange Class B units for shares of our Class A common stock or, at our election, for cash.

Subject to the availability of net cash flow at the Viant Technology LLC level, Viant Technology Inc. intends to cause Viant Technology LLC to distribute to Viant Technology Inc. and the other members of Viant Technology LLC pro rata cash distributions for the purposes of funding tax obligations in respect of the taxable income and net capital gain that is allocated to the members of Viant Technology LLC and Viant Technology Inc.’s obligations to make payments under the Tax Receivable Agreement. In addition, Viant Technology LLC will reimburse Viant Technology Inc. for corporate and other overhead expenses.

Assuming Viant Technology LLC makes distributions to its members in any given year, the determination to pay dividends, if any, to our Class A stockholders out of the portion, if any, of such distributions

 

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remaining after our payment of taxes, Tax Receivable Agreement payments and expenses (any such portion, an “excess distribution”) will be made by our board of directors. Because our board of directors may determine to pay or not pay dividends to our Class A stockholders, our Class A stockholders may not necessarily receive dividend distributions relating to our excess distributions, even if Viant Technology LLC makes such distributions to us.

Ownership of Our Businesses

The diagram below summarizes the ownership structure of Viant Technology LLC’s consolidated operations on a fully diluted basis prior to the Reorganization.

 

LOGO

The Viant Technology LLC Agreement

As a result of the Reorganization, Viant Technology Inc. will indirectly control the business through Viant Technology LLC and its consolidated subsidiaries. The operations of Viant Technology LLC, and the rights and obligations of its members, are set forth in the Viant Technology LLC Agreement, a form of which has been filed as an exhibit to the registration statement of which this prospectus forms a part. The following is a description of certain terms of the Viant Technology LLC Agreement.

Classes of Viant Technology LLC Units

Viant Technology LLC will issue Class A units, which will be issued only to Viant Technology Inc., and Class B units. In connection with the closing of this offering, members holding preferred and common units prior to the closing will have such units reclassified into Class B units.

Economic Rights of Partners

Class A units and Class B units will have the same economic rights per unit. After the closing of this offering, the holders of Viant Technology Inc.’s Class A common stock (indirectly through Viant Technology Inc.) and the holders of Class B units of Viant Technology LLC will hold approximately 14.8% and 85.2%, respectively, of the economic interests in Viant Technology Inc.’s business (or 17.0% and 83.0%, respectively, if the underwriters exercise their option to purchase additional shares of Class A common stock in full).

Net profits and net losses of Viant Technology LLC will generally be allocated on a pro rata basis in accordance with the number of units held by such holder; however, under applicable tax rules, Viant Technology

 

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LLC will be required to allocate taxable income disproportionately to its members in certain circumstances. The Viant Technology LLC Agreement will provide for quarterly cash distributions, which we refer to as “tax distributions,” to the holders of the units generally equal to the taxable income allocated to each holder of units (with certain adjustments) multiplied by an assumed tax rate. It is intended that tax distributions by Viant Technology LLC will be made to each of its members in an amount to enable each member to pay all applicable taxes on taxable income allocable to such member. The Viant Technology LLC Agreement will generally require tax distributions to be pro rata based on the ownership of Viant Technology LLC units, however, if the amount of tax distributions to be made exceeds the amount of funds available for distribution, Viant Technology Inc. shall receive a tax distribution calculated using the corporate rate before the other members receive any distribution, and the balance, if any, of funds available for distribution shall be distributed to the other members pro rata in accordance with their assumed tax liabilities (also using the corporate tax rate), and then to all members (including Viant Technology Inc.) pro rata until each member receives the full amount of its tax distribution using the individual tax rate. For a more complete overview of the assumed tax rate calculation, see “—Certain Tax Consequences to Viant Technology Inc.” In addition, Viant Technology LLC will make non-pro rata payments to reimburse Viant Technology Inc. for corporate and other overhead expenses (which payments from Viant Technology LLC will not be treated as distributions under the Viant Technology LLC Agreement). However, Viant Technology LLC may not make distributions or payments to its members if doing so would violate any applicable law or result in Viant Technology LLC or any of its subsidiaries being in default under any material agreement governing indebtedness (which we do not expect to be the case upon the closing of this offering and the Reorganization).

Voting Rights of Partners

After the closing of this offering, Viant Technology Inc. will act as the managing member of Viant Technology LLC. In its capacity as the managing member of Viant Technology LLC, Viant Technology Inc. will control Viant Technology LLC’s business and affairs. Viant Technology LLC will issue Class A units, which will only be issued to Viant Technology Inc., and Class B units. Class B unitholders will have no voting rights in Viant Technology LLC, except for the right to approve amendments to the Viant Technology LLC Agreement that adversely affect their rights as Class B unitholders.

Coordination of Viant Technology Inc. and Viant Technology LLC

Any time Viant Technology Inc. issues a share of its Class A common stock for cash, unless used to settle an exchange of a Class B unit for cash, the net proceeds received by Viant Technology Inc. will be promptly transferred to Viant Technology LLC, and Viant Technology LLC will issue to Viant Technology Inc. a Class A unit. If at any time Viant Technology Inc. issues a share of its Class A common stock upon an exchange of a Class B unit or settles such exchange for cash as described below under “—Exchange Rights,” Viant Technology Inc. will contribute the exchanged unit to Viant Technology LLC and Viant Technology LLC will issue to Viant Technology Inc. a Class A unit. In the event that Viant Technology Inc. issues other classes or series of its equity securities (other than pursuant to our incentive compensation plans), Viant Technology LLC will issue to Viant Technology Inc. an equal amount of equity securities of Viant Technology LLC with designations, preferences and other rights and terms that are substantially the same as Viant Technology Inc.’s newly issued equity securities. If at any time Viant Technology Inc. issues a share of its Class A common stock pursuant to our 2021 LTIP or other equity plan, Viant Technology Inc. will contribute to Viant Technology LLC all of the proceeds that it receives (if any) and Viant Technology LLC will issue to Viant Technology Inc. an equal number of its Class A units, having the same restrictions, if any, as are attached to the shares of Class A common stock issued under the plan. If Viant Technology Inc. repurchases, redeems or retires any shares of its Class A common stock (or its equity securities of other classes or series), Viant Technology LLC will, immediately prior to such repurchase, redemption or retirement, repurchase, redeem or retire an equal number of Class A units (or its equity securities of the corresponding classes or series) held by Viant Technology Inc., upon the same terms and for the same consideration, as the shares of our Class A common stock (or our equity securities of such other classes or series) are repurchased, redeemed or retired. In addition, Viant Technology

 

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LLC units, as well as Viant Technology Inc.’s common stock, will be subject to equivalent stock splits, dividends, reclassifications and other subdivisions. Viant Technology Inc. will issue additional shares of Class B common stock only to holders of Class B units only in a number necessary to maintain a one-to-one ratio between the number of Class B units and the number of shares of Class B common stock outstanding.

Issuances and Transfer of Viant Technology LLC Units

Class A units will be issued only to Viant Technology Inc. and are non-transferable except as provided in the Viant Technology LLC Agreement. Class B units will be issued in connection with the Reorganization as described herein and may be issued pursuant to the Viant Technology LLC Agreement, provided that a corresponding number of shares of Class B common stock is issued to the holder of such Class B units. Class B units may not be transferred, except with Viant Technology Inc.’s consent or to a permitted transferee, subject to such conditions as Viant Technology Inc. may specify. In addition, Class B unitholders may not transfer any Class B units to any person unless he, she or it transfers an equal number of shares of Viant Technology Inc.’s Class B common stock to the same transferee.

Under the Viant Technology LLC Agreement, Viant Technology Inc. can require the holders of Class B units to sell all of their interests in Viant Technology LLC in the event of certain acquisitions of Viant Technology LLC.

Certain Tax Consequences to Viant Technology Inc.

The holders of Viant Technology LLC units, including Viant Technology Inc., generally will incur U.S. federal, state and local income taxes on their proportionate share of any net taxable income of Viant Technology LLC. Net income and net losses of Viant Technology LLC generally will be allocated to its members pro rata in proportion to their respective membership units, though certain non-pro rata adjustments will be made to reflect depreciation, amortization and other allocations. In accordance with the Viant Technology LLC Agreement, we intend to cause Viant Technology LLC to make distributions to each of its members, including Viant Technology Inc., in an amount intended to enable each member to pay all applicable taxes on taxable income allocable to such member, and to make non-pro rata payments to Viant Technology Inc. to reimburse it for corporate and other overhead expenses (which payments from Viant Technology LLC will not be treated as distributions under the Viant Technology LLC Agreement). If the amount of tax distributions to be made exceeds the amount of funds available for distribution, Viant Technology Inc. shall receive a tax distribution calculated using the corporate rate before the other members receive any distribution, and the balance, if any, of funds available for distribution shall be distributed first to the other members pro rata in accordance with their assumed tax liabilities (also using the corporate tax rate), and then to all members (including Viant Technology Inc.) pro rata until each member receives the full amount of its tax distribution using the individual tax rate. Generally, these tax distributions will be computed based on our estimate of the net taxable income of Viant Technology LLC allocable per unit (based on the member which is allocated the largest amount of taxable income on a per unit basis) multiplied by an assumed tax rate equal to the highest combined U.S. federal and applicable state and local tax rate applicable to any natural person residing in, or corporation doing business in Los Angeles, California that is taxable on that income (taking into account certain other assumptions, and subject to adjustment to the extent that state and local taxes are deductible for U.S. federal income tax purposes).

Viant Technology LLC will have in effect an election under Section 754 of the Code for the taxable year of the offering and each taxable year in which an exchange of Class B units for shares of our Class A common stock occurs. As a result of this election, the exchanges of Class B units for shares of our Class A common stock, are expected to result in increases in the tax basis of the tangible and intangible assets of Viant Technology LLC, which will be allocated to Viant Technology Inc. and are expected to increase the tax depreciation and amortization deductions available to Viant Technology Inc. and decrease gains, or increase losses, on a sale or other taxable disposition, if any, of such assets and therefore may reduce the amount of tax that Viant Technology Inc. would otherwise be required to pay.

 

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Voting Rights of Class A Common Stock and Class B Common Stock

Except as provided in our amended and restated certificate of incorporation or as required by applicable law, holders of Class A common stock and Class B common stock vote together as a single class. Pursuant to our amended and restated certificate of incorporation, we may not amend, alter, repeal or waive the provisions of our amended and restated certificate of incorporation that relate to the terms of our capital stock without the approval of the holders of a majority of the then outstanding shares of our Class B common stock, voting as a class. Holders of the Class A common stock and Class B common stock, as the case may be, would also have a separate class vote if we subdivide, combine or reclassify shares of the other class without concurrently subdividing, combining or reclassifying shares of such class in a proportional manner. Pursuant to the Delaware General Corporation Law (the “DGCL”), the holders of the outstanding shares of a class shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would increase or decrease the par value of the shares of such class or alter or change the powers, preferences, or special rights of the shares of such class so as to affect them adversely. Each share of our Class A common stock and our Class B common stock will entitle its holder to one vote per share.

Immediately after this offering, our Class B stockholders will collectively hold approximately 85.2% of the combined voting power of our common stock (or 83.0% if the underwriters exercise their option to purchase additional shares in full). When a Class B stockholder exchanges Class B units for the corresponding number of shares of our Class A common stock or, at our election, for cash, it will result in the automatic cancellation of the corresponding number of shares of our Class B common stock and, therefore, will decrease the aggregate voting power of our Class B stockholders.

Exchange Rights

The Viant Technology LLC Agreement will entitle certain of its members (and certain permitted transferees thereof) to exchange their Class B units, together with an equal number of shares of Class B common stock, for shares of Class A common stock on a one-for-one basis or, at our election, for cash. The exchange ratio is subject to appropriate adjustment by Viant Technology Inc. in the event Class A units are issued to Viant Technology Inc. without issuance of a corresponding number of shares of Class A common stock or in the event of certain reclassifications, reorganizations, recapitalizations or similar transactions.

The Viant Technology LLC Agreement will provide that an owner will not have the right to exchange Class B units if we determine that such exchange would be prohibited by law or regulation or would violate other agreements with the Company, Viant Technology LLC or any of their subsidiaries to which Viant Technology LLC unitholder is subject. We intend to impose additional restrictions on exchanges that we determine to be necessary or advisable so that Viant Technology LLC is not treated as a “publicly traded partnership” for U.S. federal income tax purposes.

The Viant Technology LLC Agreement also provides for mandatory exchanges under certain circumstances, including at the option of Viant Technology Inc. if the number of units outstanding (other than those held by Viant Technology Inc.) is less than a minimum percentage and in the discretion of Viant Technology Inc. with the consent of holders of at least 50% of the outstanding Class B units.

Any beneficial holder exchanging Class B units must ensure that the applicable corresponding number of shares of Class B common stock are delivered to us for retirement as a condition of exercising its right to exchange Class B units for shares of our Class A common stock or, at our election, for cash.

Shares of Class B common stock retired upon an exchange will be restored to the status of authorized but unissued shares of Class B common stock.

 

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Registration Rights Agreement

Prior to the consummation of this offering, we intend to enter into the Registration Rights Agreement with the Vanderhook Parties and the Equity Plan LLC. This agreement will provide these holders with certain registration rights whereby, at any time following the lockup restrictions described in this prospectus, they will have the right to require us to register under the Securities Act the shares of Class A common stock issuable upon exchange of Class B units. The Registration Rights Agreement will also provide for piggyback registration rights for the holders party thereto, subject to certain conditions and exceptions.

 

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USE OF PROCEEDS

We estimate that our net proceeds from this offering, based on an assumed initial public offering price of $23.00 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), after deducting estimated underwriting discounts and commissions but before deducting expenses of this offering and the Reorganization payable by us, will be approximately $181.8 million. We will not receive any proceeds from any sale of shares of Class A common stock by the selling stockholders in the event the underwriters exercise their option to purchase additional shares of Class A common stock.

Each $1.00 increase or decrease in the assumed initial public offering price of $23.00 per share of Class A common stock would increase or decrease the net proceeds to us from this offering by approximately $7.9 million, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions but before deducting expenses of this offering and the Reorganization payable by us. Similarly, each increase or decrease of one million in the number of shares of Class A common stock offered by us would increase or decrease the net proceeds to us from this offering by approximately $21.4 million, assuming no change in the assumed initial public offering price of $23.00 per share and after deducting estimated underwriting discounts and commissions but before deducting expenses of this offering and the Reorganization payable by us.

The principal purposes of this offering are to increase our financial flexibility, create a public market for our Class A common stock, and facilitate our future access to the capital markets. We intend to use a portion of the net proceeds from this offering to purchase newly issued Viant Technology LLC units, at a per-unit price equal to the per-share price paid by the underwriters for shares of our Class A common stock in this offering.

Additionally, we intend to cause Viant Technology LLC to use approximately $4 million of the net proceeds to pay the expenses incurred by us in connection with this offering and the Reorganization.

Although we have not yet determined with certainty the manner in which we will allocate the net proceeds of this offering, we expect to cause Viant Technology LLC to use the remaining net proceeds for working capital and other general corporate purposes, including potential future acquisition of, or investment in, technologies or businesses that complement our business. We have no present commitments or agreements to enter into any such acquisitions or make any such investments.

The expected use of net proceeds from this offering represents our intentions based upon our present plans and business conditions. We cannot predict with certainty all of the particular uses for the proceeds of this offering or the amounts that we will actually spend on the uses set forth above. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business. Pending their use, we intend to invest the net proceeds of this offering in a variety of capital-preservation investments, including short- and intermediate-term, interest-bearing, investment-grade securities.

 

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DIVIDEND POLICY

We have no present intention to pay cash dividends on our common stock. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, restrictions in our existing and any future debt and other factors that our board of directors deems relevant.

Following the Reorganization and this offering, Viant Technology Inc. will be a holding company and its sole asset will be ownership of the Class A common stock of Viant Technology LLC, of which it will be the managing member. Subject to funds being legally available, we intend to cause Viant Technology LLC to make distributions to each of its members, including Viant Technology Inc., in an amount intended to enable each member to pay all applicable taxes on taxable income allocable to such member and to allow Viant Technology Inc. to make payments under the Tax Receivable Agreement, and non-pro rata payments to Viant Technology Inc. to reimburse it for corporate and other overhead expenses. If the amount of tax distributions to be made exceeds the amount of funds available for distribution, Viant Technology Inc. shall receive the full amount of its tax distribution before the other members receive any distribution and the balance, if any, of funds available for distribution shall be distributed to the other members pro rata in accordance with their assumed tax liabilities. Holders of our Class B common stock will not be entitled to dividends distributed by Viant Technology Inc., but will share in the distributions made by Viant Technology LLC on a pro rata basis.

To the extent that the tax distributions Viant Technology Inc. receives exceed the amounts Viant Technology Inc. actually requires to pay taxes and other expenses and make payments under the Tax Receivable Agreement (because of the lower tax rate applicable to Viant Technology Inc. than the assumed tax rate on which such distributions are based or because a disproportionate share of the taxable income of Viant Technology LLC may be required to be allocated to members in Viant Technology LLC other than Viant Technology Inc.), our board of directors, in its sole discretion, will make any determination from time to time with respect to the use of any such excess cash so accumulated, including potentially causing Viant Technology Inc. to contribute such excess cash (net of any operating expenses) to Viant Technology LLC. Concurrently with any potential contribution of such excess cash, in order to maintain the intended economic relationship between the shares of Class A common stock and Viant Technology LLC units after accounting for such contribution, Viant Technology LLC and Viant Technology Inc., as applicable, may undertake ameliorative actions, which may include reverse splits, reclassifications, combinations, subdivisions or adjustments of outstanding units of Viant Technology LLC and corresponding shares of Class A common stock of Viant Technology Inc., as well as corresponding adjustments to the shares of Class B common stock of Viant Technology Inc. To the extent that Viant Technology Inc. contributes such excess cash to Viant Technology LLC (and undertakes such ameliorative actions), a holder of Class A common stock would not receive distributions in cash and would instead benefit through an increase in the indirect ownership interest in Viant Technology LLC represented by such holder’s Class A common stock. To the extent that Viant Technology Inc. does not distribute such excess cash as dividends on the Class A common stock or otherwise undertake such ameliorative actions and instead, for example, holds such cash balances, the members of Viant Technology LLC (not including Viant Technology Inc.) may benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following an exchange of their Class B units for shares of the Class A common stock, notwithstanding that such members may previously have participated as holders of Class B units in distributions by Viant Technology LLC that resulted in such excess cash balances at Viant Technology Inc.

 

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CAPITALIZATION

The following table sets forth the cash and capitalization as of September 30, 2020 of Viant Technology LLC on a historical basis and Viant Technology Inc. on a pro forma basis to give effect to the Reorganization and the issuance and sale of shares of Class A common stock in this offering at an assumed initial public offering price of $23.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after (i) deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and (ii) the application of the proceeds from this offering, as described under “Use of Proceeds.”

You should read this information together with the information in this prospectus under “Selected Historical Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Capital Stock,” and with the consolidated financial statements and the related notes to those statements included elsewhere in this prospectus.

 

    

As of September 30, 2020

 
(in millions, except per share amounts and unit data)   

Historical
Viant
Technology
LLC

    

Pro Forma
Viant
Technology
Inc.

 

Cash:

   $ 13.5      $ 191.4  
  

 

 

    

 

 

 

Debt:

     

Revolving Line of Credit

     17.5        17.5  

PPP Loan

     6.0        6.0  
  

 

 

    

 

 

 

Total debt

   $ 23.5      $ 23.5  

Convertible preferred units:

     

2019 convertible preferred units, no par value (600,000 units authorized, issued and outstanding, actual; no units authorized, issued and outstanding, pro forma)

   $ 7.5      $ —    

Members’ equity – Viant Technology LLC

     

Common units, no par value (400,000 units authorized, issued and outstanding, actual; no units authorized, issued and outstanding, pro forma)

     —          —    

Total members’ equity

     19.8        —    

Stockholders’ equity – Viant Technology Inc.

     

Preferred Stock, $0.001 par value (no shares authorized, issued and outstanding, actual; 10,000,000 shares authorized, no shares issued and outstanding, pro forma)

     —          —    

Class A common stock, $0.001 par value (no shares authorized, issued and outstanding, actual; 450,000,000 shares authorized, 8,500,000 shares issued and outstanding, pro forma)

     —          —    

Class B common stock $0.001 par value (no shares authorized, issued and outstanding, actual; 150,000,000 shares authorized, 48,935,559 shares issued and outstanding, pro forma)

     —          0.1  

Additional paid-in capital

     —          30.1  
  

 

 

    

 

 

 

Total stockholders’ equity attributable to Viant Technology Inc.

     —          30.2  

Non-controlling interests

     —          174.9  
  

 

 

    

 

 

 

Total equity

     27.3        205.1  
  

 

 

    

 

 

 

Total capitalization

   $ 50.8      $ 228.6  
  

 

 

    

 

 

 

The above table does not include:

 

   

1,275,000 shares of Class A common stock that would be outstanding upon exercise of the underwriters’ option to purchase additional shares of Class A common stock from the selling stockholders;

 

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11,487,112 shares of Class A common stock issuable under the 2021 LTIP, including:

 

  (i)

6,151,357 shares of Class A common stock underlying restricted stock units or other awards to be granted to certain employees pursuant to the 2021 LTIP immediately after the closing of this offering in connection with our Phantom Unit Plan, of which 2,171,546 will vest upon expiration of the 180 day lock-up period referred to under the heading “Shares Eligible for Future Sale—Lock-Up Agreements” and the remainder of which will vest over time. This number of shares is based on an offering price of $23.00 per share and the final numbers will be calculated based on the final offering price. For example, each $1.00 increase or decrease in the assumed initial public offering price of $23.00 per share would increase or decrease this number of shares by approximately 0.4%; and

 

  (ii)

5,335,755 additional shares of Class A common stock to be reserved for future issuance of awards under the 2021 LTIP, of which 26,088 are expected to be granted to certain non-employee directors upon consummation of this offering; and

 

   

48,935,559 shares of Class A common stock reserved for issuance upon exchange of the Class B units of Viant Technology LLC (or 47,660,559 shares if the underwriters exercise their option to purchase additional shares of Class A common stock in full) (and corresponding shares of Class B common stock) that will be outstanding immediately after this offering.

 

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DILUTION

If you invest in our Class A common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma net tangible book value per share of our Class A common stock immediately after the completion of this offering. Dilution results from the fact that the per share offering price of the Class A common stock is substantially in excess of the book value per share attributable to the existing equity holders.

Our pro forma net tangible book value as of September 30, 2020 was approximately $11.5 million, or $1.35 per share of our Class A common stock. Pro forma net tangible book value represents the amount of total tangible assets less total liabilities, and pro forma net tangible book value per share represents pro forma net tangible book value divided by the number of shares of Class A common stock outstanding, after giving effect to the Reorganization and assuming that all of the Class B unitholders exchanged their Class B units outstanding immediately following the completion of the Reorganization and this offering for newly issued shares of our Class A common stock on a one-for-one basis as if such units were immediately exchangeable.

 

(in millions)

      

Pro forma assets

   $ 286.2  

Pro forma liabilities

     81.1  
  

 

 

 

Pro forma book value

   $ 205.1  

Less:

  

Goodwill

     (12.4

Intangible assets, net

     (3.3
  

 

 

 

Pro forma net tangible book value after this offering

   $ 189.4  

Less:

  

Proceeds from offering net of underwriting discounts

     (181.8

Offering expenses

     3.9  
  

 

 

 

Pro forma net tangible book value as of September 30, 2020

   $ 11.5  
  

 

 

 

After giving effect to (i) the Reorganization, (ii) the issuance and sale by us of 8,500,000 shares of our Class A common stock in this offering at an assumed initial public offering price of $23.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses payable by us and assuming the exchange of all Class B units outstanding immediately following the completion of the Reorganization and this offering for shares of our Class A common stock as if such units were immediately exchangeable; and (iii) the application of such proceeds as described in the section entitled “Use of Proceeds,” our net tangible book value, our pro forma net tangible book value as of September 30, 2020 would have been $189.4 million, or $3.30 per share. This represents an immediate increase in pro forma net tangible book value of $1.95 per share to existing equity holders and an immediate dilution in net tangible book value of $19.70 per share to new investors.

The following table illustrates this dilution on a per share basis assuming the underwriters do not exercise their option to purchase additional shares:

 

Assumed initial public offering price per share

      $ 23.00  

Pro forma net tangible book value per share of Class A common stock as of September 30, 2020

   $ 1.35     

Increase in pro forma net tangible book value per share attributable to new investors

   $ 1.95     
  

 

 

    

Pro forma net tangible book value per share after the offering

      $ 3.30  
     

 

 

 

Dilution in pro forma net tangible book value per share to new investors

      $ 19.70  
     

 

 

 

 

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The information in the preceding table is based on an assumed offering price of $23.00 per share, the midpoint of the price range set forth on the cover page of this prospectus. A $1.00 increase or decrease in the assumed price per share would increase or decrease, respectively, the pro forma net tangible book value after this offering by approximately $7.9 million and increase or decrease the dilution per share of Class A common stock to new investors in this offering by $0.86 per share, in each case calculated as described above and assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. Similarly, each increase or decrease of 1.0 million shares in the number of shares of our Class A common stock offered by us would increase or decrease, as applicable, our pro forma net tangible book value after this offering by approximately $21.4 million and increase or decrease, as applicable, the dilution per share of Class A common stock to new investors in this offering by $0.32 per share, assuming the assumed initial public offering price remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on the same pro forma basis as of September 30, 2020, the total number of shares of Class A common stock purchased from us, the total cash consideration paid to us and the average price per share paid by the existing equity holders and by new investors purchasing shares in this offering, assuming that all of the Class B unitholders exchanged their Class B units for shares of our Class A common stock on a one-for-one basis as if such units were immediately exchangeable.

 

    

Shares purchased(1)

   

Total consideration(2)

   

Average
price
per share

 
    

Number

    

%

   

Number

    

%

 

Existing equity holders

     48,935,559        85.2   $ —          0   $ —    

New investors

     8,500,000        14.8     195,500,000        100   $ 23.00  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     57,435,559        100   $ 195,500,000        100   $ 3.40  

 

(1) 

If the underwriters exercise their option to purchase additional shares from the selling stockholders in full, our existing equity holders would own approximately 83.0% and our new investors would own approximately 17.0% of the total number of shares of our Class A common stock outstanding after this offering.

(2) 

If the underwriters exercise their option to purchase additional shares from the selling stockholders in full, the total consideration paid by our new investors would be approximately $224,825,000 (or 100%).

The above table does not include:

 

   

1,275,000 shares of Class A common stock that would be outstanding upon exercise of the underwriters’ option to purchase additional shares of Class A common stock from the selling stockholders;

 

   

11,487,112 shares of Class A common stock issuable under the 2021 LTIP, including:

 

  (i)

6,151,357 shares of Class A common stock underlying restricted stock units or other awards to be granted to certain employees pursuant to the 2021 LTIP immediately after the closing of this offering in connection with our Phantom Unit Plan, of which 2,171,546 will vest upon expiration of the 180 day lock-up period referred to under the heading “Shares Eligible for Future Sale—Lock-Up Agreements” and the remainder of which will vest over time. This number of shares is based on an offering price of $23.00 per share and the final numbers will be calculated based on the final offering price. For example, each $1.00 increase or decrease in the assumed initial public offering price of $23.00 per share would increase or decrease this number of shares by approximately 0.4%; and

 

  (ii)

5,335,755 additional shares of Class A common stock to be reserved for future issuance of awards under the 2021 LTIP, of which 26,088 are expected to be granted to certain non-employee directors upon consummation of this offering.

 

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

The following unaudited pro forma consolidated balance sheet as of September 30, 2020 gives pro forma effect to the Reorganization (see transactions described under “Organizational Structure”), the consummation of this offering and our intended use of proceeds therefrom after deducting estimated underwriting discounts and commissions and other costs of this offering (collectively, the “Transactions”), as though such transactions had occurred as of September 30, 2020. The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 present our consolidated results of operations giving pro forma effect to the transactions described above as if they had occurred as of January 1, 2019.

The pro forma adjustments are based on available information and upon assumptions that management believes are reasonable in order to reflect, on a pro forma basis, the effect of these transactions on the historical financial information of Viant Technology LLC. The unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations may not be indicative of the results of operations or financial position that would have occurred had this offering and the related transactions taken place on the dates indicated, or that may be expected to occur in the future. The adjustments are described in the notes to the unaudited pro forma consolidated balance sheet and the unaudited pro forma consolidated statements of operations. The unaudited pro forma consolidated financial information and other data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

The pro forma adjustments in the Reorganization and Offering Adjustments column principally give effect to:

 

   

the Reorganization as described in “Organizational Structure”;

 

   

the issuance of 8,500,000 shares of our Class A common stock to the investors in this offering in exchange for net proceeds of approximately $181,815,000 (based on an assumed initial public offering price of $23.00 per share, the midpoint of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts and commissions but before offering expenses;

 

   

the payment of fees and expenses related to this offering and the application of the net proceeds from the sale of Class A common stock in this offering to purchase Class A units directly from Viant Technology LLC, at a purchase price per Class A unit equal to the initial public offering price per share of Class A common stock less the underwriting discount, with such Class A units representing 14.8% of the outstanding units of Viant Technology LLC; and

 

   

the provision for corporate income taxes on the income of Viant Technology Inc. that will be taxable as a corporation for U.S. federal and state income tax purposes.

Except as otherwise indicated, the unaudited pro forma consolidated financial information presented assumes no exercise by the underwriters of their option to purchase additional shares of Class A common stock from the selling stockholders in the offering.

Viant Technology LLC is considered our predecessor for accounting purposes, and its consolidated financial statements will be our historical financial statements following this offering.

Viant Technology Inc. will enter into the Tax Receivable Agreement for the benefit of the continuing members of Viant Technology LLC (not including Viant Technology Inc.), pursuant to which Viant Technology Inc. will pay them 85% of the amount of the net cash tax savings, if any, that Viant Technology Inc. realizes (or, under certain circumstances, is deemed to realize) as a result of increases in tax basis (and certain other tax

 

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benefits) resulting from Viant Technology Inc.’s acquisition of Viant Technology LLC units from pre-IPO members of Viant Technology LLC in connection with this offering and in future exchanges and any payments Viant Technology Inc. makes under the Tax Receivable Agreement. See “Organizational Structure” and “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

We have not made any pro forma adjustments relating to reporting, compliance and investor relations costs that we will incur as a public company. No pro forma adjustments have been made for these additional expenses as an estimate of such expenses is not determinable.

Viant Technology Inc. intends to terminate the Phantom Unit Plan and grant RSUs pursuant to the 2021 LTIP to employees subsequent to this offering. Approximately 35% of the RSUs will vest at the time of release of the lock-up agreements described under “Shares Eligible for Future Sale—Lock-Up Agreements,” and the unvested portion will vest over time subject to continued employment. This event is not included as an adjustment in the unaudited pro forma consolidated financial information presented below. We expect to record compensation expense of approximately $50 million in the period between the date of grant of such RSUs and the expiration of the lock-up agreement in respect of RSUs that will vest at the time of expiration of the lock-up agreements.

Viant Technology Inc. intends to grant RSUs to Board members in connection with the offering. However, as such amounts are not material to the unaudited pro forma consolidated financial information, we have excluded such transactions from the unaudited pro forma consolidated financial information presented below.

The unaudited pro forma consolidated financial information is included for informational purposes only. The unaudited pro forma consolidated financial information should not be relied upon as being indicative of our results of operations or financial condition had the Transactions, including this offering, occurred on the dates assumed. The unaudited pro forma consolidated financial information also does not project our results of operations or financial position for any future period or date. The unaudited pro forma consolidated statement of operations and balance sheet should be read in conjunction with the “Risk Factors,” “Prospectus Summary—Summary Historical Consolidated Financial Information,” “Selected Historical Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2020

(In millions, except unit and share information)

 

     Viant
Technology
LLC
Historical
     Pro Forma
Reorganization
Adjustments
    As
Adjusted
Before
Offering
    Pro Forma
Offering
Adjustments
       Viant
Technology Inc.

Pro Forma
 

Assets

              

Current assets:

              

Cash

   $ 13.5        $ 13.5     $ 177.9 (1)       $ 191.4  

Accounts receivable, net of allowances

     61.6          61.6            61.6  

Prepaid expenses and other current assets

     3.5                               3.5       (0.5 )(4)         3.0  
  

 

 

    

 

 

   

 

 

   

 

 

      

 

 

 

Total current assets

     78.6        —         78.6       177.4          256.0  

Property, equipment and software, net

     14.0          14.0            14.0  

Intangible assets, net

     3.3          3.3            3.3  

Goodwill

     12.4          12.4            12.4  

Deferred tax assets(2)(3)

     —            —              —    

Other assets

     0.5          0.5            0.5  
  

 

 

    

 

 

   

 

 

   

 

 

      

 

 

 

Total assets

   $ 108.8        —         108.8     $ 177.4          286.2  
  

 

 

    

 

 

   

 

 

   

 

 

      

 

 

 

 

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     Viant
Technology
LLC
Historical
     Pro Forma
Reorganization
Adjustments
    As
Adjusted
Before
Offering
    Pro Forma
Offering
Adjustments
     Viant
Technology Inc.

Pro Forma
 

Liabilities, convertible preferred units, members’ equity and stockholders’ equity

            

Current liabilities:

            

Accounts payable

   $ 22.3        $ 22.3        $ 22.3  

Accrued liabilities

     16.5          16.5       (0.4 )(1)       16.1  

Accrued compensation

     8.1          8.1          8.1  

Current portion of long-term debt

     1.3          1.3          1.3  

Current portion of deferred revenue

     4.1          4.1          4.1  

Other current liabilities

     2.1          2.1          2.1  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total current liabilities

     54.4        —         54.4       (0.4      54.0  

Long-term debt

     22.2          22.2          22.2  

Long-term portion of deferred revenue

     4.4          4.4          4.4  

Amounts payable pursuant to Tax Receivable Agreement(2)(3)

     —            —            —    

Other long-term liabilities

     0.5          0.5          0.5  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total liabilities

     81.5        —         81.5       (0.4      81.1  

Commitments and contingencies

            

2019 convertible preferred units, no par value (600,000 units authorized, issued and outstanding, actual; no units authorized, issues and outstanding, pro forma)

     7.5        (7.5 )(5)      —            —    

Members’ equity - Viant Technology LLC

            

Common units, no par value (400,000 units authorized, issued and outstanding, actual; no units authorized, issues and outstanding, pro forma)

     —          —   (5)      —            —    

Total members’ equity

     19.8        (19.8 )(5)      —            —    

Stockholders’ equity – Viant Technology Inc.

            

Preferred Stock, $0.001 par value (no shares authorized, issued and outstanding, actual; 10,000,000 shares authorized, no shares issued and outstanding, pro forma)

     —            —         —          —    

Class A common stock, $0.001 par value (no shares authorized, issued and outstanding, actual; 450,000,000 shares authorized, 8,500,000 shares issued and outstanding, pro forma)

     —            —         —   (6)       —    

Class B common stock, $0.001 par value (no shares authorized, issued and outstanding, actual; 150,000,000 shares authorized, 48,935,559 shares issued and outstanding, pro forma)

     —            —         0.1 (6)       0.1  

Additional paid-in capital

     —          4.0 (6)      4.0       26.1 (4), (6)       30.1  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total stockholders’ equity attributable to Viant Technology Inc.

     —          4.0       4.0       26.2        30.2  

Non-controlling interests

     —          23.3 (5)      23.3       151.6 (5)       174.9  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total convertible preferred units, members’ equity and stockholders’ equity

     27.3        —         27.3       177.8        205.1  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total liabilities, convertible preferred units and equity

   $ 108.8      $ —       $ 108.8       177.4        286.2  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

See accompanying notes to unaudited pro forma consolidated balance sheet.

 

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Notes to Unaudited Pro Forma Consolidated Balance Sheet

 

(1) 

Reflects the net effect on cash of the receipt of offering proceeds to us of $181.8 million, based on the sale of 8.5 million shares of Class A common stock at an assumed initial public offering price of $23.00 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), after deducting the estimated underwriting discounts and commissions.

A reconciliation of the gross proceeds from this offering to the net cash proceeds to Viant Technology LLC is set forth below:

 

     Pro Form
Offering
Adjustments
 

Gross proceeds from offering of Class A common stock

   $     195.5  

Payment of underwriting discounts and commissions

     (13.7
  

 

 

 

Cash proceeds received by Viant Technology Inc.

     181.8  

Estimated offering costs, exclusive of $0.5 million previously deferred in our historical financial statements(6)

     (3.5

Unpaid portion of $0.5 million previously capitalized offering costs

     (0.4
  

 

 

 

Net cash proceeds to Viant Technology LLC

   $ 177.9 (1) 
  

 

 

 

 

(2) 

As described in greater detail under “Organizational Structure” and “Certain Relationships and Related Person Transactions—Tax Receivable Agreement,” in connection with the completion of this offering, we will enter into the Tax Receivable Agreement with continuing members of Viant Technology LLC, which will provide for the payment by Viant Technology Inc. to certain continuing members of Viant Technology LLC (not including Viant Technology Inc.) of 85% of the amount of the net cash tax savings, if any, that Viant Technology Inc. realizes, or under certain circumstances is deemed to realize, resulting from (1) Viant Technology Inc.’s acquisition of such continuing member’s Viant Technology LLC units in connection with this offering and in future exchanges and (2) any payments Viant Technology Inc. makes under the Tax Receivable Agreement (including tax benefits related to imputed interest).

 

(3) 

Due to the uncertainty in the amount and timing of future exchanges of Viant Technology LLC units by the continuing members of Viant Technology LLC, and the uncertainty of when those exchanges will ultimately result in tax savings, the unaudited pro forma consolidated financial information assumes that no exchanges of Viant Technology LLC units have occurred and therefore no increases in tax basis in Viant Technology Inc.’s assets or other tax benefits that may be realized thereunder have been assumed in the unaudited pro forma consolidated financial information. Up to 1,275,000 Viant Technology LLC units may be exchanged for shares of Class A common stock in the event the underwriters exercise their option to purchase additional shares of Class A common stock. If all of the continuing members were to exchange their Viant Technology LLC units, we would recognize a deferred tax asset of approximately $350.0 million and a liability of approximately $297.5 million, assuming (i) that the continuing members redeemed or exchanged all of their Viant Technology LLC units immediately after the completion of this offering at an assumed initial public offering price of $23.00 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), (ii) no material changes in relevant tax law, (iii) a constant combined effective income tax rate of 25.0% and (iv) that we have sufficient taxable income in each year to realize on a current basis the increased depreciation, amortization and other tax benefits that are the subject of the Tax Receivable Agreement. These amounts are estimates and have been prepared for informational purposes only. The actual amount of deferred tax assets and related liabilities that we will recognize will differ based on, among other things, the timing of the exchanges, the price of shares of our Class A common stock at the time of the exchange and the tax rates then in effect.

 

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We will hold an economic interest of 14.8% in Viant Technology LLC subsequent to the Reorganization and this offering. The 85.2% interest that we do not own represents a non-controlling interest for financial reporting purposes. Viant Technology LLC has been and will continue to be treated as a partnership for U.S. federal and state income tax purposes. Following the Transactions, Viant Technology Inc. will be subject to United States federal income taxes, in addition to state and local taxes, with respect to our allocable share of any net taxable income generated by Viant Technology LLC.

 

    

As a result of this offering, we recorded a deferred tax asset of $39.1 million in the unaudited pro forma consolidated balance sheet as of September 30, 2020, as a result of the difference between the financial reporting value and the tax basis of Viant Technology Inc.’s investment in Viant Technology LLC. The Company analyzes the likelihood that its deferred tax assets will be realized. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not that some portion, or all, of a deferred tax asset related to acquiring its interest in Viant Technology LLC through newly issued LLC units is not expected to be realized unless the Company disposes of its investment in Viant Technology LLC. Viant Technology Inc. has recognized a valuation allowance of $39.1 million against the deferred tax asset (resulting in a net deferred tax asset of zero) which is considered capital in nature as it was not more likely than not that this portion of deferred tax assets would be realized.

 

    

As of September 30, 2020, we did not have any material net operating loss or credit carryforwards.

 

(4) 

Reflects deferred costs associated with this offering, including certain legal, accounting and other related costs, which have been recorded in prepaid expenses and other current assets on the consolidated balance sheet. Upon completion of this offering, these deferred costs will be charged against the proceeds from this offering with a corresponding reduction to additional paid-in capital.

 

(5) 

Upon completion of the Transactions, we will become the sole managing member of Viant Technology LLC. Although we will have a minority economic interest in Viant Technology LLC, we will have the power to control the management of Viant Technology LLC. As a result, we will consolidate the financial results of Viant Technology LLC and will report non-controlling interests related to the interests in Viant Technology LLC held by the continuing members on our consolidated balance sheet. Immediately following the Transactions, the economic interests held by the non-controlling interests will be approximately 85.2%. If the underwriters were to exercise their option to purchase additional shares of our Class A common stock from the selling stockholders in full, the economic interests held by the non-controlling interests would be approximately 83.0%. Through their ownership of shares of Class B common stock, the Class B stockholders will control a majority of the voting power of the common stock of Viant Technology Inc., the managing member of Viant Technology LLC, and will therefore have indirect control over Viant Technology LLC.

 

(6) 

The components of increase to additional paid-in capital as a result of the amounts allocable to Viant Technology Inc. from net proceeds of this offering are set forth below:

 

     Pro Forma
Reorganization
Adjustments
    Pro Forma
Offering
Adjustments
    Viant Technology Inc.
Pro Forma
 

Reclassification of members’ equity and convertible preferred units

   $ 27.3     $ —       $ 27.3  

Proceeds from offering net of underwriting discounts

     —         181.8       181.8  

Payment of estimated offering costs, exclusive of $0.5 million previously paid in our historical financial statements

     —         (3.5     (3.5

Transaction costs incurred prior to this offering deferred as prepaid expenses and other current assets(4)

     —         (0.5     (0.5

Par value of Class A common stock

     —         —         —    

Par value of Class B common stock

     —         (0.1     (0.1

Non-controlling interests

     (23.3     (151.6     (174.9
  

 

 

   

 

 

   

 

 

 

Additional paid-in capital

   $ 4.0  (6)    $ 26.1  (6)    $ 30.1  (6) 
  

 

 

   

 

 

   

 

 

 

 

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Unaudited Pro Forma Consolidated Statement of Operations for the Nine Months ended September 30, 2020

(In millions, except unit and share information)

 

     Viant Technology LLC
Historical
     Pro Forma
Offering
Adjustments
    Viant Technology Inc.
Pro Forma
 

Revenue

   $ 108.8          108.8  

Operating expenses:

       

Platform operations

     62.3          62.3  

Sales and marketing

     19.4          19.4  

Technology and development

     6.1          6.1  

General and administrative

     12.4          12.4  
  

 

 

    

 

 

   

 

 

 

Total operating expenses

     100.2        —         100.2  
  

 

 

    

 

 

   

 

 

 

Income from operations

     8.6          8.6  

Interest expense, net

     0.8          0.8  

Other income, net

     —            —    
  

 

 

    

 

 

   

 

 

 

Total other expense, net

     0.8        —         0.8  
  

 

 

    

 

 

   

 

 

 

Income before provision for income taxes

     7.8          7.8  

Provision for income taxes

     —          0.3  (1)      0.3  
  

 

 

    

 

 

   

 

 

 

Net income

   $ 7.8      $ (0.3   $ 7.5  
  

 

 

    

 

 

   

 

 

 

Less: Net income attributable to non-controlling interests

     —          6.6  (2)      6.6  
  

 

 

    

 

 

   

 

 

 

Net income attributable to Viant Technology Inc.

   $ 7.8      $ (6.9   $ 0.9  
  

 

 

    

 

 

   

 

 

 

Earnings per unit/share:

       

Basic

   $ 7.78        $ 0.11  (3) 

Diluted

   $ 7.78        $ 0.11  (3) 

Weighted-average units/shares outstanding (in thousands):

       

Basic

     400          8,500  (3) 

Diluted

     1,000          8,500  (3) 

See accompanying notes to unaudited pro forma consolidated statements of operations.

 

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Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2019

(In millions, except unit and share information)

 

     Viant Technology LLC
Historical
    Pro Forma Offering
Adjustments
    Viant Technology Inc.
Pro Forma
 

Revenue

   $ 164.9         164.9  

Operating expenses:

      

Platform operations

     94.1         94.1  

Sales and marketing

     29.0         29.0  

Technology and development

     9.2         9.2  

General and administrative

     19.8         19.8  
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     152.1       —         152.1  
  

 

 

   

 

 

   

 

 

 

Income from operations

     12.8         12.8  

Interest expense, net

     4.0         4.0  

Other income, net

     (1.1       (1.1
  

 

 

   

 

 

   

 

 

 

Total other expense, net

     2.9       —         2.9  
  

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

     9.9         9.9  

Provision for income taxes

     —         0.7  (1)      0.7  
  

 

 

   

 

 

   

 

 

 

Net income

   $ 9.9     $ (0.7   $ 9.2  
  

 

 

   

 

 

   

 

 

 

Less: Net income attributable to non-controlling interests

     —         8.4  (2)      8.4  
  

 

 

   

 

 

   

 

 

 

Net income attributable to Viant Technology Inc.

   $ 9.9     $ (9.1   $ 0.8  
  

 

 

   

 

 

   

 

 

 

Earnings per unit/share:

      

Basic

   $ 31.31       $ 0.09  (3) 

Diluted

   $ 27.37       $ 0.09  (3) 

Weighted-average units/shares outstanding (in thousands):

      

Basic

     274         8,500  (3) 

Diluted

     1,000         8,500  (3) 

See accompanying notes to unaudited pro forma consolidated statements of operations.

Notes to Unaudited Pro Forma Consolidated Statements of Operations

 

(1) 

Following the Transactions, we will be subject to United States federal income taxes, in addition to state and local taxes, with respect to our allocable share of any net taxable income of Viant Technology LLC. As a result, the unaudited pro forma consolidated statements of operations reflect adjustments to our income tax expense of $0.7 million for the year ended December 31, 2019 and $0.3 million for the nine months ended September 30, 2020.

 

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The following table sets forth the computation of pro forma effective tax rate for the periods presented:

 

     Year Ended
December 31,
2019
    Nine Months
Ended
September 30,
2020
 

Federal statutory rate

     21.0     21.0

State tax, net of federal effect

     1.4     0.9

Income attributable to non-controlling interests

     (17.9 )%      (17.9 )% 

Other

     2.2     0.3
  

 

 

   

 

 

 

Pro forma effective tax rate

     6.7     4.3
  

 

 

   

 

 

 

 

(2) 

Following the Transactions, we will become the managing member of Viant Technology LLC. We will own 14.8% of the economic interest in Viant Technology LLC assuming no exercise of the underwriters’ option to purchase additional shares, but will have the power to control the management of Viant Technology LLC. The continuing members will own the remaining 85.2% of the economic interest in Viant Technology LLC, which will be accounted for as non-controlling interests in our future consolidated financial results. Through their ownership of shares of Class B common stock, the Class B stockholders will control a majority of the voting power of the common stock of Viant Technology Inc., the managing member of Viant Technology LLC, and will therefore have indirect control over Viant Technology LLC.

 

(3) 

Pro forma basic and diluted earnings per share is computed by dividing the net income attributable to holders of Class A common stock by the weighted-average shares of Class A common stock outstanding during the period. Shares of Class B common stock do not participate in the earnings of Viant Technology Inc. As a result, the shares of Class B common stock are not considered participating securities and are not included in the weighted average shares outstanding for purposes of computing pro forma earnings per share. The weighted-average shares of Class A common stock outstanding do not include RSUs that we expect to grant in connection with this offering.

The following table sets forth a reconciliation of the numerators and denominators used to compute pro forma basic and diluted earnings per share of Class A common stock (amounts in millions except for share counts, which are in thousands):

 

     Viant Technology Inc. Pro Forma  
     Year Ended
December 31, 2019
     Nine Months Ended
September 30, 2020
 

Numerator

     

Pro forma net income

   $ 9.2      $ 7.5  

Less: Pro forma net income attributable to non-controlling interests

     8.4        6.6  
  

 

 

    

 

 

 

Pro forma net income attributable to Viant Technology, Inc.

   $ 0.8      $ 0.9  
  

 

 

    

 

 

 

Denominator

     

Shares of Class A common stock issued in connection with this offering

     8,500        8,500  
  

 

 

    

 

 

 

Pro forma weighted-average shares of Class A common stock outstanding—basic

     8,500        8,500  
  

 

 

    

 

 

 

Effect of dilutive securities

     —          —    
  

 

 

    

 

 

 

Pro forma weighted-average shares of Class A common stock outstanding—diluted

     8,500        8,500  
  

 

 

    

 

 

 

Pro forma earnings per share of Class A common stock—basic

   $ 0.09      $ 0.11  
  

 

 

    

 

 

 

Pro forma earnings per share of Class A common stock—diluted

   $ 0.09      $ 0.11  
  

 

 

    

 

 

 

 

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     Viant Technology Inc. Pro Forma  
     Year Ended
December 31, 2019
     Nine Months Ended
September 30, 2020
 

Anti-dilutive shares excluded from pro forma earnings per shares of Class A common stock—diluted:

     

Shares of Class B common stock issued in connection with this offering

     48,936        48,936  
  

 

 

    

 

 

 

Total shares excluded from pro forma earnings per share of Class A common stock—diluted

     48,936        48,936  
  

 

 

    

 

 

 

Shares of our Class B common stock do not share in the earnings or losses of Viant Technology Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. Shares of our Class B common stock are, however, considered potentially dilutive shares of Class A common stock. Amounts have been excluded from the computations of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive under the if-converted and two-class methods.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth selected financial information and other data of Viant Technology LLC on a historical basis. Viant Technology LLC is considered our predecessor for accounting purposes and its consolidated financial statements will be our historical financial statements following this offering. The following selected consolidated statement of operations data for the years ended December 31, 2018 and 2019 and the selected consolidated balance sheet data as of December 31, 2018 and 2019 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. We derived the selected consolidated statements of operations data for the nine months ended September 30, 2019 and 2020, and the selected consolidated balance sheet data as of September 30, 2020, from the unaudited consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited consolidated financial statements on the same basis as the audited consolidated financial statements and have included all adjustments, consisting only of normal recurring adjustments, which in our opinion are necessary to present fairly the financial information set forth in those statements. Our historical results and growth rates are not necessarily indicative of results or growth rates to be expected in future periods, and the results and growth rates for the nine months ended September 30, 2020 are not necessarily indicative of the results or growth rates to be expected for the full year or any other period.

You should read the following information in conjunction with “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Certain Relationships and Related Person Transactions” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus.

 

    

Year Ended
December 31,

   

Nine Months Ended

September 30,

 
    

2018

   

2019

   

2019

   

2020

 
     (in thousands, except per unit data and number of customers)  

Consolidated Statements of Operations Data:

        

Revenue

   $  108,355     $  164,892     $ 112,938     $ 108,790  

Operating expenses(1):

        

Platform operations

     74,344       94,060       65,350       62,316  

Sales and marketing

     26,766       29,027       20,750       19,393  

Technology and development

     9,585       9,240       6,655       6,080  

General and administrative

     18,326       19,770       13,173       12,408  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     129,021       152,097       105,928       100,197  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (20,666     12,795       7,010       8,593  

Total other expense, net

     4,869       2,871       2,496       816  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (25,535   $ 9,924     $ 4,514     $ 7,777  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per unit—basic(2)

   $ (137.28   $ 31.31     $ 5.38     $ 7.78  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per unit—diluted(2)

   $ (137.28   $ 27.37     $ 4.51     $ 7.78  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Key Operating and Financial Performance Metrics(3)

        

Revenue ex-TAC

   $ 64,526     $ 104,440     $ 71,597     $ 71,381  

Adjusted EBITDA

   $ (7,534   $ 24,655     $ 15,287     $ 16,220  

Net income as a percentage of gross profit

     N/A       14     9     17

Adjusted EBITDA as a percentage of revenue ex-TAC

     N/A       24     21     23

Number of Active Customers(4)

     267       277       278       258  

Average revenue ex-TAC per Active Customer(4)

   $ 242     $ 377     $ 328     $ 404  

 

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As of
December 31,

     As of
September 30,
 
    

2018

    

2019

     2020  
     (in thousands)  

Consolidated Balance Sheet Data:

        

Cash

   $ 2,655      $ 4,815      $ 13,546  

Accounts receivable, net

     48,497        68,083        61,633  

Total assets

     86,662        106,857        108,757  

Accounts payable

     17,752        20,480        22,259  

Total debt(5)

     65,955        17,500        23,535  

Total liabilities

     124,859        84,152        81,477  

Convertible preferred units(6)

     45,000        7,500        7,500  

Total members’ equity (deficit)

     (83,197      15,205        19,780  

 

(1)

Unit-based compensation expense, depreciation expense and amortization expense included above was as follows:

 

    

Year Ended
December 31,

    

Nine Months Ended

September 30,

 
    

2018

    

2019

    

2019

    

2020

 
     (in thousands)  

Unit-based compensation expense:

           

Platform operations

   $ 25      $ 42      $ 18      $ —    

Sales and marketing

     26        44        19        —    

Technology and development

     49        82        35        —    

General and administrative

     547        922        394        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total unit-based compensation expense

   $  647      $  1,090      $ 466      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

    

Year Ended
December 31,

     Nine Months Ended
September 30,
 
    

2018

    

2019

     2019      2020  
     (in thousands)  

Depreciation and amortization expense:

           

Platform operations

   $ 8,067      $ 7,535      $ 5,656      $ 5,584  

Sales and marketing

     —          —          —          —    

Technology and development

     1,314        1,537        1,138        1,206  

General and administrative

     1,247        1,083        809        864  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total depreciation and amortization expense

   $  10,628      $  10,155      $ 7,603      $ 7,654  
  

 

 

    

 

 

    

 

 

    

 

 

 

See Note 4, Note 5 and Note 9 to our consolidated financial statements included elsewhere in this prospectus for more information regarding depreciation expense, amortization expense and unit-based compensation expense, respectively.

 

(2)

See Note 2 to our consolidated financial statements for a description of the earnings (loss) per unit—basic and diluted computations. Our pro forma basic and diluted earnings per share, after giving effect to the Reorganization and this offering, are $0.09 per share for the year ended December 31, 2019 and $0.11 per share for the nine months ended September 30, 2020. See “Unaudited Pro Forma Consolidated Financial Information and Other Data.”

 

(3) 

For a detailed discussion of our key operating and financial performance metrics and a reconciliation of revenue ex-TAC and Adjusted EBITDA to the most directly comparable financial measures calculated in accordance with GAAP, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Key Operating and Financial Performance Metrics—Use of Non-GAAP Financial Measures.

 

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(4) 

We define an Active Customer as a customer that had total aggregate revenue ex-TAC of at least $5,000 through our platform during the previous twelve months. We define average revenue ex-TAC per Active Customer as revenue ex-TAC for the trailing twelve month period presented divided by Active Customers. For a detailed discussion of average revenue ex-TAC per Active Customer and Active Customers, see “Managements Discussion and Analysis of Financial Condition and Results of Operation—Key Operating and Financial Performance Metrics—Number of Active Customers and Average Revenue ex-TAC per Active Customer.

 

(5) 

Total debt as of December 31, 2018 consisted of Viant Technology LLC’s previously outstanding long-term promissory note that was owed to the Former Holdco. The Former Holdco’s outstanding units of Viant Technology LLC were retired in conjunction with Viant Technology LLC’s settlement of the promissory note on October 31, 2019, in accordance with the Unit Repurchase Agreement between Viant Technology LLC, the Former Holdco and other parties thereto. As of December 31, 2019, no outstanding amounts remained under the promissory note, and the Former Holdco was no longer a related party of Viant Technology LLC. See Note 7 and Note 13 to our consolidated financial statements included elsewhere in this prospectus for further information.

 

(6) 

We refer to our 2016 convertible preferred units held by the Former Holdco and our 2019 convertible preferred units held by Four Brothers 2 LLC collectively as “convertible preferred units” in this prospectus.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by reference to, the section entitled “Selected Historical Consolidated Financial Information” and the consolidated financial statements of Viant Technology LLC and the related notes included within this prospectus. The historical consolidated financial data discussed below reflect the historical results of operations and financial position of Viant Technology LLC. The consolidated financial statements of Viant Technology LLC, our predecessor for accounting purposes, will be our historical financial statements following this offering. The historical financial data discussed below relate to periods prior to the Reorganization described in “Organizational Structure” and do not give effect to pro forma adjustments. As a result, the following discussion does not reflect the significant effects that such events will have on us. See “Organizational Structure” and “Unaudited Pro Forma Consolidated Financial Information and Other Data” for more information.

This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these forward-looking statements, including, but not limited to, risks and uncertainties discussed under the heading “Forward-Looking Statements,” “Risk Factors” and elsewhere in this prospectus. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

We are an advertising software company. Our software enables the programmatic purchase of advertising, which is the electronification of the advertising buying process. Programmatic advertising is rapidly taking market share from traditional ad sales channels, which require more staffing, offer less transparency and involve higher costs to buyers.

Our demand side platform (“DSP”), Adelphic, is an enterprise software platform that is used by marketers and their advertising agencies to centralize the planning, buying and measurement of their advertising media across most channels. Through our technology, a marketer can easily buy ads on desktop, mobile, connected TV, linear TV, streaming audio and digital billboards.

Viant was founded in 1999 by Tim, Chris and Russ Vanderhook who continue to lead our company today. Viant has been at the forefront of digital advertising technology since its inception and has demonstrated its ability to grow, thrive, and innovate as competitors have come and gone. In 2011, Viant acquired the social network website Myspace.com. In 2011, Tim and Chris Vanderhook started Xumo, a connected TV streaming service, which was acquired by Comcast Corp. in 2020. In 2015, Viant completed its first people-based integration. Viant remained independent until 2016, when Time Inc. acquired a 60% interest in Viant through its subsidiary, the Former Holdco. That interest was later acquired by Meredith Corporation when it acquired Time Inc. in 2018. In 2017, the Company purchased Adelphic, a DSP. Since the Adelphic acquisition, the Company has materially transformed from a full-service provider of digital advertising solutions into a leading DSP that enables marketers and their advertising agencies to centralize the planning, buying and measurement of their media investments using a people-based framework. Viant has grown from a business operating from a home office to a company with nearly 300 employees in 11 offices throughout the U.S. In 2019, Viant entered into the 2019 Former Holdco transaction that resulted in the retirement of the Former Holdco’s interest in Viant and the Vanderhook Parties acquired that 60% interest in the Company, allowing it to once again become an independent company.

We serve marketers and their advertising agencies by enabling them to plan, buy and measure programmatic campaigns. We provide an easy-to-use self-service programmatic platform that delivers transparency and control. Our platform offers customers unique visibility across a variety of advertising channels with the ability to create customized audience segments leveraging our people-based and strategic partner data to

 

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reach target audiences at scale. Our people-based approach is in contrast to the inefficient approach of cookie-based tracking. People-based data enables marketers to use first-party data for both the targeting and measurement of their ad campaigns in a manner that we believe is more accurate than utilizing a cookie-based approach.

We make our platform available through different pricing options to tailor to multiple client types and customer needs. These options consist of a percentage of spend option, a subscription option and a fixed CPM pricing option. CPM refers to a payment option in which customers pay a price for every 1,000 impressions an ad receives. Customers can enter into master service agreements (“MSAs”) with us that enable them to use our platform on a self-service basis to execute their advertising campaigns. We generate revenue when the platform is used on a self-service basis by charging a platform fee that is either a percentage of spend or a flat monthly subscription fee, as well as fees for additional features such as data and advanced reporting. We also offer our customers the ability to use our services to aid them in data management, media execution and advanced reporting. When customers utilize our services, we generate revenue by charging a (1) separate service fee that represents a percentage of spend in addition to the platform fee; (2) a flat monthly fee covering services in connection with data management and advanced reporting; or (3) a fixed CPM that is inclusive of media, other direct costs and services. We believe that offering a multitude of options provides our customers greater flexibility and access to our platform. Some of our pricing options are relatively new to the market and are not yet material to our business from a financial perspective.

Our financial results include:

 

   

Revenue of $108.4 million and $164.9 million for the years ended December 31, 2018 and 2019, respectively, representing an increase of 52%, and $112.9 million and $108.8 million for the nine months ended September 30, 2019 and 2020, respectively, representing a decrease of 4%;

 

   

Revenue ex-TAC of $64.5 million and $104.4 million for the years ended December 31, 2018 and 2019, respectively, representing an increase of 62%, and $71.6 million and $71.4 million for the nine months ended September 30, 2019 and 2020, respectively, representing a decrease of 0.3%;

 

   

Net loss of $25.5 million and net income of $9.9 million for the years ended December 31, 2018 and 2019, respectively, and net income of $4.5 million and $7.8 million for the nine months ended September 30, 2019 and 2020, respectively, representing an increase of 72%; and

 

   

Adjusted EBITDA loss of $7.5 million and positive Adjusted EBITDA of $24.7 million for the years ended December 31, 2018 and 2019, respectively, and positive Adjusted EBITDA of $15.3 million and $16.2 million for the nine months ended September 30, 2019 and 2020, respectively, representing an increase of 6%.

Revenue ex-TAC and Adjusted EBITDA are non-GAAP measures. For a detailed discussion of our key operating and financial performance metrics and a reconciliation of revenue ex-TAC and Adjusted EBITDA to the most directly comparable financial measures calculated in accordance with GAAP, see “—Key Operating and Financial Performance Metrics—Use of Non-GAAP Financial Measures.”

Factors Affecting Our Performance

COVID-19

In March 2020, the World Health Organization characterized the coronavirus (“COVID-19”) a pandemic, and in March 2020, the President of the United States declared the COVID-19 outbreak a national emergency. COVID-19 has spread across the globe during 2020 and is impacting economic activity worldwide.

 

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The challenges posed by the COVID-19 pandemic on the global economy increased significantly as the first quarter of 2020 progressed and have continued throughout 2020. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. The Company instituted temporary salary reductions in the second and third quarters of 2020 due to COVID-19. In the fourth quarter of 2020, normal salaries were reinstated and the Company paid employees for the amounts by which their salaries had been reduced in the second and third quarters of 2020. Certain marketers in industries such as travel and tourism, retail and automotive, decreased or paused their advertising spend as a response to the economic uncertainty. As a result, our revenue and Adjusted EBITDA have been negatively impacted in the first nine months of 2020 as a result of the COVID-19 pandemic. In addition, as a result of our temporary salary reductions in the second and third quarters, our personnel costs decreased. The ultimate impact of COVID-19 on the Company’s results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time. See “Risk Factors—The effects of the ongoing COVID-19 pandemic and other sustained adverse market events have had, and could in the future have, an adverse impact on our business, operating results and financial condition” for further discussion of the potential impacts of the COVID-19 pandemic on our business.

Attract, Retain and Grow our Customer Base

Our recent growth has been driven by expanding the usage of our platform by our existing customers as well as adding new customers. We believe that our customers value our solutions, as our average revenue ex-TAC per Active Customer has increased from $242,000 per Active Customer to $377,000 per Active Customer, an increase of $135,000 or 56%, from the year ended December 31, 2018 to the year ended December 31, 2019. Our average revenue ex-TAC per Active Customer has increased from $328,000 per Active Customer to $404,000 per Active Customer, an increase of $76,000 or 23%, from the trailing twelve months ended September 30, 2019 to the trailing twelve months ended September 30, 2020. We added 10 new Active Customers, an increase of 4%, from the year ended December 31, 2018 to the year ended December 31, 2019. We saw a decrease in Active Customers by 20, a decrease of 7%, from the twelve months ended September 30, 2019 to the twelve months ended September 30, 2020, offset by the increase in average revenue ex-TAC per Active Customer during that period. We review changes in usage of our platform as represented by changes in aggregate spend on the platform as a metric of customer engagement. Platform usage, as represented by aggregate spend on the platform, increased by 54% for the year ended December 31, 2019 and by 8% for the nine months ended September 30, 2020. For a detailed discussion of our key operating metrics including the definition of Active Customers, see “—Key Operating and Financial Performance Metrics—Use of Non-GAAP Financial Measures.”

We continue to add functionality to our platform to encourage our customers to increase their usage of our platform. We believe many advertisers are in the early stages of moving a greater percentage of their advertising budgets to programmatic channels. By providing solutions for the planning, buying and measuring of their media spend across channels, we believe that we are well positioned to capture the increase in programmatic budgets. Further, we intend to continue to grow our marketing efforts to increase awareness of our Adelphic platform and highlight the advantages of our people-based framework as cookie-based options become increasingly limited. As a result, future revenue growth depends upon our ability to retain our existing customers and increase their usage of our platform as well as add new customers.

Investment in Growth

We believe that the advertising market is in the early stages of a secular shift towards programmatic advertising. We plan to invest for long-term growth. We anticipate that our operating expenses will increase significantly in the foreseeable future as we invest in platform operations and technology and development to enhance our product capabilities including identity resolution and the integration of new advertising channels, and in sales and marketing to acquire new customers and increase our customers’ usage of our platform. We

 

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believe that these investments will contribute to our long-term growth, although they may have a negative impact on our profitability in the near-term.

Growth of the Digital Advertising Market and Macroeconomics Factors

We expect to continue to benefit from overall adoption of programmatic advertising by marketers and their agencies. Any material change in the growth rate of digital advertising or the rate of adoption of programmatic, including expansion of new programmatic channels, could affect our performance. Recent years have shown that advertising spend is closely tied to advertisers’ financial performance and a downturn, either generally or in one or more of the industries in which our customers operate, could adversely impact the digital advertising market and our operating results.

Seasonality

In the advertising industry, companies commonly experience seasonal fluctuations in revenue. For example, many marketers allocate the largest portion of their budgets to the fourth quarter of the calendar year in order to coincide with increased holiday purchasing. Historically, the fourth quarter of the year has reflected our highest level of advertising activity for the year. We generally expect the subsequent first quarter to reflect lower activity levels, but this trend may be masked due to the continued growth of our business. In addition, historical seasonality may not be predictive of future results given the potential for changes in advertising buying patterns and consumer activity due to the COVID-19 pandemic. We expect our revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole.

Components of Our Results of Operations

We have one primary business activity and operate in a single operating and reportable segment.

Revenue

We generate revenue by providing marketers and their advertising agencies with the ability to plan, buy and measure their digital advertising campaigns using our people-based DSP. We maintain agreements with customers in the form of MSAs (in connection with the percentage of spend and monthly subscription pricing options, as well as in instances where we charge our customers a flat monthly fee for services in connection with data management and advanced reporting) and IOs (in connection with the fixed CPM pricing option) which set out the terms of the relationship and use of our platform.

We recognize revenue when we transfer control of promised services directly to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those services.

In MSA arrangements covering the percentage of spend pricing option, we recognize revenue at the point in time when a purchase by the customer occurs through our platform. In MSA arrangements covering the monthly subscription pricing option, we recognize subscription fees for customers accessing our platform as revenue over time on a ratable basis over the term of the agreement. In both instances, revenue is reported net of amounts incurred and payable to suppliers for the cost of advertising media, third-party data and other add-on features (collectively, “traffic acquisition costs” or “TAC”) since we arrange for the transfer of TAC from the supplier to the customer through the use of our platform and do not control such features prior to transfer to the customer. In MSA arrangements covering data management and advanced reporting, we recognize revenue over time on a ratable basis over the term of the agreement.

In insertion order (“IO”) arrangements, we recognize revenue at the point in time when the advertising impressions are delivered to the customer. This revenue is reported gross of any amounts incurred and payable to suppliers for TAC, since we control such features prior to transfer to the customer.

 

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We expect the portion of our revenue derived from the percentage of spend pricing option and the monthly subscription pricing option to increase in the aggregate over time, which would reduce the percentage of revenue that the Company recognizes on a gross basis in connection with the fixed CPM pricing option.

See “Critical Accounting Policies and Estimates—Revenue Recognition” for a description of our revenue recognition policies.

Operating Expenses

We classify our operating expenses into the following four categories. Each expense category includes overhead such as rent and occupancy charges, which is allocated based on headcount. We intend to grant RSUs pursuant to the 2021 LTIP to employees subsequent to this offering. Approximately 35% of the RSUs will vest at the time of the release of the lock-up agreements described under “Shares Eligible for Future Sale—Lock-Up Agreements,” and the unvested portion will vest over time subject to continued employment. We expect to record compensation expense of approximately $50 million in the period between the date of grant of such RSUs and the expiration of the lock-up agreement in respect of RSUs that will vest at the time of the expiration of the lock-up agreements. We also intend to grant RSUs to Board members in connection with the offering.

Platform Operations. Platform operations expense represents our cost of revenues, which consists of TAC, hosting costs, personnel costs, depreciation of capitalized software development costs related to our platform, customer support costs and allocated overhead. TAC recorded in platform operations consist of amounts incurred and payable to suppliers for costs associated with our fixed CPM pricing option. Personnel costs within platform operations include salaries, bonuses, unit-based compensation expense and employee benefit costs primarily attributable to personnel who directly support our platform.

Other than TAC, many of the costs included in platform operations expense do not increase or decrease proportionately with increases or decreases in our revenue. We expect platform operations expenses to increase in future periods, including as a result of stock based compensation expense and as we continue to invest in the development of our platform to add new features and functions, increase the number of advertising media and data suppliers, ramp up the volume of advertising spend on our platform resulting in increased volumes of transactions, and hire additional personnel to support our customers.

Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, bonuses, unit-based compensation expense, employee benefit costs and commissions for our sales personnel. Sales and marketing expense also includes costs for market development programs, advertising, promotional and other marketing activities and allocated overhead. Commissions are expensed as incurred.

Our sales and marketing organization focuses on marketing our platform to increase its adoption by existing and new customers. As a result, we expect sales and marketing expenses to increase in future periods, including as a result of stock based compensation expense. Sales and marketing expense as a percentage of revenue may fluctuate from period to period based on revenue levels and the timing of our investments in our sales and marketing functions as these investments may vary in scope and scale over time.

Technology and Development. Technology and development expense consists primarily of personnel costs, including salaries, bonuses, unit-based compensation expense and employee benefit costs associated with the ongoing development and maintenance of our platform and allocated overhead. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with software development that qualifies for capitalization, which are then recorded as capitalized software included in property, equipment and software, net, on the consolidated balance sheet. We record depreciation expense for capitalized software not related to our platform within technology and development expense.

We believe that continued investment in our platform is critical to attaining our strategic objectives and long-term growth. We therefore expect technology and development expense to increase as we continue to invest in the development of our platform to support and maintain additional features and functions, increase the number of advertising media and data suppliers, and ramp up the volume of advertising spend on our platform.

General and Administrative. General and administrative expense consists primarily of personnel costs, including salaries, bonuses, unit-based compensation expense and employee benefit costs associated with our

 

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executive, accounting, finance, legal, human resources, and other administrative personnel. Additionally, this includes accounting and legal professional services fees, bad debt expense and allocated overhead.

We expect to continue to invest in corporate infrastructure and incur additional expenses associated with our operation as a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs associated with developing the requisite infrastructure required for internal controls over financial reporting. As a result, we expect general and administrative expenses to increase in future periods, including as a result of stock based compensation expense.

Total Other Expense, Net

Interest Expense, Net. Interest expense, net is primarily related to our long-term debt and revolving credit facility.

Other Expense (Income), Net. Other expense (income), net primarily consist of foreign currency exchange gains and losses and miscellaneous expenses not attributable to operations. In the year ended December 31, 2018, we had foreign currency exposure related to our wholly owned UK subsidiary which had a non-U.S. dollar functional currency. During the year ended December 31, 2019, other expense (income), net primarily related to a gain on the dissolution of our UK subsidiary.

Results of Operations

The following tables set forth our consolidated results of operations, our consolidated results of operations as a percentage of revenue, and the impact of unit-based compensation expense, depreciation expense and amortization expense on each operating expense line item for the periods presented:

 

    

Year Ended

December 31,

    

Nine Months Ended

September 30,

 
    

2018

    

2019

    

2019

    

2020

 
    

(in thousands)

 

Consolidated Statements of Operations Data:

           

Revenue

   $ 108,355      $ 164,892      $ 112,938        108,790  

Operating expenses(1):

           

Platform operations

     74,344        94,060        65,350        62,316  

Sales and marketing

     26,766        29,027        20,750        19,393  

Technology and development

     9,585        9,240        6,655       
6,080
 

General and administrative

     18,326        19,770        13,173       
12,408
 
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     129,021        152,097        105,928        100,197  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) from operations

     (20,666      12,795        7,010       
8,593
 

Total other expense, net

     4,869        2,871        2,496        816  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income (loss)

   $ (25,535    $ 9,924      $ 4,514      $ 7,777  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

    

Year Ended

December 31,

   

Nine Months Ended

September 30,

 
    

2018

   

2019

   

2019

   

2020

 
     (% of revenue*)  

Consolidated Statements of Operations Data:

        

Revenue

     100     100     100     100

Operating expenses:

        

Platform operations

     69     57     58     57

Sales and marketing

     25     18     18     18

Technology and development

     9     6     6     6

General and administrative

     17     12     12     11
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     119     92     94     92
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (19 %)      8     6     8

Total other expense, net

     4     2     2     1
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (24 %)      6     4     7
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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*

Percentages may not sum due to rounding

 

(1) 

Unit-based compensation expense, depreciation expense, and amortization expense included above were as follows:

 

   

Year Ended

December 31,

   

Nine Months Ended

September 30,

 
   

2018

   

2019

   

2019

   

2020

 
    (in thousands)  

Unit-based compensation expense:

       

Platform operations

  $ 25     $ 42     $ 18     $ —    

Sales and marketing

    26       44       19       —    

Technology and development

    49       82       35       —    

General and administrative

    547       922       394       —    
 

 

 

   

 

 

   

 

 

   

 

 

 

Total unit-based compensation expense

  $ 647     $ 1,090     $ 466     $ —    
 

 

 

   

 

 

   

 

 

   

 

 

 

 

   

Year Ended

December 31,

   

Nine Months Ended

September 30,

 
   

2018

   

2019

   

2019

   

2020

 
    (in thousands)  

Depreciation expense:

       

Platform operations

  $ 6,441     $ 6,832     $ 5,128     $ 5,059  

Sales and marketing

    —         —         —         —    

Technology and development

    1,314       1,537       1,138       1,206  

General and administrative

    718       554       413       468  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total depreciation expense

  $ 8,473     $ 8,923     $ 6,679     $ 6,733  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

   

Year Ended

December 31,

   

Nine Months Ended

September 30,

 
   

2018

   

2019

   

2019

   

2020

 
    (in thousands)  

Amortization expense:

       

Platform operations

  $ 1,626     $ 703     $ 528     $ 525  

Sales and marketing

    —         —         —         —    

Technology and development

    —         —         —         —    

General and administrative

    529       529       396       396  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total amortization expense

  $ 2,155     $ 1,232     $ 924     $ 921  
 

 

 

   

 

 

   

 

 

   

 

 

 

Comparison of the Nine Months Ended September 30, 2019 and 2020

Revenue

 

    

Nine Months Ended

September 30,

    

Change

 
    

2019

    

2020

    

$

    

%

 
     (in thousands, except for percentages)  

Revenue

     $112,938        $108,790        $(4,148)        (4 %) 

Revenue decreased by $4.1 million, or 4% during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The decrease in revenue was primarily due to adverse effects of the COVID-19 pandemic. Certain marketers in industries such as travel and tourism, retail and automotive decreased or paused their advertising spending as a response to the economic uncertainty created by the COVID-19 pandemic. In

 

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addition, larger customers with more favorable pricing terms based on higher platform usage accounted for a higher percentage of total platform usage in the period. Despite the negative impacts of the COVID-19 pandemic, we have continued to experience increased customer usage of our platform, particularly in the percentage of spend pricing option, and continuing demand for our people-based advertising products and services. Platform usage, our metric of customer engagement represented by aggregate spend on the platform, increased by 8% in the comparative periods. From an advertising inventory perspective, connected TV related revenue increased substantially during the nine months ended September 30, 2020, growing 75% over the comparable prior year period and comprising 34% of total revenue. Approximately 93% of our revenue for the nine months ended September 30, 2020 came from customers that had been customers in the year ended December 31, 2019.

Platform Operations

 

    

Nine Months Ended

September 30,

   

Change

 
    

2019

   

2020

   

$

   

%

 
     (in thousands, except for percentages)  

Traffic acquisition costs

   $ 41,341     $ 37,409     $ (3,932     (10 )% 

Other platform operations

     24,009       24,907       898       4
  

 

 

   

 

 

   

 

 

   

 

 

 

Total platform operations

   $ 65,350     $ 62,316     $ (3,034     (5 %) 

Platform operations as a percentage of revenue

     58     57    

Platform operations expense decreased by $3.0 million, or 5%, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. This is primarily comprised of a $3.9 million decrease in TAC, which is variable as a function of revenue associated with our fixed CPM pricing option. The decrease was offset in part by an increase in other platform operations, including a $0.7 million increase in third-party hosting services and a $0.6 million increase in personnel costs as a result of increased headcount notwithstanding temporary salary reductions we imposed in the second and third quarters due to COVID-19. In the fourth quarter of 2020, normal salaries were reinstated. The increase in hosting costs was commensurate with the increased usage of our platform by our customers.

Sales and Marketing

 

    

Nine Months Ended

September 30,

   

Change

 
    

2019

   

2020

   

$

   

%

 
     (in thousands, except for percentages)  

Sales and marketing

   $ 20,750     $ 19,393     $ (1,357     (7 %) 

Percentage of revenue

     18     18    

Sales and marketing expense decreased by $1.4 million, or 7%, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The decrease in sales and marketing expense was primarily due to a $1.2 million decrease in travel and entertainment expenses as a result of COVID-19, a $0.9 million decrease in commissions expense commensurate with the decrease in revenue, offset by a $0.8 million increase in personnel costs as a result of increased headcount offset by temporary salary reductions in the second and third quarters due to COVID-19. In the fourth quarter of 2020, normal salaries were reinstated.

Technology and Development

 

    

Nine Months Ended 

September 30,

   

Change

 
    

2019

   

2020

   

$

   

%

 
     (in thousands, except for percentages)  

Technology and development

   $ 6,655     $ 6,080     $ (575     (9 %) 

Percentage of revenue

     6     6    

 

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Technology and development expense decreased by $0.6 million, or 9%, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The decrease in technology and development expense was primarily due to a $0.4 million decrease in personnel costs as a result of temporary salary reductions in the second and third quarters due to COVID-19, and a $0.2 million decrease in allocated overhead. In the fourth quarter of 2020, normal salaries were reinstated.

General and Administrative

 

    

Nine Months Ended 

September 30,

   

Change

 
    

2019

   

2020

   

$

   

%

 
     (in thousands, except for percentages)  

General and administrative

   $ 13,173     $ 12,408     $ (765     (6 %) 

Percentage of revenue

     12     11    

General and administrative expense decreased by $0.8 million, or 6%, during the nine months ended September 30, 2020 compa