DSP - NASDAQ

Hello, everyone, and welcome to Viant Technologies Second Quarter 2025 Earnings Conference Call. My name is Emmanuel, and I will be your operator today. Before I hand the call over to the Viant leadership team, I'd like to go over just a few housekeeping notes for the program. [Operator Instructions] As a reminder, this call is being recorded. Thank you for your attendance today. I will now turn the call over to Nick

Thank you. Good afternoon, and welcome to Viant Technology's Second Quarter 2025 Earnings Conference Call. On the call today are Tim Vanderhook, Co-Founder and Chief Executive Officer; Chris Vanderhook, Co-Founder and Chief Operating Officer; and Larry Madden, Chief Financial Officer. I'd like to remind you that we will make forward-looking statements on our call today, including, but not limited to, statements regarding our guidance for Q3 2025 and other future financial results, our platform development initiatives and industry trends that are based on assumptions and subject to future events, risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of today, and we undertake no obligation to update or revise these statements, except as required by law. For more information about factors that may cause actual results to differ materially from forward-looking statements and our entire safe harbor statement, please refer to the news release issued today as well as the risks and uncertainties described in our quarterly report on Form 10-Q for the quarter ended June 30, 2025, under the heading Risk Factors and in our other filings with the SEC. During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding these non-GAAP measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release issued today and in our earnings presentation, which have been posted on the Investor Relations page on the company's website and in our filings with the SEC. I would now like to turn the call over to Tim Vanderhook, Chief Executive Officer of Viant. Tim?

Thanks, Nick, and thank you all for joining us today. We achieved excellent results in the second quarter, setting new records across all metrics and surpassing the midpoint of our adjusted EBITDA guidance. Revenue increased 18% year-over-year and contribution ex-TAC increased 16% year-over-year, both in line with our quarterly guidance. This strong growth was fueled by demand for our unique CTV offering, increased adoption of Viant's addressability solutions and wider use of the ViantAI product suite. Adjusted EBITDA increased 18% year-over-year to $11.3 million for the quarter. Operationally, we continue to execute against our strategic priorities. We further advanced our CTV Direct Access premium publisher program through new publisher integrations. We expanded the presence of our industry-leading audience and content addressability solutions, Household ID and IRIS_ID. And we successfully launched the third phase of our ViantAI product suite, AI Measurement and Analysis, designed to revolutionize reporting with on-demand insights. Our innovative solutions are resonating across the marketplace, enabling Viant to actively pursue and secure new business from advertisers with more pronounced ad budgets. More than ever before, we are engaging with major U.S. advertisers and proactively expanding our addressable market beyond the mid-market advertiser. In a moment, Chris will discuss our evolving go-to-market strategy influenced by the ongoing rollout of ViantAI and provide an update on our growing business pipeline with major U.S. advertisers. Before that, I will provide a detailed update on our key strategic priorities: CTV, addressability and ViantAI. CTV was the strongest driver of top line growth in the quarter. We continue to position Viant as the preeminent DSP for CTV advertising. And once again, our results demonstrate that we are doing just that. In the first half of 2025, approximately 45% of total ad spend on our platform was CTV, and approximately half of that spend ran through our direct access premium publishers. Unique to Viant, the Direct Access premium publisher program connects advertisers directly to premium CTV inventory, significantly reducing supply side fees. This means more ad spend goes directly toward working media, increasing impression win rates without the need to raise bid prices, improving return on ad spend for our customers. Notable Direct Access premium publishers include the likes of Disney, Paramount, Peacock, Roku and many, many others. We recently welcomed LG, a major CTV OEM to our Direct Access premium publisher program. This partnership offers our advertisers an efficient supply path to reach LG's 45 million connected devices across the U.S. The integration also incorporates data matching, which further enhances the efficacy of Viant Household ID for audience targeting and measurement. Furthermore, LG has integrated Viant's leading content identifier, IRIS_ID, allowing advertisers to target and measure based on content relevance. This leads me to our expanding leadership position in addressability. Viant Household ID, our patented audience targeting and measurement solution continues to see strong utilization amongst advertisers. Household ID identifies approximately 95% of U.S. households and boasts availability across about 80% of biddable ad inventory, significantly exceeding alternative identifiers and enabling sophisticated audience targeting and measurement at unmatched scale. In the second quarter, ad spend linked to Household ID increased 15% year-over-year as we continue to activate Household ID matches with our premium Direct Access publishers, making their inventory both biddable and addressable. We anticipate continued growth in utilization of our Household ID as data-driven advertisers increasingly prioritize the CTV channel. Our content targeting and measurement solution, IRIS_ID, continues to ramp across publishers. Building on existing momentum, IRIS_ID is now integrated with Wurl, a leading CTV content distributor. Under the AppLovin umbrella, Wurl powers over 3,000 FAST channels across more than 55 streaming services and significantly expands the reach of IRIS_ID. Notably, this partnership marks the first time Wurl's premium FAST supply is available via programmatic real-time bidding within any DSP, a testament to our ability to bring new innovative solutions to market. Since acquiring IRIS.TV in November 2024, the presence of IRIS_ID across all available CTV bid requests has grown substantially, and we expect it will continue to climb as we onboard new publishers. As a reminder, IRIS_ID allows advertisers to target CTV ad inventory at the video level, enabling advertisers the ability to align their brand, product or service with contextually relevant content. In doing so, advertisers have been shown to experience a 5x lift in brand favorability, a 3x lift in ad recall and a 2x lift in brand awareness and consideration versus CTV control groups. As IRIS_ID continues to be integrated amongst publishers, advertisers gain the ability to deploy contextual campaigns at greater scale, which we believe will lead to increased utilization. Finally, I'd like to provide an update on our ViantAI product suite. We have now successfully rolled out 3 phases of our AI product suite with the recent launch of AI Measurement and Analysis in late June. Recall, the rollout of ViantAI consists of 4 total phases, including AI Bidding, AI Planning, AI Measurement and Analysis and AI Decisioning. I'll very briefly touch on all 4. Nearly 2 years after launch, AI Bidding automates approximately 85% of the ad spending on Viant's platform. With AI Bidding, advertisers enable Viant's algorithms to find and buy optimal ad placements across the open Internet, aiming for the lowest cost while meeting their desired KPIs, which often include reach, frequency and targeting specifications. With surging use, contribution ex-TAC generated from AI Bidding has doubled year-over-year. Early in the third quarter, we rolled out our most impactful AI Bidding model yet. While competing DSPs tout 1% tech fees, our latest AI Bidding model delivers up to 46% reductions in media costs. We believe we are just scratching the surface with AI Bidding. And through continuous innovation, we can deliver even greater savings for our clients. Advertisers can only expect to achieve these types of savings from a buy-side-only platform that doesn't own the ad inventory like Google and Amazon. In Q3 2024, we launched AI Planning, which enables advertisers to create enterprise-level campaigns in seconds. As we have continued to build awareness across the marketplace, we have seen major U.S. advertisers express interest. Relative to our existing customer base, these are bigger brands with more pronounced ad budgets. We are engaged with various CPGs, QSRs, retailers and more. They all see how ViantAI can transform their business. And the feedback is consistent. There is simply nothing else in the market like ViantAI. AI Planning streamlines the workload of media planning and execution teams. Users need only provide an advertiser name, budget, time frame and goal and within seconds, an enterprise-level media campaign designed to maximize return on ad spend is fully constructed, inclusive of budget allocation across all digital channels and publishers, audience segmentation, frequency capping, dayparting, CPM pricing and more. With a single click, the media plan is directly exported into the DSP for immediate execution, automating and streamlining tasks traditionally handled by teams of media planners and traders. It's clear to see why agencies and advertisers of all sizes are eager to work with Viant. AI Planning improves workflow, drives operational efficiency and delivers a higher return on ad spend. We are very encouraged by recent momentum and expect to win material ad spend from major U.S. advertisers moving forward. AI Measurement and Analysis launched in late second quarter and revolutionizes reporting with on-demand insights. Historically, campaign performance data has been spread across multiple dashboards, buried in spreadsheets and has required the expertise of specialized data scientists to interpret results and identify actionable insights. AI Measurement and Analysis is the easy button, built to surface actionable insights and optimization opportunities in an instant via a simple, user-friendly, chat-based interface. For agencies and advertisers, AI Measurement and Analysis provides on-demand answers to all campaign performance-related questions and offers optimization recommendations. These features represent a significant improvement to the user experience, and we believe they will further drive our customers to consolidate their ad spend on the Viant DSP. And finally, we expect to launch AI Decisioning in the second half of 2025. We are on the cusp of providing advertisers with a fully autonomous ad solution for deployment across the open Internet. AI Decisioning enables advertisers to grant ViantAI the autonomy to plan, build, execute and optimize ad campaigns in full. ViantAI is dynamic and is designed to proactively react to market conditions, adjusting campaigns as necessary to deliver the best possible outcomes. And in contrast to big tech black box competition, ViantAI is transparent, providing advertisers with unrestricted insight across campaign performance data, including publisher allocation, clearing prices, return on ad spend metrics and more. To summarize, we delivered a strong quarter and made significant progress expanding our product capabilities across our strategic priorities, CTV, addressability and ViantAI. Our commitment to innovation is driving unprecedented engagement with major U.S. advertisers, presenting an opportunity for Viant to take share in a new addressable market. With demand ramping across our platform, we believe we remain well positioned to deliver sustainable long-term growth. Before turning it over to Chris, I would like to take a moment to welcome Brett Wilson to Viant's Board of Directors. Brett is an experienced entrepreneur, executive and investor with almost 30 years of experience in technology, advertising and digital media. He is the former Co-Founder, President and CEO of TubeMogul, an ad tech company he led from inception to IPO to a successful exit. His extensive knowledge in ad tech and AI will be crucial as we continue to innovate and accelerate our growth, and we're thrilled to have him on the board. With that, I will pass it over to Chris.

Thanks, Tim. I'd like to take a moment to discuss our customer go-to-market strategy and how it has been evolving and will continue to evolve over time. We believe ViantAI permits us the opportunity to expand our addressable market beyond the mid-market advertiser, which has traditionally been our core customer. And we now believe we can win amongst the many hundreds of major U.S. advertisers as well as the many millions of data-driven advertisers comprised of small businesses, performance advertisers and direct- to-consumer e-commerce brands. For major U.S. advertisers, ViantAI delivers unprecedented operating efficiency and therefore, material cost savings, not attainable through the use of a traditional DSP. And for data-driven advertisers looking to take advantage of our industry-leading addressability solutions, ViantAI is expected to be the fully autonomous do-it-for-me solution designed to onboard advertisers seamlessly through simple integrations and intuitive user interface and a platform capable of delivering outcomes for advertisers of all sizes. We plan to attack this expanded addressable market opportunity in stages. Naturally, we first introduced ViantAI to our existing advertiser and agency clients. And as the stats indicate, our customers have overwhelmingly embraced ViantAI. As Tim mentioned, approximately 85% of ad spend on our platform runs through AI Bidding. Since its launch, AI Planning has shown increasing monthly utilization with clients engaging in approximately 25,000 interactions year-to-date, including the creation of 1,100 media plans, and early feedback from the launch of AI Measurement and Analysis has been outstanding with a growing number of clients utilizing ViantAI to extract automated campaign insights. And finally, AI Decisioning is on schedule for a late 2025 launch. As we continue to expand the ViantAI product suite, our commitment to exceptional customer service remains unchanged. We plan to fully support clients through ongoing engagement, education and activation as new capabilities come to market. And of course, we will also continue to aggressively pursue prospective mid-market advertisers where we have traditionally focused. But as Tim indicated previously, with the launch of ViantAI, we are attracting the attention of major U.S. advertisers, and we are engaging with them more frequently than we ever have before. And quite frankly, we have the right to win with major U.S. advertisers. We are in market with a product offering no one else has, capable of providing a level of efficiency no one else can offer. We hear it over and over again from both existing and prospective clients where they tell us, "There is nothing else like this in the market." ViantAI is bidding and transacting on behalf of full-time traders, building and executing enterprise-level campaigns on behalf of full- time media planners and extracting insights on behalf of full-time data scientists. This degree of autonomy is in high demand. For advertiser and agency adopters, ViantAI provides a significant opportunity to materially improve their operating structure and deliver scaled business outcomes. And transitioning to Viant from an alternative DSP platform has never been easier. We have torn down the wall of complexity that is purposely embedded into traditional DSPs, complexity that has enabled competitors to retain clients simply because switching costs were too great. With ViantAI, there are no switching costs. There is no need to certify a team of traders, no need for training, no need for familiarity. If you can chat, ViantAI can handle the rest. While competing DSPs are introducing new forms of complexity, we are laser-focused on providing advertisers with an unprecedented level of simplicity. It is the pursuit of this vision that has awarded Viant the opportunity to win business from a growing number of major U.S. advertisers. Over the last several months, we have been actively engaging with dozens of major U.S. advertisers well outside the mid-market classification. Specifically, we have established new relationships with a number of large national beverage companies, quick service restaurant chains, CPGs, major retailers, convenience stores and more. At the conclusion of a new business pitch meeting just a few weeks ago with one of the largest adult beverage companies in the U.S., their executives having sat through a number of DSP proposals, we're quick to congratulate our team on building a solution that no other competitor had to offer. Recent new business pitches with major U.S. advertisers have thus far created a pipeline of new opportunities that exceeds $250 million of incremental ad spend. These RFPs that we were invited to are being for the DSP of record starting in 2026 and our multiyear engagements. Next, let's consider the opportunity that exists with the millions of data-driven advertisers who could benefit from advertising on CTV and the open Internet, but have not had the tools to do so effectively. The launch of AI Decisioning scheduled for release in late 2025 is designed to unlock the ability for Viant to address the millions of small businesses, performance advertisers and direct-to-consumer e-commerce companies that are so heavily reliant and overinvested in search and social walled gardens. This pool of spend is ripe for diversion to CTV and the open Internet. These data-driven advertisers are believed to represent over half of the $240 billion allocated to the U.S. search and social ad market. They are drawn to search and social media channels because these platforms deliver outcomes at scale through the use of an intuitive user interface. We are innovating to deliver a superior solution for deployment across the open Internet. Through the use of our addressability solutions, Household ID and IRIS_ID, data-driven advertisers can precisely target niche consumer audiences in contextually relevant environments and accurately measure performance associated with such targeted campaigns. And through the use of Viant AI's chat-based user interface, planning, building and executing a campaign across CTV and the open Internet has never been easier. AI Decisioning, our fully autonomous, fully transparent, outcomes-based solution represents the means by which we intend to target and attract the millions of data-driven advertisers poised to allocate spend across CTV and the open Internet. Our solution is designed to rival Meta's Advantage+ and Google's PMax offering, but for use across the entirety of the open Internet, not just the walled garden. And in contrast to these black box alternatives, ViantAI is intended to offer complete transparency, providing advertisers with unrestricted campaign insights. And because we do not own any media and are not conflicted in representing any certain publishers, we will be able to generate the most amount of outcomes for our clients without any conflicts. To be clear, we expect to begin to more aggressively pursue this incremental pool of ad spend following the launch of AI Decisioning, which remains on schedule for late 2025. With our unique CTV offering, industry-leading addressability solutions and ViantAI product suite, we have a right to win across advertisers of all sizes, and we are evolving to capture share of this expanded market opportunity. And with that, I'll turn it over to Larry to provide more detail on our financial performance. Larry?

Thank you, Chris. Before I begin, I would like to remind everyone that we have posted a presentation on our Investor Relations website that includes supplemental financial information to accompany today's call. In terms of our results for the second quarter, revenue for the quarter was $77.9 million, representing an 18% increase year-over-year and a 10% increase quarter-over-quarter and was within our guidance range. Contribution ex-TAC totaled $48.4 million in Q2, up 16% compared to the prior year period and up 13% sequentially and was also within our guidance range. Both revenue and contribution ex-TAC represent record results for the 2Q period. Our results would have been even stronger if not for a temporary disruption we highlighted during our first quarter earnings call. In response to economic policy actions from the current administration, 3 advertisers paused their campaigns during the quarter. This macro-driven development created a headwind of nearly 300 basis points to revenue growth and over 400 basis points to contribution ex-TAC growth in the quarter. During the quarter, we also continued to see meaningful expansion in the number of customers generating significant levels of contribution ex-TAC. On a trailing 12-month basis through Q2, we saw a 23% increase in the number of percent of spend customers generating over $1 million in contribution ex-TAC. Additionally, contribution ex-TAC across our top 100 continuing customers grew by 21% year-over-year on a TTM basis. New customer momentum also remains strong as evidenced by a pipeline of new business opportunities that exceeds $250 million in ad spend attributable to recent engagements with major U.S. advertisers. We believe these trends fueled by growth from both existing and new customers reinforce our strong competitive positioning and support our ability to continue outgrowing the broader programmatic market over the long term. We delivered strong performance across most customer verticals in Q2 with ad spend across business services, CPG and retail leading the way. CTV remained a core growth driver in Q2, once again accounting for nearly 45% of total platform spend. In addition, CTV spend reached an all-time high for a second quarter, reflecting continued momentum as advertisers increasingly prioritize premium addressable video to drive performance. Spend across all emerging digital channels, CTV, streaming audio and digital out-of-home collectively represented nearly 55% of total platform spend in Q2, up from 50% in 2024 and 43% in 2023, highlighting the accelerating adoption of next-generation media formats and underscoring our position as a leading partner for advertisers moving beyond traditional display. Video, inclusive of CTV, continues to represent 60% of total platform spend in the quarter, reflecting the continued shift toward high- impact measurable formats. Non-GAAP operating expenses totaled $37.1 million in the second quarter, representing a 1% sequential decline and a 16% year-over- year increase. This includes strategic investments related to the acquisitions of IRIS.TV closed in November 2024 and Lockr closed in February 2025, both of which expand our long-term product capabilities and are intended to support long-term growth. Excluding these acquisitions, organic non-GAAP operating expenses increased a modest 10% year-over-year and declined 1% sequentially, reflecting continued operating leverage and disciplined expense management. Importantly, we remain focused on scaling efficiently. Even as we continue to invest in innovation across ViantAI and our broader technology stack, we are delivering measurable gains in productivity, increasing contribution ex-TAC per employee by 10% year- over-year, a clear signal of improved operational efficiency. Adjusted EBITDA for Q2 was $11.3 million, exceeding the midpoint of our guidance by 3% and growing 18% year-over-year. Adjusted EBITDA as a percentage of contribution ex-TAC was 23% for the quarter, expanding 20 basis points compared to the prior year. This margin improvement was achieved while continuing to invest in our ViantAI product suite and while integrating IRIS.TV and Lockr acquisitions, demonstrating our ability to scale efficiently while executing on strategic priorities. Non-GAAP net income, which excludes stock-based comp and other adjustments, totaled $8 million for the quarter, up 11% from $7.2 million in the prior year. Non-GAAP basic earnings per Class A share outstanding totaled $0.10 in the second quarter compared to $0.08 in the prior year. In terms of share count, we ended the quarter with 62.9 million total shares outstanding, consisting of 16.3 million Class A shares and 46.7 million Class B shares. We ended the quarter with a strong balance sheet, including $173 million in cash and cash equivalents, $192 million in positive working capital, no debt and full access to our $75 million undrawn credit facility. For the quarter, cash flow from operating activities was $20.9 million, representing a 46% year-over-year increase, reflecting healthy core operating performance. We also remain disciplined in our capital allocation. Since launching our share repurchase program in May 2024, we've returned $50.2 million to shareholders, including $10.8 million in Q2 and $28.5 million year-to-date through August 8. In total, we've repurchased 3.8 million shares at an average price of $13.15, signaling our confidence in our long-term value. As of August 8, approximately $49.8 million remains available under our current authorization. We intend to continue executing this program opportunistically with a focus on maximizing value for long-term shareholders, particularly during times when our stock is undervalued. Our strong financial foundation, combined with consistent execution and a balanced capital allocation strategy, positions us well to capture growth opportunities and drive shareholder value in the quarters ahead. Turning now to our outlook for Q3. It's important to note that 2 temporary and nonrecurring factors are expected to impact our near-term revenue and contribution ex-TAC growth, both of which are fully reflected in our guidance. First, we are lapping a high political ad spend comp from last year's presidential election cycle, which represented an approximately 400 basis point headwind for contribution ex-TAC growth in Q3. Second, one of our agency clients lost a sizable advertiser to another agency, prompting the associated ad spend to move off of Viant's platform. While such occurrences are not at all unusual, this advertiser's unique seasonality is important to note. As an outdoor entertainment company, they heavily concentrate their ad spend in the summer months, July through September. Consequently, this loss impacts Q3 contribution ex-TAC growth by approximately 600 basis points and will have a minimal effect on Q4 or subsequent periods. On a combined basis, these near-term headwinds pressure revenue growth by approximately 1,200 basis points and contribution ex- TAC growth by approximately 1,000 basis points in 3Q '25. Given these factors, our guidance for the third quarter of 2025 is as follows: Revenue of $83.5 million to $86.5 million, up 6% year- over-year and 9% sequentially at the midpoint. Contribution ex-TAC of $51 million to $53 million, reflecting 10% year-over-year growth and 8% sequentially at the midpoint. Non-GAAP operating expenses of $37 million to $38 million, up 15% year-over-year and 1% sequentially at the midpoint. Adjusted EBITDA of $14 million to $15 million, representing a 1% year-over-year decline and a 29% increase sequentially at the midpoint. Despite the noted temporary and nonrecurring factors, the midpoint of our [indiscernible] performance across revenue and [indiscernible] has never been stronger [indiscernible] and is supported by over $250 million of potential annualized ad spend opportunities associated with major U.S. advertisers, a new addressable market for Viant. These represent 2026 opportunities. And accordingly, we have the potential to exhibit accelerating revenue and contribution ex-TAC year-over-year growth rates throughout 2026. In closing, we delivered another record quarter, executing against our strategic priorities, advancing innovation across our platform and returning capital to shareholders through opportunistic share repurchases at compelling valuations. We believe we are well positioned for sustainable long-term growth trends, including CTV, addressability and ViantAI. And with that, I'll turn the call back over to the operator for questions. Operator?

[Operator Instructions] We will begin with Andrew Marok of Raymond James.

Great. So first, I wanted to talk about the ViantAI innovations and kind of this broader trend we've been hearing about performance TV getting a lot of airtime in the space recently. So I guess as you're going to market with your new solutions, how are you really standing out against what's becoming seemingly an increasingly crowded market? And then maybe related to that, what's involved in the sales team switch to going more upmarket? Is it more a reorganization? Or will there be incremental hiring involved?

Sure. Thanks, Andrew, for the questions. I'll take the first one on performance TV. The precursor to actually performing in TV is to have great addressability solutions, the ability to target and then, of course, measure those responses. So we believe we have a huge advantage with the patented Household ID, which enables all that addressability to get the ads in front of the right user and tracking it all the way through to the point-of-sale systems out there. So we've been leading in this area. Many of our customers are using it day to day. But of course, as we talked about in launching fully autonomous will enable us to go down market into those smaller advertisers looking to get on TV and drive performance. Do you want to take that?

Yes, Andrew, on the large customer kind of expanded opportunity, we're really being pulled into that. If you recall a few quarters ago when we launched ViantAI, that really -- we were the first of any ad tech platform out there that launched a real AI product that you can actually touch and use. We got pulled into the larger U.S. advertiser base. That is our -- our existing sales force really were the ones that fielded those opportunities. However, we have been actively hiring what we call our enterprise team to go after these larger customers. And our core team is really going to remain focused on the mid-market advertiser and agency group. But I will just say that there's a huge opportunity in the large customer end of the market because they see what the cost efficiencies are by adopting ViantAI, but also the level of increased performance. Many of these brands are facing, whether it be tariffs or a lot of them we've engaged with, they've had a similar dynamic we've seen with other customers. Over time, they get better and better marketing KPIs, but their total sales or market share, they see declines. So this is a big opportunity for us. Many of these marketers are looking to ride that ship. CEOs of these brands are leaning on the CMOs saying, "Hey, we're spending all this money. We're getting more efficient marketing KPIs, but total sales or market share is down. Why is this?" ViantAI is a huge opportunity here that we can rightsize that. One of the things is that marketers, they've been chasing better and better KPIs, and that's pushed them into search and social, which is really just showing ads to customers who are already going to buy from them. They're missing the full funnel opportunity. ViantAI is going to help them realize that, and they're going to help them do it much more efficiently.

Our next question comes from Maria Ripps of Canaccord.

First, maybe just expanding on this last question in terms of achieving $250 million in ad spend. Sort of, as we think about ViantAI and all the functionality that you offer now, are there any sort of specific features or parts of that offering that you -- that sort of particularly attractive to -- for these larger marketers?

Yes. Maria, thanks for the question. One of the easy ones is AI Bidding. Tim said it was already -- it's upwards of 85% of total ad spend on our platform is using AI Bidding. With a lot of DSPs, a lot of times, there's conversations around platform fees or take rates. But where some competing platforms might offer 1%, we're showing with AI Bidding, we're now up to 46% savings in media costs. This is massive for these brands. When you're able to actually showcase this and they see the value that ViantAI can bring, it makes it an easy discussion. It's not really a take rate question or lowering fees question. It's about how much more we can do for them. Many of these brands I alluded to -- many of them have suffering market share performance in market. And with that, if, let's say, it's a consumer packaged goods company, they may -- their marketing spend is usually a percentage of their total sales. So those might be declining, that means budgets could be down. So how do we get market share growth with lower budgets? ViantAI and AI Bidding is specifically answering that question, showing that to brands. So that's a big area where brands are hooked on to.

Got it. That's very helpful. And then, Larry, can you maybe just expand on sort of on this client that was lost by one of your agencies. So I think you mentioned that Q4 impact will be minimal, and you mentioned that's due to seasonality. How should we think about sort of impact in the first half of next year from this client?

The good news -- the good and bad news about this one, although it does have a large impact on Q3, they spent the majority of their budget in that quarter. So Q1, less than 100 basis points, pretty nominal. So we don't expect it to really impact us going forward. The goal would be ideally to win the advertiser back. But assuming we don't -- it will not have much of an impact in the future quarters.

Our next question comes from Laura Martin of Needham & Co.

I also have two. I'd like to follow up on Maria's question because I agree that this $250 million number that you gave on this call is the most interesting number. The way you framed it in the prepared remarks is it was incremental ad spend. Well, that would like double my number for you for next year for gross revenue. So I want to really drill down. Is it all incremental this $250 million? Or is some of it already in our estimates for next year?

Thanks for the question, Laura. That $250 million is incremental. This is a sector of the market that we really haven't heavily competed in. These are all RFP opportunities, and they really sought us out. So we view that -- our addressable market to date has largely been in the mid-market. And of that $250 million, we have already won some of that. It's not scheduled to start until 2026. In most cases, just about all of these cases, with dozens of these brands, they already have commitments to larger DSPs and those commitments will end in '25. So we expect to win a fair share of these. And again, those will -- not only the ones that we've already won, but the other ones that we're in the final stages with will start in 2026.

Really interesting. Okay. And my other one is on cadence. So you did -- I really like the way you guys have communicated this AI Bidding, AI Planning, AI Measurement, AI Decisioning. I really like that. I'd like to know the cadence. So you're already at 85% of your ad spend going over AI Bidding. Tell us what the trajectory would be for Planning and then Measurement and then Decisioning. How do you think those play out across the quarters?

Well, Planning, just that process usually happens at the upfront stage. And so the whole goal is to get adoption as high as Bidding at the upfront Planning stage. So think prior to every quarter, depending on how everyone does their campaign execution, could be quarterly, could be monthly. But the idea for Planning would have a similar adoption rate as Bidding over the initial 2 years after we launch it, get everyone comfortable with the media partners being selected and why. That's the most important part is letting the human media planners understand why. So that would be the goal there. Measurement and Analysis, this is where it's different. It's not upfront. It should be almost daily use of media traders asking for new insights, recommendations, which levers they should go in and push and pull to actually improve performance. And so I would say with Planning, it's more about how many of the campaigns live in our system were generated through Planning. That's one area. But for Measurement and Analysis, it should be almost daily use or weekly use that would come in with it there. So it's a higher increased usage. And then Decisioning really is full autonomy. That's for -- once everyone is comfortable with the way the media plans are created and the way the optimization is happening, we expect for them to turn on full self-driving and not have to actually push any of the levers anymore. And our goal for that would be 100% adoption in Decisioning over 2 years.

From launch?

Yes.

Okay. Super helpful. Doesn't this work a little bit against your revenue growth? Like when you tell me that you're saving clients 46%, and then you tell me that you grew revenue, net revenue, which is what I care about by 16%, why didn't you save them 20% and grow revenue by 25%? I don't understand why you're not working against yourself.

Well, in that scenario, and really with a lot of these products, we offer value-based pricing, and we're trying to pass the vast majority of the savings to the customer. In the end, when they get cheaper CPM prices, they get more impressions, they're reaching more people, more potential customers. And our thesis is that if they keep getting better and better performance, they're going to end up spending more. What they're not doing, if they're saving 46%, they're not taking those savings and then taking the budget off the table. They're reinvesting that into more working media. And again, over time, we feel that if we can get them the best performance, they're going to spend more on our software. So that's really the thesis.

And just the last point, it's also just talking about competition. We do compete with Amazon, Trade Desk, Google. When it comes to Google and Amazon, Amazon isn't going to lower the price proactively of Prime Video CPMs to advertisers. That's really the important part of why we're passing through the savings to the advertiser themselves is they get the benefit of a buy-side-only DSP that works on their behalf only. And we think it's a big long-term strategic advantage against those 2 big walled gardens.

Our next question comes from Matt Condon.

My first one, Chris, you talked about lowering the barriers to getting budgets on to Viant through AI. But can you talk about just more generally, what are the switching costs? So what are the things that ViantAI that locks customers in and create switching costs to retain better over time? What are just the catalyst there with ViantAI? And then my second one is what opportunities are there for you to build more direct relationships with brands so that you don't run into the same problem of a brand just switching agencies in the future? Are there opportunities for that?

Yes. Really, the barriers that get lowered. The barriers of all DSPs is once somebody knows how to use your software, just like if you're using a PC or a Mac, you get lock in. And so a traditional DSP -- and we've enjoyed that as well. One of the things we want to do is actually attack that because what we're trying to do is lower the switching costs. So we know that brands are interested in moving off of incumbent DSPs that have extremely high fees and are not producing outcomes. So we want to attack both of those things. But we want to speed it up by removing any level of friction from switching from one platform to the other. ViantAI totally nails that. Whether it be from planning or ingesting plans that you've executed and campaign performance data on another platform, you quickly just onboard performance data from your previous campaigns into ViantAI and then it automatically builds into the DSP. It literally builds the campaigns. I was recently on a call with a customer just about a little over a week ago, where they were telling us that, hey, usually, I just uploaded -- we uploaded our most recent quarter campaigns. That usually took us a number of days, in some cases, up to a week. And now we're doing that in the matter of 1 to 2 hours. I said, my team absolutely loves it. And we love hearing that. That's what we want to see. That's why we built it. These things are very -- DSPs are similar to Bloomberg terminals. I mean it takes specialized training and knowledge. But if we want to increase the accessibility of the open Internet, we have to -- I don't know, the -- I would say maybe what, 10,000 to 20,000 advertisers are buying on the open Internet, and we look in walled gardens are in the millions. So ViantAI is directly going to go after that. It's good for our current core mid-market customer. It's pulling us up into the large end of the U.S. advertiser landscape but also is going to allow us to go down market to these millions of small business and direct-to-consumer e-commerce companies. So it's really about the switching costs away from another platform but also just the ease of use. We have to make it the most accessible.

And I'll address your question around the direct relationships with advertisers. So certainly, it's stung this quarter by not having it with that current relationship that we cited. But we are investing in the sales force now on building out this enterprise sales team to help drive the relationships with the advertisers directly. Many times, the agency partners are introducing us to the clients directly, but sometimes they don't. And so we have slotted for increasing the sales team to focus on this area to strengthen our awareness at the client level to make sure this doesn't happen again.

But Matt, one other point on that. So that hiring has been underway throughout 2025, and we've had great success. And so we're going to continue that -- we'll continue that investment there. And it's not a new thing if clients switch agencies. We just want to be able to protect for what happened here in this quarter. But those motions that we already have in place already are working really well.

Our next question comes from Barton Crockett of Rosenblatt.

I wanted to ask really two things. One is just kind of stepping back, I mean, the story that's emerged from this earnings cycle has obviously been one of some concern certainly for the larger player, the Trade Desk around competition from Amazon and maybe faster growth at walled gardens. And you guys had a good quarter, and you've got some specific reasons for why you see a slowdown in the next quarter. But I was wondering if you could talk about what you see in the environment, what's going on? How real are those concerns in your view about Amazon and walled gardens faster?

Yes. I think it depends by vertical category of advertiser, how important Amazon is from a DSP perspective. So certainly, Amazon sells a lot of consumer goods to consumers and where they have valuable transaction data in those vertical categories, they're going to be a big competitor there around CPG. But that being said, Walmart is also a big competitor and these CPGs distribute through 20-plus different retailers at scale. So certainly, in CPG, Amazon has great data and relevant data for those marketers. But I think if you take across the landscape as a whole, Amazon is really not that important when it comes to financial services, automotive and many, many different areas, when it comes to a data set, that would be exclusive to Amazon. So that being said, you mentioned the larger competitor, Trade Desk. If I had large international CPG where that a lot is sold through Amazon, I could see some pressure there. I think in general, most of these concerns around Amazon's competitiveness at the larger level are overblown from our perspective, but we'll see as it goes.

Yes. And I think just as far as walled gardens, I think it's -- if you look at their financial performance, many of them can just -- if you look at what they're doing, they're increasing ad load, they increase prices. I think that they have -- they do -- one advantage they have is that they have millions of advertisers, not in the thousands. And so that's something we're directly investing in to address to really go after the largest market share opportunity we possibly can. Specifically, when we look at any one of these players that are on the sell side, it's rare if we go to market and say, look, we're buy side only, and let me tell you the reasons why that's important to you. We're the only one that works on your behalf to get you the lowest possible price. I'm completely objective. I have no skin in the game on what media -- I'm not owed to any media owner whatsoever. We want to help you get the best possible performance. Laura's earlier question is a great question, which is, hey, you're saving all this money, but how can your contribution ex-TAC isn't growing as fast. That's proof right there that I work on behalf of the marketer, and I help them get the best performance possible. I want to pass most of the value to them. But I don't want to dismiss these competitors, these walled gardens. We don't want to dismiss them at all. They are a big competitive threat. If you add up those 3 companies, they make up over 60% of total U.S. ad spend. So we are investing heavily to compete with them head on and go after the largest market share opportunity we can. And we do believe we have things that they don't have, specifically in ViantAI that we think is going to help us address that huge market opportunity that really, it's only those 3 companies that largely play in the millions of SMBs, performance advertisers, e-commerce companies. And we're really going to go after that market opportunity and compete head on with them.

And then if I could just clarify just one thing on that $250 million number you put out there. Is that essentially a contribution ex-TAC number? Or is that a gross ad spend of which...

Yes, good question. That's a gross ad spend number.

So the CXT might be a percentage of that 20% or something like that.

Correct.

Yes. Our next question comes from Jason Kreyer.

So if we just step out and look at the total AI suite that you'll have intact maybe early 2026, what does that monetization opportunity look like? And how does that monetization opportunity compare to what it looked like before you had the ViantAI products in market?

Yes, let me start. I mean the way that I look at the full monetization opportunity is the ability to go down market to the millions of advertisers that Meta and Google actually have. We view that as their ultimate differentiation is that they have an advertiser in every single subcategory. And so we wanted to bring in a fully autonomous AI ad product across the open Internet that can scale. And I think that's the big opportunity that we're excited about ViantAI as it gives us a scalable play to go down market in terms of size of advertiser. I think that the monetization of it on the current customer set, you're seeing it with AI Bidding. We think there's even bigger opportunities around monetization with Measurement and Analysis as we fully roll that out. That will drive incremental revenue in the future. But long-term, Decisioning and driving outcomes for advertisers, we think it can drastically shape the revenue growth that we can produce.

And just a quick follow-up. The 3 customers you had talked about last quarter that delayed these campaigns, just any updates on if you had any more of that activity? Or if you still feel good about that spend coming online in the back half?

Yes. So those -- on that, so we did not -- in our Q3 guide, we did not factor them turning on their ad spend. So that's already in our guide. We didn't see any other advertisers affected and outright pausing budgets due to tariffs. And we -- I would largely just characterize the market as stable. Of course, we'd like to see all of these deals done by the administration sooner rather than later. I think everybody -- I think all management teams want certainty, especially around their supply chain. So -- but I would definitely characterize it that it has been pretty stable.

Our next question comes from Chris Kuntarich.

Just you had called out the political comp of 4 points in 3Q. Could you just remind us real quick what that was in 4Q?

It's about the same. Four points, maybe a little bit higher on revenue, but about 4 points of contribution ex-TAC.

Okay. And any sort of visibility at this point into that advertiser that was about 400 basis points of headwind to rev ex-TAC or there's 3 advertisers that were 400 basis points headwind to 2Q rev ex-TAC growth turning back on in 4Q?

No, we have not heard from them. Our guide for Q3, like Chris said, doesn't include them turning on spending, and we will wait and see. Next quarter, we'll give you an update.

Okay. And then just maybe thinking about the $250 million of gross spend and that coming online, could you just remind us from when a client is joining you all? How long does it typically take for them to get up to run rate speed? Should we be thinking about that $250 million as kind of a run rate number as opposed to a full year contribution?

Those are full year contributions of 2026 budgets. They certainly have -- depending on the brand, they have different seasonality Q1 to Q4. But these are wholesale DSP of record winner take-all budgets.

So in terms of onboarding, it's usually 1 to 2 quarters to onboard a customer. Usually 1 quarter, they're up and ramping in full. But just to clarify, the $250 million that we talked about, it has not all been won. We've won some of those pitches, but the others, they are still in decision mode setting up for 2026.

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