Hello, everyone, and welcome to Viant Technology's First 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 a few housekeeping notes for the program. As a reminder, this call is being recorded. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you for your attendance today. I will now turn the call over to Nick Zangler, VP of Investor Relations for Viant.

Thank you, Emmanuel. Good morning and welcome to Viant Technology's First 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 our guidance for 2Q 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 March 31st, 2025, under the heading Risk Factors and in 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 of 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, Viant. Tim?

Thanks, Nick, and thank you all for joining us today. We delivered record first quarter results across the board, outperforming our guidance across all key financial metrics and positioning the business for continued strength in the second quarter. Revenue increased 32% year-over-year and contribution ex-TAC increased 25% year-over-year. Strong top-line growth was driven by continued CTV demand, increased use of Viant's Addressability Solutions, including Household ID and IRIS ID, and further adoption of Viant's AI product suite. Notably, this marks our seventh consecutive quarter of greater than 20% year-over-year growth in contribution ex-TAC. Adjusted EBITDA increased 76% year-over-year to $5.4 million in Q1. This marks our ninth consecutive quarter of greater than 30% year-over-year growth in adjusted EBITDA. Before providing an update on our strategic priorities CTV, addressability, and ViantAI, I would like to first offer our insights and observations on the advertising environment in light of recent tariff announcements and explain why we believe Viant is well-positioned to navigate this period of macroeconomic uncertainty. Year-to-date through April, ad spend across our platform has been strong with little discernible impact from recent tariff announcements. Year-over-year growth rates for revenue and contribution ex-TAC increased in each month throughout the first quarter, with the strongest performance observed in March. Strong double-digit growth trends persisted throughout April. Generally, advertisers have thus far exhibited a heightened level of resilience to tariff-related macroeconomic challenges. Having weathered the late 2022 advertising downturn caused by fears of a recession that ultimately never materialized. It is only very recently that we have seen a small number of advertisers adjust their plans, redirecting ad spend from the second quarter into the latter part of the year. Should macroeconomic pressures intensify, we believe we remain positioned to outperform the broader advertising industry and our peers owing to a broad diversification…

Thanks, Tim. I would like to address three major industry topics head on. These topics have dominated the conversation with investors in recent meetings. They are, number one, big tech attribution, misrepresentation, and the growing preference among advertisers to optimize for incremental lift measurement. Number two, the emerging opportunity to win incremental ad spend from data driven advertisers, diverting spend from search and social. And number three, the investor misperception that Amazon is a material threat to Open Internet DSPs. Beginning with attribution misrepresentation. In our view, big tech's deceptive attribution practices are coming to an end. For far too long, search and social media have been wrongfully credited with outcomes originating from more impactful ad channels, particularly linear television and more specifically CTV. By gamifying Last Touch Attribution, big tech has convinced advertisers that it is the very last exposure to their ads that drive the final consumer purchase decision. But we believe this is a fallacy. Enhancements in CTV measurement reveal the true customer journey. CTV sparks consumer demand and display, search and social channels merely navigate the consumer to the point of purchase. Advertisers have been misled, and in some cases, this attribution misrepresentation has led advertisers to shift budget away from highly effective channels like linear TV and CTV to the detriment of their own brand. Look to the prominent sports apparel brand that we all know as a high-profile example. Just a few years back, they slashed their TV budget and went all in on the lower funnel channels like display, search and social. The result, seemingly positive lower funnel KPIs, but slumping top-line sales. Why? They dedicated too much of their budget targeting existing customers and failed to attract any new customers. And this is the realization many advertisers are waking up to. They…

Thanks, 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 first quarter, revenue for the quarter was $70.6 million representing a 32% increase year-over-year and exceeding the high end of our guidance range by 4%. Contribution ex-TAC totaled $42.7 million in Q1, up 25% compared to the prior year period and also above the high end of our guidance range. This represents our seventh consecutive quarter of 20% plus growth in contribution ex-TAC. It also marks our strongest rate of growth in five quarters, excluding the impact of seasonal political spending. We continue to see meaningful expansion in the number of customers generating significant levels of contribution ex-TAC. On a trailing 12-month basis through Q1, we saw a 37% increase in the number of percent of spent customers generating over $1 million in contribution ex-TAC. Additionally, contribution ex-TAC across our top 100 customers grew by 24% year-over-year on a trailing 12-month basis. New customer momentum also remains strong. Our top 30 new customers added over the past year generated, on average, more than $780,000 of contribution ex-TAC during the period, more than three times the level generated by new customers in the comparable period last year. This underscores our continued success in winning larger, more strategic accounts. These trends, fueled by growth from existing and new customers, reinforce our strong competitive positioning and support our ability to continue outgrowing the broader programmatic market. We delivered strong performance across most customer verticals in Q1 with ad spend across three of our largest customer verticals healthcare, consumer goods, and business services leading the way. CTV remained a core growth driver in Q1, accounting for…

Thank you, Larry. We'll now proceed to the Q&A session. We'll begin with Jason Kreyer, Craig-Hallum. Your line is live. You may begin.

Okay. Great. Thank you. This is Cal on for Jason. So maybe just first, if you could just provide a little more color on kind of what you're hearing from your customers today. And then just in particular, as CTV continues to become a larger portion of your spend base, how do you see that potentially insulating the fundamentals from any sort of downside risk on the spend side?

Yes, I'll take the first one or the second question on CTV. We're just seeing just incredibly strong growth there. There's secular tailwinds that we wanted to align ourselves with a few years back. I think we're successfully doing that. The Direct Access program continues to be a great selling proposition. The fact that we do not take fees, we're eliminating a lot of middlemen fees in there. So if a marketer wants to buy CTV, they're going to do that through Direct Access because they're going through less middlemen. It's a great proposition. And really the -- just the scale of our Household ID just continues to pay big dividends to marketers because they want to be able to target in CTV and that ultimately that plays out in the measurement where they see how impactful that is. Those are all the things combined that got that to the share that it is today at 45%. Do you have anything there?

No.

And sorry, Cal, what was your first one again?

What customers are saying, I believe, was the --

Yes. And are you specifically talking related to tariffs?

Yes, just kind of the sentiment and kind of what you're hearing from customers.

Yes. As we talked about, pretty limited in terms of the number of advertisers. If I were to characterize it, less than 10 advertisers. And those are predominantly in consumer goods and some retail. They had pretty direct exposure to supply chains that were hit by the tariffs. So we saw some delayed spending out of them in the second quarter and they postponed some of those investments into the second half. So there is certainly, as everybody is, you'll hear on other calls. There's some uncertainty out there, but we believe that marketers have become much more resilient. Just over the past, I think they've weathered a lot of storms. The kind of fake, economic recession or worries of economic recession in late '22 caused a little bit of a headwind to ad spend. But it quickly came back in Q1 of 2023. I think COVID there was certainly a lot of uncertainty in the market. Yes, there was a short pause, but marketers quickly responded. And I think what's happening now is I think there's a lot of scenario planning happening.

A lot of what-ifs.

Yes. Of, you know, it just -- there is uncertainty of tariffs, where they're going to land, who they affect, how they're going to handle pricing of their goods to consumers. So I think I know that there's a lot of scenario planning going and that's actually good news because when they're scenario planning, they're not sitting there, you know, dazed and confused. They're planning for multiple options. And I think it's going to set up, all things being equal, at this point, I think it's going to set up for a good second half of '25.

Yes, perfect. And then maybe just a quick follow-up. Can you just kind of walk through the process of convincing advertisers to shift spend away from search and social and just any key points that you're seeing resonate in the market to get these advertisers to move more spend to your platform?

Just to start, it's about education on the consumer journeys and what's impacting what and analyzing each channel independently and then all together. And we do a lot of this education but I would say so much is happening from even third-party measurement companies. You've seen Meta roll out incrementality models for people to use. I think more of the sophisticated advertiser set is definitely moving towards this move towards allocating spend based on incrementality. But it's a big sea change from the enormous wall of money that's been spent towards Last Touch Attribution. So I would characterize it as it's all about education. Now that streaming TV or CTV is here, we're able to connect the dots better on a journey from TV ad exposure, showed up on Google search, bought the product on your website or through a retailer. So now that we're able to connect those dots, it's really just an education process while the marketers understand that new path.

And I think, when your platform, which ours is the -- it's becoming the default measurement, experiment of choice with our clients. Over half of them are using incrementality to decide where they're going to spend their money. So you're educating them up front on trying out a new form of measurement of sometimes it's called conversion lift or sales lift, but really is I spend another dollar in advertising, what drove another sale, then marketers are heat seeking after that. And that's why you see the share of spend in our platform be in the last quarter here reached 45% in CTV. That is much higher as a percentage of mix of ad spend on our platform versus other -- versus competitors. And the reason is, is that their default measurement of choice is still Last Touch Attribution. And it's because they have such high preponderance of display ad spending in their platform. So if you use Last Touch Attribution it always shows things like search outperformance because it was the last ad before purchase or display ads last seen because there's so many more of them because they're such cheaper. But when you look at incrementality it's completely turned around. The CTV on average with our -- and this is other data that's out there, not just in ours, but on average, it has a 200% incremental lift compared to other formats and channels. If you look at search, social and much of display advertising, that's in the mid-single-digits to low-double-digits of incrementality. It's not even close. So, yes, we do some upfront education but really the marketers are just heat seeking. When they see those results, they're moving the money to what's driving the largest incremental impact.

Great. Thank you.

Thanks, Cal.

Next, Chris Kuntarich, UBS. Your line is live.

Hi, Chris. How are you? Emmanuel, maybe we'll come back to Chris.

Understood. Following, we have Matt Condon of JMP. Your line is live. You may proceed.

Thank you so much for taking my questions. My first one is just on the advertisers that push spend to the back half of the year. Can you just talk about your confidence in that spend actually coming through in the back half? Like what gives you that confidence that spends actually going to be there in the second half of the year? And then my second one is, is Google launched something that appears to be akin to your Household ID or at least they're implementing IP addresses into their DSP into DV360. Can you just talk about what the differentiation of your Household ID is compared to what they have on their platform? Thank you so much.

Yes, I'll take the first one. How we're confident in the money being moved to the back half. Those aren't verbals. That wasn't what we are characterizing. In our platform think of it like an order entry system. They are taking money. They may be taking some investment out of the second quarter, but they are replacing it. And so we already see that in platform and where it's scheduled. So we're highly confident in that.

Yes. And then just addressing Google kind of doing quite a sea change from where they've been over the last five years. What I would say is they would exclude and actually hide the IP address, as you mentioned, Matt. And so they've made a change to enable IP address for use across their products, our Household ID. So one thing that's important does not represent IP address. IP address is commonly used, I would say, amongst most industry ecosystem participants. What Household ID is focused on people based identifiers, where an IP address is a digital identifier that is out there with cookies. So what is Household ID? Simply put, it's your home address, your postal address, where we're then attaching other people based identifiers to that physical home address. Very different than what Google has enabled which is allowing the IP address to flow through Google AdX and their exchange there. So they focus on a digital identifier similar that an IP address could represent a Household but our data structure is actually based on physical address, not IP address. So similar but different.

Yes. And I think IP addresses, although an interesting turn of events for Google to know all of a sudden say IP addresses are good, when they have had years and years of scaring the ecosystem that one, these were privacy violations, and two, that they should be eradicated. Google actually did eradicate IP addresses in AdX, although they've come out and said that they are going to use them and they're okay now, they are not, still not passing that through AdX. So on one hand it's good and I do believe they made this move because of a lot of the monopoly trials that are going on right now. A lot of the investigations, they're trying to show that they're playing a little nicer, but if you read through it a little bit more, well, again, it's privacy for the but not for me. They are not passing that IP address through the AdX ecosystem. So I think that that's a little bit of a false flag from them. But nonetheless IP addresses just in general are probably not the most useful. A lot of times you get an IP address that comes across, it's a server side IP, it may not be necessarily the Household. A lot of platforms, like a Roku, run through a proxy, so you can't look at those. So it's not a panacea by any means, but certainly it's much different than our Household ID.

But exactly as Chris said, the IP address, Google has it on 100%, and if you want it as an industry participant, you have to call every publisher that you're buying from and ask them to enable it. So it's always a fake proposition of we're open and playing ball, but they secretly change rules behind the scene where it advantages them.

That's very helpful, guys. Thank you so much.

Thank you.

Once again, Chris Kuntarich, your line is live.

Can you guys hear me now?

Yes. Hi, Chris.

All right. Sorry about that. Just going back to the April comment. Any color you could share there versus the context of the 14% to 19% Rev ex-TAC growth guide for 2Q? And then just the second question would be around volume of new customer conversations. How is that trending right now versus the beginning of the year and how are you thinking about that contribution to Rev ex-TAC growth at this point versus how you were thinking about at the beginning of the year?

Yes. Good. Chris, can you re-ask the first question? I wasn't clear on what you're asking.

You had just said that April was strong persistent growth and just curious kind of versus the context of 14% to 19%. Was it within that range? Was it above that range? And how should we be thinking about that strong persistent growth in April?

Larry?

Yes, it was within that range. But typically what we see as we did in Q1, where we build month-over-month. So in Q1, February is bigger than January, March is bigger than February. So we start out the quarter strong. We were pacing to have nice quarter-over-quarter bumps more than expected in May and June. We did have this little the pause or the moving of some money from Q2 to the second half, which muted that -- those May and June growth rates a bit. But it's trending in the direction we typically see where it's each month is getting larger than the next. But the -- our overall growth rate, we're, you know, the impact of those handful of advertisers is about 4% to 5% lower growth rate as a result of that money moving out of Q2.

Got it. That's helpful.

On your next question, Chris. Volume new advertisers, as we said on our last call, our pipeline's never been stronger. We're getting much larger looks at bigger pieces of business, meaning larger and larger advertisers. We're pretty, we feel very bullish on the back half in terms of new customer pipeline. And in those areas, I would kind of put it in three buckets. One is just has been our CTV dominance. When a marketer comes to us and they see and they hear about the preponderance of CTV spend on our platform that they naturally ask why, they understand what they're spending in other platforms. And so as we go through the value propositions there in CTV with our scale of our Household ID and then the recent addition of IRIS ID, that's drawing a lot of interest and new business interest towards us. Just recently with IRIS ID we just had a good handful of -- and even in the first quarter of pretty good size, Fortune 500 brands shifting spend and testing IRIS ID and we see great results there. So pretty bullish on that. And the last one I'll say will be in the second half, that's going to contribute is ViantAI. A lot of the organizations, agencies, brand marketers, they see the value in AI, but there is a bit of -- they need to rework their organizations to be able to consume AI. They all want the efficiencies that it offers. And so we've seen a bit of that. But it's been tremendous for new business wins. And we really see a strong pickup of ViantAI in the back half of the year, helping automate workflows, moving work within agencies to more strategic work instead of the rote work of campaign planning and setup and bidding and buying. So we're really excited about that.

Got it. Very helpful. Maybe just one last one on the non-GAAP OpEx expenses in 2025. It was nice 1Q cost controls here. Anything we should be thinking about specifically in the back half of the year that would be driving this above where you were previously talking to? Thanks.

No, I think it's -- last we spoke kind of the 16%, 17% range. It does included in that is about 500 basis points relating to the acquisitions. So but overall, I think for the year, you're talking 16%, 17% growth.

Got it. Thank you.

Maria Ripps, your line is live. You may proceed.

Great. Thanks. Thanks so much for taking my questions. I just wanted to follow up on your macro commentary and just ask about three verticals. One is auto. I think, Larry, you mentioned that it's not that significant for you anymore. Maybe just comment on that. Then number two is the retail vertical. I believe that's a sizable kind of vertical for you. Maybe talk about that vertical more broadly. And then three sort of what are you seeing across your public sector vertical here more recently?

Yes, on the vertical, so in automotive, we definitely under index in automotive and specifically with OEMs we highly under index there. So we don't believe we have a lot of exposure there. Within retail, as we said, we saw some small impact. We don't believe that the most effected by tariffs in the retail category, we believe we're under index in that section as well. We've done a large analysis on this, but and within public services, Larry, you want to comment on that?

Yes, public services has been consistent. It was a big growth -- really big growth driver for us a couple of quarters ago for a couple of consecutive quarters. But it's holding steady and growing nicely.

Got it. And then secondly I just wanted to ask about your Direct Access program and you obviously have a pretty strong lineup of partners there. Are you looking to sort of to expand this functionality to add more content or more partners or more inventory? And is there sort of any difference in the economics for you between Direct Access, CTV, and other CTV spend?

Well, we don't charge a fee for Direct Access. And so, no, we do not make more, we don't make more by our clients buying through Direct Access. However, we do see the second derivative there, which is, if they're buying more efficiently, they're going to, in theory, they get better results and therefore they spend more money. So that's why we've held our stance there that we don't need to charge for this. It's a benefit to marketers when we can connect directly with content owners. So we want to maintain that.

Savings there.

In terms of other partners, really what we're doing now is you've seen -- you'll continue to see and you have seen us doing press with the likes of Disney's and Paramount's, not only putting them in Direct Access, but them adopting our Household ID. And there are scores of those publishers who have done that. That continues to add to our scale and Household ID and also with IRIS ID. I mean the fact that they're now picking up, we announced IRIS, TCL, CNN, Paramount. Excuse me, I said, IRIS. But Paramount was the big one. We've doubled the presence of IRIS ID in the bid stream on CTV since the acquisition. So that's extremely positive as we continue to roll that out. But basically we're making and continuing to reinforce Direct Access program has a lot of benefits, not just cost savings to marketers and that's why they keep spending more through it.

Got it. Thank you so much.

Barton Crockett, Rosenblatt. Your line is live. You may proceed.

Okay. Thank you for taking the question. I guess a couple of things if I could. One is in terms of the commentary around this broad transition in incrementality, you guys obviously point to your own experience. Your growth is kind of evidence of that. But it seems this is such a powerful idea that there should be broader evidence of it. The flip side argument could be maybe people just like your products and services. So what else can you point to that argues that this is really a big macro theme versus you guys selling a few products and services that people like?

You know what great question.

Very good question.

And it's one that gets asked quite a lot actually. One of the reasons why, I'll tell you why it's, one, it is a -- it is an industry theme. It is picking up steam. But I wrote a post on this on LinkedIn that old habits die hard. 80% of the money we believe that is in digital advertising is spent based on Last Touch Attribution meaning whoever showed the last ad right before a consumer purchase gets all the credit for it and the money flows that way. It's absolutely wild to think that that's where we are today. That you're not -- that you're essentially going to deprioritize things like television and say streaming audio, because those are not at the point of purchase ad products. But they do drive the data is clear of how much incrementality that they drive. And I believe that entire marketing organizations are completely built around these KPIs in digital advertising. I mentioned the sports apparel brand. I mean it's a great case study around this. There's many more. Starbucks was another example of something similar where organizations are geared towards better and better and more and more efficient KPIs and marketing, but at the same time or over time, they have slumping sales or top-line revenue. And so I think it is a little bit of a re-education to a degree. And part of this is really, I think CMOs understand this. They understand that TV drives impact and maybe a branded search term isn't responsible for incremental sales, but they keep buying it. And you have to ask why. And I just think it's the over measurement of things and oftentimes it's the presence of the CFO in the room of wanting more accountability for advertising. So although one thing may appear more accountable like Google search or display ads at the point of purchase, but we think that this is definitely changing. It's not just us, but it is something that we have to continue to educate in the industry around.

And part of just one piece, Barton is Meta came out and open sourced their model for incrementalities because so many advertisers are asking to measure incrementality versus the old traditional cost per customer acquisition. So I think it's -- you'll see more and more evidence come out. Yes, from our org. And I think you'll see a litany of research coming out that shows that branded search doesn't provide as much value as initial thought. Social provides less value than initial thought. And television really is the main stimulator of consumer demand.

Okay. Thanks for that. And then something on the guidance and the outlook. Correct me if I'm wrong, but I think you guys might have been saying in the last earnings that you expected your revenue to grow faster than your expenses and there to be some margin expansion of EBITDA as a percentage of contribution ex-TAC. Is that something you still see at this point?

Absolutely. For the year, we expect that to be the case. Our guidance is they're roughly equal in this quarter, primarily due to some of that money moving out of Q2 into the second half. But we continue to -- that's a big metric of ours that we're very focused on to ensure that we're increasing our EBITDA margins throughout the year.

Okay. And then if I could just throw on one more. In terms of Google, they have offered to make some concessions short of a breakup in terms of not using first look, last look, I think a couple of other things around the minimums, allowing publishers to differentiate, giving publishers, full view of what goes through. In your mind, do those -- would those be helpful if you didn't get the breakup, but you just got that? Would that be helpful to you?

No, no. Without a breakup, Google is a machine. And I think the hard part is that the antitrust cases are attacking search or ad tech or YouTube or the -- or let's say significant parts of the machine. But they all work in lockstep to control the flow of Internet traffic. What consumers get exposed to and what they don't get exposed to. I wrote a lengthy post on how Google is the real reason for MySpace's decline, not Facebook being from the inside. Looking at the internal metrics, what happens when you get taken off of page one of Google? You evaporate off the Internet is the answer. And so Google controls traffic at the start of the Internet journey for most consumers and they push that traffic wherever they want, usually to their owned and operated businesses that they either acquired or control through their ad exchange. So short of a breakup, there is no stopping that machine from going through. If you want to use instead of search, reach out via e-mail, let's say, well, they control Gmail, and they control if you go in the junk filter as well. And I can't tell you how an organization that big worked perfectly in lockstep to ensure all these pieces were there, but they did, they executed perfectly. And it shut out so many players. So I personally, in my opinion, is that short of a breakup, it would have absolutely no impact because they can continue to use the cash flow of business A to subsidize business B until the market participants are gone, which we saw over and over and over. So the mantra that Google came out with at IPO of do not -- do no evil is certainly we're substantially past that. I think the only solution for future monopolies from the government to do is to break them up. So there's actual repercussions for breaking the law.

Thank you.

Mauricio Munoz, Raymond James. Your line is live.

Thank you for taking my questions. Just wanted to follow up on the -- on your commentary about the modest demand being pushed out to the second half and apologies this was answered already been juggling within calls. But Larry did you qualify the impact of this event in your second quarter guidance?

Correct. We said it was essentially 3% to 4% of expected revenue in CXT, which equates to about a reduction in our growth rate that we would otherwise have had of a 4% to 5% across CXT and revenue.

That's very helpful. Thank you so much. And from a customer perspective, was this driven by your larger customers or the long tail of your small advertiser base? And what channels or formats were most impacted by the push out?

Why don't you take the first part, Larry?

Yes, so it was about five customers. No like extra-large customer, not really super small ones, kind of in the middle type customers. In terms of channels, it really was kind of typical of the mix that we normally see because the customers were all a little bit different in how they approach advertising. So it didn't heavily impact one channel versus another. It's kind of consistent generally consistent with the mix we ordinarily see.

Great. Thank you. And then, yes, to my question, and this is on the competitive landscape and Chris you did touch on this on your prepared remarks and I'm talking about the perceived competitive threat from Amazon. So, yes, there's been a lot of attention and some of our checks continue to suggest that Amazon is looking to expand share at price point and this is at the very high end of the advertising base. So with the understanding that you are more on the main market, I might not even see this. Maybe you can talk about the defensibility of Viant if other scale DSPs were to come down market and start competing with you for more of the mid to smaller advertising and agency opportunity given pressure from Amazon or worsening of the macro backdrop. But if you can comment on that. Thank you.

Yes. Well, I would just classify Amazon as they compete with many, many, many verticals out there. And then I think what the perception by investors around Amazon is around their data that they have this amazing data set. And of course within the retail product category their data set is very, very strong probably second to none out there. But if you look at other verticals like automotive, quick service restaurants, travel and tourism, the data set that Amazon possesses has no benefit to that vertical category and they have no position of strength there. So certainly in retail, if you sell consumer goods, they are going to have a great data set for you as an advertiser. I think secondarily, what's driving their revenue growth is the sale of merchandise through their store. And in turn, they require people to spend in advertising based as a percentage of those gross merchandise sales through their retail store. So I think a lot of the growth is really due to the sale of merchandise to the end consumers, that's powering their ad platform. For retail consumer goods businesses, Amazon is going to be a really good partner for you and probably already is and critical to your success. But if you're in financial services, automotive, quick service restaurants, many, many, most other vertical categories that make up the advertising industry even at the Fortune 500 level, Mauricio, their data set has no value to your business overall. So I think overall it's less just about a mid-market versus big customer setup and more about what proprietary data does Amazon have and where does that give them a competitive advantage. That's squarely for the most part in retail and not so great in most other categories.

And, Mauricio, one other point too just to dispel any misunderstanding, in the mid-market, Google has been in the mid-market, Trade Desk has been in the mid-market, and mid-market customers do buy advertising from Amazon DSP. But as Tim had talked about, most of that is sponsored listing ads. So we don't really see them in the true DSP self-service arena. Much of what we see even right now is really Amazon going around trying because they've under delivered with their upfront commitments because viewership is down in Prime Video outside of a few big franchises like Thursday Night Football, they're trying to place those ads somewhere which is why they're going to say, hey, I won't charge a fee for that, which I think is a larger problem for them. So we've competed with large companies even in the mid-market and we've been able to win share there. It really is, we don't see them in the true self service space. They do get ad commitments, as Tim's saying. They do get those predominantly in the retail media side and sponsor listings area.

Helpful. Thank you. That's all from me. Thank you.

All right. Thank you, Mauricio.

Thanks.

All right. Nat, I see you on there. We'll take your question.

Yes. Hey, guys, just wondering, I've been hearing a lot about advertisers and really large agencies beginning to bulk a little at the cost of the ad tech stack. And specifically relating to one particular competitor that has gotten pretty expensive. How have you guys? And you are now growing solidly better than that competitor, mostly because your CTV side, which is the growth area of the industry. How well have you been -- how are the conversations going with the large agencies and how much room is there to move up market in the current environment?

Yes, thanks for that, Nat. Yes, we are, as we've said in our last few quarters, we certainly are moving up market within what we still want to call the mid-market. A mid-market advertiser spends between $50 million and up to $1 billion a year in advertising. But they're US-based national advertisers. That's how I would characterize them. So we are getting bigger swings at larger accounts certainly. One of the, yes, there are -- there's always groans of anytime, and if I look over the last 10 years or 15 years, you hear where there's inefficient pricing, customers may be getting charged too much. That's always an opportunity for a challenger brand. But it's kind of in our ethos. It's why we don't charge for things like Direct Access. Because I don't need to. Why not pass the value to the customer? One, why don't I give an easy win to our salespeople when they go out and compete against somebody who's charging for the exact same thing and we don't? That's just a big win. And we can win more customers a lot faster. We want to do that. We may offer other -- we may have other pricing mechanisms that aren't fixed costs, but maybe are value-based pricing. So we only make our fee if we're providing value there. So there's things that we do where we don't need to charge. We are widely noted as being more efficient from a pricing standpoint compared to larger DSPs. That's always served us well. And I think that's an area where we can stay because, from an efficiency standpoint as a company, we don't need to charge those things and we can still grow our EBITDA percentage.

But, Nat, specifically around the competitor that you mentioned, what around the Trade Desk, what people are sick of is the incremental fees. Not so much the platform fee, it's the incremental fees that are getting charged. And I believe with the rollout of Kokai, there were substantial increases in incremental fees. And that's really what the chatter that you're hearing about as well as it automatically opts you in to purchase through their open path SSP solution. So I think those are the major issues amongst the competitor side. We really don't play that game though of trying to go tit for tat on pricing. We price what we think is fair. We try and not charge as many incremental fees as the other customers. Of course, if someone asks for third-party something, there are incremental costs, but we just try and do our best job at negotiating the take rate straight across the board and providing as much transparency and visibility into what's driving value for them. Thank you, Nat.

Sorry I wanted to just follow-up.

Yes.

You guys talked a lot about Amazon here. And following up on the specific pricing issue, one of the things we've been hearing from advertisers and agencies is specifically their lack of nickel and diming kind of as you brought up, that has been a problem, particularly at the large agency side. I know that in the end though, what's going to matter is the total percentage of the dollars that are being taken by the ad tech stack. How do you compare? Right now if I wanted to put you versus Trade Desk, where do you think you come out in price on DSP plus data? And I know it can vary, but on a -- for an advertiser and is it -- is there a significant difference?

Yes, I'm sure every advertiser is somewhat different because I think the more scaled and I think in all DSPs, the more an advertiser spends, the better the deal they may end up getting. But what we say is we get head-to-head all the time and it's pretty simple. Pick your -- pick whatever you want to buy, Mr. Marketer, buy whatever publisher you want. What's the CPM? You don't have to do a lot of brain surgery. What can you acquire that content for? Put an audience on it, use the same audiences in both platforms. What do you see and we come out ahead on those all the time, and really, I would say it's more indicative of our customer base as well. We believe in the mid-market that they are much more data driven than in the Fortune 100. It's not that the Fortune 100 doesn't, that they're just buying ads, but a lot of them don't have a heavy reliance on e-commerce. They're not doing monthly and quarterly planning, looking at incremental return on ad spend as much. They're looking to move a million cases of toilet paper. So they may not be buying as much data in the market because everybody buys toilet paper. So our customer set, we believe is, largely different. And I, without a doubt, there is a high scrutiny on, as you say, the ad tech tax. There's a very high scrutiny. And what I will say is if you're not delivering the returns and if your costs get out of whack and fees that you charge are too much, their results will suffer. And so it's obvious what happens. They may move their spend to another platform.

And I think there's just to add some color to that. There's huge infrastructure costs that someone like the Trade Desk or Google has to carry to support the large holding companies, which is operations in 40 countries or 30 countries wherever that footprint is. Those international operations are all money losers, absolute money losers. And so you have to in the profitable business is actually in North America or the US specifically. So what you end up with is inflated take rates to pay for this international infrastructure that never spits out anything but losses. And that's where I think the main frustration is stemming from, is you do have an inflated take rate. But it's these platforms are required to support that holding company in 40 countries and ad spend across those 39 other countries besides the US doesn't support the staff that's required to be there. And this is always why our strategic perspective was to stay on US, national advertisers, what we call the mid-market, and focus on there because we hit operating leverage in our business model at substantially lower ad spend flowing through our platform than the Trade Desk did historically when they went public and were building their business. So we think we have a strategic advantage not having to support this enormous money loser of international operations and digital advertising because the ARPU of ad spend there is just not supportive in those other countries.

Makes sense. Thanks, guys.

At this point there are no more raised hands in the queue.

All right. And with that we'll close the call. Thank you everyone for joining Viant's earnings call. See you next quarter.