Hello, everyone. And welcome to Viant’s Fourth Quarter 2022 Earnings Webinar. My name is Kelsey, and I will be your operator today. Before I turn the webinar over to the Viant leadership team, I’d like to go over just a few housekeeping notes for the program. As a reminder, today's webinar is being recorded. Attendees are in a view and listen-only mode, but following the speaker's remarks, there will be a question-and-answer session. Thank you for your attendance today and I will now turn things over to Nicole Borsje from The Blueshirt Group.

Thank you, Kelsey. Good afternoon. And welcome to Viant Technologies' fourth quarter 2022 financial results 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 our guidance for Q1 2023, that are based on assumptions and subject to future events, risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update 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 registration statement on Form 10-K for the year end of December 31, 2022, under the heading Risk Factors and 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 GAAP to non-GAAP measures, are included in the news release we issued today 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, Nicole, and thanks everyone for joining us today. I'm pleased to report that we finished the year with Q4 Advertiser spend revenue and contribution ex-TAC tech results consistent with our guidance and adjusted EBITDA significantly exceeding our guidance, which is a testament to the hard work of our teams managing expenses and driving operational efficiencies. Last month marked the two-year anniversary of Viant's IPO, a notable milestone for the company. While the past COVID market environment has been volatile to say the least, our mission and purpose has remained consistent: to provide advertisers with a market-leading solution to buy and measure omnichannel digital advertising as the industry puts more emphasis on privacy protection and moves away from cookies and device identifiers. We've been steadfast in executing on this mission, introducing new capabilities to our platform, including our world without cookies release, as well as numerous other features and data solutions to help advertisers with measurement and attribution using our household ID technology. There is no question that Viant has already been skating to where the puck is going in the programmatic advertising industry, and we feel very confident in our positioning and market opportunity for the future. Looking ahead, there are three key trends that we believe will continue to shape the ad industry and our business in 2023 and beyond. I'll touch on these trends and why I believe we are well positioned to benefit in this evolving landscape. The first is the growing importance of AI and machine learning, or as we have previously described, our vision as autonomous advertising. At Viant, we are focused on delivering products that take away the laborious tasks of humans using these programmatic ad platforms—tasks like creating an ad campaign or ad format and selecting channel device publisher, and ultimately deciding bid prices for inventory. By leveraging AI, we will be able to automate many of these processes and provide our customers a more efficient experience and reduce the amount of time and people it takes to optimize these complex and almost infinite combinations of choices for programmatic traders. We made tremendous progress in this area in 2022 and believe that we have a substantial lead over our peers. We are excited to begin making these AI innovations public later in the year. Our customers can expect increased efficiency, higher return on investment, and a better and simpler experience overall as we continue to integrate AI tech into our products and services. Our focus on AI is part of a broader mission to make advertising more efficient, effective, and sustainable. This brings me to the second trend: connected TV. CTV is a trend that is rapidly growing in the ad industry, and we are excited about the growth opportunities it provides for our business. CTV represents more than one-third of total spend on our platform, and according to E-marketer, the U.S. CTV ad spend market will grow by 27% in 2023, and it's expected to continue to grow at double-digit rates over the next few years. The benefits of CTV over linear television are vast, and we believe this is a significant driver of the shift. With CTV, advertisers can reach their target audience in a more precise manner, increasing the measurability, effectiveness, and ultimately the return on ad spend of their ad campaigns. Another benefit of CTV is that it offers a more immersive experience for viewers, allowing for better storytelling opportunities and enhanced brand awareness. It also offers an environment where viewers are less likely to multitask or change the channel, which increases the likelihood that the ad will be seen and remembered. Viant's patented and scaled Household ID is a differentiator that gives our customers a unique advantage. With household ID enabled across 80% of the bid stream today, we can identify individual households that have connected devices like smart TVs, smart speakers, and mobile and desktop devices, and then deliver ads that are tailored to their viewing habits and preferences. This allows for more effective ad campaigns and the ability to provide a higher return on ad spend for our customers today. Additionally, because the household ID is deterministic, we can match data with precision, meaning our customers can use our platform to run more cost-efficient campaigns reaching their desired audience without wasting ad spend on irrelevant viewers. Viant’s scaled Household ID is just one of the many differentiating factors driving our customers to consolidate their ad spend on our platform, and it distinguishes us from our peers that are reliant on cookie-based tech that does not scale in the new emerging technology channels such as CTV. Looking to the future, we believe that the shift from linear TV to CTV is still in its early stages. There is still over $60 billion of linear TV ad spend that is yet to move to CTV, and we expect this to happen over the coming years. With Viant's focus on innovation and commitment to providing value to our customers, we believe we are well positioned to capitalize on this shift and continue to drive growth in the CTV market. The third trend that we are seeing this year is the increasing focus on sustainability. Here at Viant, we believe that sustainability is not just a trend, but a responsibility. Our electricity program is a prime example of how we are leveraging our technology to help our customers achieve their carbon reduction goals. According to recent statistics, 83% of the Fortune 500 companies have a stated carbon reduction goal, and 75% of consumers consider sustainability in their purchase decisions. Therefore, it's crucial for businesses to focus on minimizing their carbon footprint in supporting their customers and vendors and reducing their carbon footprint. Viant's Electricity program is designed to help our customers, both ad agencies and advertisers, accelerate their carbon reduction goals through the purchase of wind and solar renewable energy credits, which can be used to advance their publicly stated carbon reduction timelines. This means that by selecting Viant as their DSP, our customers can significantly advance their sustainability goals. We're proud to be focused on this area and believe that programmatic advertising can lead the way in promoting a sustainable economy. We're also focused on sustainability in terms of the programmatic supply chain. We have partnered with Scope3, an independent company offering a carbon calculator that provides a comprehensive view of carbon emissions throughout the digital ad supply chain. Scope3 is quickly becoming recognized as an unbiased standard for measuring carbon emissions across the advertising industry. Their rigorous methodology assesses every website and app providing detailed information on carbon emissions at each stage of the supply chain. This valuable partnership enables Viant to identify heavy polluting publishers and intermediaries and enables our customers to accelerate the reduction of their carbon footprint through sustainable ad spend. This partnership, in combination with our electricity program, enables our customers to reduce their Scope 2 and Scope 3 carbon emissions. At Viant, we have committed to becoming carbon neutral with respect to all known and measurable emissions from our energy usage by the end of 2023. Sustainability is a key part of our mission, and we're excited to continue driving progress in this area. In closing, we see the growing importance of AI and the accelerating adoption of CTV as two major tailwinds that we stand to benefit from in the years ahead. At the same time, we are leading the industry in our mission to support our customers as they look to meet their sustainability goals and believe this presents a meaningful opportunity for Viant in the long term. We are well positioned to win share in the market as we continue to deliver innovation for our customers. Now I'll hand the call over to Chris to discuss more around the business.

Thanks, Tim. We had a strong end of the year, with active customers increasing 6% year-over-year to 326 in Q4, driven by growth in mid-market ad agencies and client direct customer segments which helped drive advertiser spend per active customer by 9% year-over-year. Additionally, we continue to see growth in emerging channels in Q4 with digital at-home increasing 55% year-over-year and streaming audio increasing 38% year-over-year. As many of you know, our primary focus is on mid-market agencies and direct advertisers. I wanted to highlight our strong growth in this area in 2022. For the full year 2022, these two customer segments represented about 65% of our total advertiser spend. I'd like to unpack this a bit more and talk about why we are succeeding in these market segments. First, mid-market agencies not only select us based on our innovative programmatic ad buying platform, our proprietary data services, and forward programs like electricity, but they also value our flexible engagement models and our keen focus on customer success and support. Our scale competitors often evolve to a one-size-fits-all model geared towards the largest, most resource-rich companies and the five largest ad agency holding companies. According to statistics, there are over 14,000 advertising agencies in the U.S., which means there is a very large mid-market opportunity that exists today. Most of these agencies sit outside the few large agency holding company groups, yet they control a large portion of the total advertising spend market. Mid-market agencies have become an increasingly popular choice for many brands and advertisers in recent years because these agencies often provide more flexible engagement models that cater to the unique needs of mid-size businesses while also offering a more tailored approach to advertising and marketing services. Additionally, the mid-market agencies tend to have clients that require a greater focus on their return on ad spend. This focus is a big reason why our measurement offering has such great adoption with these clients. A new partnership in 2023 that I would like to highlight is with Empower Media, America's largest female-owned media agency. Empower is a strong independent agency led by Ashley Clark with an exciting roster of both national and regional clients. As a preferred DSP, we not only help power their programmatic advertising capabilities, but we enable them to bring true differentiation to their current clients, and we look forward to helping them as a partner in winning new business. Our mid-market advertisers are another segment of growth and are responsible for emerging vertical growth areas like sports betting, direct-to-consumer, and retail media, just to name a few. These businesses are rooted in first-party data, efficient programmatic buying, and driving customer acquisition growth—all common traits in what we look for in bringing on the right types of mid-market customers. Next, I would like to highlight some of our top business priorities in 2023. Number one, we will be launching a major upgrade to our Viant data lake that will now be named the Viant data platform. This upgrade will include all of the incredible features of our data lake offering with significant improvements to the overall user experience. Additionally, we will be introducing enhanced capabilities to continue our lead in cross-cloud and cross-clean room identity matching as well as measurement solutions for our clients. The Viant data platform will allow customers to seamlessly match their first-party data across publishers and platforms where cookies don't exist. This is the process utilized when targeting audiences and measuring return on ad spend in cookie-less environments. We believe this will be the way forward in how the industry operates in a post-cookie world. Moving to number two, we have previously discussed our vision for autonomous advertising, and at the core of that vision is our ability to develop products leveraging machine learning and artificial intelligence. This year, we will release a steady cadence of these features that are all aimed at helping our clients achieve the most efficient CPM pricing while increasing campaign performance KPIs, which result in lower customer acquisition costs and higher return on ad spend. And lastly, number three, we are launching a new program called Direct Access. Direct Access is a program that creates the most efficient supply path for our customers by creating partnerships with premium content owners to merchandise their premium content to our clients directly. This program will drive a more efficient supply chain, provide bids on ad impressions directly to publishers, and eliminate unnecessary carbon emissions by eradicating duplicative ad requests sent to our platform. We know innovation drives success in our industry and we are squarely focused on winning here. Next, I'd like to touch on the cost realignment efforts we undertook in the second half of 2022. This included reducing our employee headcount by approximately 13% in Q4 and actively managing our expenses. Despite the reduction in non-GAAP operating expenses, we were still able to invest in our product and technology product and technology teams, nearly doubling the size of our product teams in the second half of 2022 while also growing our engineering staff by 20%. Since year-end, as the level of talent available on the market has increased substantially from a year ago, our new team members come to us from Amazon, Apple, Meta, and Snapchat, to name a few, and will help accelerate our ability to fulfill on the autonomous advertising platform. We envision that our efforts to reduce costs and increase efficiencies will continue, and we are confident that we can maintain our strong position in the market. To that end, we were recently awarded G2's 2023 Best Software Award for marketing and advertising, which is true validation by actual users of these software platforms. We will continue creating a lane for ourselves in this massive market opportunity of programmatic advertising. Thank you, and I'll now turn it over to Larry to provide more details on our financial performance.

Thanks, Chris, and thank you everyone for joining us today. Before I begin, I'd like to remind everyone that we have posted a presentation to our investor relations website with supplemental financial information to accompany today's presentation. As Tim mentioned, we are pleased to report that our Q4 performance was within our previously issued guidance for advertiser spend, growth, revenue, and contribution ex-TAC, and for the quarter we exceeded the high end of our previously issued adjusted EBITDA guidance by 160%. I will talk more about this in a moment, but during the quarter we remained extremely focused on driving operational efficiencies in the business, which we believe sets us up for meaningful adjusted EBITDA profitability in 2023. For the fourth quarter, advertiser spend across our platform decreased 13% over the prior year while increasing 9% over Q3. For the full year, advertiser spend increased 15% year-over-year. In the fourth quarter, revenue was $54.5 million, a decrease of 34% versus the prior year period and an increase of 12% versus Q3. For the year, revenue totaled $197.2 million, representing a decrease of 12% year-over-year. Contribution ex-TAC for the fourth quarter was $33.4 million, a decrease of 31% versus the prior year period and an increase of 4% over Q3. For the year, contribution ex-TAC totaled $124.7 million, representing a year-over-year decrease of 12%. There are several key points I'd like to highlight relative to both Q4 and the full year 2022 top line performance. To begin with, we started 2022 with accelerating growth and spend across our platform, with advertiser spending in Q1 increasing 44%, well above industry growth rates. That momentum continued in Q2, and we again saw strong growth of 32% for the quarter. We began seeing the early stages of a pullback in spend by some of our clients in June due to macroeconomic concerns that pullback continued in Q3, with growth in spend slowing to 19%, and ultimately these challenging conditions resulted in spend declining year-over-year in Q4. In terms of customer verticals, as we discussed on our last earnings call in Q4 2021, we did exceptionally well in the jobs and employment customer vertical. These customers spent significantly to close out 2021 in an effort to capitalize on the heightened demand for labor, leveraging our fixed pricing option. In Q4 2022, customers across this vertical reduced their spend by more than 95% as labor markets cooled. This dynamic alone contributed to about half of the revenue decline and well over 40% of the decline in contribution ex-TAC in Q4. The good news is that we do not expect any continued weakness across this vertical to have a material impact on 2023 as spend throughout 2022 across this vertical was de minimus due to the changes in the labor market. In terms of other notable customer verticals, I'd first like to touch on our largest customer vertical—retail. As we mentioned last quarter, growth across this vertical began slowing in Q3, and that trend continued in Q4, with retail spend down year-over-year in the quarter. In contrast, our travel and gaming verticals continued to perform exceptionally well despite the macro weakness, with both posting strong growth in Q4. And for the first time in several quarters, our CPG and automotive verticals showed solid growth during the quarter. In terms of advertising formats and channels, video, which includes CTV, continues to represent over 60% of advertiser spend on the platform. As Chris mentioned, streaming audio and digital out-of-home continued to perform exceptionally well in the quarter, with more and more customers engaging with these emerging channels. We ended the year with 326 active customers, an increase of 6% or 17 net new customers on a year-over-year basis. Advertisers spend per active customer also increased 9% on a year-over-year basis, and percent of spent customers spent on average nearly three times more than fixed-price customers in 2022. Non-GAAP operating expenses, which are defined as the difference between contribution ex-TAC and adjusted EBITDA, totaled $30.7 million in the quarter, representing a year-over-year decrease of 1% and a quarter-over-quarter decrease of 9%. During the quarter, we prudently managed costs, reducing our workforce by approximately 13% in December, and significantly curtailing our discretionary spending. As Chris mentioned, at the same time, we continued investing in our product and engineering teams to further advance our efforts towards our goal of developing an autonomous advertising platform. Our actions in Q4 realigned our costs with our top priorities for 2023. For the fourth quarter, we generated adjusted EBITDA of $2.6 million, which exceeded the midpoint of our guidance by approximately $3 million. The better-than-expected result is due to the previously mentioned cost optimization actions that we took during the second half of the year. From a liquidity perspective, we ended the quarter with $207 million in cash or $3.35 per share outstanding. We also had $228 million of positive working capital and no debt. We believe our strong balance sheet positions us extremely well to take advantage of the significant market opportunity in front of us. With that, I'll now turn to our guidance for Q1 and I'll provide some color on our full year 2023 expectations. Many of our customers are navigating a challenging macroeconomic environment, which creates a volatile demand environment. Given this uncertainty, we believe there could be a wider range of outcomes for Q1, which was reflected in our Q1 guidance. For the first quarter of 2023, we expect revenue in the range of $39 million to $42 million, which represents a year-over-year decline of 5% at the midpoint of guidance; contribution ex-TAC in the range of $25 million to $27.5 million, which represents a year-over-year decline of 4% at the midpoint of guidance; non-GAAP operating expenses of approximately $30 million, which represents a year-over-year decline of 5% and a quarter-over-quarter decline of 2%; and adjusted EBITDA in the range of negative $2.5 million to negative $4.5 million. A couple of general observations about our guide for Q1 and our outlook for the year: Q1 2022 was a strong quarter for Viant, creating a tough comp for the current quarter. As I mentioned earlier, in Q1 of last year, we saw 44% growth in ad spend across the platform. As we move through 2023, year-over-year comps will become easier as we began seeing the impact of the macro weakness beginning in June of last year. As such, we expect improving revenue and contribution ex-TAC growth rates as we move through the year. We also expect the adjusted EBITDA to increase each quarter as we move through 2023, driven by the cost reduction initiatives in the second half of 2022 and increasing revenue and contribution ex-TAC. We intend to closely manage expenses in 2023 while continuing to make focused strategic investments with the goal of generating meaningful positive EBITDA in 2023. In closing, while macroeconomic uncertainties are contributing to a challenging market, we continue to be encouraged by the increasing adoption of our platform, and we remain confident in our ability to deliver long-term top-line growth and EBITDA expansion. We believe our points of differentiation will enable us to successfully capitalize on the growing market opportunity in front of us. We are confident that our strong balance sheet, strategic investments in technology, and disciplined cost management during these challenging times position us to continue growing our market share in this fast-growing programmatic market. That concludes our prepared remarks today. And with that, I will now turn it back over to the operator to open the floor to questions.

Thank you so much, Larry, and again, we will now move into taking your questions. Our first question will come from Nat Schindler with B of A.

Great. Hey, thanks, guys. So Larry, you said that you, as the comps ease on because the macro concerns affected your business mostly in the second half of last year, that you'd see growth improving throughout the year. We're still really kind of waiting for this recession that everybody's been calling for. What would happen to your customer base and their spending habits if we really saw consumers begin to feel this recession and consumer spending fall off?

Yeah, I mean, our comments I gave on the '23 guide really assume somewhat of an improvement in the second half. It doesn't assume a full improvement in the second half by any means. Certainly if things turn out worse based on what's going on in the economy, we could have further softness. But you know, we're pretty comfortable right now based on what we put out that I think those are realistic targets at this point for us.

Now, this is Tim. I would just add to that programmatic advertising, generally speaking, is a leading indicator for recessions—just ad spending in general. It's one of the variable expenses, given the nature of programmatic that you can hit pause or scale back at any moment. And so I always view us as a forward indicator. As you see us start to rebound or other players in the space, that would be a leading indicator for the economy.

And if you look across a lot of the online brand spend players, they took it in the worst around Q3. Things and your predictions coming into Q4, you got better than you expected. What was happening, call it September, October versus what was happening November, December, January, February? That kind of changes the view of what advertisers are acting?

I would call it stabilized. I would say it's slow, but stable is the best classification that I would call it where we saw in the back half of 2022 a deceleration continuing. So the first month of the quarter would start out and it would continually weaken throughout the quarter. I would just classify it as starting to stabilize at this point, still slow, but stable.

And I’m just clearly if any of us are talking about the economy, we're only pontificating. However, what I do think is based on a lot of our discussions with clients and just hearing from other companies, I think that everyone was waiting for the other shoe to drop last year, and it was going to be a lot worse. And I think in the fourth quarter, especially if you look at retail, they expected a huge consumer pullback. I don't think we necessarily saw that. There was some instability there, definitely de-sell, and instability in the outlook, but I think what's different, what we're seeing right now is stability in the outlook. Although it's a slow start to the year, management teams were slow to get budgets set and therefore delayed ad spending. That's just across the board. You're hearing that everywhere. But I do think I would characterize it that I don't think the outlook is as unstable as it was in Q4, and I think it has stabilized and we do see there's going to be a pickup. I mean, we saw it in February; we saw a nice bounce from January, and that was pretty strong. We think that continues, but again, I think we're being pretty realistic in our outlook.

Yeah, one other data point that I would give you, Nat, is so retail, which is our largest customer vertical, was down pretty significantly in Q4. While it's still down in Q1, it is not down nearly as much as it was down in Q4. So, you know, that speaks to the kind of stabilization of what we're seeing across our clients.

And we will now move on to Laura Martin with Needham and Company.

Hi there, you guys. So just a couple from me. Loved all the new business stuff. So data direct access, which I'm going to call open path because that's what trade does; calls it. And measurement, my question is business models, are those up-sells, or are they just going to be wrecked into the platform so you get new business faster, or can we like make more money from a new revenue stream from some of these what do you think?

So you had said data platform. Okay. So I mean each of them are a little different. I think that direct access is less of an opportunity where we're looking to make more money but really simplify the supply chain. We're hearing it from a ton of clients around that. I see that as us being able to win new customers. That's the first comment on that one measurement. So the big thing on measurement is if you go back, you know, the digital marketer in years past just had this easy report, and it was in double click, and they could look at all, they could attribute all of their sales or conversions to all of their impressions, so to speak. And over the last, you know, 18 months, that is no longer the case. Marketers have a hard time understanding when they spend money, what are they getting, what are they getting in return. And so they're looking at platforms like us to do more. And we really stand out there. And that actually is a bit of an up-sell that is more of a premium offering that we get paid a little bit more for. So I think that for us is more of a driver there. And I would say the data platform is really going to be meant the why. So the change of the name, one and then two of the feature sets that we're really adding on is really going to drive, it's going to allow customers—all of our customers that have signed up to companies like Snowflake and all these other clean rooms, they've all done it, and the data's there, but they have no idea how to get it out of there and put it to use in advertising. Same thing we're seeing with content owners. They have large authenticated user bases, watching CTV, but they don't know how to connect that data in a privacy-friendly way with market or first-party data for targeting and then also for measurement. So again, I think that what we're doing is making it very seamless from publisher to advertiser to match first-party data sets to really drive the buying. I see this as a massive differentiator, and it's going to allow us to see active customer growth.

Super helpful. And then one of the things that leaned last year on revenue growth was this transition from managed service to self-service. Are we through that, or is that continued into Q4 and continuing going directly to self-service from managed service?

Yeah, in Q1 we've pretty much lapped the impact that accelerated mix shift that happened in '22. So in Q1, our growth rates, because what happened last year you could see that our spend growth rates far exceeded or significantly exceeded our growth in revenue and our growth in ex-TAC. In '23 that is not going to be the case. They're going to be much closer because the mix shift really occurred all throughout last year. It will continue to some degree this year, but on a much smaller scale.

Hi guys, thanks so much for taking my questions. I want to try two industry questions. So one of which is can you guys just talk about how clients are speaking about the DOJ case against Google? What are they saying to you? How are you guys thinking about that? And then secondly on CTV, Disney is now live with their ad products, so is Netflix, as you guys are starting to see more supply coming to the market, are you guys seeing any changes there as just consumption on the user side continues to ramp with AVOD?

I'll take the DOJ piece. I think it that with a player the size of Google that if there was any smaller player that was caught with their hand in the cookie jar the way that they were, they would have faced major punishment right away. But because of the size of Google, I think that that was slower. And I don't think that any of this was news because a lot of this was leaked out there already. But it is so clear when talking to clients that Google is so conflicted and when you have the level of market power that they do, they use it to their own benefit. And I believe that that is driving a big push for more independence and why buy side only, at least for us, I think plays really well. We're definitely seeing that. I definitely believe that they've been losing share on the DSP side because of those concerns. But now I think it's really come to the fore, and clients are looking, I do believe there will be a lot of switching there—that clients want an independent buy side to represent them as the buyer of the ad, and they don't want someone conflicted on the sell side as well. So I think that that plays really well for us, especially on continuing to grow active customers this year. On the supply question, just around Disney and Netflix adding their supply, I mean, what does increased supply like that mean for connected TV? It means it's more competitive this year compared to last year when against linear TV. And again, linear TV is the budget that all of us are focused on pulling from to drive our CTV growth figures. And so now with Netflix, that isn't available on linear TV, that's going to cause more budget to shift from linear to CTV. But I think all content owners are pretty much aligned at this point. The major media companies that streaming is the future linear television, the traditional cable and satellite is the past. And so I think even when you look at their content selections, they're putting content on their streaming apps first, which then reinforces that consumer demand to go there to get it. So for us, the increase in supplies and increase in competitiveness, I think when you couple the increase of supply with the ad recession that we're currently going through, that's a big win for programmatic advertising because we are usually plugged in to fill that gap in demand. And I see that as a big positive for DSPs and programmatic in general this year.

Thank you for taking my question. This is Maurizio for Andrew today. Just wondering if you could talk about the competitive landscape? It looks like Q4 marks the second consecutive quarter of sequential declines in active customers. Is this more of a macro-driven advertisers pullback, or are you seeing any optics in spending consolidation across advertisers and agencies that are maybe looking to reduce their number of active partners? So if you could provide some color on that please?

Yeah, I could take the talk about the active customers. So we did see in Q4, a 2% quarter-on-quarter decline, a net reduction of eight customers. This was primarily related to the fixed-price side of our business. So for the year, our percentage of spent customers increased 16%. The number of active customers in fixed price decreased 6%. In Q4 in particular, as we talked about on the prepared remarks across our jobs in the employment vertical, those customers in that vertical spent significantly in '21 and largely went dark in 2022 for that reason. So those fell out of the customer count. We think they will come back when their businesses improve. But generally speaking, we did see weakness across fixed price, especially in the second half of the year. And we believe that's due to the macro concerns. Fixed price tends to be a bit more discretionary in nature. So it's easier for the marketers to kind of pull those and cut those budgets when they're looking to reduce spend. I think it's really a macro issue specifically tied to the fixed price side of our business. But again, that being said, we feel pretty confident that we can get these customers back once they start re-engaging in spending.

That's very helpful, thank you. And then I have one on capital allocation. So you currently have $200 million in cash and no debt. And it looks like you are cautiously optimistic about a potential rebound sometimes in the second half of 2023. So with the understanding that you'll remain disciplined on spending while you navigate through the current environment, maybe you could talk about investment opportunities that you're envisioning in the year that will probably or perhaps allow you to capitalize on a potential rebound later in 2023? Thank you.

Yep. I'll take that. I mean, just from a capital allocation perspective, we do have a fantastic balance sheet with the amount of cash that we have and no debt. And this year, we're estimating positive adjusted EBITDA. So we feel very comfortable in that our balance sheet is protected. The primary uses of that capital will be towards M&A. We're active in the market. We have been for some time looking for the right combination of businesses that can increase our value to our customers' self. And so again, these would be independent buy-side assets. As Chris talked about, we think that independence is key, but certainly gives us a great ability to execute on M&A in the back half of the year.

And our next question will come from Cal Bartyzal with Craig-Hallum.

Hey, just stepping on here for Jason. A couple questions from me. So first just wanted to talk could you go a little bit deeper on what you're seeing in CTV and maybe any potential signals of a rebound coming in that? And then secondly, you know, you talked about some progress in digital out of home and audio and those emerging categories, but just wanted to know if you had any more color on any progressions in the video game advertising. We're just trying to understand if you think the industry's ready for this, and if there's really any real volumes of impressions available for you guys to monetize? Thanks.

Yeah, around the CTV rebound, I mean, I think that as far as the market goes, we're going to see a significant amount of new money from linear shifting to CTV—that's undeniable. So regardless of what the total industry does, CTV is definitely going to grow. And for us, I think that we feel really confident around CTV. We have a lot of differentiation there. Tim talked in our prepared remarks around our household ID and really the efficiencies of that drives for marketers being able to control their spending, which is what we call frequency capping, and then also measuring what their impact is. I think also our direct access—not to get too far ahead of that—but our direct access program's squarely going to be aimed at that. We have a lot of content owners that are looking at our customer base. I mean, think of people, if you think of large premium content owners, they are already—and they've been working with, you know, the biggest brands in the world, you know, the biggest CPG brands. They've been working with these companies for 50 years. A lot of them have rates that are more than 30 years old. And when they look at someone like Viant and they look at our differentiation as a demand source and the market that we serve in the mid-market, those are not the top 25 to 50 spenders in the U.S. So that is really—we are differentiated demand for them, and that's new money coming to them. If I'm a large CBG company talking to these premium content owners, they're the ones striking those deals. If you look at our customers in the mid-market, they're not striking deals in the upfronts with the largest content owners. So that's the reason why they're interested in partnering with us. So from a CTV perspective, I think that opens up a lot of really interesting opportunities. It's going to be great for our customers, it's going to save them some costs as well. But really I think that that's going to bode well for us, our direct access program in CTV. But, but we remain really bullish there. And I'll take the in-game question as well. I would classify in-game as still experimental budgets with marketers in-game advertising. I wouldn't say that it's a supply problem. There's certainly a huge amount of daily active users and monthly active users playing Minecraft, roadblocks and all the different other areas that we're integrated there. But certainly the audience is there and the time spent is there in mass to reach that younger audience and younger players that are playing video games daily for huge amounts of time. I think the friction point for marketers to unlock budget there is around the ad format itself. They don't have these creative assets built by their creative agency in the brand style and tone that they want. So there's a big effort to get those formats created once they understand what the value is in placing media in these environments. I would liken it similarly to what streaming audio went through. As we brought audio on board, not everyone had an audio ad available ready to go that spoke to the product or service that they were offering. And a lot of companies had to include free ad creative to get that media buy in there, whether it be Pandora or Spotify, etc.—all the major streaming audio. But now it's becoming more and more regular and normal as another ad format that marketers have ready to go off the shelf. I would expect 2023 to be experimental for in-game, and I would expect 2024 for it to be a normal part of the buy as we get through this experimental period and can show the returns. They'll start regularly making these smart objects as the correct ad format as part of their normal course, and we'll see it on most buys then.

We have time for one additional question, which will come from Chris Kuntarich with UBS.

Hi, thanks for taking the question here. I may have missed it, but is there any ad spend guide implied in the Q1 revenue guide?

We actually did not put that out yet, or put it out this quarter. And really, what’s going on there? As I mentioned earlier in 2023, the spend growth will be much closer to revenue growth and ex-TAC growth. So the fact that our growth rates are starting to align, which was not the case last year. Last year specifically, we would put out spend growth guides because it was so much different than the revenue and ex-TAC guide because of the mix shift that was happening. This year, we're not going to see that. So we did not put a spend growth number out, but it will be within the range or pretty close to the revenue guide we gave growth guide and ex-TAC growth guide.

Okay. So definitely still declining. I guess as we think about the re-acceleration in the second half of the year. Like what would need to happen in order for ad spend to re-accelerate to 20% ad growth?

It's really, I mean, think about it—the—we were impacted in the second half of 2022. So the comps, as I said earlier, are a lot easier to beat. And the business really is about, we are growing notwithstanding what's happening, the impact of the economic situation is impacting our growth, but we are still doing well. As we start getting into lapping the macro impact on our prior quarters, you know, it's really not, we're not expecting huge growth; we're just expecting a stabilization to happen as we move into the second half, which we think can drive growth based on the comps that we have for last year.

And Chris, just to add a little bit more color, just a little bit more tactically what we're doing on the business side. What we ended up doing as part of our cost realignment, we also ended up realigning our sales force. We talked a lot about and had been talking a lot about the mid-market. And we actually continue—we do this every couple of years where we kind of assess where we are seeing the most penetration. Some of that might be geographic markets, but in this case what we're seeing is that we're doing so well in the mid-market, both agencies and clients that we had a re-alignment there. So I think that is going to add to new customer wins. So I expect that as part of the reacceleration of growth. That's one. Two, as we talked about, both Tim and I did around some of these new innovations that we're going to be launching this year around AI feature sets within the platform, really what that is. Those are all things that are going to improve campaign performance. And I don't care what market we're in; when campaigns perform, the budgets continue to grow if you're hitting customer acquisition targets and return on ad spend targets. So I—we have some things in the works that we'll see the light of day here pretty shortly that are going to improve. And again, the last piece I'll say, yes, it's a slow start, but it is stable. And then just again, to focus people around the, regardless of what the macro looks like, the shift of linear into CTV is naturally a big growth tail end, and that's going to be another leg of growth for us. So I think those three things are tactically what we're expecting to reaccelerate growth into the areas that you talked about.

Got it. And as just one last question here: you called out the mid-market opportunity re-accelerating customer growth. Should we be thinking about customers growing in one queue on a sequential basis? And just as we're thinking about '23 and kind of the scope of this opportunity with mid-market, you grew by, if I have this right, 17 customers in '22 on a year-over-year basis—that's down from where you were in '21. Should we be thinking about kind of like low double-digit, high teens? How should we think about the scope of that opportunity and how that factors into 1Q?

It's hard to say exactly when customers make the switch. And so I think on an annualized basis, it's pretty consistent within any given quarter. It could be choppy; some might not be ready to go in Q1, some might be ready to go in Q1. So it really just depends on where the customers are at in their cycle. And so to me, I don't look at it on a quarter-by-quarter, but more of an annualized basis. But certainly, that's the focus of our organization is on those mid-market agencies winning new customers. And then with our current customers, consolidating that ad spend more and more to grow the average spend per customer. And so that's going to be our focus. I wouldn't read into any one quarter or the other, but we're very focused on getting those customers into the percent of spend model because that's when they enter our cohort and we have more predictability into the future.

One other point I'd like to make on the customer account. So when we were setting up priorities for '23, we took a close look at our customer base. And what we found was that we had a handful of customers that were not scaling on the platform. Now the large majority of our customers, especially on the percentage of spend side, consistently scale—they spend more in year two after year one and so forth. So as we cycle through some of those low-spending customers, there will be some negative impact on the customer count as we move through '23. Although we don't expect it to be that significant, the impact from cycling through those customers will not be significant from a spend perspective though. But it could impact customer count on a quarter-over-quarter basis.

And Chris, just to put that, those customers, although hit the minimum thresholds, we don't see the spend ability in future years, and when Larry's saying cycle, we're cycling them out. The impact that you then see might be some small nominal amount, but there's some noise on customer count, but you'll see the spend proactive customer actually then grow.

And again, that does conclude our Q&A session for today. Larry, Chris, Tim, any closing comments?

That’s it. Thanks everyone for joining the call and we will see you next quarter.

Again, this does conclude today’s earnings webinar. Again, we thank you all for your participation, and you may now disconnect.