Viant Technology Inc. Q1 FY2025 Earnings Call

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. 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 of US-based advertisers, limited exposure to those verticals most directly impacted by tariffs and strategic alignment to secular growth channels, including CTV and the ongoing adoption of differentiated product offerings in the industry. To further elaborate, we serve a broad and diversified group of well over 1,000 advertisers spanning all major industry verticals, with no one advertiser representing more than 5% of the total ad spend on the platform. After conducting a thorough review of our advertiser base, we anticipate recently imposed tariffs will only minimally impact our future performance, as exposure to high-risk verticals like automotive, for example, is limited. It is also worth emphasizing we believe our business is strategically positioned to foster the growth of proliferating digital channels, including CTV, streaming audio, and digital-out-of-home. These are secular growth channels in the early stages of adoption, making them more resistant to economic cycles. Collectively, these three digital channels represented over 50% of our total ad spend on our platform in 2024, up from 43% in 2023 and 40% in 2022. And based on historical precedents, we would actually expect an economic downturn to accelerate the ongoing shift of linear TV ad spend into CTV, where campaigns are addressable. More granularly, our winning strategy with advertisers hinges on our differentiated platform offerings tailored to support growth within proliferating digital channels. In CTV, our Direct Access program provides advertisers with a streamlined path to premium inventory, eliminating unnecessary intermediaries and delivering greater spend toward working media. Our Addressability Solutions, Household ID and IRIS ID empower advertisers to deploy sophisticated ad campaigns and measure efficacy through the use of industry-leading, audience and contextual identifiers. And ViantAI, which we expect will prove to be a disruptive innovation is currently providing early adopters with meaningful workflow improvements, operating structure efficiencies and meaningful media cost savings and ROAS enhancement. The continued uptake of these innovative solutions is creating powerful tailwinds that support our long-term secular growth strategy. Moving to our strategic priorities. CTV, addressability, and ViantAI. CTV was the strongest driver of top-line growth in the quarter and leading in CTV is our highest priority. We are committed to being the premier DSP for CTV advertising, a position we believe we currently hold and intend to strengthen. This is evidenced by our recent performance and our product roadmap, which is strategically focused on CTV dominance. During the first quarter, over 45% of total spend on our platform was allocated to CTV, clearly demonstrating the dominance of our CTV offering. Over 55% of CTV spend is now running through our Direct Access premium publishers, which uniquely connects advertisers directly to premium CTV inventory. When advertisers utilize Direct Access, supply side fees are significantly reduced. This means more of their budget goes directly toward working media, increasing impression win rates without the need to raise bid prices. We expect Direct Access will continue to attract incremental CTV spend to our platform, enabling Viant to maintain market-leading CTV growth. Fundamentally, we believe the DSP that wins in CTV will win across all other Open Web digital channels. In our view, CTV will become the cornerstone of every advertiser's marketing strategy, with other digital channels serving complementary roles. In fact, this reprioritization of CTV is currently underway. Advertisers are increasingly recognizing the fallacy of Last Touch Attribution campaign strategies, where big tech takes credit for outcomes by showing the last ad before a purchase, without truly providing any incremental value. Last Touch Attribution has trained advertisers to allocate spend to consumers that would have purchased their product anyway. This is not advertising. This is simply a tax. Smart advertisers are shifting gears, directing ad spend based on incremental lift, where another dollar of ad spend drives new business growth through another incremental sale and data shows CTV trounces search and social in driving incremental lift. Chris will elaborate further in a few minutes. Moving to our leadership position in addressability, Viant's Household ID, our patented audience targeting and measurement solution, is experiencing unprecedented demand. Household ID boasts availability across roughly 80% of biddable ad inventory, significantly exceeding other identifiers. This quarter, ad spend linked to Household ID surged 33% year-over-year as we continue to activate Household ID matches with our premium Direct Access publishers, making them both biddable and addressable. We anticipate continued growth for Household ID as an influx of data-driven advertisers prioritize the CTV channel. Direct-to-consumer e-commerce businesses, performance advertisers, and small to medium-sized businesses, all pivoting budgets to CTV can leverage Household ID to target highly responsive audiences and track campaign effectiveness. Our contextual targeting and measurement solution, IRIS ID, is also gaining traction among both publishers and advertisers with the addition of Paramount, Lionsgate Films, CNN, and TCL, among others, as newly minted IRIS-enabled publishers, the presence of IRIS ID across all available CTV bid requests has more than doubled since acquiring IRIS in November 2024. IRIS ID allows advertisers to target CTV ad inventory at the video level, enabling them to align their brand, product, or service with contextually relevant content. As recently reported by Upwave, an independent measurement platform, campaigns utilizing IRIS ID demonstrated a 5x lift in brand favorability, a 3x lift in ad recall, and a 2x lift in brand awareness and consideration when measured against CTV control groups. This performance has been a key driver in attracting new customers to Viant in the quarter. As IRIS ID continues to win adoption among publishers, advertisers gain the ability to deploy contextual campaigns at greater scale, which will lead to increased utilization over time. Finally, I will provide an update on our ViantAI product suite. As a reminder, two phases have rolled out and we expect to complete the next two phases later this year. The four phases consist of AI Bidding, AI Planning, AI Measurement and Analysis, and AI Decisioning. I'll very briefly touch on all four. Less than two years after launch, AI Bidding now automates 85% of the ad spending on our platform, up from 80% in Q4 2024. With AI Bidding, advertisers enable Viant's algorithms to find and buy optimal ad placements across the Open Web, aiming for the lowest cost while meeting their KPIs. With surging use contribution ex-TAC generated from AI Bidding is up 75% year-over-year. AI Bidding is a major success and we expect to see a similar adoption trajectory across our other AI products. In the third quarter of 2024, we launched AI Planning, which enables advertisers to create enterprise-level ad campaigns in seconds. Early agency adopters are reaping the benefits of an improved workflow as their capacity for new business pitches has accelerated. Greater operational efficiency as employees are redeployed to more strategic initiatives and improved return on ad spend as ViantAI is now utilized to navigate the complexities of campaign construction to yield optimal results. Launching later this quarter, AI Measurement and Analysis is expected to revolutionize reporting with on-demand insights. Advertisers can simply ask ViantAI for specific data and receive answers in seconds, eliminating the need for lengthy reports. This streamlines productivity and empowers continuous campaign optimization. And finally, we expect to launch AI Decisioning in the second half of 2025, enabling advertisers to grant ViantAI the autonomy to manage their media plans. ViantAI will actively adapt campaigns to market fluctuations, aiming for the best possible outcomes. And in contrast to big tech black box services, ViantAI is fully transparent, providing advertisers with detailed insights into their campaign data, including publisher allocation, clearing prices, return on ad spend metrics and so much more. To summarize, our business is growing quickly, fueled by our investment in secular growth channels and our distinct innovative offerings. Looking ahead, we expect CTV to emerge as the most effective digital channel. Addressable campaigns to become widespread and AI to usher in a new era of efficiency, further improving return on ad spend for our customers. Viant is well-positioned for long-term growth as these market dynamics evolve. Before turning it over to Chris, I want to briefly address the recent district court ruling which affirmed Google is a monopolist in ad tech and marked a win for the ad tech industry at large. The DOJ is pursuing remedies that could include a divestiture of both the DoubleClick assets and Google AdX, which collectively include Google's SSP and Ad Server. If these assets are spun off into an independent entity, it is reasonable to expect this new supply-side platform to seek out incremental demand through additional partnerships with third-party DSPs beyond Google's DV360. In time, this could present an opportunity to provide our clients with access to YouTube ad inventory through our buying platform. Additionally, the removal of DV360's exclusive access to YouTube may level the playing field among DSPs, which provides Viant an opportunity to attract ad spend from advertisers looking to consolidate on our platform. Truly, any regulatory action taken to limit Google's illegal market dominance will improve Viant's competitive positioning, and in our view, an open market for YouTube is the most beneficial outcome. With that, I'll now turn it over to Chris.

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 budgets 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. This is the realization many advertisers are waking up to. They have been overallocating spend to search and social, and in doing so, they have been wasting budget marketing to consumers that were ready to buy their product anyway. Google, Meta, Amazon, they've all been winners of the gamification of Last Touch Attribution. Left unchecked they will take credit for every outcome. However, advertisers are shifting their strategy, prioritizing the measurement of incremental lift, which identifies the ad channels that bring in entirely new customers, those who would not have made a purchase without the exposure to the highly impactful informative ads delivered via CTV. Anchored by Household ID, Viant's measurement solutions offer advertisers the ability to measure incremental lift, which is now the most requested measurement feature on our platform. Demand for this feature has in part powered a 500% increase in Household ID powered ad spending on a trailing 12-month basis over the last two years, with a growing portion of that spend directed towards CTV. The convergence of these trends presents a significant opportunity for Viant. As advertisers increasingly turn to incremental lift measurement, we believe our platform reveals CTV's superior impact, driving significant ad spend growth across our platform. Over the coming years, we believe search, social, and other forms of display advertising will come under pressure as advertisers prioritize more effective ad channels like CTV, which prove to drive incremental sales. This leads me to my next major industry topic. There is a significant opportunity to win ad spend from data-driven advertisers over-invested in search and social. This group, comprising 10 million small businesses, performance marketers, and direct-to-consumer e-commerce companies, is believed to represent over half of the $200 billion US search and social ad market. We think this spend is poised for reallocation to more effective digital channels like CTV. We believe Viant has a compelling value proposition that effectively attracts data-driven advertisers and aligns with their current buying behaviors. 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 gain insightful feedback, including incremental lift measurement to assess overall campaign effectiveness. And unlike search and social walled gardens, our measurement solutions provide advertisers with transparent and objective attribution, helping them allocate ad spend to the channels that deliver the highest return on their investment. We have built ViantAI to make the Open Internet accessible to data-driven advertisers, greatly simplifying the DSP interface. We have stripped away the complexities of a traditional DSP, removing the primary barrier which has prohibited smaller data-driven advertisers from accessing the Open Internet. In its current state, ViantAI is building detailed media plans and manages continuous bidding for advertisers. Our goal is to release a completely autonomous DSP by the end of the year, offering dynamic campaign planning, optimized execution, and reporting. We believe the displacement of search and social and prioritization of CTV as the cornerstone of ad campaign strategy, coupled with the simplicity of ViantAI, will draw data-driven advertisers to Viant. Finally, I would like to address the misperception by some investors that Amazon has suddenly emerged as the new threat in the Open Web DSP space. Let's not forget we have already been competing with an illegal monopoly for the entirety of our existence, one who entices clients with a bundling of services, price discounting, free use of unique data, and exclusive supply to YouTube, the world's largest video platform. Of course, I'm referring to Google, and just like Google, Amazon cannot convincingly claim to be an objective, independent partner to advertisers. Amazon is a seller of ads and purposefully directs ad spend to its own and operated inventory, Amazon sponsored ads, and Amazon Prime Video, where it extracts full margin. This creates a bias. And by manipulating attribution, we believe Amazon can undermine the effectiveness of competing streaming services by directing spend to Amazon Prime Video. At the opposite end of the bid stream, we believe publishers are reluctant to provide Amazon with addressable signals, be it audience or contextual identifiers, as doing so could incidentally strengthen the Amazon identity graph and pull spend away from the Open Internet and into Amazon's walled garden. In our view, Amazon's conflict of interest and lack of objectivity weakens its position with the Open Internet and therefore presents little threat to Viant. Rarely have we ever encountered Amazon DSP in an RFP process. Now, where Amazon is succeeding is in retail media, which is displacing Google search spend. This is where Amazon is taking share, not from Open Internet DSPs. As Amazon's e-commerce presence has grown, consumers have migrated search queries from Google to Amazon, which Amazon then monetizes via sponsored listing ads on its e-commerce website and app. This makes up the overwhelming majority of Amazon's reported ad spend. Due to Amazon's e-commerce dominance, investors are quick to point to the quality of Amazon's first-party data as a potential threat. And while highly effective within Amazon's walled garden, its usefulness is limited across the Open Internet. Signal goes both ways; a targeted ad campaign requires first-party data from both the advertiser and publisher to construct the data match that permits for targeted ads to flow across the bid stream. What signal are CTV publishers like Netflix, Disney and Paramount willing to provide to Amazon, a competing streaming service? We believe none. Conversely, both advertisers and publishers willingly provide Viant with access to first-party data to match audiences and power addressable campaigns. 80% of biddable inventory is addressable with Viant, and 95% of Households are identifiable within our ID graph, empowering advertisers with the ability to target and measure at unmatched scale across the Open Internet. I will finish with this: Viant is arguably the only completely independent and objective enterprise-level self-service DSP that exists in the marketplace. We plan to continue to fend off big tech behemoths, including Amazon, through independence and our focus on our three strategic priorities: CTV, addressability, and ViantAI. In CTV, we will direct advertisers to the CTV content that drives the highest return on spend, period, with absolutely no bias. Our Addressability Solutions provide unmatched scale as we are not limited to a walled garden audience, but rather the entirety of the Open Internet. And with ViantAI, we aim to surpass the level of simplicity offered by competing search and social AI products while providing a level of transparency they are seemingly unwilling to match. And with that I'll turn it over to Larry to provide more detail on our financial performance.

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 over 45% of total platform spend, our highest CTV mix on record. In addition, CTV spend reached an all-time high for our first quarter, reflecting continued momentum as advertisers increasingly prioritize premium, addressable video to drive performance. Spend across all emerging digital channels, including CTV, streaming audio, and digital-out-of-home, collectively represented 54% of total platform spend in Q1, the highest combined share in our history. This milestone highlights the accelerating adoption of next-generation media formats, underscoring our position as a leading partner for advertisers moving beyond traditional display. Video, inclusive of CTV, represented 62% of total platform spend in the quarter, further reflecting the continued shift toward high-impact measurable formats. Non-GAAP operating expenses totaled $37.3 million for the quarter, reflecting a 20% year-over-year increase and flat sequentially. Notably, these figures include incremental costs related to the recent acquisitions of IRIS.TV, which closed in November 2024, and Lockr, which closed in February 2025. Excluding the impact of these acquisitions, organic non-GAAP operating expenses increased 14% year-over-year and declined 2% sequentially. While we remain committed to investing in AI and technology to fuel long-term growth and market share gains, we continue to prioritize operational discipline. Over the past 12 months, we increased contribution ex-TAC per employee by 13%, reflecting improved efficiency across the organization. Adjusted EBITDA for Q1 was $5.4 million, exceeding the high end of our guidance by more than 27% and growing 76% year-over-year. Adjusted EBITDA as a percent of contribution ex-TAC was 13% for the quarter, expanding by 360 basis points compared to the prior year. This margin improvement was achieved while continuing to invest in our ViantAI product suite and integrating the IRIS.TV and Lockr acquisitions, demonstrating our ability to scale efficiently while executing on strategic priorities. Non-GAAP net income, which excludes stock-based compensation and other adjustments, totaled $2.8 million for the quarter, up 109% from $1.3 million in the prior year. Non-GAAP basic earnings per Class A share outstanding totaled $0.04 in the first quarter compared to $0.02 in the prior year period. In terms of share count, we ended the quarter with 63.1 million total shares outstanding, consisting of 16.4 million Class A shares and 46.7 million Class B shares. We ended the quarter with $174 million in cash and cash equivalents and $199 million in positive working capital with no debt and access to a $75 million undrawn credit facility. For the quarter, cash flow from operating activities before changes in operating assets and liabilities was $8.2 million, representing a 30% year-over-year increase. In the quarter, we invested $12.6 million in operating assets and liabilities, largely driven by seasonality and continued growth. Additionally, we used $22.7 million in cash for financing activities during the quarter, including $17 million for repurchases of our Class A common stock and $3.2 million for taxes related to the net settlement of equity awards. As a reflection of our confidence in our strategy and market positioning, we capitalized on recent stock market volatility and aggressively repurchased Viant Class A common stock in the open market at a valuation discount. Since initiating our $50 million share repurchase program in May 2024, we have returned $46.5 million to shareholders, including $17 million in Q1 and $24.9 million year-to-date through May 2nd. This has resulted in the repurchase of 3.5 million shares at an average price of $13.12 since inception. As of May 2nd, $3.5 million remains available under the current authorization. Having nearly exhausted our existing $50 million share repurchase authorization, today, we have announced the approval of a $50 million increase to our share repurchase authorization, which we expect to deploy strategically to support existing shareholders, particularly when our stock is undervalued. Our solid financial foundation, combined with disciplined execution and strategic capital allocation, positions us exceptionally well to capture the significant market opportunity ahead. Turning now to our outlook, while we remain encouraged by the strength of quarter-to-date ad spend across our platform, macroeconomic uncertainty, specifically related to recently imposed tariffs, have prompted a small number of advertisers to delay campaign activations originally planned for Q2. As a result, our Q2 guidance reflects the deferral of approximately 3% to 4% of expected Q2 revenue and contribution ex-TAC to the second half of 2025. We view these shifts as temporary and timing-driven, not indicative of reduced spend commitments or structural weakness. In fact, the majority of the spend is expected to be realized in the second half of 2025. While this dynamic introduces some near-term forecasting variability, customer engagement remains strong, and our long-term growth outlook is unchanged. Given these factors, our guidance for the second quarter of 2025 is as follows. Revenue of $77 million to $80 million, representing 19% year-over-year growth at the midpoint. Contribution ex-TAC of $47.5 million to $49.5 million reflecting 17% year-over-year growth at the midpoint. Non-GAAP operating expenses of $37 million to $38 million, up 17% year-over-year and approximately flat sequentially at the midpoint. Adjusted EBITDA of $10.5 million to $11.5 million representing 15% growth year-over-year at the midpoint. Our guide assumes record Q2 performance across all metrics spend, revenue, CXT, and adjusted EBITDA despite the macroeconomic headwinds. In closing, we delivered another strong 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 to navigate near-term macroeconomic headwinds while continuing to capitalize on secular tailwinds, including CTV, addressability and ViantAI. And with that, I'll turn the call back over to the operator for questions.

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 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, there is uncertainty regarding tariffs, including where they will land, whom they will affect, and how companies will adjust their pricing for consumers. However, it's reassuring to see that many are engaging in scenario planning, which means they're not passive but actively considering multiple options. I believe this approach will lead to a positive second half of 2025, assuming everything remains stable.

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.

I believe our platform is becoming the standard measurement and preferred method for experimentation among our clients. More than half of them now rely on incrementality to inform their spending decisions. We are teaching them to explore a modern measurement approach, often referred to as conversion lift or sales lift, which essentially evaluates how an additional dollar in advertising influences additional sales. Marketers are actively seeking this information. That's reflected in our platform, where CTV reached a spending share of 45% last quarter, significantly higher than the ad spending mix of our competitors. Many of those competitors continue to rely on Last Touch Attribution as their preferred measurement, largely due to their high investment in display ads. This approach tends to overemphasize search performance because it captures the last ad seen before a purchase, while display ads dominate due to their lower cost. However, viewing it through the lens of incrementality reveals a different story. On average, CTV offers a 200% incremental lift compared to other formats and channels, while search, social media, and much of display advertising tend to see mid-single- to low-double-digit incrementality. The difference is substantial. While we do provide some initial education, marketers quickly adapt when they see the results, reallocating their budgets to maximize incremental returns.

Great. Thank you.

Thanks, Cal.

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

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, it was within that range. Typically, we experience month-over-month growth, as we saw in Q1, where February exceeded January and March exceeded February. We started the quarter strong and expected to see significant quarter-over-quarter growth in May and June. However, the shifting of some funds from Q2 to the second half slightly dampened the growth rates for May and June. Overall, we are observing the usual trend where each month surpasses the previous one. Nevertheless, the impact of a few advertisers has led to a growth rate that is approximately 4% to 5% lower due to this shift in funding from Q2.

On your next question, Chris. The volume of new advertisers, as mentioned in our last call, is at its strongest point ever. We are receiving significantly larger opportunities from bigger businesses, which means larger advertisers. We are very optimistic about the second half regarding the new customer pipeline. I would categorize this into three main areas. Firstly, our dominance in CTV has been a significant factor. When marketers approach us and notice the substantial amount of CTV spending on our platform, they naturally inquire why as they compare it to their expenditures on other platforms. As we explain the value propositions in CTV, especially with our Household ID and the recent addition of IRIS ID, we are drawing considerable interest and new business opportunities. Recently, with IRIS ID, we have seen several sizable Fortune 500 brands shifting their spending and testing IRIS ID, yielding positive results. Therefore, we are quite optimistic about that. The last contributing factor in the second half will be ViantAI. Many organizations, agencies, and brand marketers acknowledge the value of AI, though they need to adjust their structures to effectively leverage it. They are eager for the efficiencies it offers. We have noticed some of this adjustment. However, it has been tremendously beneficial for securing new business. We anticipate a significant increase in the use of ViantAI in the latter half of the year, assisting in automating workflows and shifting tasks within agencies towards more strategic efforts as opposed to the repetitive tasks involved in campaign planning, setup, bidding, and purchasing. We are very excited about this advancement. 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.

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