All right. Hello, everybody. Thank you for joining us. My name is Matt Kost from the Morgan Stanley U.S. Internet team. I'm very happy to be joined by Chris Vanderhoek, co-founder and COO of Viant. Thanks for being here.

Yeah, thanks for having me.

Just before we begin, for important disclosures, please see the Morgan Stanley Research Disclosure website at morgansanley.com slash research disclosures. If you have any questions, please reach out to your MS sales representative. And with that, maybe for those in the audience and maybe newer to Viant, maybe let's start with a quick overview of the company, where it sits in the ad landscape. And you've been with the company, I think, since it was founded 25 years ago or a little more even.

Talk about how the landscape has changed. Yeah, so my brother and I co-founded the company together. Tim's usually here, but he likes to vacation. um but uh we so yeah we started in 1999 actually the first iteration of of our company um back then we were this is early early internet everybody was you know it was 468 by 60 pixel banners pop-ups it was wild there was no third-party ad serving google didn't even exist um it was it was the wild west uh of the internet um and kind of the uh i'll fast forward this story but um we we actually sold the business to Time Inc. in 2015. That was quite a trip. And we thought that was going to be the end of it. And then, you know, we really saw the opportunity on the DSP side. And while we were there, we acquired a company called the Delphic out of Boston. And they had great tech. They were self-service DSP. We saw that landscape consolidating big time. And we knew that there would only be a handful of companies. Long story short, we ended up, they get acquired by Meredith, hostile takeover bit of one magazine company over another. It was insane. We bought the company back in 2019, and we took it back. We used our own capital and bought the company back. We took the business public in 2021, but what we were at that point was just a DSP. And today, the landscape is there's a handful of DSPs that exist in the world that are self-service, enterprise-grade DSPs. That's Google. That's the Trade Desk. It's us, Yahoo, and a new entrant into the space in Amazon. Great.

So maybe let's talk about addressability. I think it's one of three major strategic areas of focus, but let's start there because I think it's where you have some pretty unique assets from a data and signal perspective. Talk to us about household ID. about Iris ID, and the other unique data assets that you're leveraging on this part of your go-to market, and how are those differentiated from those competitors that you just mentioned? Yeah.

So if you look at digital advertising, if I go back to when we first started, we used to go to advertisers and say, why are you buying in linear television or traditional media? Digital is data-driven. You can measure everything. You can target ads, everything. And really what we were doing was laying the groundwork, which later became known as addressability. So the number one thing that we think the largest platforms will have to have is addressability. Marketers want to be able to address or target their audience they're looking for, men 18 to 34, women 25 to 49, whatever it is. You need to have, you want to deliver highly addressable advertising, so there's no waste. And I know that people who are like, well, doesn't everybody do that in digital? No, they don't. So our household ID has, our household ID has, it's basically, this is household level addressability. We think that is a more privacy friendly approach that we've gone down. And we also have a big focus on CTV, which I'll get into. And those are household level devices. and so household id has 80 percent scale of every bid request that we see we have we get 15 million bid requests a second 80 of the time we resolve that back to the household we know which household that is that's very powerful uh in ctv it's actually 90 we can resolve back to who the household is instantly this is very powerful for marketers because they're not wasting their dollars on households or people that aren't in their target. If you compare that to our head-on competitor, which is the Trade Desk, they have UID2. Their idea is public in the bid stream. We see it. They have about 20% addressability. The next closest one is LiveRamp, and they have about 30 to 35, depending on the day. That's their level of addressability. We've been at this since 2013. what this process is, is what's called identity resolution. I have some data in a database, a name, an address, an email, or whatever it is. And can I resolve that back to who this household is right now? And it's somewhat complex, but just the headline is that we resolve 80% of the time. That's our scale. And the competitors are in the 20% to 30%. So we're instantly much more addressable. The second thing is to building a really good ad product that's going to deliver great returns or sales or outcomes for advertisers. I want to know what content you consume. And I don't take my cues from the Trade Desk or Yahoo. We really study, I think, who does a very good job in their ad platform, especially in using AI, which we'll get into, is Meta. Meta does a very good job. They have something called Advantage Plus. And Meta knows two things. They know who you are when you're logged into the app, addressable. And they know what content you're consuming because it's on their platform. And if you've ever used, like, Reels, somehow you're consuming whatever niche piece of content watching, and they're really good. They have an algorithm that feeds you more of that. And then they match an advertiser that closely associates to that content. That's what drives the power of Meta's ads business. It's completely lost on people and lost on even our competitors in the space. Like, no one's really interested in that. So there's a company that we – Tim and I actually invest in. There's a VC firm that invests in, like, ad tech companies called Imperium. We're an investor in that, and they invested in a company called Iris. I met the two founders of that, thought it was really interesting. They work with content owners in CTV. They go to them, and they say, hey, send me, you know, Paramount. You have 20,000 titles in your VOD library. Send us every video. We will create, they stamp it with what's called an Iris ID. Behind that Iris ID, what they do is they take that video, they run computer vision, and they say, what is this content about? Oh, it's, you know, season one, episode two of Yellowstone. It's a Western. It has Kevin Costner in it. In this scene, there's fishing. In the next scene, there's, you know, a bar fight, blah, blah, blah. What we're doing is pulling out all the content intelligence about that video file so that a marketer, when they go to Target and CTV, they can show up relevant. My customer Cabela's, when there's a phishing scene, they want to then show an ad about their phishing rods and all that. If I have a customer that sells women products, I'm probably not going to show it there. They probably don't want to buy that. This offers incredible content intelligence that helps us in CTV. And that was the thesis behind the acquisition. Problem was they were a small company. They only had 7% penetration in CTV. In our last quarter, we reported we were in the high 30 percentiles of penetration. We have earnings next week. I'll give the update on where we are there. But we're signing more and more content owners every day. We have every OEM. Publicly, we've announced we have every major television manufacturer who's adopted that. and we have a bunch of large content owners that will make announcements about as well.

Let's shift over to Viant AI. I think that since really you went public, you've been pretty consistently talking about autonomous advertising, and over the course of the past couple of years, you've been launching these AI products with the goal of kind of a fully autonomous ad platform, if I have that right. So talk about the various components of Viant AI, the launch cadence, and where we stand with that.

Yeah. So we saw this migration. The industry went from managed service where people manage absolutely everything. And then DSPs came out and then it went to self-service. What that meant was agencies wanted to control every decision. They wanted to pull all the levers. They wanted all the transparency. And self-service has been amazing for the industry for 10 years. But now these systems, these DSPs, they're like Bloomberg terminals. If somebody started, and I look at these DTC e-com companies, they want data-driven advertising, but they don't have reams of staff and traders. They don't. They want automated systems that just deliver them sales. That's what they want. And so, again, we looked at the future was going to be autonomous. These platforms are overly complex, and it's too much for a human trader or a room full of human traders to make optimal decisions. And so we came out with Vine AI, and we started that about two years ago, all with the goal of moving towards full autonomy. The first thing we launched was AI bidding, and 70% of our customers are the traders. They belong at an ad agency for us. and what the first thing that they do is they set up a campaign it's complex then what they do is bid on every publisher every audience segment they're trying to bid the right price at the right time and that actually is you know there's no that's an exercise of utility for them because this is a 24 7 365 15 million bid requests per second a human can't possibly change price at that speed. So we launched AI bidding two years ago. And it's just an AI model that predicts a bid the lowest possible price for that ad request. What's the price that we should bid? We have 85% customer adoption on that product. And what we're saving customers, 40% our model does versus human bidding. And so that's been a tremendous product that we have out there. The next thing we launched was AI planning. Agencies have tons of people that work in planning, and a traditional media plan takes, at best, six to eight weeks. Tons of market research. It's very expensive. And they're designing a media plan for their marketer. We do it in 60 seconds. You give us the URL of the advertiser or product that you're going to advertise, your budget, your flight dates, and what's your goal. Your goal might be to raise awareness. Your goal might be to generate sales. Whatever the goal is, in 60 seconds, it builds out a full media plan. It's incredible. And we use all of our unique data signals behind that, all the bid stream data, our household ID, Iris ID that I talked about, and we build plans in 60 seconds. From there, the trader builds a plan, and it clicks a button to build it in the DSP. We save you, traditionally, you know, a typical ad campaign may take anywhere between two and seven days to set up in a DSP. It's very time consuming. So we eliminate all that time. We have about 30% customer adoption of our AI planning. The third thing we did was we launched AI measurement analysis. Just think, if you're in a DSP, there's so many reports. What a trader is doing after setting up a campaign and then bidding, they're trying to get insights as to what's driving performance. And they want to double down on that. But that's very complex for them to get at a lot of that data. And so what we want to do is completely automate it. You just basically chat with it. You create prompts and it gives you all the insights. You could say, hey, for my CTV campaign, what are the top performing publishers? What are the top performing Iris IDs and segments? Which shows are driving the best performance? What should I do to improve performance? And it makes recommendations to you. We have great customer adoption on that. That's a phenomenal product. And then the last thing we did was AI decisioning. This is our move towards full autonomy. We want to create a decisioning architecture, a decisioning system that will make human-like decisions, but it'll do it at the speed that a human can't. We committed that we had launched that in 2025. We did that in the fourth quarter. We launched a product called Outcomes, which is the first fully autonomous ad product that we launched. And what makes this possible is an innovation that we built, and it's called a lattice brain. Most autonomous systems that are out there today, whether it be self-driving cars or guided missile systems or unmanned drones, they all have some type of lattice architecture that makes decisions based on a set of inputs in real time, but they make human-like decisions. I like to use the self-driving car example because everyone gets that with like a Tesla but it's the same thing in these advertising platforms we want to make human-like decisions but at a speed that humans can't and what we're trying to do is compress what we call decision latency where in these current systems we make recommendations or our platform make recommendations to traders every day on how to improve performance but then they think about it And then they sometimes got to take that recommendation to their boss and say, well, hey, we want to make this change. Boss might call a client, the end advertiser, say, hey, we need approval to do this or that. And then they think about it. And then a week later, they might make the decision. Most of the time, they don't make the decision. And then ad performance, campaign performance leaks all over the place. And we want to compress that. And that's what our outcomes product is about.

It's our first fully autonomous product. we ran a series of about 20 pilots in the fourth quarter and the performance results were incredible so let's stick with outcomes there for a second it sounds a little bit like performance max or advantage plus from Google and from Meta I guess when you're talking to advertisers about this product where are you differentiating yourselves and what is that process like for pitching outcomes?

Yeah, so about $400 billion dollars is spent in the United States in digital. About 70% of that is performance-based advertising is where those dollars are going. And that's predominantly in three companies, Google, Meta, and Amazon, right? Sponsor listing ads on Amazon, that's performance-based. We want to go after that market because it's largely untapped by anyone on the open internet. So it is true that some of the more automated ad products are Advantage Plus for Meta and Google's PMAX or DemandGen that they have. And it is aimed to compete with those companies. They operate those automated systems, but they do them in their own wall gardens against their own content that they own. And we want to bring a solution like that for the open Internet. And I think that that is just an incredible opportunity, and we think that we have advantages over them. And really, those advantages, we know that we have to deliver performance that are on par or better with them. I think a lot of the performance that a marketer will get in meta and in Google operates off of the thinking that whoever showed the last ad gets credit for the sale. I tell our customers all the time, I promise you that Google, Meta, and myself, we know who's about to buy your product. But just because I snuck an ad right in front of them before they purchase doesn't mean that your total business is going to grow. And so we're aimed at, we're a buy-side only player. We don't have any content that we own. I only represent the marketer. And my whole goal is to drive business performance for them, but not business performance in a dashboard. I want business performance that you report to Wall Street. And this is an insight that a lot of companies, they've been in digital for years. They've been seeing customer acquisition costs go down and down and down, get more and more efficient. But results they report to Wall Street don't tell the same story. There's lots of customers who have this problem. And we want to drive incremental growth in their business, not the same growth or the same sales they were going to get anyways. And Meta and Google prey on less sophisticated advertisers who don't know the difference. And we are out, when we deliver our outcomes product, it's about delivering new growth to the brand, not the same sales. And we think that the vehicle that does that most effectively is actually in the CTV channel. And so I think that those are some of the ways that we're different than them.

So it sounds like you're kind of in the business, at least with this product, of eliminating, I don't want to say wasteful spending, but certainly helping people focus on the spending that they can actually tie back to dollars on the P&L. So it's a more focused way of doing it. I guess, what's the financial opportunity for outcomes?

The outcomes, I think it's absolutely massive. Just start with the 70% that I believe we currently don't touch today. You know, there's probably about 10,000 advertisers that buy on the open internet. There's probably 1,000 or less advertisers that buy in television. Meta has 10 million customers. So that right there, I really like that opportunity. To me, that's sort of like freedom because if I produce a return on ad spread for you of whatever your goal is, when I do that, you give me more money. In the television business, if you raise unaided awareness by two points, you don't get more money. Like the brand has a fixed budget amount they're going to spend for the year. So we like being able to go after this performance opportunity because that money is heat-seeking. They don't care who they spend it with. The other insight, too, on Meta, these e-com and direct-to-consumer, of the 10 million, I believe most of their growth is driven by a few hundred thousand of these e-com and direct-to-consumer companies. and most of these companies spend all their money with Meta. They're only on Meta. They run their whole business there. But a lot of them tap out on performance, and you can see it. There's a whole, they call it a DTC on X, like these groups on X, and they put a bunch of content out, and you see them regularly. In the fourth quarter, they get absolutely squeezed on Meta's pricing, performance dips, they have nowhere else to go. We think that it's an unbelievable opportunity to go to them, deliver an autonomous product, yes, and outcomes, but we can bring them into CTV, and we see it across all customers. The incrementality or the net new sales that you get in a channel like CTV, it absolutely trounces Google Search, which has zero incrementality. I have not had one customer where I've seen any notable point gains of incremental customers from Google-branded search, which is 40% of all search buying. And in meta, you typically see around 20% incrementality in meta. But in CTV, on average, we see somewhere around 150% to 200% growth on average.

It'll be interesting to see how that develops. Sounds like a really big opportunity. I guess flipping the AI debate around to the other side, there's a lot of questions being asked right now about the durability of software business models. Really, across tech, we hear about it for the past couple of years at this conference, but certainly very intense this year as well. Can you talk about the set of concerns? How do you believe Viant may be insulated from this idea that AI can stand up a software solution that could replace or replicate a DSP in an afternoon?

Yeah, absolutely. Well, first, you know, I think first it was the SaaS-pocalypse. Then it was the AI apocalypse, because then it was like it was going to take out all enterprise software. And then it was like, oh, wait, it's also going to take out all marketplace businesses like DoorDash. No one said Amazon. I mean, that's the biggest marketplace. And this is and then basically I watched through that, you know, our stock had absolutely hammered with everybody else. And internally, everyone's like, no, wait. We are the company that's moving towards autonomy. We are attacking the workflow of, like, that is what we do. We're leading that. So it's a bit of a lazy take, I think, by investors. However, just to hit it head on, I do not believe that people are going to vibe code everything. thing. And I don't think that they're going to vibe code all software. I think you can vibe code a UI. Like I have a DSP. You can vibe code my UI, and you can vibe code the Trade Desk UI. Sure. And I think if that's your moat is your UI, which is for a lot of software companies, once you get someone who knows how to use your software, you get lock-in on that. We benefit from that, the trade desk, they benefit from that immensely. But there's so much more that I think is lost on people with this narrative. It's the last mile that's everything. And what I mean by that is when we were competing against the trade desk for years, my whole original thinking was we build a UI that's very similar to theirs and we get to feature parity. And I should be able to win half the customers because, I don't know, I can sell pretty well and I think I'm charismatic and you'll like, half the people will like me, half they won't. I'll win half of them. It didn't happen. Then what I did was we introduced, fine, when we go head to head, I'll just beat them on pricing. And in some cases, some customers, we literally dropped our fees down to zero or 1%. Someone else is doing that in the space right now. It's called Amazon. It didn't work. The level of differentiation that you have to have to win customers is immense in this industry, that's number one. And two, you have to build for the customer. You have to know what they want, and you have to build for that. That's that last mile that, sure, you could vibe code something that looks like what I have, but you're not going to win any customers. You're not going to be able to customize it for their exact needs. All the integration work that you have to do with CDPs and all these data warehouse companies where all the customers house their first-party data, their CRM data, they want to use that in advertising. You're not going to vibe code that. The infrastructure that it takes, the actual technical infrastructure to handle 15 queries or ad requests per second, you can't vibe code that. So I think that that makes it defensible for all DSVs. Now, when I think about other enterprise software apps and things like that, I'm saying, well, these tools have been out there. The number one target is Salesforce. No one likes Salesforce, myself included, anything about them. but what okay like cool but vibe code it please someone just do it the tools are here like why do we have to talk about the boogeyman that's going to do this like someone actually do it if it only takes two days and like some nerd in a basement like bring on the nerds let's go but no one's doing it so i think that i don't know i i think that some enterprise apps will definitely be up ended we we license tons of them internally it's unbelievable how these businesses are created off this like little niche use case and enterprise software um and i think some of them that aren't infrastructure that don't represent infrastructure that aren't connected into all other data systems if they're very skinny i think they can be upended um yeah and the last thing i'll say about all the AI companies. Keep in mind, 60 days ago, no one knew who Dario Amadei was. No one knew who he was. He's everywhere right now. Remember what he's doing. He's in the middle of a fundraiser. I did invest in his route. But I think that the whole AI apocalypse, he's selling that. That's what he's selling. He's raising money. Sam Walton's doing the same thing. So a guy who was on my board once said, be careful of the loudest guy in the room. He's always selling something.

You mentioned Amazon in there. And I want to talk a little bit about kind of what they're doing in this space. There's definitely reports coming far and wide that they're being aggressive in trying to sell this product. So have you observed heightened competitive intensity from them? And why should investors not be concerned about it?

I think that my competitor, the trade desk publicly is every quarter he says that Amazon's not a threat and no, he doesn't see them and all that. We don't have the same take. It's Amazon. So why? Are they a threat? Yes. Why? Because they have the lowest cost of capital of anyone. So I don't care where they point that cannon. They can point it anywhere and you have to be concerned about that. So that's just being honest. They have a DSP. Their goal of what I do believe about them is, their entire existence is to sell ads on properties that they own. They are out offering 1%, what I do for 1%. I haven't seen any degradation in my business because they're offering 1%. And for what they're talking about that's 1%, we charge 3% for it. Trade desk charges 3%. No one's making a change to save two points. To switch DSPs is an incredible effort for brands, And I don't think anyone's moving for that. I think a lot of brands, we recently won customer, we announced Molson Coors. I said to them, you sell product on Amazon. Why were they not in the mix? Just curious. And they said, well, we do sell product to them. I've seen their DSP. They've been in here a lot. They do not have a good DSP, which I know when I hear that a lot. It's not built for us. and their whole goal is to sell more Prime Video. And we are going to buy Prime Video from them. They have Thursday Night Football. They have the NBA. We are going to spend with them. But we don't believe that they have our interests in mind. Why would I give them my customer data and let them plan all my buys on Disney and Paramount and all the other ones? We're a little weary of them. Their point and their biggest fear is that they come out with Amazonia Lite, which they said they've done in many categories. So, no, we're not going to choose them. So I think that, again, I think it's Amazon, so you've got to watch them. But we haven't seen, you know, they're talked about a lot in the press, but they themselves have a long way to go from a feature set standpoint to even get to par with some of us, the other four that are out there.

Got it. So you brought up Molson Coors, and I want to stick with that because I think historically you've served mostly U.S.-based mid-market customers, but with outcomes and this Molson Coors launch, it seems like you are kind of expanding there. So talk about that win, what it means for Viant, and kind of how that relationship was established. And then what does that mean for your ability to go after customers that maybe investors would associate more with DV360 or with trade? Yeah.

Well, every time you go to market, and this has always been the case for, I don't know, 10, 15 years, customers say, all right, I get you have your DSP, blah, blah, blah. What unique data do you have or inventory that you represent that would get me to switch? And like that, that's everything. What exclusive data do you have that I can't get anywhere else, or what inventory do you own or have access to that I can't get through anyone else? Those are the two headline value propositions. Molson selects us really based on, they had a whole press release around this, but scale of our household ID. They have about 180 million plus people in their CRM system. They own a ton of different brands. They are big time in addressable advertising. I've talked about our household ID. but what they realized they're very sophisticated a lot of people what they wanted to do was not just take their 180 million crm file match it in a database they want to see how many you actually find out on the internet how many people do you actually find and that's actually the real test of addressability it's not like you matched 180 million emails in a database no go find them on and plus. Go find them on Paramount. Go find them on those apps because I want to serve them addressable advertising. That was the first one that we separated ourselves. We absolutely crushed the trade desk. We crushed their incumbent platform. We really stand out there. The second thing was, so again, what unique data do you have? They realized it in household ID. The next piece was around Iris. This is a regulated company. They need to show ads at a certain level with 21 plus households. They can't be showing Coors Light ads on kids' content. They get sued for it all the time. Iris ID was huge in that. That when you buy today, if you buy CTV and any other platform, you don't get to know the content that's behind it. So if you buy Paramount Plus, they have 20,000 titles. Well, which content is it? If they show ads on kids' programming, but they can't do that iris idea was an amazing uh solution for them because we know what the actual content is we know the we know the video we know the name of the show we know everything about it and so that was big for them not just from a avoid getting sued but if this is live nfl football you're going to have a football themed ad if this is you know and you're going to let's say you're going to show coors light or miller light that they own if it's a romantic comedy. You may show a different one of your products. You may bid differently. They saw the value of that as being able to increase campaign performance. The last thing is, and another unique data signal that we have, is something that we call the supply quality model. Beer sales are down. Only 52% of drinking age Americans say that they actually drink alcohol. It's the lowest point in 70 years, probably why our birth rate is depleting. But what they have to do is get their ad dollars to work harder. When sales go down, marketing spend is a percentage of sales. And so they have decreasing budgets likely because of sales, yet their CEO is still calling for growth. And in that pitch this year, because I've been pitching them for the last three years, and it's what are we going to do to get, you have a lower ad spend, but how are you going to grow? And they're like, yeah, that's like topic du jour internally. How are we going to do that with less money? I said, we are going to use not only our household idea, you're going to be more addressable. You're going to show ads on more relevant content, but you're going to use and take advantage of our supply quality model. And I'll give you some facts that you may not like, but the truth is about the internet that at least 30 to 40% of the ads that you buy are not seen by a human, are not shown to a device that's a real device or and is not on a site that you think it is and it's likely a made what we call a made for advertising site that has a boatload of ads all over it there's no content and they get people to just click on the ads and you think that they work we audited and took them through their whole media plan uh we used our supply quality model showed them that for the same dollars just by using our supply quality we're going to get you another 30 percent of more working media, and this is how we're actually going to use a lower dollar amount of ad spend this year, but to actually drive more results. That is usually controversial for people, because I'm not selling a brand safety solution. I'm just selling, how do I get my clients' dollars to work harder so that they use advertising to grow their business more effectively? That's all I want. If we start growing sales at Molson Coors, that's good for me, because sales go up, budgets go up, they spend more money with me. That last piece that I told you either gets us thrown out of the room or it's a big buying Well, I think that's our time.

But Chris, thank you so much for being here. Thanks for having me.