Viant Technology Inc. (DSP) Earnings Call Transcript & Summary

All right. Well, thank you very much everyone for being here with us today. I'm Chris Kuntarich, part of the US (sic) [ UBS ] Internet team. We have with us here Tim and Chris from Viant, and thank you very much for being here with us today.

Yes. It's great to be here. Thanks for having us.

Great. Well, let's just get right into it. I think what a lot of the folks really are -- macro has been dominating the themes of Internet as of late as everywhere, but I guess, just curious what your thoughts are on potential accelerating digital ad revenue next year and how you guys are thinking about that and how that could be filtering through to Viant?

Yes. I mean, currently -- the current macroeconomic environment we signaled in our fourth quarter guide that it was soft and I think that's going to continue as we finish out this year. But when you look at programmatic or digital advertising as a whole, there are a tremendous amount of tailwinds. Starting, number one is Connected TV, although going through a tough spot now. As advertisers shift from brand advertising to performance advertising, I think the television market is taking a little bit of hit. But one of the best things that programmatic offers is flexibility for advertisers. That's negative for us when they hit pause, but usually, programmatic is the first thing to turn on as these recessions start to wane, because they need to stimulate consumers and drive demand and programmatic is the spot that they use that. Big tailwinds for us are Connected Television has been huge. Another emerging channel, not as big as CTV, but we expect to be a bigger contributor in 2023 is streaming audio, has all the benefits of Connected TV just without the visual effect and more and more advertisers are understanding that audio plays an important role in the media plan.

And I think if you look ahead to next year, there's going to be, I would say, more tepid growth definitely in the market, I would say, definitely in the first half. But what people aren't realizing is how much money in CTV is still set to shift from linear into CTV. So we look at that, we play pretty heavily there. We think that, that can allow us to grow above market. And I think we're going to remain in the position that we are right now, which is a lot of our growth this year has been coming from stealing market share, which for most of the year, if you look at our spend growth percentages in the first 3 quarters, we felt like we did that pretty well. And so we think that we'll continue to do that. So our outlook, although the growth in the market is going to come down, we still think we can outperform.

Got it. Got it. And just maybe a quick reminder on customer base, just from vertical concentrations, anything we should be thinking about that would be driving it from that perspective? And we know the CTV narrative is big. Just maybe as we kind of think about it up level it, what is that mix of brand versus direct spend and how we should be thinking about that and how that kind of evolves?

Yes. So we have been seeing, I would say, a shift from marketers moving generically in the market, moving out of less brand more into direct response tactics. What that's causing is a mix shift in some of the channels. So not as much in CTV, but redeploying into mobile and desktop. So we are seeing some of that. From a vertical perspective, from -- on the client side, I mean I expect the same big categories to be spending next year. Some will be affected. New ones always pop up. I think, one, we see emerging pretty heavily is in the casino and online gambling space. That's been an incredible category for us. I think in the pandemic, everybody was worried when that hit, all of a sudden, health care just came out of -- I don't want to say it, well, kind of at that point it came out of nowhere, but we all understand why health care spending has been large. But in times where ad spend looks to be threatened, there's always new categories that pop up. And I think that we've done a really good job tactically from a sales and marketing approach to go after those.

And looking at the consumer, the only other category I would mention where spending has held up pretty nicely is in the travel sector. Consumers continue to travel the demand for those services there and we see advertisers are trying to match that consumer demand with more spending in market.

Got it. Got it. And maybe just to bring it back to, back to Viant and away from the macro side of things. Just help us think about like the ad tech space is historically very competitive. And yes, compared to other DSPs, really, how is Viant uniquely positioned? And really, what makes advertisers choose Viant over other options here?

Yes. I think the reason why they choose us today will be different why it is today. I think right now, if you look at our -- where are we successful, we're successful in the mid-market. And this is mid-market agencies, client directs, don't think Procter & Gamble and Unilever and Ford and GM. You're 1 level down from that. These customers still spend hundreds of millions of dollars in advertising. They're looking for a software platform where they can consolidate that ad spend. And why do they choose us? It's so they can understand what the return on ad spend actually is. Measurement is coming -- is becoming the de facto reason why you choose 1 DSP versus the other. And our advanced measurement capabilities have really led the way on why the customers are choosing us. And you can continue to see this. In our space, there's something called Apple's privacy changes, deleting IDFA, cookie deletion, et cetera, et cetera. We've solved that problem technically. We have a patent on it. We call it the Household ID. And most of our customers aren't questioning our ID. It's just questioning where else can we spend inside of your software and being able to consolidate down. So today, I think it's all about mid-market customers. We're going to stay very focused in that segment. And I think in the future, it's going to be the next level up of those customers that we're going to get the crack at where 1 big issue with our stock price, our company is that Google didn't delete cookies and they kind of reversed course and did a 180 on what they said they were going to do. Many investors had left the stock and fled, but our business continued to perform at market or above market even though Google didn't do it. So I think what you have is a bifurcated industry right now, where Apple has pulled that trigger and deleted all of these IDs. And we're seeing lots of traction and understanding by advertisers there where Google has maintained status quo because they've got such a large digital advertising business that it could disrupt. And so right now, as we go through 2023, with or without ID deprecation, we've solved the really big technical problem already. We've got patents issued on it. And so I think we're in a very good spot as marketers better understand what are the ID providers out there? What are the use cases for them? How do we compare against our biggest competitor, Trade Desk and their UID2 initiative. I think most customers are finding that, that lack scale, they can't actually spend enough of their ad spend through, through this new UID2 and more and more, we're getting from customers. Our solution is scaled. 8 out of 10 ad request that works on today, where maybe UID2 works on maybe 2 out of 10, if I'm being generous.

Got it. Got it. And yes, I guess what is really driving the revenue story here other than ad spend as you guys are also going through the fixed price to percentage of spend transition, can you just -- yes, where are we at on that transition at this point? And really, when should we be starting to see that comp to be comping through?

Yes. We've talked about -- in 2023, we'll see a lot of that flush through. So on the comp, it will improve next year. Where you're going to be able to see this is in contribution ex TAC, you'll see that get much closer to spend growth. And at some point, we've said this that at some point, it will actually exceed spend growth. As long as we offer this fixed price, which we account for on a gross revenue basis, as long as we offer that, our revenue, GAAP revenue won't exactly meet spend, but we think in '23, we're really going to be able to come through that. This was the painful year because the amount of customers who moved and adopted our percentage spend pricing model and started trading on our software on their own was -- those amount of customers we predicted it would take probably 2-plus years for that to happen, but they accelerated it this year. That was great news because of the adoption of our software and they're spending a lot more. The bad news was it happened all compressed them 1 year. So we took some pain there. But we think next year, we'll be able to see through the other side of that early in the year.

Got it. And I think you had said on the 3Q call that like 60% of new customers are signing up this way, and it was like closer to 35%. Just maybe give us a sense for like where you think the percentage of spend is going to be overall? And is it 100% that we're going towards? Or is...

Yes. Probably not 100%, again, as long as we offer it and why do we offer that? I think our view is changing on that. Originally, the reason why we offered fixed price was to get someone to test our software without signing a master services agreement without getting their legal counsel involved, that is a 9- to 12-month protracted endeavor that takes way too long. So we came out with fixed price, test us, see if you like it. If you like the software and it does what we say it does, then we'll have a champion internally to get that. That helped us really short circuit the sales cycle. Now our view is changing on that a bit because now it seems that the vast majority of customers are going straight to percentage of spend. They know us more. Our brand is more well known. Maybe someone in their agency is already using us on an account, and they're like, okay, I'll adopt the -- Viant's Adelphic software. I still think that there's a lot of customers in the future who because of the way that their billing relationship may be set up in their agency with the client, they don't allow pass-through costs. So they need it -- they need it on a fixed price basis. And so I think for the foreseeable future, we're going to continue to offer that. I think it is the minority today. It will remain the minority...

Fixed price...

Fixed price is the minority in terms of the share. But I think just overwhelmingly, it's percent of spend is really the big driver.

Got it. Got it. And we heard from Netflix today you guys also had brought up CTV and streaming audio being big drivers. But maybe just help us think on the AVOD side of things. Yes, how does Viant really benefit from the rollout of these new large AVOD?

Netflix was music to our ears. I mean, we represent buyers of advertising. So if there's new sellers in the market, which Netflix is that you can integrate, that's going to drive more buying through our platform to purchase Netflix, and we make a 1% of that spend. So when you think of CTV in '23 versus '22, just start with Netflix as #1. If you look at Disney, the second largest provider in the market, they've increased their ad load. They're adding ads in many more apps that weren't there before. The ad inventory available to buy is skyrocketing, and that's great news for buyers of advertising, and it's great news for our revenue and profitability as well.

And I think today, we heard -- I believe that was Paramount today that talked about how the fourth quarter was softer than the third quarter -- so if we think about this.

I've never heard that in 23 years, by the way. Just so everyone understands, that statement is, I've never heard a fourth quarter lower than the third quarter given traditional holiday spending.

And I would say, what does that also mean, I think it's showing that there is a lot of -- it used to be in CTV, there's not that much supply. So everything is bought direct. I don't need a DSP to bid and buy in the open auction. It's just all direct sold. That's largely been true. But as we've seen that more and more content comes online, more and more consumers consuming it, there's more availability. It's a soft ad market in the fourth quarter. So we see a lot more availability. We see prices drop. We see more action in the open market in CTV. And I think that's only going to continue. With Disney+ coming online in January now, they've brought forward their advertising plans, Netflix getting into the game. I just think there's a lot of supply that's going to be out there. And the biddable part of CTV is actually -- it's going to flip the other way. I believe it's probably 80% of CTV is probably direct sold today. 20% is bidded. And I think that you're going to see that normalize to more of a 50-50 relationship next year.

But beyond CTV, if you start looking at these emerging channels, which CTV to us a couple of years ago, was [ co-emerging ], still not quite big and new. The new emerging channels that are coming down, streaming audio, we look at Spotify's revenue, consistent advertising revenue growth quarter after quarter. Audio provides us very unique experience and advertisers are trying to figure out how do you really put audio in a programmatic way and do it in the proper way. We've been driving that. The other things like the metaverse. No one likes to talk about now because everything -- Web3world has kind of taken a back seat. But we're the first DSP to integrate with Minecraft. We're also integrated with Roblox, getting ads inside of video games. If you just generally follow the media landscape and where consumers are spending their time, it's streaming and video games are a pretty substantial opportunity. And so we're driving advertising into these video game environments that didn't exist. And so it's just new channels that fast forward. What does an emerging channel look like in 3 years. It looks like another $100 million revenue leg. So it's kind of looking at CTV as an emerging now more of mature but still very fast growing. Streaming audio coming down can equally match, even though it's not as big as the TV market can equally match television over the long term. And video games may or may not be bigger than TV given how much time is spent there. And so we see lots of legs of growth for this business moving forward.

Got it. And Chris, you had called out that you think it's kind of like an 80-20 split right now. You think it goes to 50-50 over time. I know that's usually like other platforms Snap, that was kind of the direction it went like what needs to happen from a technical perspective? Do you think between now and getting to that 50% mix, like -- what needs to happen in order for that to happen? And like is that a 12- to 18-month type of time frame?

Probably somewhere in that tune. It could happen next year. I think it's just supply and demand. There's more demand for premium supply and CTV. So that's why it's all direct sold. I think if I work at Disney or Fox or any of these companies that have streaming, I don't have a -- there's not a gluttony of supply. I have a limited amount, my sales team, I'm going to cater to them, them direct selling to their clients, the agencies and the big Fortune 500 advertisers, either in the upfront or in the scatter, they're going to be able to sell the predominant amount. When supply ends up continuing to run, it exceeds their sales force. That's when you need to bring in programmatic demand. And I really see -- I see that happening, not on Netflix next year. I think Netflix probably won't have that supply issue for some time, especially in the U.S. just my guess. But I think you're going to see that with the larger players at some point next year.

But just to add to that, what we needed for that to happen was a recession. And I mean, what does recessions do? It forces organizations to get more efficient. What does that mean from an advertising perspective? If I'm buying ads, I'm a marketer and I'm buying ads, let's look at linear television. I believe this will be the nail in the coffin for linear TV being the primary ad spend on a media campaign or an ad campaign. Now what's going to happen in linear TV is it's not measured the same way digital is measured. Digital, we can go from ad exposure and linked to sales that happened in a store or online. You go to linear television, the best you can get is a rating point from Nielsen on what you think the content audience was, what the reach was for that. Nothing even close to what digital advertising provides from a measurement perspective. And so I think 2023 will be the year capitulation happens where streaming TV becomes the #1 way to reach consumers, linear TV, I guess the way to do it is linear TV was primary and CTV was incremental reach to the linear TV plan. And I think you're going to see that flip from '23 forward where CTV is the primary and linear TV will be purchased as incremental to reach non-streamers. And I think we needed a recession to kind of accelerate this adoption of digital advertising of advanced measurement capabilities and really push digital to the future to the #1 spot.

Got it. Yes, yes, maybe to round out CTV in the streaming audio side of things, like we've talked about kind of the broader ecosystem, maybe bringing it back to Viant here. What are the missing pieces? Are there missing pieces here for Viant that could accelerate the trends that you're seeing today in your business?

I don't think anything technically is missing. We've solved a lot of the technical challenges. A lot of our heavy lifting we do as an organization is simply introducing global advertisers to our software platform and the unique differentiator that we bring, which is we've solved this really big ID problem across Apple devices today. That's resonating with them. It's half the market out there in terms of the U.S. mobile devices. There's lots of ad spend going there and it's creating the ability for us to introduce our software platform in these, what we call cookieless or idealist environments. CTV is just another one of those idealist environments where we've got a tremendous amount of expertise in technology prowess in there. The ability to show an ad on Hulu and tell you if you're a yogurt manufacturer, the next week on how much incremental sales you got through all your grocery store retailers, that's what marketers are looking for in a recession. The old reach and frequency have I reached 100 million households is 3 times. And hopefully, we push x amount of cases of product through is no longer acceptable. What would you add?

I think that there's things -- I don't think we need, need anything for this next year. There are things on the horizon that we are looking to. The whole cookieless opportunity of that actually happening was going to bring on a lot of things. I think the first thing that investors read into is like, oh, okay, well, that's your chance. Everyone else loses, they need a home for the money, boom, we're going to hit you guys. Maybe that was a little bit why our IPO was pretty successful. However, that wasn't necessarily what we were looking at. We were looking at, okay, cookies go away. The cookie data is low-quality data. Marketers know it. All these other platforms that compete with us, they know it, too. You need to get to a higher fidelity data set that's more standardized and that's going to bring on a lot of new things and new technology. One of the things I'm talking about is artificial intelligence, machine learning. There's been a lot of talk about this, but that has had a hardware and compute issue for the number of years, but we're finally getting over that. And then the training set of the data has to be really clean and standardized. I think that's happening in the artificial intelligence world right now. And I think that cookieless actually happening is going to bring that. A lot of people think when cookies go away and IDs go away, there's less data, there's no more ad personalization and then marketers can't tell you what -- can't understand what they're getting for their money. That isn't going to happen. Personalization is going to continue. It's only going to get better. Marketers are going to continue to be able to measure in a much more effective way and truly know what they get for their money. And then on the back end of that, we're really excited about machine learning and artificial intelligence. It's an area where we've been investing. And we had some early success. I talked about this on our last earnings call that marketers are seeing great success and really us automating the performance of their campaigns. I don't know if anybody has ever seen other things out in the areas like OpenAI, is anyone familiar? Anybody see GPT come out, ChatGPT this weekend, phenomenal. And it's scratching the surface of something that we've been looking at, but there's a lot of applications of that to our business. And I think it's going to bring a ton of innovation in the space, not just with us. I think it's going to really open a whole new leg of another 10-year big cycle in advertising with the application of these technologies.

I would just add to getting to the automation and the long-term goal, what we call autonomous advertising. One of the big problems in programmatic advertising, there's not enough skilled labor that knows how to use software platforms like ours, the Trade Desk, Google, et cetera. It takes a skill set that you've got to learn the software. The way you solve for that in the future is you remove the need for the human to actually traffic a campaign, target ads, identify which audience segments and publishers, we should place the ad campaign. With artificial intelligence and the advancements in machine learning that we're applying, we see a future where it needs no human to actually start a campaign, optimize the campaign and drive revenue growth for the customer of in-store sales or online sales if it's an e-commerce store. So our long-term vision for this is that no humans are involved. It runs fully autonomous and will place your campaign. With ChatGPT, what he's talking about is it's not just the buying of the advertising that's going to be automated, now it appears the creation of the advertisement itself without having to license music, pay for actors, get a set in facility, you're now starting to see the actual ad get created from artificial intelligence. When you match media buying with the ad creation and that's going to be pretty powerful and something we're very excited about.

So realistically, how far away do you think we are from that type of moment?

I think we're a lot closer than the average person thinks. And the more you play with the AI models that are available out there today, the more you see how close we are. And I would say that you exit '23 and you're going to start seeing products brought to market that are AI-based, automatically generating creatives, automatically generating media plans and automatically optimizing those campaigns for you. I think it's end of '23, you're going to see all these products launch. I know internally, we're very fast at work on trying to say how do we apply machine learning and artificial intelligence to reduce the need for labor across the board, which opens up more companies that have the ability to use a programmatic app platform.

I don't think it's a technology holdback at this point. I think it's the way things currently operate in humans in the way. I'll give you an example. Let's say that we bring, hey, look, Mr. Marketer and Agency, you don't need to create ads that you charge people $2 million for a spot, you can do this with artificial intelligence. That doesn't sound very good for business if you're in a creative agency. However, what do I really think that happens long term, although that will be a sticker shock in the beginning, they will themselves will actually use this and apply this to their clients. So there's a lot of stuff. We know a lot of times when clients run campaigns, if it doesn't work, they'll say, either the media I ran it against was bad or maybe whoever optimized my campaign ran it for me was bad. But a lot of times, you do the research like the creative spend. So in TV, they knew that. But in digital, you make your creative once, and it is what it is, hopefully, we get the best performance. Now you're actually going to be able to iterate on creative. It's the one area we've -- it's the one area that hasn't gotten a lot of innovation, the creative and it's probably the most impactful thing is the message that you're giving consumers.

I mean already, I'll share some internal stuff. Already right now internally, we can predict if the ad is good or bad before it even runs based on the actual image and historical data that we're applying machine learning, too. But when you tell a client, hey, this is a bad add, it's not going to work, and they've already invested hundreds of thousands or millions of dollars into the production of that advertisement, it's not the best conversation. But when you call it ahead of time and the data plays out, that it wasn't effective and we have predictive elements in the creative that we can predict this, that's -- it goes a long way to your credibility when you're launching that next product.

Do you think that's resonating more now in an environment where people have had a lot of their targeting and measurement capabilities kind of [ rub pole ].

Deprecated? Yes, absolutely. I mean Facebook can't measure on adds to sales anymore, given Apple's changes across IDFA. I mean -- but just when you do things like based on your image, this ad is not going to perform to the metrics that you need for your business. I mean that type of intelligence is incredible to make decisions off of. When you think the creative is making the ad as one piece of the budget, but the vast majority of the budget is the ad spend or the media spend behind it and placing that, you can save quite a bit of money if the production is not great.

Got it. Got it. Very interesting. Maybe to bring it back to 4Q and away from the product side of things. You guys have guided to that down 11% to down 20% on ad spend in 4Q. Really, can you just kind of unpack that there? What are kind of the key drivers and maybe any sort of quarter-to-date update?

Yes. So at a high level, from a macro point of view, so sequentially from the third quarter, we guided from a spend basis up 1% to up 11%...

From Q3.

From Q3. So what that means is we are seeing a little bit of a bump from Q3, but we typically see about a 40% increase in spend. So the holiday spending that you normally get in the fourth quarter largely isn't really showing up. And then coupled in there, we have a tough comp issue year-over-year. Last year in the fourth quarter, in our careers and jobs category, we had a -- I don't want to say it was a one-time event, but it was in the fourth quarter. It was split among multiple advertisers, but they're all in the careers and jobs. And they showed up with a ton of money. They all happen to be fixed-price customers. And the -- and we knew it was great when we got it, but we thought, oh, man...

It's like political.

This is going to hurt when it's not here next year, if they don't come back, right? So lo and behold, labor market turns. So that is the comp. That really is the year-over-year comp. Fourth quarter not really showing, but the biggest thing you see, especially in the revenue -- the deceleration in revenue, it's really due to the comp issue is the biggest item.

Got it. And just kind of -- you had called out that somebody else at the conference may have made a comment about it being down Q-over-Q and your guide implying plus 1% to 11%. Is like should we be thinking about it more like that is kind of similar to what you all are seeing? Or was that something that really truly caught you by surprise that what you had heard earlier?

I was just surprised. Usually, you would think a big company like Paramount would be able to eke out holiday spending. It was just to me that was a shocking statistic and one that I've never seen. Even for us, though, on 1% to 11% from Q3 is also -- that's not punching above your weight, that's below expectations. So I think in the end, the economy is changing very, very fast as Fed rates have risen very, very fast from the start of the year. And so I think there's a lot of uncertainty in the market, which is when there's a lack of confidence, advertising is one of the first expenses to be pulled back. However, when you need to stimulate demand, there's only one way to do it and it's to stimulate demand to drive product when they feel consumers are there and we're going to be turned back on in a very, very fast way. One thing that makes me feel good about 1% to 11% when I hear Paramount is going to be down as well, we're outperforming some of the biggest media companies in the world. So it shows you the need and the benefits that our software platform brings to advertisers, we're more important than, say, a major media company being on a buy. That's what that tells me. But overall, it's a soft economy. Hopefully, we can get the economy back on track and advertising starts moving on its way.

Got it. Got it. And you guys have historically had significant exposure to the retail vertical as well. Just curious kind of what you saw from CyberFi, Black Friday, whatever you want to call it?

Bah humbug is what we saw. I think there's a whole lot of coal in people stocking this year. Retail is the big -- is one of the big factors we cited coming into Q4 that we saw softness in it. And I think that's continuing to kind of play out in terms of retail. That being said, people are still spending on travel and travel spending is there. Financial services has still been there. There's -- some categories are up, some categories are down, but retail happens to be a bigger category for us. Chris mentioned the careers and jobs, which was, I think, more of an internal company issue that we faced with on a tough comp. But yes, that's it.

Yes, I would just say one other thing. I am seeing e-commerce growth year-over-year kind of come in line, but I don't necessarily see that with clients as we stated, I mean, that's interesting news, but we stated we expect the retail to be soft into the fourth quarter even from Q3. I think that what's happening with some with a lot of companies in the space are something similar to what we saw with CPG over the last year, 1.5 years, which is yes, I have some supply chain. There is some macro issue, but I'm going to take a lot of my ad spending and I'm going to put it on my balance sheet. I'm going to raise my prices maybe, and I'm going to take the benefit. I think you saw that in CPG and auto a little bit. I think we're seeing a little bit -- I think it's possible they thought it would be really, really, really soft, retailers out there and e-commerce companies. And maybe it's not going to be -- if industry reports are somewhat correct, maybe it's not going to be as soft, but they'll have a discretionary pullback in spending, so it will be a benefit to them. But typically, we just don't see advertising held back for that long and especially in the category where you're looking to drive e-commerce because advertising drives it.

Yes. And I think we had talked about it in the past, just the idea of the budget flush at the end of the year where people held on to spend and they need to get rid of it at the end of the year. Like are any of the dynamics that you're laying out? Like do you see it making it more or less likely in some of these key verticals to where we do have that type of budget flush towards the end, like I guess, from here until the end of the year?

Less likely.

I hope so.

I think when earnings are under pressure, advertising is a variable expense that you cannot spend and put directly to your bottom line. And I think prudent management teams make that call in the face of a lack of consumer demand, they can prop up their earnings by reducing their expenses. That's however, the demand just gets pent up, that money -- I wouldn't look at it as a budget flush. It's just ROI. If I spend x millions am I going to get y tens of millions in return, if they don't see that confidence factor, they're going to not spend the money and wait until the consumer demand is there.

Got it. Makes sense. Yes, maybe just bringing it to the customer level and thinking through the 4Q and as we think into '23, how should we be thinking about new versus existing customers driving revenue growth?

Yes. I would say -- I mean, we're still going to remain aggressive on new customer acquisition. We -- I still think that for us, we can be in market. And I'm not expecting a disaster '23, I think -- we think it's going to be soft in the first half. And we think from our conversations with customers, they don't know -- I would just -- let me say, nobody knows anything, I think that's true. No one in this -- on this planet knows what's actually going on or what's going to happen. But we think the back half will be better than the first half. That's what we think, soft first half. I still think that marketers still -- they have to get a return on investment. They're still going to spend. It's not very many customers that I know that are like zeroing out, they're not doing that. So I think they're cutting back a bit and they're being cautious and I think they're going to redeploy in the back half of the year. I think we can outperform and steal more market share next year. I expect to get more next year than this year, actually, because I think there's more demand for our software. That's number one. Number two, we have this cohort effect. So year 1, when someone tests our software, that's a year 1 of our cohort. When they do that, they typically test them in 1 channel, let's say, it's like CTV. Then in year 2, they renew, they add more budget to the existing channel, let's say, it was CTV. And then they added another channel, so they're in 2, like 2 channels. Then by the year 3, they renew and all of a sudden, you're in 3 channels, and they're consolidating not just the first channel, but 2 channels now. So really what that does, they spend more and more and more every year. Because we also offer all of these channels, they're consolidating all of that spend. So I still expect that to happen. Clearly, if you look at just top line macro, there won't be as much that you're consolidating, but we're not -- we haven't consolidated all of -- we're still early in the cohorts with a lot of these customers. So we still expect decent size spend growth out of those customers.

And I would just remind investors, too, when we went public in 2021, it was really predicated on Google deleting the cookie and we had this cookieless technology that was actually there. And then that didn't manifest. But if you go look at our performance as a business relative to the industry leader or the Trade Desk, our ad spend and their ad spend is almost identical through Q3, very similar all the way through. And that's without the ID being deprecated. So if we already have our ad spend growth rates matching the market leader, imagine what the growth rates will be when these IDs are gone. And it's because the reality today on 80% of the bid requests that are out there that we can bid and buy an ad, there is no ID. And marketers are very aware of this, which is what's driven our ad spend growth equal to the market leader. I would say our valuation relative to the Trade Desk is pretty tremendously different. I think when I look at the enterprise value, we're trading at something today like $0.25 a share, yet have growth rates equal to the leader. We have $200 million of cash. We have no debt. And if I rewind how do we get here? It's Google's one announcement and investors sold the stock off and a total misunderstanding of the market opportunity that we have. So if I'm an investor outside looking in, we are an incredible investment. Our enterprise value is trading at cash. If you're relined, we're going to lose money this year, but we were heavily investing to drive top line growth rate of revenue growth in the face of a macroeconomic downturn. It's very easy for us to pull back these costs, which we've taken action to, to start generating positive EBITDA again. In 2021, we grew 30% revenue and we had about $37 million of adjusted EBITDA. The #1 complaint for us by investors to us was that your growth rate isn't big enough. And so we took a lot of that EBITDA, reinvested it back into the business, unfortunately, with bad timing. But it's very easy for us to pull that cost out, start generating positive cash flow again and what a great investment with $200 million of cash, no debt, fast-growing company, and we have a patented technology solution to a huge problem in a huge addressable market of advertising globally, and we're only operating in the U.S. today. Truthfully, I believe we're one of the best buys out there if you're looking for multiples on your money. I can't see a lot of other places besides Viant that you can invest at $0.25 a share enterprise value today if you move fast.

I don't know if I can beat that and I feel a little foolish asking about it. But it's -- from the fixed and variable cost side, like what are you guys kind of thinking -- how are you thinking about that into '23?

Yes. What's our #1 problem when we go to a customer, they have no idea who we are. And so if you're Procter & Gamble, you're not shifting $1 billion of ad spend to a company that you've never heard of, never tested, never worked with. These ad spends are too important and it's like a supply chain. So it takes a while to get introduced, to get tested a whole bunch of individuals within these organizations from the legal team to the Chief Information Officer to the CTO to the CMO. It's not just the CMO. There are so many constituents in modern day organizations because this is technology that you're bringing in-house to actually execute your advertising. It's not just digital advertising, this is now just advertising. Through our software, you can place billboard ads, you can buy ads on Hulu, you can buy banner ads on a website. All the opportunities have been aggregated and pulled in. So we've got to win over a lot of people. Part of those variable expenses was just our own marketing expense. So people weren't hearing our name the first time we walked through the door, someone in our business development group. Our literal -- our enemy is lack of awareness. And so we drove more marketing expense. We did increase our sales force as well, too, which has been paying off pretty big dividends and driving that top line spend. But everything is productively measured. We make data-driven decisions. We pulled back some of that marketing expenses variable just like our customers do. But one of the biggest opportunities we see now moving forward is the ability to pull incredible levels of talent in the technology group. I can't tell you how tough it was when we had the careers and jobs category to be able to recruit engineers and product teams, it was like Meta, Amazon, everybody was plucking and hiring this specific skill set at an incredible rate. We were losing our own talent for offers that were double what we could pay. Fast forward to today, there are many engineers and highly talented product individuals available in organizations like us. Our Chief Product Officer, we hired is Dustin Kwan. He was the General Manager of Amazon's DSP, which went from $0 to $35 billion of ad spend and he ran that for 8 years as the General Manager, and he's now our Chief Product Officer. If you look at every single individual that he's brought in, it's primarily the Amazon advertising team that's there. When we start looking at the engineers, it's coming from places like Snap and other social networks that are churning out these engineers. So I think we're at a great place to pull in the final piece of the talent that we need to shore up the engineering and product team, which was one of the biggest struggles and it was also driving the wage inflation within our own business. And now it's a much more normalized environment there, huge opportunity to bring more talent in. It's specifically in that area while we optimize our other expenses.

Got it. Well, I think we are officially out of time here.

Great.

Really appreciate it.

Thanks for having us.

Thank you.

I'll call it there. Thank you