Viant Technology Inc.

DSP Details

Viant Technology Inc. (NASDAQ: DSP) is a people-based advertising software firm that helps marketers and agencies to plan, acquire, and measure their advertising efforts across most channels. Adelphic, the company’s self-service Demand Side Platform (DSP), allows advertisers to run programmatic advertising campaigns across Connected TV, Linear TV, mobile, web, audio, and digital out-of-home channels. DSP earns revenues by collecting platform fees, which are either a percentage of spend or a set monthly subscription fee and payments for extra features like data and advanced reporting. The company was listed on NASDAQ on February 10, 2021, with an issue price of USD 25.00.

Expand Cookie-Free Predictive Audience Access: On June 16, 2021, Comscore (NASDAQ: SCOR), an American media measurement and analytics business, announced the successful integration of its contextual Activation suite with DSP's digital platform Adelphic. Comscore's cookie-free targeting solutions, which include brand protection, contextual relevance, keyword targeting, and Comscore's most recent invention, Predictive Audiences, which turns audience targets into privacy-friendly contextual signals, are now available to DSP advertisers also.

Robust Q1FY21 Results: For Q1FY21 (ended March 31, 2021), the company reported a 5.20 percent growth in net revenues to USD 40.14 million, up from USD 38.16 million in Q1FY20. Net loss for Q1FY21 was USD 14.87 million, compared to a net income of USD 0.33 million reported in Q1FY20. As of March 31, 2021, the company stood at the cash and cash equivalents of USD 246.59 million while the total debt amounted to USD 23.53 million.

Key Risks: Advertising agencies account for the majority of the company's revenue, with two advertising agency holding firms accounting for 13.3% and 13.2% of total revenue in FY20, respectively. As a result, the loss of such agencies could have a severe impact on the company's operations. In addition, DSP is also reliant on third-party data center hosting facilities (such as Google Cloud Platform and Amazon Web Services) to ensure that its servers have constant power, internet access, and technological security. The termination/lapse of service or damage to a facility could affect the DSP’s brand name and financial position.

Outlook: For FY21, DSP expects its revenue to be in the range of USD 200.0 - 205.0 million, with adjusted EBITDA to be around USD 24.0 - USD 27.0 million. DSP’s revenue and adjusted EBITDA estimates for Q2FY21 range from USD 45.0 - USD 47.0 million and USD 3.5 - USD 4.5 million, respectively.

Valuation Methodology: Price/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

DSP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: DSP share price fell by 47.61% in the past three months, and is currently trading at 8.76% below its original issue price. On the technical chart, the next support level is USD 20.59. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 27.75. Considering the attractive valuation of the newly listed company, product enhancements, positive outlook, and associated risks, we recommend a “Speculative Buy” rating on the stock at the current price of USD 22.81, up by 0.70% as of July 09, 2021, at 1:50 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.