Viant Technology Inc.

DSP Details

Viant Technology Inc. (NASDAQ: DSP) is an advertising software company, which enables marketers and agencies to plan, acquire, and measure their advertising efforts across most channels. DSP's self-service demand-side platform, Adelphic, allows marketers and ad agencies to plan, buy, and measure advertising across several channels. It earns its revenue by charging platform fees from its customers, either a percentage of the spending or a set monthly subscription fee and payments for extra features like data and advanced reporting. The company's shares were listed on NASDAQ on February 10, 2021, at an issue price of USD 25.00.

Adding Value for Advertisers: On August 05, 2021, DSP's digital platform Adelphic announced the successful integration of CatapultX's video monetization and contextual AI platform. As a result, DSP's advertisers can now use CatapultX's contextually effective promotional options, which merges advertising within the program and ensures the delivery of brand messages with higher relevance and impact. 

Q2FY21 Results: The company reported YoY growth of 65.69% in total revenues to USD 50.41 million in Q2FY21 (ended June 30, 2021) compared to USD 30.43 million in Q2FY20, attributable to growth in the number of active customers and average contribution. Adjusted EBITDA for Q2FY21 grew 3.03x YoY and stood at USD 8.35 million compared to USD 2.75 million in Q2FY20. Net loss for the company expanded to USD 3.66 million in Q2FY21 vs. USD 0.03 million in Q2FY20. As of June 30, 2021, the company had a cash balance of USD 252.27 million and total debt of USD 17.5 million.

Key Risks: DSP operates in the digital and in-app advertising industry, dependent on internet browsers (such as Chrome, Firefox, Internet Explorer, and Safari) and operating systems (Android and iOS) provided by established technology companies. It also provides Internet Protocols (IP) and practices of internet service providers. Therefore, any material alteration in the operation and policies of browser and operating system by significant technology companies or adoption of new IP by internet providers could affect its operational and financial performance. Furthermore, two advertising agency holding firms accounted for 13.3% and 13.2% of its total revenue in FY20. Hence, the loss of any of these key customers could harm its financials.

Outlook: As of Q2FY21, DSP expects to earn revenue of USD 48 - 50 million along with an adjusted EBITDA ranging between USD 4 - 5 million during Q3FY21. For FY21, DSP forecasts its revenue in the range of USD 205 - 210 million, with adjusted EBITDA to the tune of USD 29 -32 million.

Valuation Methodology: Price/Sales Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM 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's stock price decreased 40.21% in the past three months and is currently leaning towards the lower band of its 52-week range of USD 14.46 to USD 69.16. The stock is currently trading below its 50 DMA level, and its RSI Index is at 38.14. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 21.64. 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 16.36, down 9.76% as of August 13, 2021, 12:17 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.