AI And CTV Expansion Will Advance Market Position In Ad Tech Industry

Key Takeaways

• Viant's leadership in CTV and strategic acquisitions bolster its competitive edge, enhancing targeting capabilities and capturing a growing share of ad spend.
  
• ViantAI's AI-driven solutions and SMB market expansion are expected to improve campaign efficiency, optimize ad spend, and drive significant revenue growth.
  
• Viant Technology's heavy reliance on CTV and streaming audio markets, along with competitive pressures, poses risks to revenue growth and profitability.

Catalysts

Operates as an advertising technology company.

• The proliferation of Connected TV (CTV) and the ongoing shift of ad spend from linear TV to CTV is expected to drive Viant's revenue, as they are positioned to capture a significant portion of this growing market by offering industry-leading targeting and measurement solutions.
  
• Viant's leadership in addressability, utilizing their patented household ID technology and the recent acquisition of Lockr, is anticipated to enhance net margins by improving ad campaign precision and efficiency, leading to better returns on ad spend.
  
• The rollout of ViantAI, which includes AI bidding, planning, measurement, and analysis, is poised to significantly improve earnings by increasing campaign efficiencies, optimizing ad spend, and attracting more advertisers through AI-driven automation and insights.
  
• The strategic acquisitions of IRIS.TV and Lockr are expected to further enhance Viant's CTV targeting and measurement capabilities, contributing to future revenue growth by solidifying their competitive advantage and enabling a higher adoption rate of their platforms.
  
• The expansion into the small and mid-sized business (SMB) market, facilitated by the simplicity and efficiency of ViantAI, is projected to drive higher revenue by capturing advertising budgets previously concentrated in search and social ad channels.

Viant Technology Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Viant Technology's revenue will grow by 15.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.8% today to 1.8% in 3 years time.
• Analysts expect earnings to reach $7.9 million (and earnings per share of $0.31) by about April 2028, up from $2.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 213.3x on those 2028 earnings, up from 88.3x today. This future PE is greater than the current PE for the US Software industry at 29.6x.
• Analysts expect the number of shares outstanding to decline by 0.95% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.66%, as per the Simply Wall St company report.

Viant Technology Future Earnings Per Share Growth

Risks

• There is the risk of competitive pressures as the company operates in a highly competitive ad tech industry, which could impact Viant's ability to secure market share and sustain revenue growth.
  
• The company's heavy reliance on CTV (connected TV) market growth implies that any overall market slowdown or shift in technology trends could negatively affect Viant’s revenues and profitability.
  
• Incremental operating expenses due to acquisitions, such as IRIS.TV and Lockr, could affect net margins if the expected strategic benefits and synergies do not materialize at a faster pace or at all.
  
• The focus on integrating AI solutions, although potentially beneficial, poses execution risks that might lead to increased operational costs if the deployment of AI capabilities does not yield the planned efficiencies in customer acquisition and campaign management.
  
• High concentration of revenues in certain sectors, like CTV and streaming audio, exposes the company to sector-specific economic downturns which may limit advertisement spending, thus affecting overall revenues and earnings.
  

Valuation

• The analysts have a consensus price target of $22.143 for Viant Technology based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $27.0, and the most bearish reporting a price target of just $18.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $448.7 million, earnings will come to $7.9 million, and it would be trading on a PE ratio of 213.3x, assuming you use a discount rate of 7.7%.
• Given the current share price of $12.75, the analyst price target of $22.14 is 42.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.