In the summer of 2021, I Wonder what was happening to the shares of Vient Technology (Nasdaq:dsp,, as shares fell 80% in just a half-year time frame since the public offering. 2021 was set to show meaningful Growth in a pandemic-affected year, as shares looked pretty cheap, damn cheap, though I had some underlying concerns.
Jumping forward two years, shares have halved, now trading at $7, and change. This is the case even though shares have doubled recently as the business has shown some signs of life again, though not enough for me to get too excited and get involved.
Vient went public in February 2021, becoming the next automated/programmatic advertising company to go public. Finding a winner in this market is important, as the sector has seen spectacular failures places, as well as some undisputed winners, for example, trade deskTTD,,
Vient provides automated planning, buying and measurement of advertising across all channels through its Adelphic software. New solutions are vital, as cookie-based identification, privacy concerns and tighter regulation make older methods ineffective.
Through the platform, marketers can buy ads faster and easier across all channels and devices, relying on open data instead of cookies. Note that the business is not a transformative play that was established in recent years, as the business was founded in 1999, with the real transformation taking place since the purchase of Adelphic in 2017.
Shares went public in February 2021 at $25 per share, as shares rose to a high of $65 per share in the days that followed, valuing operating assets at approximately $3.5 billion.
The company’s 2019 sales rose 52% to $165 million, as an operating loss of $20 million turned into a profit of $13 million. The company was set to report flat revenue of $165 million in 2020 amid the pandemic, resulting in a sales multiple of 20 times, let alone a resulting earnings multiple at those levels.
I couldn’t have imagined that as a publicly traded company, shares would drop 80% in the first half. The company guided for 2021 sales to grow 19% to $197 million, yet the problem was that the adjusted EBITDA guidance for 2021 (at $23 million) was far below the more than $31 million EBITDA number it posted in 2020. By raising full-year sales guidance to $207 million and EBITDA guidance to $30 million, by the second quarter, shares were coming under a lot of pressure.
In fact, at $13, the company earned a valuation of just $600 million by the summer of 2021, a number that also included a net cash position of $230 million. The resulting $370 million operating asset valuation comes in at less than 2 times sales and roughly 12 times EBITDA, which looks like a modest multiple. Hampered by low valuations, I failed to have conviction about the business, and with growth not strong enough, I failed to pull the trigger.
caution saves the day
Since the summer of 2021, Wyant’s shares have continued to decline, reaching a low of $3 and turning around by the end of 2022. In fact, shares used to trade at $4 and turned around in recent weeks, before rising to the $7 mark today.
As it turned out, the company Enhanced Sales in 2021 hit $224.1 million, with an EBITDA number of $37.1 million. However, this resulted in a larger GAAP loss because it did not include, among other things, a stock-based compensation expense of approximately $69 million. The problem is that lack of operational strength and competitive solutions plagued the firm in 2022. Sales fell more than 12% to $197.2 million, as operating losses widened to $49 million as the company reported an adjusted EBITDA loss. Another $6 million in change.
The company provided only first quarter guidance for the year 2023, which saw sales of $39-$42 million, with an EBITDA loss of between $2.5 and $4.5 million. Still holding a net cash position of $206 million, the position represents a substantial portion of its market capitalization of approximately $434 million at $7 per share. This means that the business has actually traded around a net cash position of $3 and change over most of the past year.
In May, the company informed of First quarter sales declined 2% to $41.7 million, coming in at the high end of revenue guidance, as an adjusted EBITDA loss of $0.4 million was narrower than previously reported.
The company outlined relatively upbeat guidance for the second quarter, which saw sales between $52 million and $55 million, and adjusted EBITDA between $2 million and $3 million. As it turned out in August, the company Enhanced Sales increased 12% to $57.2 million in the second quarter, but also yielded EBITDA of $6.8 million. Note that despite the great improvement, the company still reported a GAAP operating loss of $5.2 billion, although the net loss was narrowing due to interest income received on the net cash balance.
Beyond that the company believes that better days are ahead, with third quarter sales of $56-59 million and EBITDA of $6.5-7.5 million, the company has a recent history of giving slightly lighter guidance.
one last word
As revenues here are firmly on track to cross the $200 million mark and losses are narrowing fast, so are the hopes that this has pushed the shares higher. Operating assets trade at just 1x sales, with valuations of operating assets just crossing the $200 million mark at just $7, but I still have some long-term concerns about the business as the company is still not profitable .
The business is showing some signs of operational performance, which is now evident in the share price as well, I’m still very cautious. The signs are encouraging, but I just feel like the quality of the business isn’t good enough to be believed here, as the company still has some tough work to do to achieve a realistic break-even level.