Andrew Boone: Hi, guys. Congrats on the strong results. The key takeaway for me this quarter is the inflection in profitability, right? EBITDA came in much better than we expected. If I go back and I look at 2020 and 2021, assuming a stable macro environment, do you guys have a path to kind of high 20s margins next year or how do we think about you guys balancing the profile of growth versus profitability?
Tim Vanderhook: Yeah. It’s hard to comment on next year, Larry, please comment if you’d like to. I think what we’re focused on is the application of artificial intelligence internally, as well as externally for our clients and then we’re going to see adoption rates of these technologies. AI is also a scary concept for some users of it. They don’t know how it’s going to do. They don’t want to mess up results. So it’s watching the adoption rates. In a perfect world, certainly, those numbers you talk about are achievable in a perfect world. But again, customers have to adopt it. The product has to perform. But certainly, the early results we’re seeing are encouraging.
Larry Madden: I would add in terms of next year, we’ll continue to make strategic investments and continue to innovate. But I would say that, you — I would not expect to see our operating expenses growing anywhere near what our contribution ex-TAC and revenue will grow. So hence to answer your question, our EBITDA margins will be higher next year than they are this year.
Andrew Boone: That’s helpful. And then I wanted to go back to the mid-market, right? You guys answered this in a certain respect with Maria’s question. But how do you guys think about the needs of the middle market agency and how are they different than the holdco and how are you guys addressing that, right? So how are you guys winning that business? Thanks so much.
Tim Vanderhook: Number one, I think, the — right off the bat, the mid-market agencies and the mid-market customers, in general, they need — it’s all about campaign performance. They have to see the return on ad spend. These aren’t customers who, in Laura’s question, like, in the holdco, you get a lot of broadcast style buying, we’re just buying content, you’re delivering ads. You’re delivering X millions of impressions of ads. So the bar that you have to clear from an ad performance isn’t very high. When it gets to the mid-market, these customers are steering at [ph] customer acquisition cost, it has to perform. That’s number one. A big component of that is the price that you are paying for the ad impression.
So we’re really standing out there, as we highlighted with our AI Bid Optimizer. The second I’ll say is that, the mid-markets don’t carry the level of staff that we typically see trading or programmatic trading. So the platform has to be a lot more automated. So they demand it just because they don’t have that same level of headcount, and again, we have a huge focus on automation. So that’s why we continue to win there. But in the end, the mid-market needs exactly what the holdcos have by partnering with Google, Meta at huge levels and billion dollars of ad spend. They need a sophisticated ad platform that’s able to get the right ad in front of the right user and pay the right price. I think that’s where the DSP steps in and helps them accomplish those goals very efficiently from an employee productivity perspective.
Andrew Boone: Thank you, guys.
Tim Vanderhook: Thanks, Andrew.
Operator: Thank you. Next up we have Andrew Marok from Raymond James.
Andrew Marok: Yeah. Thank you for taking my questions. Understanding that you’re making intentional efforts in terms of which customers to allocate resources to, I guess, in light of that customer list optimization, how many of the remaining 314 customers do you think are ones that you can forge these higher value relationships with, and I guess, how does that impact your sales strategy and potentially the sales and marketing line as well?
Chris Vanderhook: The predominant amount of them are those types of customers without a doubt. So we feel really good around the engagement with our customers right now. I think what you’re highlighting is just the decision that we made with lower spending customers who don’t show the same level of adoption as the higher spending ones that we basically, it’s not that we kick them off the platform. But if they don’t spend a certain amount, they’re going to have higher pricing and so we do expect some of those to continue to drop off. Again, the customers we want, although we’re in the mid-market, we’re aiming for customers that are going to spend in the tens of millions and that’s really where we’re focused.
Tim Vanderhook: At this stage, yeah. It’s important to scale with customers that can scale with you.
Andrew Marok: Great. And then with Direct Access, we’ve seen a good number of peers introducing these kinds of disintermediating products, whether coming from the demand side and the supply side or vice versa. I guess can you talk about how you see that space evolving if everyone has a Direct product? And then how does Viant kind of set themselves apart in that future scenario?
Tim Vanderhook: Yeah. Well, one, I don’t think it’s so much so about disintermediating, what I think it is, from our standpoint, again, buy-side, we represent the advertiser. It’s about getting them the lowest possible price or eliminating unnecessary tech tax in the middle. And there’s a lot — look, in programmatic, historically, there’s been a lot of middlemen trading that I think the buy-side has really been focused on driving out and I think that’s what you’re seeing. So anyone who has direct relationships with publishers, they’re going to continue to do well there. This is just a — I would say this has been going on for probably three years to four years, this concept of supply path optimization, that’s really what it’s about is, they want the most direct path to the content owner and they don’t want a bunch of unnecessary people in the middle taking attacks.
So that’s really what it’s about. In the end, price drives, is a huge component of campaign performance, and at the end of the day, customers rely on us to drive that campaign performance. So again, we’re going to remain completely on the buy-side. We don’t — these aren’t sell-side initiatives. It’s giving the sell-side direct access to our customers’ demand.
Andrew Marok: Appreciate the color. Thank you.
Tim Vanderhook: Thank you, Andrew.
Operator: Our next question is from Jason Kreyer from Craig-Hallum.
Jason Kreyer: Hi, guys. Thank you. Great results. You talked a lot about mid-market, and so after the quarter, we saw the announced bankruptcy of one of your competitors and I think they had a presence in the mid-market. Just curious if you see an opportunity for further share gain on the heels of that?
