volfan,
Great catch, thanks! I don’t see it on TTD’s web/calendar page, so unclear if this will be something to listen in on or not though.
-Dreamer
Darthtaco,
I think this was an interesting and underrated bit of math you did, so much so that I wanted to highlight it:
Take the aforementioned segments. I don’t think you can find a breakdown exactly from what revenue to what revenue but they did say that revenue for the three “emergerging channels” Native (200% growth), Audio (600% growth), and Connected TV (535% qoq and 1000%Dec to Dec) generated $100M in add spend on TTd platform for 2017. That’s about 1/15th of the $1.55B in spend for the year. They earned $308M in revenue on that spend for about 20%. So they earned maybe $20M in revenue from these emerging segments.
But 20M is still a very small number against their 308M of total revenue. If that even doubles in 2018 I would sit up and notice. I think there is basically 0% chance that it grows to 100M or more in the next year or two, and you can quote me on that. And by that time the growth rate will be much slower. Plus (and this was my real point) these fast-growing segments are just offsetting the slowing growth in their much larger segments. Look for overall revenue growth to continue to slow.
Everyone,
Thanks for the interesting discussion on this thread. I remain convinced that the story here is more compelling than the reality.
Bear
4 Likes
Bear, in light of the original post in this thread, I am interested to see your updated thoughts after this most recent quarter.
The Trade Desk +22.1% after solid beat, raised 2018 guidance https://seekingalpha.com/news/3355574?source=ansh $TTD
volfan84
Long TTD
Not intending this as a call-out, but you may have focused a bit too much on the wrong things last quarter, with the small base part as a reasonable point made.
Bear, in light of the original post in this thread, I am interested to see your updated thoughts after this most recent quarter.
Unlike Twilio, this is not one where the company performance was what I expected. I am very surprised to see them grow at 61%. I still don’t believe they will keep it up, but I could just be wrong again. Congrats to the longs.
Another random thought: could they have seen a demand uptick throughout Facebook’s struggles?
Bear
4 Likes
Another random thought: could they have seen a demand uptick throughout Facebook’s struggles?
It was addressed on conf call. Will post transcript later.
Net is more data was bought thru their platform in march than ever before, despite all the concerns on data due to FB.
They believe brands/agencies view digital/programmatic as a primary driver and not just as a supplemental driver, and thus they need to diversify beyond the top search giant and top social network.
GDPR is a good thing for them…they have been at forefront of data privacy for almost a decade.
Biggest drivers continue to be outside of FB and GOOGL grasp, such as intl/china (they bring brands to spend money in china…win-win for china), audio, mobile, and of course CTV.
They executed nearly flawlessly. Again.
Guidance calls for $433m, which is 44% y/y guidance. So assume they beat as usual.
Profitable, positive FCF, growing 60% y/y in latest Q and CTV is in “first inning”.
Very few companies can match that rev growth and FCF/profitabilty when over $400m/yr rev mark.
Dreamer
4 Likes
That sounds about right, DreamerDad.
Bear, I would only add that FB had an excellent 1st quarter. If FB is struggling (which I don’t think they are), it has not showed up in FB’s results yet. If more advertising revenue is headed TTD’s way from FB struggles, however, it would first show up in TTD’s Q2 results. Another possible catalyst for TTD if you will.
I really like TTD and its CEO Green. I’m not in it, because I have very large positions in FB and Google and I figure all my money can’t be in online/digital advertising companies. But I readily admit TTD’s upside is much higher. I’m still tempted actually.
Anyway, yes, congrats to all the longs and I would bet on more good days ahead.
Matt
Long FB/GOOGL
MasterCard (MA), PayPal (PYPL), Skechers (SKX) and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx
2 Likes
This was an extraordinary quarter for TTD. Can they keep it up? I truly think they can.
Green is incredibly sharp and has attacked the market all while being profitable - really an incredible feat for a SaaS company. I’m careful betting on Green as I’ve put too much stock in leaders in the past. Yet, he seems like the real deal and for that reason it is roughly 7% of my portfolio even in an industry that has been beaten and battered. The walled gardens are the competitors with only CRTO doing anything profitable in the space. Yes, TTD does seem to have it figured out.
Their optionality is fantastic focusing on Asia, CTV and mobile. CTV grew at a “meager” 21 tines this quarter. Yes, I know. Small base and all. Growth anywhere near that will eradicate small bases.
A.J.
1 Like
Hello Dreamer,
You have covered many of the salient points on the call. One that you haven’t mentioned that I thought was meaningful was Jeff Green’s comment on TTD commissioning a Nielsen report that shows that 41% of the American TV audience NEVER watches traditional TV. Thus, when brands desire “reach” they must turn to programmatic for a significant portion of their spend. He likened it to TV’s early days when brands must buy CBS, ABC, and NBC to get the reach they wanted.
Best regards,
Mike
1 Like
I will reply on a thread that has more positive thoughts on TTD.
Been looking to update with the transcript, but you have a good point on the Nielsen comment for sure.
Thanks!
Dreamer
Mar 2017: revenue grew 76%!
Jun 2017: revenue grew 54% – still awesome
Sep 2017: revenue grew 50% – no complaints here
Dec 2017: revenue grew 42%
No one would ever say that 42% is bad, but it’s just over half what it was a few quarters ago. It is fair to say that the growth rate is slowing FAST. That fact tells a very different story than their gaudy triple digit segment growth numbers.
Sorry Bear, but I cannot help but bring light to this thread again…and in your defense, you had no way of knowing that growth was about to re-accelerate to 60-something % for the quarter ending in March 2018 and stay at 54% for the quarter ending in June 2018.
I still regret not sticking more with my own conviction and adding more to my TTD position prior to that May announcement for the quarter ending in March.
-volfan84
still long TTD
I stand by my conclusion on TTD:
The Trade Desk isn’t down and out by any means. They’re still growing…just not as fast as they used to be. They had a fine year, yes. But is this the bargain of a lifetime? A foregone conclusion? A destined long run success? I’m just not so sure.
June 2017 EPS: 0.54
June 2018 EPS: 0.60
That’s not a lot of earnings growth. Sure, revenue is growing at a rapid clip, and maybe earnings will follow. But they used to have earnings AND revenue growth. I’m just saying, the water’s a little murky here. But it will take more than 2 quarters to play out.
Bear
3 Likes
One thing to note with TTD, which may not be a big deal since it may be mostly due to the share price increase is that Stock Based Compensation is up quite a bit (well more than doubling since 2017). Sorry about the mostly lame formatting, I fixed it partially.
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Platform operations $1,107 $496 $1,903 $725
Sales and marketing 2,759 1,238 4,724 1,777
Technology and development2,534 1,326 4,892 1,991
General and administrative2,858 1,131 5,022 2,020
Total $9,258 $4,191 $16,541 $6,513
One thing to keep an eye on.