There is a difference between following the board and slavishly following Saul. While we all deeply respect Saul, he is not the only perceptive one here … indeed, he is the first to admit that others know more about specific areas than he does. The participants of this board don’t always agree … sometimes even fairly dramatically, like the RDVT exchange … but very often with shades of difference based on perception or weighting of factors. So, by all means follow the board and weigh these differences and find your own vision in them.
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MoneySpin -
I don’t know how else I can learn other than following somebody more experienced like you…
You’re not thinking big enough. This board is but one source. Good information is everywhere. You can say you don’t have time, skill or experience, but how will you get any of those if you let someone else do the heavy lifting? How do you think Saul or anyone else got to that point?
I do believe your inquiries are sincere. However, no one is here to give you easy answers because there are none. Read the Knowledgebase posts on the right. I’d suggest you do that multiple times. Start slow. Follow along. Chime in when you can.
There is no shortcut. Just do the work.
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MoneySpin,
I didn’t really want to use more board space with a post like this but I noticed you just joined TMF 3/21/20 and I’m not sure anyone pointed you toward Saul’s Knowledge Base. Forty-eight hours is probably not enough time to get through Saul’s Knowledge base even once, let alone the multiple reads it requires for even moderate understanding. I would encourage you to read that several times. There’s a link to it on the right side or bottom of this screen, depending on what device you are using.
This may seem like I’m shilling for TMF, but I would also strongly encourage you to sign up for Stock Advisor or Rule Breakers services. They’re inexpensive and open up the world of TMF premium boards with a lot of company specific information. They also provide some good basic stock recommendations with some excellent analysis. A number of the great ideas put forth on this board are also covered on those boards.
These two suggestions will help immensely with your investing education.
David
10 Likes
Hi Saul,
A portion of your post was linked over on the Premium TTD discussion board by BroadwayDan and he boiled it down to the quote given. I answered it over there and, because I don’t think it’s been answered yet over here (based a quick scroll through this thread), I am cross-posting it here.
I hope this answers your question.
Best,
Jim
The crux of the issue is this - “How can a company growing CTV spend at 137%, and audio spend at 185%, and with mobile video spend up over 50%, and mobile in-app spend data spend up 67%, etc, etc have revenue up just 35%??? It just doesn’t make sense!”
Hi Dan,
I think it’s an issue with the way the company earns its revenue and what appears to be a misunderstanding of how those cited growth rates play into TTD’s revenue.
From the most recent 10-K, page 4: Our clients are primarily the advertising agencies and other service providers for advertisers, with whom we enter into ongoing master services agreements (“MSAs”). We generate revenue by charging our clients a platform fee based on a percentage of a client’s total spend on advertising. We also generate revenue from providing data and other value-added services and platform features. – https://www.sec.gov/ix?doc=/Archives/edgar/data/1671933/0001…
In other words, TTD is paid a percentage of how much its customers spend on ads on its platforms. That’s it.
The customer can buy ads via TTD’s platforms in different categories and the amounts purchased in those different categories can change, but only the total amount spent to buy ads on its platforms affects revenue.
The growth numbers Saul reports show how the customers’ choices are shifting as far as categories of ad types go. For example, TTDs customers, as a group, spent 137% more buying ads to be shown on CTV in Q3 2019 than they did the prior year. But unless the total amount spent across all categories goes up (that is total spend), TTD’s revenues won’t go up.
Here are the relevant numbers from the S-1 and 10-Ks, all amounts in $MM:
Gross Growth Growth Rev/
Year spend YoY Revenue YoY Gross spend
2014 $ 211.3 --- $ 44.5 --- 21.1%
2015 $ 552.3 161.4% $113.8 156.7% 20.6%
2016 $1,027.9 86.1% $202.9 78.3% 19.7%
2017 $1,555.9 51.4% $308.2 51.9% 19.8%
2018 $2,350.9 51.1% $477.3 54.9% 20.3%
2019 $3,128.9 33.1% $661.1 38.5% 21.1%
Sources:
• S-1, table on page 10: https://www.sec.gov/Archives/edgar/data/1671933/000119312517…
• Most recent 10-K, table on page 36: https://www.sec.gov/ix?doc=/Archives/edgar/data/1671933/0001…
What’s apparent from that table is that TTD generates revenue at a fairly stable 20% to 21% fraction of the gross spend levels of its clients. And its revenue grows at a pace that’s essentially the same as the growth in gross spend of its clients. How those clients spend the money across the different categories TTD offers (like CTV, audio, etc.) has nothing to do with revenue growth.
Cheers,
Jim
39 Likes
What’s apparent from that table is that TTD generates revenue at a fairly stable 20% to 21% fraction of the gross spend levels of its clients.
Thanks for boiling that down.
Just wanted to add a few more thoughts to what Jim wrote in terms of the future.
TTD’s older, display and mobile businesses are likely holding back over growth given the company touts very high growth rates in other segments. The other segments are video (CTV is in here) and audio.
Here was the breakdown of segments from TTD IR and email in January.
The other buckets outside of mobile include:
Video which is a little over 25%
Display (desktop) which is a little over 20%
Audio which is ~5%
And the of course Mobile which is 47%
While the segments don’t matter as much as overall spend, there are a few nuances.
CTV has a much larger runway than the rest of the segments. If I’m not mistaken, TV ad spend is in the range of $350B. We should expect the “take rate” to fall slightly in CTV as Green called this out in the last call. They are grabbing share in this space and are lowering their take slightly.
A lowering take rate could easily be offset if they can take market share. That remains to be a big if. However, consider that TTD provides one of the only platforms for an ad buyer to be able to connect with their customers in almost whatever platform they choose to use. Connecting your ads to that specific buyer across many platforms is powerful. Of course, they can’t get follow their users into the walled gardens.
As the TV ad spend is much larger than their traditional markets, if that spend accelerates toward CTV and if TTD is successful, total ad spend would increase significantly.
I realize there are a lot of weasel terms in the above but I’m writing about the future so I feel compelled to equivocate a bit.
A.J.
4 Likes
Saul,
Are you going to weigh in on TMFTortoise’s response to your Trade Desk revenue concern? Just curious! It seemed like a decent retort.
Thanks,
CP