The Trade Desk Q4 FY 2020 Earnings

The Trade Desk Q4 FY 2020 Earnings Release:

Q4 Non-GAAP EPS of $3.71 beats by $1.83; GAAP EPS of $3.05 beats by $1.75. Revenue of $319.9M (+48.2% Y/Y) beats by $27.44M.

“While 2020 was a uniquely challenging year, it was also a turning point for our industry and our company. We won more share in our fastest growing channels such as CTV and Audio, which helped drive record ad spend of $4.2 billion on our platform in 2020,” said Co-Founder and CEO of The Trade Desk, Jeff Green. “Perhaps just as important, in 2020 we saw several years of advertising disruption and innovation compressed into a few months. Marketers are being more deliberate and data-driven in everything they do, and as a result, they are gravitating to the advertising opportunities of the open internet. With CTV now offering a data-driven alternative to linear, with brands seeking a scalable and brand-safe alternative to user-generated content, and with new identity tools that provide a common currency for the open internet as well as enable better cross channel measurement, the industry is gravitating to the open internet and standardizing on our platform.”

Fourth Quarter and 2020 Business Highlights Include:

Continued Share Gain: 2020 gross spend on the platform was approximately $4.2 billion, a 34% increase from a year ago.

Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for each quarter, the previous 6 years.

Continued Industry-Wide Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0, a new industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. The ID is an upgrade and alternative to third-party cookies. Partnerships in 2020 include:

Nielsen Holdings, a global measurement and data analytics company

Criteo S.A. (CRTO), a global technology company that powers world marketers
LiveRamp Holdings, the leading data connectivity platform

Magnite, the world’s largest independent sell-side advertising platform
Index Exchange, a large global advertising marketplace where premium digital media companies sell their ad impressions

The Washington Post, a large American daily newspaper published in Washington, D.C.
Pubmatic, a leader in developing and implementing online advertising software and strategies for the digital publishing and advertising industry.

Neustar (NSR), a leading technology company that provides real-time information and analytics for the Internet and digital performance.

MediaVine, one of the largest ad management companies in the U.S.

OpenX, a programmatic advertising technology company that combines ad server and a real-time bidding exchange with a standard supply-side platform

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This was a monster report. 3 things stuck out for me:

  1. Massive re-acceleration in growth to 48.2% from 32% in Q3 and -13% in Q2 (and easy numbers to lap for the next 3 quarters)

  2. Unbelievable leverage with the profitability at the bottom line effectively tripling from $50.9m to $151.9m (and eps from 106 to 305) for Q4

  3. Establishing a deal with Magnite. If you ever wanted to consider playing the SSP side of the field, then TTD has it sewn up too.

There was the usual talk about CTV but as usual it was very thin on numbers.

Q1 guidance was raised but pitched at the usual low ball 30% growth level.