The Trade Desk TTD Q4 Earnings

Trade Desk earnings just came out…

I would call it an “as expected” quarter.

Revenue came in a little above guidance at $395 million, +24%, but keep in mind, that was a non-election political spend Q4 in 2021 compared to a humungous amount of political spend in the presidential election cycle year in Q4 2020, so it’s kind of amazing that they even grew 24% considering how much tougher the comp was in the prior year. Next year, with the midterm cycle, it will go the other way with Q4 '22 getting an extra boost.

Q1 2022 guidance of $303 million shows a more normal (non election impacted) growth rate of +38%, which they’ll certainly beat and probably be in the mid 40%'s

And keep in mind, TTD is a very seasonal business, so you can’t look at Q4 to Q1 sequential growth like you can with other companies since advertising peaks every year in Q4 due to Holiday advertising.

I’m a bit disappointed that they only provided Q1 guidance and not full year. Will be interesting to see if they get asked about it on the call and what can be read into how they respond (e.g. are their expectations really high but they’re afraid to over-promise, or is there a reason why they are being more cautious than they have recently, etc)

For the year, they say they generated $6.2 billion of spend on the platform, up 42% for the year, (that’s how much their customers spent and TTD collected from them. However, those of you that follow the Trade Desk know that, due to the accounting rules, TTD has to record revenue “net” meaning they can only put their commission (or “take rate”) into revenue, which was about $1.2 billion in 2021. In other words, of the $6.2 billion they charged customers for advertising, $5.0 billion of it they paid back out to the owners of the advertising space (streaming services etc) and they keep $1.2 billion, which for other companies is essentially similar to a gross margin.

So that suggests that their take rate or comission rate was about 19.4% in 2021. In the prior year, they said they had ad spend of $4.2 billion with $836m of revenue, so it was 19.9% in 2020. That decline may be impacted by how fast their CTV revenue is growing which may be slightly lower margin than some other types, I’ll need to dig in to see if I can get a better sense of what’s driving this.

G&A expenses were very high in Q4, there is a footnote on the press release that notes that this is mostly driven by a long terms CEO performance stock based comp grant in Q4. It’s a big number, but hey, I consider Jeff Green to be the one of the best CEO’s I’ve ever invested in, so if this is what it takes to keep him locked in for the next several years, I have no problem with that. I suspect he’s going to earn it several times over. and this isn’t an “every year” kind of thing, it was a long term grant, and he did comment last year that he expects to be CEO of TTD for at least several more years. If they lost Jeff, that would have a big impact on my investment thesis.

The press release refers to continued growing adoption of Unified ID 2.0, which they support to essentially replace “cookies” that are being phased out. They list Snowflake as one of the companies that is partnering and supporting UID 2.0, which is nice to see.

Most of the rest of what is in the press release is a recap of the announcements they’ve made earlier in 2021 (Walmart partnership, Samsung Ads partnership, launch of new Solimar platform, expansion of NBC/Peacock partnership, etc)

They have the rare mid-trading day earnings call, which takes place at 8:30am pacific time, or 11:30am east coast time. I’ll be listending and looking forward to hearing what else they share during the call.



I was disappointed with the top line growth for quarter plus guidance, with all seasonality and elections etc considered, I felt like TTD was going to show re-acceleration and instead it delivered numbers that were just ok. I’d only recently re-entered with a hope that it would show more life and instead, it showed that it’s not a hypergrowth stock once again. I made a small trading profit and just sold it all premarket.

1 Like

Nice notes.
Not in the stock now, but always keeping an eye on them and may get in again down the road.

I didn’t see you mention Open Path, which had a PR yesterday:…

"OpenPath has been described as a hub that “provides advertisers with direct access to premium digital advertising inventory” that helps minimize waste for advertisers while maximizing revenue for participating publishers.

It lets advertisers gain direct access to ad inventory from participating publishers and represents the latest move in The Trade Desk’s supply-path optimization efforts. Participating publisher partners on board at launch include CafeMedia, Condé Nast, Gannett, Hearst, McClatchy, Nexstar Digital, Reuters, Tribune Publishing, The Washington Post, among others."

Most notably, this may signal a turn to become more independent from their ad agency partners. Years ago, that was always called out as a risk, as Worldcom, Publicis, and the other big agencies all made up a large chunk of their spend. If I read this right, it sounds like this new project could bypass/alienate some of those agencies. Add this to UID project, and TTD is slowly I think trying to become more independent and make themselves more valuable to ad spenders in the process.

"He further stated that by committing to direct deals with publisher partners The Trade Desk is effectively stating that it won’t participate in such auctions.

Other sell-side sources, who declined to be named due to the sensitive nature of trade negotiations, noted how direct deals between a DSP and a publisher were in contrast to the trading agreements struck between holding groups and SSPs.

One such source noted how OpenPath would be “something that agencies are not happy with.”"

I think this TTD story is far from over, but it may be a bit bumpy along the way, if not ultimately much more profitable.



Jeff Green, founder and CEO of The Trade Desk: “Major advertisers and partners around the world are embracing this vision as the global advertising market races toward a $1 trillion TAM. And as a result, more and more of them are gravitating to our platform.”…

1 Like

There are three questions for all companies facing these comps:

  1. Can companies beat the estimates for the quarter, even if the grow itself will look less than before?

2. Will guidance out of the quarter exceed estimates, implying that the COVID year wasn’t just a “pull forward,” but rather simply a new, higher base on which to continue growth?

3. Can profitability improve in Q4 2021, even as growth slows for the comparable period a year before?

The answers to these questions for TTD are yes, yes, and yes.

Let’s see them…