TLRA

Investment Analysis Clubs Saul’s Investing Discussions
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Motley Fool on the free site had published an article about Telaria (TLRA):

https://www.fool.com/investing/2019/08/13/heres-my-top-stock…

Meet Telaria (NYSE:TLRA) – a company that is not only in the same industry as hot growth stock The Trade Desk (NASDAQ:TTD) but is also growing faster and trading at a much cheaper valuation than its highly respected peer. To be fair, I own Telaria stock myself, so take my recommendation with a grain of salt. But there are good reasons to bet on this fast-growing company.

Any thoughts on this as a possible growth stock to invest in?

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Hi flxman2,

This is an email reply to your post. I have been asked by Saul and the other board moderators to email recent posters who may not fully understand how this board works.

You will likely find that short posts like this simply asking for help with your research are generally not well received by the board regulars. Instead of just posting a link with a line or two, this board has a typical format that is used when bringing a new stock idea forward.

You should find all the information that you need to bring an idea forward in the following link for board newcomers written by imyoung:

https://discussion.fool.com/for-board-newcomers-34245478.

You may also wish to take a look at the post that follows yours’ written by foolchandra to get a better sense of what is expected when one requests feedback from the board.

As always I have copied Saul and the other moderators on this email so that they are aware that I have reached out to you.

I wish you the very best with your investments.

Kind regards,
Lennie

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Sorry, meant to send this as a private email. Oops.
Lennie

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Telaria is predominantly on the “sell side” of the CTV, programmatic advertising equation. In other words, providing software to help the publishers sell their available ad inventory. TTD is a third party vendor, sexy name for middle-man. Telaria has a fairly impressive list of clients: Hulu, Discovery Channel, MLB.tv, Fox News, ABC News, Sinclair, etc.

I read the article you provided earlier today and the article presents the growth story, which is not as aggressive as many of the companies that seem to be on the radar of this message board; other long-time members will certainly know better than I:

Q4 '18: 31% YoY
Q1 '19: 42% YoY
Q2 '19: 47% YoY

A nice growth take-away however is that CTV related Revenue in Q2 which grew an impressive 133% YoY; accounting for 39% of total revenue. Just two years ago (Q2 '17) CTV related revenue was merely 5% of total revenue.

Another take-away that requires more in depth evaluation than I am capable of providing would be identifying the drivers that allow for TTM gross margins of 84%, which the author attributes to Telaria working with only premium video publishers.

In other investing articles I have read on this subject, they have discussed the following as it pertains to CTV programmatic advertising:

  • The market maturation and gains slowdown is out on the horizon, out to 2023-2025
  • CTV has been taking an increasing amount of market share from mobile; large brands prefer TV
  • mobile and desktop are seen as not being effective for brand impressions and brand messaging
  • brand messaging/impressions require 30 sec impression time
  • companies with the largest advertising budgets are target brand impression and not purchase intent
  • CTV in 2018 accounts for $8.2B of $70B spent on global TV advertising
  • TV has 2x the active viewer attention of YouTube and 15x the viewer attention of FaceBook

I do not own TLRA, I do own TTD.

p.s. I have place a Sears Christmas catalog down the back of my jeans because I anticipate receiving a good 'ol fashion butt whopping here shortly because this is either OT or has been previously discussed by the many experts that are long time and qualified contributors to this board.

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And while I’m at it, here is a link for the board newcomers that will actually work.

https://discussion.fool.com/for-board-newcomers-34245478.aspx

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if i recall, Jeff Green, ceo of TTD, isn’t very bullish on the sell side. Maybe he’s just talking his book, but he seems to think there will be a lot of pressure on how much SSPs can charge their publisher customers. he said ultimately, people are going to get paid based on how much value they provide.

a DSP like TTD can potentially create a lot of value for buyers. a highly targeted ad is highly valuable for an advertiser. and if TTD is right that their tech is 10 years ahead of the competition and if they have the scale and reach that many other DSPs don’t have, their ads will be much more targeted and will create a lot of value.

what value does an SSP like Telaria create? they connect with DSPs and hold auctions. they filter ads to make sure they load properly, are brand safe, etc. that has some value, but it seems to me, they have less ability to create value for their clients compared to TTD. i could be completely wrong about that and would love to hear opposing arguments. i’m keeping an eye on the company, but don’t think i’ll pull the trigger anytime soon, especially because the market cap is much smaller than i am used to dealing with

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what value does an SSP like Telaria create? they connect with DSPs and hold auctions. they filter ads to make sure they load properly, are brand safe, etc. that has some value, but it seems to me, they have less ability to create value for their clients compared to TTD. i could be completely wrong about that and would love to hear opposing arguments. i’m keeping an eye on the company, but don’t think i’ll pull the trigger anytime soon, especially because the market cap is much smaller than i am used to dealing with – stockfan

maybe sorta like this:
https://www.trulia.com/p/sc/murrells-inlet/912-n-waccamaw-dr…

"revenue growth is accelerating as ctv revenue is growing as a percentage of total revenue. the company’s second-quarter revenue increased 47% year over year – up from 42% growth in Q1 and 31% in the fourth quarter of 2018. second-quarter ctv revenue soared 133% year over year and accounted for 39% of total revenue – up from 24% and 5% of total revenue in the second quarters of 2018 and 2017, respectively.

not only is telaria’s top line growing rapidly, but the company also boasts a lucrative business model. its trailing-12-month gross margin is 84% – higher than the trade desk’s gross margin of 76% over the same timeframe.".

there’s the start of an opposing arguement. maybe they’re not the future, but they’re doing ok right now. numbers seem ok.

rob
rule breaker / market pass / supernova navigator home fool & stmp/mth maintenance coverage fool
he is no fool who gives what he cannot keep to gain what he cannot lose.

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“what value does an SSP like Telaria create? they connect with DSPs and hold auctions. they filter ads to make sure they load properly, are brand safe, etc. that has some value, but it seems to me, they have less ability to create value for their clients compared to TTD. i could be completely wrong about that and would love to hear opposing arguments.”

With the understanding that I am long on TTD; Based on my research (in other words, these are not thoughts organic to me and should be footnoted to credit the author if I had taken better notes on this topic)…Demand side platforms (DSPs) are at risk because, like many economic relationships and business transactions, the supply side can set the market and control the market. The content owner/publisher (COPs)and supply side platforms (SSPs) are interested in maximizing ad revenue and therefore will work with as many DSPs and third-party platforms (3PPs) as possible to create a competitive marketplace whereby the SSP can maximize price and ad revenue in a competitive marketplace for the COPs. There is no loyalty to any single DSP or 3PP, such as TTD, in this marketplace.

"Telaria has in excess of 30 plugged-in DSP partners using their “Demand Dashboard” of which THE TRADE DESK is one of a list of 30 and growing video demand partners.

Although it would require additional research, perhaps there is additional value add in their Video Management Platform (VMP). VMP includes an ad-server that allows for both programmatic and direct sales in a single platform. It incorporates a live analytics dashboard to visualize 1st and 3PPs in one view to assist the COPs decision making process.

"About Telaria

Telaria, Inc. (NYSE:TLRA) powers the future of TV advertising with proprietary, programmatic software that optimizes ad yield for leading video publishers, enabling the most effective advertising experience across desktop, mobile and CTV. Telaria’s clients include the most innovative video content publishers across the globe such as Hulu, SlingTV, SonyVue, Viacom’s PlutoTV, TubiTV, Singtel, Australia’s Channel Nine and Channel Ten, and Brazil’s Globo.

Telaria is headquartered in New York City and supports its global client base out of 13 offices worldwide across North America, EMEA, LATAM and APAC."

Can we agree that it might be worthy of “Watch List” status? I’m putting it on mine.

H

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Demand side platforms (DSPs) are at risk because, like many economic relationships and business transactions, the supply side can set the market and control the market.

I know Jeff Green has said demand-side is way more profitable than supply-side. I did some googling to research this (“jeff green demand side supply side”). And the third search result brought me right back to Saul’s message board! That was kind of amazing.

The post that came up was written back in May, by BobbyBe. Very good stuff.

https://discussion.fool.com/roku-and-the-trade-desk-34209440.asp…

The content owner/publisher (COPs)and supply side platforms (SSPs) are interested in maximizing ad revenue and therefore will work with as many DSPs and third-party platforms (3PPs) as possible to create a competitive marketplace whereby the SSP can maximize price and ad revenue in a competitive marketplace for the COPs. There is no loyalty to any single DSP or 3PP, such as TTD, in this marketplace.

The interesting thing is that Roku is on the supply side. Roku, basically, is a “walled garden” like Facebook and Google. Green believes that all the walled gardens will fall. I’m not sure if that’s true. But the important thing to understand is that we have several walled gardens that are supply side platforms. You want to advertise on Google? You have to go to Google. You want to advertise on Facebook? You have to go to Facebook. You want to advertise on Roku? You have to go to Roku.

So who goes there? People who know they want to advertise on Facebook, or Roku, or Google.

The Trade Desk is a demand-side platform. What if you are agnostic on the question of where your ad will appear? What if you want to know the best possible place to run your ad? What if you are open and want to explore possibilities? Then you’d go to The Trade Desk.

Telaria is a supply-side platform. Like TTD, they are cut off (I think) from the walled gardens of Google, Facebook, Roku. But the rest of the vast internet might conceivably end up on their platform. So if you know specifically that you want your ad to appear on the Motley Fool, you might go to Telaria and see if they have any Motley Fool space for sell, and you might bid on it. Or you might just go to the Motley Fool directly and see what they charge.

That’s okay, I guess, although the margins are tiny for Telaria.

What makes TTD a far more exciting investment is that its technology helps advertisers (the demand side) find the best place for their ad campaigns. You might think you want to buy space on the Motley Fool. But maybe there are way better places for your advertising dollar. You won’t discover that info on Telaria, but you will at TTD.

Somebody please correct me if my understanding is wrong!

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The content owner/publisher (COPs)and supply side platforms (SSPs) are interested in maximizing ad revenue and therefore will work with as many DSPs and third-party platforms (3PPs) as possible to create a competitive marketplace whereby the SSP can maximize price and ad revenue in a competitive marketplace for the COPs. There is no loyalty to any single DSP or 3PP, such as TTD, in this marketplace.

Telaria claims to be the only company that works only as an SSP, just as The Trade Desk works only as a DSP. The comparison that everyone always make is a real estate agent. Neither the buyer or the seller will ever get the best price if the agent is working both ends of the deal. That is why when Mark Zagorski became CEO a couple of years ago they sold off the buy-side part of the business. Their biggest competitors are SpotX, a private company, and FreeWheels, owned by Comcast. Both of them are both buy and sell companies.

Also, Zagorski claims to be the most transparent company when it comes to pricing. They had an independent audit done to verify that.

So the advantages over their competitors are no conflict of interest and transparent pricing policies.

Jeb
No Position (yet, still researching)
Long TTD
Explorer Supernaut
You can see all my holdings here: https://discussion.fool.com/profile/TMFJebbo/info.aspx

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What makes TTD a far more exciting investment is that its technology helps advertisers (the demand side) find the best place for their ad campaigns. You might think you want to buy space on the Motley Fool. But maybe there are way better places for your advertising dollar. You won’t discover that info on Telaria, but you will at TTD.

Hey SaintCroix!

I’m in the process of trying to get a handle on this as well. I don’t know if the last sentence I bolded is as straight forward as you make it sound. I was just reading an article on Supply-Side Platforms and found this paragraph. It seems from this like both DSPs and SSPs would have the same customer insights.

Reports (here they mean report from the SSP) organize and visualize statistics to provide macro and micro insights into what works and what doesn’t. Also, reporting helps publishers to understand the true value of their digital inventory. Today, supply-side platforms use Big Data analysis to make statistics in real-time.

SSP dashboard should provide information across all metrics that matter. For instance, click-through rate (CTR) and the total number of clicks placement generates, fill rates and so on.

https://smartyads.com/blog/meet-ssp-the-very-best-friend-of-…

Jeb

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With the initial disclaimer that I do not profess to be the expert in this space, it is important that as part of this conversation, we separate the idea of the all-inclusive field of “digital” programmatic advertising (mobile, laptop, TV, CTV, etc.) from the subset “CTV” programmatic advertising which is primarily for video and Advanced TV and is the primary realm of Telaria:

(https://goodwaygroup.com/blog/advanced-tv-definitions-need-k…

Telaria is a SSP that has developed an analytical software platform which they call their Video Management Platform (VMP)and tout it as the “industry’s only complete solution”. VMP is referenced on their website as being “An ad-server built for video and Advanced TV that enables the management, delivery and reporting across programmatic and direct sold in a single platform. Providing live analytics dashboards to visualize 1st and 3rd-party data in one view to empower publishers with insights that inform the best decisions in real time. Enhanced decisioning tools provide greater control over the value and safety of ad inventory, while providing the best possible CTV viewing experience.”

https://investor.telaria.com/press-release/telaria-launches-…

Telaria is working with a number of premium content providers (Hulu, MLB.tv, Sling TV, Fox News, ABC News, Sinclair, Discovery Channel, A&E Networks) in conjunction with and in cooperation with the top demand partners (DSPs); including The Trade Desk, DoubleClick, AppNexus, etc. through Telaria’s Demand Dashboard to optimize programmatic advertising sales for their clients.

Wall Garden concept: “You want to advertise on ROKU? You have to go to ROKU.”

But what if ROKU had a sell side management system provided by a third party vendor such as Telaria? Just like Hulu has done? In other words, in real estate, if you want to by my house, you have to come to me. However, I have engaged Compass as my agent/broker and they are going to take my house (i.e. supply) to the market and bring me back multiple offers from multiple, pre-qualified, interested parties/buyers (i.e. demand). The analogy may be off slightly, but it clarifies my point.

You reference the TTD and the excitement that technology adds to advertisers; Technology is just as important and as much as a game changer for content owners/publishers. They are able to easily get their inventory in front of multiple buyers or DSPs in an auction setting and drive both efficiencies and margins.

I addressed a couple of your points here. I appreciate the insight because I think it helps flush out the thesis by addressing the “warts”.

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the margins are tiny for Telaria. – SaintCroix

Hmmmmm…2Q19 presentation: Gross profit/revenue = $14.7million/$18.2million = 80%+

https://investor.telaria.com/sites/tremorvideo.investorhq.bu…

Looks OK to me, although maybe others want a bigger margin. Won’t speak for them, but it works for me!

:wink:

Rob
Rule Breaker / Market Pass / Supernova Navigator Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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i looked at TLRA last year and that led me to adtech stock RUBI which i have owned since January for a nice double and recently added, just before earnings release. I do not own TLRA but do own TTD and ROKU.

Sorry i don’t understand the tech too well but RUBI seems to serve both the buy and sell side. The brilliant young founder was a floundering senior executive a few years ago and had the wisdom to bring in a serious adult as CEO who seems to be executing one of those rare turnarounds.

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Sorry i don’t understand the tech too well but RUBI seems to serve both the buy and sell side.

What led you to this purchase? Looking at the financials (and ignoring the trend in the stock price), it seems like they are moving in the wrong direction at least through the end of last year. Sales have trended downward for two years in a row.

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That’s why i called it a turnaround. Last year was a long time ago.

This year is a very different story as you can see from the 2019 Quarterly reports and the consensus estimates for 2019 and 2020. Growth is accelerating rapidly, not 30% yet (though it could soon get there), but it’s priced like it’s going nowhere, which was the case for a couple of years.

But the dominant variable that satisfies me that a turnaround has a good chance to be successful is highly capable, honorable leadership, as explained in my previous post. I tend to spend many hours on that critical factor, including interviews, Q report transcripts, speeches, etc. I love numbers, but it usually only takes me a few minutes to assess them.

I’m not always right about leadership. Got burned by the Tyco CEO many years ago. He turned out to be a crook and i didn’t see it coming. Lost a lot of money. But i do it better today than then. Still, i’m wrong sometimes. But when my confidence is high in the CEO, i’ll hang in through wild undulations when they continue to meet their commitments.

I need and appreciate the tech savvy available here, from Bert, from beth kindig, and others so i can get a better sense of the competition, the TAM, and the adjacent/optionalities. Perhaps most importantly, these are the sources from where i learn about companies i would have never otherwise discovered. While i’m pretty decent on the numbers, there is still plenty to pick up from here on that also.

Hope this helps.

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This year is a very different story as you can see from the 2019 Quarterly reports and the consensus estimates for 2019 and 2020. Growth is accelerating rapidly, not 30% yet (though it could soon get there), but it’s priced like it’s going nowhere, which was the case for a couple of years.

I like the Telaria story, but everything doesn’t seem quite right.

Last quarter revenue was up 47% to $18.2M. Next quarter they have guided to $16-17M. Down? They are operating in the very hot space of connected TV and going into the Christmas shopping season and they are guiding down. REALLY?

Q3 from last year revenue was $13.5M. So if they come in at the low range of their guidance they will have 18% YOY growth. Meh.

I’m still looking but something doesn’t smell right.

Jeb
No Position
Explorer Supernaut
You can see all my holdings here: https://discussion.fool.com/profile/TMFJebbo/info.aspx

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Last quarter revenue was up 47% to $18.2M. Next quarter they have guided to $16-17M. Down?

I’m still looking but something doesn’t smell right.

Perhaps you are correct–but I am left wondering if what doesn’t smell right could be that they are sandbagging guidance?

I think many on this board feel that forward guidance from most of the high growth companies discussed here is often artificially low…

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Hi Jeb.

Sorry i should have been more clear.

My post was about RUBI, about which i am bullish. I have no opinion on TLRA