From the prepared remarks:
http://investors.thetradedesk.com/static-files/e0169700-2afa…
Over 160 advertisers spent at least $100,000 each in CTV, with a double-digit number of them spending in the millions
So that would mean a minimum spend of 150x$100,000=$15M plus 10x$1M=$10M so an absolute minimum of $25M.
More realistically around $30-40M which given that:
Spend on our platform surpassed $2.35 billion. Revenue was a record $477 million. means that CTV is around 1% of spend and so around $4-5M in revenue. Maybe more but it’s still tiny.
This would explain why they were so reticent to give any numbers before now apart from “1000% growth” etc.
All credit to Jeff for finally releasing some numbers, but this will take a while to significantly impact growth unless I’ve misread or miscalculated the numbers.
Still my second largest position after TWLO and growing like a weed so will stay long, but thought that this was interesting given the attention focused on CTV.
Cheers, PB
And yes, I ballsed it up by confusing revenue for all of 2018 ($477M) vs Q4 2018 ($160M). Go me.
Revenue for the quarter was a record $160 million, up 56% from Q4 2017.
So $30-$40M would be around 20-25% of revenues for this quarter.
Ach. Forgive me.
Cheers, PB.
No way.
I’m sorry to say you got this way wrong IMHO. You mixed up TTD revenue with ad spend of their clients.
By all measures CTV is still only a small seed in the ground - but one which grows quickly and where others like Google or Facebook have trouble competing. So it is relevant for TTD’s growth story.
First, anything that grows 1000% or now 500% must have a tiny base.
Second, TTD‘s customers spend in excess of 2 billion via TTD. Out of this a meager 30-40 million (as per your calculation) goes into CTV. So it is tiny.
Third, a quick plausibility check tells you that the vast majority of the ad money goes to FB and YouTube and then anywhere else in the internet. Individually targeted ads to connected TVs are still a drop in an ocean. In parts this is because everybody has a laptop and a smartphone. Not everybody has a CTV.
Hope this helps putting things into perspective. Don’t hope for 40% of TTD revenue to grow at 500%. That would be insane.
LNS
By all measures CTV is still only a small seed in the ground - but one which grows quickly and where others like Google or Facebook have trouble competing. So it is relevant for TTD’s growth story.
The 30-40 mil. was for Q4, your spend is for the year. It is still a small seed, just 2.5 times
larger.
More significantly, the ad agency does not get the platform for managing an ad campaign from YouTube or Facebook. Therefore, there is a network effect with TTD that brings spend in mobile, ctv, et al. Green has built a very good business already, and appears to have a long runway ahead.
Best regards,
Mike
I expected an uptick of maybe 15% today tops, but I can’t remember owning a stock that went up by more than 25% after earnings except TTD and maybe TWLO a while ago.
CTV is tiny at the moment but will become a factor in future years was the point I made (badly).
In the meantime then I’m going to have a beer. 
Cheers, PB.
This is really about the future. The market cap is only $8b, with a first mover advantage and significant TAM this stock is just getting started. Look at the market cap of other advertising focused companies. This stock has the potential to be a game changer.
PoorBloke -
This is a great find and if we triangulate a variety of data points I think we can get a decent range on the size of the CTV business.
- “In Q4, we had record spend in CTV. Over 160 advertisers spent at least $100,000 each in CTV, with a double-digit number of them spending in the millions.”
First I want to agree with others in the thread that this is spend not revenue. While we don’t know the specific spend to revenue ratio of CTV, company wide it is ~20% for TTD per their finish and guidance so I believe it is a fair assumption to use this multiplier to get a rough revenue number.
Second, I think it is key to include the sentence before in the press release which makes it clear these numbers are specific to Q4.
While I agree with your bare minimum calculation of $25M spend (roughly $5M revenue using logic above), I think that is very understated. I have no expertise in any type of bell curve analysis (even that would be a rather big assumption) but I think a reasonable number is likely ~3X this amount. My admittedly 100% guess driven math would be as follows:
The over $1M club is “double-digit” so theoretically could be 10-99; I agree it is likely much closer to 10 given the phrasing and that only 160 customers are over $100K. I also agree that the spend over $1M likely stays pretty close to $1M, but say a reasonable guess is 15 customers with average of $1.5M spend and you are at $22.5M for this group.
The remaining customers (in my example ~145 customer) are somewhere between $100K-$999K. In this case, I think the average is likely well above $100K. Maybe still tilted toward the lower end, but I don’t see why ~$400K would be a bad guess on average for this subset. 145 customer with average of $400K spend is $58M.
Combine those two and we are at $58M + $22M = $80M spend x 20% conversion to revenue = $16M CTV revenue in Q4’18. So maybe the range is $5M-$20M but I think it is a very reasonable estimate that is is double digit millions in Q4’18 and approaching 10% of revenue.
The other check point on this number is if we then take this estimate and back into all the growth figures of CTV provided by TTD over the last 9 quarters. If we do this, it would indicate a base of roughly $750K in full year 2016 which is less than 0.5% of total revenue that year. At some point you cant get much smaller than that in the base period which I believe helps validate the number being in this range. For reference here are the data points we have:
Q4’16 2X+ Q/Q
Q1’17 3X+ Y/Y
Q2’17 167% Y/Y
Q3’17 159% Y/Y
Q4’17 535% Y/Y
Q1’18 2000%+ Y/Y (WOW)
Q2’18 2X+ Q/Q (DOUBLE WOW given Q1’18 growth)
Q3’18 10X+ Y/Y
Q4’18 525% Y/Y (9X+ full year 2018)
Please poke holes in the above if you run the numbers and disagree. The takeaway for me is that CTV is now approaching meaningful levels at likely just under 10% of revenue in Q4’18 and should help maintain or even accelerate growth rates into 2019 and beyond.
Erik
Thanks, Erik.
Your numbers make sense since I posted at about 5:30am my time after a bout of food poisoning so wasn’t exactly on top form.
I did state that my numbers were bare minimum spend on CTV in Q4 so at least I got that right.
Jeff said that the revenue was actually material now so your estimate is probably accurate.
Cheers, PB.