Google growth slowed. They became a beast on display (desktop) ad rev. TTD focuses on audio, mobile, intl, and ctv. data also. All those channels appeared up over 50% y/y.
Let us look at some numbers. Google’s revenue was 250 times that of TTD for 2018.
For simplicity, assume Google had 40% of the total digital market rev. in 2018 (lumping mobile, desktop, video etc.).
This Q (yoy numbers) Google grew at 17%, FB grew at 30% and AMZN ad rev grew at 36%. Assume that the total digital market grew at 23% (weighted avg. of these 3 at 40:20:10).
So, after Q1 2018:
Google was at 250 (40% market share)
Market was 625
TTD was 1 (0.16% market share)
After Q1 2019:
Google is 293 (1.17x)
Market is 769 (1.23x)
TTD is 1.41 (0.18% market share)
Given its very small market share to begin with and best neutral DSP status, I would expect TTD to grow much faster. Despite their already huge numbers these behemoths are able to grow so fast.
I have not sold any TTD yet and do not plan to. Questions I would like to know - specifically how much of Hulu’s and Roku’s ads are they selling? Tinker’s comments suggests not much perhaps.
Texmex thank you for these numbers. The way I look at it is ttd’s Market share should be based on gross ad volume, which should be $700 million this quarter, no?
Also looking at the past few years the company posted the largest % growth in the first quarter, possibly giving this quarter the hardest comps.
To your point they should be growing fast given the size of the market and how fast it’s growing.
However there are 3 things that I’m looking at. They’ve slowed down this far before, they raised guidance for the full year, and possibly just tough comps.
I never bought TTD for CTV. And I don’t appreciate Jeff green’s touting the growth there without revealing the numbers. I’m more excited about China.
12x,
You are right. I have to account for the 20% take rate. So, to make an apples to apples comparison of ad volume should raise TTD rev by 5x. So, here is my revised numbers but the message is the same.
Let us look at some numbers. Google’s ad revenue was 50 times that of TTD ad volume for 2018.
For simplicity, assume Google had 40% of the total digital market rev. in 2018 (lumping mobile, desktop, video etc.).
This Q (yoy numbers) Google grew at 17%, FB grew at 30% and AMZN ad rev grew at 36%. Assume that the total digital market grew at 23% (weighted avg. of these 3 at 40:20:10).
So, after Q1 2018:
Google was at 250 (40% market share)
Market was 625
TTD was 5 (0.8% market share)
After Q1 2019:
Google is 293 (1.17x)
Market is 769 (1.23x)
TTD is 7.05 (0.9% market share)
Given its very small market share to begin with and best neutral DSP status, I would expect TTD to grow much faster. Despite their already huge numbers these behemoths are able to grow so fast.
I have not sold any TTD yet and do not plan to. Questions I would like to know - specifically how much of Hulu’s and Roku’s ads are they selling? Tinker’s comments suggests not much perhaps.
So, after Q1 2018:
Google was at 250 (40% market share)
Market was 625
TTD was 5 (0.8% market share)
After Q1 2019:
Google is 293 (1.17x)
Market is 769 (1.23x)
TTD is 7.05 (0.9% market share)
This makes no sense.
You are comparing google and market rev growth y/y to ttd mkt share % y/y.
Of course the mkt share % will move less compared to a titan like Google.
My original point was that it has been known for a while that legacy display (think: desktop) ad rev has been declining. Google has offset this recently with Youtube (streaming video) but since Youtube had a bad Q for them, their rev growth was down a lot this recent ER, because display is a declining ad channel.
The channels to focus on are mobile, intl, ctv, audio, data…all the things Green has consistently touted the past 2 years I have been reading ER/CCs for TTD.
TTD is very small. It should be able to grow much faster. If not why do we keep hearing that it is harder grow now that we are larger (TWLO etc.) - law of large nos… FB grew 40% till last year and it is 25x larger than TTD. Market share numbers was just to show the small size of TTD compared to these behemoths and potential huge TAM.
My point simply is if a company is small and has a huge TAM and best product it should be able to grow fast. 1 Quarter is definitely not a trend. Let us hope growth picks up later the year and does not trend down… Any CC insight on growth of programmatic market as a whole this Q? Or partnering with Hulu, Roku whose ad rev are growing faster?
Last quarter TTD blew it out and gave guidance. The stock popped greatly. Now they beat that stated guidance and the stock tanks. I have more to learn…
Last quarter TTD blew it out and gave guidance. The stock popped greatly. Now they beat that stated guidance and the stock tanks. I have more to learn…
without having dug into the details too much yet myself, I think last quarter they beat both the stated guidance and the whisper number. This quarter they beat the stated guidance but were below what many on the street were probably expecting
Any CC insight on growth of programmatic market as a whole this Q? Or partnering with Hulu, Roku whose ad rev are growing faster?
Per the CC: “Programmatic is still a relatively small part of total global advertising. It is estimated at around $33 billion in 2019 and growing about 20% year-over-year, according to Magna Global. But it is growing 5x faster than total advertising.” Green noted “In Q1, we grew twice as fast as the programmatic industry and about 10x the pace of global advertising growth.”
This clearly shows that TTD is gaining market share. Just keep in mind that they tech take will only be a fraction of the total global spend. It will always be harder for them to put up growth rates against the GOOG,AMZN and FB because in many cases they OWN the ad space and will take the lion’s share of each dollar for those ads on their sites. And the cost for that ad space is bid on so the cost can vary with demand. TTD will still only get their take no matter where those dollars are spent.
You are spot on that Green is a salesman first and touts the stats that make TTD appear the best. He has always given us % growth rather than tell us the absolute number that contributes to total revenue.
This is a very disappointing quarter IMO…41% revenue growth in what has historically been one of their highest quarters…have to go back to a single quarter 12/2017 to see that low…all others have been 49-85% revenue growth YoY.
CTV and China are most certainly longer term plays…they have not materially improved its revenue growth but have materially improved the hope in its stock (forward PE around 74 and P/S around 13).
But to your point about Green’s “enthusiasm” (aka touting), let’s look at the revenue growth rate for “CTV”…the holy grail according to Green:
This quarter 300%
Last quarter 900%
3rd quarter 1000%
2nd quarter 21,000%
See the trend??
So while CTV and China maybe their future…it appears to be truly INTO the future.
The guide for next quarter was also pretty poor IMO…what 38% or so?? Even with a beat…not the growth one would have expected based on their past performance.
I am still long until I read the earnings call but one cannot be pleased with that earnings report and the growth of CTV…their holy grail.
Long term holders probably still do OK from here but the massive returns since early 2017 that have been made in that short time (4+ multiple) are unlikely to repeat in the next 2 years IMO.
I’m strongly considering selling tomorrow for 2 reasons, despite my being at a very high price ($220):
YOY Q1 revenue growth dropped from 61% in 2018 to 41% in 2019.
Connected TV spending went from 21x in Q1 2018 to 3x Q1 2019 - tells me that advertisers are either using another method/business to advertise, or perhaps CTV has little advertising on it that the “TAM for CTV” is more limited than we think, at least for TTD.
Not sure what I would get into. I had Roku, and actually had sold to get into TTD thinking that if Roku is successful, then TTD would also be, and TTD has a larger reach in other methods for advertising. Looks like I was wrong as one was up 20% and the other was down 20% today…
Speaking of Jeff Green, I happened to look at insider sales at TTD on Finviz and found that JG has been selling stock at an aggressive rate. Looking just at Oct of 2018 and Feb of this year, he sold in excess of 850k shares for @$130M. I’m not sure how accurate the current totals of his holdings are but this chart shows it to be about 93k shares. Should that raise any red flags?
1) YOY Q1 revenue growth dropped from 61% in 2018 to 41% in 2019. 2) Connected TV spending went from 21x in Q1 2018 to 3x Q1 2019 - tells me that advertisers are either using another method/business to advertise, or perhaps CTV has little advertising on it that the “TAM for CTV” is more limited than we think, at least for TTD.
That seems like the rational thing to do if one is just looking at numbers, especially that specific number. It would definitely be a reason to bail on the stock if you think there are better opportunities. I will admit there could be better opportunities in the short term, but I will definitely be holding here. I just can’t trade in and out of a stock and really today’s opportunities seem much more sparse than the past two years or so. If the next report for TTD is poor, and by that I mean if they don’t raise guidance for the year, I’d begin questioning things more. I expect the full year to come in close to $680M for the full year, by the way.
I disagree. While CTV percentage is decreasing, one can only imagine what base the 21x increase started from. CTV is in its early stages and is not a significant contributor to revenue today. And look at the other sectors growing like mad. China and the rest of the international market have great growth. 45% of their business grew at 60% (mobile). Other sectors grew faster.
Just looking at the revenue growth decelerating would have one selling TTD in a heartbeat, but these things have to be taken within context. Green seems to be methodical in entering markets. He has invested ahead of the game and continues to do so. China, International, CTV, they will come around, just not right now.
Finally, I expect them to grow over 40% this year without the tailwinds of China and CTV. I’m happy holding, but have been in for quite some time which I will say makes it a bit easier.
I tend to be a bit longer on holding stocks than some on these boards, but I think considering selling on a 15% haircut on a crazy volatility day, when they blew away their numbers and their projections and increased the expectations for next quarter seems nutty to me.
I look at these things from a long term perspective, and from the point of view of the business growth/profitability/competition.
Is the market big? It is huge and growing fast.
Are they able to grow and scale profitably? - definitely.
Do they have competition snapping their heels who could trip them up? None yet - they are so far ahead we can’t see the competition, who are still using manual techniques for what they have developed technology for.
Did their share price get ahead of itself? Yes - it has for all the stocks on this board, and we can expect occasional 20% haircuts on all of them. That doesn’t make them suddenly bad investments though, just a little riskier at this price point.
Most important (my time horizon for TTD is 5 years) - Is TTD going to be worth more in 5 years than it is now? I ask this to gauge my own confidence on a pick against my time horizon. Since I’m looking at 5 years, I’m willing to be down for 6 months as long as am certain it will be worth a hell of lot more in 5 years. Absolutely - no doubt in my mind this will be worth much more than it is today in 5 years
Based on my answers to these questions, I would never sell TTD now, and actually bought a decent allotment more.
“I’m not sure how accurate the current totals of his holdings are but this chart shows it to be about 93k shares. Should that raise any red flags?”
An Oct article mentions he owns 10%, which even after today’s drop is over 1.5B USD so even after selling out 130M he should well be well over 1B so the 93k shares seems low
The numbers on his share totals must be in accurate because if you go down the list on each of his insider sales, the total share count doesn’t change from the 93K. It would be nice to get an accurate count from him but I still am concerned that he’s selling every 2 weeks - 1 month like he is. If you go down the list he’s sold around a million shares in the past year, I did an estimate without adding them all up but if he believes so strongly in everything this company is doing and that it will take a dominate position then why is he selling shares like crazy?
This is my largest holding and today certainly hurt, I was so optimistic about the earnings report that I actually bought more shares last night at their absolute peak, reducing my gains even further after today.
I’m honesty not sure what to do now. I listened to the earnings call and he’s a great salesman, I feel like I believe in the company but there are several red flags that I wasn’t aware of before today.
Looking at the SEC filing when he last sold shares the 93K is class A shares. It shows he also owns over 4.4 million class B shares which would be worth around 831 million. So I personally wouldn’t consider him selling a small percentage of that a red flag. I’d be diversifying into other investments if I owned that much stock in 1 company as well.
Hi Inphanint,
I do not post very often but I could not resist to reply to your post.
Automated selling of the CEO on a bi-weekly or monthly basis is not a red flag in my opinion.
Maybe he needed cash, bought a house or whatever…
He is still running the company extraordinarily well and owns a significant chunk of stock.
Regarding the earnings call - I personally never buy before the release - this is like gambling in a casino and not investing.
After the release of the numbers, I can now re-evaluate the position and decide to buy,sell or just hold.
I think the numbers were not spectacular but I will wait another quarter to see if the growth picks up again.
Regarding the earnings call - I personally never buy before the release - this is like gambling in a casino and not investing.
Freddy, well put. This may be what I was trying to say in that other thread, which I won’t start back up. But basically, if you go all in before earnings, you’re voluntarily cutting a leg out from under yourself. Because TTD did exactly what I expected and yet went down. That means I got to buy more, because I wasn’t “betting big” that they’d go up after earnings with a crazy sized position, or options, or whatever.
I guess the point is, be in a position where if earnings doesn’t change the story for you, and the stock goes down, you can buy more.