TTD earnings

The Trade Desk has just reported earnings that beat expectations.

Revenue of $280M (+100.9% Y/Y) beats by $17.18M.

Q2 Non-GAAP EPS of $0.18 beats by $0.05; GAAP EPS of $0.10 beats by $0.05.

“Revenue more than doubled year-over-year to $280 million in the second quarter. Our growth speaks to The Trade Desk’s position as the default DSP for the open internet. Nowhere is this more apparent than in Connected TV, as more premium streaming inventory becomes available to meet growing marketer demand for data-driven TV advertising,” said Jeff Green, founder and CEO of The Trade Desk.…



And guidance in the report is for only $2 million more next quarter than for this one. While we know that the company sandbags expected earnings, the company turned in $216 million for third quarter last year. For the past three quarters, excluding the one just reported, TTD has grown revenue by 32%, 48% and 37%. Given the erratic growth, I would be hesitant to call this an upward trend. Still, great results.


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Is this shaping up to be another ETSY-like headfake on revenue growth?

The Q3 guide of $282m, assuming a comparable 6% beat, would be a slowdown from 101% YoY in Q2 just reported to 38% in Q3 YoY.

On the plus side, the profitability is outstanding. TTD will/should be joining the ranks of stocks being evaluated on a P/E basis soon. Forward P/E multiple is already under 100x, and that number is still growing mightily.



The Q3 guide of $282m, assuming a comparable 6% beat, would be a slowdown from 101% YoY in Q2 just reported to 38% in Q3 YoY.

The Q2 101% growth was certainly a result of the pandemic impact in the comparison PY period Q2 2020 which clobbered advertising spend. Future quarters aren’t expected to be anywhere near that. If they an grow in the 40%'s for the rest of 2021, considering that there won’t be any of the huge political election spend in the second half of this year, like there was last year (but it will be back somewhat in 2022, and then moreso two years later) that would be a really strong result imo.

It’s not as easy to look at sequential quarterly trends for a seasonal (advertising activity driven) company like the Trade Desk, like it is for other companies we follow where revenue comes from user licenses and usage which grows more smoothly period to period. For example, in 2019 before the pandemic, TTD only grew sequentially by +2.6% from Q2 to Q3 during a year when they grew about +40%(Magnite/Rubicon Project was actually down sequentially that quarter in Q3’19). If TTD beats the top end of guidance by 7% again next quarter (like they just did in Q2), the Q3 sequential gain will be a lot better in Q3’21 than it was in Q3 2019, pre-pandemic. So seasonaility adds a layer of complexity for sure.

And yes, from a profit and income standpoint, The Trade Desk has been consistently strong and profitable, every quarter, for several years. TTD is one of the few companies I follow that has been able to grow their revenue at a consistent high rate, year in and year out, while managing costs and remaining quite profitable. Adjusted EBITDA going from $14m in Q2’20 last year to $117m this quarter Q2’21 certainly jumps out from the earnings release. Although again the PY number was significantly impacted by the pandemic. Although it’s pretty incredible that they had positive EBITDA at all in Q2 2020 last year given the crushing impact of COVID on their business that quarter in particular.

The earnings call is at 8:30am Pacific (11:30 Eastern) this morning.



Is this shaping up to be another ETSY-like headfake on revenue growth?
The Q3 guide of $282m, assuming a comparable 6% beat, would be a slowdown from 101% YoY in Q2 just reported to 38% in Q3 YoY.

I would definitely hesitate (whoa, oxymoron kinda) to to make that comparison, or at least to put similar reasoning behind it. I’m sure someone could correct me but I saw Etsy’s YoY revenue jump as a Covid pop, whereas The Trade Desk’s revenue growth was not nearly as tied to the pandemic. Stock price jump, sure, but not revenue. It could be that I follow TTD more closely (because I own some) than ETSY (because I don’t) but I’m not as worried. Nonethless, TTD guiding for a slowdown appears to be resulting in more downvotes than upvotes in the market this morning (~ -4.5%).

Thing about ‘headfakes’ is that the longer the field/court/rink is, the more you can play back a bit and not get beaten by short-term moves. Easier to aim for where the the ball/puck is going to be than trying to catch it where it is.

-n8 (sportsball fan)


A couple of things to consider when comparing this year to last year:

  • Last year was an election year, this year is not.
  • Many online companies dependent on eyeballs slow down in FY Q2/Q3 because
    – in North America it’s summer
    – lots of people are on vacation
    – Online activities slow down during this time.

Netflix sees this all the time. Every single year their Q2/Q3 earnings are lower than the previous Q4 & Q1. FY Q4/FY+1 Q1 is where all the activity is. I would expect this type of seasonality to exist with TTD, FUBO, MGNI, NFLX, and many, many other companies dependent on (mostly North American) eyeballs.

The fact that they beat expectations is great. The fact that they’re guiding for a Q3 which is only slightly better than Q2 is not surprising (and likely has some decent sand-bagging involved as well). Q4 and FY22 Q1 is where we’ll see their biggest gains. Though, I’d expect to see some kind of Olympics-related bump in their Q3 report.

Paul - Long TTD


The earnings call just ended

Every time I walk away from a TTD Jeff Green earnings call, I walk away wondering why I don’t have a lot more of my portfolio in Trade Desk (I already have 15% in TTD) and today was no different.

Here are a few bullet point notes I took from the call:

CTV revenue in Europe was up tenfold in Q2’21 vs Q2’20, from a small base (they later said, it actually increased 11x), Europe is early in the cycle converting to CTV compared to USA but “won’t stay small for very long”. The Trade Desk “significantly expanded relationship” with Sky, one of the biggest broadcasters in the UK and Europe.

There are more than 10,000 CTV advertisers on their platform, up over 50% vs a year ago

They can reach more than 87 million households through CTV, which they claimed more households can now be reached by CTV than can be reached through linear TV.

An industry group (I missed their name) reported growth in ad supported video from $4.4 Billion in 2020 to $18 Billion as soon as 2025 (this would bode well for both TTD and Magnite)

Solimar – This is the new platform that Trade Desk has been building for a while now and just released this quarter. They called it the biggest release in company history, and has been exceeding their own expectations already. We should expect the “majority” of buying to be on the Solimar platform by the end of the year. Good timing to release it now so that the users get used to it before the big peak holiday advertising season.

The commented that some advertisers (not on TTD) have actually been paying “to make customers hate them” by showing the same ads over and over again. (my own side note - I used to personally hate chef Guy Fieri for a while for this exact reason, after seeing the same Diners Drive ins and Dives commercial about 20 times in a short period one day) Purchasing through TTD prevents this from happening.

Jeff took a few shots at the walled gardens (google, facebook, etc) and talked about why advertisers are better off going through TTD on the open internet rather than them.

Big progress on UID 2 (new anonymous tracking system to somewhat replace cookies), talked about how various ad agencies are adopting, and how Snowflake is working with UID 2 to help their customers use their own data to work better with the advertising decisions

Jeff later referred to Snowflake’s adoption of UID 2 as “one of the biggest headlines for UID2 to date”

They said UID 2 is at a “critical inflection point”, becoming necessary to do business and compete effectively. Comparison to accepting credit cards. Stores could choose not to take Discover or AMEX and be ok. But not accepting Visa or Mastercard would usually really put you at a disadvantage and make it difficult to operate your business successfully…and that’s where UID 2 is going (or where it’s at now), becoming as necessary to adopt as Visa/MC if you want to be able to effectively compete.

India, they referred to as the first big market that TTD entered starting with CTV rather than starting with display. One of the deals mentioned was with Samsung in India. (Again my own note - Makes it sound like TTD is somehow preinstalled in Samsung TV’s in India?, almost like Roku, although it’s certainly not a full blown TTD interface like Roku has, so I’m not sure how exactly it works. Maybe I misheard, but my ears perked up at this. I might email IR and look back at their last 10-K to try to understand this better since there were no questions on it)

Jeff took a shot at basically every other high growth tech company by saying TTD is “Generating EBITDA at higher rates than almost all of our high growth software peers”…(which has been consistently true for a long time!)

They said that Video, including CTV, is currently in the “high 30’s percent of the business”

CTV will continue to drive growth over the next couple of years

Toward they end they were asked about a deal with Walmart (might have been Laura Martin from Needham) which, if I heard it right, enables advertisers to see how the ads are working on sales in physical sales in real time (or close to it)?

  • This is really interesting to me because I used to work for a large independent music distribution company, that was essentially a tech company and they had a deal with iTunes to get live download/streaming data and their IT dept built a “heat map” that showed live data of where digital music was being purchased in real time. So an advertiser could run a very small test advertising campaign via facebook, google etc in some small city anywhere in the country, and see instantly if it generated sufficient returns from sales, and the record label/advertiser could immediately decide if they should roll out those ads to more geographic locations. It was a game changer and something none of the competition could offer to their record labels.
  • That’s how this Walmart deal sounds, although instead of just limiting it to data from online sales, it sounds like it also provides advertisers with pretty instant (maybe not real time, maybe daily, etc?) data on how your products are selling in particular walmart physical stores after you run some ads via TTD in that city. That’s a big deal and should definitely provide value to ad buyers that other DSP’s without the size and reach to do a big deal like this with Walmart(or can’t develop the platform to give them timely useful access to the data) can’t do. I’m sure TTD’s Walmart deal includes lots of controls to make sure the data is secured and safeguarded and only being used for its intended purpose, which a smaller DSP also probably couldn’t guarantee).
    I could be making some wrong assumptions about how this works, but that’s how it came across during the call, and is probably just one small example of the value that Trade Desk adds, and why so many advertisers use their platform for their ad campaigns.

That’s it. I still feel this is just an amazing company that is continuing to take over the world (of advertising at least). No question, despite how much its stock has risen since I first invested, I want to continue to be a part of this ride for a long time to come. I have the utmost confidence in Jeff Green and the Trade Desk



So the 101% YoY growth laps Q2 last year when revenues dropped 13% on 2018 Q2 so yes to a degree that is a feature of the pandemic.

The go forwards guidance sees Q3 lapping last year’s election period where there is a 6% headwind in the compares so that plus sandbagging probably means that the fundamentals is not quite an Etsy headfake.

I completely put TTD in the P/E camp of valuation possibilities now and given its profitability and earnings growth it’s very attractive I would say. For me TTD could easily 10x and still grow into its valuation and that’s with a very low risk already profitable business model.



For me TTD could easily 10x and still grow into its valuation and that’s with a very low risk already profitable business model.

That would put TTD’s market cap over $410Billion, which would make it larger than Proctor & Gamble, Home Depot, Mastercard, United Health, and WalMart, not to mention a boatload of other S&P 500 companies.

I like TTD, too, but I think the company would have to expand into some new business lines to be worth that much.