I went back through the latest earnings release for TTD as I’m trying to determine if I want to add to my already out sized position (~23% of portfolio). Their guide for FY 2019 revenue was $637 million, or ~34% y-o-y growth, obviously a very low guide. Revenue growth rates for the past three years (2016-2018): 78, 52, and 54. We know they are likely to beat and crush their guidance, but by how much?
-FY 2019 Revenue growth of 45% would mean $690 million
-FY 2019 Revenue growth of 50% would mean $715 million
-FY 2019 Revenue growth of 55% would mean $740 million
The last scenario above would mean continued revenue acceleration y-o-y. I cant speak to the likelihood of that scenario occurring but I would imagine Connected TV revenue growth and any revenue from their business in China will play key roles in determining whether revenue growth continues to accelerate (I wonder when Connected TV spend numbers will get broken out…must be pretty small at this point because we only see growth rates).
Buying TTD consistently over the past few years has worked out…so I may continue to do so, regardless of position size. I sleep just fine with TTD as a 23% position, so it seems silly for me to worry about it exponentially more if it were to be a 30% position. Jeff Green and his team have showed few if any signs of missing the mark thus far. As always, we will evaluate the results and determine the best path going forward.