Customer retention remained over 95% during the third quarter, as it has for the past nine consecutive years.
Share Repurchases: We repurchased $90 million of our Class A common stock in the third quarter of 2023. As of September 30, 2023, we had $273 million available and authorized for repurchases.
Fourth Quarter 2023 outlook summary:
Revenue at least $580 million vs $611.07M consensus
Adjusted EBITDA of approximately $270 million
-Quick take - looks like weak guidance of $580 million or approx. 18.2% rev growth next quarter has some folks running for the hills. The weak guidance was especially disappointing as they are entering the busiest time of the year. Also, Meta & Google reported pretty well recently so the market, and I, were expecting stronger guidance.
“Q3 was a strong quarter for The Trade Desk as we delivered revenue of $493 million, accelerating growth to 25%. This performance underlines the premium that advertisers are placing on precision, agility and transparency as they seek to maximize returns from their campaigns,” said Jeff Green, Co-founder and CEO of The Trade Desk. “As we enter our busiest time of year and look ahead to 2024, we have never been in a better position to capture greater share of the $1 trillion advertising TAM. With the generational shift to CTV, the growing opportunity in shopper marketing, our leadership in identity, and our most important product release ever with Kokai, we are better positioned than ever to help advertisers leverage data to drive growth and differentiate their brands.”
agree with this, the guide is causing folks to sell in AH, especially given how tied TTD’s business is to the macro environment and given the positive Meta and Google prints. I do note their couch their guidance as * Revenue at least $580 million*, like they are admitting they are sandbagging. The market favors future revenue growth (no surprises there), but I really was impressed with their Free Cash Flow number showing sequential and YoY growth (Q3 free cash flow = $184Mish, +62% YoY). This company is recognized as one of the standout businesses in the current tech landscape still though, and I wonder if it’s appealing at the present valuation, despite the higher multiple (compared to its peers) it enjoys, even with this haircut. I’ll be curious if tomorrow’s market action shows the same pessimism as today’s After Hour market action. Will be down no doubt, but down 30%?
Just got off the call. They said the first week of October was as expected. Then in the second week of October they noticed customers across several verticals become more cautious in their spend. He called out auto, entertainment, and electronics. Might have included healthcare, too. I don’t remember.
But in both auto and entertainment, the reluctance appears to have been connected to the strikes. The CFO reported that spending had normalized during the first week of November.
The call was very bullish for 2024, and it seems like a 30% drop when they (A) beat handily on the top and bottom lines for the quarter, (B) are profitable, and (C) have no debt is way overblown. I had trimmed a good bit of TTD when it was above $80/share. So I’ve bought some back tonight.
One more thing that I think is important to keep in mind is that the fourth quarter last year got a boost by ad spending on midterm elections which won’t take place this year.
TTD said on the call that they believe midterm election ads accounted for about 4% of the revenue in Q4’22, so adjusting for that implies that their guidance for next quarter is about +22%, excluding the impact of election spend.
I’m not surprised that the stock price is down given the guidance but I also think -30% is overdone. I hope they do buy back some more shares at these prices.
The market agrees with you today as TTD is down 20%. Hopefully some of those $$ they earmarked for buybacks is being used up.
A more important issue for me is what is the proper response in the philosophy of this board? Buy, sell, hold?
From the knowledge base:— I didn’t know anything about XYZ, nor did I read their results, but the general idea of buying more of a company because it had bad results and the price fell, and thinking you are getting a bargain seems foolish to me.
There are exceptions: If a stock, after reporting excellent earnings, falls off a cliff because it didn’t meet estimates, or some such nonsense, but I know what the news was, I have read the conference call, and I know there is nothing wrong, at least that I could see, I don’t hesitate to add. —
Which is it? I am leaning toward the second - there is weak guidance that was attributed to both macro headwinds and the auto strike. The first one scares me, the second not so much. What I am saying is that if I believe management, I believe this is an opportunity. If I don’t trust them, I do not add and look to exit. Jeff Green has earned my trust. How do others feel?
