TTD’s third quarter was not a strong one: http://investors.thetradedesk.com/news-releases/news-release…
Revenue growth decelerated to 38%. They beat their lowball guidance (revenue and EPS), but didn’t raise full year guidance – it remains $653 million for revenue.
Bear
From The Trade Desk Press Release on their website:
Fourth Quarter 2019:
Revenue of $213 million
Adjusted EBITDA of $78.5 million
Full Year 2019
Revenue of at least $658 million, revised up from $653 million
Adjusted EBITDA of $209 million or about 31.8% of revenue, revised up from $201 million
They beat their lowball guidance (revenue and EPS), but didn’t raise full year guidance – it remains $653 million for revenue.
They did raise full year guidance by $5m to $658m. However, I believe the increase was only in line with the Q3 beat, so they are essentially leaving Q4 guidance as-is. Same for EBITDA, increased full year guidance from $201m to $209m, which I believe the increase is the Q3 beat.
Quick look over the release one number that jumps out at you is the cash flow from operations for the 9 month period was $88m compared to only $38m for the first nine months of 2018. That’s +131%
Will be listening to the call which starts at 5pm Eastern link here:
http://investors.thetradedesk.com/news-releases
-mekong
Revenue of at least $658 million, revised up from $653 million
You’re right, my apologies. They did raise guidance. Still doesn’t look like a very good quarter to me, but maybe I’m missing something (else).
Bear
This link says they raised guidance to “at least $658M” which is less than 1% so not very significant. Also raised EBITDA guidance to $209M from $201M.
https://finance.yahoo.com/news/trade-desk-reports-third-quar…
Also “Connected TV spend grew 145% from Q3 2018 to Q3 2019” which I’m assuming is still off a tiny base but I’d like to hear what it is.
I agree that it wasn’t the quarter I was looking for. The beat was $1.2M (prior guide was $163M). So we can model in at least a $4M beat for next quarter which gives 35% rev growth. This quarter’s 39% and the next quarter’s guide doesn’t show the type of stabilization in the low 40% range I was looking for.
However, TTD is profitable. TTM earnings are $3.28 with a resultant after hours PE of about 56x.
I believe the profitability helps them to a great degree in terms of some sort of stock price stability. Honestly, with the current sentiment, I expected to see them lower, but this is only after hours after all.
GM% and OpM% as I calculate them remained relatively steady though not stellar.
Those numbers bounce around a bit, but they were in recent ranges.
We shall see. I’ll be listening in 20 minutes for further info.
A.J.
Be nice to know the actual number but 145% is a dramatic slow down from what was. Sure bigger numbers. But one still gets the sense the numbers are small. Mongo is growing Atlas faster w probably larger revenues. Although that is likely to continue to slow.
After hours down but not a big deal. No disaster as the market is taking it in the numbers.
Tinker
Be nice to know the actual number but 145% is a dramatic slow down from what was
Last quarter CTV was reported to have growth over “2.5x”. This quarter is 2.45x so presumably it wasn’t that much of a slowdown.
It grew over “3x” in Q1.
A.J.
Much softer after hours reaction then I expected so that’s kinda nice.
But revenue growth slowing is a concern, i was hoping for 43%, 1% sequential increase in revenue.
You are right though. In this current market a profitable growth company is still liked, a company that is trending towards profitability with exceptionally high rev growth is also okay, GH just reported and I am a shareholder, I bought a put for protection because I was worried basically of their still very high valuation. (Thanks a lot soft bank for pumping up all your companies valuations). Basically makes any soft bank company 3 years out in projections. So GH had to preform perfectly, which they did. Increase rev growth to 181% and trending towards profitability with (.14) loss per share. where any unprofitable hyper growth company has been about halfway for some of them.
I’m still not sure why AYX is still trending down.
Anyways sorry I rambled on
I am starting to wonder if TTD is a bit cyclical with election cycles.
This feels a lot like 2017.
Specifically, in Nov 2017, things just seemed a bit softer, and then growth ramped throughout 2018.
2020 catalysts:
CTV barely launched, with Disney+ launching next week, then HBOMax and Peacock, and Amazon Prime Video growing and now partnered with TTD.
China - possible we have trade deal…regardless, this has barely launched and has big upside.
Election year ramp
Live sports ramping up
Streaming gaming (this is just my thought…Google and MSFT Apple adding Stadia and other streaming gaming options. Not sure if these have or will have ad components, but only can be upside if that is the case.
TTD continues to scale…the cost to compete against them (startups) is more daunting every Q and every year as they continue to be profitable and invest back into their platform.
Walled gardens breaking down. May never happen, but again only upside.
But I am still not happy with 38%. Que sera sera.
Dreamer
I am starting to wonder if TTD is a bit cyclical with election cycles.
Bingo, Dreamer! Though no need for the qualification of “election cycles.” Jeff Green just answered this explicitly on the call: those who look for linearity are missing the big picture trend that is “up and to the right.”
This makes sense: advertising is by nature an industry of moments; short-term outlooks are always, umm, short-sighted; this appears particularly true for advertising.
Jeff Green just assured Monkey big-time of the opportunity ahead, of the investments already in place, and of pretty much nothing to worry about in this quarters numbers.
That said, Monkey seems to have missed the shadowy tenor of Twilio’s conference call, so please take Monkey’s interpretation with a salty banana. But none of ya’ll are getting even one of Monkey’s TTD shares tomorrow am.
Hugs,
Monkey (long TTD)
I might have said it last time too, but listening to the earnings call tonight, everything is done and said in plain english that anyone can understand. Unlike other companies where their earnings calls are somewhat tech-speaky, Jeff Green answers all of the questions in a way that are really helpful for investors to understanding the company.
Unless my internet just had a connectivity issue, I think they got cut off mid sentence when the call hit a hard stop at 6pm Eastern. It seemed like Jeff was too excited to answer questions and must not have realized it was approaching the deadline.
The thing they said that resonated the most with me is that 20% of TV content is now streaming, while only 3% of TV ads have moved to streaming. Jeff estimates that most, if not all, TV will eventually be streaming in some way, and therefore, most all of the related advertisements will go to the streaming platforms too. That spells a huge runway ahead in connected TV alone!
-mekong
mekong: The thing they said that resonated the most with me is that 20% of TV content is now streaming, while only 3% of TV ads have moved to streaming. Jeff estimates that most, if not all, TV will eventually be streaming in some way, and therefore, most all of the related advertisements will go to the streaming platforms too. That spells a huge runway ahead in connected TV alone!
CMFMonkey: Jeff Green just assured Monkey big-time of the opportunity ahead, of the investments already in place, and of pretty much nothing to worry about in this quarters numbers.
Not trying to be pithy, but if all this is true, why is revenue growth decelerating?
Bear
Bear,
Forgive Monkey the lack of exactitude, but from listening to the call, the answer to “why is revenue growth decelerating” was a combination of “we’re bigger” + “advertising seasonality” + “2019 was an investment year to get the proper structures in place to capture the immense growth opportunity ahead.”
Maybe my ears need cleaning with a stiff banana, but that’s what Monkey heard. And it seems to make sense. Or maybe it’s Jeff Green’s clarity and apparent lack of obfuscation that has Monkey believing the story. Do these bits, when added together, add up to a sufficiently acceptable answer?
Monkey
I think it is just that their growth wont be as linear due to ad trends.
In feb 2018, for their q4-2019 ER, when their growth dipped from 50% to 42%, you wrote:
"The Trade Desk isn’t down and out by any means. They’re still growing…just not as fast as they used to be. They had a fine year, yes. But is this the bargain of a lifetime? A foregone conclusion? A destined long run success? I’m just not so sure.
Bear"
Their atock was about $50 at the time. And their growth ramped back up as 2018 went on.
I think we may see a similar resurgence thru 2020 as ctv becomes truly material, as election year ramps, as amazon partnership matures, as china matures, etc…
I am in no rush to sell.
If we get to may 2020 (q1 2020 ER) and their growth has slowed further, i may move on.
Right now, their cagr for me in 2017, 2018, and 2019 to-date has been beyond market-beating.
Dreamer
In feb 2018, for their q4-2019 ER,
Argh…should have read q4-2017 ER.
Great summary on premium board from TMFer:
https://discussion.fool.com/4056/conference-call-notes-34338048…
Here’s what the analysts think about it so far:
* Trade Desk Inc : Jefferies cuts target price to $210 from $270
* Trade Desk Inc : Oppenheimer cuts target price to $260 from $290
Price targets are multifaceted, including sentiment.
I can’t think of an ER bar LVGO that has led to increased price targets in this round of ERs
For AYX, after they smashed it out of the park:
11/1/2019 Bank of America Lower Price Target Buy $140.00 ? $112.00
11/1/2019 DA Davidson Lower Price Target Neutral $123.00 ? $95.00
I wouldn’t use analysts estimates for much more than satisfying curiousity
With all due respect, Saul, I think you’re stretching here as you’ve never liked ad-related stocks and have been ready to jettison TTD for awhile. We don’t know who these analysts/investment bankers are and for all we know there is a guy sitting across from them buying up the stock on these price cuts/downgrades.
“Here’s what the analysts think about it so far” is an off-the-cuff comment, but it implies two analysts represent the thinking of all analysts. Obviously you meant here’s what the first two analysts to weigh in think, but it’s worth noting how the meaning of the sentence changes depending on language used.
Point being, seems to this Saul-fan and Fool, the Saul/TTD relationship was never going to be a life-long venture. The stock remains very popular throughout Fooldom, of 18 analysts on Vanguard 8 have Buy, 10 Hold, none sell. And it’s no secret the Fool is not about to sell a stock with this many tailwinds anytime soon.
I’m not trying to be nitpicky, just think it’s an important point, that as Damodaran says, if we want a reason to sell a stock we’ll find it - whether it’s in detailed spreadsheets, perceived shifts in the narrative, dream visions, goat entrails or investment banker upgrades/downgrades.
BD