September 23, 2023
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Trade Desk shares jump 30% on Q3 earnings report


Shares of The Trade Desk jumped nearly 30% on Nov. 8, following the company’s announcement of its third quarter earnings, which beat analysts’ expectations and highlighted continued growth for one of the leading companies in the advertising technology space.

The Trade Desk, a Ventura-based ad tech company, delivered net income in the third quarter of $59.3 million, or 12 cents per share, up 44% from the same quarter a year ago, in a report issued Nov. 8. Non-GAAP net income was $89.2 million, or 18 cents per share, up from 13 cents per share a year ago and above the Zacks’ Consensus Estimate of 16 cents per share for the most recent quarter.

Revenue also grew substantially year-over-year, up 39% to $301.1 million in the third quarter of 2021.

Trade Desk CEO Jeff Green said during the company’s Nov. 8 earnings call that “once again” the company had exceeded its own expectations.

“This performance builds on our momentum year-to-date,” Green said.

Trade Desk Shares rose sharply as a result of the positive earnings release. The stock closed at $68.55 on Nov. 5 and $88.75 on Nov. 8, an increase of 29.5% in a single trading day.

According to Forbes, Green’s shares gained $957 million in value in a day, giving him a net worth of around $5 billion.

The Trade Desk specializes in digital marketing, which saw a huge surge during the COVID-19 pandemic as more consumers shopped online and watched streaming video.

The total global advertising market today is worth about $750 billion, with industry experts expecting that to rise above $1 trillion later this decade. The bulk of that growth, Green said, will be digital, driven by advertisers “embracing data-driven decisioning more aggressively.”

As advertising shifts to digital, issues of privacy, data security and what Green called “the open internet” will become even more important. Apple is planning new privacy measures in its products, and Google plans to phase out third-party tracking cookies in its Chrome browser by 2023. These moves present a challenge for advertising companies, but so far The Trade Desk has weathered them successfully.

The Trade Desk’s answer to these issues is Unified ID 2.0, which is a way to serve targeted ads without personally identifying information about users. Green said the platform is reaching “critical scale” as it added more customers during the third quarter across a variety of digital spaces.

“UID is setting new benchmarks every week and every month. The growth is phenomenal,” Green said. “We never thought that our vision would be shared by so many companies outside of our own company. As a reminder, UID started with us but it belongs to the internet today. It is open source and being used around the world and across many functions of the internet from payments companies.”

When Google announced and then delayed its phaseout of third-party cookies, the news caused shares of The Trade Desk to plummet and then surge.

Green said he thinks Google’s decision to move away from third-party cookies is “a strategic mistake,” but it isn’t something that affects The Trade Desk much.

“We have been, we are, and we expect to continue to do very well regardless of Google’s policy choice,” Green said. “A very small percentage of our business runs through Google’s Ad Exchange and we are not dependent on Google for our business. The bottom line for us is the market gravitates toward competition over time.”

Connected TV, or streaming TV, continued to be the fastest growing channel around the world for The Trade Desk, CFO Blake Grayson said during the earnings call.

“Video, which includes CTV, and separately mobile, represented just about 40% each as a percentage share of our business” in the third quarter, Grayson said, adding that the growth in the video channel was driven by CTV.

Display and audio advertising represented 15% and 5% of the rest of the revenue, respectively, for the third quarter, Grayson said.

About 88% of The Trade Desk’s business in the third quarter was in North America. International growth continues to be a priority for the company, as Green said that nearly two-thirds of the total advertising market is outside of North America.

The Trade Desk has opened offices in India, Italy and Taiwan. India was a particularly strong performer in the most recent quarter, with The Trade Desk’s connected TV revenues growing faster there than in any other market, Grayson said.

During the quarter, The Trade Desk launched Solimar, its biggest-ever system upgrade. Green said that adoption of the new platform is “exactly where we expected to be.”

The Trade Desk ended the quarter with cash and cash equivalents worth $576.9 million.