The Trade Desk Delivers That Rare Combination Of High Growth And Profits

According to a recent eMarketer report, digital advertising spending in the US is expected to grow from $83 billion in 2017 to $129.23 billion in 2021. Digital ad expenditures overtook TV ad spend in 2016. TV ad spend is expected to reduce from 35.2% in 2017 to 30.8% by 2021. During the same period, digital advertising will grow to nearly half of the advertising spend in 2021 compared with 36.7% in 2016. The Trade Desk (Nasdaq: TTD) is a self-serve ad platform that went public recently.

The Trade Desk’s Offerings

Ventura, California-based The Trade Desk was founded in 2009 by Jeff Green and Dave Pickles. It allows ad buyers to share customized messages with the targeted population in the context that they choose. Advertisers can deliver targeted messages for both an individual potential customer or a global audience. It enables organizations to bid on real-time auctions for ad spaces, especially for programmatic advertising.

Zenith’s Programmatic Marketing Forecast expects programmatic advertising to grow the fastest among digital channels at 31% in 2017. Social media advertising is expected to grow 25% in 2017 and online video advertising is expected to grow at 20%. The increased adoption of programmatic advertising is helping The Trade Desk deliver stellar financial results.

For the recently reported quarter, The Trade Desk saw revenues grow 76% over the year to $53.4 million. Net income improved from a loss of $1 million a year ago to $4.9 million earnings this quarter. Adjusted EPS grew from $0.09 a year ago to $0.18 per share for the recently reported quarter.

The Trade Desk forecast revenues of $67 million for the current quarter with an adjusted EBITDA of $14.5 million. It expects to end the current year with revenues of at least $291 million and an adjusted EBITDA of $78 million. It has revised its year’s forecast upwards from revenues of $270 million and an adjusted EBITDA of $78 million.

The Trade Desk’s Expanding Offerings

The Trade Desk is delivering robust performance across all its channels. Mobile In-App advertising grew 150% and mobile video grew 200%. To continue to drive this growth, it has been working on several new product features and enhancements. The company has been pleased with the momentum of its Native offering. Native advertisements are those that don’t appear to be ads at first glance. During the quarter, The Trade Desk released a new Native video release that offers the same functionality as a hosted native creative workflow by supporting video upload, completion rate metrics, and creative safeguards. It also announced an expansion of the Native offering to include Native video and additional display inventory through partners including Sharethrough and TripleLift.

Additionally, to improve targeting, it released a data provider audience injector that utilizes one of its large data partner’s self- service UI for audience creation and management.

The Trade Desk is also growing through partnerships. Within TV advertising, the industry is seeing a bigger shift towards on-demand and connected TV advertising. The company is focusing its efforts on establishing stronger relationships with upcoming TV service providers like Hulu and Sling. It did not divulge details on the partnerships, but the fact that it grew its Connected TV segment by 200% is worth a mention.

The Trade Desk went public last September with a list price of $18. Prior to listing, it had raised $252.5 million at undisclosed valuations in both venture and debt financing from investors including Double M Partners, Founder Collective, Hermes Growth Partners, IA Ventures, Joshua Stylman, Kortschak Investments, L.P., Neu Venture Capital, Opus Bank, Revel Partners, SV Angel, Wellington Management, and Wider Wake Networks. The stock is currently trading at $50.39 with a market capitalization of $2.13 billion. It has risen significantly from the low of $22.00 it had fallen to in October last year. The stock had risen to a high of $57.57 in May this year.

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