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Trade Desk (TTD) Beats Q3 Earnings and Revenue Estimates
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Shares of The Trade Desk (TTD - Free Report) plunged 9.2% in the last two-trading sessions, following the announcement of third-quarter 2018 results. Notably, the stock has gained 142.6% against the industry’s decline of 23.6% on a year-to-date basis.
The Trade Desk delivered third-quarter 2018 adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate by 16 cents. The figure grew 85.7% year over year.
Net revenues increased 49.6% from the year-ago quarter to $118.8 million, beating the consensus mark of $117 million. The year-over-year growth was primarily driven by robust growth in the mobile platform accompanied by expanding international presence.
Quarter in Details
In the reported quarter, Trade Desk witnessed a record increase in spend in the mobile platform which accounted for 46% of the company’s total spend, indicating the growing importance of this channel to advertisers. Growth in Mobile (in-app, video and web) was 65% year over year. Notably, growth in Mobile in-app and video were 90% and 98%, respectively, from the year-ago quarter.
Cross-device spend increased three times, while Connected TV (CTV) witnessed growth of 10 times from the year-ago quarter. Moreover, the number of advertisers running on CTV increased 100% year over year. Notably, the transition in advertiser’s budget from Linear TV to CTV is likely to accelerate growth for the company next year.
Additionally, the company witnessed robust growth in the audio segment’s spend, which grew 192% year over year.
Trade Desk won significant new business with large global brands moving spend to the company’s platform in the reported quarter. Moreover, international spend was greater than domestic spend, with Spain, Hamburg and Hong Kong growing 380%, 206% 107%, respectively, year over year.
The company is working with some of the biggest publishers like Google, Alibaba, Pandora, Spotify, CBS, Dish Network, Discovery and DirecTV, which contributed to the company’s top line. Additionally, The Trade Desk also announced its partnership with Tencent and ITE Taiwan, which is expected to boost the company’s share in China.
The Trade Desk continues to win advertisers, which is evident from the fact that it signed up three more Ad Age's top 200 global advertisers in the reported quarter. The company also stated that half of Ad Age’s top 200 brands increased spend by more than 50%, year over year, which is a positive.
In the reported quarter, the company also benefited from portfolio strength, supported by the launch of innovative products including Nielsen On-Target-Percentage and Custom cost-per-acquisition. This helped the company retain users, which remained above 95% in the third quarter.
The Trade Desk Inc. Price, Consensus and EPS Surprise
Trade Desk’s reported operating expenses rose 58.2% year over year to $96.5 million primarily due to higher technology & development and platform operation expenses. As a percentage of revenues, operating expenses increased 440 basis points (bps) on a year-over-year basis to 81.2%.
In absolute dollars, platform operations, sales & marketing, technology & development and general & administrative expenses grew 68.4%, 43.8%, 71.2% and 50%, respectively, year over year.
The increase in platform operations expense was primarily due to increases of $9.1 million in hosting costs and $1.4 million in personnel costs, including $0.4 million of stock-based compensation.
As a percentage of revenues, platform operations and technology and development surged 270 bps and 240 bps, respectively. Meanwhile, sales and marketing declined 80 bps.
Income from operations came in at $22.3 million compared with operating income of $18.4 million in the year-ago quarter. Adjusted EBITDA came in at $36.6 million, increasing 50% from the year-ago quarter. As a percentage of revenues, EBITDA margin increased 10 bps to 30.8%.
Guidance
For the fourth quarter of 2018, revenues are projected to be $147 million and adjusted EBITDA is expected to be $53 million.
For the full year, the company expects revenues to be $464 million and adjusted EBITDA to be $145 million or 31% of revenues.
Zacks Rank & Other Stocks to Consider
The Trade Desk currently carries a Zacks Rank #2 (Buy).
Long-term earnings growth rate for SS&C Technologies, Twitter and NetApp is projected to be 13.5%, 22.1% and 14.1%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Trade Desk (TTD) Beats Q3 Earnings and Revenue Estimates
Shares of The Trade Desk (TTD - Free Report) plunged 9.2% in the last two-trading sessions, following the announcement of third-quarter 2018 results. Notably, the stock has gained 142.6% against the industry’s decline of 23.6% on a year-to-date basis.
The Trade Desk delivered third-quarter 2018 adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate by 16 cents. The figure grew 85.7% year over year.
Net revenues increased 49.6% from the year-ago quarter to $118.8 million, beating the consensus mark of $117 million. The year-over-year growth was primarily driven by robust growth in the mobile platform accompanied by expanding international presence.
Quarter in Details
In the reported quarter, Trade Desk witnessed a record increase in spend in the mobile platform which accounted for 46% of the company’s total spend, indicating the growing importance of this channel to advertisers. Growth in Mobile (in-app, video and web) was 65% year over year. Notably, growth in Mobile in-app and video were 90% and 98%, respectively, from the year-ago quarter.
Cross-device spend increased three times, while Connected TV (CTV) witnessed growth of 10 times from the year-ago quarter. Moreover, the number of advertisers running on CTV increased 100% year over year. Notably, the transition in advertiser’s budget from Linear TV to CTV is likely to accelerate growth for the company next year.
Additionally, the company witnessed robust growth in the audio segment’s spend, which grew 192% year over year.
Trade Desk won significant new business with large global brands moving spend to the company’s platform in the reported quarter. Moreover, international spend was greater than domestic spend, with Spain, Hamburg and Hong Kong growing 380%, 206% 107%, respectively, year over year.
The company is working with some of the biggest publishers like Google, Alibaba, Pandora, Spotify, CBS, Dish Network, Discovery and DirecTV, which contributed to the company’s top line. Additionally, The Trade Desk also announced its partnership with Tencent and ITE Taiwan, which is expected to boost the company’s share in China.
The Trade Desk continues to win advertisers, which is evident from the fact that it signed up three more Ad Age's top 200 global advertisers in the reported quarter. The company also stated that half of Ad Age’s top 200 brands increased spend by more than 50%, year over year, which is a positive.
In the reported quarter, the company also benefited from portfolio strength, supported by the launch of innovative products including Nielsen On-Target-Percentage and Custom cost-per-acquisition. This helped the company retain users, which remained above 95% in the third quarter.
The Trade Desk Inc. Price, Consensus and EPS Surprise
The Trade Desk Inc. Price, Consensus and EPS Surprise | The Trade Desk Inc. Quote
Operating Results
Trade Desk’s reported operating expenses rose 58.2% year over year to $96.5 million primarily due to higher technology & development and platform operation expenses. As a percentage of revenues, operating expenses increased 440 basis points (bps) on a year-over-year basis to 81.2%.
In absolute dollars, platform operations, sales & marketing, technology & development and general & administrative expenses grew 68.4%, 43.8%, 71.2% and 50%, respectively, year over year.
The increase in platform operations expense was primarily due to increases of $9.1 million in hosting costs and $1.4 million in personnel costs, including $0.4 million of stock-based compensation.
As a percentage of revenues, platform operations and technology and development surged 270 bps and 240 bps, respectively. Meanwhile, sales and marketing declined 80 bps.
Income from operations came in at $22.3 million compared with operating income of $18.4 million in the year-ago quarter. Adjusted EBITDA came in at $36.6 million, increasing 50% from the year-ago quarter. As a percentage of revenues, EBITDA margin increased 10 bps to 30.8%.
Guidance
For the fourth quarter of 2018, revenues are projected to be $147 million and adjusted EBITDA is expected to be $53 million.
For the full year, the company expects revenues to be $464 million and adjusted EBITDA to be $145 million or 31% of revenues.
Zacks Rank & Other Stocks to Consider
The Trade Desk currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the same sector include SS&C Technologies Holdings, Inc. (SSNC - Free Report) , Twitter, Inc. and NetApp, Inc. (NTAP - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Long-term earnings growth rate for SS&C Technologies, Twitter and NetApp is projected to be 13.5%, 22.1% and 14.1%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>