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The Trade Desk (TTD) Q2 Earnings and Revenues Top Estimates
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The Trade Desk (TTD - Free Report) reported second-quarter 2023 non-GAAP earnings of 28 cents per share, beating the Zacks Consensus Estimate by 7.7% and surging 40% year over year.
Revenues of $464 million also surpassed the Zacks Consensus Estimate by 2%. The top line soared 23.2% year over year.
During second-quarter 2023, Customer retention remained over 95%.
The Trade Desk witnessed strong momentum around key initiatives like Connected TV, retail media, Unified ID 2.0, OpenPath and new data marketplace.
The Trade Desk’s Unified ID 2.0 (UID2) is an industry-wide approach to identity that preserves the value of relevant advertising while putting user control and privacy at the forefront. UID2 is an upgrade and alternative to third-party cookies.
During the reported quarter, The Trade Desk extended its support to Warner Bros. Discovery (WBD - Free Report) by integrating with UID2 across its premium entertainment, sports, news and lifestyle brands with Warner Bros.’ digital platforms, including HBO Max and Discovery+.
The Trade Desk also announced its collaboration with Walmart’s (WMT - Free Report) advertising arm, Walmart Connect, which commenced testing UID2 integration to inform decisioning across the open internet within the Walmart DSP.
Additionally, The Trade Desk launched EUID, the European counterpart to UID2 specifically developed for the European market, which is gaining support across Europe from brands, publishers and retailers.
Operating Details
Adjusted EBITDA in second-quarter 2023 increased 29.5% year over year to $180 million. Adjusted EBITDA margin was 38.8%, which expanded 190 basis points (bps) on a year-over-year basis.
Operating expenses increased 12.6% year over year to $422.6 million. The upside was caused by higher Platform operations expenses, which increased 28.4% year over year to $86.7 million.
Sales & Marketing (S&M) expenses were $111.5 million, up 24.7% year over year. General & Administrative (G&A) costs declined 6.4% from the prior-year quarter’s levels to $126.1 million. Technology & development expenses of $98.3 million increased 17.8% year over year.
As a percentage of revenues, G&A declined from the year-ago quarter’s 35.8% to 27.2% in the reported quarter.
Platform operations and S&M and expenses increased 80bps and 30 bps to 18.7% and 24%, respectively. Technology & development expenses decreased 100 bps to 21.2%.
Income from operations was $41.7 million against the year-ago quarter’s operating income of $1.7 million.
Balance Sheet
As of Jun 30, 2023, cash and cash equivalents were $965.8 million compared with $892.7 million on Mar 31, 2023.
Cash flow from operations was $128 million in the second quarter compared with first-quarter 2023 figure of $187.6 million.
Non-GAAP free cash flow was $119 million compared with $177 million reported in the previous quarter.
Guidance
For third-quarter 2023, The Trade Desk expects revenues of at least $485 million.
Additionally, the company anticipates adjusted EBITDA to be nearly $185 million.
Zacks Rank & Key Stock to Consider
Currently, The Trade Desk has a Zacks Rank #2 (Buy).
The company’s shares have gained 80.5% year to date compared with the Zacks Computer & Technology sector’s increase of 37.3%.
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The Trade Desk (TTD) Q2 Earnings and Revenues Top Estimates
The Trade Desk (TTD - Free Report) reported second-quarter 2023 non-GAAP earnings of 28 cents per share, beating the Zacks Consensus Estimate by 7.7% and surging 40% year over year.
Revenues of $464 million also surpassed the Zacks Consensus Estimate by 2%. The top line soared 23.2% year over year.
During second-quarter 2023, Customer retention remained over 95%.
The Trade Desk witnessed strong momentum around key initiatives like Connected TV, retail media, Unified ID 2.0, OpenPath and new data marketplace.
The Trade Desk Price, Consensus and EPS Surprise
The Trade Desk price-consensus-eps-surprise-chart | The Trade Desk Quote
Expanding Customer Base
The Trade Desk’s Unified ID 2.0 (UID2) is an industry-wide approach to identity that preserves the value of relevant advertising while putting user control and privacy at the forefront. UID2 is an upgrade and alternative to third-party cookies.
During the reported quarter, The Trade Desk extended its support to Warner Bros. Discovery (WBD - Free Report) by integrating with UID2 across its premium entertainment, sports, news and lifestyle brands with Warner Bros.’ digital platforms, including HBO Max and Discovery+.
The Trade Desk also announced its collaboration with Walmart’s (WMT - Free Report) advertising arm, Walmart Connect, which commenced testing UID2 integration to inform decisioning across the open internet within the Walmart DSP.
Additionally, The Trade Desk launched EUID, the European counterpart to UID2 specifically developed for the European market, which is gaining support across Europe from brands, publishers and retailers.
Operating Details
Adjusted EBITDA in second-quarter 2023 increased 29.5% year over year to $180 million. Adjusted EBITDA margin was 38.8%, which expanded 190 basis points (bps) on a year-over-year basis.
Operating expenses increased 12.6% year over year to $422.6 million. The upside was caused by higher Platform operations expenses, which increased 28.4% year over year to $86.7 million.
Sales & Marketing (S&M) expenses were $111.5 million, up 24.7% year over year. General & Administrative (G&A) costs declined 6.4% from the prior-year quarter’s levels to $126.1 million. Technology & development expenses of $98.3 million increased 17.8% year over year.
As a percentage of revenues, G&A declined from the year-ago quarter’s 35.8% to 27.2% in the reported quarter.
Platform operations and S&M and expenses increased 80bps and 30 bps to 18.7% and 24%, respectively. Technology & development expenses decreased 100 bps to 21.2%.
Income from operations was $41.7 million against the year-ago quarter’s operating income of $1.7 million.
Balance Sheet
As of Jun 30, 2023, cash and cash equivalents were $965.8 million compared with $892.7 million on Mar 31, 2023.
Cash flow from operations was $128 million in the second quarter compared with first-quarter 2023 figure of $187.6 million.
Non-GAAP free cash flow was $119 million compared with $177 million reported in the previous quarter.
Guidance
For third-quarter 2023, The Trade Desk expects revenues of at least $485 million.
Additionally, the company anticipates adjusted EBITDA to be nearly $185 million.
Zacks Rank & Key Stock to Consider
Currently, The Trade Desk has a Zacks Rank #2 (Buy).
The company’s shares have gained 80.5% year to date compared with the Zacks Computer & Technology sector’s increase of 37.3%.
Another top-ranked stock that investors can consider in the broader sector is NVIDIA (NVDA - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA shares have outperformed the sector year to date, gaining 190.1%. NVDA is set to report second-quarter 2023 results on Aug 23.