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The Trade Desk (TTD) Q3 Earnings and Revenues Top Estimates
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The Trade Desk (TTD - Free Report) reported third-quarter 2023 non-GAAP earnings of 33 cents per share, beating the Zacks Consensus Estimate by 13.79% and surging 27% year over year.
Revenues of $493.3 million also surpassed the Zacks Consensus Estimate by 1.3%. The top line soared 24.9% year over year.
North America represented about 87% of The Trade Desk’s third-quarter revenues and international represented about 13%.
During third-quarter 2023, Customer retention remained at more than 95%.
The Trade Desk witnessed strong momentum around key initiatives like Connected TV (mid-40% market share), Mobile (mid-30% market share), Display (double-digit), and Audio (roughly 5%).
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.
An expanding partner base that includes Warner Bros. Discovery (WBD - Free Report) and Walmart (WMT - Free Report) has been driving growth.
The Trade Desk integrated UID2 across its premium entertainment, sports, news and lifestyle brands with Warner Bros.’ digital platforms, including HBO Max and Discovery+.
The company also collaborated with 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.
During the reported quarter, NBCUniversal announced that it is implementing UID2 on Peacock across all devices and consumer touchpoints, including CTV, the web, apps and devices.
Operating Details
Adjusted EBITDA in the third quarter of 2023 increased 22.6% year over year to $199.5 million. Adjusted EBITDA margin was 40.5%, which contracted 80 basis points (bps) on a year-over-year basis.
Operating expenses increased 24.5% year over year to $455.6 million. The upside was caused by higher Platform operations expenses, which increased 33.2% year over year to $93.4 million.
Sales & Marketing (S&M) expenses were $112.5 million, up 32.3% year over year. General & Administrative (G&A) costs increased 0.8% year over year to $132 million. Technology & development expenses of $117.8 million increased 47.7% year over year.
As a percentage of revenues, G&A declined 640 bps year over year.
Platform operations and S&M expenses increased 120 bps and 130 bps to 18.9% and 22.8%, respectively. Technology & development expenses increased 360 bps to 23.9%.
Income from operations was $37.7 million against the year-ago quarter’s operating income of $28.8 million.
Balance Sheet
As of Sep 30, 2023, cash and cash equivalents were $1.52 billion compared with $965.8 million on Jun 30, 2023.
Cash flow from operations was $192 million in the third quarter compared with the second-quarter 2023 figure of $128 million.
Non-GAAP free cash flow was $184 million compared with $119 million reported in the previous quarter.
The company repurchased $90 million of its Class A common stock in the third quarter of 2023. As of Sep 30, 2023, The Trade Desk had $273 million available and authorized for repurchases.
Guidance
For fourth-quarter 2023, The Trade Desk expects revenues of at least $580 million, indicating year-over-year growth of 18%.
Additionally, the company anticipates adjusted EBITDA to be nearly $270 million.
Zacks Rank & A Key Stock to Consider
Currently, The Trade Desk has a Zacks Rank #3 (Hold).
The company’s shares have gained 71.3% year to date compared with the Zacks Computer & Technology sector’s increase of 39.1%.
Image: Bigstock
The Trade Desk (TTD) Q3 Earnings and Revenues Top Estimates
The Trade Desk (TTD - Free Report) reported third-quarter 2023 non-GAAP earnings of 33 cents per share, beating the Zacks Consensus Estimate by 13.79% and surging 27% year over year.
Revenues of $493.3 million also surpassed the Zacks Consensus Estimate by 1.3%. The top line soared 24.9% year over year.
North America represented about 87% of The Trade Desk’s third-quarter revenues and international represented about 13%.
During third-quarter 2023, Customer retention remained at more than 95%.
The Trade Desk witnessed strong momentum around key initiatives like Connected TV (mid-40% market share), Mobile (mid-30% market share), Display (double-digit), and Audio (roughly 5%).
The Trade Desk Price, Consensus and EPS Surprise
The Trade Desk price-consensus-eps-surprise-chart | The Trade Desk Quote
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.
An expanding partner base that includes Warner Bros. Discovery (WBD - Free Report) and Walmart (WMT - Free Report) has been driving growth.
The Trade Desk integrated UID2 across its premium entertainment, sports, news and lifestyle brands with Warner Bros.’ digital platforms, including HBO Max and Discovery+.
The company also collaborated with 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.
During the reported quarter, NBCUniversal announced that it is implementing UID2 on Peacock across all devices and consumer touchpoints, including CTV, the web, apps and devices.
Operating Details
Adjusted EBITDA in the third quarter of 2023 increased 22.6% year over year to $199.5 million. Adjusted EBITDA margin was 40.5%, which contracted 80 basis points (bps) on a year-over-year basis.
Operating expenses increased 24.5% year over year to $455.6 million. The upside was caused by higher Platform operations expenses, which increased 33.2% year over year to $93.4 million.
Sales & Marketing (S&M) expenses were $112.5 million, up 32.3% year over year. General & Administrative (G&A) costs increased 0.8% year over year to $132 million. Technology & development expenses of $117.8 million increased 47.7% year over year.
As a percentage of revenues, G&A declined 640 bps year over year.
Platform operations and S&M expenses increased 120 bps and 130 bps to 18.9% and 22.8%, respectively. Technology & development expenses increased 360 bps to 23.9%.
Income from operations was $37.7 million against the year-ago quarter’s operating income of $28.8 million.
Balance Sheet
As of Sep 30, 2023, cash and cash equivalents were $1.52 billion compared with $965.8 million on Jun 30, 2023.
Cash flow from operations was $192 million in the third quarter compared with the second-quarter 2023 figure of $128 million.
Non-GAAP free cash flow was $184 million compared with $119 million reported in the previous quarter.
The company repurchased $90 million of its Class A common stock in the third quarter of 2023. As of Sep 30, 2023, The Trade Desk had $273 million available and authorized for repurchases.
Guidance
For fourth-quarter 2023, The Trade Desk expects revenues of at least $580 million, indicating year-over-year growth of 18%.
Additionally, the company anticipates adjusted EBITDA to be nearly $270 million.
Zacks Rank & A Key Stock to Consider
Currently, The Trade Desk has a Zacks Rank #3 (Hold).
The company’s shares have gained 71.3% year to date compared with the Zacks Computer & Technology sector’s increase of 39.1%.
A better-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 stocks here.
NVIDIA shares have outperformed the sector year to date, gaining 211.1%. NVDA is set to report third-quarter 2023 results on Nov 21.