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Can Trade Desk Sustain Double-Digit Revenue Growth Amid Headwinds?
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Key Takeaways
Higher operating costs and macro uncertainty may hurt TTD's profitability and demand.
Higher operating costs and macro uncertainty may hurt TTD's profitability and demand.
TTD expects a 38% adjusted EBITDA margin, aided by AI tools like Kokai and growing CTV momentum
The Trade Desk, Inc. (TTD - Free Report) expects at least $682 million in revenues for the second quarter of 2025, implying approximately 17% year-over-year growth. It is to be noted that in the first quarter, the company recorded 25% year-over-year growth. This slowdown may indicate that TTD is entering a more mature phase in its growth cycle, where sustaining high double-digit expansion becomes increasingly difficult. As companies become larger, growth often naturally moderates due to a larger revenue base and broader market saturation.
At the same time, rising macroeconomic uncertainty and escalating trade tensions do not bode well for TTD as well as other players in this intensely competitive landscape, as these could squeeze advertising budgets. TTD highlighted the impact of the volatile macro backdrop, particularly on the large global brands. If macro headwinds worsen or persist in the second half of 2025, revenue growth may face further pressure due to reduced programmatic demand.
In addition, rising operating costs are likely to weigh on profitability. In the last reported quarter, TTD’s total operating expenses surged 21.4% year over year to $561.6 million, driven by continued investments in enhancing platform capabilities, particularly in platform operations.
Nonetheless, The company is benefiting from higher adoption of Connected TV (CTV) amid the convergence of the Internet and television programming. This particular growth driver is fast becoming the focus of the company’s growth strategy. Moreover, with global ad spend projected to rise, particularly in CTV and retail media, TTD is well-positioned to convert the international momentum into a balanced global revenue base.
On the innovation front, TTD’s flagship products like Kokai, Unified ID 2.0 and OpenPath are gaining solid demand momentum as well. Management noted that two-thirds of its clients now use its AI platform, Kokai, with full adoption expected by year-end. Kokai helps cut costs, lowering the cost per conversion by 24% and the cost per acquisition by 20%.
Management expects adjusted EBITDA of $259 million, implying a margin of nearly 38%, 400 basis points higher than in the first quarter. This anticipated margin improvement is attributed to targeted investments in infrastructure and talent, positioning the company to benefit from the ongoing shift toward a more open and competitive internet.
Revenue Outlook for TBLA & PUBM
Taboola.com Ltd. (TBLA - Free Report) is a global leader in performance advertising, helping businesses grow across the open web. Taboola’s growth strategy encompasses driving incremental ad spend through Realize's new capabilities and focusing on a go-to-market strategy, including verticalizing its sales organization and targeting ideal customer profiles and new supply partners that offer unique data sought by advertisers. First-quarter results were solid with revenues of $427 million improving 3%, adjusted EBITDA increasing 53%, and operating cash flow improving 48%, giving Taboola more than $216 million of cash with modest leverage. Banking on the momentum, Taboola expects second-quarter 2025 revenues of $438 million to $458 million, with full year guidance in the $1.84 billion–$1.89 billion range.
PubMatic, Inc. (PUBM - Free Report) is navigating macroeconomic headwinds with a focus on high-growth segments like CTV, commerce media and mobile. For the second quarter, the company expects revenues in the range of $66 million to $70 million, supported by a growing share of business through supply path optimization (SPO) and AI-powered infrastructure. While overall growth remains modest, PubMatic maintains financial discipline, with adjusted EBITDA projected to be between $9 million and $12 million. Management anticipates stronger revenue acceleration, targeting more than 15% growth in the second half of 2025.
TTD’s Price Performance and Valuation
Shares of TTD have plunged 23.3% in the past year compared with the Zacks Internet -Services industry’s decline of 1.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, TTD trades at a forward price-to-sales of 11.86X, higher than the industry’s average of 5.31X.
Image: Bigstock
Can Trade Desk Sustain Double-Digit Revenue Growth Amid Headwinds?
Key Takeaways
The Trade Desk, Inc. (TTD - Free Report) expects at least $682 million in revenues for the second quarter of 2025, implying approximately 17% year-over-year growth. It is to be noted that in the first quarter, the company recorded 25% year-over-year growth. This slowdown may indicate that TTD is entering a more mature phase in its growth cycle, where sustaining high double-digit expansion becomes increasingly difficult. As companies become larger, growth often naturally moderates due to a larger revenue base and broader market saturation.
At the same time, rising macroeconomic uncertainty and escalating trade tensions do not bode well for TTD as well as other players in this intensely competitive landscape, as these could squeeze advertising budgets. TTD highlighted the impact of the volatile macro backdrop, particularly on the large global brands. If macro headwinds worsen or persist in the second half of 2025, revenue growth may face further pressure due to reduced programmatic demand.
In addition, rising operating costs are likely to weigh on profitability. In the last reported quarter, TTD’s total operating expenses surged 21.4% year over year to $561.6 million, driven by continued investments in enhancing platform capabilities, particularly in platform operations.
Nonetheless, The company is benefiting from higher adoption of Connected TV (CTV) amid the convergence of the Internet and television programming. This particular growth driver is fast becoming the focus of the company’s growth strategy. Moreover, with global ad spend projected to rise, particularly in CTV and retail media, TTD is well-positioned to convert the international momentum into a balanced global revenue base.
On the innovation front, TTD’s flagship products like Kokai, Unified ID 2.0 and OpenPath are gaining solid demand momentum as well. Management noted that two-thirds of its clients now use its AI platform, Kokai, with full adoption expected by year-end. Kokai helps cut costs, lowering the cost per conversion by 24% and the cost per acquisition by 20%.
Management expects adjusted EBITDA of $259 million, implying a margin of nearly 38%, 400 basis points higher than in the first quarter. This anticipated margin improvement is attributed to targeted investments in infrastructure and talent, positioning the company to benefit from the ongoing shift toward a more open and competitive internet.
Revenue Outlook for TBLA & PUBM
Taboola.com Ltd. (TBLA - Free Report) is a global leader in performance advertising, helping businesses grow across the open web. Taboola’s growth strategy encompasses driving incremental ad spend through Realize's new capabilities and focusing on a go-to-market strategy, including verticalizing its sales organization and targeting ideal customer profiles and new supply partners that offer unique data sought by advertisers. First-quarter results were solid with revenues of $427 million improving 3%, adjusted EBITDA increasing 53%, and operating cash flow improving 48%, giving Taboola more than $216 million of cash with modest leverage. Banking on the momentum, Taboola expects second-quarter 2025 revenues of $438 million to $458 million, with full year guidance in the $1.84 billion–$1.89 billion range.
PubMatic, Inc. (PUBM - Free Report) is navigating macroeconomic headwinds with a focus on high-growth segments like CTV, commerce media and mobile. For the second quarter, the company expects revenues in the range of $66 million to $70 million, supported by a growing share of business through supply path optimization (SPO) and AI-powered infrastructure. While overall growth remains modest, PubMatic maintains financial discipline, with adjusted EBITDA projected to be between $9 million and $12 million. Management anticipates stronger revenue acceleration, targeting more than 15% growth in the second half of 2025.
TTD’s Price Performance and Valuation
Shares of TTD have plunged 23.3% in the past year compared with the Zacks Internet -Services industry’s decline of 1.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, TTD trades at a forward price-to-sales of 11.86X, higher than the industry’s average of 5.31X.
Image Source: Zacks Investment Research
TTD currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.