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Will Headwinds Derail Trade Desk's Double-Digit Growth Trajectory?
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Key Takeaways
The Trade Desk projects at least $717M in Q3 revenue, up 14% year over year.
Growth is slowing from Q1's 25% and Q2's 18.6%, signaling a maturing trajectory.
Rising operating costs, up 17.8%, are pressuring margins amid competition and uncertainty.
The Trade Desk, Inc. (TTD - Free Report) reported second-quarter 2025 revenues of $694 million, reflecting an 18.6% year-over-year increase. The figure exceeded the company’s guidance of at least $682 million and topped the consensus estimate by 1.4%. Connected TV (CTV) remained the fastest-growing channel, supported by deepening partnerships with leading media players like Disney, NBCU, Netflix, Roku and Walmart. The company’s leadership in CTV, along with strengths in retail media, digital audio, identity, measurement and data, is helping it expand business with both new and existing clients. Trade Desk is also securing a record number of multiyear joint business plans (JBPs) with top agencies and brands. The company’s Kokai platform continues to gain traction.
More than 70% of clients are now on the Kokai platform, with full adoption expected by 2025. Powered by Koa, the industry’s most advanced AI, Kokai enables advertisers to achieve unmatched precision and relevance across campaigns. With AI embedded throughout the system, clients are seeing significant performance gains. In the second quarter, Samsung recorded a 43% increase in audience reach for an omnichannel campaign in Europe, while Cashrewards in Asia reported a 73% improvement in cost per acquisition. Overall, Kokai campaigns are outperforming legacy ones by more than 20 points on key KPIs. Expanding generative AI, Trade Desk also partnered with Rembrand, Nova, Bunny Studio and Spaceback.
Apart from this, the company is streamlining the digital ad supply chain with OpenPath, which boosts transparency and efficiency, while the Sincera acquisition adds free ad quality insights and AI-driven signals in Kokai to help advertisers buy the right impressions. In the second quarter, the company launched Deal Desk to manage ad deal performance and introduced the Connector App on Snowflake, providing retail conversion data and embedding AI signals into Kokai for smarter ad buying.
For the third quarter of 2025, The Trade Desk projects revenues of at least $717 million, implying 14% year-over-year growth. This marks a slowdown from the second quarter’s pace and represents the second consecutive quarter of decelerating growth, following a 25% rise in the first quarter, pointing to signs of a maturing growth trajectory.
Macroeconomic uncertainty is likely to weigh on advertising budgets. TTD remains cautious regarding 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. The intensely competitive nature of the digital advertising industry, dominated by industry giants like Google and Amazon, as well as other smaller players like Magnite (MGNI - Free Report) and Taboola.com Ltd. (TBLA - Free Report) , continues to put pressure on TTD’s market positioning.
While CTV remains a strong revenue driver, this market is also increasingly becoming competitive. Heavy reliance on CTV for growth is a concern, as any adverse impact on this segment could weigh heavily on the overall performance.
Moreover, rising expenses remain a concern for profitability. In the last quarter, operating costs climbed 17.8% year over year, largely from continued platform investments, putting pressure on margins and heightening risks if revenue growth slows.
Revenue Outlook for TBLA & MGNI
Taboola 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. In the second quarter, revenues came in at $465.5 million, up 8.7% year over year. Growth was largely fueled by an 8.5% increase in Scaled Advertisers, supported by a 1.8% rise in Average Revenue per Scaled Advertiser. For the third quarter of 2025, the company expects revenues in the range of $461 million to $469 million. For 2025, revenues are anticipated to be between $1,858 million and $1,888 million.
Magnite helps publishers maximize revenues through transparent CTV, video and display monetization. With ongoing tech innovation and expanded partnerships, Magnite solidifies its leadership as one of the largest independent sell-side platforms in digital advertising. In the second quarter of 2025, MGNI posted revenues of $173.3 million, reflecting a 6% year-over-year increase. Contribution ex-TAC came in at $162 million, up 10% from the prior year. For the third quarter of 2025, the company expects total Contribution ex-TAC to range between $161 million and $165 million. For 2025, Contribution ex-TAC is projected to grow more than 10%.
TTD’s Price Performance and Valuation
Shares of TTD have plunged 50.2% in the past year against the Zacks Internet -Services industry’s growth of 21.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, TTD trades at a forward price-to-sales of 8.06X, higher than the industry’s average of 5.37X.
Image: Bigstock
Will Headwinds Derail Trade Desk's Double-Digit Growth Trajectory?
Key Takeaways
The Trade Desk, Inc. (TTD - Free Report) reported second-quarter 2025 revenues of $694 million, reflecting an 18.6% year-over-year increase. The figure exceeded the company’s guidance of at least $682 million and topped the consensus estimate by 1.4%. Connected TV (CTV) remained the fastest-growing channel, supported by deepening partnerships with leading media players like Disney, NBCU, Netflix, Roku and Walmart. The company’s leadership in CTV, along with strengths in retail media, digital audio, identity, measurement and data, is helping it expand business with both new and existing clients. Trade Desk is also securing a record number of multiyear joint business plans (JBPs) with top agencies and brands. The company’s Kokai platform continues to gain traction.
More than 70% of clients are now on the Kokai platform, with full adoption expected by 2025. Powered by Koa, the industry’s most advanced AI, Kokai enables advertisers to achieve unmatched precision and relevance across campaigns. With AI embedded throughout the system, clients are seeing significant performance gains. In the second quarter, Samsung recorded a 43% increase in audience reach for an omnichannel campaign in Europe, while Cashrewards in Asia reported a 73% improvement in cost per acquisition. Overall, Kokai campaigns are outperforming legacy ones by more than 20 points on key KPIs. Expanding generative AI, Trade Desk also partnered with Rembrand, Nova, Bunny Studio and Spaceback.
Apart from this, the company is streamlining the digital ad supply chain with OpenPath, which boosts transparency and efficiency, while the Sincera acquisition adds free ad quality insights and AI-driven signals in Kokai to help advertisers buy the right impressions. In the second quarter, the company launched Deal Desk to manage ad deal performance and introduced the Connector App on Snowflake, providing retail conversion data and embedding AI signals into Kokai for smarter ad buying.
The Trade Desk Price and Consensus
The Trade Desk price-consensus-chart | The Trade Desk Quote
For the third quarter of 2025, The Trade Desk projects revenues of at least $717 million, implying 14% year-over-year growth. This marks a slowdown from the second quarter’s pace and represents the second consecutive quarter of decelerating growth, following a 25% rise in the first quarter, pointing to signs of a maturing growth trajectory.
Macroeconomic uncertainty is likely to weigh on advertising budgets. TTD remains cautious regarding 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.
The intensely competitive nature of the digital advertising industry, dominated by industry giants like Google and Amazon, as well as other smaller players like Magnite (MGNI - Free Report) and Taboola.com Ltd. (TBLA - Free Report) , continues to put pressure on TTD’s market positioning.
While CTV remains a strong revenue driver, this market is also increasingly becoming competitive. Heavy reliance on CTV for growth is a concern, as any adverse impact on this segment could weigh heavily on the overall performance.
Moreover, rising expenses remain a concern for profitability. In the last quarter, operating costs climbed 17.8% year over year, largely from continued platform investments, putting pressure on margins and heightening risks if revenue growth slows.
Revenue Outlook for TBLA & MGNI
Taboola 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. In the second quarter, revenues came in at $465.5 million, up 8.7% year over year. Growth was largely fueled by an 8.5% increase in Scaled Advertisers, supported by a 1.8% rise in Average Revenue per Scaled Advertiser. For the third quarter of 2025, the company expects revenues in the range of $461 million to $469 million. For 2025, revenues are anticipated to be between $1,858 million and $1,888 million.
Magnite helps publishers maximize revenues through transparent CTV, video and display monetization. With ongoing tech innovation and expanded partnerships, Magnite solidifies its leadership as one of the largest independent sell-side platforms in digital advertising. In the second quarter of 2025, MGNI posted revenues of $173.3 million, reflecting a 6% year-over-year increase. Contribution ex-TAC came in at $162 million, up 10% from the prior year. For the third quarter of 2025, the company expects total Contribution ex-TAC to range between $161 million and $165 million. For 2025, Contribution ex-TAC is projected to grow more than 10%.
TTD’s Price Performance and Valuation
Shares of TTD have plunged 50.2% in the past year against the Zacks Internet -Services industry’s growth of 21.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, TTD trades at a forward price-to-sales of 8.06X, higher than the industry’s average of 5.37X.
Image Source: Zacks Investment Research
TTD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.