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Trade Desk (TTD) Q4 Earnings and Revenues Surpass Estimates

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The Trade Desk (TTD - Free Report) delivered adjusted earnings of $1.09 per share in fourth-quarter 2018, beating the Zacks Consensus Estimate by 30 cents. The figure grew 101.9% year over year.

Net revenues increased 56.4% from the year-ago quarter to $160.5 million, beating the consensus mark of $148 million. This year-over-year increase was primarily driven by robust growth in the mobile platform and increasing spend in Connected TV (“CTV”) platform.

Quarter in Detail

In the reported quarter, Trade Desk witnessed a record increase in spend in the mobile platform, which accounted for 45% of the company’s total spend, indicating the growing importance of this channel to advertisers. Growth in Mobile (in-app, video and web) was 69% year over year. Notably, growth in Mobile in-app and video were 90% and 130%, respectively, from the year-ago quarter.

Cross-device spend increased three times while CTV witnessed growth of 9 times from the year-ago quarter. Moreover, over 160 advertisers spent at least $100,000 each in CTV in the reported quarter. Notably, the transition in advertiser’s budget from Linear TV to CTV is likely to accelerate growth for the company in the next year.

Additionally, Trade Desk witnessed robust growth in the audio segment’s spend, which grew 230% year over year.

Trade Desk is witnessing growing traction in the Unified ID initiative. Notably, companies like Sharethrough and PubMatic integrated the company’s solution on their respective platforms in the reported quarter.

Trade Desk won significant new businesses, with large global brands moving spend to the company’s platform in the reported quarter. Moreover, international spend grew twice from that of the domestic spend.

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 top line.

Further, in order to provide multinational advertisers with access to premium audiences in China, the company announced partnerships with Baidu Exchange Services, iQIYI, Tencent Social Ads and Youku in the reported quarter. Notably, these partnerships are expected to boost Trade Desk’s share in China.

The company witnessed strong customer retention rate at 95% in the reported quarter.

The Trade Desk Inc. Price, Consensus and EPS Surprise

 

Year in Detail

Total revenues in 2018 were $477.3 million, up 55% year over year. Net earnings per share were $2.70, up 69% from the year-ago quarter.

Adjusted EBITDA increased 67% year over year to $159.4 million.

Operating Results

In fourth-quarter, Trade Desk’s reported operating expenses rose 52.1% year over year to $111.5 million primarily due to higher technology & development, and platform operation expenses. As a percentage of revenues, operating expenses declined 200 basis points (bps) on a year-over-year basis to 69.5%.

In absolute dollars, platform operations, sales & marketing, technology & development, and general & administrative expenses grew 68.2%, 46.5%, 41.8% and 51.2%, respectively, year over year.

As a percentage of revenues, platform operations surged 160 bps year over year. Meanwhile, sales and marketing as well as technology and development declined 110 bps and 160 bps, respectively, year over year.

Income from operations was $48.9 million compared with operating income of $29.3 million in the year-ago quarter. Adjusted EBITDA was $67.1 million, increasing 69.3% from the year-ago quarter. As a percentage of revenues, EBITDA margin increased 330 bps to 41.8%.

Guidance

For the first quarter of 2019, revenues are projected to be $116 million and adjusted EBITDA is expected to be $18.3 million.

For the year, the company expects revenues of $637 million and adjusted EBITDA of $182 million or 29% of revenues.

Zacks Rank & Stocks to Consider

Trade Desk currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Brightcove Inc. (BCOV - Free Report) , MeetMe, Inc. (MEET - Free Report) and Koninklijke Philips N.V. (PHG - Free Report) . All these stocks currently 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 Brightcove, MeetMe and Philips are projected to be 15%, 20% and 15.2%, respectively.

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