The Trade Desk ( TTD Quick Quote TTD - Free Report) reported fourth-quarter 2019 adjusted earnings of $1.49 cents per share, which beat the Zacks Consensus Estimate by 25.2% and increased 36.7% from the year-ago quarter. Revenues of $215.9 million beat the Zacks Consensus Estimate by 1.2% and increased 34.5% year over year, driven by continued strength in programmatic ad buying. Moreover, the company witnessed strong growth in its audio, video, Connected TV (CTV) and mobile in-app channels, with 89% of the spend coming from existing customers.
Quarterly Details The company’s video channel spend increased 54% sequentially in the fourth quarter, while CTV spend witnessed sequential growth of 100% during the quarter. Customer retention remained over 95% during the quarter, as it has for the previous 24 quarters. Total operating costs increased 46% year over year to $163.3 million. Platform operations expense or effectively cost of revenues increased 34% to $47.3 million, driven primarily by the increase in the company’s platform fees or QPS. Moreover, platform operations expense is decreasing year over year as a percentage of revenues. Technology and development expenses grew 36% to $32.8 million, driven by increased investments in the company’s platform, while sales and marketing expenses grew 59% to $42.9 million, driven by increased spending on account management and business development. Further, general and administrative (G&A) expenses increased 61% year over year to $40.3 million during the quarter. However, the company expects G&A to improve in 2020 as it further scales its business. Adjusted EBITDA was $84.5 million in the fourth quarter, up 24.6% year over year, while adjusted EBITDA margin contracted 310 basis points (bps) year over year to 38.7%. Balance Sheet & Cash Flow Cash, cash equivalents and short-term investments were $255 million as of Dec 31, 2019, compared with $296.5 million as Sep 30, 2019. Cash flow from operating activities as of Dec 31, 2019 was $60.2 million. Free cash flow during the quarter was $19 million. Guidance For first-quarter 2020, The Trade Desk expects revenues of $169 million. The Zacks Consensus Estimate for revenues is pegged at $159.6 million, indicating growth of 31.9% from the year-ago quarter. Adjusted EBITDA is expected to be $35 million. For full-year 2020, the company expects revenues of $863 million. The consensus mark for full- year revenues is pegged at $853.7 million, indicating year-over-year growth of 29.7%. Total gross spend on the company’s platform is expected to be at least $4.24 billion due to increased focus on expanding market share and deepening engagement and strategic importance with customers. For full-year 2020, adjusted EBITDA is expected to be $259 million or 30% of revenues. Zacks Rank & Stocks to Consider The Trade Desk currently carries a Zacks Rank #3 (Hold). Dropbox, Inc. DBX, Alteryx, Inc. ( AYX Quick Quote AYX - Free Report) and ManTech International Corporation MANT are some better-ranked stocks in the broader computer and technology sector. Dropbox and ManTech sport a Zacks Rank #1 (Strong Buy), while Alteryx carries a Zacks Rank #2 (Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here Long-term earnings growth rate for Dropbox, Alteryx and ManTech is currently pegged at 20.2%, 50.6% and 8% respectively. 5 Stocks Set to Double Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >>