The Trade Desk: An Opportunity Or A Trap?
Hi Multis
You may or may not have seen it, but The Trade Desk (TTD) released its earnings yesterday.
The stock crashed by about 30% after the market and it's down even more after multiple downgrades from analysts today. It's now down about 38%.
I know this creates uncertainty for many Multis and that's why I wanted to be fast with this analysis. So, I already analyzed yesterday (after my HIMS article) and then set my alarm clock early this morning. Because I know you want to know: What really happened here? Is it an opportunity or a trap?
Let's have a quick look at the numbers first.
The Numbers
Revenue: +19% YoY to $694M, a beat by $8M
Operating Margin: 17% (+1pp YoY)
Adjusted EBITDA: $271M, 39% margin (-2pp YoY but +1pp vs. guidance)
Non-GAAP EPS: $0.41, a beat by $0.01
Customer Retention: >95% for 11 consecutive years
Channel Mix: CTV 47.5%, Mobile 35%, Display 12.5%, Audio 5%
Geographic Split: North America 86%, International 14%
Operating Cash Flow: $165M (+103% YoY), FCF $117M (+106% YoY)
Cash Position: $1.7B with no long-term debt
Guidance: Q3 revenue "at least" $717M (+14% YoY); Adj EBITDA ~$277M
The Trade Desk delivered a solid quarter with a beat on revenue and EPS. While the beats were small, they were still beats. But the stock cratered 30% in after-hours trading, as we saw, and it continued to drop further today. This was not a repeat of their Q4 2024 quarter, though. Then the company missed its own guidance and Jeff Green plainly said they messed up. This was a fundamentally solid quarter that beat both revenue, EPS and EBITDA expectations, albeit slightly. There were good reasons for that, as you’ll see later in this article.
While some point at the guidance as the culprit ('just 14%), I want to point out that the guidance still beats the consensus. Just a little bit, again, but still. Don't forget that 2024 was an election year and that The Trade Desk usually sees mid-single-digit extra revenue from elections, often combined with slightly higher margins.
If you are a free subscriber, what are you waiting for? Do you realize that 1 good call (and this one may be it) could earn your subscription money back multiple times? So, don’t wait and upgrade to know if this is an opportunity you can’t miss and if I will buy now or not. Of course, you get a ton more, like my full portfolio, Best Buys Now, a great community, etc.