Trade Desk ((TTD)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call from The Trade Desk painted a nuanced picture of the company’s current standing and future prospects. While the company boasted record revenue growth and strategic advancements, particularly in the connected TV (CTV) and international markets, there were notable challenges. The company faced a rare shortfall in meeting financial expectations due to execution missteps and increased expenses, creating a balanced outlook.
Record-Breaking Year for The Trade Desk
The Trade Desk reported a stellar year with total platform spending surpassing $12 billion, and revenue growing to over $2.4 billion, marking a 26% year-over-year increase. The company’s adjusted EBITDA exceeded $1 billion, and free cash flow was more than $600 million, underscoring a financially robust performance.
Strong CTV Growth
Connected TV (CTV) advertising saw significant growth, though it remains a relatively small portion of the total TV ad spend. This indicates a substantial potential for further expansion as more advertisers transition from traditional linear TV to digital platforms.
Expansion of Joint Business Plans
The company’s strategy to expand Joint Business Plans with brands and agencies paid off, growing 50% faster than the rest of the business. This highlights the importance of strategic partnerships in driving growth.
International Growth
For the eighth consecutive quarter, The Trade Desk’s international growth outpaced its North American operations. CTV growth was particularly strong in international markets, reflecting the company’s successful global expansion efforts.
AI and Kokai Enhancements
Investments in artificial intelligence and the transition of clients from Solimar to Kokai were emphasized as key areas for enhanced performance. These advancements are expected to improve capabilities and client outcomes.
Missed Financial Expectations
For the first time in 33 quarters, The Trade Desk did not meet its financial expectations, marking a significant moment. This shortfall was attributed to execution missteps and increased operating expenses.
Execution Missteps
The company acknowledged several execution missteps, including a slower rollout of Kokai and internal structural changes. These factors contributed to the financial shortfall experienced in the fourth quarter.
Q4 Revenue Shortfall
The Trade Desk’s Q4 revenue reached $741 million, a 22% increase year-over-year, but it fell short of internal expectations. This deviation from historical performance highlights some challenges faced by the company.
Increased Operating Expenses
Operating expenses in Q4, excluding stock-based compensation, increased by 23% from the previous year. This rise in expenses impacted the company’s margins, adding to the financial challenges faced.
Forward-Looking Guidance
Looking ahead, The Trade Desk remains optimistic, forecasting Q1 2025 revenue of at least $575 million, representing a 17% year-over-year increase. Adjusted EBITDA is expected to be around $145 million. The company is implementing organizational changes to better align with market opportunities and plans strategic investments to leverage the growing digital advertising space.
In summary, The Trade Desk’s earnings call reflected both triumphs and trials. Record revenue growth and strategic advancements were marred by execution challenges and increased expenses. However, the company’s forward-looking guidance suggests optimism for continued growth and strategic investments in the digital advertising landscape.
