Trade Desk Profits Impress, Should Continue To Gain Market Share

Trade Desk Inc TTD reported stronger than expected results for Q4, while issuing the 2017 guidance ahead of the consensus expectations, which could still prove conservative.

Cantor Fitzgerald’s Youssef Squali maintained an Overweight rating on the company, while raising the price target from $30 to $40.

Highly Differentiated

“Robust programmatic demand for mobile, video and audio ad inventory drove much of the outperformance and is likely sustainable,” the analyst mentioned, while adding, “TTD stands out as a highly differentiated, quality buy side-only focused DSP, in a challenging ad tech segment; we believe it should continue to profitably gain share.”

However, management also announced a public offering of secondary shares worth $125 million, which could pressure the stock in the near term.

Solid Results

For Q4, Trade Desk reported total revenue of $72.4 million, with EBITDA of $28.6 million and adjusted EPS of $0.33, with all the metrics beating the consensus forecasts, driven by meaningfully higher than industry growth and market share gains during a seasonally strong quarter, boosted by the international, mobile and video segments.

“Mobile and video now represent the majority of spend and are growing faster than the overall business,” Squali stated, while pointing out that mobile in-app grew 400 percent year on year during Q4, with native spend growing 700 percent quarter on quarter.

The analyst went on to say that digital audio, which was still in its infancy, was one of the fastest growing channels for Trade Desk.

Related Link: Here's A Preview Of Q4 Mid-Cap Internet Stock Earnings

Impressive Profitability

Profitability during the quarter was also impressive, with margins rising to 39.5 percent, beating the guidance of 30 percent and almost in line with the company’s long-term target of 40 percent.

“This margin level was achieved despite aggressive investment in product, people, and global expansion. The company opened its 17th office in Jakarta, Indonesia, in 4Q16, and in Paris and Madrid in 1Q17, with more to come,” Squali said.