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The Trade Desk Reports Second Quarter Financial Results

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The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its second quarter ended June 30, 2019.

"We delivered outstanding performance in the second quarter, once again surpassing our expectations. Q2 revenue growth of 42% accelerated from the 41% growth in Q1. This performance is testament to the increasing trust that major global advertisers are placing in us as they shift more of their advertising dollars to programmatic. For the quarter, revenue was $159.9 million, up 42% from a year ago and adjusted EBITDA increased to a Q2 record of $58 million. We are executing well. The fundamentals of our business are solid, and we continue to scale our business across markets in key growth areas such as CTV," said Founder and CEO of The Trade Desk, Jeff Green. "In one of our most important initiatives in CTV to date, we recently joined forces with Amazon Publisher Services (APS) to bring programmatic demand to their third-party premium TV content providers. We are in the midst of the digitization and transformation of TV advertising, and we are uniquely positioned to help advertisers and TV content providers become more data driven in everything they do. We are helping to drive transparency across the ad ecosystem, including CTV, which is improving advertiser confidence and driving demand."

Second Quarter 2019 Financial Highlights:

The following table summarizes our consolidated financial results for the periods ended June 30, 2019 and 2018 ($ in millions, except per share amounts):

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2019

 

2018

 

 

2019

 

2018

GAAP Results

 

 

 

 

 

 

 

 

Revenue

$

159.9

 

$

112.3

 

$

280.9

 

$

198.0

 

Increase in revenue year over year

 

42

%

 

54

%

 

42

%

 

57

%

Net Income

$

27.8

 

$

19.3

 

$

38.0

 

$

28.4

 

Diluted EPS

$

0.58

 

$

0.43

 

$

0.80

 

$

0.63

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

58.0

 

$

36.9

 

$

82.6

 

$

55.8

 

Adjusted EBITDA Margin

 

36

%

 

33

%

 

29

%

 

28

%

Non-GAAP Net Income

$

45.6

 

$

27.2

 

$

68.7

 

$

42.6

 

Non-GAAP Diluted EPS

$

0.95

 

$

0.60

 

$

1.44

 

$

0.95

 

 

 

 

 

 

 

 

 

 

Second Quarter and Recent Business Highlights Include:

  • Continued Omnichannel Spend Growth: Omnichannel solutions remain a strategic focus for The Trade Desk as the industry continues shifting toward transparency and programmatic buying. Specific channel highlights include:
    • Total Mobile (in-app, video, and web) was 47% of gross spend for the quarter highlighting the growing scale and importance of this channel to advertisers
    • Mobile Video spend grew 50% from Q2 2018 to Q2 2019
    • Mobile In-App spend grew 63% from Q2 2018 to Q2 2019
  • Newer Channels Delivering Strong Spend Growth: Two of our newest and most promising channels, Connected TV and audio grew multiples faster than The Trade Desk's larger and more mature channels:
    • Connected TV spend grew over 2.5x from Q2 2018 to Q2 2019
    • Audio spend grew over 270% from Q2 2018 to Q2 2019
  • Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for the previous 22 quarters.
  • Continued Unified ID Momentum: The Trade Desk is committed to enhancing the effectiveness of programmatic advertising by providing a free unified ID solution that allows all parties across the supply chain (SSPs, DSPs, DMPs and data providers) to utilize The Trade Desk's cookie footprint to increase their own cookie coverage across the global independent internet. During the quarter, new partners adopting unified ID included:
    • YIELDONE, the first Japan-based SSP to adopt The Trade Desk's unified ID solution
    • Prebid.org., an industry wide initiative dedicated to creating standardized solutions for programmatic advertising
    • Throtle, a leading identity-based data onboarder
    • Factual, a location data company
    • Tapad, a leading global marketing technology company
  • Industry Awards: The Trade Desk won for Best Demand-Side Technology in the inaugural AdExchanger Awards and was named Best Demand Side Platform at the ClickZ Marketing Technology Awards 2019. The Trade Desk was also ranked #2 on the 2019 Best Workplaces in Technology (small and medium companies) by Fortune.

Third Quarter and Revised Full Year 2019 Outlook:

Mr. Green added: "The first half of 2019 is off to a great start. The biggest brands in the world continue to shift their advertising spending to programmatic on our platform. As a result, we are raising our 2019 revenue guidance to be at least $653 million. At the same time, we are continuing to make large investments in areas critical to our future. We now expect our adjusted EBITDA to be $201 million for 2019. The secular tailwind of programmatic is strong. Our focus is on gaining share and revenue growth as this will ultimately maximize profitability over the long-term."

The Trade Desk is providing its financial targets for the third quarter of 2019 and revised targets for its fiscal year 2019. The Company's financial targets are as follows:

Third Quarter 2019:

  • Revenue of $163 million
  • Adjusted EBITDA of $45 million

Full Year 2019

  • Revenue of at least $653 million, revised from $645 million
  • Adjusted EBITDA of $201 million or about 30.8% of revenue, revised from $188.5 million

Reconciliation of adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the variability and complexity with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of our stock-based compensation expense that are directly impacted by unpredictable fluctuations in our share price. We expect the variability of the above charges could have a significant and potentially unpredictable, impact on our future U.S. GAAP financial results.

Use of Non-GAAP Financial Information

Included within this press release are the non-GAAP financial measures of Adjusted EBITDA, Non-GAAP net income and Non-GAAP diluted EPS that supplement the Consolidated Statements of Income of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before depreciation and amortization, stock-based compensation, interest expense (income), net and provision for income taxes. Non-GAAP net income excludes charges and the related income tax effects for stock-based compensation. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 30% have been used in the computation of non-GAAP net income and non-GAAP diluted EPS. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Consolidated Statements of Income. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company's financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for or superior to corresponding, similarly captioned, GAAP measures and may be different from non-GAAP financial measures used by other companies.

Second Quarter Financial Results Webcast and Conference Call Details

  • When: August 8, 2019 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time).
  • Webcast: A live webcast of the call can be accessed from the Investor Relations section of The Trade Desk's website at http://investors.thetradedesk.com/. Following the call, a replay will be available on the company's website.
  • Dial-in: To access the call via telephone in North America, please dial 877-407-0782. For callers outside the United States, please dial 1-201-689-8567. Participants should reference the conference call ID "The Trade Desk Call" after dialing in.
  • Audio replay: An audio replay of the call will be available beginning about two hours after the call. To listen to the replay in the United States, please dial 877-481-4010 (replay code: 51622). Outside the United States, please dial 1-919-882-2331 (replay code: 51622). The audio replay will be available via telephone until August 15, 2019.

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/investor-overview), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), and Facebook page (https://www.facebook.com/TheTradeDesk/), and Jeff Green's Twitter feed (@jefftgreen) and LinkedIn profile (https://www.linkedin.com/in/jefftgreen/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to The Trade Desk's press releases, SEC filings, public conference calls and webcasts.

About The Trade Desk

The Trade Desk is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns across ad formats and devices. Integrations with major data, inventory, and publisher partners ensure maximum reach and decisioning capabilities, and enterprise APIs enable custom development on top of the platform. Headquartered in Ventura, CA, The Trade Desk has offices across North America, Europe, and Asia Pacific. To learn more, visit thetradedesk.com or follow us on Facebook, Twitter, LinkedIn and YouTube.

Forward-Looking Statements

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody assumptions that may prove to have been inaccurate, including statements relating to the industry and market trends, and the Company's financial targets such as revenue and Adjusted EBITDA. When words such as "believe," "expect," "anticipate," "will", "outlook" or similar expressions are used, the Company is making forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give readers any assurance that such expectations will prove correct. These forward-looking statements involve risks, uncertainties and assumptions, including those related to the Company's limited operating history, which makes it difficult to evaluate the Company's business and prospects, the market for programmatic advertising developing slower or differently than the Company's expectations, the demands and expectations of clients and the ability to attract and retain clients. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond the control of the Company. These are disclosed in the Company's reports filed from time to time with the Securities and Exchange Commission, including its most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K, available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

Three Months Ended

   

Six Months Ended

 

 

June 30,

   

June 30,

 

 

2019

 

2018

   

2019

 

2018

Revenue

 

$

159,924

 

 

$

112,333

   

$

280,911

 

 

$

198,001

Operating expenses:

 

 

 

 

 

 

 

   

 

 

 

 

 

 

Platform operations

 

 

35,330

 

 

 

26,601

   

 

68,981

 

 

 

49,498

Sales and marketing

 

 

31,072

 

 

 

20,690

   

 

53,809

 

 

 

36,720

Technology and development

 

 

29,452

 

 

 

19,484

   

 

54,764

 

 

 

37,185

General and administrative

 

 

32,121

 

 

 

19,396

   

 

65,738

 

 

 

38,506

Total operating expenses

 

 

127,975

 

 

 

86,171

   

 

243,292

 

 

 

161,909

Income from operations

 

 

31,949

 

 

 

26,162

   

 

37,619

 

 

 

36,092

Total other expense (income), net

 

 

(1,420

)

 

 

1,064

   

 

(1,087

)

 

 

1,764

Income before income taxes

 

 

33,369

 

 

 

25,098

   

 

38,706

 

 

 

34,328

Provision for income taxes

 

 

5,569

 

 

 

5,755

   

 

755

 

 

 

5,915

Net income

 

$

27,800

 

 

$

19,343

   

$

37,951

 

 

$

28,413

Earnings per share:

 

 

 

 

 

 

 

   

 

 

 

 

 

 

Basic

 

$

0.63

 

 

$

0.46

   

$

0.86

 

 

$

0.68

Diluted

 

$

0.58

 

 

$

0.43

   

$

0.80

 

 

$

0.63

Weighted average shares outstanding:

 

 

 

 

 

 

 

   

 

 

 

 

 

 

Basic

 

 

44,404

 

 

 

42,174

   

 

44,157

 

 

 

41,903

Diluted

 

 

47,828

 

 

 

45,242

   

 

47,573

 

 

 

44,895

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2019

2018

2019

2018

Platform operations

$

1,331

$

1,107

$

2,387

$

1,903

Sales and marketing

 

4,831

 

2,759

 

8,058

 

4,724

Technology and development

 

6,497

 

2,534

 

11,433

 

4,892

General and administrative

 

8,398

 

2,858

 

15,048

 

5,022

Total

$

21,057

$

9,258

$

36,926

$

16,541

 

 

 

 

 

 

 

THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

 

 

As of

As of

 

June 30,

2019

December 31,

2018

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

130,590

$

207,232

Short-term investments

 

100,461

Accounts receivable, net

 

830,646

 

834,764

Prepaid expenses and other current assets

 

22,319

 

14,527

Total current assets

 

1,084,016

 

1,056,523

Property and equipment, net

 

43,521

 

33,046

Operating lease assets

 

82,711

Deferred income taxes

 

8,460

 

8,460

Other assets, non-current

 

20,743

 

19,843

Total assets

$

1,239,451

$

1,117,872

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

616,222

$

669,147

Accrued expenses and other current liabilities

 

37,429

 

44,844

Operating lease liabilities

 

16,822

Total current liabilities

 

670,473

 

713,991

Operating lease liabilities, non-current

 

71,699

Other liabilities, non-current

 

5,058

 

9,314

Total liabilities

 

747,230

 

723,305

 

 

 

Stockholders' equity:

 

 

Preferred stock

Common stock

Additional paid-in capital

 

330,150

 

270,447

Retained earnings

 

162,071

 

124,120

Total stockholders' equity

 

492,221

 

394,567

Total liabilities and stockholders' equity

$

1,239,451

$

1,117,872

 

 

 

 

 

 

 

 

 

 

 

 

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

2019

 

2018

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

37,951

 

 

$

28,413

 

Adjustments to reconcile net income to net cash

provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

9,277

 

 

 

4,830

 

Stock-based compensation

 

 

36,926

 

 

 

16,541

 

Bad debt expense

 

 

843

 

 

 

1,239

 

Noncash lease expense

 

 

8,935

 

 

 

 

Other

 

 

(2,056

)

 

 

2,725

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

4,987

 

 

 

(50,348

)

Prepaid expenses and other assets

 

 

(11,960

)

 

 

(2,702

)

Accounts payable

 

 

(51,937

)

 

 

11,220

 

Accrued expenses and other liabilities

 

 

(6,312

)

 

 

491

 

Operating lease liabilities

 

 

(5,848

)

 

 

 

Net cash provided by operating activities

 

 

20,806

 

 

 

12,409

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(17,002

)

 

 

(6,585

)

Capitalized software development costs

 

 

(2,420

)

 

 

(2,772

)

Purchases of investments

 

 

(122,432

)

 

 

 

Maturities of investments

 

 

22,424

 

 

 

 

Net cash used in investing activities

 

 

(119,430

)

 

 

(9,357

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repayment on line of credit

 

 

 

 

 

(27,000

)

Payment of debt financing costs

 

 

(7

)

 

 

 

Proceeds from exercise of stock options

 

 

16,975

 

 

 

3,209

 

Proceeds from employee stock purchase plan

 

 

8,648

 

 

 

7,014

 

Taxes paid related to net settlement of restricted stock awards

 

 

(3,634

)

 

 

(544

)

Net cash provided by (used in) financing activities

 

 

21,982

 

 

 

(17,321

)

Decrease in cash and cash equivalents

 

 

(76,642

)

 

 

(14,269

)

Cash and cash equivalents—Beginning of period

 

 

207,232

 

 

 

155,950

 

Cash and cash equivalents—End of period

 

$

130,590

 

 

$

141,681

 

Non-GAAP Financial Metrics

(Amounts in thousands, except per share amounts)

The following tables show the Company's GAAP financial metrics reconciled to non-GAAP financial metrics included in this release.

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2019

2018

2019

2018

 

 

Net income

$

27,800

 

$

19,343

 

$

37,951

 

$

28,413

Add back:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

4,821

 

 

2,579

 

 

9,277

 

 

4,830

Stock-based compensation expense

 

21,057

 

 

9,258

 

 

36,926

 

 

16,541

Interest expense (income), net

 

(1,286

)

 

(32

)

 

(2,283

)

 

124

Provision for income taxes

 

5,569

 

 

5,755

 

 

755

 

 

5,915

Adjusted EBITDA

$

57,961

 

$

36,903

 

$

82,626

 

$

55,823

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2019

 

2018

 

 

2019

 

2018

GAAP net income

$

27,800

 

$

19,343

 

$

37,951

 

$

28,413

 

Add back (deduct):

 

 

 

 

Stock-based compensation expense

 

21,057

 

 

9,258

 

 

36,926

 

 

16,541

 

Adjustment for income taxes

 

(3,291

)

 

(1,364

)

 

(6,208

)

 

(2,390

)

Non-GAAP net income

$

45,566

 

$

27,237

 

$

68,669

 

$

42,564

 

 

 

 

 

 

GAAP diluted EPS

$

0.58

 

$

0.43

 

$

0.80

 

$

0.63

 

Non-GAAP diluted EPS

$

0.95

 

$

0.60

 

$

1.44

 

$

0.95

 

 

 

 

 

 

Weighted average shares outstanding—diluted

 

47,828

 

 

45,242

 

 

47,573

 

 

44,895

 

 

 

 

 

 

 

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