The Trade Desk Reports Fourth Quarter and Fiscal Year 2021 Financial Results

Rhea-AI Summary

The Trade Desk reported strong financial results for Q4 and FY 2021, with revenue hitting $1.2 billion, a 43% increase from 2020. The company's platform achieved total spend of nearly $6.2 billion, reflecting a 47% year-over-year growth. Adjusted EBITDA reached over $500 million, and customer retention remained above 95%. Despite a decline in net income to $137.8 million, CEO Jeff Green highlighted significant advancements with their new platform, Solimar, and ongoing partnerships. Looking ahead, Q1 2022 revenue is expected to be at least $303 million.

Positive

• Revenue increased 43% year-over-year to $1.2 billion.
• Adjusted EBITDA rose to over $500 million.
• Customer retention remained over 95% for 8 consecutive years.
• Launch of Solimar platform with advanced media buying features.
• New partnerships with major companies expanding market reach.

Negative

• Net income decreased to $137.8 million from $242.3 million in 2020.
• Diluted EPS declined from $0.49 to $0.28.

LOS ANGELES--(BUSINESS WIRE)-- The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its fourth quarter and fiscal year ended December 31, 2021.

“2021 was a remarkable year for The Trade Desk capped off by record performance in the fourth quarter. The launch of Solimar, our most important new platform to date, along with major progress in areas such as CTV, identity and retail data, enabled us to gain more share of the data-driven advertising market. As a result, we generated nearly $6.2 billion of total spend on our platform, nearly $1.2 billion in revenue and over $500 million in adjusted EBITDA in 2021 as we continue to scale the business with profitable growth. We exceeded our objectives for 2021 and I could not be more excited about the momentum we’re carrying into the first quarter and the year ahead,” said Jeff Green, founder and CEO of The Trade Desk. “We remain committed to creating a better internet that is open, competitive and fair for all participants. Major advertisers and partners around the world are embracing this vision as the global advertising market races toward a $1 trillion TAM. And as a result, more and more of them are gravitating to our platform.”

Fourth Quarter and Full Year 2021 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters and fiscal years ended December 31, 2021 and 2020 ($ in millions, except per share amounts):

		Three Months Ended								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
GAAP Results
Revenue		$	395.6			$	319.9			$	1,196.5			$	836.0
Increase in revenue year over year			24	%			48	%			43	%			26	%
Net Income		$	8.0			$	151.9			$	137.8			$	242.3
Diluted EPS		$	0.02			$	0.31			$	0.28			$	0.49
Non-GAAP Results
Adjusted EBITDA		$	191.5			$	152.9			$	502.7			$	283.7
Adjusted EBITDA Margin			48	%			48	%			42	%			34	%
Non-GAAP Net Income		$	208.1			$	184.8			$	455.6			$	335.6
Non-GAAP Diluted EPS		$	0.42			$	0.37			$	0.91			$	0.69

Fourth Quarter and 2021 Business Highlights:

• Continued Share Gains: 2021 gross spend on the platform was approximately $6.2 billion, a 47% increase year-over-year.
• Strong Customer Retention: Customer retention remained over 95% during the fourth quarter and throughout fiscal year 2021, as it has for the past 8 consecutive years.
• Continued Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0, an industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. The ID is an upgrade and alternative to third-party cookies. New partnerships in 2021 included: Publicis, Xandr, Acuity Ads, Throttle, FuboTV, Prebid, Interpublic Group, Omnicom Group, AMC Networks, Blockgraph, OpenAP, Snowflake, TrueData, Netwise, iCook, and Made In, among others.
• Launched New Media Trading Platform, Solimar: Launched in July, Solimar features advanced goals-based media buying, easy first-party-data onboarding, and an innovative measurement marketplace to help marketers optimize their digital advertising campaigns across the open internet.
• Expanded Partnerships:
  • In Q1, The Trade Desk announced our partnership with Walmart to launch a new DSP based on The Trade Desk’s platform that will provide advertisers with access to unique Walmart shopper data and sales measurement data in a self-service platform.
  • In September, The Trade Desk announced a collaboration with Samsung Ads in India, giving marketers on The Trade Desk platform access to CTV inventory on Samsung Smart TVs offered through its free AVOD streaming service.
  • In October, The Trade Desk partnered with Xiaomi, the world’s second largest smartphone maker, that allows advertisers to access Xiaomi’s global audience through its mobile ad offerings directly via The Trade Desk platform.
  • In November, The Trade Desk expanded its partnership with NBCUniversal, adding Peacock to its industry-leading CTV platform. As a result, the world’s leading advertisers will have access to premium Peacock video on-demand inventory via The Trade Desk, including NBC Sports, NBC and Sky News, NBC Next-Day Prime, Peacock originals, and an extensive catalog of content.
• Industry Recognition:
  • FORTUNE: Future 50 list.
  • Gartner Magic Quadrant for Ad Tech: positioned highest for “Completeness of Vision” and recognized for “Ability to Execute.”
  • FORTUNE: 100 Fastest Growing Companies for 2021.
  • The Software Report: Top 100 Software Companies of 2021.
  • Adweek Readers’ Choice: Best of Tech awards for both Demand Side Platform and Innovator of the Year categories.
  • Forbes: Global 2000 list.
  • FORTUNE: Best Medium Workplace 2021.
  • Great Places to Work: Best Workplace in New York.

Financial Guidance:

Assuming that the economy continues to recover and we do not have any major COVID-19 related setbacks that may cause economic conditions to deteriorate, we estimate the following:

First Quarter 2022 outlook summary:

• Revenue at least $303 million
• Adjusted EBITDA of approximately $91 million

We have not provided an outlook for GAAP Net income or reconciliation of adjusted EBITDA guidance to net income, the closest corresponding U.S. GAAP measure, because net income outlook 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 (benefit from) 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 25% to 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.

Fourth Quarter and Fiscal Year 2021 Results Webcast and Conference Call Details

• When: February 16, 2022 at 8:30 A.M. Pacific Time (11:30 A.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 888-506-0062. For callers outside the United States, please dial 1-973-528-0011. Participants should reference the conference call ID code “903621” 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: 44548). Outside the United States, please dial 1-919-882-2331 (replay code: 44548). The audio replay will be available via telephone until February 23^rd, 2022.

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 relatively 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								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
Revenue		$	395,598			$	319,905			$	1,196,467			$	836,033
Operating expenses (1):
Platform operations			66,845				51,645				221,554				178,812
Sales and marketing			72,501				58,740				249,298				174,742
Technology and development			62,836				48,723				226,137				166,654
General and administrative			218,777				54,365				374,661				171,617
Total operating expenses			420,959				213,473				1,071,650				691,825
Income (loss) from operations			(25,361	)			106,432				124,817				144,208
Total other expense (income), net			1,221				(529	)			2,781				305
Income (loss) before income taxes			(26,582	)			106,961				122,036				143,903
Benefit from income taxes			(34,621	)			(44,941	)			(15,726	)			(98,414	)
Net income		$	8,039			$	151,902			$	137,762			$	242,317
Earnings per share:
Basic		$	0.02			$	0.32			$	0.29			$	0.52
Diluted		$	0.02			$	0.31			$	0.28			$	0.49
Weighted average shares outstanding:
Basic			480,873				469,173				476,851				462,865
Diluted			500,314				497,540				498,540				489,881
(1) Includes stock-based compensation expense as follows:
STOCK-BASED COMPENSATION EXPENSE
(Amounts in thousands)
(Unaudited)
		Three Months Ended								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
Platform operations		$	4,289			$	3,335			$	15,913			$	8,794
Sales and marketing			13,309				11,177				50,671				29,726
Technology and development			16,454				12,327				57,791				36,672
General and administrative (1)			171,351				11,185				213,038				36,583
Total		$	205,403			$	38,024			$	337,413			$	111,775
(1) Stock-based compensation for the three months ended December 31, 2021, included a $158 million expense related to a long-term CEO performance grant in G&A.

THE TRADE DESK, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
		As of				As of
		December 31, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	754,154			$	437,353
Short-term investments			204,625				186,685
Accounts receivable, net			2,020,720				1,584,109
Prepaid expenses and other current assets			112,150				102,170
Total current assets			3,091,649				2,310,317
Property and equipment, net			135,856				115,863
Operating lease assets			234,091				248,143
Deferred income taxes			68,244				50,168
Other assets, non-current			47,500				29,154
Total assets		$	3,577,340			$	2,753,645
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,655,684			$	1,348,480
Accrued expenses and other current liabilities			101,472				88,335
Operating lease liabilities			46,149				37,868
Total current liabilities			1,803,305				1,474,683
Operating lease liabilities, non-current			238,449				254,562
Other liabilities, non-current			8,280				11,255
Total liabilities			2,050,034				1,740,500
Stockholders' equity:
Preferred stock			—				—
Common stock			—				—
Additional paid-in capital			915,177				538,778
Retained earnings			612,129				474,367
Total stockholders' equity			1,527,306				1,013,145
Total liabilities and stockholders' equity		$	3,577,340			$	2,753,645

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

		Year Ended December 31,
		2021				2020
OPERATING ACTIVITIES:
Net income		$	137,762			$	242,317
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			42,219				28,632
Stock-based compensation			337,413				111,775
Deferred income taxes			(16,777	)			(31,218	)
Allowance for credit losses on accounts receivable			1,456				3,149
Noncash lease expense			40,315				33,269
Other			5,803				2,190
Changes in operating assets and liabilities:
Accounts receivable			(444,342	)			(418,054	)
Prepaid expenses and other assets			1,648				(66,655	)
Accounts payable			309,410				481,313
Accrued expenses and other liabilities			7,596				35,446
Operating lease liabilities			(43,990	)			(17,095	)
Net cash provided by operating activities			378,513				405,069
INVESTING ACTIVITIES:
Purchases of investments			(278,387	)			(230,759	)
Sales of investments			4,539				—
Maturities of investments			253,444				167,602
Purchases of property and equipment			(54,804	)			(74,061	)
Capitalized software development costs			(5,169	)			(6,053	)
Business acquisition			(13,261	)			—
Net cash used in investing activities			(93,638	)			(143,271	)
FINANCING ACTIVITIES:
Proceeds from line of credit			—				143,000
Repayment on line of credit			—				(143,000	)
Payment of debt financing costs			(1,924	)			—
Proceeds from exercise of stock options			61,476				76,146
Proceeds from employee stock purchase plan			29,229				21,671
Taxes paid related to net settlement of restricted stock awards			(56,855	)			(53,138	)
Net cash provided by financing activities			31,926				44,679
Increase in cash and cash equivalents			316,801				306,477
Cash and cash equivalents—Beginning of period			437,353				130,876
Cash and cash equivalents—End of period		$	754,154			$	437,353

Non-GAAP Financial Metrics
(Amounts in thousands, except per share amounts)

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

		Three Months Ended								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
Net income		$	8,039			$	151,902			$	137,762			$	242,317
Add back:
Depreciation and amortization expense			12,250				7,855				42,219				28,632
Stock-based compensation expense			205,403				38,024				337,413				111,775
Interest expense (income), net			474				84				1,030				(656	)
Benefit from income taxes			(34,621	)			(44,941	)			(15,726	)			(98,414	)
Adjusted EBITDA		$	191,545			$	152,924			$	502,698			$	283,654
		Three Months Ended								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
GAAP net income		$	8,039			$	151,902			$	137,762			$	242,317
Add back (deduct):
Stock-based compensation expense			205,403				38,024				337,413				111,775
Adjustment for income taxes			(5,314	)			(5,119	)			(19,619	)			(18,460	)
Non-GAAP net income		$	208,128			$	184,807			$	455,556			$	335,632
GAAP diluted EPS		$	0.02			$	0.31			$	0.28			$	0.49
Non-GAAP diluted EPS		$	0.42			$	0.37			$	0.91			$	0.69
Weighted average shares outstanding—diluted			500,314				497,540				498,540				489,881

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220216005511/en/

Investors

Jake Graves

Manager, Investor Relations

The Trade Desk

ir@thetradedesk.com

Media

Melinda Zurich

GM, Communications

The Trade Desk

melinda.zurich@thetradedesk.com

201-320-9398

Source: The Trade Desk, Inc.

FAQ

What were The Trade Desk's Q4 2021 financial results?

The Trade Desk reported Q4 revenue of $395.6 million, a 24% increase year-over-year.

What is The Trade Desk's expected revenue for Q1 2022?

The Trade Desk estimates Q1 2022 revenue will be at least $303 million.

How much total spend did The Trade Desk's platform achieve in 2021?

The Trade Desk's platform generated nearly $6.2 billion in total spend in 2021.

What is the adjusted EBITDA for The Trade Desk in 2021?

The Trade Desk reported adjusted EBITDA of over $500 million for the fiscal year 2021.

How did customer retention perform for The Trade Desk in 2021?

Customer retention remained over 95% during 2021, consistent for the past 8 years.