The Trade Desk Reports Third Quarter 2022 Financial Results

Rhea-AI Summary

The Trade Desk, Inc. (NASDAQ: TTD) reported robust Q3 2022 financial results with a 31% year-over-year revenue growth, totaling $395 million. Despite this growth, the company faced a net loss of $16 million, compared to a profit of $59 million in Q3 2021. Adjusted EBITDA reached $163 million, maintaining a margin of 41%. The company emphasized strong customer retention, over 95%, and partnerships supporting Unified ID 2.0, enhancing data privacy. For Q4 2022, revenue is projected to exceed $490 million with an adjusted EBITDA of approximately $229 million.

Positive

• 31% revenue growth year-over-year, reaching $395 million in Q3 2022.
• Adjusted EBITDA of $163 million with a 41% margin.
• Customer retention over 95% for eight consecutive years.
• Support for Unified ID 2.0, enhancing advertising relevance and user privacy.
• Fourth quarter 2022 revenue guidance of at least $490 million with approximately $229 million in adjusted EBITDA.

Negative

• Net loss of $16 million in Q3 2022 compared to a profit of $59 million in Q3 2021.
• GAAP diluted EPS of $0.03, down from $0.12 in the previous year.

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 third quarter ended September 30, 2022.

“Q3 was another strong quarter for The Trade Desk with 31% growth that significantly outpaced the market. This performance underlines the value of decisioned media buying on The Trade Desk as the world’s largest advertisers seek to maximize return on every campaign dollar,” said Jeff Green, founder and CEO of The Trade Desk. “Nowhere is this more apparent than in the rapidly growing market for Connected TV advertising, as more of the world’s leading CTV platforms partner with us to bring advertising demand to their inventory. Additionally, more of the world’s top retailers are working with us to help our clients unleash retail data to tie campaign activity to actual retail sales. In both CTV and retail data, we are helping our clients pioneer new approaches to identity that preserve the value of relevant advertising while improving consumer privacy.”

Third Quarter 2022 Financial Highlights:

The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2022 and 2021 ($ in millions, except per share amounts):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
GAAP Results
Revenue		$	395			$	301			$	1,087			$	801
Increase in revenue year over year			31	%			39	%			36	%			55	%
Net income (loss)		$	16			$	59			$	(18	)		$	130
GAAP diluted earnings (loss) per share		$	0.03			$	0.12			$	(0.04	)		$	0.26
Non-GAAP Results
Adjusted EBITDA		$	163			$	123			$	423			$	311
Adjusted EBITDA margin			41	%			41	%			39	%			39	%
Non-GAAP net income		$	129			$	89			$	332			$	247
Non-GAAP diluted earnings per share		$	0.26			$	0.18			$	0.66			$	0.50

Third Quarter and Recent Business Highlights:

• Strong Customer Retention: Customer retention remained over 95% during the third quarter, as it has for the past eight consecutive years.

• Continued Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0 (UID2), an industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. UID2 is an upgrade and alternative to third-party cookies. Recent partnerships and pledges of integration and support include:
  • In September, Procter & Gamble, one of the world's largest advertisers, announced its support and adoption of UID2. P&G noted the urgency for advertisers and publishers to implement a consumer-centric identity solution that will raise the bar on privacy and improve consumers' experiences with advertising.
  • MediaMath, a demand side platform that works with over 3,500 advertisers, announced it will support UID2 on its platform, allowing advertisers to perform enhanced targeting and measurement by matching UID2s to first-party data.
  • Narrative, a data commerce platform that makes it easy for organizations to build audience segments from their first party data, announced a partnership with The Trade Desk. The partnership enables Narrative's customers to match their first party data with UID2 and make audience segments available for advertisers on The Trade Desk platform.
  • FuboTV, which became the first CTV platform to adopt UID2 in February of 2021, reported ad revenues increasing 113% faster than impression growth on its platform for campaigns transacted using UID2 over the past year. Ad spend on FuboTV also increased by 61% year over year and ad prices rose on a CPM basis for campaigns using the open identity framework.

• Industry Recognition (2022):
  • Customers’ Choice for Ad Tech on Gartner® Peer Insights™
  • BIG Innovation Award for Technology Product (Solimar)
  • Sales and Marketing Technology Awards: Product of the Year for User Optimization Experience
  • Crain's 100 Best Places to Work in NYC 2022 (9th consecutive year)
  • Stevie Awards for Great Employers - Employer of the Year, Computer Software
  • Stevie Awards for Customer Service Success - Silver, Technology Industries
  • Forbes Global 2000
  • Samantha Jacobson, Chief Strategy Officer, named to AdAge 40 under 40

Financial Guidance:

Fourth Quarter 2022 outlook summary:

• Revenue at least $490 million
• Adjusted EBITDA of approximately $229 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 Condensed Consolidated Statements of Operations of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before interest expense (income), net; provision for income taxes; depreciation and amortization; and stock-based compensation. 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 Condensed Consolidated Statements of Operations. 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.

Third Quarter 2022 Financial Results Webcast and Conference Call Details

• When: November 9, 2022 at 5:00 A.M. Pacific Time (8:00 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 877-545-0320. For callers outside the United States, please dial 1-973-528-0002. Participants should reference the conference call ID code “843070” 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: 46916). Outside the United States, please dial 1-919-882-2331 (replay code: 46916). The audio replay will be available via telephone until November 16, 2022.

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), Facebook page (https://www.facebook.com/TheTradeDesk/), 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Revenue		$	394,773			$	301,091			$	1,087,058			$	800,869
Operating expenses (1):
Platform operations			70,124				53,400				201,504				154,709
Sales and marketing			85,038				59,278				245,146				176,797
Technology and development			79,915				55,847				235,397				163,301
General and administrative			130,892				52,120				391,517				155,884
Total operating expenses			365,969				220,645				1,073,564				650,691
Income from operations			28,804				80,446				13,494				150,178
Total other expense (income), net			(1,698	)			1,470				(1,756	)			1,560
Income before income taxes			30,502				78,976				15,250				148,618
Provision for income taxes			14,633				19,592				33,052				18,895
Net income (loss)		$	15,869			$	59,384			$	(17,802	)		$	129,723
Earnings (loss) per share:
Basic		$	0.03			$	0.12			$	(0.04	)		$	0.27
Diluted		$	0.03			$	0.12			$	(0.04	)		$	0.26
Weighted-average shares outstanding:
Basic			487,963				478,101				486,168				475,496
Diluted			500,300				498,912				486,168				497,942

___________________________
(1)		Includes stock-based compensation expense as follows:

STOCK-BASED COMPENSATION EXPENSE
(Amounts in thousands)
(Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Platform operations		$	3,517			$	2,518			$	14,254			$	11,624
Sales and marketing			14,861				9,099				48,718				37,362
Technology and development			22,641				11,269				67,258				41,337
General and administrative (1)			79,984				11,573				240,881				41,687
Total		$	121,003			$	34,459			$	371,111			$	132,010

___________________________
(1)		Includes stock-based compensation expense related to a long-term CEO performance grant of $66 million and $197 million for the three and nine months ended September 30, 2022, respectively.

THE TRADE DESK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
		As of September 30, 2022				As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	994,656			$	754,154
Short-term investments, net			326,745				204,625
Accounts receivable, net			2,026,929				2,020,720
Prepaid expenses and other current assets			67,033				112,150
Total current assets			3,415,363				3,091,649
Property and equipment, net			166,078				135,856
Operating lease assets			230,917				234,091
Deferred income taxes			67,640				68,244
Other assets, non-current			43,956				47,500
Total assets		$	3,923,954			$	3,577,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,651,447			$	1,655,684
Accrued expenses and other current liabilities			82,768				101,472
Operating lease liabilities			51,025				46,149
Total current liabilities			1,785,240				1,803,305
Operating lease liabilities, non-current			215,728				238,449
Other liabilities, non-current			8,698				8,280
Total liabilities			2,009,666				2,050,034
Stockholders' equity:
Preferred stock			—				—
Common stock			—				—
Additional paid-in capital			1,319,961				915,177
Retained earnings			594,327				612,129
Total stockholders' equity			1,914,288				1,527,306
Total liabilities and stockholders' equity		$	3,923,954			$	3,577,340

THE TRADE DESK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
		Nine Months Ended September 30,
		2022				2021
OPERATING ACTIVITIES:
Net income (loss)		$	(17,802	)		$	129,723
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			37,581				29,969
Stock-based compensation			371,111				132,010
Non-cash lease expense			32,554				29,914
Allowance for credit losses on accounts receivable			2,961				520
Deferred income taxes			604				5,044
Other			3,694				6,730
Changes in operating assets and liabilities:
Accounts receivable			24,905				(48,637	)
Prepaid expenses and other current and non-current assets			42,913				20,627
Accounts payable			(68,758	)			(44,105	)
Accrued expenses and other current and non-current liabilities			(18,778	)			(14,790	)
Operating lease liabilities			(35,731	)			(31,886	)
Net cash provided by operating activities			375,254				215,119
INVESTING ACTIVITIES:
Purchases of investments			(379,206	)			(233,427	)
Sales of investments			1,977				4,539
Maturities of investments			252,699				192,077
Purchases of property and equipment			(36,394	)			(43,920	)
Capitalized software development costs			(4,833	)			(3,684	)
Business acquisition			—				(13,261	)
Net cash used in investing activities			(165,757	)			(97,676	)
FINANCING ACTIVITIES:
Payment of debt financing costs			—				(1,924	)
Proceeds from exercise of stock options			42,712				39,559
Proceeds from employee stock purchase plan			25,547				22,758
Taxes paid related to net settlement of restricted stock awards			(37,254	)			(38,273	)
Net cash provided by financing activities			31,005				22,120
Increase in cash and cash equivalents			240,502				139,563
Cash and cash equivalents—Beginning of period			754,154				437,353
Cash and cash equivalents—End of period		$	994,656			$	576,916

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 September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Net income (loss)		$	15,869			$	59,384			$	(17,802	)		$	129,723
Add back:
Depreciation and amortization expense			12,957				8,952				37,581				29,969
Stock-based compensation expense			121,003				34,459				371,111				132,010
Interest expense (income), net			(1,741	)			317				(1,321	)			556
Provision for income taxes			14,633				19,592				33,052				18,895
Adjusted EBITDA		$	162,721			$	122,704			$	422,621			$	311,153
		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
GAAP net income (loss)		$	15,869			$	59,384			$	(17,802	)		$	129,723
Add back (deduct):
Stock-based compensation expense			121,003				34,459				371,111				132,010
Adjustment for income taxes			(8,284	)			(4,616	)			(21,419	)			(14,305	)
Non-GAAP net income		$	128,588			$	89,227			$	331,890			$	247,428
GAAP diluted earnings (loss) per share		$	0.03			$	0.12			$	(0.04	)		$	0.26
GAAP weighted-average shares outstanding—diluted			500,300				498,912				486,168				497,942
Non-GAAP diluted earnings per share		$	0.26			$	0.18			$	0.66			$	0.50
Non-GAAP weighted-average shares used in computing Non-GAAP earnings per share, diluted (1)			500,300				498,912				499,754				497,942

_________________________
(1)		Includes an additional 13.6 million of dilutive securities for the nine months ended September 30, 2022, which are not included in GAAP diluted weighted-average shares outstanding due to the Company's net loss position for the nine months ended September 30, 2022.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221109005395/en/

Investors

Jake Graves

Manager, Investor Relations

The Trade Desk

ir@thetradedesk.com

312-620-0806



Media

Melinda Zurich

VP, Communications

The Trade Desk

melinda.zurich@thetradedesk.com

201-320-9398

Source: The Trade Desk, Inc.

FAQ

What were The Trade Desk's earnings for Q3 2022?

The Trade Desk reported earnings of $395 million in revenue for Q3 2022, marking a 31% growth year-over-year.

How did the net income of The Trade Desk change in Q3 2022?

The Trade Desk experienced a net loss of $16 million in Q3 2022, a decline from a net income of $59 million in the same quarter of 2021.

What is The Trade Desk's Q4 2022 revenue guidance?

For Q4 2022, The Trade Desk projects revenue of at least $490 million.

What is The Trade Desk's adjusted EBITDA for Q3 2022?

The Trade Desk reported an adjusted EBITDA of $163 million for Q3 2022.

What is The Trade Desk's customer retention rate?

The Trade Desk maintains a customer retention rate of over 95%, consistent for eight years.