The Trade Desk (TTD +9%) is trading higher following its Q2 earnings beat. The cloud-based online advertising platform reported a 25.9% year-over-year revenue increase to $584.6 million, surpassing expectations. Additionally, TTD guided Q3 revenues above analyst forecasts.
Key highlights from the earnings call:
- Continued growth in the Connected TV (CTV) segment, with accelerated growth in 1H24 compared to 2H23. CTV led the company's growth, as more advertisers sought efficiency and measurable results, especially in CTV and retail media.
- Benefited from a stable digital advertising environment, supported by agencies and brands. Access to premium inventory, including events like the Olympics through NBCU and platforms like Roku and Netflix, bolstered long-term success. Reported robust Q2 adjusted EBITDA of $242 million, a 41% margin, with similar expectations for Q3.
- Strong performance in most verticals, notably in home and garden, food and drink, and shopping. Family relationship and healthy living verticals were below average. North America accounted for 88% of sales, with international at 12%. TTD aims to capture more international market share.
- Industry reports show a significant shift in consumer digital time from walled gardens to the open Internet, with more time spent on premium open channels like CTV and digital audio. Platforms like Spotify, Netflix, Disney, and Warner Bros. Discovery have changed consumer behavior.
Overall, The Trade Desk had a strong quarter, driven by its CTV segment. Key growth drivers include CTV, retail media, international expansion, a strong identity strategy, and a major product upgrade with Kokai. Despite more impressive past quarters, investors are pleased with TTD's Q2 results, especially given the weak performance from related names like MGNI, PINS, and SNAP.
