The Trade DeskTTD

The Trade Desk reported revenue of about 720 million dollars for the quarter, which was lower than the 750 million dollars analysts expected. While the company earned 34 cents per share, beating the 18 cents expected, the slower sales growth is a concern for a business priced for high expansion. Management noted that marketers are dealing with a complex environment, which has made it harder to close deals at the pace the company originally planned.

This is a rare miss for a company that usually meets its targets. The core of the business is helping brands buy ads on the open internet instead of inside closed systems like Google. If marketers are pulling back or taking longer to decide on their budgets, it directly hits the volume of ads flowing through the platform. The stock fell about 18 percent as the market adjusted to this slower growth outlook.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Revenue growth stalling: Revenue grew just 3% to $715 million, which is a sharp drop from the 19% growth the company saw in the same period last year. This suggests the business is struggling to maintain its pace as advertisers deal with a more complex market.
• Weak outlook ahead: Management expects third quarter revenue to be at least $650 million, which would be a decrease from the $715 million earned this quarter. They also forecast adjusted EBITDA, a measure of core operational profit, to fall to $160 million from the $241 million reported today.
• Efficiency is slipping: The adjusted EBITDA margin, which shows how much profit is kept from every dollar of sales, fell to 34% compared to 39% a year ago. Profits are being squeezed because revenue growth did not keep up with rising costs for platform operations, which jumped by $33 million.
• Customer loyalty holds: The company kept its customer retention rate above 95%, a level it has maintained for over 10 years. Keeping existing clients is vital for the long term, especially while the company tries to navigate current growth challenges.
• New inventory access: The platform added major new partners like Netflix and Samsung Ads, which gives its customers more places to buy high quality video ads. Expanding into these premium streaming areas is a key part of the plan to win more digital advertising budgets.

Our take: This was a weak quarter that signals a significant slowdown for a company usually known for high growth. The 3% revenue increase is a major step back from last year, and the lower guidance for next quarter suggests these struggles will continue. While customer retention remains high, the business must prove it can reignite growth to support its long term case.