Trade Desk Inc (NASDAQ:TTD) traded higher into and out of its earnings report late last week – yet another solid beat and raise.
The company expects gross ad spend on its platform to accelerate to 37% growth in 2020 from 33% growth in 2019. 2020 revenue is expected to grow 31% from 39% but that outlook is conservative and leaves room for upside as the year progresses.
Ad spend will outpace revenue as the company concedes take rate in order to maximize share gains. The company still enjoys GAAP EBITDA margins of ~30% despite investing in and focusing on growth. Political ads are a tailwind and Connected TV ad spend is expected to double again this year after growing 137% in 2019.
Wells Fargo upgraded TTD to Overweight in response to the quarter. There’s really not much to pick at here. This is a difficult environment right now for momentum stocks in the wake of last week’s crash. But TTD's business is mostly immune from COVID-19 impacts.
Trade Desk Inc (NASDAQ:TTD) is a cloud-based advertising-buying platform.
Ad buyers can value each impression like traders value stocks, using first and third party data to decide which impression to buy and how much to pay. Its platform enables advertising clients to purchase and manage digital advertising campaigns across various formats, including connected TV (CTV), mobile, video, audio, display, social and native, on a multitude of devices, including smart TVs, computers, and mobile devices.
There was very little action in the stock for at least a year until Q1 2018 results hit the tape and the world took notice of the stock (that was May 10). It has been off to the races ever since, powered by, a steady stream of new brands and agencies joining the company’s platform. Looking ahead, the company has expressed interest in Connected TV.
As the company frames itself, it provides a self-service omnichannel software platform that enables clients to purchase and manage data-driven digital advertising campaigns in the United States and internationally. The company's platform allows clients to manage integrated advertising campaigns in various advertising channels and formats, including connected TV, mobile, video, audio, display, social, and native on various devices, such as smart TVs
Our TTD Earnings Summary:
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The Trade Desk beats by $0.33, beats on revs; guides Q1 revs above consensus; guides FY20 revs above consensus (250.01 -16.89)
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Reports Q4 (Dec) earnings of $1.49 per share, excluding non-recurring items, $0.33 better than the S&P Capital IQ Consensus of $1.16; revenues rose 34.6% year/year to $215.94 mln vs the $213.28 mln S&P Capital IQ Consensus.
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Reported $108.3 million in net income and $213.9 million of adjusted EBITDA.
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Co issues upside guidance for Q1, sees Q1 revs of $169 mln vs. $159.97 mln S&P Capital IQ Consensus.
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Also sees adjusted EBITDA of $35 million.
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Co issues upside guidance for FY20, sees FY20 revs of "at least" $863 mln vs. $860.84 mln S&P Capital IQ Consensus.
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Also sees Total Gross Spend of at least $4.24 billion and adjusted EBITDA of $259 million or 30% of revenue
Our TTD Conference Call, Analyst, and Research Notes:
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Pivotal Research Group lowers their TTD tgt to $300 from $320. Analyst Michael Levine said, "The 1Q20 and FY20 guides were much better than expected with 1Q20 implying reacceleration to 41% y/y from 4Q19 levels of 35% y/y. The guide seems quite conservative at 31% given a forecasted reacceleration to 39% billings growth from 34% in 2019. Take rates are forecast to decline, but we think it is more a function of mix-shift with CTV. We think that a decent amount of the 1Q20 forecasted upside could be from political, but we anticipate the company to continue to be a positive beneficiary from this throughout the course of 2020 and believe the annual revenue guidance will prove to be conservative. If we think about the businesses today vs 2016, TTD has become the most obvious turnkey "independent/non-walled garden" within digital. In our view, they are now the most obvious alternative for political spending -- both for the presidential and primary campaigns -- but also Senate and Congressional races. We maintain our buy rating, though slightly lower our PT to $300 from $320 as we slightly reduce our 2022 revenue estimates."
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Upgraded to Overweight from Equal Weight at Wells Fargo.