UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 22, 2018

 

THE TRADE DESK, INC.

(Exact name of registrant as specified in its charter)

 

Delaware 001-37879 27-1887399
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)

 

42 N. Chestnut Street

Ventura, CA 93001

(Address of principal executive offices) (Zip Code)

 

(805) 585-3434

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 
  
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 
  
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

    Emerging growth company   ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02Results of Operations and Financial Condition

 

On February 22, 2018, The Trade Desk, Inc. (the “Registrant”) issued a press release announcing its financial results for the quarter and year ended December 31, 2017. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01Financial Statements and Exhibits
   
(d)Exhibits
   
99.1Press release dated February 22, 2018 of the Registrant, announcing its financial results for the quarter and year ended December 31, 2017.

 

 

 

 

 

Exhibit Index

 

Exhibit No.   Description
     

99.1

 

Press release dated February 22, 2018 of the Registrant, announcing its financial results for the quarter and year ended December 31, 2017.

 

 

 

 

 

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 

 

 

THE TRADE DESK, INC.

(Registrant)

       
Date: February 22, 2018      
  By:   /s/ Paul E. Ross
      Paul E. Ross
      Chief Financial Officer
(Principal Financial and Accounting Officer)

 

EdgarFiling

EXHIBIT 99.1

The Trade Desk Reports Fourth Quarter and Fiscal Year 2017 Financial Results

LOS ANGELES, Feb. 22, 2018 (GLOBE NEWSWIRE) -- 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, 2017. 

“The fourth quarter was outstanding for the Trade Desk and a capstone to a terrific 2017.  For the year, we surpassed $1.55 billion in gross spend on our platform, grew revenue 52% to more than $308 million and generated over $95 million of adjusted EBITDA,” said Founder and CEO of The Trade Desk, Jeff Green. “Our mission has always been to change the way advertising is bought on our software platform and 2017 marked a year of great strides toward that goal.  Exiting the year, we had more of the largest brands in the world spending on our platform than ever before as they recognize we are the only purely independent platform buying media at scale, objectively, across digital channels and devices. We also invested more into technology and product development than we ever have before to help drive our next stage of growth in the coming years. We expect 2018 to be another record year for the company as we continue to see great momentum in the adoption of programmatic advertising on our platform worldwide.”

Fourth Quarter and Fiscal Year 2017 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters and fiscal years ended December 31, 2017 and 2016 ($ in millions, except per share amounts):

  Three Months Ended Year Ended
  December 31, December 31,
   2017   2016   2017   2016 
GAAP Results        
Revenue $  102.6   $  72.4   $  308.2   $  202.9  
Increase in revenue year over year  42%   70%   52%   78% 
Net Income $  16.8   $  10.3   $  50.8   $  20.5  
Diluted EPS(1) $  0.38   $  0.24   $  1.15   $  (1.46)
         
Non-GAAP Results        
Adjusted EBITDA $  39.5   $  28.6   $  95.5   $  65.2  
Adjusted EBITDA Margin  38%   39%   31%   32% 
Non-GAAP Net Income(1) $  24.2   $  14.2   $  70.4   $  35.3  
Non-GAAP Diluted EPS(1) $  0.54   $  0.33   $  1.60   $  0.89  
         
(1)  Attributable to common stockholders-diluted      
         

Fourth Quarter and 2017 Business Highlights Include:

Full Year 2018 and First Quarter Outlook:

Mr. Green added: “We exited 2017 with strong momentum with more customers and more spend on more channels than ever before and 2018 is off to a strong start. For 2018, we expect gross spend on our platform to be at least $2.1 billion and revenue to be at least $403 million. In the year ahead, we are launching an enhanced user experience on our platform based on data visualization and we are unveiling robust media planning tools that will leverage our data to model optimum campaigns.  In addition, we are making incremental investments of $15-20 million in high opportunity areas such as mobile, Connected TV, global expansion, and creating a safer programmatic environment. As a result, we expect our adjusted EBITDA to be $117 million or about 29% of revenue. Our focus is on gaining share and revenue growth as this will ultimately maximize profitability over the long-term.“

The Trade Desk is providing its financial targets for the fiscal year 2018 and first quarter of 2018. The Company’s financial targets are as follows:

Full Year 2018

First Quarter 2018:

Reconciliation of adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure 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 non-GAAP financial measures that supplement the Condensed Consolidated Statements of Operations of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company's actual results prepared under GAAP by excluding charges for depreciation and amortization, stock-based compensation, interest expense, secondary offering costs and changes in fair value of preferred stock warrant liabilities. A tax rate on the tax-deductible portion of the stock-based compensation expense approximating 40% has been used in the computation of non-GAAP Net loss and non-GAAP diluted EPS attributed to common stockholders. Since the other excluded charges are non-taxable, a tax effect for those charges was not included. Also included in these non-GAAP financial measures are adjustments to diluted earnings per share amounts, as applicable, to reflect the conversion upon the Company’s IPO of all then-outstanding shares of convertible preferred stock into one third of one share of common stock using the as-if-converted method, as of January 1, 2016, or the date of issuance, if later. 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.

Fourth Quarter and Fiscal Year 2017 Results Webcast and Conference Call Details

About The Trade Desk

The Trade Desk™ (Nasdaq:TTD) is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize more expressive data-driven digital advertising campaigns across ad formats, including display, video, audio, native and, social, on a multitude of devices, such as computers, mobile devices, and connected TV. 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.

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 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

Contact
Investors
Chris Toth
Vice President Investor Relations, The Trade Desk
ir@thetradedesk.com 
310-334-9183

Media
Austin Rotter
Associate Vice President, 5WPR
arotter@5wpr.com
646-862-6866

         
THE TRADE DESK, INC.
         
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended Year Ended
  December 31, December 31,
   2017  2016  2017  2016 
Revenue $  102,648  $  72,410  $  308,217  $  202,926  
Operating expenses:        
Platform operations    21,133     13,259     66,230     39,876  
Sales and marketing    18,537     14,774     61,379     46,056  
Technology and development    17,029     9,619     52,806     27,313  
General and administrative    16,631     10,721     58,446     32,163  
Total operating expenses    73,330     48,373     238,861     145,408  
Income from operations    29,318     24,037     69,356     57,518  
Total other expense, net    1,282     1,073     5,731     13,684  
Income before income taxes    28,036     22,964     63,625     43,834  
Provision for income taxes    11,225     12,684     12,827     23,352  
Net income $  16,811  $  10,280  $  50,798  $  20,482  
Net income (loss) attributable to
  common stockholders
 $  16,811  $  10,280  $  50,798  $  (26,727)
Earnings (loss) per share:        
Basic $  0.41  $  0.27  $  1.26  $  (1.46)
Diluted $  0.38  $  0.24  $  1.15  $  (1.46)
Weighted average shares outstanding:        
Basic    41,108     38,588     40,262     18,280  
Diluted    44,464     43,023     44,056     18,280  
         


         
STOCK-BASED COMPENSATION EXPENSE
(Amounts in thousands)
(Unaudited)
         
  Three Months Ended Year Ended
  December 31, December 31,
   2017  2016  2017  2016
Platform operations $  1,131  $  642  $  2,674  $  756
Sales and marketing    2,984     1,389     6,261     1,707
Technology and development    2,680     1,183     6,661     1,513
General and administrative    2,116     794     5,721     1,080
Total $  8,911  $  4,008  $  21,317  $  5,056
         


     
THE TRADE DESK, INC.
     
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
     
  As of As of
  December 31,
2017
 December 31,
2016
ASSETS    
Current assets:    
Cash and cash equivalents $  155,950  $  133,400  
Accounts receivable, net    599,565     377,240  
Prepaid expenses and other current assets    10,298     5,763  
Total current assets    765,813     516,403  
Property and equipment, net    17,405     14,779  
Deferred income taxes    3,359     1,778  
Other assets, non-current    10,587     4,636  
Total assets $  797,164  $  537,596  
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable $  490,377  $  321,163  
Accrued expenses and other current liabilities    28,155     22,973  
Total current liabilities    518,532     344,136  
Debt, net    27,000     25,847  
Other liabilities, non-current    6,049     3,233  
Total liabilities    551,581     373,216  
     
Stockholders' equity:    
Preferred stock    —     —  
Common stock    —     —  
Additional paid-in capital    209,603     179,198  
Retained earnings (accumulated deficit)    35,980     (14,818)
Total stockholders' equity    245,583     164,380  
Total liabilities and stockholders' equity $  797,164  $  537,596  
     


     
THE TRADE DESK, INC.
     
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
     
  Year Ended December 31,
   2017   2016 
OPERATING ACTIVITIES:    
Net income $  50,798   $  20,482  
Adjustments to reconcile net income to net cash
  provided by operating activities:
    
Depreciation and amortization    7,209      3,798  
Stock-based compensation    21,317      5,056  
Change in fair value of preferred stock warrant liabilities    —      9,458  
Deferred income taxes    (1,581)    (607)
Bad debt expense    4,289      1,890  
Other    (1,303)    1,160  
Changes in operating assets and liabilities:    
Accounts receivable    (224,636)    (187,736)
Prepaid expenses and other assets    (5,033)    (2,675)
Accounts payable    171,793      209,483  
Accrued expenses and other liabilities    8,371      14,722  
Net cash provided by operating activities    31,224      75,031  
INVESTING ACTIVITIES:    
Purchases of property and equipment    (10,110)    (6,884)
Capitalized software development costs    (2,954)    (2,337)
Business acquisition    (3,000)    —  
Net cash used in investing activities    (16,064)    (9,221)
FINANCING ACTIVITIES:    
Proceeds from line of credit    —      75,847  
Repayment on line of credit    —      (65,000)
Repayment of term debt    —      (30,000)
Payment of debt financing costs    (154)    (976)
Payment of financing obligations    (1,001)    (550)
Proceeds from issuance of Series C convertible preferred stock    —      60,000  
Repurchase of preferred stock and common stock    —      (54,000)
Proceeds from exercise of stock options    2,565      488  
Proceeds from employee stock purchase plan    6,997      4,224  
Taxes paid related to net settlement of restricted stock awards    (1,017)    —  
Payment of stock repurchase costs    —      (155)
Payment of Series C convertible preferred stock offering costs    —      (129)
Proceeds from the issuance of Class A common stock in initial public offering,
  net of underwriting commissions
    —      78,120  
Payment of offering costs—initial public offering    —      (4,326)
Net cash provided by financing activities    7,390      63,543  
Increase (decrease) in cash and cash equivalents    22,550      129,353  
Cash and cash equivalents—Beginning of period    133,400      4,047  
Cash and cash equivalents—End of period $  155,950   $  133,400  
     

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

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

  Three Months Ended Year Ended
  December 31, December 31,
   2017  2016  2017  2016
             
  (in thousands)
Net income $  16,811  $  10,280  $  50,798  $  20,482
Add back:        
Depreciation and amortization expense    2,052     1,186     7,209     3,798
Stock-based compensation expense    8,911     4,008     21,317     5,056
Interest expense    501     411     1,791     3,075
Secondary offering costs    —     —     1,523     —
Change in fair value of preferred stock
  warrant liabilities
    —     —     —     9,458
Provision for income taxes    11,225     12,684     12,827     23,352
Adjusted EBITDA $  39,500  $  28,569  $  95,465  $  65,221
         


  Three Months Ended Year Ended
  December 31, December 31,
   2017   2016   2017   2016 
GAAP net income attributable to common stockholders
  -diluted
 $  16,811   $  10,280   $  50,798   $  (26,727)
Add back (deduct):        
Stock-based compensation expense    8,911      4,008      21,317      5,056  
Secondary offering costs    —      —      1,523      —  
Premium on repurchase of convertible preferred stock    —      —      —      47,209  
Change in fair value of preferred stock warrant
  liabilities
    —      —      —      9,458  
Liquidation fee related to prior debt facility    —      —      —      750  
Adjustment for income taxes    (1,502)    (118)    (3,274)    (444)
Non-GAAP net income attributable to common
  stockholders-diluted
 $  24,220   $  14,170   $  70,364   $  35,302  
         
         
GAAP weighted average shares outstanding-diluted    44,464      43,023      44,056      18,280  
Add back:        
Convertible preferred stock    —      —      —      16,268  
Dilutive stock options to purchase common stock    —      —      —      4,518  
Dilutive ESPP shares    —      —      —      36  
Dilutive stock warrants    —      —      —      363  
Non-GAAP weighted average shares outstanding-diluted    44,464      43,023      44,056      39,465  
         
GAAP diluted EPS attributable to common stockholders $  0.38   $  0.24   $  1.15   $  (1.46)
Non-GAAP diluted EPS attributable to common
  stockholders
 $  0.54   $  0.33   $  1.60   $  0.89