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The Trade Desk Reports Second Quarter Financial Results

LOS ANGELES, Aug. 10, 2017 (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 second quarter ended June 30, 2017. 

“The programmatic revolution continued to gain momentum and our success was driven by our commitment to be an objective, independent, data-driven software platform for our customers to unleash the power of programmatic advertising through all channels and devices that touch the consumer,” said Jeff Green, founder and CEO of The Trade Desk. “A great start in the first half of the year points to a strong 2017 for our business. We’ve broken our previous revenue record and surpassed our own expectations during the second quarter with revenue of $72.8 million, which is a 54% increase year over year and we generated $10.7 million in cash from operations. During the quarter, our momentum continued with strong customer wins, international growth was robust again, mobile continued to lead our growth, along with strong results in native and audio. We also are excited to have opened our newest office in Shanghai.”

Second Quarter 2017 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters ended June 30, 2017 and 2016 ($ in millions, except per share amounts)

       
  Three Months Ended
  June 30,
  2017   2016
GAAP Results      
Revenue $ 72.8     $ 47.2  
Increase in revenue year over year   54 %     93 %
Net Income $ 18.8     $ 7.6  
Diluted EPS(1) $ 0.43     $ 0.15  
       
Non-GAAP Results      
Adjusted EBITDA $ 25.3     $ 15.7  
Adjusted EBITDA Margin   35 %     33 %
Non-GAAP Net Income(1) $ 23.0     $ 8.2  
Non-GAAP Diluted EPS(1) $ 0.52     $ 0.22  
       
(1) Attributable to common stockholders-diluted.      
       

Second Quarter and Recent Business Highlights Include:

  • Continued Omni-channel Growth: Omni-channel solutions remain a strategic focus for The Trade Desk as the industry continues shifting toward transparency and programmatic buying.  Specific channel highlights include:
    - Mobile (In-App, Video and Web) increased to over a third of gross spend for the quarter highlighting the growing importance of this channel to advertisers.
    - Native spend was very strong in Q2 surpassing all Native spend in 2016, which was launched in Q2 2016.
    - Mobile In-App grew 87% from Q2 2016 to Q2 2017.
    - Mobile Video grew 171% from Q2 2016 to Q2 2017.
    - Connected TV grew 167% from Q2 2016 to Q2 2017.
  • Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for the previous 14 quarters.
  • New Products and Features: The Trade Desk recently released many new product features and enhancements to its platform including:
    - Introduction of “My Reports”, our best-in-class reporting stack, which gives users an even-easier way to garner campaign insights. Enhanced customization capabilities let users include or exclude metrics from standard templates or build their own from scratch. Everything that is reported can be optimized in the platform to maximize performance.
    - Enhanced the user experience with Private Marketplace Troubleshooting tools in the UI, which exposes common reasons PMP deals are excluded from bidding, previously only available via a custom report.
    - An integration with Placed that allows customers to easily measure how their digital advertising drives in-store foot traffic.
  • Brand Safety:
    - Expanded our integration with Integral Ad Science to offer reporting in the UI for viewability, suspicious activity and brand safety.  The Trade Desk continues to lead the industry in offering some of the most “brand safe” and “premium inventory” through its platform.  
    - A commitment to the IAB Tech Lab’s Ads.txt initiative, the new open standard and technical specification for increasing transparency across the digital programmatic ecosystem.
  • Global Footprint Expansion: In the second quarter of 2017, The Trade Desk broadened its coverage with the opening of its 20th office in Shanghai, China.

Third Quarter and Revised Full Year 2017 Outlook:

Mr. Green added, “We continue to see momentum as ad dollars shift to programmatic, and as such, we now expect revenue to be at least $303 million for the full year. We continue to make aggressive, yet prudent investments in our business in our key growth areas, such as mobile, video, connected TV and expanding our existing global offices, and we now expect our adjusted EBITDA for 2017 to be $88 million.”

The Trade Desk is providing its financial targets for the third quarter of 2017 and revised targets for its fiscal year 2017. The Company’s financial targets are as follows:

Third Quarter 2017:

  • Revenue of $76 million
  • Adjusted EBITDA of $21 million

Full Year 2017

  • Revenue at least $303 million, revised from $291 million
  • Adjusted EBITDA of $88 million, revised from $78 million

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 this 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.

Second Quarter Fiscal Year 2017 Results Webcast and Conference Call Details

  • When: August 10, 2017 at 2:00 P.M. Pacific Time (5:00 P.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 866-682-6100.  For international callers, please dial 1-862-255-5401.  Participants should reference the conference call ID “The Trade Desk Call” 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 North America, please dial 1-877-481-4010 (replay code: 19256).  International callers, please dial 1-919-882-2331 (replay code: 19256). The audio replay will be available via telephone until September 10, 2017.

Date for 2017 Investor Day

The Trade Desk today also announced that it plans to host an Investor Day on Wednesday, October 4, 2017 in New York City.  At the event, The Trade Desk management team will provide an overview of the company's global strategy, key business and product initiatives, and financial objectives.

A live webcast and replay of the presentation will be available on The Trade Desk’s investor website at investors.thetradedesk.com.

Professional investors and financial analysts interested in attending the event should contact The Trade Desk investor relations. Advanced registration is required.

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.

                 
THE TRADE DESK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2017   2016   2017   2016
Revenue   $ 72,804     $ 47,182   $ 126,156     $ 77,560  
Operating expenses:                
Platform operations     15,151       8,682     27,700       16,195  
Sales and marketing     14,166       11,251     26,642       19,682  
Technology and development     12,135       5,763     22,596       10,402  
General and administrative     11,658       6,452     27,588       12,851  
Total operating expenses     53,110       32,148     104,526       59,130  
Income from operations     19,694       15,034     21,630       18,430  
Total other expense, net     1,303       1,260     2,095       6,524  
Income before income taxes     18,391       13,774     19,535       11,906  
Provision for (benefit from) income taxes     (458 )     6,176     (4,223 )     5,348  
Net income   $ 18,849     $ 7,598   $ 23,758     $ 6,558  
Net income (loss) attributable to common stockholders   $ 18,849     $ 2,392   $ 23,758     $ (40,651 )
Earnings (loss) per share:                
Basic   $ 0.47     $ 0.22   $ 0.60     $ (3.74 )
Diluted   $ 0.43     $ 0.15   $ 0.54     $ (3.74 )
Weighted average shares outstanding:                
Basic     40,046       10,893     39,609       10,871  
Diluted     43,944       15,535     43,752       10,871  
                 

 

STOCK-BASED COMPENSATION EXPENSE
(Amounts in thousands)
(Unaudited)
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2017   2016   2017   2016
Platform operations   $ 496   $ 24   $ 725   $ 39
Sales and marketing     1,238     67     1,777     117
Technology and development     1,326     74     1,991     114
General and administrative     1,131     68     2,020     122
Total   $ 4,191   $ 233   $ 6,513   $ 392
                 

 

THE TRADE DESK, INC.
         
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
         
    As of   As of
    June 30,   December 31,
    2017   2016
ASSETS        
Current assets:        
Cash   $ 115,859   $ 133,400  
Accounts receivable, net     382,209     377,240  
Prepaid expenses and other current assets     17,250     5,763  
Total current assets     515,318     516,403  
Property and equipment, net     17,144     14,779  
Deferred taxes, net     1,778     1,778  
Other assets, non-current     7,018     4,636  
Total assets   $ 541,258   $ 537,596  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable   $ 290,399   $ 321,163  
Accrued expenses and other current liabilities     21,110     22,973  
Total current liabilities     311,509     344,136  
Debt, net     27,000     25,847  
Other liabilities, non-current     4,520     3,233  
Total liabilities     343,029     373,216  
         
Stockholders' equity:        
Preferred stock     -     -  
Common stock     -     -  
Additional paid‑in capital     189,289     179,198  
Retained earnings (accumulated deficit)     8,940     (14,818 )
Total stockholders' equity     198,229     164,380  
Total liabilities and stockholders' equity   $ 541,258   $ 537,596  
         

 

THE TRADE DESK, INC.
         
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
         
    Six Months Ended
    June 30,
    2017   2016
OPERATING ACTIVITIES:        
Net income   $ 23,758     $ 6,558  
Adjustments to reconcile net income to net cash provided by (used in)        
operating activities:        
Depreciation and amortization     3,189       1,653  
Stock‑based compensation     6,513       392  
Change in fair value of preferred stock warrant liabilities     -       4,805  
Bad debt expense     3,460       296  
Other     (968 )     315  
Changes in operating assets and liabilities:        
Accounts receivable     (6,853 )     (45,054 )
Prepaid expenses and other assets     (11,643 )     (2,112 )
Accounts payable     (28,527 )     55,383  
Accrued expenses and other liabilities     (900 )     410  
Net cash provided by (used in) operating activities     (11,971 )     22,646  
INVESTING ACTIVITIES:        
Purchases of property and equipment     (6,707 )     (2,036 )
Capitalized software development costs     (1,811 )     (1,092 )
Net cash used in investing activities     (8,518 )     (3,128 )
FINANCING ACTIVITIES:        
Proceeds from line of credit     -       60,847  
Repayment on line of credit     -       (20,000 )
Repayment of term debt     -       (30,000 )
Payment of debt financing costs     (120 )     (976 )
Payment of financing obligations     (321 )     (135 )
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     1,124       185  
Proceeds from employee stock purchase plan     2,294       -  
Taxes paid related to net settlement of restricted stock awards     (29 )     -  
Payment of stock repurchase costs     -       (155 )
Payment of Series C convertible preferred stock offering costs     -       (129 )
Payment of offering costs—initial public offering     -       (1,592 )
Net cash provided by financing activities     2,948       14,045  
Increase (decrease) in cash     (17,541 )     33,563  
Cash—Beginning of period     133,400       4,047  
Cash—End of period   $ 115,859     $ 37,610  
         

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   Six Months Ended
    June 30,   June 30,
    2017   2016   2017   2016
                 
Net income   $ 18,849     $ 7,598   $ 23,758     $ 6,558
Add back (deduct):                
Depreciation and amortization expense     1,696       834     3,189       1,653
Stock-based compensation expense     4,191       233     6,513       392
Interest expense     413       482     777       1,317
Secondary offering costs     583       -     1,523       -
Change in fair value of preferred stock warrant liabilities     -       422     -       4,805
Provision for (benefit from) income taxes     (458 )     6,176     (4,223 )     5,348
Adjusted EBITDA   $ 25,274     $ 15,745   $ 31,537     $ 20,073
                 

 

    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2017   2016   2017   2016
                 
GAAP net income (loss) attributable to common stockholders-diluted   $ 18,849     $ 2,392     $ 23,758     $ (40,651 )
Add back (deduct):                
Stock-based compensation expense     4,191       233       6,513       392  
Secondary offering costs     583       -       1,523       -  
Premium on repurchase of convertible preferred stock     -       -       -       47,209  
Income attributable to convertible preferred stock     -       5,206       -       -  
Change in fair value of preferred stock warrant liabilities     -       422       -       4,805  
Adjustment for income taxes     (602 )     (6 )     (926 )     (11 )
Non-GAAP net income attributable to common stockholders-diluted   $ 23,021     $ 8,247     $ 30,868     $ 11,744  
                 
                 
GAAP weighted average shares outstanding-diluted     43,944       15,535       43,752       10,871  
Add back:                
Convertible preferred stock     -       22,079       -       22,139  
Dilutive stock options to purchase common stock     -       -       -       4,667  
Dilutive stock warrants     -       448       -       511  
Non-GAAP weighted average shares outstanding-diluted     43,944       38,062       43,752       38,188  
                 
GAAP diluted EPS attributable to common stockholders   $ 0.43     $ 0.15     $ 0.54     $ (3.74 )
Non-GAAP diluted EPS attributable to common stockholders   $ 0.52     $ 0.22     $ 0.71     $ 0.31  
                 


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

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