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The Trade Desk Reports Second Quarter 2022 Financial Results

08/09/2022

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, 2022.

“We delivered outstanding performance in the second quarter, growing 35% versus a year ago, significantly outpacing worldwide programmatic advertising growth. More of the world’s leading brands are signing major new or expanded long-term agreements with The Trade Desk, which speaks to the innovation and value that our platform provides compared to the limitations of walled gardens,” said Jeff Green, Co-Founder and CEO of The Trade Desk. “This trend also gives us confidence that we will continue to gain market share in any market environment. At the same time, we continue to invest to drive future growth in key areas such as identity, Connected TV, retail media and supply chain optimization. In each of these areas, we signed major new partnerships with some of the world’s leading publishers, broadcasters, retailers and technology partners in the second quarter.”

Second Quarter 2022 Financial Highlights:

The following table summarizes our consolidated financial results for the three and six months ended June 30, 2022 and 2021 ($ in millions, except per share amounts):

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

GAAP Results

 

 

 

 

 

 

 

Revenue

$

377

 

 

$

280

 

 

$

692

 

 

$

500

 

Increase in revenue year over year

 

35

%

 

 

101

%

 

 

39

%

 

 

67

%

Net income (loss)

$

(19

)

 

$

48

 

 

$

(34

)

 

$

70

 

GAAP diluted earnings (loss) per share

$

(0.04

)

 

$

0.10

 

 

$

(0.07

)

 

$

0.14

 

 

 

 

 

 

 

 

 

Non-GAAP Results

 

 

 

 

 

 

 

Adjusted EBITDA

$

139

 

 

$

118

 

 

$

260

 

 

$

188

 

Adjusted EBITDA margin

 

37

%

 

 

42

%

 

 

38

%

 

 

38

%

Non-GAAP net income

$

99

 

 

$

88

 

 

$

203

 

 

$

158

 

Non-GAAP diluted earnings per share

$

0.20

 

 

$

0.18

 

 

$

0.41

 

 

$

0.32

 

Second Quarter and Recent Business Highlights:

  • Strong Customer Retention: Customer retention remained over 95% during the second quarter, as it has for the past eight consecutive years.
  • Continued Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0 (UID2), an industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. UID2 is an upgrade and alternative to third-party cookies. Recent partnerships and pledges of integration and support include:
    • Integration with Disney to power interoperability between Disney’s industry-leading Audience Graph and the open-source addressability framework of UID2. Equips advertisers with the ability to leverage UID2 when making programmatic buys on Disney properties, including ESPN, ABC, Hulu, FX, and National Geographic.
    • Amazon Web Services (AWS) announced it will support UID2 on its platform. The move will provide AWS customers with a turnkey identity solution bolstering the scalability and accessibility of UID2.
    • Integration with Vox Media (owner of SB Nation, Curbed, Eater, Polygon, New York Magazine, Thrillist and The Verge) and its first-party data solution as they debut their supply-side platform, Concert SSP.
  • Expanded Partnerships:
    • In June, The Trade Desk announced a partnership with Albertsons Media Collective, the retail media arm for Albertsons Companies, to bring verified-buyer audience and measurement solutions to The Trade Desk platform, helping advertisers understand the connection between ad campaigns and customer sales.
  • Industry Recognition:
    • 2022 Customers’ Choice for Ad Tech on Gartner® Peer Insights™
    • 2022 BIG Innovation Award for Technology Product (Solimar)
    • 2022 Top Women in Media & Ad Tech
    • Adweek Readers’ Choice: Best of Tech awards for both Demand Side Platform and Innovator of the Year categories.
    • Best Overall Ad Tech Solution in the Martech Breakthrough Awards
    • Best Overall Technology for Programmatic Trading in the Drum Digital Advertising Awards US

Financial Guidance:

Third Quarter 2022 outlook summary:

  • Revenue at least $385 million
  • Adjusted EBITDA of approximately $140 million

We have not provided an outlook for GAAP Net Income or reconciliation of Adjusted EBITDA guidance to Net Income, the closest corresponding U.S. GAAP measure, because Net Income outlook 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 the non-GAAP financial measures of Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Diluted EPS that supplement the Consolidated Statements of Operations of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before interest expense (income), net; provision for (benefit from) income taxes; depreciation and amortization; and stock-based compensation. Non-GAAP Net Income excludes charges and the related income tax effects for stock-based compensation. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 25% to 30% have been used in the computation of non-GAAP Net Income and non-GAAP Diluted EPS. 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 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 2022 Financial Results Webcast and Conference Call Details

  • When: August 9, 2022 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 877-545-0320. For callers outside the United States, please dial 1-973-528-0002. Participants should reference the conference call ID code “432394” 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 the United States, please dial 877-481-4010 (replay code: 46182). Outside the United States, please dial 1-919-882-2331 (replay code: 46182). The audio replay will be available via telephone until August 16, 2022.

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/investor-overview), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), and Facebook page (https://www.facebook.com/TheTradeDesk/), and Jeff Green’s Twitter feed (@jefftgreen) and LinkedIn profile (https://www.linkedin.com/in/jefftgreen/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to The Trade Desk’s press releases, SEC filings, public conference calls and webcasts.

About The Trade Desk

The Trade Desk™ is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns across ad formats and devices. 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 Pacific. To learn more, visit thetradedesk.com or follow us on Facebook, Twitter, LinkedIn and YouTube.

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 relatively 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

J une 30,

 

Six Months Ended

J une 30,

 

2022

 

2021

 

2022

 

2021

Revenue

$

376,962

 

 

$

279,967

 

 

$

692,285

 

 

$

499,778

 

Operating expenses (1):

 

 

 

 

 

 

 

Platform operations

 

67,490

 

 

 

50,809

 

 

 

131,380

 

 

 

101,309

 

Sales and marketing

 

89,420

 

 

 

61,755

 

 

 

160,108

 

 

 

117,519

 

Technology and development

 

83,483

 

 

 

53,536

 

 

 

155,482

 

 

 

107,454

 

General and administrative

 

134,826

 

 

 

51,919

 

 

 

260,625

 

 

 

103,764

 

Total operating expenses

 

375,219

 

 

 

218,019

 

 

 

707,595

 

 

 

430,046

 

Income (loss) from operations

 

1,743

 

 

 

61,948

 

 

 

(15,310

)

 

 

69,732

 

Total other expense (income), net

 

(339

)

 

 

398

 

 

 

(58

)

 

 

90

 

Income (loss) before income taxes

 

2,082

 

 

 

61,550

 

 

 

(15,252

)

 

 

69,642

 

Provision for (benefit from) income taxes

 

21,155

 

 

 

13,853

 

 

 

18,419

 

 

 

(697

)

Net income (loss)

$

(19,073

)

 

$

47,697

 

 

$

(33,671

)

 

$

70,339

 

Earnings (loss) per share:

 

 

 

 

 

 

 

Basic

$

(0.04

)

 

$

0.10

 

 

$

(0.07

)

 

$

0.15

 

Diluted

$

(0.04

)

 

$

0.10

 

 

$

(0.07

)

 

$

0.14

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

486,310

 

 

 

475,512

 

 

 

485,256

 

 

 

474,172

 

Diluted

 

486,310

 

 

 

496,987

 

 

 

485,256

 

 

 

497,449

 

___________________________

(1) Includes stock-based compensation expense as follows:

 

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

 

 

Three Months Ended

J une 30,

 

Six Months Ended

J une 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Platform operations

$

4,787

 

 

$

4,091

 

$

10,737

 

 

$

9,106

 

Sales and marketing

 

17,332

 

 

 

14,579

 

 

 

33,857

 

 

 

28,263

 

Technology and development

 

22,224

 

 

 

13,974

 

 

 

44,617

 

 

 

30,068

 

General and administrative (1)

 

80,870

 

 

 

12,553

 

 

 

160,897

 

 

 

30,114

 

Total

$

125,213

 

 

$

45,197

 

 

$

250,108

 

 

$

97,551

 

___________________________

(1) Includes stock-based compensation expense related to a long-term CEO performance grant of $66 million and $131 million for the three and six months ended June 30, 2022, respectively.

THE TRADE DESK, INC.

 

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

As of June

30,

2 022

 

As of

December 31,

2 021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

932,683

 

$

754,154

Short-term investments, net

 

280,459

 

 

 

204,625

 

Accounts receivable, net

 

1,902,504

 

 

 

2,020,720

 

Prepaid expenses and other current assets

 

80,531

 

 

 

112,150

 

Total current assets

 

3,196,177

 

 

 

3,091,649

 

Property and equipment, net

 

139,214

 

 

 

135,856

 

Operating lease assets

 

225,380

 

 

 

234,091

 

Deferred income taxes

 

66,689

 

 

 

68,244

 

Other assets, non-current

 

45,286

 

 

 

47,500

 

Total assets

$

3,672,746

 

 

$

3,577,340

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

1,537,448

 

 

$

1,655,684

 

Accrued expenses and other current liabilities

 

79,339

 

 

 

101,472

 

Operating lease liabilities

 

48,287

 

 

 

46,149

 

Total current liabilities

 

1,665,074

 

 

 

1,803,305

 

Operating lease liabilities, non-current

 

219,341

 

 

 

238,449

 

Other liabilities, non-current

 

8,500

 

 

 

8,280

 

Total liabilities

 

1,892,915

 

 

 

2,050,034

 

 

 

 

 

Stockholders' equity:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

 

 

 

 

Additional paid-in capital

 

1,201,373

 

 

 

915,177

 

Retained earnings

 

578,458

 

 

 

612,129

 

Total stockholders' equity

 

1,779,831

 

 

 

1,527,306

 

Total liabilities and stockholders' equity

$

3,672,746

 

 

$

3,577,340

 

THE TRADE DESK, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

2022

 

2021

OPERATING ACTIVITIES:

 

 

 

Net income (loss)

$

(33,671

)

 

$

70,339

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

24,624

 

 

 

21,017

 

Stock-based compensation

 

250,108

 

 

 

97,551

 

Allowance for credit losses on accounts receivable

 

2,078

 

 

 

239

 

Noncash lease expense

 

21,343

 

 

 

19,553

 

Deferred income taxes

 

1,555

 

 

 

5,044

 

Other

 

6,630

 

 

 

9,065

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

112,345

 

 

 

49,802

 

Prepaid expenses and other current and non-current assets

 

29,018

 

 

 

(6,812

)

Accounts payable

 

(129,853

)

 

 

(133,510

)

Accrued expenses and other current and non-current liabilities

 

(22,190

)

 

 

(22,852

)

Operating lease liabilities

 

(24,029

)

 

 

(23,995

)

Net cash provided by operating activities

 

237,958

 

 

 

85,441

 

INVESTING ACTIVITIES:

 

 

 

Purchases of investments

 

(233,877

)

 

 

(164,031

)

Sales of investments

 

1,977

 

 

 

4,539

 

Maturities of investments

 

154,092

 

 

 

116,769

 

Purchases of property and equipment

 

(12,541

)

 

 

(18,499

)

Capitalized software development costs

 

(3,226

)

 

 

(2,675

)

Net cash used in investing activities

 

(93,575

)

 

 

(63,897

)

FINANCING ACTIVITIES:

 

 

 

Payment of debt financing costs

 

 

 

 

(1,852

)

Proceeds from exercise of stock options

 

31,795

 

 

 

26,339

 

Proceeds from employee stock purchase plan

 

25,547

 

 

 

22,758

 

Taxes paid related to net settlement of restricted stock awards

 

(23,196

)

 

 

(29,235

)

Net cash provided by financing activities

 

34,146

 

 

 

18,010

 

Increase in cash and cash equivalents

 

178,529

 

 

 

39,554

 

Cash and cash equivalents—Beginning of period

 

754,154

 

 

 

437,353

 

Cash and cash equivalents—End of period

$

932,683

 

 

$

476,907

 

Non-GAAP Financial Metrics

(Amounts in thousands, except per share amounts)

 

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

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Net income (loss)

$

(19,073

)

 

$

47,697

 

 

$

(33,671

)

 

$

70,339

 

Add back:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

12,274

 

 

 

11,006

 

 

 

24,624

 

 

 

21,017

 

Stock-based compensation expense

 

125,213

 

 

 

45,197

 

 

 

250,108

 

 

 

97,551

 

Interest expense (income), net

 

(656

)

 

 

194

 

 

 

420

 

 

 

239

 

Provision for (benefit from) income taxes

 

21,155

 

 

 

13,853

 

 

 

18,419

 

 

 

(697

)

Adjusted EBITDA

$

138,913

 

 

$

117,947

 

 

$

259,900

 

 

$

188,449

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

GAAP net income (loss)

$

(19,073

)

 

$

47,697

 

 

$

(33,671

)

 

$

70,339

 

Add back (deduct):

 

 

 

 

 

 

 

Stock-based compensation expense

 

125,213

 

 

 

45,197

 

 

 

250,108

 

 

 

97,551

 

Adjustment for income taxes

 

(7,500

)

 

 

(4,682

)

 

 

(13,135

)

 

 

(9,689

)

Non-GAAP net income

$

98,640

 

 

$

88,212

 

 

$

203,302

 

 

$

158,201

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share

$

(0.04

)

 

$

0.10

 

 

$

(0.07

)

 

$

0.14

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares outstanding—diluted

 

486,310

 

 

 

496,987

 

 

 

485,256

 

 

 

497,449

 

 

 

 

 

 

 

 

 

Non-GAAP diluted earnings per share

$

0.20

 

 

$

0.18

 

 

$

0.41

 

 

$

0.32

 

 

 

 

 

 

 

 

 

Non-GAAP weighted-average shares used in computing Non-GAAP earnings per share, diluted (1)

 

499,155

 

 

 

496,987

 

 

 

499,477

 

 

 

497,449

 

_________________________

(1) Includes an additional 12.8 million and 14.2 million of dilutive securities for the three and six months ended June 30, 2022, respectively, which are not included in GAAP diluted weighted-average shares outstanding due to the Company's net loss position for the three and six months ended June 30, 2022.

 

Investors
Jake Graves
Manager, Investor Relations
The Trade Desk
ir@thetradedesk.com
312-620-0806

Media
Melinda Zurich
VP, Communications
The Trade Desk
melinda.zurich@thetradedesk.com
201-320-9398

Source: The Trade Desk, Inc.

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