LOS ANGELES--(BUSINESS WIRE)--Aug. 6, 2020-- The Trade Desk, Inc. (NASDAQ: TTD), a global technology company that empowers buyers of advertising, today announced financial results for its second quarter ended June 30, 2020.

“While the advertising industry hit the pause button early in the second quarter due to uncertainty around the COVID-19 pandemic, we saw substantial improvement in ad spend as the quarter progressed. Indeed, the month of June ended strongly with ad spend growth turning positive on a year-over-year basis. This improvement comes as marketers recognize the role that data-driven advertising plays in driving business growth as markets start to reopen,” said Jeff Green, Co-Founder and CEO, The Trade Desk. “In this environment, advertisers value the agility and flexibility that our platform provides, along with the ability to measure the ROI of every advertising dollar. Nowhere is this more apparent than television, where the accelerated consumer shift to streaming services and the greater availability of premium inventory, allows advertisers to apply data to their massive TV campaigns for the first time.”

Second Quarter 2020 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters ended June 30, 2020 and 2019 ($ in millions, except per share amounts):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

GAAP Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

139.4

 

 

$

159.9

 

 

$

300.0

 

 

$

280.9

 

Increase (decrease) in

revenue year over year

 

 

(13

)%

 

 

42

%

 

 

7

%

 

 

42

%

Net Income

 

$

25.1

 

 

$

27.8

 

 

$

49.2

 

 

$

38.0

 

Diluted EPS

 

$

0.52

 

 

$

0.58

 

 

$

1.01

 

 

$

0.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

14.6

 

 

$

58.0

 

 

$

53.6

 

 

$

82.6

 

Adjusted EBITDA Margin

 

 

10

%

 

 

36

%

 

 

18

%

 

 

29

%

Non-GAAP Net Income

 

$

44.8

 

 

$

45.6

 

 

$

88.2

 

 

$

68.7

 

Non-GAAP Diluted EPS

 

$

0.92

 

 

$

0.95

 

 

$

1.82

 

 

$

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter and Recent Business Highlights Include:

  • Continued Omnichannel Spend Growth: Omnichannel solutions remain a strategic focus for The Trade Desk as the industry continues shifting toward transparency and programmatic buying. Channel highlights from Q2 include:
    • Connected TV spend grew about 40% from Q2 2019 to Q2 2020
    • Mobile Video spend grew 15% from Q2 2019 to Q2 2020
    • Audio spend grew about 20% from Q2 2019 to Q2 2020
  • Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for the previous 5 years.
  • Expanding Partnerships:
    • The Trade Desk and FreeWheel, a Comcast Company expanded its partnership in connected TV. The Trade Desk now can access FreeWheel’s unified decisioning capability that enables buyers and sellers to seamlessly transact across both direct sold and programmatic advertising.
  • Industry Awards: The Trade Desk was named a 2020 Best Medium Workplace™ in the U.K. and a 2020 Best Workplace in Hong Kong™ by Great Places to Work®. The Trade Desk recently won for the Best Overall Technology for Programmatic Trading at The Drum Digital Advertising Awards (US) and was a Gartner Peer Insights 2020 Customers’ Choice for Ad Tech. The Trade Desk was also named a Best Workplace in New York™ by Great Place to Work™ and Fortune for the third year in a row.

Impact of COVID-19 on our Outlook:

Our business has been impacted by the COVID-19 pandemic that has significantly impacted advertiser demand. Like many companies that are ad-funded, we are facing a period of higher uncertainty in our business outlook. We expect our business performance could be impacted by issues beyond our control, such as changing economic conditions or shelter-in-place orders that may or may not occur. Assuming that the economy continues to recover and we do not have any major COVID-19 related setbacks that may cause economic conditions to deteriorate, we estimate revenue growth in Q3 to increase 8 to 10 percent on a year-over-year basis. Under this assumption, we estimate adjusted EBITDA to be at least $30 million in Q3.

Third Quarter 2020 outlook summary:

  • Revenue range between $177 million and $181 million
  • Adjusted EBITDA of at least $30 million

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 Income of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before depreciation and amortization, stock-based compensation, interest expense (income), net, credit loss expense on available-for-sale securities and provision for (benefit from) income taxes. 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 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 Income. 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 Financial Results Webcast and Conference Call Details

  • When: August 6, 2020 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 with passcode: To access the call via telephone in the United States, please dial 866-342-8588. For callers outside the United States, please dial 1-203-518-9865. Participants should use the passcode “44571” to access the 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 the United States, please dial 877-481-4010 (replay code: 36377). Outside the United States, please dial 1-919-882-2331 (replay code: 36377). The audio replay will be available via telephone until August 13, 2020.

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 and the impact of COVID-19 on the Company and its customers and partners, 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 INCOME

 

(Amounts in thousands, except per share amounts)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

139,355

 

 

$

159,924

 

 

$

300,015

 

 

$

280,911

 

Operating expenses (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Platform operations

 

 

42,133

 

 

 

35,330

 

 

 

82,341

 

 

 

68,981

 

Sales and marketing

 

 

37,071

 

 

 

31,072

 

 

 

71,365

 

 

 

53,809

 

Technology and development

 

 

40,058

 

 

 

29,452

 

 

 

76,852

 

 

 

54,764

 

General and administrative

 

 

35,865

 

 

 

32,121

 

 

 

74,463

 

 

 

65,738

 

Total operating expenses

 

 

155,127

 

 

 

127,975

 

 

 

305,021

 

 

 

243,292

 

(Loss) income from operations

 

 

(15,772

)

 

 

31,949

 

 

 

(5,006

)

 

 

37,619

 

Total other expense (income), net

 

 

194

 

 

 

(1,420

)

 

 

611

 

 

 

(1,087

)

(Loss) income before income taxes

 

 

(15,966

)

 

 

33,369

 

 

 

(5,617

)

 

 

38,706

 

Provision for (benefit from) income taxes

 

 

(41,077

)

 

 

5,569

 

 

 

(54,785

)

 

 

755

 

Net income

 

$

25,111

 

 

$

27,800

 

 

$

49,168

 

 

$

37,951

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

 

$

0.63

 

 

$

1.07

 

 

$

0.86

 

Diluted

 

$

0.52

 

 

$

0.58

 

 

$

1.01

 

 

$

0.80

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

46,136

 

 

 

44,404

 

 

 

45,818

 

 

 

44,157

 

Diluted

 

 

48,654

 

 

 

47,828

 

 

 

48,484

 

 

 

47,573

 

_______________________

 

 

 

 

 

 

 

 

 

 

 

 

 

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

STOCK-BASED COMPENSATION EXPENSE

 

(Amounts in thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Platform operations

 

$

2,358

 

 

$

1,331

 

 

$

3,820

 

 

$

2,387

 

Sales and marketing

 

 

6,319

 

 

 

4,831

 

 

 

11,633

 

 

 

8,058

 

Technology and development

 

 

7,844

 

 

 

6,497

 

 

 

16,434

 

 

 

11,433

 

General and administrative

 

 

7,413

 

 

 

8,398

 

 

 

15,012

 

 

 

15,048

 

Total

 

$

23,934

 

 

$

21,057

 

 

$

46,899

 

 

$

36,926

 

THE TRADE DESK, INC.

 

CONSOLIDATED BALANCE SHEETS

 

(Amounts in thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

As of

 

 

 

June 30,

2020

 

 

December 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

426,344

 

 

$

130,876

 

Short-term investments, net

 

 

128,974

 

 

 

124,112

 

Accounts receivable, net

 

 

869,064

 

 

 

1,166,376

 

Prepaid expenses and other current assets

 

 

67,437

 

 

 

27,857

 

Total current assets

 

 

1,491,819

 

 

 

1,449,221

 

Property and equipment, net

 

 

96,075

 

 

 

64,012

 

Operating lease assets

 

 

203,914

 

 

 

173,449

 

Deferred income taxes

 

 

30,648

 

 

 

18,950

 

Other assets, non-current

 

 

26,515

 

 

 

23,129

 

Total assets

 

$

1,848,971

 

 

$

1,728,761

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

656,168

 

 

$

868,618

 

Accrued expenses and other current liabilities

 

 

43,147

 

 

 

47,178

 

Operating lease liabilities

 

 

31,385

 

 

 

14,577

 

Total current liabilities

 

 

730,700

 

 

 

930,373

 

Operating lease liabilities, non-current

 

 

205,556

 

 

 

174,873

 

Debt, net

 

 

142,000

 

 

 

 

Other liabilities, non-current

 

 

12,364

 

 

 

10,998

 

Total liabilities

 

 

1,090,620

 

 

 

1,116,244

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

Additional paid-in capital

 

 

476,859

 

 

 

380,079

 

Accumulated other comprehensive income

 

 

274

 

 

 

 

Retained earnings

 

 

281,218

 

 

 

232,438

 

Total stockholders' equity

 

 

758,351

 

 

 

612,517

 

Total liabilities and stockholders' equity

 

$

1,848,971

 

 

$

1,728,761

 

THE TRADE DESK, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Amounts in thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

49,168

 

 

$

37,951

 

Adjustments to reconcile net income to net cash provided by

operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

13,260

 

 

 

9,277

 

Stock-based compensation

 

 

46,899

 

 

 

36,926

 

Allowance for credit losses on accounts receivable

 

 

2,384

 

 

 

843

 

Investment credit loss

 

 

13

 

 

 

 

Noncash lease expense

 

 

15,825

 

 

 

8,935

 

Deferred income taxes

 

 

(11,697

)

 

 

 

Other

 

 

(2,385

)

 

 

(2,056

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

293,577

 

 

 

4,987

 

Prepaid expenses and other assets

 

 

(31,368

)

 

 

(11,960

)

Accounts payable

 

 

(214,396

)

 

 

(28,952

)

Accrued expenses and other liabilities

 

 

(7,535

)

 

 

(6,312

)

Operating lease liabilities

 

 

(4,735

)

 

 

(5,848

)

Net cash provided by operating activities

 

 

149,010

 

 

 

43,791

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(89,689

)

 

 

(122,432

)

Maturities of investments

 

 

85,183

 

 

 

22,424

 

Purchases of property and equipment

 

 

(37,720

)

 

 

(17,002

)

Capitalized software development costs

 

 

(2,317

)

 

 

(2,420

)

Net cash used in investing activities

 

 

(44,543

)

 

 

(119,430

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from line of credit

 

 

143,000

 

 

 

 

Repayment on line of credit

 

 

(1,000

)

 

 

 

Payment of debt financing costs

 

 

 

 

 

(7

)

Proceeds from exercise of stock options

 

 

41,695

 

 

 

16,975

 

Proceeds from employee stock purchase plan

 

 

15,035

 

 

 

8,648

 

Taxes paid related to net settlement of restricted

stock awards

 

 

(7,729

)

 

 

(3,634

)

Net cash provided by financing activities

 

 

191,001

 

 

 

21,982

 

Increase (decrease) in cash and cash equivalents

 

 

295,468

 

 

 

(53,657

)

Cash and cash equivalents—Beginning of period

 

 

130,876

 

 

 

207,232

 

Cash and cash equivalents—End of period

 

$

426,344

 

 

$

153,575

 

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

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

Net income

 

$

25,111

 

 

$

27,800

 

 

$

49,168

 

 

$

37,951

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,783

 

 

 

4,821

 

 

 

13,260

 

 

 

9,277

 

Stock-based compensation

 

 

23,934

 

 

 

21,057

 

 

 

46,899

 

 

 

36,926

 

Interest expense (income), net

 

 

104

 

 

 

(1,286

)

 

 

(988

)

 

 

(2,283

)

Credit loss expense on available-for-sale securities

 

 

(262

)

 

 

 

 

 

13

 

 

 

 

Provision for (benefit from) income taxes

 

 

(41,077

)

 

 

5,569

 

 

 

(54,785

)

 

 

755

 

Adjusted EBITDA

 

$

14,593

 

 

$

57,961

 

 

$

53,567

 

 

$

82,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

GAAP net income

 

$

25,111

 

 

$

27,800

 

 

$

49,168

 

 

$

37,951

 

Add back (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

23,934

 

 

 

21,057

 

 

 

46,899

 

 

 

36,926

 

Adjustment for income taxes

 

 

(4,248

)

 

 

(3,291

)

 

 

(7,901

)

 

 

(6,208

)

Non-GAAP net income

 

$

44,797

 

 

$

45,566

 

 

$

88,166

 

 

$

68,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

$

0.52

 

 

$

0.58

 

 

$

1.01

 

 

$

0.80

 

Non-GAAP diluted EPS

 

$

0.92

 

 

$

0.95

 

 

$

1.82

 

 

$

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares

outstanding—diluted

 

 

48,654

 

 

 

47,828

 

 

 

48,484

 

 

 

47,573

 

 

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

Media
Ian Colley
Vice President Public Relations, The Trade Desk
ian.colley@thetradedesk.com
914-434-3043

Source: The Trade Desk, Inc.