The Trade Desk Reports First Quarter Financial Results

LOS ANGELES--()--The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its first quarter ended March 31, 2020.

“Despite the Covid-19 pandemic, our team delivered a strong March quarter. We delivered 33% year-over year revenue growth and strong EBITDA margins. We generated robust cash flow in the quarter and ended March with a strong cash position and balance sheet. This financial discipline allows us to continue to invest in our platform,” said Founder and CEO of The Trade Desk, Jeff Green. “This will be key as the world’s leading brands and agencies look to leverage advertising to gain share as we emerge from this current environment. While the timing is unpredictable right now, we can be certain that advertisers will increasingly value measurability in their campaigns, and that they’ll use data-driven strategies to drive precision and value across all channels. And nowhere will this be more apparent than the accelerated shift from linear to connected TV.”

First Quarter 2020 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters ended March 31, 2020 and 2019 ($ in millions, except per share amounts):

 

 

Three Months Ended

 

 

March 31,

 

 

2020

 

2019

GAAP Results

 

 

 

 

 

 

 

 

Revenue

 

$

160.7

 

 

$

121.0

 

Increase in revenue year over year

 

 

33

%

 

 

41

%

Net Income

 

$

24.1

 

 

$

10.2

 

Diluted EPS

 

$

0.50

 

 

$

0.21

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

39.0

 

 

$

24.7

 

Adjusted EBITDA Margin

 

 

24

%

 

 

20

%

Non-GAAP Net Income

 

$

43.4

 

 

$

23.1

 

Non-GAAP Diluted EPS

 

$

0.90

 

 

$

0.49

 

First 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. Specific channel highlights from Q1 include:
    • Total Mobile (in-app, video, and web) spend grew 38% from Q12019 to Q12020
    • Mobile Video spend grew 74% from Q12019 to Q12020
    • Mobile In-App spend grew 55% from Q12019 to Q12020
    • Connected TV spend grew 100% from Q12019 to Q12020
    • Audio spend grew 60% from Q12019 to Q12020
  • Strong Customer Retention:Customer retention remained over 95% during the quarter, as it has for the previous 5 years.
  • Expanding Partnerships in Asia:
    • The Trade Desk and TikTok, the leading destination for short-form mobile video, announced a new advertising partnership covering key Asia Pacific markets. The partnership will allow advertisers to directly access premium TikTok inventory across the Asia-Pacific region via The Trade Desk platform. TikTok is the first short-form video platform to integrate its ad offerings with The Trade Desk, making this a unique industry-leading development for brands in the region.
    • The Trade Desk and Samba TV, the leading provider of consumer cross screen television insights and analytics, expanded their US partnership to international markets beginning in Australia.
  • Revamped The Trade Desk “Edge” Academy learning platform:
    • The Trade Desk revamped its industry-leading digital advertising courseware and certification platform, and is making it available free of charge for the first time until the end of 2020. In addition, the learning platform will be open to all users, from advertising industry professionals to those looking to build the required skills to enter the field.
  • Industry Awards: The Trade Desk was recently ranked #7 for Best Workplaces™ Asia 2020 for the small/medium company category and was named a Best Workplaces™ in Greater China 2019 by Great Places to Work®. The Trade Desk won for the Best Demand Side Platform at the ClickZ Marketing Technology Awards 2019 and Best Demand-Side Technology in the 2019 AdExchanger Awards. The Trade Desk was also named Best Medium Workplace by Great Place to Work™ and Fortune for the third year in a row.

Financial Guidance:

As a result of the impact of the Covid-19 pandemic on economic activity and advertiser demand, The Trade Desk is not providing financial guidance for revenue or Adjusted EBITDA for the second quarter of 2020. In addition, the Company is withdrawing its outlook for gross spend, revenue and Adjusted EBITDA for the full year 2020.

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 income, net, and 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.

First Quarter Financial Results Webcast and Conference Call Details

  • When: May 7, 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: To access the call via telephone in the United States, please dial 844-407-9500. For callers outside the United States, please dial 1-862-298-0850. 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 the United States, please dial 877-481-4010 (replay code: 34433). Outside the United States, please dial 1-919-882-2331 (replay code: 34433). The audio replay will be available via telephone until May 14, 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

 

March 31,

 

2020

2019

Revenue

$

160,660

 

$

120,987

 

Operating expenses (1):

 

 

 

 

 

 

Platform operations

 

40,208

 

 

33,651

 

Sales and marketing

 

34,294

 

 

22,737

 

Technology and development

 

36,794

 

 

25,312

 

General and administrative

 

38,598

 

 

33,617

 

Total operating expenses

 

149,894

 

 

115,317

 

Income from operations

 

10,766

 

 

5,670

 

Total other expense, net

 

417

 

 

333

 

Income before income taxes

 

10,349

 

 

5,337

 

Benefit from income taxes

 

(13,708

)

 

(4,814

)

Net income

$

24,057

 

$

10,151

 

Earnings per share:

 

 

 

 

 

 

Basic

$

0.53

 

$

0.23

 

Diluted

$

0.50

 

$

0.21

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

45,501

 

 

43,906

 

Diluted

 

48,313

 

 

47,314

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

 

March 31,

 

2020

2019

Platform operations

$

1,462

 

$

1,056

 

Sales and marketing

 

5,314

 

 

3,227

 

Technology and development

 

8,590

 

 

4,936

 

General and administrative

 

7,599

 

 

6,650

 

Total

$

22,965

 

$

15,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE TRADE DESK, INC.

 

CONSOLIDATED BALANCE SHEETS

 

(Amounts in thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

March 31,
2020

 

December 31,
2019

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

325,211

 

 

$

130,876

 

Short-term investments, net

 

 

120,625

 

 

 

124,112

 

Accounts receivable, net

 

 

947,973

 

 

 

1,166,376

 

Prepaid expenses and other current assets

 

 

48,002

 

 

 

27,857

 

Total current assets

 

 

1,441,811

 

 

 

1,449,221

 

Property and equipment, net

 

 

78,877

 

 

 

64,012

 

Operating lease assets

 

 

200,242

 

 

 

173,449

 

Deferred income taxes

 

 

18,950

 

 

 

18,950

 

Other assets, non-current

 

 

27,324

 

 

 

23,129

 

Total assets

 

$

1,767,204

 

 

$

1,728,761

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

663,410

 

 

$

868,618

 

Accrued expenses and other current liabilities

 

 

48,437

 

 

 

47,178

 

Operating lease liabilities

 

 

22,527

 

 

 

14,577

 

Total current liabilities

 

 

734,374

 

 

 

930,373

 

Operating lease liabilities, non-current

 

 

204,688

 

 

 

174,873

 

Debt, net

 

 

143,000

 

 

 

 

Other liabilities, non-current

 

 

11,108

 

 

 

10,998

 

Total liabilities

 

 

1,093,170

 

 

 

1,116,244

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

Additional paid-in capital

 

 

417,769

 

 

 

380,079

 

Accumulated other comprehensive income

 

 

158

 

 

 

 

Retained earnings

 

 

256,107

 

 

 

232,438

 

Total stockholders' equity

 

 

674,034

 

 

 

612,517

 

Total liabilities and stockholders' equity

 

$

1,767,204

 

 

$

1,728,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2020

 

2019

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

24,057

 

 

$

10,151

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,477

 

 

 

4,456

 

Stock-based compensation

 

 

22,965

 

 

 

15,869

 

Allowance for credit losses on accounts receivable

 

 

1,310

 

 

 

224

 

Investment credit loss

 

 

275

 

 

 

 

Noncash lease expense

 

 

7,402

 

 

 

4,421

 

Other

 

 

3,209

 

 

 

379

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

210,552

 

 

 

127,232

 

Prepaid expenses and other assets

 

 

(15,791

)

 

 

(6,580

)

Accounts payable

 

 

(205,967

)

 

 

(138,886

)

Accrued expenses and other liabilities

 

 

892

 

 

 

(4,489

)

Operating lease liabilities

 

 

(2,673

)

 

 

(3,066

)

Net cash provided by operating activities

 

 

52,708

 

 

 

9,711

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(35,705

)

 

 

(73,950

)

Maturities of investments

 

 

39,180

 

 

 

 

Purchases of property and equipment

 

 

(18,310

)

 

 

(6,085

)

Capitalized software development costs

 

 

(965

)

 

 

(1,417

)

Net cash used in investing activities

 

 

(15,800

)

 

 

(81,452

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from line of credit

 

 

143,000

 

 

 

 

Payment of debt financing costs

 

 

 

 

 

(6

)

Proceeds from exercise of stock options

 

 

19,320

 

 

 

9,502

 

Taxes paid related to net settlement of restricted stock awards

 

 

(4,893

)

 

 

(1,146

)

Net cash provided by financing activities

 

 

157,427

 

 

 

8,350

 

Increase (decrease) in cash and cash equivalents

 

 

194,335

 

 

 

(63,391

)

Cash and cash equivalents—Beginning of period

 

 

130,876

 

 

 

207,232

 

Cash and cash equivalents—End of period

 

$

325,211

 

 

$

143,841

 

 

 

 

 

 

 

 

 

 

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

 

March 31,

 

2020

2019

 

 

 

Net income

$

24,057

 

$

10,151

 

Add back:

 

 

 

 

 

 

Depreciation and amortization

 

6,477

 

 

4,456

 

Stock-based compensation

 

22,965

 

 

15,869

 

Interest income, net

 

(1,092

)

 

(997

)

Credit loss expense on available-for-sale securities

 

275

 

 

 

Benefit from income taxes

 

(13,708

)

 

(4,814

)

Adjusted EBITDA

$

38,974

 

$

24,665

 

 

 

 

 

 

 

 

 

Three Months Ended

 

March 31,

 

2020

2019

GAAP net income

$

24,057

 

$

10,151

 

Add back (deduct):

 

 

 

 

 

 

Stock-based compensation expense

 

22,965

 

 

15,869

 

Adjustment for income taxes

 

(3,653

)

 

(2,917

)

Non-GAAP net income

$

43,369

 

$

23,103

 

 

 

 

 

 

 

 

GAAP diluted EPS

$

0.50

 

$

0.21

 

Non-GAAP diluted EPS

$

0.90

 

$

0.49

 

 

 

 

 

 

 

 

Weighted average shares outstanding—diluted

 

48,313

 

 

47,314

 

 

 

 

 

 

 

 

 

Contacts

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

Contacts

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