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The Trade Desk (TTD) Q4 Earnings Beat, Revenues Rise Y/Y

Zacks Equity Research

The Trade Desk TTD reported fourth-quarter 2019 adjusted earnings of $1.49 cents per share, which beat the Zacks Consensus Estimate by 25.2% and increased 36.7% from the year-ago quarter.

Revenues of $215.9 million beat the Zacks Consensus Estimate by 1.2% and increased 34.5% year over year, driven by continued strength in programmatic ad buying.

Moreover, the company witnessed strong growth in its audio, video, Connected TV (CTV) and mobile in-app channels, with 89% of the spend coming from existing customers.

The Trade Desk Inc. Price, Consensus and EPS Surprise

The Trade Desk Inc. Price, Consensus and EPS Surprise
The Trade Desk Inc. Price, Consensus and EPS Surprise

The Trade Desk Inc. price-consensus-eps-surprise-chart | The Trade Desk Inc. Quote

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Quarterly Details

The company’s video channel spend increased 54% sequentially in the fourth quarter, while CTV spend witnessed sequential growth of 100% during the quarter. Customer retention remained over 95% during the quarter, as it has for the previous 24 quarters.

Total operating costs increased 46% year over year to $163.3 million.

Platform operations expense or effectively cost of revenues increased 34% to $47.3 million, driven primarily by the increase in the company’s platform fees or QPS. Moreover, platform operations expense is decreasing year over year as a percentage of revenues.

Technology and development expenses grew 36% to $32.8 million, driven by increased investments in the company’s platform, while sales and marketing expenses grew 59% to $42.9 million, driven by increased spending on account management and business development.

Further, general and administrative (G&A) expenses increased 61% year over year to $40.3 million during the quarter. However, the company expects G&A to improve in 2020 as it further scales its business.

Adjusted EBITDA was $84.5 million in the fourth quarter, up 24.6% year over year, while adjusted EBITDA margin contracted 310 basis points (bps) year over year to 38.7%.

Balance Sheet & Cash Flow

Cash, cash equivalents and short-term investments were $255 million as of Dec 31, 2019, compared with $296.5 million as Sep 30, 2019.

Cash flow from operating activities as of Dec 31, 2019 was $60.2 million. Free cash flow during the quarter was $19 million.

Guidance

For first-quarter 2020, The Trade Desk expects revenues of $169 million. The Zacks Consensus Estimate for revenues is pegged at $159.6 million, indicating growth of 31.9% from the year-ago quarter.

Adjusted EBITDA is expected to be $35 million.

For full-year 2020, the company expects revenues of $863 million. The consensus mark for full- year revenues is pegged at $853.7 million, indicating year-over-year growth of 29.7%.

Total gross spend on the company’s platform is expected to be at least $4.24 billion due to increased focus on expanding market share and deepening engagement and strategic importance with customers.

For full-year 2020, adjusted EBITDA is expected to be $259 million or 30% of revenues.

Zacks Rank & Stocks to Consider

The Trade Desk currently carries a Zacks Rank #3 (Hold).

Dropbox, Inc. DBX, Alteryx, Inc. AYX and ManTech International Corporation MANT are some better-ranked stocks in the broader computer and technology sector. Dropbox and ManTech sport a Zacks Rank #1 (Strong Buy), while Alteryx carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Dropbox, Alteryx and ManTech is currently pegged at 20.2%, 50.6% and 8% respectively.

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ManTech International Corporation (MANT) : Free Stock Analysis Report
 
The Trade Desk Inc. (TTD) : Free Stock Analysis Report
 
Alteryx, Inc. (AYX) : Free Stock Analysis Report
 
Dropbox, Inc. (DBX) : Free Stock Analysis Report
 
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