The Trade Desk delivered a weak 2Q result after the close and issued a disappointing outlook, sending shares down ~20% after hours. Revenue growth slowed to just 3%, while earnings and EBITDA both missed consensus.
Key results:
- Revenue of US$715 million, around 5% below the US$752 million expected.
- Adjusted EPS of US34c, below Bloomberg consensus of US40c.
- Adjusted EBITDA of US$241 million, around 8% below the US$261 million expected.
- Adjusted EBITDA margin of 34%, down as earnings fell 11% year-on-year.
The bigger concern was guidance. Third-quarter revenue is expected to be at least US$650 million, roughly 20% below consensus near US$808 million, while adjusted EBITDA guidance of US$160 million was less than half the US$343 million expected.CEO Geoff Green acknowledged the quarter fell short of its standards and is taking action to improve execution and upgrade the platform – we’ve heard this before.
However, the size of the guidance miss raises more serious questions around market-share losses, pricing and take-rate pressure, and the impact of AI on advertising across the open internet.
MM’s view: This was another material disappointment, and the weak outlook suggests the issues extend beyond timing. We exhibited too much patience with TTD, which is now gone. – the stock is down 78% over the past year. The only consolation is that it only has a small prevailing weight in the International Equities Portfolio, so the overall performance impact is minimal.
MM is neutral TTD ~$US17
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