The advertising technology company reported strong Q4 earnings at the end of last week, and the stock rallied ~17% on the result, although it pulled back ~7% overnight. This often plays out with TTD and other stocks that have a high degree of stock-based compensation for employees, the window to sell stock opens after they report results. Looking through this noise, the result itself was a very strong one and eased concerns about slowing advertising markets, while their outlook for Q1 suggests that momentum is being sustained.
- Quarterly revenue of $US606mn was up +23% YoY and a 3% beat to consensus, while they guided to revenue for Q1 of $US478m, around 6% ahead of expectations. They also announced a further $US647m worth of share buy-backs, meaning they have $US700m for stock repurchases.
Looking at the company page on the Market Matters website shows a well-loved stock, with 27 buys/strong buys, 5 holds & 2 sells. When a stock is so well ‘loved’, it does open itself up to selling on any sniff of soft news. Overnight saw Walmart announce a deal to buy smart tv maker Vizio as they continue their successful push into advertising. In a similar strategy to Amazon (through Prime) and others, Walmart is leveraging the 37m customers it serves daily into adjacent areas, in this case through Walmart Connect, which essentially brings together entertainment and retail promoting Walmart suppliers. A deal like this could have ramifications for TTD and shows how dynamic online advertising is; however, it’s hard to know what /if any, impact it will have so early on.
- When owning a company like TTD in an area that is so fast-moving (online advertising), there is certainly a large element of ‘backing the team’, and TTD has shown a consistent ability over a long period to be at the forefront in this space.
MM remains long and bullish TTD US
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