A very volatile week for a traditionally very volatile stock. The advertising technology company with a market capitalisation of $US33bn last week reported a 25% year-over-year revenue increase to $493m in Q3, putting them on a YTD run rate of $US1.34bn, up 23% YoY. Despite these very strong earnings numbers, which were ahead of expectations, shares fell ~16% after the result. The issue stemmed from Q4 guidance, the company saying they’ll do revenue of at least $580m while the market was at $610m. If they meet their lower guidance, revenue in FY23 will be up 22% on FY22, but on 52x, it is clearly an expensive stock, and the market has little tolerance for anything other than meets or beats.
The softer guidance though can be explained, with actors and autoworkers striking which has tempered demand from advertisers in these sectors, but these are short-term issues that may well resolve themselves before quarter end. The CEO Jeff Green, articulated why we continue to back TTD over the medium term, and remain comfortable looking through these short-term blips. “With the generational shift to [connected TV], the growing opportunity in shopper marketing, our leadership in identity, and our most important product release ever with Kokai, we are better positioned than ever to help advertisers leverage data to drive growth and differentiate their brands.”
- We remain big believers in the TTD business model and view the current weakness as a buying opportunity.
MM remains long & bullish TTD
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