Key Takeaways:
- Q2 revenue of $715 million, up 3 percent year over year, below internal expectations
- Q3 guidance of at least $650 million implies a year-over-year revenue decline
- Stock trades at 15.7 times earnings, a level not seen since 2017
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Trade Desk revenue grows 3% as Q3 guidance signals decline
The Trade Desk reported Q2 revenue of $715 million, up 3 percent year over year, below internal expectations and triggering a sharp stock decline.
"The macro conditions have made it more difficult for some of the world's largest brands to grow," CEO Jeff Green said on the earnings call.
Non-GAAP EPS fell to $0.34 from $0.41 a year earlier. Adjusted EBITDA was $241 million, a 34 percent margin. GAAP net income was $64 million, about 9 percent of revenue. The company guided Q3 revenue to at least $650 million, implying a year-over-year decline. Auto and consumer packaged goods, which represent about 25 percent of platform revenue, have been set back by tariffs and oil prices, Green said.
The stock now trades at 15.7 times earnings, the lowest since 2017. CEO Jeff Green purchased 6 million shares worth approximately $148 million during the quarter, while the company repurchased $78 million of its own stock, leaving $269 million in authorization.
Customer retention remained above 95 percent, a level maintained for over a decade. Joint business plans reached 217 clients, up 38 percent year over year, with revenue under those plans growing sixfold faster than overall company revenue. The majority of the top 100 accounts grew double digits year over year.
Connected TV and audio grew double digits in Q2. Video, including CTV, represented a low 50s percent share of the business. Audio represented about 7 percent of revenue and grew faster than any other channel for the fourth consecutive quarter. EMEA and APAC grew almost 30 percent year to date, while China grew over 100 percent. Advertisers outside the top 500 grew over 50 percent year over year year to date.
Non-GAAP operating expenses rose 12 percent year over year to $504 million, driven by investments in platform operations as the company transitions workloads from public cloud to owned data centers. The company holds approximately $1.5 billion in cash and short-term investments.
The company is preparing to launch Zuma, a platform usability upgrade, later this month. It is also ramping Audience Unlimited, a subscription-based data product. A recent campaign using Audience Unlimited reduced cost per unique household and data CPM by more than 25 percent. A General Mills Nature Valley campaign in the U.K. delivered a fivefold sales uplift and a twofold return on ad spend improvement. A new measurement framework is in alpha testing with major media and data partners. The company renewed its retail media partnership with Walmart and added Netflix to its Sellers and Publishers 500+ inventory marketplace.
The guidance cut signals management expects macro pressures to persist through at least Q3. Investors will watch the Zuma launch later this month and whether JBP-driven revenue growth can offset weakness in auto and CPG categories.
This article is for informational purposes only and does not constitute investment advice.
