Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Trade Desk Inc (TTD, Financial) achieved a record-breaking year in 2024 with total spend on their platform exceeding $12 billion and revenue surpassing $2.4 billion, marking a 26% year-over-year growth.
- The company generated over $1 billion in adjusted EBITDA and delivered more than $600 million in free cash flow, highlighting the strength of their platform.
- The Trade Desk Inc (TTD) has made significant structural changes, including the largest reorganization in company history, to improve clarity in roles and responsibilities and streamline client-facing teams.
- The company is focusing on expanding brand direct relationships, which are growing 50% faster than the rest of their business, and increasing resource allocation on brands.
- The Trade Desk Inc (TTD) is investing heavily in AI to enhance targeting, optimization, forecasting, and identity measurement, positioning them for future growth.
Negative Points
- For the first time in 33 quarters, The Trade Desk Inc (TTD) fell short of their own expectations, missing their guidance due to a series of small execution missteps.
- The company experienced slower than anticipated rollout of their Kokai platform, impacting short-term performance.
- There were challenges in the fourth quarter due to a polarized political environment and lower GDP, which affected advertising budgets.
- The Trade Desk Inc (TTD) anticipates a modest increase in the growth rate of operating expenses in 2025, which may lead to some margin compression.
- The company faces competition from major players like Amazon, which is aggressively improving its DSP and expanding Prime Video ads, posing a competitive threat.
Q & A Highlights
Q: Jeff, what went wrong in the fourth quarter where you came in below expectations?
A: Jeffrey Green, CEO: We missed our own expectations due to a series of small execution missteps while preparing for the future. It wasn't due to a smaller opportunity or increased competition. We are recalibrating the company to address a larger opportunity faster than anticipated. We've made structural changes, including a major reorganization, agile product development, and clearer roles for client-facing teams to ensure this doesn't become a pattern.
Q: Can you elaborate on the factors that contributed to the Q4 shortfall and how they differ from industry trends?
A: Jeffrey Green, CEO: In 2022, we outperformed despite macro challenges. This time, we had internal execution issues, including a slower Kokai rollout, which was partly deliberate to inject AI and improve long-term performance. The political environment and economic factors weren't ideal, but we've navigated similar conditions before. The changes we're making are aimed at capturing a larger market share.
Q: How do you view the company's potential to sustain a 20%-plus compound growth rate over the next several years?
A: Jeffrey Green, CEO: We need to focus on making the open Internet better than walled gardens, leveraging our access to premium media. Our supply chain improvements and focus on scale, objectivity, and CTV growth are key. We believe we can reaccelerate growth by addressing these areas and capturing opportunities left by Google and Facebook's shift away from the open Internet.
Q: What are your thoughts on Google's potential exit from the open Internet and its impact on The Trade Desk?
A: Jeffrey Green, CEO: Google's network business has been deprioritized, and I believe they will eventually exit the open Internet, creating a significant opportunity for us. This shift could happen abruptly or gradually, but we are positioning ourselves to capture the opportunity. Google's exit would remove a major hindrance to an effective supply chain, benefiting us and the open Internet.
Q: Can you discuss the role of OpenPath and the Sincera acquisition in your strategy?
A: Jeffrey Green, CEO: OpenPath allows major content owners to integrate directly with us, bypassing SSPs. This is financially beneficial for them and aligns with their desire for yield control. The Sincera acquisition will enhance supply chain visibility and efficiency, ensuring we buy inventory from those who describe it best. We expect 2025 to be a pivotal year for OpenPath's growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
