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The Trade Desk (TTD - Free Report) reported third-quarter 2024 non-GAAP earnings of 41 cents per share, beating the Zacks Consensus Estimate by 2.5% and increasing 24.2% year over year.
TTD’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average earnings surprise being 6.09%.
Revenues of $628 million surpassed the Zacks Consensus Estimate by 1.31%. The top line soared 27.3% year over year.
Following third-quarter 2024 results, TTD shares fell 5.58% to close at $125.13 on Friday. The Trade Desk shares have appreciated 73.9% year to date, outperforming the Zacks Computer and Technology sector’s return of 30%.
However, TTD shares are expected to benefit from growing market share in the Connected TV (CTV) domain, which was its fastest-growing channel in the third quarter of 2024. A rich partner base that includes the likes of Disney (DIS - Free Report) , Comcast’s (CMCSA - Free Report) division NBCU, Walmart, Roku (ROKU - Free Report) , LG, Netflix and others is a key catalyst.
TTD Expands CTV Partnerships and UID2 Adoption
TTD is benefiting from an expanding global footprint, continuing development of the omnichannel ad inventory and strong adoption of programmatic advertising.
North America represented about 88% of The Trade Desk’s third-quarter revenues and international represented about 12% in the third quarter of 2024.
In third-quarter 2024, customer retention remained at more than 95%.
Expanding partner base is a major growth driver. Spotify extended its partnership with TTD, piloting integrations with OpenPath and UID2 through the Spotify Ad Exchange.
TTD is signing more multiyear joint business plans (JBPs) with leading agencies and brands. More than 40% of the company’s business this year will fall under JBPs, which improves revenue visibility.
TTD won several new clients in the third quarter of 2024. Reach, a UK news publisher of 130 media brands, adopted EUID to enhance ad experiences while also protecting journalism.
Global media company Motorsport Network adopted EUID to offer relevant ads to its 60 million users, focusing on privacy and transparency.
Cint also integrated UID2 for enhanced and omnichannel brand lift measurement.
Roku announced its adoption of UID2 to enhance advertiser targeting precision and enable secure data collaboration through Roku Media.
TTD’s Operating Margin Improves
Adjusted EBITDA in the third quarter of 2024 rose 28.8% year over year to $257 million. Adjusted EBITDA margin was 40.9%, which expanded 50 basis points (bps) on a year-over-year basis.
Operating expenses increased 14% year over year to $519.5 million. The upside was caused by higher Platform operations expenses.
Operating income was $108.5 million compared with the year-ago quarter’s reported figure of $37.7 million.
TTD’s Balance Sheet and Cash Flow Remain Strong
As of Sept. 30, 2024, cash and cash equivalents were $1.21 billion compared with $1.01 billion on June 30, 2023.
Net cash from operating activities was $273 million in the third quarter compared with the second-quarter 2024 figure of $81 million.
The company repurchased $54 million of its Class A common stock in the third quarter of 2024. As of Sept. 30, 2024, The Trade Desk had $521 million available and authorized for repurchases.
TTD’s Q4 Guidance Positive
For fourth-quarter 2024, The Trade Desk expects revenues to be $756 million, which suggests growth of about 25% on a year-over-year basis.
TTD anticipates adjusted EBITDA to be nearly $363 million.
The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $753.61 million, indicating year-over-year growth of 24.4%. The consensus mark for earnings is pegged at 57 cents per share, unchanged over the past 30 days and suggesting 39.02% growth year over year.
The Zacks Consensus Estimate for TTD’s 2024 revenues is pegged at $2.46 billion, indicating year-over-year growth of 26.49%. The consensus mark for earnings is pegged at $1.63 per share, unchanged over the past 30 days and indicating 29.37% growth year over year.
TTD Shares: Buy, Sell or Hold Post Q3 Earnings?
The Trade Desk’s strong portfolio and expanding partner base are positive. The growing footprint in the retail media is a tailwind for TTD’s prospects. Its AI-powered solution, Kokai, is helping advertisers identify and target new potential customers with much greater precision.
Hence, investors who already own the stock might expect the company’s growth prospects to be rewarding over a longer term.
The technical indicator is also bullish for The Trade Desk as the shares trade above the 50-day and 200-day moving averages, indicating robust upward momentum.
TTD Shares Trade Above 50-Day & 200-Day SMA
Image Source: Zacks Investment Research
However, The Trade Desk’s Value Score of F suggests a stretched valuation at the moment.
Currently, TTD is trading at a premium, with a forward 12-month Price/Sales of 21.13x compared with the sub-industry’s 6.25x.
Image: Bigstock
Can Solid Q3 Earnings Beat & Encouraging View Push TTD Stock Higher?
The Trade Desk (TTD - Free Report) reported third-quarter 2024 non-GAAP earnings of 41 cents per share, beating the Zacks Consensus Estimate by 2.5% and increasing 24.2% year over year.
TTD’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average earnings surprise being 6.09%.
The Trade Desk Price, Consensus and EPS Surprise
The Trade Desk price-consensus-eps-surprise-chart | The Trade Desk Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $628 million surpassed the Zacks Consensus Estimate by 1.31%. The top line soared 27.3% year over year.
Following third-quarter 2024 results, TTD shares fell 5.58% to close at $125.13 on Friday. The Trade Desk shares have appreciated 73.9% year to date, outperforming the Zacks Computer and Technology sector’s return of 30%.
However, TTD shares are expected to benefit from growing market share in the Connected TV (CTV) domain, which was its fastest-growing channel in the third quarter of 2024. A rich partner base that includes the likes of Disney (DIS - Free Report) , Comcast’s (CMCSA - Free Report) division NBCU, Walmart, Roku (ROKU - Free Report) , LG, Netflix and others is a key catalyst.
TTD Expands CTV Partnerships and UID2 Adoption
TTD is benefiting from an expanding global footprint, continuing development of the omnichannel ad inventory and strong adoption of programmatic advertising.
North America represented about 88% of The Trade Desk’s third-quarter revenues and international represented about 12% in the third quarter of 2024.
In third-quarter 2024, customer retention remained at more than 95%.
Expanding partner base is a major growth driver. Spotify extended its partnership with TTD, piloting integrations with OpenPath and UID2 through the Spotify Ad Exchange.
TTD is signing more multiyear joint business plans (JBPs) with leading agencies and brands. More than 40% of the company’s business this year will fall under JBPs, which improves revenue visibility.
TTD won several new clients in the third quarter of 2024. Reach, a UK news publisher of 130 media brands, adopted EUID to enhance ad experiences while also protecting journalism.
Global media company Motorsport Network adopted EUID to offer relevant ads to its 60 million users, focusing on privacy and transparency.
Cint also integrated UID2 for enhanced and omnichannel brand lift measurement.
Roku announced its adoption of UID2 to enhance advertiser targeting precision and enable secure data collaboration through Roku Media.
TTD’s Operating Margin Improves
Adjusted EBITDA in the third quarter of 2024 rose 28.8% year over year to $257 million. Adjusted EBITDA margin was 40.9%, which expanded 50 basis points (bps) on a year-over-year basis.
Operating expenses increased 14% year over year to $519.5 million. The upside was caused by higher Platform operations expenses.
Operating income was $108.5 million compared with the year-ago quarter’s reported figure of $37.7 million.
TTD’s Balance Sheet and Cash Flow Remain Strong
As of Sept. 30, 2024, cash and cash equivalents were $1.21 billion compared with $1.01 billion on June 30, 2023.
Net cash from operating activities was $273 million in the third quarter compared with the second-quarter 2024 figure of $81 million.
The company repurchased $54 million of its Class A common stock in the third quarter of 2024. As of Sept. 30, 2024, The Trade Desk had $521 million available and authorized for repurchases.
TTD’s Q4 Guidance Positive
For fourth-quarter 2024, The Trade Desk expects revenues to be $756 million, which suggests growth of about 25% on a year-over-year basis.
TTD anticipates adjusted EBITDA to be nearly $363 million.
The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $753.61 million, indicating year-over-year growth of 24.4%. The consensus mark for earnings is pegged at 57 cents per share, unchanged over the past 30 days and suggesting 39.02% growth year over year.
The Zacks Consensus Estimate for TTD’s 2024 revenues is pegged at $2.46 billion, indicating year-over-year growth of 26.49%. The consensus mark for earnings is pegged at $1.63 per share, unchanged over the past 30 days and indicating 29.37% growth year over year.
TTD Shares: Buy, Sell or Hold Post Q3 Earnings?
The Trade Desk’s strong portfolio and expanding partner base are positive. The growing footprint in the retail media is a tailwind for TTD’s prospects. Its AI-powered solution, Kokai, is helping advertisers identify and target new potential customers with much greater precision.
Hence, investors who already own the stock might expect the company’s growth prospects to be rewarding over a longer term.
The technical indicator is also bullish for The Trade Desk as the shares trade above the 50-day and 200-day moving averages, indicating robust upward momentum.
TTD Shares Trade Above 50-Day & 200-Day SMA
Image Source: Zacks Investment Research
However, The Trade Desk’s Value Score of F suggests a stretched valuation at the moment.
Currently, TTD is trading at a premium, with a forward 12-month Price/Sales of 21.13x compared with the sub-industry’s 6.25x.
Price/Sales Ratio
Image Source: Zacks Investment Research
The Trade Desk carries a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.