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The Trade Desk Reports Third Quarter 2022 Financial Results

The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its third quarter ended September 30, 2022.

“Q3 was another strong quarter for The Trade Desk with 31% growth that significantly outpaced the market. This performance underlines the value of decisioned media buying on The Trade Desk as the world’s largest advertisers seek to maximize return on every campaign dollar,” said Jeff Green, founder and CEO of The Trade Desk. “Nowhere is this more apparent than in the rapidly growing market for Connected TV advertising, as more of the world’s leading CTV platforms partner with us to bring advertising demand to their inventory. Additionally, more of the world’s top retailers are working with us to help our clients unleash retail data to tie campaign activity to actual retail sales. In both CTV and retail data, we are helping our clients pioneer new approaches to identity that preserve the value of relevant advertising while improving consumer privacy.”

Third Quarter 2022 Financial Highlights:

The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2022 and 2021 ($ in millions, except per share amounts):

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

GAAP Results

 

 

 

 

Revenue

$

395

 

$

301

 

$

1,087

 

$

801

 

Increase in revenue year over year

 

31

%

 

39

%

 

36

%

 

55

%

Net income (loss)

$

16

 

$

59

 

$

(18

)

$

130

 

GAAP diluted earnings (loss) per share

$

0.03

 

$

0.12

 

$

(0.04

)

$

0.26

 

 

 

 

 

 

Non-GAAP Results

 

 

 

 

Adjusted EBITDA

$

163

 

$

123

 

$

423

 

$

311

 

Adjusted EBITDA margin

 

41

%

 

41

%

 

39

%

 

39

%

Non-GAAP net income

$

129

 

$

89

 

$

332

 

$

247

 

Non-GAAP diluted earnings per share

$

0.26

 

$

0.18

 

$

0.66

 

$

0.50

 

Third Quarter and Recent Business Highlights:

  • Strong Customer Retention: Customer retention remained over 95% during the third quarter, as it has for the past eight consecutive years.
  • Continued Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0 (UID2), an industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. UID2 is an upgrade and alternative to third-party cookies. Recent partnerships and pledges of integration and support include:
    • In September, Procter & Gamble, one of the world's largest advertisers, announced its support and adoption of UID2. P&G noted the urgency for advertisers and publishers to implement a consumer-centric identity solution that will raise the bar on privacy and improve consumers' experiences with advertising.
    • MediaMath, a demand side platform that works with over 3,500 advertisers, announced it will support UID2 on its platform, allowing advertisers to perform enhanced targeting and measurement by matching UID2s to first-party data.
    • Narrative, a data commerce platform that makes it easy for organizations to build audience segments from their first party data, announced a partnership with The Trade Desk. The partnership enables Narrative's customers to match their first party data with UID2 and make audience segments available for advertisers on The Trade Desk platform.
    • FuboTV, which became the first CTV platform to adopt UID2 in February of 2021, reported ad revenues increasing 113% faster than impression growth on its platform for campaigns transacted using UID2 over the past year. Ad spend on FuboTV also increased by 61% year over year and ad prices rose on a CPM basis for campaigns using the open identity framework.
  • Industry Recognition (2022):
    • Customers’ Choice for Ad Tech on Gartner® Peer Insights™
    • BIG Innovation Award for Technology Product (Solimar)
    • Sales and Marketing Technology Awards: Product of the Year for User Optimization Experience
    • Crain's 100 Best Places to Work in NYC 2022 (9th consecutive year)
    • Stevie Awards for Great Employers - Employer of the Year, Computer Software
    • Stevie Awards for Customer Service Success - Silver, Technology Industries
    • Forbes Global 2000
    • Samantha Jacobson, Chief Strategy Officer, named to AdAge 40 under 40

Financial Guidance:

Fourth Quarter 2022 outlook summary:

  • Revenue at least $490 million
  • Adjusted EBITDA of approximately $229 million

We have not provided an outlook for GAAP Net Income or reconciliation of Adjusted EBITDA guidance to Net Income, the closest corresponding U.S. GAAP measure, because Net Income outlook is not available without unreasonable efforts on a forward-looking basis due to the variability and complexity with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of our stock-based compensation expense that are directly impacted by unpredictable fluctuations in our share price. We expect the variability of the above charges could have a significant and potentially unpredictable impact on our future U.S. GAAP financial results.

Use of Non-GAAP Financial Information

Included within this press release are the non-GAAP financial measures of Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Diluted EPS that supplement the Condensed Consolidated Statements of Operations of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before interest expense (income), net; provision for income taxes; depreciation and amortization; and stock-based compensation. Non-GAAP Net Income excludes charges and the related income tax effects for stock-based compensation. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 25% to 30% have been used in the computation of non-GAAP Net Income and non-GAAP Diluted EPS. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Condensed Consolidated Statements of Operations. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash-generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for or superior to corresponding, similarly captioned, GAAP measures and may be different from non-GAAP financial measures used by other companies.

Third Quarter 2022 Financial Results Webcast and Conference Call Details

  • When: November 9, 2022 at 5:00 A.M. Pacific Time (8:00 A.M. Eastern Time).
  • Webcast: A live webcast of the call can be accessed from the Investor Relations section of The Trade Desk’s website at http://investors.thetradedesk.com/. Following the call, a replay will be available on the company’s website.
  • Dial-in: To access the call via telephone in North America, please dial 877-545-0320. For callers outside the United States, please dial 1-973-528-0002. Participants should reference the conference call ID code “843070” after dialing in.
  • Audio replay: An audio replay of the call will be available beginning about two hours after the call. To listen to the replay in the United States, please dial 877-481-4010 (replay code: 46916). Outside the United States, please dial 1-919-882-2331 (replay code: 46916). The audio replay will be available via telephone until November 16, 2022.

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), Facebook page (https://www.facebook.com/TheTradeDesk/), Jeff Green’s Twitter feed (@jefftgreen) and LinkedIn profile (https://www.linkedin.com/in/jefftgreen/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to The Trade Desk’s press releases, SEC filings, public conference calls and webcasts.

About The Trade Desk

The Trade Desk is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns across ad formats and devices. Integrations with major data, inventory, and publisher partners ensure maximum reach and decisioning capabilities, and enterprise APIs enable custom development on top of the platform. Headquartered in Ventura, CA, The Trade Desk has offices across North America, Europe, and Asia Pacific. To learn more, visit thetradedesk.com or follow us on Facebook, Twitter, LinkedIn and YouTube.

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody assumptions that may prove to have been inaccurate, including statements relating to the industry and market trends, and the Company’s financial targets, such as revenue and Adjusted EBITDA. When words such as “believe,” “expect,” “anticipate,” “will,” “outlook” or similar expressions are used, the Company is making forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give readers any assurance that such expectations will prove correct. These forward-looking statements involve risks, uncertainties and assumptions, including those related to the Company’s relatively limited operating history, which makes it difficult to evaluate the Company’s business and prospects, the market for programmatic advertising developing slower or differently than the Company’s expectations, the demands and expectations of clients and the ability to attract and retain clients. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond the control of the Company. These are disclosed in the Company’s reports filed from time to time with the Securities and Exchange Commission, including its most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K, available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.

THE TRADE DESK, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue

$

394,773

 

$

301,091

 

$

1,087,058

 

$

800,869

 

Operating expenses (1):

 

 

 

 

Platform operations

 

70,124

 

 

53,400

 

 

201,504

 

 

154,709

 

Sales and marketing

 

85,038

 

 

59,278

 

 

245,146

 

 

176,797

 

Technology and development

 

79,915

 

 

55,847

 

 

235,397

 

 

163,301

 

General and administrative

 

130,892

 

 

52,120

 

 

391,517

 

 

155,884

 

Total operating expenses

 

365,969

 

 

220,645

 

 

1,073,564

 

 

650,691

 

Income from operations

 

28,804

 

 

80,446

 

 

13,494

 

 

150,178

 

Total other expense (income), net

 

(1,698

)

 

1,470

 

 

(1,756

)

 

1,560

 

Income before income taxes

 

30,502

 

 

78,976

 

 

15,250

 

 

148,618

 

Provision for income taxes

 

14,633

 

 

19,592

 

 

33,052

 

 

18,895

 

Net income (loss)

$

15,869

 

$

59,384

 

$

(17,802

)

$

129,723

 

Earnings (loss) per share:

 

 

 

 

Basic

$

0.03

 

$

0.12

 

$

(0.04

)

$

0.27

 

Diluted

$

0.03

 

$

0.12

 

$

(0.04

)

$

0.26

 

Weighted-average shares outstanding:

 

 

 

 

Basic

 

487,963

 

 

478,101

 

 

486,168

 

 

475,496

 

Diluted

 

500,300

 

 

498,912

 

 

486,168

 

 

497,942

 

___________________________

(1)

Includes stock-based compensation expense as follows:

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Platform operations

$

3,517

 

$

2,518

 

$

14,254

 

$

11,624

 

Sales and marketing

 

14,861

 

 

9,099

 

 

48,718

 

 

37,362

 

Technology and development

 

22,641

 

 

11,269

 

 

67,258

 

 

41,337

 

General and administrative (1)

 

79,984

 

 

11,573

 

 

240,881

 

 

41,687

 

Total

$

121,003

 

$

34,459

 

$

371,111

 

$

132,010

 

___________________________

(1)

Includes stock-based compensation expense related to a long-term CEO performance grant of $66 million and $197 million for the three and nine months ended September 30, 2022, respectively.

 
THE TRADE DESK, INC.
 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

As of September 30,

2022

 

As of December 31,

2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

994,656

 

$

754,154

Short-term investments, net

 

326,745

 

 

 

204,625

 

Accounts receivable, net

 

2,026,929

 

 

 

2,020,720

 

Prepaid expenses and other current assets

 

67,033

 

 

 

112,150

 

Total current assets

 

3,415,363

 

 

 

3,091,649

 

Property and equipment, net

 

166,078

 

 

 

135,856

 

Operating lease assets

 

230,917

 

 

 

234,091

 

Deferred income taxes

 

67,640

 

 

 

68,244

 

Other assets, non-current

 

43,956

 

 

 

47,500

 

Total assets

$

3,923,954

 

 

$

3,577,340

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

1,651,447

 

 

$

1,655,684

 

Accrued expenses and other current liabilities

 

82,768

 

 

 

101,472

 

Operating lease liabilities

 

51,025

 

 

 

46,149

 

Total current liabilities

 

1,785,240

 

 

 

1,803,305

 

Operating lease liabilities, non-current

 

215,728

 

 

 

238,449

 

Other liabilities, non-current

 

8,698

 

 

 

8,280

 

Total liabilities

 

2,009,666

 

 

 

2,050,034

 

 

 

 

 

Stockholders' equity:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

 

 

 

 

Additional paid-in capital

 

1,319,961

 

 

 

915,177

 

Retained earnings

 

594,327

 

 

 

612,129

 

Total stockholders' equity

 

1,914,288

 

 

 

1,527,306

 

Total liabilities and stockholders' equity

$

3,923,954

 

 

$

3,577,340

 

THE TRADE DESK, INC.
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

Nine Months Ended

September 30,

 

 

2022

 

2021

OPERATING ACTIVITIES:

 

 

 

Net income (loss)

$

(17,802

)

 

$

129,723

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

37,581

 

 

 

29,969

 

Stock-based compensation

 

371,111

 

 

 

132,010

 

Non-cash lease expense

 

32,554

 

 

 

29,914

 

Allowance for credit losses on accounts receivable

 

2,961

 

 

 

520

 

Deferred income taxes

 

604

 

 

 

5,044

 

Other

 

3,694

 

 

 

6,730

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

24,905

 

 

 

(48,637

)

Prepaid expenses and other current and non-current assets

 

42,913

 

 

 

20,627

 

Accounts payable

 

(68,758

)

 

 

(44,105

)

Accrued expenses and other current and non-current liabilities

 

(18,778

)

 

 

(14,790

)

Operating lease liabilities

 

(35,731

)

 

 

(31,886

)

Net cash provided by operating activities

 

375,254

 

 

 

215,119

 

INVESTING ACTIVITIES:

 

 

 

Purchases of investments

 

(379,206

)

 

 

(233,427

)

Sales of investments

 

1,977

 

 

 

4,539

 

Maturities of investments

 

252,699

 

 

 

192,077

 

Purchases of property and equipment

 

(36,394

)

 

 

(43,920

)

Capitalized software development costs

 

(4,833

)

 

 

(3,684

)

Business acquisition

 

 

 

 

(13,261

)

Net cash used in investing activities

 

(165,757

)

 

 

(97,676

)

FINANCING ACTIVITIES:

 

 

 

Payment of debt financing costs

 

 

 

 

(1,924

)

Proceeds from exercise of stock options

 

42,712

 

 

 

39,559

 

Proceeds from employee stock purchase plan

 

25,547

 

 

 

22,758

 

Taxes paid related to net settlement of restricted stock awards

 

(37,254

)

 

 

(38,273

)

Net cash provided by financing activities

 

31,005

 

 

 

22,120

 

Increase in cash and cash equivalents

 

240,502

 

 

 

139,563

 

Cash and cash equivalents—Beginning of period

 

754,154

 

 

 

437,353

 

Cash and cash equivalents—End of period

$

994,656

 

 

$

576,916

 

 

Non-GAAP Financial Metrics

(Amounts in thousands, except per share amounts)

The following tables show the Company’s non-GAAP financial metrics reconciled to the comparable GAAP financial metrics included in this release.

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Net income (loss)

$

15,869

 

 

$

59,384

 

 

$

(17,802

)

 

$

129,723

 

Add back:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

12,957

 

 

 

8,952

 

 

 

37,581

 

 

 

29,969

 

Stock-based compensation expense

 

121,003

 

 

 

34,459

 

 

 

371,111

 

 

 

132,010

 

Interest expense (income), net

 

(1,741

)

 

 

317

 

 

 

(1,321

)

 

 

556

 

Provision for income taxes

 

14,633

 

 

 

19,592

 

 

 

33,052

 

 

 

18,895

 

Adjusted EBITDA

$

162,721

 

 

$

122,704

 

 

$

422,621

 

 

$

311,153

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

GAAP net income (loss)

$

15,869

 

 

$

59,384

 

 

$

(17,802

)

 

$

129,723

 

Add back (deduct):

 

 

 

 

 

 

 

Stock-based compensation expense

 

121,003

 

 

 

34,459

 

 

 

371,111

 

 

 

132,010

 

Adjustment for income taxes

 

(8,284

)

 

 

(4,616

)

 

 

(21,419

)

 

 

(14,305

)

Non-GAAP net income

$

128,588

 

 

$

89,227

 

 

$

331,890

 

 

$

247,428

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share

$

0.03

 

 

$

0.12

 

 

$

(0.04

)

 

$

0.26

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares outstanding—diluted

 

500,300

 

 

 

498,912

 

 

 

486,168

 

 

 

497,942

 

 

 

 

 

 

 

 

 

Non-GAAP diluted earnings per share

$

0.26

 

 

$

0.18

 

 

$

0.66

 

 

$

0.50

 

 

 

 

 

 

 

 

 

Non-GAAP weighted-average shares used in computing Non-GAAP earnings per share, diluted (1)

 

500,300

 

 

 

498,912

 

 

 

499,754

 

 

 

497,942

 

_________________________

(1)

Includes an additional 13.6 million of dilutive securities for the nine months ended September 30, 2022, which are not included in GAAP diluted weighted-average shares outstanding due to the Company's net loss position for the nine months ended September 30, 2022.

 

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