The Trade Desk (TTD) Falls More Than Broader Market Amidst Earnings Expectations

The Trade Desk (TTD) dipped 1.14% to $73.56, lagging the S&P 500's 0.79% loss. The digital-advertising platform operator's shares have risen 4.13% over the last month, but are down from the Computer and Technology sector's 7.88% gain and the S&P 500's 5.22% gain. Analysts expect Q4 EPS of $0.42, up 7.69% YoY, and revenue of $684.33 million, up 17.07% YoY. For FY22, EPS is expected to be $1.77, up 6.63% YoY, and revenue is expected to be $2.85 billion, up 16.6% YoY.

Title: The Trade Desk: Q1 2025 Results Signal a Strong Comeback

The Trade Desk (TTD) reported a robust 25% year-over-year (YoY) revenue growth in Q1 2025, marking a significant turnaround after its earnings miss in Q4 2024. The company's shares, however, dipped 1.14% to $73.56, lagging behind the S&P 500's 0.79% loss. Despite the recent dip, TTD has shown resilience, with its shares rising 4.13% over the last month. Analysts expect Q4 EPS of $0.42, up 7.69% YoY, and revenue of $684.33 million, up 17.07% YoY. For FY22, EPS is expected to be $1.77, up 6.63% YoY, and revenue is expected to be $2.85 billion, up 16.6% YoY [1].

# Q1 2025 Performance

The Trade Desk's Q1 2025 results indicate a strong comeback. Revenue for the quarter was $616 million, up 25% YoY, surpassing management's guidance of at least $575 million. This growth was driven by a 22% YoY increase in revenue in Q4 2024, which was slightly below guidance. Profitability improved significantly, with a 34% adjusted EBITDA margin and $230 million in free cash flow. The company's "Rule of 40" score, which measures growth and profitability, was 63 [1].

# Strategic Initiatives

The Trade Desk's turnaround can be attributed to its strategic initiatives. CEO Jeff Green led a comprehensive reorganization in late 2024, restructuring client-facing teams and clarifying roles across brand and agency accounts. The engineering department was reorganized into smaller, fast-moving teams, and the product release cycle was accelerated to weekly updates. These changes aimed to make the company more responsive and scalable [1].

# Kokai Platform

A key driver of The Trade Desk's performance was the adoption of its Kokai platform, which has been integrated into over two-thirds of its client base. This platform has delivered measurable gains in reach efficiency and conversion cost, with clients reporting a 42% reduction in cost per unique reach and a 20% improvement in cost per acquisition [1].

# Regulatory Shifts

Jeff Green framed regulatory shifts as a tailwind for the company, stating that if The Trade Desk has been winning in an unfair market, imagine what it can do in a fair one. The DOJ verdicts against Google and Spotify's legal win against Apple mark a shift towards a more level playing field, creating opportunities for independent players like The Trade Desk [1].

# OpenPath and Sincera

The Trade Desk continues to expand its OpenPath initiative, which provides advertisers a clearer line-of-sight into where their dollars go while enabling publishers to capture more value from impressions. Major names like Warner Bros. Discovery and The Guardian have joined the initiative, with the New York Post seeing an eightfold increase in fill rate and nearly doubling its programmatic revenue [1].

# Outlook

The Trade Desk's Q2 2025 revenue guidance of at least $682 million implies 17% YoY growth, despite a challenging macro backdrop. The company's "Rule of 40" score of 63 indicates that it is well-positioned to outpace the market as marketers seek alternatives to walled gardens and embrace the open internet [1].

Conclusion

The Trade Desk's Q1 2025 results signal a strong comeback, with robust revenue growth and improved profitability. The company's strategic initiatives and the adoption of the Kokai platform have driven measurable gains. Analysts expect continued growth, with Q4 EPS of $0.42 and revenue of $684.33 million. For FY22, EPS is expected to be $1.77, and revenue is expected to be $2.85 billion, indicating a positive outlook for the company.

References

[1] https://www.gurufocus.com/news/2859514/is-the-trade-desks-comeback-enough-to-justify-a-premium?r=caf6fe0e0db70d936033da5461e60141