While The Trade Desk (TTD 4.15%) may be the hot stock investors think of when they think of programmatic advertising, there's a much smaller industry peer that has been making a name for itself on the other side of the data-driven advertising equation: the sell side. While The Trade Desk is helping ad agencies and brands buy ads, Telaria (TLRA) is helping publishers sell their ad inventory. Even more, the company has carved out a niche for itself in one specific channel: the nascent and promising connected TV market. Telaria is the leading independent data-driven software platform built to help premium video publishers optimize their digital advertising yield.
With strong business momentum since the company sold its buy-side platform in 2017 and refocused its business entirely on the sell-side, investors will be watching Telaria closely when the company reports its third-quarter results early next month.
Ahead of the results, here are some key metrics for investors to watch.
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1. Revenue growth
Telaria has seen impressive top-line momentum recently. Its second-quarter revenue surged 47% year over year to $18.2 million.
But what should investors expect from Q3?
Management guided for revenue between $16 million and $17 million -- figures that reflect the seasonality of TV advertising. While down sequentially, the midpoint of this guidance range implies 33% year-over-year growth.
Analysts, on average, expect Telaria to report revenue of $16.6 million in Q3.
2. Earnings per share
Though Telaria's fast-growing revenue and its 84% trailing-12-month gross profit margin put the company on a path to achieve profitability soon, it's not quite there yet. Management guided for adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to be between negative $1 million and breakeven during Q3.
While Telaria doesn't provide earnings per share guidance, the consensus analyst estimate calls for a loss per share of $0.05.
3. Connected TV revenue
In addition, investors should check in on Telaria's fast-growing connected TV (CTV) revenue. Revenue in this channel increased 133% year over year in Q3 and accounted for 39% of revenue -- up from 24% of revenue in the second quarter of 2018.
Can this strong momentum continue?
4. Guidance
Finally, investors should look to Telaria's fourth-quarter guidance.
The seasonality of TV advertising means that the company's final quarter of the year will be its biggest. Assuming Telaria's third-quarter revenue comes in within management's guidance range for the period, its full-year outlook for revenue between $68 to $72 million implies fourth-quarter revenue between $19.7 million and $23.7 million.
Analysts are expecting Telaria to guide for fourth-quarter revenue of $21.9 million.
The tech company will be up against a tough comparison, when Telaria's fourth-quarter revenue jumped 31% year over year to $19.7 million.
Telaria will report its third-quarter results before the market opens on Nov. 5.
