The Trade Desk (TTD 1.36%) has been one of the unsung heroes of the recent stock market rebound. While the S&P 500 is sitting near breakeven for the year, shares of the online advertising platform operator are up more than 75%. Even more impressive, however, is the stock's meteoric rise since the COVID-19-fueled bear market that rocked Wall Street earlier this year. Since it hit bottom in mid-March, the stock has gained more than 200%.
Yet as impressive as its gains have been so far this year, the best may be yet to come. The Trade Desk has been leaning into several opportunities that are only just beginning to bear fruit and could drive its growth for years to come.
The future of advertising
Over the past couple of years, The Trade Desk has focused its energy on a number of high-growth, omnichannel capabilities, riding the wave of advancing technology. Mobile segments including in-app, video, and web, as well as audio and connected TV (CTV) have helped push The Trade Desk's growth into overdrive.
While the company's revenue grew 33% year over year in the first quarter, several of the underlying segments outlined above have grown much faster. Revenue from mobile in-app and audio ads grew 55% and 60% year over year, respectively, while mobile video grew 74%.
The crown jewel, however, was CTV, which grew 100%. The pandemic has fueled unprecedented adoption growth for streaming video, including channels supported by advertising. CTV was already an area of particular interest for The Trade Desk, and it expects to reach well over 80 million households courtesy of CTV in the U.S. this year. In fact, said CEO Jeff Green, "The Trade Desk will likely surpass traditional TV in reach capabilities for the first time in our history."
If his prognostication turns out to be correct, The Trade Desk has a long runway for growth.
A global push
The Trade Desk sees the international marketplace as one of its next big growth opportunities, and to that end has, in Green's words, "made significant investments outside the U.S. over the last two years and will continue to do so."
The company closed out last year with record spending in Spain, France, the U.K., and South Korea. The company has been able to reproduce a pattern that begins with investing in an international market, followed by a stair-step increase in revenue growth. The Trade Desk is scaling its business in 25 international offices, and expects to produce revenue acceleration from each of those locations in the near future.
Late last week, The Trade Desk announced two big appointments that highlight the increasing importance of international markets to its growth.
On Friday, the company appointed Michelle Hulst as executive vice president of global data and strategy. Hulst has a long list of credentials spanning more than 15 years, most recently as the global VP of marketing and strategic partnerships for Oracle's Data Cloud. At the same time, The Trade Desk promoted Matt Goldberg to executive vice president of global operations from his role as executive vice president of North America -- a position he's held for just five months.
In 2019, business outside the U.S. accounted for less than 15% of The Trade Desks gross billings. As the programmatic advertising industry matures across the globe, however, the company expects international revenue to account for about two-thirds of its total.
All in all, The Trade Desk's stock has been something of a dynamo. Since the company went public in late 2016, its share price has risen by 1,420%, though a large fraction of those gains came from 2020's stock surge.
It isn't just the stock that's been on a bull run. Since 2015, The Trade Desk's revenues have risen at a compound annual growth rate (CAGR) of 55%. Even more impressive, its net income has grown by an average of 61% annually.
With that track record as a backdrop, and CTV and international markets as ongoing catalysts, it's easy to envision The Trade Desk continuing its torrid growth.