What happened
Shares of The Trade Desk (TTD 4.15%) charged sharply higher Monday, surging as much as 27.7%. As of 10:44 a.m. EST, the stock was up 24.8%.
The catalyst that drove the digital advertising maven higher was third-quarter financial results that sailed past even the most bullish expectations.
So what
The Trade Desk delivered revenue of $301.1 million, up 39% year over year, calming investor fears that its growth might be slowing. At the same time, the company delivered adjusted earnings per share (EPS) of $0.18, which surged 380%.
To give those numbers context, analysts' consensus estimates were calling for revenue of $283.5 million and adjusted EPS of $0.15.
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Earlier this year Apple rolled out new privacy features that made it harder for some ad-tech companies to measure digital advertising campaigns. That, combined with concerns about Alphabet's move to do away with ad-tracking cookies, was a one-two punch for many companies in the digital advertising industry.
The Trade Desk has long said that its Unified ID 2.0 technology, which is an "upgrade and alternative to third-party cookies," would be largely unaffected by these developments, but investors had lingering concerns.
Now what
The company gave investors other reasons to celebrate. Its fourth-quarter outlook was more robust than expected. It's guiding for revenue of at least $388 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately $175 million, which would represent growth of 21% and 14%, respectively. Given its recent performance, those estimates are likely conservative.
By providing evidence that the company will continue to thrive -- even as Apple and Google make things more challenging for digital advertisers, The Trade Desk has gone a long way toward quieting investor fears about its future prospects.
The stock isn't cheap using traditional valuation metrics, with a price-to-sales ratio of 40, but investors have thus far been willing to overlook that due to The Trade Desk's continued strong growth.
Further, its ability to "beat and raise," surpassing analysts' expectations, while supplying robust guidance, was enough to send The Trade Desk stock surging higher.
