What happened

Shares of The Trade Desk (TTD 0.70%) moved sharply higher Wednesday, surging as much as 35.4%. As of 10:37 a.m. ET, the stock was up 33.6%.

The catalyst that sent the ad tech stock higher was the company's latest financial results, which were far better than many investors anticipated. 

So what

While many digital advertisers were feeling the pressure of ad budgets being cut, The Trade Desk's second-quarter results showed no signs of the macroeconomic headwinds that have battered many of its contemporaries.

Revenue of $377 million increased 35% year over year, driven by new and expanded long-term advertising agreements, which the company signed at a record rate. This helped fuel bottom-line growth, as adjusted earnings per share of $0.20 climbed 11%.

This was in stark contrast to the disappointing results delivered by many companies in the digital advertising space. To give the numbers some context, analysts' consensus estimates were calling for revenue of $364.9 million and adjusted EPS of $0.20. 

CEO Jeff Green said (emphasis added) that the results give The Trade Desk "confidence that we can execute in any market environment." He went on to identify several secular tailwinds that boosted the company this quarter and will continue to fuel its future growth. The accelerating adoption of connected TVs, the decreasing popularity of walled gardens -- including Facebook parent Meta Platforms -- and the regulatory scrutiny facing Alphabet's Google are all helping drive The Trade Desk's market-share gains.  

Now what

For the third quarter, management is guiding for revenue of at least $385 million, which would represent year-over-year growth of roughly 28%. However, given The Trade Desk's history of issuing conservative guidance, the results will likely be higher.

Additionally, as excited as investors are about The Trade Desk's performance this quarter, this could be just the beginning. The company is targeting a massive market opportunity. The Trade Desk generated revenue of $1.2 billion in 2021, which pales in comparison to total global ad spending of roughly $750 billion. 

Given the company's blockbuster performance, industry leadership, and secular tailwinds, I believe The Trade Desk stock is a buy.