What happened
Shares of The Trade Desk (TTD 1.67%), a digital ad-buying platform, were skyrocketing today after the company surprised investors by reporting better-than-expected earnings in the fourth quarter and issued first-quarter guidance that outpaced Wall Street's consensus estimate.
As a result, The Trade Desk's stock spiked 25.5% as of 10:51 a.m. ET.
So what
Investors were holding their breath before the adtech company released results this morning as they hoped The Trade Desk could continue its streak of beating earnings expectations -- and it delivered once again.
The Trade Desk's non-GAAP (adjusted) earnings of $0.38 per share were down from $0.42 in the year-ago quarter but were good enough to beat analysts' average estimate of $0.36.
The company's top line didn't beat expectations, but was still impressive, especially considering a macroeconomic environment that weighed on the broader advertising industry. The Trade Desk's revenue increased 24% to $491 million in the quarter, slightly missing Wall Street's average estimate of about $492 million.
CEO Jeff Green addressed the difference between the company's sales growth and the broader advertising market on the company's earnings call this morning, saying: "I don't think we've ever had the level of industry outperformance in our six years or so as a public company as we did in 2022. And it means that we can be very confident that we're gaining share and that our platform continues to gain traction with advertisers."
Green added that while the company's sales grew by 24% in the fourth quarter, some of The Trade Desk's biggest competitors were seeing their sales decline.
Another highlight from the quarter is The Trade Desk keeping its customer retention rate above 95%, which it has done for nine consecutive quarters.
The company also said that its Unified ID 2.0 -- an online identifier that gives users more privacy than online trackers -- continues to be accepted by more companies, including the addition of Paramount Advertising in the quarter.
Green said he expects Unified ID 2.0 to continue growing as online trackers (called cookies) "become less important" in the ad industry.
Now what
The Trade Desk's management also announced a share repurchase program of up to $700 million that is "designed to help offset the impact of future share dilution from employee stock issuances."
In addition to the company's strong quarterly results, investors celebrated the company's first-quarter guidance. Management said revenue will be "at least" $363 million, which is better than Wall Street's average estimate of $360.9 million for the quarter.
With The Trade Desk's strong fourth quarter, upbeat guidance, and the fact that the company is a bright spot in the otherwise dim ad industry right now, investors had a lot to be excited about today.
