Stock market volatility appeared poised to continue on Thursday, as stock index futures were mixed in premarket trading. Ongoing concerns about inflation and a slowing economy are weighing on investor sentiment, and it's unclear whether a broader macroeconomic recession is avoidable at this point.
Yet even as some stocks reacted negatively to that dour mood, a couple of bright spots in the advertising technology space suggested that some parts of the economy might be doing better than many believe. Both The Trade Desk (TTD -0.54%) and Magnite (MGNI -3.30%) saw sizable gains in premarket trading, and their latest financial results could offer a rebuttal to those who are convinced that a downbeat future is inevitable. Read on to learn more about what Magnite and The Trade Desk said.
The Trade Desk looks to connected TV for growth
Shares of The Trade Desk were up nearly 7% in premarket trading Thursday morning. The programmatic advertising software platform pioneer reported first-quarter financial results late Wednesday, and the company's continued growth came largely from the promise of connected television as a new and fast-growing ad market.
The Trade Desk kept delivering solid financial results. Revenue climbed 21% year over year to $383 million, slowing from a 43% growth rate in the year-ago quarter but still producing impressive gains. The Trade Desk posted a modest $0.02-per-share profit, and after accounting for extraordinary items, adjusted net income of $114 million rose 9% from year-ago levels and produced adjusted earnings of $0.23 per share.
CEO Jeff Green lauded the shift from linear television to connected TV, which should highlight the added value from programmatic advertising to an even greater extent. Moreover, the shopper data that The Trade Desk has helped make more accessible to marketing professionals is also paying off with more successful campaigns, driving greater demand for the adtech company's software platform.
Best of all, The Trade Desk sees revenue growing substantially in the second quarter compared to first-quarter results. Projections for $452 million or more in sales and adjusted pre-tax operating earnings of $160 million made investors happy about The Trade Desk's prospects, and fundamentally, the company is doing a good job of keeping up its momentum even under tough macroeconomic conditions.
Magnite lights up
Shares of Magnite did even better, climbing 14% in premarket trading. The sell-side advertising platform specialist had a lot in common with The Trade Desk in its first-quarter financial results, as it also sees a lot of potential in new ad markets despite facing macroeconomic stresses.
Magnite's financial results from the first quarter of 2023 weren't quite as robust as The Trade Desk's. Revenue at Magnite was up just 10% year over year to $130 million. Net losses widened from year-ago levels, and even after making allowances for extraordinary items, adjusted earnings of $0.04 per share got cut in half from the first quarter of 2022.
Yet CEO Michael Barrett remained upbeat about the prospects for the future. With cautious optimism about improving sales and bottom-line figures, Magnite expects to use its leadership role in connected TV to drive more customers to embrace digital advertising.
Magnite in particular has seen its shares plunge from highs set a couple of years ago, but many increasingly believe that the adtech stock is poised for a comeback. With a growing addressable market, both Magnite and The Trade Desk appear to be in a good position to profit when the advertising industry sounds the all-clear and starts seeing spending levels rise sharply again.
