Though The Trade Desk (TTD 1.89%) shares pulled back following the adtech platform provider's second-quarter earnings report on Wednesday, there was much to like in the update. Beyond the company's better-than-expected revenue, adjusted earnings, and guidance, the tech company's earnings call was packed with many important takeaways. Overall, the call made a great case for strong growth persisting (and possibly even accelerating) in the second half of 2023 and into 2024.
It turns out that management's guidance for its strong, double-digit revenue growth to persist into Q3 is likely just the tip of the iceberg. CEO Jeff Green said in The Trade Desk's earnings call that 2024 boasts a handful of catalysts combining to create a "tidal wave of opportunity."
Let's dig deeper into why The Trade Desk is so confident about its growth prospects next year.
Numerous catalysts
"2024 is looking like the tidal wave of opportunity that is both daunting as well as just massive in terms of what an incredible chance this is for us to once again grab land," said Green during the call.
One of the many catalysts The Trade Desk expects to benefit from next year is the growing antitrust pressure on Alphabet's (GOOG 0.82%) (GOOGL 0.72%) Google. Earlier this year, the U.S. Department of Justice filed a lawsuit against Google, alleging its dominance in the digital advertising space violates federal antitrust laws.
While it will likely take years for the lawsuit to play out, Green believes that the pressure will make the advertising market "a bit more fair." This will ultimately lead to Google executing slower than it would without this pressure, creating an opportunity for The Trade Desk to take more market share in the meantime, Green predicts.
Additionally, he believes the decline of investment in traditional television, both from a content and advertising perspective, will eventually see an explosive end. "It's going to have a pretty steady, then accelerating decay," Green explained. "And then there's a point where it stops being worth it for anybody to operate in the space."
This, of course, will lead to a surge in demand for connected TV (CTV) advertising, Green predicts. While the timing of traditional TV's demise is difficult to predict, it's getting closer every day.
Finally, the CEO believes the company is well-positioned for strong revenue growth next year, thanks to its recent product innovation. Consider these catalysts:
- Programmatic artificial intelligence (AI) product, Kokai
- A new always-on forward market
- Open-source identify solution UID2
- Growing adoption of OpenPath, The Trade Desk's direct pipeline for publishers
- International momentum
- An expected inflection in political ad spend next year
Growth could accelerate
Bolstering the bull case, the company's guidance for third-quarter revenue of "at least $485 million" implies growth equal to or greater than the company's impressive 23% year-over-year growth rate in Q2. This means there's a good chance the company's accelerating trajectory persists even in the near term.
Indeed, The Trade Desk Chief Financial Officer Laura Schenkein said the company witnessed business trends improve throughout Q2, accelerating to year-over-year revenue trends "north of 23%" toward the end of the quarter. "We exited June on a great trajectory, and that's continued so far in Q3," she added.
It would take a serious deterrent to slow down The Trade Desk at this point -- both in 2023 and 2024. This is a marvel in light of the uncertain macroeconomic environment.