Here's our take on The Trade Desk's (TTD 1.75%) fourth-quarter earnings report.
Headline Numbers vs. Projections
| Metric | Q4 2023 | Q4 2024 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $606 million | $741 million | +22% | Missed |
| Adjusted earnings per share | $0.41 | $0.59 | +44% | Beat |
| Net income margin | 16% | 25% | +9 pp | n/a |
| Adjusted EBITDA margin | 47% | 47% | unchanged | n/a |
The Trade Desk Deals With Disappointment
At first glance, The Trade Desk's fourth-quarter financial results might not seem to have been too bad. Revenue gains in the low to mid-20%s for the quarter and full 2024 year were consistent with the company's growth levels last year, and stable margins on an adjusted basis, along with reasonable efforts to keep costs in check, led to even faster growth in profits. Yet investors had hoped to see another 2 or 3 percentage points in the fourth-quarter growth rate.
CEO Jeff Green didn't back away from failing to meet the company's guidance for the quarter, but he remained optimistic about The Trade Desk's prospects. After doing better than the overall digital advertising industry in terms of growth and advertising spending on its programmatic advertising platform, The Trade Desk underwent reorganization efforts to take greater advantage of favorable trends in connected TV. Moreover, its innovations in areas like its AI-powered Kokai platform were in line with what its advertising clients have come to demand in a world of cutting-edge technology.
The Trade Desk didn't offer full-year 2025 guidance, but its calls for $575 million in revenue in the first quarter fell short of the consensus forecast among those following the ad-tech pioneer. That sent a message that investors might need to get used to a slightly lower growth trajectory for the foreseeable future.
NASDAQ: TTD
Key Data Points
Immediate Market Reaction
Investors punished The Trade Desk's stock in response to the report, with shares falling 25% in the first half hour of trading in the after-hours session Wednesday afternoon. Those following the stock were none too pleased to see signs that revenue growth might decelerate.
It's also worth mentioning that the plunge comes after what has been extraordinary performance from the stock over the past couple of years. Since the beginning of 2023, The Trade Desk's share price had almost tripled coming into the report. Even after the drop, shares still fetch more than twice what they did after 2022's bear market.
What to Watch
The Trade Desk has made a couple of big moves recently, with the release of its streaming TV operating system, dubbed Ventura, and its pending acquisition of digital ad data company Sincera. Deploying the Ventura OS has the potential to further build The Trade Desk's ecosystem of collaborations with television manufacturers and other distribution partners. And integrating Sincera's tools could further enhance the insights that users of The Trade Desk's programmatic ad platform are able to gain.
Optimistic investors might well take the stock's drop as a short-term opportunity to invest in a company that still has promising prospects for long-term growth.
