The Trade Desk (TTD 2.82%) stock tumbled 6.2% through 9:50 a.m. ET Thursday, despite beating analyst targets for both sales and earnings last night.
Analysts forecast The Trade Desk to earn $0.34 per share on sales of $841.2 million in Q4. TTD actually earned $0.59 per share on sales of $847 million.
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The Trade Desk Q4 earnings
Unfortunately, this good news wasn't quite as good as it looks at first glance. "$0.59," you see, was a non-GAAP number; when calculated under generally accepted accounting principles (GAAP), The Trade Desk actually earned closer to $0.39 per share -- just 8% more than last year.
Viewed in the context of 14% year-over-year sales growth, this implies weakening profit margins for the advertising seller and advertising effectiveness measurer, and indeed, TTD's net profit margin contracted by three full percentage points to 22%.
For the full year fiscal 2025, TTD grew sales 18% to $2.9 billion (so sales growth also slowed in Q4). On the plus side, full-year net profit margin was only 15%, so Q4 represented an improvement in that regard. Profits for the year were $0.90 per share -- up 15%.
NASDAQ: TTD
Key Data Points
Is The Trade Desk stock a sell?
Turning to guidance, The Trade Desk says investors can expect revenue to decline sequentially in Q1 2026, but rise year over year, to $678 million. Even the y-o-y growth rate, however, will be only 10%, representing continued deceleration.
Management did not give GAAP earnings guidance for Q1, noting only that "adjusted EBITDA" will be "approximately $195 million" -- down more than half from Q4 2025.
Long story short, TTD is a 27.5 P/E stock with slowing sales growth and potentially declining profits. That sounds like a sell to me.
