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The Trade Desk Reports Fourth Quarter and Fiscal Year 2018 Financial Results

February 21, 2019 4:01 PM

LOS ANGELES--(BUSINESS WIRE)-- Global advertising technology leader The Trade Desk (Nasdaq: TTD) today announced financial results for its fourth quarter and fiscal year ended December 31, 2018.

“2018 was a huge year for The Trade Desk. Revenue growth accelerated to 55% in 2018 from 52% in 2017. In 2018, we surpassed $2.35 billion in gross spend on our platform resulting in $477 million in revenue. Our fourth quarter revenue growth also accelerated, growing 56% to a record $160.5 million,” said Founder and CEO Jeff Green. “2018 was a foundational year. We launched the biggest product, called the Next Wave, in our history; Connected TV became a must-have on the media plan; we partnered with some of the largest internet companies in China; data usage on our platform accelerated; and our Unified ID initiative gained steam across the industry. Our vision is to change the way advertising is bought by enabling programmatic, data-driven decisions and 2018 marked another year of great strides toward that goal.”

Fourth Quarter and Full Year 2018 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters and fiscal years ended December 31, 2018 and 2017 ($ in millions, except per share amounts):

� Three Months Ended � Year Ended
December 31, December 31,
2018 � 2017 2018 � 2017
GAAP Results
Revenue $ 160.5 $ 102.6 $ 477.3 $ 308.2
Increase in revenue year over year 56 % 42 % 55 % 52 %
Net Income $ 39.4 $ 16.8 $ 88.1 $ 50.8
Diluted EPS $ 0.84 $ 0.38 $ 1.92 $ 1.15
�
Non-GAAP Results
Adjusted EBITDA $ 67.1 $ 39.5 $ 159.4 $ 95.4
Adjusted EBITDA Margin 42 % 38 % 33 % 31 %
Non-GAAP Net Income $ 51.1 $ 24.2 $ 123.8 $ 70.4
Non-GAAP Diluted EPS $ 1.09 $ 0.54 $ 2.70 $ 1.60
�

Fourth Quarter and 2018 Business Highlights Include:

Full Year 2019 and First Quarter Outlook:

Mr. Green added, “We exited 2018 strong and are seeing that momentum continue into 2019. Marketers continue to adopt channels such as Mobile, Connected TV, and Audio as they move advertising spend to our platform. In 2019, we expect gross spend on our platform to be at least $3.2 billion and revenue to be at least $637 million. In the coming year, we will continue to make aggressive investments in high growth areas such as Connected TV, data, and global expansion, including in China. Our focus is on grabbing programmatic market share and deepening our engagement and strategic importance with our customers. We expect our adjusted EBITDA to be $182 million, or about 29% of revenue. We believe investing in our core growth opportunities will maximize profitability over the long-term.”

The Trade Desk is providing its financial targets for the fiscal year 2019 and first quarter of 2019. The Company’s financial targets are as follows:

Full Year 2019:

First Quarter 2019

We have not provided outlook for GAAP Net income or reconciliation of adjusted EBITDA guidance to net income, the closest corresponding U.S. GAAP measure, because net income outlook is not available without unreasonable efforts on a forward-looking basis due to the variability and complexity with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of our stock-based compensation expense that are directly impacted by unpredictable fluctuations in our share price. We expect the variability of the above charges could have a significant and potentially unpredictable, impact on our future U.S. GAAP financial results.

Use of Non-GAAP Financial Information

Included within this press release are the non-GAAP financial measures of Adjusted EBITDA, Non-GAAP net income and Non-GAAP diluted EPS that supplement the Consolidated Statements of Operations of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before depreciation and amortization, stock-based compensation, interest expense, interest income, secondary offering costs and provision for income taxes. Non-GAAP net income excludes charges and the related income tax effects for stock-based compensation and secondary offering costs. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 30% and 40% have been used in the computation of non-GAAP net income and non-GAAP diluted EPS for the 2018 and 2017 periods, respectively. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Consolidated Statements of Operations. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for or superior to corresponding, similarly captioned, GAAP measures and may be different from non-GAAP financial measures used by other companies.

Fourth Quarter and Fiscal Year 2018 Results Webcast and Conference Call Details

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/investor-overview), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), and Facebook page (https://www.facebook.com/TheTradeDesk/), and Jeff Green’s Twitter feed (@jefftgreen) and LinkedIn profile (https://www.linkedin.com/in/jefftgreen/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to The Trade Desk’s press releases, SEC filings, public conference calls and webcasts.

About The Trade Desk

The Trade Desk™�is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns across ad formats and devices. Integrations with major data, inventory, and publisher partners ensure maximum reach and decisioning capabilities, and enterprise APIs enable custom development on top of the platform. Headquartered in Ventura, CA, The Trade Desk has offices across North America, Europe, and Asia Pacific. To learn more, visit�thetradedesk.com�or follow us on�Facebook,�Twitter,�LinkedIn and YouTube.

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a)�are not historical facts, (b)�predict or forecast future events or results, or (c)�embody assumptions that may prove to have been inaccurate, including statements relating to the industry and market trends, and the Company’s financial targets such as revenue and Adjusted EBITDA. When words such as “believe,” “expect,” “anticipate,” “will”, “outlook” or similar expressions are used, the Company is making forward-looking statements.�Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give readers any assurance that such expectations will prove correct.�These forward-looking statements involve risks, uncertainties and assumptions, including those related to the Company’s limited operating history, which makes it difficult to evaluate the Company’s business and prospects, the market for programmatic advertising developing slower or differently than the Company’s expectations, the demands and expectations of clients and the ability to attract and retain clients. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond the control of the Company. These are disclosed in the Company’s reports filed from time to time with the Securities and Exchange Commission, including its most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K, available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.

�
THE TRADE DESK, INC.
� � � � � �
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
�
Three Months Ended Year Ended
December 31, December 31,
2018 2017 2018 2017
Revenue $ 160,468 $ 102,648 $ 477,294 $ 308,217
Operating expenses:
Platform operations 35,256 21,133 114,098 66,230
Sales and marketing 27,064 18,537 87,071 61,379
Technology and development 24,086 17,029 83,892 52,806
General and administrative � 25,094 � 16,631 � 84,910 � 58,446
Total operating expenses � 111,500 � 73,330 � 369,971 � 238,861
Income from operations 48,968 29,318 107,323 69,356
Total other expense (income), net � (336 ) � 1,282 � 1,586 � 5,731
Income before income taxes 49,304 28,036 105,737 63,625
Provision for income taxes � 9,869 � 11,225 � 17,597 � 12,827
Net income $ 39,435 $ 16,811 $ 88,140 $ 50,798
Earnings per share:
Basic $ 0.91 $ 0.41 $ 2.08 $ 1.26
Diluted $ 0.84 $ 0.38 $ 1.92 $ 1.15
Weighted average shares outstanding:
Basic � 43,223 � 41,108 � 42,442 � 40,262
Diluted � 46,777 � 44,464 � 45,793 � 44,056
�

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

�

Three Months Ended

Year Ended

�

December 31,

�

December 31,

�

2018

�

2017

�

2018

�

2017

Platform operations

$

1,326

$

1,131

$

4,463

$

2,674

Sales and marketing

3,549

2,984

11,306

6,261

Technology and development

4,950

2,680

13,855

6,661

General and administrative

�

4,427

�

2,116

�

12,586

�

5,721

Total

$

14,252

$

8,911

$

42,210

$

21,317

�

�
THE TRADE DESK, INC.
� � �
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
�
As of As of
December 31,

2018

December 31,

2017

ASSETS
Current assets:
Cash and cash equivalents $ 207,232 $ 155,950
Accounts receivable, net 834,764 599,565
Prepaid expenses and other current assets � 14,527 � 10,298
Total current assets 1,056,523 765,813
Property and equipment, net 33,046 17,405
Deferred income taxes 8,460 3,359
Other assets, non-current � 19,843 � 10,587
Total assets $ 1,117,872 $ 797,164
�
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 669,147 $ 490,377
Accrued expenses and other current liabilities � 44,844 � 28,155
Total current liabilities 713,991 518,532
Debt, net — 27,000
Other liabilities, non-current � 9,314 � 6,049
Total liabilities � 723,305 � 551,581
�
Stockholders' equity:
Preferred stock — —
Common stock — —
Additional paid-in capital 270,447 209,603
Retained earnings � 124,120 � 35,980
Total stockholders' equity � 394,567 � 245,583
Total liabilities and stockholders' equity $ 1,117,872 $ 797,164
�

�
THE TRADE DESK, INC.
� �
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
�
Year Ended December 31,
2018 2017
OPERATING ACTIVITIES:
Net income $ 88,140 $ 50,798

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 11,822 7,209
Stock-based compensation 42,210 21,317
Deferred income taxes (5,101 ) (1,581 )
Bad debt expense 2,115 4,289
Other 2,905 (1,303 )
Changes in operating assets and liabilities:
Accounts receivable (239,901 ) (224,636 )
Prepaid expenses and other assets (10,551 ) (5,033 )
Accounts payable 177,675 171,793
Accrued expenses and other liabilities � 17,289 � 8,371
Net cash provided by operating activities � 86,603 � 31,224
INVESTING ACTIVITIES:
Purchases of property and equipment (19,795 ) (10,110 )
Capitalized software development costs (5,396 ) (2,954 )
Business acquisition � — � (3,000 )
Net cash used in investing activities � (25,191 ) � (16,064 )
FINANCING ACTIVITIES:
Repayment on line of credit (27,000 ) —
Payment of debt financing costs (279 ) (154 )
Payment of financing obligations — (1,001 )
Proceeds from exercise of stock options 10,021 2,565
Proceeds from employee stock purchase plan 13,805 6,997
Taxes paid related to net settlement of restricted

stock awards

� (6,677 ) � (1,017 )
Net cash provided by (used in) financing activities � (10,130 ) � 7,390
Increase in cash and cash equivalents 51,282 22,550
Cash and cash equivalents—Beginning of period � 155,950 � 133,400
Cash and cash equivalents—End of period $ 207,232 $ 155,950
�

Non-GAAP Financial Metrics

(Amounts in thousands, except per share amounts)

The following tables show the Company’s GAAP financial metrics reconciled to non-GAAP financial metrics included in this release.

� Three Months Ended � Year Ended
December 31, December 31,
2018 � 2017 2018 � 2017
�
Net income $ 39,435 $ 16,811 $ 88,140 $ 50,798
Add back:
Depreciation and amortization expense 3,715 2,052 11,822 7,209
Stock-based compensation expense 14,252 8,911 42,210 21,317
Interest expense 601 501 1,550 1,791
Interest income (821 ) (47 ) (1,883 ) (93 )
Secondary offering costs — — — 1,523
Provision for income taxes � 9,869 � 11,225 � 17,597 � 12,827
Adjusted EBITDA $ 67,051 $ 39,453 $ 159,436 $ 95,372
�
� Three Months Ended � Year Ended
December 31, December 31,
2018 � 2017 2018 � 2017
GAAP net income $ 39,435 $ 16,811 $ 88,140 $ 50,798
Add back (deduct):
Stock-based compensation expense 14,252 8,911 42,210 21,317
Secondary offering costs — — — 1,523
Adjustment for income taxes � (2,585 ) � (1,502 ) � (6,503 ) � (3,274 )
Non-GAAP net income $ 51,102 $ 24,220 $ 123,847 $ 70,364
�
GAAP diluted EPS $ 0.84 $ 0.38 $ 1.92 $ 1.15
Non-GAAP diluted EPS $ 1.09 $ 0.54 $ 2.70 $ 1.60
�
Weighted average shares outstanding—diluted � 46,777 � 44,464 � 45,793 � 44,056
�

Investors

Chris Toth

Vice President Investor Relations, The Trade Desk

[email protected]

310-334-9183

Media

Austin Rotter

Associate VP, 5WPR

[email protected]

646-862-6866

Source: The Trade Desk

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