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The Trade Desk Reports Second Quarter Financial Results

August 8, 2019 4:01 PM

LOS ANGELES--(BUSINESS WIRE)-- The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its second quarter ended June 30, 2019.

“We delivered outstanding performance in the second quarter, once again surpassing our expectations. Q2 revenue growth of 42% accelerated from the 41% growth in Q1. This performance is testament to the increasing trust that major global advertisers are placing in us as they shift more of their advertising dollars to programmatic. For the quarter, revenue was $159.9 million, up 42% from a year ago and adjusted EBITDA increased to a Q2 record of $58 million. We are executing well. The fundamentals of our business are solid, and we continue to scale our business across markets in key growth areas such as CTV,” said Founder and CEO of The Trade Desk, Jeff Green. “In one of our most important initiatives in CTV to date, we recently joined forces with Amazon Publisher Services (APS) to bring programmatic demand to their third-party premium TV content providers. We are in the midst of the digitization and transformation of TV advertising, and we are uniquely positioned to help advertisers and TV content providers become more data driven in everything they do. We are helping to drive transparency across the ad ecosystem, including CTV, which is improving advertiser confidence and driving demand.”

Second Quarter 2019 Financial Highlights:

The following table summarizes our consolidated financial results for the periods ended June 30, 2019 and 2018 ($ in millions, except per share amounts):

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

GAAP Results

Revenue

$

159.9

$

112.3

$

280.9

$

198.0

Increase in revenue year over year

42

%

54

%

42

%

57

%

Net Income

$

27.8

$

19.3

$

38.0

$

28.4

Diluted EPS

$

0.58

$

0.43

$

0.80

$

0.63

Non-GAAP Results

Adjusted EBITDA

$

58.0

$

36.9

$

82.6

$

55.8

Adjusted EBITDA Margin

36

%

33

%

29

%

28

%

Non-GAAP Net Income

$

45.6

$

27.2

$

68.7

$

42.6

Non-GAAP Diluted EPS

$

0.95

$

0.60

$

1.44

$

0.95

Second Quarter and Recent Business Highlights Include:

Third Quarter and Revised Full Year 2019 Outlook:

Mr. Green added: “The first half of 2019 is off to a great start. The biggest brands in the world continue to shift their advertising spending to programmatic on our platform. As a result, we are raising our 2019 revenue guidance to be at least $653 million. At the same time, we are continuing to make large investments in areas critical to our future. We now expect our adjusted EBITDA to be $201 million for 2019. The secular tailwind of programmatic is strong. Our focus is on gaining share and revenue growth as this will ultimately maximize profitability over the long-term.”

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

Third Quarter 2019:

Full Year 2019

Reconciliation of adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure 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 Income 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 (income), net and provision for income taxes. Non-GAAP net income excludes charges and the related income tax effects for stock-based compensation. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 30% have been used in the computation of non-GAAP net income and non-GAAP diluted EPS. 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 Income. 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.

Second Quarter Financial 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 INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Revenue

$

159,924

$

112,333

$

280,911

$

198,001

Operating expenses:

Platform operations

35,330

26,601

68,981

49,498

Sales and marketing

31,072

20,690

53,809

36,720

Technology and development

29,452

19,484

54,764

37,185

General and administrative

32,121

19,396

65,738

38,506

Total operating expenses

127,975

86,171

243,292

161,909

Income from operations

31,949

26,162

37,619

36,092

Total other expense (income), net

(1,420

)

1,064

(1,087

)

1,764

Income before income taxes

33,369

25,098

38,706

34,328

Provision for income taxes

5,569

5,755

755

5,915

Net income

$

27,800

$

19,343

$

37,951

$

28,413

Earnings per share:

Basic

$

0.63

$

0.46

$

0.86

$

0.68

Diluted

$

0.58

$

0.43

$

0.80

$

0.63

Weighted average shares outstanding:

Basic

44,404

42,174

44,157

41,903

Diluted

47,828

45,242

47,573

44,895

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Platform operations

$

1,331

$

1,107

$

2,387

$

1,903

Sales and marketing

4,831

2,759

8,058

4,724

Technology and development

6,497

2,534

11,433

4,892

General and administrative

8,398

2,858

15,048

5,022

Total

$

21,057

$

9,258

$

36,926

$

16,541

THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

As of

As of

June 30,
2019

December 31,
2018

ASSETS

Current assets:

Cash and cash equivalents

$

130,590

$

207,232

Short-term investments

100,461

—

Accounts receivable, net

830,646

834,764

Prepaid expenses and other current assets

22,319

14,527

Total current assets

1,084,016

1,056,523

Property and equipment, net

43,521

33,046

Operating lease assets

82,711

—

Deferred income taxes

8,460

8,460

Other assets, non-current

20,743

19,843

Total assets

$

1,239,451

$

1,117,872

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

616,222

$

669,147

Accrued expenses and other current liabilities

37,429

44,844

Operating lease liabilities

16,822

—

Total current liabilities

670,473

713,991

Operating lease liabilities, non-current

71,699

—

Other liabilities, non-current

5,058

9,314

Total liabilities

747,230

723,305

Stockholders' equity:

Preferred stock

—

—

Common stock

—

—

Additional paid-in capital

330,150

270,447

Retained earnings

162,071

124,120

Total stockholders' equity

492,221

394,567

Total liabilities and stockholders' equity

$

1,239,451

$

1,117,872

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

Six Months Ended June 30,

2019

2018

OPERATING ACTIVITIES:

Net income

$

37,951

$

28,413

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

Depreciation and amortization

9,277

4,830

Stock-based compensation

36,926

16,541

Bad debt expense

843

1,239

Noncash lease expense

8,935

—

Other

(2,056

)

2,725

Changes in operating assets and liabilities:

Accounts receivable

4,987

(50,348

)

Prepaid expenses and other assets

(11,960

)

(2,702

)

Accounts payable

(51,937

)

11,220

Accrued expenses and other liabilities

(6,312

)

491

Operating lease liabilities

(5,848

)

—

Net cash provided by operating activities

20,806

12,409

INVESTING ACTIVITIES:

Purchases of property and equipment

(17,002

)

(6,585

)

Capitalized software development costs

(2,420

)

(2,772

)

Purchases of investments

(122,432

)

—

Maturities of investments

22,424

—

Net cash used in investing activities

(119,430

)

(9,357

)

FINANCING ACTIVITIES:

Repayment on line of credit

—

(27,000

)

Payment of debt financing costs

(7

)

—

Proceeds from exercise of stock options

16,975

3,209

Proceeds from employee stock purchase plan

8,648

7,014

Taxes paid related to net settlement of restricted stock awards

(3,634

)

(544

)

Net cash provided by (used in) financing activities

21,982

(17,321

)

Decrease in cash and cash equivalents

(76,642

)

(14,269

)

Cash and cash equivalents—Beginning of period

207,232

155,950

Cash and cash equivalents—End of period

$

130,590

$

141,681

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

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Net income

$

27,800

$

19,343

$

37,951

$

28,413

Add back:

Depreciation and amortization expense

4,821

2,579

9,277

4,830

Stock-based compensation expense

21,057

9,258

36,926

16,541

Interest expense (income), net

(1,286

)

(32

)

(2,283

)

124

Provision for income taxes

5,569

5,755

755

5,915

Adjusted EBITDA

$

57,961

$

36,903

$

82,626

$

55,823

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

GAAP net income

$

27,800

$

19,343

$

37,951

$

28,413

Add back (deduct):

Stock-based compensation expense

21,057

9,258

36,926

16,541

Adjustment for income taxes

(3,291

)

(1,364

)

(6,208

)

(2,390

)

Non-GAAP net income

$

45,566

$

27,237

$

68,669

$

42,564

GAAP diluted EPS

$

0.58

$

0.43

$

0.80

$

0.63

Non-GAAP diluted EPS

$

0.95

$

0.60

$

1.44

$

0.95

Weighted average shares outstanding—diluted

47,828

45,242

47,573

44,895

Investors

Chris Toth

Vice President Investor Relations, The Trade Desk

[email protected]

310-334-9183

Media

Ian Colley

Vice President Public Relations, The Trade Desk

[email protected]

914-434-3043

Source: The Trade Desk, Inc.

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