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The Trade Desk Inc Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- The company expects revenue to be at least $575 million, reflecting 17% YoY growth in Q1.
- The company has revised and will continue to revise its product process to remain agile as it ingests more inputs for more stakeholders.
- The company stumbled in Q4 due to a series of small execution missteps while simultaneously preparing for the future.
- The company is disappointed that it didn't do well this time, but it knew at some point it would have to miss.
- The company acknowledges that there are inefficiencies in the supply chain, but it is at the right size to change it.
- Brands are increasingly wary of the dangers of cheap reach.
- Capital intensity remains low, and CapEx is expected to be approximately 5% of total revenue.
- The company expects a modest increase in the growth rate of operating expenses in 2025 compared to previous years, resulting in modest deleverage for the year.
- The company expects revenue to be at least $575 million in Q1, reflecting 17% YoY growth.
- The company expects another strong year of cash flow generation.
- The company expects adjusted EBITDA to be approximately $145 million in Q1.
Q&A Highlights from The Trade Desk Inc Earnings Call Q4 2024
- Analyst asked about the reason for missing the guidance in Q4.
- The company missed its guidance due to a series of small execution missteps, which resulted in them losing the game. The company made a number of trade-ups that compounded, leading to a loss. The company is not facing a smaller opportunity, but a bigger one, and they are recalibrating the company to become a bigger company to capture the opportunity.
- The company missed its guidance due to a series of small execution missteps, which resulted in them losing the game. The company made a number of trade-ups that compounded, leading to a loss. The company is not facing a smaller opportunity, but a bigger one, and they are recalibrating the company to become a bigger company to capture the opportunity.
- Analyst asked about the difference between The Trade Desk and the industry, and the impact of factors like the polarized political environment and product rollout issues on the shortfall in Q4.
- The company has outperformed in challenging environments before, and they are confident in their ability to do so again. The GDP, unusual election uncertainty, continued pricing pressure on some consumers and companies doesn't create an ideal environment, but the company has navigated that before. The company believes that the objective-independent, focused DSP should get the largest market share, and they are fighting hard to get there first. The company is making internal changes to become a better company and capture the most market share possible.
- The company has outperformed in challenging environments before, and they are confident in their ability to do so again. The GDP, unusual election uncertainty, continued pricing pressure on some consumers and companies doesn't create an ideal environment, but the company has navigated that before. The company believes that the objective-independent, focused DSP should get the largest market share, and they are fighting hard to get there first. The company is making internal changes to become a better company and capture the most market share possible.
- Analyst asked about the impact of Google's shift in focus on the company's business.
- Jeffrey Terry Green, CEO of The Trade Desk, explained that Google's network business has been shrinking for years, and the company has been prioritizing its own products and services over the open internet. He believes that Google will eventually exit the open internet, which will create a big opportunity for other companies, including The Trade Desk. He also noted that the company's de-prioritization of the open internet has created more room for The Trade Desk to compete and benefit from it.
- Jeffrey Terry Green, CEO of The Trade Desk, explained that Google's network business has been shrinking for years, and the company has been prioritizing its own products and services over the open internet. He believes that Google will eventually exit the open internet, which will create a big opportunity for other companies, including The Trade Desk. He also noted that the company's de-prioritization of the open internet has created more room for The Trade Desk to compete and benefit from it.
- Analyst asked about the company's plans for OpenPath and the acquisition of Sincera.
- Laura Schenkein, CFO of The Trade Desk, explained that OpenPath is at a tipping point this year, and it was one of the company's top five priorities. She mentioned that OpenPath allows content owners to integrate with The Trade Desk directly, and the company expects many of the biggest content owners to take this route. She also discussed the acquisition of Sincera, a metadata company that helps The Trade Desk evaluate what's happening across the entire supply chain. The company believes that Sincera will help them create more price discovery, better standards, and only buy inventory from those who describe it best.
- Laura Schenkein, CFO of The Trade Desk, explained that OpenPath is at a tipping point this year, and it was one of the company's top five priorities. She mentioned that OpenPath allows content owners to integrate with The Trade Desk directly, and the company expects many of the biggest content owners to take this route. She also discussed the acquisition of Sincera, a metadata company that helps The Trade Desk evaluate what's happening across the entire supply chain. The company believes that Sincera will help them create more price discovery, better standards, and only buy inventory from those who describe it best.
- Analyst asked about the areas in which The Trade Desk wants to hire senior leadership.
- The company plans to hire a world-class COO to enhance its go-to-market strategy and increase operational efficiency. They also want to add to their team to improve their GTM. The company believes that adding a COO will help them become more efficient and operationally rigorous.
- The company plans to hire a world-class COO to enhance its go-to-market strategy and increase operational efficiency. They also want to add to their team to improve their GTM. The company believes that adding a COO will help them become more efficient and operationally rigorous.
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