According to an eMarketer report, the global digital advertising market is estimated to grow 18% to $333.25 billion in 2019 and reach $517.5 billion by 2023. Digital advertising is expected to account for over 60% of the global advertising market by 2023. Online advertising marketplace The Trade Desk (Nasdaq: TTD) recently announced its first quarter results that outpaced market expectations, and the company shows no signs of slowing growth.
The Trade Desk’s Financials
For the quarter, The Trade Desk’s revenues grew 41% over the year to $121 million, ahead of the market’s forecast of $117 million. Net income improved from $9.1 million a year ago to $10.2 million for the quarter. Adjusted EPS was at $0.49, compared with the Street’s forecast of $0.25.
Among key metrics, total mobile (in-app, video, and web) based customer spending accounted for 45% of gross spend with mobile video and mobile in-app spend growing 60%. Its newest channels of the Connected TV and Audio continued to deliver promising results. Connected TV spend grew three times over the year and Connected Audio spend recorded a growth of 270% over the year. Customer retention remained strong at more than 95% during the quarter.
The Trade Desk forecast revenues of $154 million for the current quarter and $645 million for the year. The Street was looking for revenues of $152.38 million and EPS of $0.62 for the quarter and revenues of $640.48 million and EPS of $2.56 for the year.
The Trade Desk’s International Expansion
To continue to drive growth, Ventura, California-based The Trade Desk continued to grow its international footprint. It has been working on its presence in China for the last two years, and earlier this quarter, announced plans to go live. It has entered into several integrations and partnerships with top companies like Baidu, Baidu’s streaming service iQIYI, Tencent Marketing Solution, and Alibaba’s video streaming service Youku.
Within China, the company is driving on three key principles – desire for transparency, delivering premium inventory to global advertisers, and the ability to properly put third-party data to use. It has also built a team of people in its Shanghai and Hong Kong offices and is looking towards China as a long-term, high growth potential market.
Within the developed markets of Europe and North America, The Trade Desk is pushing growth by investing heavily in the Connected TV (CTV) services. Its CTV inventory continues to grow and it is adding more channels, users, and ad opportunities on its platform. It is accessing more inventory in live events with events like the NCAA March Madness Basketball Tournament.
According to eMarketer, 2.8% of all television advertising spend in 2019 will be in programmatic, but that is a number that will continue to grow rapidly. The Trade Desk currently reaches 80 million households worldwide through its CTV inventory and is planning to keep growing that number as its next growth opportunity.
According to a Zenith Media report, programmatic advertising is among the fastest-growing segments of the digital advertising market. It is expected to account for $84 billion in revenues in 2019 and grow to $98 billion by 2020. The Trade Desk is poised to continue to benefit from this growth.
The company listed in 2016 and prior to that had raised $252.5 million in both venture and debt financing from investors including Double M Partners, Founder Collective, Hermes Growth Partners, IA Ventures, Joshua Stylman, Kortschak Investments, L.P., Neu Venture Capital, Opus Bank, Revel Partners, SV Angel, Wellington Management, and Wider Wake Networks.
At the time of listing it raised $84 million by selling stock at $28.75 apiece and at a valuation of $1.1 billion. In less than three years since listing, the stock has come a long way. It is currently trading at $233.77 with a market capitalization of $10.41 billion. It touched a 52-week high of $257.99 earlier last month. It has recovered from the 52-week low of $83.66 that it had fallen to in July last year.