Our view: Following a mixed start to the year by their standards against a difficult set-up, we expect the company to deliver strong results in Q2 reflecting a more positive macro backdrop in a normalizing environment. We believe The Trade Desk remains uniquely positioned as a power broker in the open-internet as we assume coverage with an OP rating and $95 PT.
Key points:
All you need to know: We expect The Trade Desk to deliver strong Q2/21 results in early August and would look for upside vs. consensus revenue/ adj-EBITDA of $261M/$86M, which implies y/y revenue growth of 87% vs. 37% last quarter as we comp the pandemic trough. That said, over the past four quarters, the company has outperformed consensus by an average of 8.3%, 4.6% excluding Q3, while the prior 4-year average Q2 beat is 5.2%. We believe revenue could be +$270M based on 4-5% potential upside to current expectations. As we lap Q2/20, comps become more challenging, but we feel a robust macro-environment driven by an accelerated shift toward digital marketing, a pause in the overhang from cookie-loss and continued recovery of impacted verticals make TTD well-positioned to deliver upside to full-year results. Regarding investor sentiment, shares are +18% since Q1/21 results vs. the S&P +4%. We are confident in the long-term value of ad-tech in the open-internet and believe TTD is the key component of that environment as we assume coverage with an OP rating and $95 PT.
The power broker: We believe that TTD is a key to the success of ad-tech in the open-internet and remains the most likely candidate to fill the void left by cookies with its Unified ID. Due to the rise of programmatic, particularly in a cookie-less world, the scale and differentiation of data sets will be key to driving ROI and the company's partnership with Walmart provides an example of the opportunities that come with scale. The key to sustaining this position will be the ability to evolve with the digital revolution including CTV. While we think the CTV shift from linear will likely have a long tail similar to the shift we saw toward the hybrid-cloud in software, in our view TTD remains well positioned in this market for long-term share gain.
Looking to the future: Last week, TTD launched Solimar and dubbed it the biggest platform upgrade in company history with the ability to combine targeting and measurement into a unified interface allowing brands to plan campaigns based on specific KPIs and enable customers to better utilize their own first party data sets aimed at driving the allusive goal of ad- tech, tangible ROI. Solimar's features are also available via API, which along with their new venture capital arm TD7, show continued support for open- internet innovators highlighting their role as the central cog of the eco- system.