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The Trade Desk Reports Fourth Quarter and Fiscal Year 2020 Financial Results

TTD

Global advertising technology leader The Trade Desk (Nasdaq: TTD ) today announced financial results for its fourth quarter and fiscal year ended December 31, 2020.

“While 2020 was a uniquely challenging year, it was also a turning point for our industry and our company. We won more share in our fastest growing channels such as CTV and Audio, which helped drive record ad spend of $4.2 billion on our platform in 2020,” said Co-Founder and CEO of The Trade Desk, Jeff Green. “Perhaps just as important, in 2020 we saw several years of advertising disruption and innovation compressed into a few months. Marketers are being more deliberate and data-driven in everything they do, and as a result, they are gravitating to the advertising opportunities of the open internet. With CTV now offering a data-driven alternative to linear, with brands seeking a scalable and brand-safe alternative to user-generated content, and with new identity tools that provide a common currency for the open internet as well as enable better cross channel measurement, the industry is gravitating to the open internet and standardizing on our platform.”

Fourth Quarter and Full Year 2020 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters and fiscal year ended December 31, 2020 and 2019 ($ in millions, except per share amounts):

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

2020

2019

GAAP Results

Revenue

$

319.9

$

215.9

$

836.0

$

661.1

Increase in revenue year over year

48

%

35

%

26

%

39

%

Net Income

$

151.9

$

50.9

$

242.3

$

108.3

Diluted EPS

$

3.05

$

1.06

$

4.95

$

2.27

Non-GAAP Results

Adjusted EBITDA

$

152.9

$

83.5

$

283.7

$

213.9

Adjusted EBITDA Margin

48

%

39

%

34

%

32

%

Non-GAAP Net Income

$

184.8

$

71.6

$

335.6

$

176.3

Non-GAAP Diluted EPS

$

3.71

$

1.49

$

6.85

$

3.69

Fourth Quarter and 2020 Business Highlights Include:

  • Continued Share Gain: 2020 gross spend on the platform was approximately $4.2 billion, a 34% increase from a year ago.
  • Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for each quarter, the previous 6 years.
  • Continued Industry-Wide Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0, a new industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. The ID is an upgrade and alternative to third-party cookies. Partnerships in 2020 include:
    • Nielsen Holdings, a global measurement and data analytics company
    • Criteo S.A., a global technology company that powers world marketers
    • LiveRamp Holdings, the leading data connectivity platform
    • Magnite, the world’s largest independent sell-side advertising platform
    • Index Exchange, a large global advertising marketplace where premium digital media companies sell their ad impressions
    • The Washington Post, a large American daily newspaper published in Washington, D.C.
    • Pubmatic, a leader in developing and implementing online advertising software and strategies for the digital publishing and advertising industry.
    • Neustar, a leading technology company that provides real-time information and analytics for the Internet and digital performance.
    • MediaVine, one of the largest ad management companies in the U.S.
    • OpenX, a programmatic advertising technology company that combines ad server and a real-time bidding exchange with a standard supply-side platform
  • Expanded Partnerships in 2020:
    • In Q1, The Trade Desk and TikTok, the leading destination for short-form mobile video, announced a new advertising partnership covering key Asia Pacific markets. The partnership will allow advertisers to directly access premium TikTok inventory across the Asia-Pacific region via The Trade Desk platform. TikTok is the first short-form video platform to integrate its ad offerings with The Trade Desk, making this a unique industry-leading development for brands in the region.
    • Also in Q1, The Trade Desk and Samba TV, the leading provider of consumer cross screen television insights and analytics, expanded their U.S. partnership to international markets beginning in Australia.
    • In Q2, The Trade Desk and FreeWheel, a Comcast company expanded its partnership in connected TV. The Trade Desk now can access FreeWheel’s unified decisioning capability that enables buyers and sellers to seamlessly transact across both direct sold and programmatic advertising.
  • Industry Awards: For the fourth consecutive year, The Trade Desk was named a Best Medium Workplace™ 2020 by Great Places to Work®. The Trade Desk was also named a Best Workplace in Asia™, a Best Workplace in UK™, a Best Workplace in Hong Kong™ and a Best Workplace in New York™. The Trade Desk won Best Overall Adtech Solution at the MarTech Breakthrough Awards, won for the Best Overall Technology for Programmatic Trading at The Drum Digital Advertising Awards (US) and was named Marketing Technology Company of the Year at the B&T 2020 Awards (Australia). The Trade Desk was also a Leader in the Gartner Adtech Magic Quadrant, 2020.

Impact of COVID-19 on our Outlook:

Our business has been impacted by the COVID-19 pandemic that has significantly impacted advertiser demand. Like many companies that are ad-funded, we are facing a period of higher uncertainty in our business outlook. We expect our business performance could be impacted by issues beyond our control, such as changing economic conditions or additional shelter-in-place orders that may or may not occur. Assuming that the economy continues to recover and we do not have any major COVID-19 related setbacks that may cause economic conditions to deteriorate, we estimate the following:

First Quarter 2021 outlook summary:

  • Revenue range between $214 million and $217 million
  • Adjusted EBITDA of at least $55 million

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 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 (benefit from) 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.

Fourth Quarter and Fiscal Year 2020 Results Webcast and Conference Call Details

  • When: February 18, 2021 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time).
  • Webcast: A live webcast of the call can be accessed from the Investor Relations section of The Trade Desk’s website at http://investors.thetradedesk.com/ . Following the call, a replay will be available on the company’s website.
  • Dial-in: To access the call via telephone in North America, please dial 888-506-0062. For callers outside the United States, please dial 1-973-528-0011. Participants should reference the conference call ID code “510840” after dialing in.
  • Audio replay: An audio replay of the call will be available beginning about two hours after the call. To listen to the replay in the United States, please dial 877-481-4010 (replay code: 39926). Outside the United States, please dial 1-919-882-2331 (replay code: 39926). The audio replay will be available via telephone until March 4, 2021.

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 relatively 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

Year Ended

December 31,

December 31,

2020

2019

2020

2019

Revenue

$

319,905

$

215,944

$

836,033

$

661,058

Operating expenses (1):

Platform operations

51,645

47,267

178,812

156,180

Sales and marketing

58,740

42,931

174,742

132,882

Technology and development

48,723

32,803

166,654

116,752

General and administrative

54,365

40,293

171,617

143,048

Total operating expenses

213,473

163,294

691,825

548,862

Income from operations

106,432

52,650

144,208

112,196

Total other expense (income), net

(529

)

(1,045

)

305

(4,024

)

Income before income taxes

106,961

53,695

143,903

116,220

Provision for (benefit from) income taxes

(44,941

)

2,750

(98,414

)

7,902

Net income

$

151,902

$

50,945

$

242,317

$

108,318

Earnings per share:

Basic

$

3.24

$

1.13

$

5.24

$

2.43

Diluted

$

3.05

$

1.06

$

4.95

$

2.27

Weighted average shares outstanding:

Basic

46,917

45,036

46,287

44,533

Diluted

49,754

48,034

48,988

47,806

(1) Includes stock-based compensation expense as follows:

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

2020

2019

Platform operations

$

3,335

$

1,456

$

8,794

$

5,350

Sales and marketing

11,177

7,675

29,726

20,769

Technology and development

12,327

7,974

36,672

26,553

General and administrative

11,185

7,285

36,583

28,086

Total

$

38,024

$

24,390

$

111,775

$

80,758

THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

As of

As of

December 31,

2020

December 31,

2019

ASSETS

Current assets:

Cash and cash equivalents

$

437,353

$

130,876

Short-term investments

186,685

124,112

Accounts receivable, net

1,584,109

1,166,376

Prepaid expenses and other current assets

102,170

27,857

Total current assets

2,310,317

1,449,221

Property and equipment, net

115,863

64,012

Operating lease assets

248,143

173,449

Deferred income taxes

50,168

18,950

Other assets, non-current

29,154

23,129

Total assets

$

2,753,645

$

1,728,761

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

1,348,480

$

868,618

Accrued expenses and other current liabilities

88,335

47,178

Operating lease liabilities

37,868

14,577

Total current liabilities

1,474,683

930,373

Operating lease liabilities, non-current

254,562

174,873

Other liabilities, non-current

11,255

10,998

Total liabilities

1,740,500

1,116,244

Stockholders' equity:

Preferred stock

Common stock

Additional paid-in capital

538,778

380,079

Retained earnings

474,367

232,438

Total stockholders' equity

1,013,145

612,517

Total liabilities and stockholders' equity

$

2,753,645

$

1,728,761

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

Year Ended December 31,

2020

2019

OPERATING ACTIVITIES:

Net income

$

242,317

$

108,318

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

Depreciation and amortization

28,632

21,662

Stock-based compensation

111,775

80,758

Deferred income taxes

(31,218

)

(10,490

)

Allowance for credit losses on accounts receivable

3,149

2,702

Noncash lease expense

33,269

21,894

Other

2,190

(1,939

)

Changes in operating assets and liabilities:

Accounts receivable

(418,054

)

(331,369

)

Prepaid expenses and other assets

(66,655

)

(19,597

)

Accounts payable

481,313

191,763

Accrued expenses and other liabilities

35,446

6,845

Operating lease liabilities

(17,095

)

(10,342

)

Net cash provided by operating activities

405,069

60,205

INVESTING ACTIVITIES:

Purchases of investments

(230,759

)

(212,776

)

Maturities of investments

167,602

89,539

Purchases of property and equipment

(74,061

)

(35,693

)

Capitalized software development costs

(6,053

)

(4,911

)

Net cash used in investing activities

(143,271

)

(163,841

)

FINANCING ACTIVITIES:

Proceeds from line of credit

143,000

Repayment on line of credit

(143,000

)

Payment of debt financing costs

(6

)

Proceeds from exercise of stock options

76,146

29,874

Proceeds from employee stock purchase plan

21,671

16,746

Taxes paid related to net settlement of restricted stock awards

(53,138

)

(19,334

)

Net cash provided by financing activities

44,679

27,280

Increase (decrease) in cash and cash equivalents

306,477

(76,356

)

Cash and cash equivalents—Beginning of period

130,876

207,232

Cash and cash equivalents—End of period

$

437,353

$

130,876

Non-GAAP Financial Metrics
(Amounts in thousands, except per share amounts)

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

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

2020

2019

Net income

$

151,902

$

50,945

$

242,317

$

108,318

Add back:

Depreciation and amortization expense

7,855

6,416

28,632

21,662

Stock-based compensation expense

38,024

24,390

111,775

80,758

Interest expense (income), net

84

(956

)

(656

)

(4,719

)

Provision for (benefit from) income taxes

(44,941

)

2,750

(98,414

)

7,902

Adjusted EBITDA

$

152,924

$

83,545

$

283,654

$

213,921

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

2020

2019

GAAP net income

$

151,902

$

50,945

$

242,317

$

108,318

Add back (deduct):

Stock-based compensation expense

38,024

24,390

111,775

80,758

Adjustment for income taxes

(5,119

)

(3,783

)

(18,460

)

(12,768

)

Non-GAAP net income

$

184,807

$

71,552

$

335,632

$

176,308

GAAP diluted EPS

$

3.05

$

1.06

$

4.95

$

2.27

Non-GAAP diluted EPS

$

3.71

$

1.49

$

6.85

$

3.69

Weighted average shares outstanding—diluted

49,754

48,034

48,988

47,806

Investors
Chris Toth
Vice President Investor Relations, The Trade Desk
ir@thetradedesk.com
310-334-9183

Media
Ian Colley
Vice President Public Relations, The Trade Desk
ian.colley@thetradedesk.com
914-434-3043



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