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The Trade Desk Reports First Quarter 2022 Financial Results

TTD

The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its first quarter ended March 31, 2022.

“We delivered outstanding performance in the first quarter, growing 43% versus a year ago, representing our strongest first quarter revenue growth in the last four years. This performance is testament to the value that marketers are increasingly placing on data-driven advertising on the open internet,” said Jeff Green, Co-founder and CEO of The Trade Desk. “We continue to innovate in ways that help marketers succeed, whether it’s launching the world’s most advanced data marketplace that helps advertisers value and price data accurately and use more of it, or our OpenPath solution, which provides advertisers with a more direct path to premium publisher inventory. With this innovation focus, along with strong growth across all channels, led by CTV, we are reinforcing our position as the default demand side platform for the open internet.”

First Quarter 2022 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters ended March 31, 2022 and 2021 ($ in millions, except per share amounts):

Three Months Ended

March 31,

2022

2021

GAAP Results

Revenue

$

315

$

220

Increase in revenue year over year

43

%

37

%

Net income (loss)

$

(15

)

$

23

GAAP diluted earnings (loss) per share

$

(0.03

)

$

0.05

Non-GAAP Results

Adjusted EBITDA

$

121

$

71

Adjusted EBITDA margin

38

%

32

%

Non-GAAP net income

$

105

$

70

Non-GAAP diluted earnings per share

$

0.21

$

0.14

First Quarter and Recent Business Highlights:

  • Strong Customer Retention: Customer retention remained over 95% during the first quarter, as it has for the past eight consecutive years.
  • Continued Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0, an 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. Recent partnerships and pledges of support include:
    • Collaboration with LiveRamp to create European Unified ID (EUID), a new privacy-first, interoperable solution for the European Advertising Market.
    • Partnership with AppLovin, marking the first mobile-native in-app exchange to enable Unified ID 2.0 signals for mobile publishers.
  • Expanded Partnerships:
    • In March, The Trade Desk announced a new integration with Adobe Real-Time CDP, a leading customer data platform. As marketers prepare for the deprecation of third-party cookies, the collaboration empowers the activation of first-party data to create more precise digital advertising campaigns.
    • In March, The Trade Desk launched a new certified service partner program for small and medium-sized businesses (SMBs). As part of the announcement, Goodway Group became The Trade Desk’s first certified service partner to help meet rising demand from SMBs as they increasingly turn to data-driven advertising to optimize budgets.
  • Launched OpenPath: Highlights include:
    • Ability for publishers to integrate directly with The Trade Desk, allowing advertisers direct access to their inventory.
    • Removes inefficiencies often present in the programmatic supply chain, including those propagated by walled gardens.
  • Industry Recognition:
    • 2022 Customers’ Choice for Ad Tech on Gartner® Peer Insights™
    • 2022 BIG Innovation Award for Technology Product (Solimar)
    • 2022 Top Women in Media & Ad Tech
    • FORTUNE: Future 50 list
    • Gartner Magic Quadrant for Ad Tech: positioned highest for “Completeness of Vision” and recognized for “Ability to Execute”
    • FORTUNE: 100 Fastest Growing Companies for 2021
    • The Software Report: Top 100 Software Companies of 2021
    • Adweek Readers’ Choice: Best of Tech awards for both Demand Side Platform and Innovator of the Year categories
    • Forbes: Global 2000 list
    • FORTUNE: Best Medium Workplace 2021

Financial Guidance:

Second Quarter 2022 outlook summary:

  • Revenue at least $364 million
  • Adjusted EBITDA of approximately $121 million

We have not provided an 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 Operations of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before interest expense (income), net; provision for (benefit from) income taxes; depreciation and amortization; and stock-based compensation. 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 25% to 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 Operations. 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.

First Quarter 2022 Financial Results Webcast and Conference Call Details

  • When: May 10, 2022 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 “656956” 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: 45287). Outside the United States, please dial 1-919-882-2331 (replay code: 45287). The audio replay will be available via telephone until May 17, 2022.

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 OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)

Three Months Ended

March 31,

2022

2021

Revenue

$

315,323

$

219,811

Operating expenses (1):

Platform operations

63,890

50,500

Sales and marketing

70,688

55,764

Technology and development

71,999

53,918

General and administrative

125,799

51,845

Total operating expenses

332,376

212,027

Income (loss) from operations

(17,053

)

7,784

Total other expense (income), net

281

(308

)

Income (loss) before income taxes

(17,334

)

8,092

Benefit from income taxes

(2,736

)

(14,550

)

Net income (loss)

$

(14,598

)

$

22,642

Earnings (loss) per share:

Basic

$

(0.03

)

$

0.05

Diluted

$

(0.03

)

$

0.05

Weighted-average shares outstanding:

Basic

484,190

472,816

Diluted

484,190

497,916

_______________________

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

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

Three Months Ended

March 31,

2022

2021

Platform operations

$

5,950

$

5,015

Sales and marketing

16,525

13,684

Technology and development

22,393

16,094

General and administrative (1)

80,027

17,561

Total

$

124,895

$

52,354

_______________________

(1) Stock-based compensation for the three months ended March 31, 2022 included $66 million expense related to a long-term CEO performance grant in G&A.

THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

As of

As of

March 31,
2022

December 31,
2021

ASSETS

Current assets:

Cash and cash equivalents

$

844,223

$

754,154

Short-term investments, net

260,347

204,625

Accounts receivable, net

1,760,985

2,020,720

Prepaid expenses and other current assets

89,784

112,150

Total current assets

2,955,339

3,091,649

Property and equipment, net

130,640

135,856

Operating lease assets

228,991

234,091

Deferred income taxes

73,548

68,244

Other assets, non-current

44,203

47,500

Total assets

$

3,432,721

$

3,577,340

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

1,405,673

$

1,655,684

Accrued expenses and other current liabilities

92,903

101,472

Operating lease liabilities

47,226

46,149

Total current liabilities

1,545,802

1,803,305

Operating lease liabilities, non-current

229,489

238,449

Other liabilities, non-current

8,327

8,280

Total liabilities

1,783,618

2,050,034

Stockholders' equity:

Preferred stock

Common stock

Additional paid-in capital

1,051,572

915,177

Retained earnings

597,531

612,129

Total stockholders' equity

1,649,103

1,527,306

Total liabilities and stockholders' equity

$

3,432,721

$

3,577,340

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

Three Months Ended March 31,

2022

2021

OPERATING ACTIVITIES:

Net income (loss)

$

(14,598

)

$

22,642

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

Depreciation and amortization

12,350

10,011

Stock-based compensation

124,895

52,354

Allowance for credit losses on accounts receivable

725

203

Noncash lease expense

10,515

9,451

Deferred income taxes

(5,304

)

Other

998

4,905

Changes in operating assets and liabilities:

Accounts receivable

259,483

208,847

Prepaid expenses and other assets

23,743

(16,180

)

Accounts payable

(245,937

)

(200,578

)

Accrued expenses and other liabilities

(8,688

)

(5,691

)

Operating lease liabilities

(11,990

)

(10,894

)

Net cash provided by operating activities

146,192

75,070

INVESTING ACTIVITIES:

Purchases of investments

(121,221

)

(89,354

)

Sales of investments

4,539

Maturities of investments

64,133

62,670

Purchases of property and equipment

(8,401

)

(13,120

)

Capitalized software development costs

(1,614

)

(1,062

)

Net cash used in investing activities

(67,103

)

(36,327

)

FINANCING ACTIVITIES:

Proceeds from exercise of stock options

24,408

12,621

Taxes paid related to net settlement of restricted stock awards

(13,428

)

(17,080

)

Net cash provided by (used in) financing activities

10,980

(4,459

)

Increase in cash and cash equivalents

90,069

34,284

Cash and cash equivalents—Beginning of period

754,154

437,353

Cash and cash equivalents—End of period

$

844,223

$

471,637

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

March 31,

2022

2021

Net income (loss)

$

(14,598

)

$

22,642

Add back:

Depreciation and amortization

12,350

10,011

Stock-based compensation

124,895

52,354

Interest expense, net

1,076

45

Benefit from income taxes

(2,736

)

(14,550

)

Adjusted EBITDA

$

120,987

$

70,502

Three Months Ended

March 31,

2022

2021

GAAP net income (loss)

$

(14,598

)

$

22,642

Add back (deduct):

Stock-based compensation expense

124,895

52,354

Adjustment for income taxes

(5,635

)

(5,007

)

Non-GAAP net income

$

104,662

$

69,989

GAAP diluted earnings (loss) per share

$

(0.03

)

$

0.05

GAAP Weighted average shares outstanding—diluted

484,190

497,916

Non-GAAP diluted earnings per share

$

0.21

$

0.14

Non-GAAP Weighted average shares used in computing Non-GAAP earnings per share, diluted (1)

499,801

497,916

_______________________

(1) Includes an additional 15.6 million of dilutive securities for the three months ended March 31, 2022, which are excluded from GAAP diluted weighted average shares outstanding due to the Company’s net loss position for the three months ended March 31, 2022.

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