Shares of The Trade Bureau (NASDAQ: TTD) fell today as a solid earnings report wasn’t enough to satisfy investors in the expensive ad tech stocks.
As a result, shares fell 6.9% as of 11:52 a.m. ET on Friday.
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The Trade Desk came into its third quarter earnings report with a sky-high valuation, which seemed to be the reason the stock fell as investors wanted a bigger price than they got.
Revenue in the quarter rose 27% to $628 million, beating the consensus of $619.9 million. The company also saw strong margin expansion under generally accepted accounting principles (GAAP) as investments such as the Kokai AI platform upgrade paid off.
Customer retention remained above 95%, continuing a decade-long quarterly streak. The Unified ID 2.0 protocol continues to expand its reach and forge partnerships with Roku And Spotify.
GAAP operating income nearly tripled to $108.5 million as spending on technology and general and administrative expenses remained largely flat. On an adjusted basis, earnings per share rose from $0.33 to $0.41, ahead of the $0.39 consensus.
CEO Jeff Green expressed optimism about the fourth quarter, saying, “As we enter our business time of year and look ahead to 2025, we have never been in a better position to capture a larger portion of the $1 advertising campaign trillion to conquer. [total addressable market].”
The company expects revenue of at least $756 million, representing growth of at least 25% from the year-ago quarter.
In short, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to total about $363 million, showing a margin of almost 50%.
With the stock trading at a price-to-earnings ratio of around 200 on a GAAP earnings basis, it’s understandable why the stock is falling, but The Trade Desk appears well-positioned for long-term growth after the latest report.
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