Core Viewpoint - The Trade Desk has experienced a significant decline in 2025, losing 66.2% of its value, making it one of the worst-performing stocks in the S&P 500 Index, raising questions about its future performance and potential recovery in 2026 [1][2]. Financial Performance - The Trade Desk's market capitalization is currently $18 billion, with a current stock price of $36.63, down from a 52-week high of $136.42 [3]. - The company missed revenue estimates for Q4 2024, marking its first miss in 33 quarters, despite a revenue growth of over 22% in that quarter [3][4]. - For 2025, revenue is projected to be $2.89 billion, reflecting an 18.2% growth rate, which is an 8-percentage-point deceleration from 2024 [4]. - Adjusted earnings per share are expected to grow by only 7.2% in 2025, indicating margin compression [4][5]. Challenges Faced - The Trade Desk's performance has been impacted by tough comparisons to the 2024 election year, which typically sees increased ad spending [8]. - The company has invested heavily in overhauling its digital ad data marketplace, introducing new services like Audience Unlimited, which may have contributed to the financial strain [9]. - High executive turnover, including the replacement of key positions such as CFO, COO, and CRO, has raised investor concerns [10]. - Increased competition from larger tech companies, particularly Amazon, poses a significant threat, as Amazon has been aggressively undercutting The Trade Desk's pricing [12][13]. Competitive Landscape - Amazon's demand-side platform (DSP) is seen as a major competitor, leveraging its e-commerce data to enhance ad offerings while offering lower fees compared to The Trade Desk [12][13]. - The Trade Desk's CEO has argued that Amazon's DSP primarily serves its own inventory, suggesting that Amazon may not effectively compete in the broader market [17][20]. Future Outlook - There is potential for a turnaround if The Trade Desk can demonstrate stronger revenue and earnings growth, as current valuations may already reflect existing fears [22]. - The stock trades at 22.1 times this year's adjusted EPS and 18.9 times next year's estimates, indicating a more favorable risk-reward ratio for potential buyers [22][23]. - The company's focus on maintaining neutrality and measuring ad effectiveness across the open internet could position it favorably against competitors in the long run [18][21].

Core Insights - The Trade Desk, Inc. (TTD) is strategically positioned for growth through 2026, driven by innovations in its Kokai platform and strong digital advertising demand, reporting Q3 revenues of $739 million, an 18% year-over-year increase [1][9] Group 1: Innovations and Product Developments - TTD introduced three major innovations in Q4, including a platform upgrade and two new products aimed at enhancing long-term growth [2] - The revamped data marketplace is designed to be more competitive and AI-driven, offering richer data and better rewards for contributors [2] - The launch of Audience Unlimited allows users to access and layer third-party data more freely, enhancing campaign performance [3] - Trading Modes, which provide flexibility in ad buying, will enable users to choose their level of control, supported by agentic AI for performance optimization [3][4] Group 2: Market Position and Competitive Landscape - TTD is well-positioned to capture market share in 2026, supported by the expansion of Kokai adoption, growth in CTV and retail media, and strong client retention [5] - Competitors like Magnite and Taboola are also innovating; Magnite reported an 18% growth in CTV, while Taboola's new platform, Realize, leverages AI to enhance performance advertising [6][7] Group 3: Financial Performance and Valuation - TTD's shares have declined 72.3% over the past year, contrasting with the S&P 500's rise of 15.4% [10] - The forward price/earnings ratio for TTD is 31.16X, higher than the Internet Services industry's 29.43X [11] - The Zacks Consensus Estimate for TTD's earnings for 2025 has increased over the past 60 days, indicating positive sentiment [13]

Core Insights - AppLovin (APP) and The Trade Desk (TTD) both reported Q3 2025 earnings that exceeded estimates, but their market reactions diverged significantly, with APP's stock surging 71% over the past year while TTD's stock fell 68% from its highs [1] AppLovin (APP) - AppLovin's revenue increased by 68% year-over-year to $1.41 billion, surpassing the estimate of $1.34 billion [2][4] - The company reported a net income of $836 million, reflecting a 92% increase from the previous year, and achieved an operating margin of 76.8% [2][4] - Operating cash flow reached $1.05 billion, up 91% year-over-year, indicating strong cash generation capabilities [4][7] - AppLovin's business model leverages its AXON 2.0 AI engine, providing end-to-end AI solutions for mobile app developers, which contributes to its high operating margin [5] The Trade Desk (TTD) - The Trade Desk's revenue grew by 18% to $739 million, slightly exceeding the estimate of $719 million [3][4] - Operating income rose by 49% to $161 million, but net income growth of 23% lagged behind revenue growth, indicating potential margin pressures [3][4] - Operating cash flow declined by 18% year-over-year to $225 million, and the company's cash position decreased by 47% to $653 million [3][4][7] - TTD's strategy focuses on a self-service programmatic advertising platform for the open internet, which results in a different cost structure reflected in its 21.8% operating margin [6]

Core Insights - The Trade Desk, Inc. (TTD) is positioned as a strong player in the open Internet advertising space, leveraging AI and data transparency to enhance advertiser decision-making [1][8] - The demand for premium content is expected to drive growth in the open Internet, allowing TTD to capture a larger share of advertising budgets [2][8] - AI advancements are making the open Internet more effective, enabling advertisers to control their data and improve long-term success [3][4] Industry Dynamics - The open Internet is characterized by competition and transparency, contrasting with walled gardens like Google and Amazon that rely on closed inventory [1] - Digital ad supply consistently exceeds demand, creating a buyer's market that benefits TTD and the open Internet [2] - For the open Internet to outpace closed platforms, it must leverage competition and efficient supply chains [2] Company Strategy and Performance - TTD's flagship products, such as Kokai and Deal Desk, are enhancing operational efficiency and market share as the company aims for expansion into 2026 and beyond [4][8] - The company is focused on data-driven, targeted advertising on premium content to maintain competitiveness [4] - TTD's shares have seen a significant decline of 65.3% over the past year, contrasting with the growth of the Zacks Internet -Services industry and S&P 500 [7] Competitive Landscape - Competitors like Magnite and Taboola are also making strides in the open Internet space, with Magnite reporting a 25% growth in CTV and Taboola expanding its performance advertising platform [5][6] - Magnite estimates that a 1% market share gain from increased competition could add approximately $50 million annually [5] Financial Metrics - TTD's forward price/earnings ratio stands at 36.6X, higher than the Internet Services industry's ratio of 26.88 [9] - The Zacks Consensus Estimate for TTD's earnings for 2025 has seen a slight increase over the past 60 days, indicating positive sentiment [11]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $739 million, representing an 18% year-over-year growth, and a 22% growth when excluding political spend from the previous year [39] - Adjusted EBITDA for the quarter was approximately $317 million, or about 43% of revenue [39] - Adjusted net income for Q3 was $221 million, or $0.45 per diluted share [41] - Free cash flow for Q3 was $155 million, with a strong cash and liquidity position of about $1.4 billion in cash and short-term investments at the end of the quarter [42] Business Line Data and Key Metrics Changes - CTV (Connected TV) continues to be the largest and fastest-growing channel, representing around 50% of the business in Q3 [39] - Mobile accounted for a low 30% share, display for a low double-digit share, and audio for around 5% [39] - The company is seeing strong growth in retail media and significant adoption across various verticals [5] Market Data and Key Metrics Changes - North America represented 87% of the business, while international markets accounted for about 13% [40] - Growth in international markets, particularly EMEA and APAC, is outpacing growth in North America [40] - Strong growth was noted in verticals such as medical health, automotive, and technology [40] Company Strategy and Development Direction - The company is focused on leading the open internet and enhancing operational efficiency through new leadership and structural changes [31][63] - Investments are being made in AI and product innovations to drive growth and improve client performance [38][39] - The company aims to capture a larger share of the $1 trillion advertising TAM as more dollars shift to programmatic [36] Management's Comments on Operating Environment and Future Outlook - The management describes the current macro environment as a "tale of two cities," with some brands facing pressure from tariffs and inflation, while others are experiencing strong momentum [72] - The company is optimistic about the potential of the open internet and believes that independent DSPs will capture the majority of open internet spend [28] - The focus remains on building a more accountable and metrics-driven culture to support long-term growth [66] Other Important Information - The company has repurchased nearly $2 billion through its share repurchase program since the first authorization in 2023 [42] - New product features and upgrades are expected to significantly contribute to growth in the coming years [27] Q&A Session Summary Question: Clarification on Amazon as a competitor and the evolving competitive environment - Management acknowledges Amazon and Google as significant players but emphasizes that their focus is primarily on owned and operated inventory, while The Trade Desk focuses on decisioned, data-driven buying across the open internet [49][51] Question: Areas for impact in the next couple of years - The CFO highlights the importance of disciplined resource allocation and a metrics-driven approach to drive growth and ROI [54][55] Question: Broader advertising and macro environment trends for 2026 - Management notes strong momentum across the business but acknowledges pressures in certain sectors due to external factors like tariffs and inflation [72]

Financial Data and Key Metrics Changes - The Trade Desk reported Q3 2025 revenue of $739 million, representing an 18% year-over-year growth. Excluding political spend from last year's Q3, revenue increased by approximately 22% [38][42] - Adjusted EBITDA for Q3 was approximately $317 million, or about 43% of revenue [38] - Adjusted net income for the quarter was $221 million, or $0.45 per diluted share [41] - Free cash flow was $155 million in Q3, with a strong cash and liquidity position of about $1.4 billion at the end of the quarter [42] Business Line Data and Key Metrics Changes - Connected TV (CTV) remains the largest and fastest-growing channel, with video (including CTV) representing around 50% of the business in Q3 [38] - Mobile accounted for a low 30% share, while display represented a low double-digit share, and audio was around 5% [38] - The Trade Desk's focus on retail media is seeing strong adoption across verticals, contributing to overall growth [5] Market Data and Key Metrics Changes - North America represented 87% of the business in Q3, while international markets accounted for about 13% [39] - Growth in international markets, particularly EMEA and APAC, is outpacing growth in North America [39] - Strong growth was noted in verticals such as medical health, automotive, and technology [40] Company Strategy and Development Direction - The company is focused on leading the open internet and enhancing operational efficiency through new leadership and structural changes [31][36] - The Trade Desk is investing in AI and automation to improve platform capabilities and drive productivity [18][63] - The company aims to capture a larger share of the $1 trillion advertising total addressable market (TAM) as more dollars shift to programmatic [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of the open internet and the advantages of an objective platform [28] - The company anticipates continued growth driven by innovations in AI and programmatic buying, particularly in CTV and retail media [43] - The Trade Desk is well-positioned to capitalize on the evolving advertising landscape, with a focus on operational rigor and long-term growth [43] Other Important Information - The company has repurchased nearly $2 billion through its share repurchase program since the first authorization in 2023 [42] - The board of directors approved a new authorization of $500 million for share repurchases [42] Q&A Session Summary Question: Clarification on Amazon as a competitor and the evolving competitive environment - Jeff Green acknowledged Amazon and Google as significant players but emphasized that their advertising efforts primarily focus on owned and operated inventory, with little competition in the open internet space [47][51] Question: Areas for impact in the organization - Jeff Green highlighted the importance of new leadership and structural changes aimed at strengthening the company's foundation and improving operational efficiency [59][61] Question: Trends in the advertising and macro environment for 2026 - Management noted the growing importance of the open internet and the potential for increased value in an objective platform, with a focus on disciplined resource allocation and international growth [69]

Core Insights - The advertising industry is facing significant challenges due to tariffs, inflation, and macroeconomic uncertainty, impacting media budgets and spending strategies of advertisers [1][2][6] - The Trade Desk is experiencing a decline in investor sentiment due to weak fiscal guidance and a substantial drop in share price, despite a year-over-year revenue increase [4][5] Industry Overview - 91% of surveyed ad buyers are concerned about tariffs affecting their media budgets, with 62% to 69% expecting significant impacts on the auto, retail, and consumer electronics sectors [1] - The IAB has lowered the 2025 U.S. ad spend outlook from 7.3% to 5.7%, indicating pressure on ad budgets and intensified competition from major players like Alphabet, Meta Platforms, and Amazon [6] Company Performance - The Trade Desk's revenue rose 19% year-over-year to $694 million in Q2 2025, surpassing consensus estimates, but this did not boost investor confidence [5] - The company is guiding for Q3 revenues of $717 million, slightly below consensus estimates, and expects an adjusted EBITDA margin of 38.6%, down from 39% in Q2 [4] Future Prospects - The Trade Desk's Kokai platform, which utilizes AI, is gaining traction, with campaigns showing over 20-point improvements in key performance indicators compared to legacy systems [3][8] - Connected TV (CTV) is a rapidly growing segment for The Trade Desk, accounting for 40% of total revenues in Q2 2025, with expectations for CTV to capture over 40% of global ad spend by 2030 [9][10] Strategic Initiatives - The company is enhancing pricing transparency through initiatives like OpenPath and Deal Desk, which could provide a competitive edge in the programmatic advertising space [11][12] - The Trade Desk is well-positioned to leverage its AI capabilities and cash reserves of $1.7 billion to fund future growth initiatives [13]

Core Insights - Coatue Management holds $71.92 million worth of shares in The Trade Desk, Inc. (NASDAQ:TTD), representing 0.20% of its total 13F portfolio, indicating confidence in the stock's potential upside [1] Group 1: AI-Driven Innovations - The Trade Desk, Inc. announced the launch of Audience Unlimited, an AI-driven tool designed to enhance digital advertising by scoring and selecting relevant data segments, improving targeting precision and reducing costs [2] - Audience Unlimited is a significant upgrade aimed at making third-party data more accessible and effective, alongside the introduction of Koa Adaptive Trading Modes, which provide advertisers with options for dynamic optimization or manual management with AI insights [3] Group 2: Advertising Platform Capabilities - The Trade Desk's cloud-based advertising platform facilitates planning, managing, and measuring digital ad campaigns across various channels, including video, display, mobile, and streaming, thereby enhancing overall ad performance [4]

Core Insights - Trade Desk (TTD) has a strong balance sheet with a cash position of $1.7 billion and reported free cash flow of $117 million on revenues of $694 million, reflecting a 19% year-over-year increase [1][10] - The company focuses on AI-driven platforms and data transparency tools, with significant investments in UID2 and Audience Unlimited, enhancing its competitive edge [2] - TTD's disciplined capital allocation is evident as it repurchased $261 million worth of stock in the second quarter, while projecting revenues of at least $717 million for the third quarter, indicating a 14% year-over-year growth [3][4] Financial Performance - TTD's adjusted EBITDA margin stands at nearly 39%, showcasing operational efficiency [1] - The company expects adjusted EBITDA to be around $277 million for the third quarter, contributing to steady cash flows [3] - TTD's liquidity allows for opportunistic share buybacks and investments in AI infrastructure and global expansion [4][5] Competitive Landscape - TTD faces competition from Amazon, which is increasing investments in its DSP and CTV businesses, leveraging extensive proprietary data for optimization [6][7] - Amazon's cash and cash equivalents were reported at $57.7 billion, providing it with significant resources to scale its advertising business [7] - Magnite, another competitor, reported an operating cash flow of $33.9 million and a cash balance of $426 million, indicating a different financial position compared to TTD [8]

Core Insights - Advertisers are cautious about third-party data due to high costs and effectiveness uncertainty, leading to low adoption rates and significant media spend losses [1] - The Trade Desk is addressing these challenges with Audience Unlimited, enhancing its marketplace for third-party data [1][9] Group 1: Audience Unlimited and Koa Adaptive Trading Modes - Audience Unlimited utilizes AI to rank third-party data segments for campaign relevance, offering a simplified pricing model that reduces costs for advertisers [2][9] - Koa Adaptive Trading Modes provide two options: Performance Mode, which optimizes bids and budgets dynamically, and Control Mode, which allows manual management with AI recommendations [3][4] - In Performance Mode, Audience Unlimited is included at no extra cost, while Control Mode has tiered rates of 3.3% or 4.4% of impression costs [4] Group 2: Performance Improvements and Ecosystem Developments - The Trade Desk's Kokai platform, powered by Koa AI, has led to over 20-point KPI lifts for clients, with spending on Kokai growing 20% faster than non-users [5] - OpenPath enhances supply chain transparency, benefiting publishers and clients, and promotes unbiased access to premium inventory [5] Group 3: Competitor Innovations - Magnite is enhancing its supply-side platform with updates to ClearLine for unified inventory management and AI tools from Streamr.ai to streamline workflows [6] - Taboola is expanding its performance advertising platform, Realize, with new Generative AI features to improve measurable results for advertisers [8] Group 4: Financial Performance and Market Position - The Trade Desk's shares have declined 54.4% over the past year, contrasting with the rise of the Zacks Internet -Services industry and S&P 500 [11] - TTD's forward price/earnings ratio stands at 24.98X, higher than the industry average of 24.15 [12]