The Trade Desk (NasdaqGM:TTD) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Company ParticipantsAlec Brondolo - Director Equity ResearchChris Toth - VP of Investor RelationsJason Helfstein - Managing Director - Head of Internet ResearchJeff Green - CEO, Co-Founder, and Board ChairmanMatthew Swanson - Director Equity ResearchTahnil Davis - Interim CFO and Chief Accounting OfficeYoussef Squali - Managing Director and Head of Internet and Digital Media Research GroupNone - Company RepresentativeConferenc ...

The Trade Desk (NasdaqGM:TTD) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Speaker6Greetings. Welcome to The Trade Desk fourth quarter and full year 2025 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to ...

INVESTOR RELATIONS PRESENTATION 2026 Statement of caution under the Private Securities Litigation Reform Act of 1995 O B J E C T I V E We operate only on the buy-side and are not biased toward specific inventory or partners. Our interests are aligned with our clients. 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 foreca ...

Industry Overview - The global digital advertising market is projected to grow at a CAGR of 9.4% from 2026 to 2035, indicating its attractiveness as a long-term growth market in the technology sector [1]. Company Profiles The Trade Desk (TTD) - TTD operates a leading demand-side platform (DSP) focused on data-driven advertising, facing significant competition from major players like Meta, Apple, Google, and Amazon [2][5]. - TTD's total operating costs surged 17% year over year to $457 million, driven by investments in enhancing platform capabilities [6]. - The company expects revenues of at least $840 million for Q4 2025, with a projected year-over-year revenue growth rate of 18.5% [9]. - TTD's AI-powered Kokai platform is used by 85% of its clients, strengthening its competitive position [8][11]. PubMatic (PUBM) - PUBM is a sell-side platform that helps publishers monetize their inventory, with a focus on connected TV (CTV) and retail media growth [2][10]. - PUBM reported over 50% year-over-year growth in CTV revenues in Q3, capitalizing on the shift of approximately $155 billion in linear television ad spend to digital formats [12]. - The company anticipates fourth-quarter revenues between $73 million and $77 million, with adjusted EBITDA projected between $19 million and $21 million [16]. - PUBM's revenues from emerging revenue streams grew over 80% year over year, contributing 10% of total revenues in Q3 [14]. Competitive Landscape - Both TTD and PUBM are experiencing growth in CTV and retail media but face rising competition and macroeconomic risks [11]. - TTD's focus on geographic expansion and AI integration presents both opportunities and challenges, particularly with regulatory changes [7][8]. - PUBM's reliance on major DSP clients poses risks, as evidenced by a recent revision in bidding approach affecting its top line [17]. Share Performance & Valuation - Over the past month, TTD and PUBM's shares have declined by 25.8% and 14.7%, respectively [20]. - TTD's shares are trading at a forward price/sales ratio of 3.55X, while PUBM's is at 1.09X, indicating a higher valuation for TTD [21]. Analyst Estimates - Analysts have kept estimates unchanged for both TTD and PUBM for the current fiscal year, indicating stability in expectations [22][24]. - TTD currently holds a Zacks Rank of 4 (Sell), while PUBM has a Zacks Rank of 3 (Hold), suggesting PUBM may be a better pick at the moment [25].

Core Insights - The Trade Desk, Inc. (TTD) is set to report its fourth-quarter 2025 results on February 25, with a consensus estimate for earnings at 59 cents and total revenues at $841.9 million, reflecting a 13.6% year-over-year increase [1][10] Revenue and Earnings Expectations - TTD anticipates revenues to be at least $840 million, with an 18.5% year-over-year growth rate when excluding U.S. political ad spend from the prior year [2] - The company projects an adjusted EBITDA of $375 million [2] - TTD has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 8.4% [2] Business Performance Factors - Continued momentum in Connected TV (CTV) is expected to support TTD's top-line performance, as CTV is the fastest-growing segment in digital advertising [5] - Management noted a rapid transition towards biddable CTV, which is anticipated to become the default buying model, offering greater flexibility and control for advertisers [6] - Other growth drivers include retail media, international expansion, and the Kokai platform, with 85% of clients using Kokai as their default experience [7] Competitive Landscape - TTD faces significant competition from major players like Amazon and Alphabet, particularly in the CTV space [10][12] - The digital advertising market is characterized as a buyer's market, leading to persistent pricing and margin pressures [13] - TTD's stock has declined 51.4% over the past six months, underperforming the Internet-Services industry and the S&P 500 [16] Valuation Metrics - TTD's stock is trading at a forward 12-month price/earnings ratio of 11.82X, which is lower than the industry average of 25.3X [20] - Competitors like Amazon and Alphabet are trading at higher forward price/earnings multiples of 25.65X and 25.7X, respectively [21] Strategic Initiatives - TTD's initiatives such as OpenPath, Deal Desk, Pubdesk, and OpenAds aim to enhance transparency and supply-chain efficiency by connecting advertisers directly to publishers [8] - The company is focusing on embedding AI across its portfolio, which may increase capital expenditures and operational costs [14]

Core Insights - THG Ingenuity has formed a strategic partnership with The Trade Desk, enhancing its digital commerce capabilities [1] - This partnership allows media buyers to access THG's segments from Cult Beauty and LOOKFANTASTIC through The Trade Desk's Kokai platform [1] - The new offering addresses the increasing market demand for personalized advertising solutions [1] Company Overview - THG Ingenuity is a global digital commerce platform that is part of The Hut Group [1] - The Trade Desk is recognized as a leader in global advertising technology [1] Market Demand - There is a growing demand in the market for more personalized advertising experiences [1]

Core Viewpoint - The Trade Desk (NASDAQ: TTD) has experienced an 81% decline from its peak, yet analysts believe the stock is significantly undervalued, with a median target price of $50 per share indicating an 85% upside from its current price of $27 [1]. Group 1: Company Overview - The Trade Desk operates a demand-side platform (DSP) that assists media buyers in planning, measuring, and optimizing data-driven advertising campaigns across digital channels [4]. - The latest version of its DSP, named Kokai, utilizes artificial intelligence (AI) to manage budgets, customize bids, and dynamically target audiences [4]. Group 2: Investment Thesis - The investment thesis for The Trade Desk is based on its independent business model, which does not involve owning media content, thus avoiding biases in ad spending [5]. - This independence allows The Trade Desk to foster better data sharing with publishers, enhancing the effectiveness of its measurement tools across the open internet [6]. Group 3: Market Position - The Trade Desk's objectivity is a significant advantage for advertising buyers, making it the most popular DSP for the open internet [7]. - The company has a strong presence in connected TV (CTV) advertising and off-site retail advertising, which are among the fastest-growing segments in the digital advertising market [7]. Group 4: Competitive Landscape - The emergence of generative AI tools is altering consumer engagement with the internet, leading to a predicted slowdown in open internet ad spending growth from approximately 25% in 2024 to about 5% by 2028 [8]. - The Trade Desk charges higher fees, typically between 15% to 20% of ad spending, compared to competitors like Amazon, which charges less than 10%, and AppLovin, which primarily earns revenue based on performance [8].

Core Insights - The Trade Desk (TTD) has experienced a significant decline in stock price, dropping 26.7% over the past month, reflecting investor concerns about its performance in the digital ad tech space [1][7] - The broader Zacks Internet Services industry has also faced challenges, with a 4% decline, while the Computer & Technology sector and S&P 500 have lost 2.9% and 0.9%, respectively, indicating a widespread downturn in the digital advertising ecosystem [4] Company-Specific Challenges - TTD's recent sell-off is attributed to rising costs, slowing revenue growth, macroeconomic volatility, and increasing competition [6][8] - Total operating costs (excluding stock-based compensation) surged 17% year over year to $457 million, driven by investments in enhancing platform capabilities [8] - The company faces macro-driven ad spend caution, which could pressure revenue growth due to reduced programmatic demand amid higher interest rates and geopolitical instability [9] Competitive Landscape - TTD's strongest long-term growth driver, Connected TV (CTV), is becoming increasingly competitive, with rivals like Amazon expanding their demand-side platform (DSP) business [10] - Competition from major players such as Meta Platforms, Apple, Google, and Amazon, as well as smaller companies like Magnite and PubMatic, is intensifying in the CTV and retail media spaces [10] - Regulatory changes, including the deprecation of cookies and tightening data-privacy laws, present ongoing challenges for TTD [11] Long-Term Catalysts - Despite current challenges, TTD has several long-term growth catalysts, including the rise of CTV, expanding retail media networks, and the adoption of its AI-powered platform, Kokai, which is used by 85% of clients [14] - Kokai has demonstrated significant performance improvements, delivering 26% better cost per acquisition, 58% better cost per unique reach, and a 94% better click-through rate compared to its previous platform [14] - The acceleration of retail media is driven by demand for measurable outcomes, with TTD's platform integrating retail data with identity solutions for precise targeting [16] Valuation Metrics - TTD's stock is currently trading at a price/book multiple of 5.03X, compared to the industry's 7.84X, indicating a relative undervaluation [18] - Competitors such as Amazon, Magnite, and PubMatic are trading at multiples of 5.47X, 2.01X, and 1.23X, respectively [19]

Company Performance - The Trade Desk has experienced a significant decline, with its stock dropping by 67% in 2025 and an additional 20% at the start of the current year [1] - Despite the recent downturn, The Trade Desk has historically outperformed the broader market over its lifetime [3] Competitive Landscape - The competitive environment for The Trade Desk has intensified, particularly with Amazon emerging as a major player in digital advertising by launching a competing platform and partnering with Netflix [5] - The Trade Desk's revenue growth has slowed for several quarters, which is concerning for a company with a high valuation [5] Valuation and Financial Health - At its peak in late 2024, The Trade Desk was trading at 85 times its forward earnings estimates, indicating a valuation that was difficult to sustain [4] - Currently, the stock is trading at under 15 times forward earnings estimates, which suggests a potential undervaluation given the anticipated earnings growth of 20% annually over the next three to five years [8] Management Changes - The Trade Desk recently faced management instability, having fired its new chief financial officer after only a few months, which has contributed to the lack of confidence from Wall Street [6] Technological Advancements - The company has transitioned to an improved, AI-capable technology platform named Kokai in 2023, which may enhance its competitive position in the market [7]

Group 1 - The Trade Desk is expected to report its fourth-quarter results soon, with shareholders hoping for a turnaround after a significant decline in stock value, which is down about 74% from its all-time high of over $139 and approximately 55% over the last five years [1][2] - Despite the stock's poor performance, The Trade Desk's revenue and earnings have shown resilience, with third-quarter revenue reaching $739 million, reflecting an 18% year-over-year growth, although this is a deceleration from previous quarters [3][4] - Customer retention remains strong at over 95%, marking an 11-year streak, indicating that the underlying business is performing well despite stock market challenges [4] Group 2 - The Trade Desk's revenue growth has slowed, with management guiding for even slower growth in Q4 due to tough comparisons from political ad spending in 2024 [7] - When excluding political spending, the company's third-quarter revenue growth was actually 22% year-over-year, driven by increased ad spending on its AI-powered programmatic ad-buying platform, Kokai [5][6] - The company has been actively repurchasing shares, announcing an additional $500 million share repurchase authorization after spending $310 million on buybacks during Q3 [8]