Public Domain / Wikimedia Commons Quick Read AppLovin (APP) grew revenue 68% to $1.41B with a 76.8% operating margin driven by its AXON 2.0 AI engine. Trade Desk (TTD) revenue rose 18% to $739M but operating cash flow fell 18% to $225M. AppLovin generated $1.05B in operating cash flow while Trade Desk’s cash position dropped 47% to $653M. If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected ...

Core Insights - The Trade Desk, Inc. (TTD) is experiencing significant growth in connected TV (CTV) and retail media, with Q3 2025 revenues rising 18% year over year to $739 million, exceeding expectations of at least $717 million [1][9] - The shift towards biddable CTV is gaining traction, with decision-based buying becoming the preferred method for advertisers due to its flexibility and measurable performance [2] - Retail media is also accelerating, driven by demand for measurable outcomes, with TTD's platform integrating retail data and identity solutions to enhance targeting and attribution [3] CTV and Retail Media Growth - CTV remains TTD's fastest-growing channel, with decision-based buying gaining industry momentum [1][9] - Retail media is seeing increased investment as brands seek to connect consumer behavior directly to business results, supported by TTD's AI-enhanced Kokai platform [3][4] Ecosystem Strategy - TTD's broader ecosystem strategy includes innovations like OpenPath, OpenAds, and Deal Desk, which enhance supply chain transparency and auction integrity, positioning the company for sustained growth into 2026 and beyond [4] Competitive Landscape - TTD faces competition from Magnite, Inc. (MGNI) and Amazon.com, Inc. (AMZN), both of which are also making strides in the CTV and advertising space [5][6][7] - MGNI reported Q3 2025 revenues of $179.5 million, up 11% year over year, with strong performance in CTV [6] - Amazon's AI initiatives are gaining momentum, with significant growth in its AI chip business and overall sales [7] Financial Performance and Valuation - TTD's shares have declined 23.4% in the past month, contrasting with the Internet – Services industry's growth of 9.3% [10] - The forward price/earnings ratio for TTD is 32.76X, higher than the industry average of 26.45X [11] - The Zacks Consensus Estimate for TTD's earnings for 2025 has been slightly revised upward over the past 60 days [12]

Core Insights - The Trade Desk (TTD) is focusing on expanding its revenue streams beyond connected TV (CTV), with audio advertising emerging as a significant growth driver [1][10] - TTD's AI-powered platform, Kokai, is enhancing performance in audio campaigns, leading to improved metrics for clients [2][3][10] - TTD faces increasing competition from major players like Amazon and independent ad-tech companies such as Magnite [4][5][10] Group 1: Business Expansion and Performance - TTD is seeing audio advertising grow, currently representing about 5% of its business, with expectations for further increases due to the premium nature of these channels [1] - Consumers are spending approximately three hours daily on music and podcasts, expanding the market for digital audio ads [1] - Kokai has shown significant performance improvements, with 26% better cost per acquisition, 58% better cost per unique reach, and 94% better click-through rates compared to previous platforms [3] Group 2: Competitive Landscape - Amazon's digital advertising services are rapidly growing, with projected revenues of $56.2 billion in 2024 and a 22% year-over-year increase in Q3 revenues to $17.6 billion [5][6] - Amazon's DSP platform is gaining traction, providing advertisers access to over 300 million ad-supported audiences across various platforms, including Spotify and SiriusXM [6] - Magnite reported Q3 revenues of $179 million, an 11% increase year-over-year, with a strong adjusted EBITDA margin of 34% [7] Group 3: Strategic Initiatives - TTD's OpenPath and OpenAds initiatives are designed to enhance transparency and efficiency in the advertising supply chain [3][10] - The company is leveraging partnerships and technology to strengthen its competitive position in the digital advertising space [8]

Core Insights - The Trade Desk (TTD) stock has decreased by 15.6% over the past month, closing at $43.26, significantly lower than its 52-week high of $141.53 and closer to its 52-week low of $41.77 [1] - Revenues for Q3 2025 increased by 18% year over year to $739 million, surpassing consensus estimates by 3% and exceeding the company's own expectations of at least $717 million [1][9] - Adjusted EBITDA rose to $371 million from $257 million year over year, with adjusted EPS at 45 cents, exceeding estimates and up from 41 cents in the previous year [2] Revenue Growth Drivers - Connected TV (CTV) is identified as the fastest-growing segment in the digital ad market, with management expecting decision-based CTV buying to become the default model in the future [3] - The company's AI-powered platform, Kokai, is utilized by 85% of clients and has shown significant performance improvements compared to previous models, enhancing its competitive edge [4] - Initiatives like OpenPath and OpenAds are designed to connect advertisers directly with publishers, improving transparency and efficiency in the supply chain [5] Market Opportunities - Approximately 60% of TTD's total addressable market is outside the United States, with international business currently accounting for about 13% of total revenues, indicating potential for long-term growth [6] - The company has a strong cash position of $1.4 billion with no debt, providing a buffer against macroeconomic volatility [7] Stock Performance and Valuation - TTD repurchased $310 million worth of stock in Q3 and has approved a new buyback plan of $500 million [8] - The stock is currently trading at a premium valuation, with a price/book multiple of 8.13X compared to the industry average of 7.69X [16] Competitive Landscape - The competitive environment is intensifying, with major players like Meta, Apple, Google, and Amazon dominating the ad tech space, which could pressure TTD's market position [13] - Smaller competitors like Magnite and PubMatic are also expanding their presence in CTV and retail media, increasing competition for ad dollars [14] Cost and Profitability Challenges - Total operating costs surged by 17% year over year to $457 million, driven by investments in platform capabilities, which may compress margins if revenue growth slows [15] - Macro volatility poses a significant concern for TTD, as worsening conditions could lead to reduced programmatic demand and pressure on revenue growth [12] Conclusion - Given the solid fundamentals and near-term headwinds, TTD is currently rated as a hold, suggesting that existing investors may retain their positions while new investors should wait for a more favorable entry point [18]

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]