Q4 2024 Earnings Summary
- Massive Addressable Market with Significant Growth Opportunities: The Trade Desk currently controls just 1% of a $1 trillion Total Addressable Market (TAM), highlighting substantial room for growth. The company is focusing on expanding in Connected TV (CTV), which is its fastest-growing and largest channel, as well as untapped areas like audio and international markets that are growing faster than the U.S.
- Anticipated Acceleration Due to OpenPath and Supply Chain Improvements: The company expects that 2025 will be the year OpenPath enters the steep acceleration phase, driven by major CTV players adopting OpenPath to achieve a more efficient supply chain. The acquisition of Sincera will enhance supply chain transparency and efficiency, potentially leading to improved margins and competitiveness.
- Positioned to Capitalize on Google's Potential Exit from the Open Internet: The Trade Desk believes that Google will likely exit the open internet, which would leave a significant gap in the market. TTD is strategically positioned to capture this opportunity, potentially accelerating growth and increasing market share as advertisers seek alternatives.
- The Trade Desk missed its own expectations for Q4 2024 for the first time in 8 years due to a series of execution missteps, including internal issues and product rollout delays, indicating potential management and operational challenges.
- The company anticipates increased operating expenses in 2025, leading to some deleverage for the year, potentially impacting profitability and margins.
- Slower-than-anticipated rollout of key platform updates like Kokai affected short-term revenues, suggesting potential issues with product development and deployment.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q1 2025 | no prior guidance | at least $575 million, 17% YoY growth | no prior guidance |
Adjusted EBITDA | Q1 2025 | no prior guidance | approximately $145 million | no prior guidance |
Capital Expenditures (CapEx) | 2025 | around 5% of revenue | approximately 5% of total revenue | no change |
Operating Expenses | 2025 | no prior guidance | modest increase in the growth rate | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Massive addressable market with TTD controlling ~1% | Q3 2024: ~1% share of ~$1T market. Q2 2024: No exact % mentioned. Q1 2024: Not specified, but ~$1T TAM. | Still ~1% share, controlling $12B in a $1T industry. | Recurring. Messaging remains bullish on growth. |
Shift from linear TV to CTV | Q1–Q3 2024: Major growth driver. | Remains a key channel, ~40s% of business. | Recurring. Sentiment still bullish. |
Partnerships with major streaming providers | Q1–Q3 2024: Netflix, Disney, Roku partnerships in early stages. | 2024 called a year of landmark partnerships, but fewer new specifics. | Recurring. Expanded but less detail in Q4. |
Unified ID 2.0 (UID2) | Q1–Q3 2024: Primary identity solution, wide adoption across CTV/audio. | Adoption by streaming leaders, key case studies in Q4. | Recurring. Adoption and impact growing each quarter. |
Kokai platform updates | Q1–Q3 2024: AI enhancements, strong adoption, improved performance. | Solimar transition nearly complete, more agile dev teams, AI integration. | Recurring. Continual improvements, positive outlook. |
Regulatory challenges affecting Google | Q1–Q3 2024: DOJ scrutiny, Google deprioritizing open Internet. | Google’s shrinking network business cited; regulatory baggage emphasized. | Recurring. More optimistic about TTD’s position. |
Dependency on political advertising | Q3 2024: Low single digits. Q2 & Q1 2024: Not specifically addressed. | About 5% in Q4, net effect “too close to call”. | Recurring. Moderate relevance each cycle. |
Supply influx in CTV | Q1–Q3 2024: Influx noted, potential lower CPMs. | No direct mention in Q4. | No mention. Topic overshadowed by other CTV drivers. |
Integration of retail media networks | Q1–Q3 2024: Key growth with first-party data activation. | Emphasized as a significant opportunity, success stories (Boiron, Sulwhasoo). | Recurring. Increasing importance. |
Macro uncertainty and scrutiny on CMOs | Q2–Q3 2024: CMOs face heavy pressure. | No mention in Q4. | No longer mentioned. Overshadowed by internal issues. |
Video ad mix percentage plateau | Q1 2024: Stuck in mid-40% range. No Q2/Q3 mention. | High 40s% share in Q4, no plateau concern. | No longer a concern. Video remains strong. |
OpenPath and supply chain improvements | Q1–Q3 2024: OpenPath fosters direct connections. | Sincera acquisition to enhance transparency, major CTV adoption. | Recurring with new acquisition details in Q4. |
Potential Google exit from open Internet | Q1–Q3 2024: Speculation on diminishing involvement. | Likely exit highlighted, seen as opportunity for TTD. | Recurring. Stronger emphasis in Q4. |
Missed Q4 2024 expectations | No prior mention. | First miss in 33 quarters, attributed to internal missteps. | New topic. Negative short-term sentiment. |
Increased opex and potential deleverage in 2025 | No mentions Q1–Q3 2024. | Modest opex growth planned, some deleverage expected. | New topic. Cautious view for 2025. |
-
Q4 Miss Explanation
Q: What went wrong in Q4 leading to guidance miss?
A: Jeff Green acknowledged that The Trade Desk missed their own expectations due to a series of small execution missteps, including slower Kokai rollout and internal reorganization—the largest in the company's history—but emphasized that the long-term opportunity is not diminished. -
Growth Outlook
Q: Can TTD sustain 20%+ growth over several years?
A: Jeff Green believes they can reaccelerate growth by focusing on the vast untapped TAM of $1 trillion, where TTD currently controls just over 1%. They plan to capitalize on opportunities in CTV, audio, and international markets, improve supply chain efficiency, and make strategic investments in infrastructure and talent. -
Revenue Reacceleration Factors
Q: What will drive revenue reacceleration?
A: Factors include growth in CTV, tapping into the untapped audio market, international expansion, enhancing supply chain efficiency, benefiting from Google's reduced focus on the open internet, and bringing in senior leadership like a world-class COO to improve operational efficiency. -
Industry Performance vs. TTD
Q: Why did TTD underperform compared to peers?
A: Jeff Green stated that despite challenging macro conditions, the underperformance was due to internal execution issues, such as slower Kokai rollout and organizational complexities, rather than external factors, and that they have outperformed in similar environments before. -
Google's Reduced Role
Q: Is there a shift in advertiser sentiment away from Google?
A: Jeff Green observes that Google's network business has been shrinking for years, and they are deprioritizing the open internet, focusing instead on areas like Gemini, cloud, AI, search, and YouTube. This creates a significant opportunity for TTD to capture market share as Google exits the space. -
Amazon Competition
Q: How does Amazon impact TTD's competitive landscape?
A: Jeff Green sees Amazon's DSP as less of a competitor due to their objectivity problem, as they compete with many Fortune 500 companies. He views Prime Video as a potential partner opportunity and believes TTD's independent, objective DSP is better positioned to gain market share. -
OpenPath and Sincera
Q: What's the plan for OpenPath and Sincera's role?
A: OpenPath enables direct integration with major content owners, allowing them to manage their own yield without SSPs. Jeff Green expects significant adoption in 2025, especially in CTV and audio. The Sincera acquisition improves supply chain visibility and efficiency, aiding in price discovery and ensuring they buy inventory only from accurately described sources. -
Expense Ramp
Q: Explain the operating expense increase and margin impact.
A: Laura Schenkein stated they anticipate a modest increase in operating expenses in 2025, leading to some deleverage for the year, as they invest in key areas like infrastructure and talent. EBITDA typically improves as the year progresses due to investment choices and business seasonality. -
Senior Leadership Hiring
Q: What senior leadership roles are you hiring for?
A: Jeff Green mentioned they plan to add a world-class COO to enhance operational efficiency and help the company scale, as well as other senior hires to strengthen their go-to-market efforts and capitalize on growth opportunities.