The Trade Desk Reports Strong Earnings, Forecasting a More ‘Cautious’ Google

The numbers

$628 million – Q3 revenue, beating analyst expectations of $619.85 million. That’s growth of 27% year-over-year. Over the last 11 quarters, The Trade Desk has had growth of over 20%.

$94.2 million – profit for the quarter.

$756 million – guidance revenue for Q4, approximately $363 million in EBITDA.

95% – customer retention over the quarter, matching what it has been over the past 10 quarters.

The watercooler talk

CEO Jeff Green referenced 10 significant landscape changes impacting the business, including the shift to AI, regulatory pressures on Google, CTV market dynamics (TTD’s fastest-growing channel), opportunities in retail media, audio (shown in a Spotify partnership), and live sport.

According to Green, TTD is a powerful force in driving positive trends in the open internet by promoting transparency, efficiency, and objectivity, positioning TTD in opposition to the walled gardens, particularly Google. He also noted that other adtech vendors need to work on adding value rather than extracting profits.

Green said on the call that for it to champion the open internet, it needs OpenPath, (its SPO product that connects buyers directly with publishers, and informs publishers what TTD is willing to pay for ad impressions). One major news publisher who has deployed OpenPath saw fill rate increase by 7x, leading to a revenue increase of more than 25%.

While Green doesn’t talk specifically about OpenPath growth, he does characterize partnerships with publishers like Disney and Fox as being in the “crawl phase.”

CTV has long been a bright spot for TTD, despite now being a substantial portion of its business. With more streamers adding ads to their services, Green notes a shift from inventory scarcity to a focus on differentiation. This is where its identifier UID2, comes in. Content with identity attached to it will “do better,” he said. In April, Roku announced it is using UID2.

Retail media is rapidly becoming one of the “fastest-growing areas” of The Trade Desk’s business, with the retail data available on the platform “transforming” how many CPG advertisers approach measurement and attribution, said Green.

The key quote:

On the impact of Google’s regulatory challenges:

“Whenever the outcome of the trial, I do believe that Google will become more cautious.”

“But even if they don’t [deprioritize their network business], what I think is inevitable is that Google has to play more fair…But we have managed to win in an unfair market. I believe they will be forced, whether that’s from government or just by their own choosing because this risk-reward is not worth it. So, by their own choosing, I think they would make the market more fair and, therefore, make it easier for us to do well.”

On OpenPath as publisher friendly: “The reason why we [inform publishers how much they are willing to pay for impressions] is because there are many publishers who are saying, ‘I don’t have any idea what you’re willing to pay,’ because of all of the companies that exist between us, and it’s a way for them to hold them accountable to earn their keep. Some have wrongly assumed that this is us trying to cut them out.”