Business Highlights
The Trade Desk reported its third-quarter 2024 earnings on Thursday, November 7, 2024. During the earnings call, CEO Jeff Green highlighted advancements in CTV, retail media, and AI-driven tools, including its new ad-ops platform, Kokai. Partnerships with major media players like Netflix, Disney, and Walmart underscored the strength of The Trade Desk’s ecosystem.
Revenue
Third-quarter revenue reached $628 million, marking a robust 27% growth compared to Q3 2023’s $493 million. This result brings The Trade Desk’s average year-on-year growth rate to an impressive 25% over the past eight quarters. This increase outperforms most other AdTech players except for Applovin, which is doing even better than The Trade Desk (and has overtaken it both in terms of revenue and market capitalization last quarter).
Revenue by Product Segment
The Trade Desk’s growth has primarily been driven by CTV and retail media. Video sales, which include CTV, now contribute nearly 50% of total revenue, outpacing other segments. Retail media is reportedly growing rapidly, though the company does not disclose these sales separately. This suggests its current contribution to overall revenue could still be modest in spite of fast growth. Other segments, such as mobile, display, and audio, maintain steady contributions, but CTV’s rapid expansion is reshaping the company’s revenue mix and reinforcing its leadership in programmatic CTV as traditional TV loses ground to digital.
INternational Expansion Lacking
The majority of The Trade Desk’s revenue still comes from North America, representing 88% of its recent quarterly revenue, with only 12% from non-U.S. markets. This regional split has remained largely unchanged for the past five years, indicating missed growth opportunities abroad. It raises the question: does management believe that solidifying U.S. dominance will lead to international success, or does survival dictate a U.S.-focused strategy?
Perhaps. But then, Applovin’s example proves that one can expand internationally and still be successful overall in AdTech. The international contribution for Applovin was 42% in 2023, up from 33% in 2019 – while the company at large shows stellar growth.
Operating Income
The Trade Desk has been consistently profitable on an annual basis for the past five years and continues to maintain profitability in 2024. The company reported an operating income of $108 million this quarter, achieving an impressive 17% profitability margin—a reflection of its ability to balance aggressive growth with profitability in the competitive ad tech sector.
Stock Price Impact
Despite strong Q3 results, The Trade Desk’s stock price declined by about 5% in the days following the earnings release. This drop is likely short-term, especially given that the stock price had already risen in anticipation of positive earnings.
An Ample War Chest
The Trade Desk’s cash reserves reached $1.2 billion by the end of Q3 2024 (up from $895 million), positioning it well for strategic investments and acquisitions. This cash cushion enables the company to finance future expansion initiatives, including advancements in its AI-enabled platform, potential partnerships, and R&D.
Looking Ahead
Looking forward, The Trade Desk’s announcements and strategic initiatives set a promising foundation for continued success. The rollout of its proprietary Smart TV OS, as rumored, could strengthen its position in CTV by enabling direct control over the user experience in ad-supported streaming. Additionally, the adoption of its Unified ID 2.0 initiative, which has gained traction among partners like Roku and Spotify, reinforces The Trade Desk’s commitment to privacy-focused identity solutions.
The Trade Desk’s Q3 2024 performance cements its role as a leader in the digital advertising ecosystem. As the industry continues to shift towards addressable, data-driven advertising, The Trade Desk’s focus on transparency, innovation, and scalable solutions will likely keep it at the forefront of digital advertising.
About The Trade Desk
The Trade Desk is a leading global technology platform that enables advertisers to create, manage, and optimize digital ad campaigns across various channels, including CTV, display, mobile, and audio, with a strong emphasis on data-driven and transparent solutions.
For more on The Trade Desk, visit their official website.
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