The Trade Desk Q4 2024 Earnings: A Rainy Day In Paradise
The Trade Desk (NASDAQ: TTD) reported its fourth-quarter earnings for 2024 on Wednesday, February 12, 2025, delivering strong numbers but missing its own guidance for the first time in 33 quarters, as well as financial analysts’ expectations. The impact of the miss was exacerbated by competitor AppLovin’s accelerated growth; in 2024, AppLovin surpassed TTD’s annual revenue for the first time. This resulted in a stock-price surge that propelled AppLovin’s market capitalization to four times that of TTD. In a bout of short-termism, some investors sold off TTD stock the next day, causing a drop of more than 30%. In response, about a dozen analysts lowered their price targets.
The market has overreacted. TTD’s latest numbers remain fundamentally solid, with no signs of underlying issues. Revenue for 2024 grew 26% to $2.4 billion, in line with historical performance. Net income more than doubled to $427 million. And the company’s client retention rate remained above 95% for the 11th consecutive year.
Revenue Numbers
In Q4 2024, revenue reached $741 million, representing a 22% year-over-year increase. While impressive, this growth fell short of internal forecasts, which CEO Jeff Green attributed to a series of minor execution missteps rather than macroeconomic factors or competitive pressures. Historically, TTD has consistently delivered annual growth of 20-30%, significantly outpacing the broader digital advertising market. For context, Google’s DSP and Criteo grew roughly half as fast as TTD in 2024 (see chart below).
However, this was not the case for AppLovin, which has consistently grown faster than TTD for several years. In 2023, AppLovin nearly matched TTD’s revenue, and in 2024, its sales exceeded TTD’s by nearly 40%. This disparity may have fueled investor disappointment, underscoring how quickly a company of TTD’s size can grow even within the notoriously challenging ad tech sector. TTD may need to consider potential entry points into AppLovin’s core markets or other high-growth segments to boost competitiveness.
Revenue Breakdown by Segment
TTD segments its revenue across video (primarily connected TV [CTV]), mobile, display, and audio. In Q4 2024, CTV accounted for nearly half of total spend and maintained the highest growth rate among segments. Mobile contributed approximately 35%, display represented a low double-digit share, and audio came in at around 5%. Video’s share has gradually increased over the past three years, largely at the expense of mobile and display. Audio’s share remained stable, supported by steady growth. As CEO Jeff Green noted during the earnings call: “While CTV may be the biggest opportunity, audio might be one of the most untapped, and I continue to argue it’s the most on-sale corner of the Internet.”
“While CTV may be the biggest opportunity, audio might be one of the most untapped, and I continue to argue it’s the most on-sale corner of the Internet.”
Jeff Green, CEO, The Trade Desk
TTD is far more advanced in capitalizing on the CTV boom than it is in audio. The company has partnerships with four of the top five video streamers – Disney, Netflix, Amazon, and Roku – with YouTube the only exception. TTD is also developing Ventura, its proprietary smart TV operating system, in an effort to gain more control over CTV inventory supply, which currently depends on publisher partnerships.
Ventura will stand and fall with distribution. However, so far, the only partnership with a hardware manufacturer TTD has announced for the inclusion of Ventura OS into streaming devices is one with Sonos. Reports suggest this device is aimed at competing with existing players like Apple TV, Roku, and Amazon Fire TV. It’s described as a streaming box that might be controlled via mobile devices, offering a unique approach to user interface and app management. The device was rumored to launch in late 2024 or early 2025 but has faced delays, with some reports indicating a potential launch in March 2025. This streaming box would not be a smart TV but rather an accessory to complement existing TVs, focusing on streaming content and enhancing the Sonos ecosystem.
Could this partnership work? We see TTD, a company not in the business of developing operating systems, partner with Sonos, a company not in the business of producing TV sticks or Smart TVs – but both with the dire need and ambition to branch out to grow and secure their businesses. There is no reason why TTD and Sonos wouldn’t be able to come up with a sexy TV stick. On the TTD side, ex-Roku specialists work on the OS, and on Sonos’ side, hardware specialists. Yet, it is unlikely that Sonos could find as much distribution as other devices for now. But a working Sonos TV stick, together with favorable revenue splits offered to partners, could perhaps pave the way for partnerships with other hardware manufacturers.
Beyond CTV, TTD sees potential in retail media but acknowledged that more work is needed to unlock significant growth. This admission is somewhat surprising given retail media’s rapid rise as a close rival to CTV in industry buzz.
Revenue Breakdown by Geography
TTD has long prioritized its North American business over international expansion, but management now sees global markets as a potential growth engine. While international revenue has grown faster than U.S. revenue in recent years, its share of total revenue has remained stagnant at around 12% for the past three years. Achieving meaningful growth in international markets will require a focused, well-funded effort.
Looking Ahead: Strengths, Weaknesses, Opportunities, and Challenges
TTD continues to execute at a high level but now faces the imperative to accelerate growth in response to AppLovin’s ascent. This reality may have contributed to the sharp stock decline, as investors recognized the company’s untapped potential.
To drive growth, TTD is pursuing several strategic initiatives:
International expansion
Connected TV and the Sonos smart TV OS initiative
Retail media growth
Audio advertising
Direct sales into brands – a notable shift for TTD, which has traditionally focused on agency relationships. To mitigate potential friction with agencies, TTD is introducing “joint business plans” (JBP) to foster collaboration.
Sincera acquisition for better measurement, making TTD’s product more attractive.
Major restructuring and layoffs in December 2023, aimed at streamlining operations and increasing efficiency.
TTD also faces challenges:
Kokai UI adoption: Adoption of the new, AI-enhanced Kokai interface has been slower than expected, possibly due to its departure from familiar, web-based ad-ops workflows. TTD plans to prioritize client adoption and aims for full penetration by year-end.
UID 2.0 traction: The open-identity framework has seen slower adoption than hoped, prompting TTD to introduce SP500+ – a curated premium inventory offering.
DSP disintermediation by SSPs: While not yet a critical threat, some supply-side platforms are bypassing DSPs to sell directly to buyers, potentially undercutting TTD’s value proposition.
Fortunately for TTD, the company ended the year with $1.9 billion in cash and no debt, providing ample liquidity for growth initiatives.
Conclusion
While TTD’s fourth-quarter performance fell short of expectations, its long-term trajectory remains promising. The company’s strategic bets on AI, retail media, and CTV align with fundamental shifts in the advertising market. If TTD can successfully navigate near-term execution challenges, it is well-positioned to remain the dominant force in programmatic advertising.
About The Trade Desk
The Trade Desk is a global technology company that empowers advertisers to purchase digital advertising campaigns across various channels, including connected TV, display, mobile, audio, and digital out-of-home. The company is known for its innovative approach to data-driven marketing, helping brands reach relevant audiences while maximizing performance and efficiency. Its platform offers unmatched transparency and flexibility, reinforcing its leadership in the open internet advertising ecosystem.
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