By Karsten Weide, Chief Analyst
Executive Summary
Criteo reported its second-quarter 2025 earnings on Wednesday, July 31, marking a quarter of steady topline results, significant gross margin expansion, and strategic progress in retail media and AI-powered advertising. While growth remains modest, and profitability has come under pressure due to higher investment, the company is navigating its pivot from a legacy retargeting business toward a more diversified, forward-facing commerce media platform.
The Headline Numbers:
A Story of Continued Strength
The Trade Desk’s financial results for Q2 2025 painted a picture of a healthy and resilient business. The company reported net revenue of $694 million, a notable 19% increase year-over-year that was ahead of both consensus estimates and its own guidance. This performance demonstrated that the company continues to gain market share in a digital advertising market that is growing at a slower rate. However, that 19% growth rate marked a drop-off from the average 25% growth rate the company had enjoyed for the last ten quarters.
The Trade Desk’s revenue growth rate shows the clear drop-off in Q2 2025.
Most of the slowed growth is due to slower business in the U.S.
Profitability metrics were also robust, with adjusted EBITDA coming in at $271 million, representing a 39% margin. This figure reflects disciplined operations despite ongoing investments in platform enhancements and personnel. The foundation of this financial health is the company’s exceptional client loyalty, evidenced by a customer retention rate that has remained above 95% for an impressive eleventh consecutive year. These numbers, on their own, would typically be cause for celebration, affirming The Trade Desk’s leadership in the programmatic advertising space and its ability to execute effectively against a challenging macroeconomic backdrop.
The Market’s Anxiety:
A Confluence of Concerns
Despite the solid financial performance, the market’s reaction was swift and brutal, with the stock tumbling almost 40% in after-hours trading. This seismic event was not a response to the second-quarter results but a visceral reaction to the company’s outlook and other strategic announcements.
The first major point of concern was the Q3 2025 revenue guidance of at least $717 million. While technically just above the analyst consensus, this forecast implied a deceleration in year-over-year growth to around 14%, a stark contrast to the 19% growth seen in Q2, let alone the 25% average of the past 2-1/2 years. For a company whose valuation has been predicated on a high-growth narrative, this more muted guidance was interpreted as a red flag. Management attributed this cautious outlook to broader macroeconomic volatility, specifically mentioning the impact of U.S. tariffs on key advertising sectors such as automotive and consumer packaged goods (CPG).
The second major driver of investor unease was the announcement of a significant leadership change. The company disclosed that its long-time CFO, Laura Schenkein, would be stepping down, to be replaced by current board member Alex Kayyal. While the transition was framed as orderly, with Schenkein staying on through year-end, the departure of a veteran C-suite executive created uncertainty for investors. The role of a CFO at a high-growth tech company extends beyond financial reporting to include capital allocation and maintaining Wall Street’s confidence, making the timing of this change jarring for a market already on edge.
Next, the competitive landscape came into sharp focus, with many observers pointing to the intensifying competition from Amazon’s advertising platform. Reports have highlighted how Amazon has been aggressively overhauling its demand-side platform (DSP), improving its user interface, and reducing tech fees, leading to major brands shifting millions in ad spend away from platforms like The Trade Desk. This development directly challenges The Trade Desk’s position. In response, CEO Jeff Green asserted that Amazon and Google are “not a competitor” in the open internet ecosystem, positioning the company as a champion of transparency against the “walled gardens”. However, for many in the market, the specter of a well-funded competitor actively capturing market share remains a potent threat.
And finally, as users replace traditional search with AI search overviews and AI chatbots, Google has begun to forward significantly less traffic to publishers’ Web sites, which translates into less advertising and weaker demand for AdTech across the entire value chain, including The Trade Desk’s products.
The Growth Pillars:
Innovation and Strategic Positioning
While the market focused on the challenges facing the company, the earnings call also reinforced the long-term strategic pillars that continue to define The Trade Desk’s bull case. The company’s leadership in Connected TV (CTV) remains a key strength, with video advertising, primarily driven by CTV, comprising a “high-40s percentage” of the company’s overall business. This channel is a powerful engine for growth as ad dollars continue to shift from traditional linear television to programmatic streaming. The company is actively deepening its ties in this space through partnerships with major players like Disney and Walmart.
Another area of increasing importance is retail media, where new data tie-ups with partners such as Instacart and Visa are enhancing targeting and measurement capabilities, creating structural advantages in a rapidly expanding sector. However, long term, five years out, as consumers begin to hand off online shopping to AI-based shopping bots, retail media sales will likely experience a decline.
Central to the company’s strategic narrative is its AI-driven platform, Kokai. Following an initially challenging rollout that was met with user skepticism and a steep learning curve, Kokai has become a success story. The company accelerated feature rollouts and revamped its engineering processes to address user feedback, ultimately proving the platform’s effectiveness with hard data. According to the company, over 70% of client spend is now flowing through the platform, and those clients who have fully adopted it are seeing significant performance improvements, making clients spend more with The Trade Desk. The company aims to complete the migration of all clients to Kokai by the end of 2025, positioning the platform as a key differentiator against walled gardens and a means to “future-proof” the business in a post-cookie world.
Furthermore, The Trade Desk continues to invest in foundational technologies for the open internet. The expansion of its privacy-preserving identity solution, Unified ID 2.0 (UID2), and its direct-to-publisher initiative, OpenPath, are critical moves to enhance addressability and supply chain transparency. By fostering collaborations with partners like AppsFlyer, Bell Media, and Freestar, the company is actively building a more efficient advertising ecosystem that benefits advertisers and publishers alike, a core part of its value proposition as an independent DSP.
Conclusion: A Crossroads for Investors
The Trade Desk’s second quarter of 2025 was a defining moment for the company’s investment narrative. The results themselves were strong, but they were eclipsed by the market’s focus on future uncertainty. Investors are now at a crossroads, faced with a clear choice between two competing stories.
The bearish perspective, fueled by a cautious Q3 guidance and the departure of a long-standing CFO, sees a company losing momentum in a challenging macroeconomic environment with intensified competition. The sell-off reflects a repricing of the stock from a “priced for perfection” growth valuation to a more sober outlook.
The bullish perspective, however, finds strength in the company’s foundational execution and long-term strategy. The company is not standing still; it is actively doubling down on its key strengths by dominating the fastest-growing channels like CTV and retail media. Its investments in AI through the Kokai platform are proving to be successful, delivering tangible results for clients and deepening the company’s differentiation in the market. With a stellar retention rate and a fortress-like balance sheet, the company’s underlying fundamentals remain robust. The challenge now lies in whether the new leadership can effectively navigate the headwinds and continue to articulate a compelling long-term growth story that can regain investor confidence. Ultimately, the stock’s future hinges on whether the market will choose to believe in the strength of the company’s strategic pillars or remain fixated on the signs of a bumpy road ahead.
About The Trade Desk
The Trade Desk (NASDAQ: TTD) operates a leading demand-side platform that enables advertisers to buy digital media across formats and devices. The company is headquartered in Ventura, California. Learn more at www.thetradedesk.com.
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