The Trade Desk, ad tech’s publicly listed star performer, revealed its Q1 results this week.
The Trade Desk reported $121 million in revenue for the period, and, although its stock price has taken a bit of a hit since, it’s worth noting that earnings were up 41% year-over-year.
And in a week where Google announced several updates to its Chrome browser, it’s not surprising that Wall Street had a few questions.
In a post-earnings call with analysts, The Trade Desk’s CEO, Jeff Green, shared his opinion that the collective announcements of Google’s and Apple’s policies on ad targeting “thread the needle between relevance and privacy.” Green noted differences in methods favored by Google, i.e., asking Chrome users to proactively turn off cookie targeting (should they choose to), and Apple advocating doing so by default.
“I don’t expect that a lot of [Chrome] users will do this, when your users have been given the ability to do so in other cases and didn’t take advantage of it,” he added.
Commenting on the proposed browser extension that will let web users have more direct insight into how ad-tech companies help target them with ads, Green interpreted it as an opportunity to build trust with the public.
“This gives us a place to share with consumers how we use their data,” he said. “And, honestly, we’ve never had a place to do this with consumers, because our relationship isn’t direct. So, we’re delighted for the opportunity to share with them essentially how benign we are.”
Almost every KPI showed arrows pointing in the right direction with mobile, video, in-app connected TV and audio all growth areas for The Trade Desk, which boasted customer retention rates of 95% when fellow ad-tech companies experienced harsher times.
Various theories abounded as to why The Trade Desk’s stock price took a double-digit dive in the hours after its latest filing, although there were some who noted that it was priced at the very highest end of expectations for quite some time.
RBC Capital Markets’ Mark Mahaney pointed out in a note to investors that the ad-tech company operates in a hypercompetitive sector with a history of tech disintermediation.
Additionally, take rates—the commission that generates such companies’ revenues—face compression across the sector as both advertisers and media owners increasingly probe the transparency of the early operating models of ad tech.
In the call, financial analysts probed The Trade Desk’s various growth opportunities plus potential risks, with Oppenheimer’s Brian Schwartz inquiring on the potential for the company, which had a market cap of more than $6 billion within the last 12 months, to partake in the sector’s ongoing M&A activity.
Analysts raised the topic of the ongoing sell-off of the remains of Sizmek, an independent ad-tech stack which recently filed for Chapter 11 protection. Green pointed out the prospect of its buy-side ad server—a piece of ad tech many felt could rival Google.
“There’s a lot of consolidation happening in this space right now: ad servers like Sizmek that go out of business, and of course we’re going to look closely and say, ‘Is there an opportunity here?’” Green noted.
“But what’s the better one, is it to buy it? Is it to go after the client? Is it to build our own?” he said. “So, we look at every one of those, and one of the most important things we do in our calculus is ask ‘How do we do this [acquire a company] and preserve our culture and not take unnecessary risk?'”