The Trade Desk Inc. (NASDAQ: TTD) is the largest independent demand-side platform (DSP) for advertising buyers. Its self-service, cloud-based advertising technology (AdTech) platform, Kokai, enables advertisers and agencies to programmatically manage digital advertising campaigns across various channels, including video, display, audio, and connected TV (CTV).
The Trade Desk is thriving from the recovery in demand-side digital advertising, which accommodates ad buyers. The supply side continues to struggle, as evidenced by the weak performance of Pubmatic Inc. (NASDAQ: PUBM).
The Trade Desk runs an asset-light business because it doesn't actually own any ad inventory but plays the objective middleman data-driven platform that facilitates the transactions. Artificial intelligence (AI) features help optimize ad bidding, targeting and performance.
The Trade Desk operates in the computer and technology sector, competing with adtech platforms like Alphabet Inc. (NASDAQ: GOOGL), Google Ads, Magnite Inc. (NASDAQ: MGNI) and Pubmatic Inc. (NASDAQ: PUBM).
Connected TV is Growing Like Gangbusters
If you watch streaming videos and movies on a smart TV or a Roku Inc. (NASDAQ: ROKU) streaming device or Amazon Inc. (NASDAQ: AMZN) Firestick, then you’re using a connected TV (CTV). CTV refers to devices that receive streaming video through an internet connection to be watched on your TV. CTV enables viewers to watch ad-supported video content, movies and videos.
CTV devices include smart TVs, streaming sticks, set-top boxes and gaming consoles like the Sony Inc. (NYSE: SNE) PlayStation or Microsoft Co. (NASDAQ: MSFT) Xbox. The advent of streaming services and notable ad-supported video-on-demand (AVOD) channels has helped CTV growth accelerate, driving the boom in digital advertising dollars.
The Trade Desk is the King of CTV and Gains More UID2 Penetration
The Trade Desk offers the largest CTV inventory marketplace in the world. Since it is independent and doesn’t compete in content or supply, premium publishers favor it. The Trade Desk developed a new open-source identity framework called UID2 to replace third-party cookies to identify viewers and measure ad performance. Due to privacy concerns, Apple Inc. (NASDAQ: AAPL) and Google have phased out third-party cookies.
In Q2 2024, Netflix Inc. (NASDAQ: NFLX) announced it would expand ad buying capabilities to include The Trade Desk as one of its main programmatic partners for advertisers. FOX Co. (NASDAQ: FOX) expanded its partnership through the integration of UID2 and OpenPath across FOX brands and the AdRise technology platform. E.W. Scripps will be the first CTV publisher to adopt The Trade Desk’s single sign-on solution, OpenPass. Roku will adopt UID2 to enable advertisers to implement more precise targeting. LG Ad Solutions is integrating UID2 so advertisers can leverage first-party data across LG's audience network.
TTD Stock Forms a V Bottom
The daily candlestick chart for TTD illustrates a V-bottom pattern. TTD fell sharply from $102.39 to $77.11 but surged back up to $99.30 in 4 days, driven by its Q2 2024 earnings report. TTD will either reject or pierce through as it bounces back to the $102.39 lip line. If it pierces through, then it will peak and pull back for a retest. That retest will determine if a new support level at the prior resistance will have formed. The daily relative strength index (RSI) is rising to the 61-band. Pullback support levels are at $94.63, $90.00, $84.33 and $80.54.
Q2 2024 Top and Bottom Line Beats and Q3 Forecasts Raised
The Trade Desk reported Q2 2024 EPS of 39 cents, beating consensus estimates for 36 cents by 3 cents. Revenues jumped 26% YoY to $584.55 million, beating $578.03 million consensus analyst estimates. Adjusted EBITDA rose 34.4% YoY to $242 million, exceeding $223 million prior guidance. Customer retention remained over 95% in the quarter.
The Trade Desk raised its Q3 2024 revenue guidance to be at least $618 million, beating $604.70 million consensus analyst expectations. Adjusted EBITDA will be around $248 million.
The Trade Desk Co-Founder and CEO Jeff Green commented, “As Kokai ramps, we're intuitively surfacing value for advertisers, integrating data into every decision, advancing the full power of AI as a co-pilot, and enabling advertisers to maximize the potential of their first-party data.”
Green concluded, “With ongoing innovations in Kokai, the widespread adoption of UID2, and the expanding use of retail data, we will continue to deliver exceptional value to advertisers and grow our leadership in key high-growth markets such as CTV."
The Trade Desk analyst ratings and price targets are at MarketBeat. There are 28 analyst ratings on TTD stock, comprised of 1 Strong Buy, 24 Buys, 2 Holds and 1 Sell.
