The Trade Desk saw its stock drop nearly 30% after it included soft third-quarter guidance in its Q2 earnings report Thursday.
It was the second steep after-hours decline for The Trade Desk this year, following a massive 55% correction in February, when TTD missed its Q4 revenue guidance.
But this time was different — the Ventura, Calif. demand-side platform (DSP) provider, as well as maker of various AI-driven ad-tech tools, exceeded second-quarter revenue forecasts, with revenue surging 18.7% to $694 million (here’s the earnings release). TTD also announced plenty of hopeful news about its new AI-driven media-buying platform, Kokai. Seventy percent of client spending is now occurring on Kokai, the company said.
But still, TTD forecasted only 15% revenue growth for the third quarter. The company attributed the narrow guidance to a tough comparable to the third quarter of 2024, which included connected TV advertising largesse tied to a contentious election cycle.
Removing political ads from the equation, TTD said its revenue growth forecast would be up 18% — which is still notably lower than the 27% YoY revenue growth in reported in Q3 of 2024.
TTD executives worked hard Thursday to calm investor nerves.
“We don’t see disruptions from large global brands, which make up a significant portion of our business, due to tariff uncertainty,” assured chief financial officer Laura Schenkein, who also announced her pending departure from The Trade Desk.
Alex Kayyal, who joined the TTD board of directors in February from Lightspeed Venture Partners, will replace Schenkein. (Here’s the company’s press release on that executive move.)
Meanwhile, company CEO Jeff Green also worked to dispel the notion that Amazon is emerging from its walled garden to poach advertising share from TTD on the open internet.
“Despite their mixed messages, they are not trying to buy the open internet objectively. They can’t. They have way too much Prime Video supply to sell to ever honestly pitch large brands to objectively buy the Open Internet,” Green said.
Green also tried to assure investors that any economic volatility in the latter half of 2025 would benefit companies like TTD that are situated in efficient programmatic ad buying tools.
For his part, MoffettNathanson analyst Michael Nathanson doesn’t buy Green’s assertion that Amazon doesn’t represent emerging CTV competition, noting the e-commerce giant’s recent deal with Roku and its assumption of national NBA media rights. Nathanson also worries that Alphabet’s funneling of search into GenAI destinations will reduce open internet traffic, where TTD makes its bones. And he wonders if meta, Google and Amazon might use AI to create more effective solutions for advertisers within their respective walled gardens.
With that, Nathanson downgraded TTD from “neutral” to “sell.”
Article updated with additional commentary from analyst Michael Nathanson.