After beating its own guidance for all 33 quarters of its life as a public company, The Trade Desk reported a big Q4 miss last week. Let’s just say the good times were quickly forgotten on Wall Street, which tanked the ad-tech giant’s stock by around 33% in the immediate aftermath of its earnings call.
The stock has slid a few percentage points further this week, finishing Wednesday at $78.15 a share. A week earlier, it stood at $122.23.
Q4 revenue for The Trade Desk of $741 million not only came in under guidance, but it also missed analysts’ consensus projections of $763 million. There was also lowered guidance for 2025, which suggested to investors that the huge growth experienced in 2024 might be over, at least for now. (Here’s a landing page for last week’s earnings.)
So what happened? And what are the long-term implications not only for the largest independent demand-side platform (DSP), The Trade Desk, but also the broader connected TV (CTV) market it serves?
Speaking to analysts during last week’s call (here’s a transcript), TTD CEO Jeff Green dismissed theories based around erosion of the CTV market and increased competition among DSPs.
“This didn’t happen because the opportunity isn’t as big as we thought. In this case, it isn’t because of our competition, either,” said Green, rather attributing his company’s earnings shortfall to a "series of small execution missteps, while simultaneously preparing for the future.”
Downgrading TTD from “outperform” to “in line,” equity research company Evercore ISI did corroborate some of Green’s contention about execution. Specifically, the firm said that the slower-than-expected rollout of TTD’s new ad-tech platform, Kokai, was one problem.
Evercore mentioned TTD’s dual relationships with agencies and brands, and the inherent conflict surrounding that, as a possible revenue killer.
But mostly, Evercore and other equity analysts seemed to focus on increased competition in the DSP market. Not only do dominant platforms from Google, Meta, and Amazon get in the way, but also so does AppLovin, which has expanded well beyond its primordial origins of mobile gaming apps to now encroach on TTD’s primacy among premium advertisers and CTV.
Meanwhile, analyst Michael Nathanson noted “the potential that the CTV market was on the cusp of further consolidation and competition as sub-scale streaming platforms like Peacock, Max and Paramount+ would be forced to merge while retail media giants like Amazon and Walmart were getting even more aggressive in the CTV space.”
“These moves,” Nathanson added, “could end up shifting ad dollars out of DSPs and into more direct pockets.”
For his part, Nathanson was also critical of Green’s bedside manner during last week’s call, suggesting aesthetics made TTD’s investor beatdown worse than it needed to be.
“At times like this, we have found that management’s best antidote to a massive stock collapse is to answer as many questions as possible with crisp, fact-filled answers,’ the analyst wrote. “Last night’s turgid call wasn’t that … by a long shot.”