The Trade Desk, Inc. (TTD) 10 May 232023 Q1 Earnings call transcript

Greetings. Welcome to The Trade Desk First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Chris Toth.

You may begin.

operator. you, Thank day good Hello to and everyone. The earnings XXXX to first quarter call. Desk conference Welcome Trade

On are Vice section. call earnings website Officer, Laura the at today A press Blake Chief Jeff Schenkein. the found Grayson; Financial release Green; thetradedesk.com can and on of in Executive copy President be Finance, Founder of our and our CEO, Relations Investor

and our Q&A and historical would contain expressly in Before remind for statements projections incorrect, forward-looking of results actual to and made. by those in or in the included which we of I Should any obligations statements of any and update factors and dependent may risk our beliefs only such beliefs assumptions except like financial these our certain be information, SEC we our refer our statements. Actual statements the assume encourage no referenced are discussion begin, significantly that press recent you some from are represent assumptions or risks may to our results to release materially date as most responses These forward-looking you forward-looking upon statements. uncertainties. vary to prove I filings. to implied the forward-looking differ of could our

can meaningful non-GAAP In providing provides performance. representation results, non-GAAP be that measures results, with the found addition more press financial our We financial to combined company's to believe supplemental GAAP in of reporting we operational our data. non-GAAP a present our GAAP of A reconciliation measures, release. the GAAP earnings

Green. CEO, over call With Jeff? turn to that, the now and Jeff Founder I'll

joining Thanks, us Chris for you and today. thank all

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gaining open market as embrace share the on relevance advertisers via the precision platform. Internet are and advertising We our of data-driven

advertisers Even have more dollars as dollars of brands some with confidence opportunities, level as can are they that are and campaign as deal working to most those possible. continue of decision, where increasingly more they uncertainty, data-driven shifting their to hard

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say fair personal I'm Laura much of CFO. proud think Laura that to and new achievements Blake of mentored I understands here her business our and to he a come during my note how Laura trust and has on helped because is her one our significant his the recommendations. grow. call time to strategic most partner I for very for worked to decade. with counsel I've and a it's

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to addition performance, we exceeding line top own in XX% generated our or EBITDA expectations. in In QX, adjusted strong revenue, of million $XXX

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am I repurchase to Additionally, that share for proud our shareholders via excess capital generation cash time allowed the program. first to return robust our us

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the grew in CTV business into well Europe Our triple in QX. digits year-over-year

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as capture continue Looking see conditions ahead, significant markets share opportunities improve. to to in international we operating

their As is drive demonstrated late deliver customers to optimize Desk as value positioned and seek we ROI ad The in well Trade spend, to XXXX.

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within for verticals. We continue potential to still share gain to most is us of believe there our

now excluding QX compensation, XX% stock-based $XXX to expenses; million, up expenses in Turning operating year-over-year. were

team yet year profitable to or our not many peers, due in-person a during events. ad-funded in-person continue and the operating prior Unlike that and support compensation, managed prudently events responsibly did maintaining headcount fully We invest resumed as of take the to few objectives. expenses, quarter the to focus stock-based in we we years, expenses technology operating had not to partly have year-over-year on in back place office growth. was over growth and The increase QX travel excluding long-term work past our in

while spend to are share increase generating significant we capture positioned result, a As well and adjusted EBITDA. market

was DSOs We million at were fully share. million can short-term in quarter cash $XXX record the cash Cash, benefit investments benefits for quarter, were DPOs million operating which strong tax days the billion. in $XXX the and $XX associated free $X.XX $XXX XX activities quarter position. Adjusted awards, was the was per timing and cash exited income exited the provided the $X.X tax and to record and days. flow was of QX. cash in variable. diluted Net a a or liquidity ended income with QX XX equivalents employee a mainly with Our million quarter by stock-based due be net

will no allocation common balance have Class capital depending capital We the a of review amount for QX, In million repurchase program. priorities. program A repurchase debt of The $XXX on In we on stock million X.X February, conditions and upon million. the opportunistically aggregate repurchased of we to share an sheet. company continue market $XXX shares approach our strategy, announced

by summarize outlook XXXX Laura to saying business. Desk with The strong the start Trade Before for to the I'll to I cover momentum is pass microphone off across in QX, fantastic a the

drivers growth capturing sheet Our business in of data joint highly the share powerful CTV, well the as share optimistic market growing environment CTV and such continue ahead. marketing media, secular retail potential the such robust and trends succeed markets, positioned gaining and in us shift years with and linear the long-term the model plans balance growing to significant from to international and business campaigns as we solid use current have to in are about

to And with it Laura. that, I'll hand over

the month. of mentorship the incredibly have take to years. CTV's for I'm Thank strong It's I And prepared they've be well CFO the because Jeff's these feel thank last upon Blake build his to you, taking Jeff, role excited future. starting worked and I and you, kind on baton next words. X.X foundation feel Blake. fortunate to set with the for that

now Turning second for outlook quarter. our the to

While beginning macro visibility slightly the has conditions remain since of uncertain, year. the improved

$XXX least revenue growth QX estimate XX% to would million which basis. of and optimistic a at on cautiously year-over-year be are We represent

political be of which a QX rate We a estimated QX approximately percent XX% election growth about adjusted year $XXX million to represented U.S. XXXX, revenue EBITDA this spend Excluding QX. in low estimate in our on basis. in would spend of year-over-year single-digit be

Jeff large business. has see invest market in to growth the in thoughtfully front us, addressable and outlined, continue significant the of we As with opportunities

to adjusted ourselves the us technology continue free top chain distancing the service be areas optimization. to one continue renovation, We supply flow. identity and companies of platform This and from as high capable margins such cash customer competition generating of EBITDA line growth, in enables consistently few significant

focused this progress as expect headcount continue as of growth, rate to our half growth year-over-year to year, the XXXX remain decelerate about on future we addition, we to we throughout support although hiring year. In at the

That questions. prepared concludes that, our open operator, remarks. up with call for And the let's

first Our Patil question Instructions] from [Operator Susquehanna. with Shyam comes

open on you've about to Could and this you. this just Congrats one about Trade Desk move? what performance. I actually benefits while talked seeing Jeff, you this of about you Laura, is you're And something timing think how benefits lot from a front? the strong And talk for the all starting hearing and now. to about the on a up the walled Blake, to best. And just gardens question. have congrats that we're

appreciate Thanks, the and also words Shyam. I question. the kind

demand, Google, and essentially make show the that biggest, of a size players that and But anyone. that the think to economic in the to strategy creating those strategy restating I've or is to up demand and playbook been over in world. something comping of result even you than let it and do a the by their start the are believe said and just have cracks walls before, as for said Googles walled times inventory. bad that more I've I buy So proportion long-term the they're not garden [ph] the That me good for not many I supply to that Tencents includes welcome have the harder lot years. inventory. the strategy of friction smaller Facebooks Baidus, And And buy Alibabas Facebook your you want and sort it's when especially walled more gardens. pressure in of there

that natural makes, certainly, those smaller. options advent gardens the an open So that, more there's CTV than pressure and, all the lot where it's that on walled before in but been there's ever pressure especially that a of so there's are of in puts Internet environment

specific to and of is do, just us scrutinize One think I to very type they're to I in the you come. encourage who've be on for they're understand available indicative public we're been do using a how So "We're might number demand." exciting And about though, And transfer with and but can core inventory not that extremely buying into of is our actually it an That and where opening and price we to know what on to we're up Internet we the us. exactly business. exciting is rest when what in and in discoverable budgets do just what the phrases opening other want do like of up. API demand talking they're bid everybody commenting what's to bidding that's market, companies thing and more of opening that's to plug the ways,

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So favor. that of tailwind another in all together, really secular our yet is I think, creating

very So the and it excited question, appreciate you. Shyam. Thank about

Justin Next with Patterson from question comes KeyBanc.

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the but flyboys, this become success time, has of widen amount have Walmart underscore pay the many boots, of doing with including to a a and big convenience and short most we're totally that like Macy's and partnership in come; grocery Macy's, just so the in and that only Albertsons with just recent Target those that is the others want all But expect to the -- clothing so just continue does few many our and and very then very the others, been announcement the ago world, we Kroger over of part stories Indonesia fashion about a around so more dividends albeit of amazing part where and really not it this to we many time a I'm TAM stores economy getting excited of so and for and just into been types, to excited we've our others. what and Walgreens business, much I But different first Lastly, stores very days is has GoJets and the so about it. world. years

saving appreciate I for clarify. question the because simply retargeting, to Thanks appreciate much really the so it I so me. opportunity more is than

Karasyov Research. with Cannonball next The question Okay. Vasily comes from

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with comes question Squali from Truist. Youssef next The

on luck. assignment. on new the Laura, solid congrats the And quarter. congrats of And Blake, best

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this investing very Koa I and we much continue gives why beginning, of really about that and question. thinking we to I the we're well Thanks so much, why a on launched the why so in sense captures that we have just that iterate think been topic. XXXX But for on the have another very why hopefully, opinion from you it.

Next, we have Jason Helfstein with Oppenheimer.

from for the Trade the the either SSPs using one. thinking advertisers they're Desk Jeff, are TV would then to ask of solution? kind to connected benefits there the pitching? what risk but Is publisher product And like the How downside kind upfront kind PMP of of be are of offering you from about I'll PMP versus kind or their direct product? what

Yes.

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buying and things, across rate frequency lot you're buying different the Now controlling guarantees you're all a you in lose And not or at cases a you of programmatic in lose benefits fact, then where the decisioning. programmatic. these you're fixed of

bit I'll So the happening the reach let I fixed you, to at need decisioning. to They're don't about is value And is I people a term, get. saying, haul. need into this impressions which digital I the decide move television weakened of that the over broadcast to just in from the rate. care are is going control seller, jump and a traditional of frequency. sometimes or ecosystem." you've "Hey, short in proposition it that, buying don't given of sort and programmatic, I even a seller what

all SSP the benefits programmatic. because do DSP could rid the or you've You of of with that or an gotten best benefits a

the temporarily up the for if move people the just or in us to that compare in we to to be to believe And DSP good we this a that where have couple they're same, to announced others else, you want of that buy will want are last authorize be to in [ph] to, use "If they do do wants order them that's soon buy even medium for long what stepping about this are saying, DSPs. moving something can directly." in, dollars listen to over, very acknowledging and want somebody read what help as But as is use term, and and Comac you the But they closely So buy you that. while holistic them days, over. instance,

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in it an it's are have us to the end to because is the going we think to I sort believe when trying that control over decisioning. be holistically. gravitate buyers holistic going somebody with just are where going of to that in might CTV. it can they done amount especially long Advantage world term, term, means the highlighting we to belief of But else, save long But pipes, both in up to and the think that the medium with the And us, and places are up end so they're from medium short that place a that term, they where decision with insertion people they just they be with is SSPs And any somebody of or so and able over do decisioning a they'll view. move order point not dumb with that essentially doing more us and it is to have Advantage of can else. X. a do

Tim is Nollen The next question Macquarie. from with

the had, due conversations don't insight sides, bit a into Disney? of if just the the with want X us you're Or advertisers as talking the related programmatic, a you talk ad to advertising question format, if week. groups the for ago upfront here. tier the well. you've that about My actively to ads just CTV-related interesting and them maybe you get using offer for of seeing is Bob I've Jeff, call -- -- inventory if doing listening I got of both And talk something in including mean, market to of you Iger it programmatic about pricing X,XXX that added orders and to their driving their your network some more is market they've advertisers with them which a specifically could started participating other before on. to as or call Forward said and just to very is saying I given insertion things had CTV working revenue Disney X/X that They're start Disney, question are new month this was then in next trying -- event give tiers, value of the so how in how their them you're is, to ad-supported are X/X programmatic. not and programmatic. inhabitable

course, and jumped to the very those over, Absolutely. of I focusing we're by the remarks question on I appreciate and Bob really that heard remarks ours excited before of some made. I

Disney just proud about both there. QX. and fact with also and Paramount the Let our of UIDX of so adoption their say MBC me first I'm done in what we've partnership excited I'm that announced

think this, of content the on adoption I has in the publicly everyone adoption United it UIDX, comments a And the owners now competition. about relates streaming all spoken major their of whether commentary state or of Bob's States, is as UIDX. of the to So all

So and current commentary of and also are cost. grow profitable trying there's a a on to but numbers environment that. -- lot on the Disney actually, with and be on also the pressure They're

competitive. so especially can more the been means that making and continue make market content more the all that and what more So money more owners, need content content they do And they've make the as less. and people higher people need the fund they that with to to is same CPMs that gets

of to that same-site participate we moving and biddable so the to that advertisers. are is do only value. more to make do excited effective for ads more leverage we're What transparency to all the and way marketplaces only these more UID about and The and is that The most is increased get way can relevant biddable. that towards

just biddable anyone's marketplace. said CPMs. That's only were So not question interest in that about want because what higher execute they last dumb -- way environment. in the that highly-decision, is a of when we people how to use don't means is a efficacy, publishers moving in the light highly into in that, biddable decisioning, term that we then long need that. pipes can when best The works And advertisers data-driven need everybody talking

buy to happening When Forward in we the look are we have well talked going at at that into that data. to willing and means the themes hearing -- fact their ability honestly, it sort data. the we and as for our pay because ecosystem. look often that the what's event activate more data-driven biddable buy upfront is of not price I about honest, them all And as strike, say, heads means just that and people that's and programmatic. and for on more they But the want uncertainty 'XX We're their upfronts what And things great I'll their helps mean on "You everybody, of that are know advertisers market." to that spot of over us because cloud a writers’ connected I actually that, it in the that to they're keep TV more we want the what, this excite to amount market so decisioning. the think be spot the a makes likely premium is seeing the it value ability

anybody in as this can. I think well about Forward our Hershey's, event in as fact, articulated In from

underlines add strike, you of I bring towards writers’ for the and the to in everybody add more that adjust. biddable, cloud believe to I we're this its people to flexibility And add And future. also that, in think when that data you that more you as everybody programmatic Bob so and environment, ability seeing to that the easier looking and when makes gravitate course, ability have equation, becomes the marketplace. it then the think it economic And is just of more in uncertainty. to you, economic And more Iger having

his So appreciate by question. comments. I excited was I your

Cost from Matthew Morgan [ph] is question with Stanley. Next

This is Chloe [ph] on for Matt.

bit lot moving But products quarter throughout year? model? there OpEx the year, to then And out media retail sounds on. going would second little about and call the you leverage think areas UIDX, to longer-term you forward, prioritizing? focused that the a And potentially of growth investment any so where priorities, are little we parts a between a what do the of exciting many what's bit there's most OpenPath, then What the in as to a and Just it going project? CTV, many you contribute you're leverage there gain are second, is so you looking opportunity, you're in to like have significantly this unpack on key that think like more

bet. You

then going in little and both. then part add ask or of opportunities free the talk a on take color investment to I'll the and and chime OpEx, on about I'm to I'll on So it first also Laura feel the that

Chloe, at picture look of the Thank for question. you, for the and QX When we're rest excited. big we XXXX, Absolutely. the

digits investments stay got even XXXX. proud how growth companies, since we've managed and are or really I'm high-growth the flow. is the our great the got our a we profitability over We're since share few well contracting others expense intend growth. disciplined and grab and past of Unlike And have with We've in tech our can and responsibly paid growing We cash years digits, still peers low operating luxury. course revenue high double stay pulling our off. back. and headcount we ad-funded other it's while of as are we've while in many the to single peers our

year-over-year our both we for our increase to investments deliberate and we XXXX So expenses be continue will compensation extremely in do that without hiring. and operating and stock-based with our expect

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have anything That you. OpEx. was don't to on Laura. Very amazing. impressive, Thank the I add

opportunity of that to recognize amazing us. always there's day fun. all well just isn't On frame moment just the ecosystem excited day that let of as overall, us it I why. this in managing moment we're as want side, about the add, to for am investment macro that creates lots explain that just now But for I conditions say me I'll and the I And so right just the in this sort uncertainty and first just

So in invest first, grow opportunity people our to culture. we and to have our continue an to

-- our because culture the just didn't our was preserving very certain and and the of difficult, decisions in things layoff. a So get that part moment had too too managing that in were we to path. we It's set hire where to for a and hard. made And things continue to and me to had We team invest that. I during pandemic, he's We do now never hit aggressively. and on really it was the we're -- really that to was to up Blake remote make we well like never Laura brakes hard. Everybody continue

every We years are all. them Valley, with in with at company companies and the from we're hiring competing those today. competing And unlike seemingly world, were X.X we're we hiring now Silicon ago, other in not where especially

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close out the can you call. John,

may lines and Thank this you concludes participation. for This today's time. conference at disconnect you. your you your Thank