The Trade Desk Inc. (TTD) shares took a nosedive after the company released its third-quarter financial results on Thursday, even though the report showed strong performance. While the company beat analysts’ estimates for both revenue and earnings, the market reacted negatively, indicating potential concerns about future growth.
The Trade Desk reported total revenue of $628 million in the third quarter, a 27% increase year-over-year, exceeding analysts’ expectations of $619.85 million. The company also reported adjusted earnings per share of 41 cents, surpassing the estimated 39 cents. This performance underscores the continued demand for The Trade Desk’s services, particularly in the programmatic advertising landscape.
The company highlighted its strong customer retention rate, exceeding 95% in the third quarter. This metric suggests that advertisers are satisfied with The Trade Desk’s offerings and are continuing to rely on its platform for their campaigns.
Jeff Green, co-founder, and CEO of The Trade Desk, expressed optimism about the company’s future prospects. He stated, “The Trade Desk delivered strong performance in the third quarter, with revenue of $628 million, accelerating growth to 27%. This performance underlines the value that advertisers are placing on precision and transparency as they work with us to maximize the impact of their campaigns.” Green added that the company is well-positioned to capture a larger share of the $1 trillion advertising market.
The company also disclosed its share repurchase activity, stating that it repurchased $54 million of its common stock during the quarter. With $521 million remaining on its buyback program, The Trade Desk ended the quarter with $1.22 billion in cash and equivalents.
Looking ahead, The Trade Desk anticipates fourth-quarter revenue of at least $756 million, surpassing the consensus estimate of $749.78 million. The company also expects adjusted EBITDA of approximately $363 million for the fourth quarter.
While the company’s financial performance was solid, the market’s reaction suggests that investors may be concerned about factors like potential market saturation or the ability to sustain such strong growth in the future. The Trade Desk’s focus on programmatic advertising, particularly in the growing connected TV (CTV) market, highlights the evolving landscape of digital advertising. The company’s ability to navigate these trends and maintain its market leadership will be crucial in determining its future success.
The Trade Desk shares fell by 10.10% in after-hours trading, trading at $119.15 at the time of publication. Investors will be closely watching the company’s future performance to see if it can address market concerns and continue its growth trajectory.