Trade Desk (TTD) Q3 Earnings Miss, Revenues Increase Y/Y

The Trade Desk Inc. TTD reported third-quarter 2016 earnings (including stock based compensation) of 22 cents per share, which missed the Zacks Consensus Estimate by a penny. Excluding stock-based compensation, non-GAAP earnings surged 58.6% from the year-ago quarter to 23 cents.

Total revenue was almost $53 million, up 84.1% from the year-ago quarter, which exceeded the Zacks Consensus Estimate of $47 million.

Shares rose 8.6% to close at $25.45 on Nov 11.

Quarter Details

Trade Desk completed its Initial Public Offering (IPO) on Sep 21, 2016. Net proceeds from the IPO were almost $73.6 million.

The company’s top-line growth was driven by higher spending through newer channels such as Mobile and Audio. Customer retention remained over 95% during the quarter.

Trade Desk launched a number of new product features and enhancements during the quarter. This includes new user interface update, new version of the company’s viewability product and hyperlocal mobile targeting product.

Adjusted EBITDA was soaring 77.7% year over year to $16.6 million.

Operating expenses as percentage of revenues surged 350 basis points (bps) to 71.6% in the reported quarter, primarily due to higher general & administrative (G&A) expense as percentage of revenues that surged 450 bps from the year-ago quarter.

Further, technology and development (T&D) expense as percentage of revenues increased 190 bps. These increases were partially offset by lower platform operations and sales & marketing (S&M) expenses, which declined 110 and 190 bps, respectively.

As a result, operating margin contracted 350 bps from the year-ago quarter to 28.4%.

Guidance

For fourth-quarter 2016, Trade Desk anticipates revenues of $62 million and adjusted EBITDA margin of 30%.

Zacks Rank & Key Picks

Trade Desk carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Facebook FB, TrueCar TRUE and Zillow Group ZG. All the three stocks has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Long-term earnings growth for Facebook, TrueCar and Zillow is currently pegged at 28.8%, 100% and 30%, respectively. Trade Desk is expected to grow at 4%.

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