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| 8-K - FORM 8-K - Trade Desk, Inc. | f8k_111016.htm |
EXHIBIT 99.1
The Trade Desk Reports Third Quarter Financial Results
LOS ANGELES, Nov. 10, 2016 (GLOBE NEWSWIRE) -- The Trade Desk, Inc. (NASDAQ:TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its third quarter ended September 30, 2016.
“Media buyers find enormous value in the ability to look at millions of ad opportunities every second across devices and formats, using data to make the best decisions in real-time. We are excited to share today that we exceeded our own expectations for the third quarter,” said Jeff Green, founder and CEO of The Trade Desk. “We’ve broken many of our previous records during the quarter including revenue of $53.0 million which is an 84% increase year over year. We delivered net income of $3.6 million and adjusted EBITDA of $16.6 million, distinguishing The Trade Desk from many comparable companies. Following our successfully completed IPO in September, we continue to see great momentum from our customers in the adoption of programmatic advertising on our platform and our global offerings. Because of our significant growth in international expansion, mobile, video, and television, we have significantly outgrown the industry and are massively outpacing the growth of the overall market.”
Third Quarter 2016 Financial Highlights:
The following table summarizes our consolidated financial results for the quarters ended September 30, 2016 and 2015 ($ in millions, except per share amounts):
| Three Months | |||||||
| Ended September 30, | |||||||
| 2016 | 2015 | ||||||
| GAAP Results | |||||||
| Revenue | $ | 53.0 | $ | 28.8 | |||
| Increase in revenue year over year | 84 | % | 157 | % | |||
| Net Income | $ | 3.6 | $ | 4.6 | |||
| Diluted EPS(1) | $ | 0.06 | $ | 0.10 | |||
| Non-GAAP Results | |||||||
| Adjusted EBITDA | $ | 16.6 | $ | 9.3 | |||
| Adjusted EBITDA Margin | 31 | % | 32 | % | |||
| Non-GAAP Net Income(1) | $ | 9.4 | $ | 5.4 | |||
| Non-GAAP Diluted EPS(1) | $ | 0.24 | $ | 0.15 | |||
| (1) Attributable to common stockholders-diluted. | |||||||
Third Quarter and Recent Business Highlights Include:
- Completed Initial Public Offering: Began trading on the NASDAQ on September 21, 2016. Net proceeds from the IPO were approximately $73.6 million, after underwriting discounts and other offering costs.
- Continued Omni-channel Growth: Third quarter gross spend with non-display campaigns increased to over half of gross spend for the first time driven by newer channels such as Mobile and Audio. Omni-channel solutions remain a strategic focus for us as the industry continues shifting toward transparency and programmatic buying.
- Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for the previous 11 quarters.
- New Products and Features: During the quarter, The Trade Desk issued a number of new product features and enhancements to its platform including a major new user interface update, new cutting edge version of our viewability product, hyperlocal mobile targeting, and reporting improvements to enterprise APIs, new cross-device targeting capabilities and audio channel offerings.
- Momentum with Audio: The Trade Desk announced that it now offers ad buyers access to programmatic advertising with Audio leaders such as Spotify, Triton Digital and AdsWizz.
- Global Footprint Expansion: Through the third quarter of 2016, The Trade Desk broadened its coverage with the opening of its Hong Kong and Orange County, California offices. Additional geographic expansion is planned for Europe and Asia Pacific.
- Best Places to Work: The Trade Desk was ranked #12 among the 100 Best Places to Work for Millennials by Fortune and was named by Crain’s New York Business 2016 as one of the best places to work in New York City.
Fourth Quarter Outlook:
The Trade Desk is providing its financial targets for the fourth quarter of fiscal year 2016. The Company’s financial targets are as follows:
- Revenue of $62 million
- Adjusted EBITDA margin of 30%
Reconciliation of adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the variability and complexity with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of our stock-based compensation expense that are directly impacted by unpredictable fluctuations in our share price. We expect the variability of the above charges could have a significant, and potentially unpredictable, impact on our future U.S. GAAP financial results.
Use of Non-GAAP Financial Information
Included within this press release are non-GAAP financial measures that supplement the Company's Condensed Consolidated Statements of Operations prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company's actual results prepared under GAAP by excluding charges for stock-based compensation, changes in fair value of preferred stock warrant liabilities and a liquidation fee related to a prior debt facility that became due upon the IPO. A 40% tax rate on the liquidation fee has been used in the computation of non-GAAP EPS, and as the other excluded charges are non-taxable, a tax effect for those charges was not included. Also included in these non-GAAP financial measures are adjustments to diluted earnings per share amounts, as applicable, to reflect the conversion upon the IPO of all then-outstanding shares of convertible preferred stock voting together as a single class on an as-converted to common share basis of each outstanding convertible preferred share into one third of one share of common stock using the as-if-converted method, as of January 1, 2015, or the date of issuance, if later. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Condensed Consolidated Statements of Operations. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for or superior to corresponding, similarly captioned, GAAP measures.
Quarterly Report on Form 10-Q
The company expect to file its quarterly report on Form 10-Q for the third quarter of the 2016 fiscal year with the Securities and Exchange Commission on Thursday November 10, 2016. This report will be available for viewing and download at http://investors.thetradedesk.com/.
Third Quarter 2016 Results Webcast and Conference Call Details
- When: November 10, 2016 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time).
- Webcast: A live webcast of the call can be accessed from the Investor Relations section of The Trade Desk’s website at http://investors.thetradedesk.com/. Following the call, a replay will be available on the company’s website.
- Dial-in: To access the call via telephone in North America, please dial 800-862-9098. For international callers, please dial 1-785-424-1051. Participants should reference the conference call ID “The Trade Desk Call” after dialing in.
- Audio replay: An audio replay of the call will be available via telephone until November 24, 2016, beginning about two hours after the call. To listen to the replay in North America, please dial 1-877-481-4010 (replay code: 10124). International callers, please dial 1-919-882-2331 (access code: 10124).
About The Trade Desk
The Trade Desk™ is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize more expressive data-driven digital advertising campaigns across ad formats, including display, video, audio, native and social, on a multitude of devices, such as computers, mobile devices, and connected TV. Integrations with major data, inventory, and publisher partners ensure maximum reach and decisioning capabilities, and enterprise APIs enable custom development on top of the platform. Headquartered in Ventura, CA, The Trade Desk has offices across the United States, Europe, and Asia.
Forward-Looking Statements:
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody assumptions that may prove to have been inaccurate. These forward-looking statements involve risks, uncertainties and assumptions. When words such as “believe,” “expect,” “anticipate,” “will”, “outlook” or similar expressions are used, the Company is making forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give readers any assurance that such expectations will prove correct. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond the control of the Company. These are disclosed in the Company’s reports filed from time to time with the Securities and Exchange Commission, including its most recent S-1 report and Form 10-Q, available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.
| THE TRADE DESK, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Amounts in thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue | $ | 52,956 | $ | 28,768 | $ | 130,516 | $ | 71,178 | ||||||||
| Operating expenses: | ||||||||||||||||
| Platform operations | 10,422 | 5,968 | 26,617 | 15,610 | ||||||||||||
| Sales and marketing | 11,600 | 6,838 | 31,282 | 18,530 | ||||||||||||
| Technology and development | 7,292 | 3,411 | 17,694 | 8,507 | ||||||||||||
| General and administrative | 8,591 | 3,359 | 21,442 | 8,536 | ||||||||||||
| Total operating expenses | 37,905 | 19,576 | 97,035 | 51,183 | ||||||||||||
| Income from operations | 15,051 | 9,192 | 33,481 | 19,995 | ||||||||||||
| Total other expense, net | 6,087 | 1,376 | 12,611 | 2,812 | ||||||||||||
| Income before income taxes | 8,964 | 7,816 | 20,870 | 17,183 | ||||||||||||
| Provision for income taxes | 5,320 | 3,211 | 10,668 | 6,904 | ||||||||||||
| Net income | $ | 3,644 | $ | 4,605 | $ | 10,202 | $ | 10,279 | ||||||||
| Net income (loss) attributable to common stockholders | $ | 972 | $ | 1,453 | $ | (37,007 | ) | $ | 6,922 | |||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | 0.08 | $ | 0.14 | $ | (3.23 | ) | $ | 0.68 | |||||||
| Diluted | $ | 0.06 | $ | 0.10 | $ | (3.23 | ) | $ | 0.26 | |||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 12,629 | 10,228 | 11,461 | 10,193 | ||||||||||||
| Diluted | 17,064 | 14,231 | 11,461 | 16,586 | ||||||||||||
| STOCK-BASED COMPENSATION EXPENSE | ||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Platform operations | $ | 75 | $ | 34 | $ | 114 | $ | 51 | ||||||||
| Sales and marketing | 200 | 34 | 318 | 88 | ||||||||||||
| Technology and development | 216 | 24 | 330 | 53 | ||||||||||||
| General and administrative | 165 | 24 | 286 | 59 | ||||||||||||
| Total | $ | 656 | $ | 116 | $ | 1,048 | $ | 251 | ||||||||
| THE TRADE DESK, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Amounts in thousands) | ||||||||
| (Unaudited) | ||||||||
| As of | As of | |||||||
| September 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 123,968 | $ | 4,047 | ||||
| Accounts receivable, net | 274,008 | 191,943 | ||||||
| Prepaid expenses and other current assets | 5,536 | 3,812 | ||||||
| Total current assets | 403,512 | 199,802 | ||||||
| Property and equipment, net | 10,545 | 6,625 | ||||||
| Deferred taxes, net | 1,171 | 1,171 | ||||||
| Other assets, non-current | 4,492 | 2,633 | ||||||
| Total assets | $ | 419,720 | $ | 210,231 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK | ||||||||
| AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 206,194 | $ | 108,461 | ||||
| Accrued expenses and other current liabilities | 14,007 | 9,937 | ||||||
| Financing obligation, current portion | 721 | 502 | ||||||
| Total current liabilities | 220,922 | 118,900 | ||||||
| Debt, net | 50,847 | 44,888 | ||||||
| Convertible preferred stock warrant liabilities | - | 6,927 | ||||||
| Other liabilities, non-current . | 1,732 | 140 | ||||||
| Financing obligation, non-current | 485 | 1,030 | ||||||
| Total liabilities.. | 273,986 | 171,885 | ||||||
| Convertible preferred stock | - | 24,204 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock | - | - | ||||||
| Common stock | - | - | ||||||
| Additional paid‑in capital | 170,832 | 1,039 | ||||||
| Retained earnings (accumulated deficit) | (25,098 | ) | 13,103 | |||||
| Total stockholders' equity | 145,734 | 14,142 | ||||||
| Total liabilities, convertible preferred stock and stockholders' equity | $ | 419,720 | $ | 210,231 | ||||
| THE TRADE DESK, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Amounts in thousands) | ||||||||
| (Unaudited) | ||||||||
| Nine Months | ||||||||
| Ended September 30, | ||||||||
| 2016 | 2015 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 10,202 | $ | 10,279 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 2,612 | 1,123 | ||||||
| Stock‑based compensation | 1,048 | 251 | ||||||
| Change in fair value of preferred stock warrant liabilities | 9,458 | 1,162 | ||||||
| Other | 810 | 532 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (82,322 | ) | (49,016 | ) | ||||
| Prepaid expenses and other assets | (2,425 | ) | (2,908 | ) | ||||
| Accounts payable | 94,352 | 10,749 | ||||||
| Accrued expenses and other liabilities | 5,252 | 2,303 | ||||||
| Net cash provided by (used in) operating activities | 38,987 | (25,525 | ) | |||||
| INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (3,516 | ) | (1,463 | ) | ||||
| Capitalized software development costs | (1,796 | ) | (1,236 | ) | ||||
| Redemption of short-term investment | - | 551 | ||||||
| Net cash used in investing activities | (5,312 | ) | (2,148 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from line of credit | 75,847 | 20,000 | ||||||
| Repayment on line of credit | (40,000 | ) | - | |||||
| Repayment of term debt | (30,000 | ) | - | |||||
| Payment of debt financing costs | (976 | ) | - | |||||
| Payment of financing obligations | (326 | ) | (53 | ) | ||||
| Proceeds from issuance of Series C convertible preferred stock | 60,000 | - | ||||||
| Repurchase of preferred stock and common stock | (54,000 | ) | - | |||||
| Proceeds from exercise of stock options | 433 | 71 | ||||||
| Payment of stock repurchase costs | (155 | ) | - | |||||
| Proceeds from the issuance of Class A common stock in initial public offering, | ||||||||
| net of underwriting commissions | 78,120 | - | ||||||
| Payment of offering costs—initial public offering | (2,568 | ) | - | |||||
| Payment of Series C convertible preferred stock offering costs | (129 | ) | - | |||||
| Net cash provided by financing activities | 86,246 | 20,018 | ||||||
| Increase (decrease) in cash | 119,921 | (7,655 | ) | |||||
| Cash—Beginning of period | 4,047 | 17,315 | ||||||
| Cash—End of period | $ | 123,968 | $ | 9,660 | ||||
Non-GAAP Financial Metrics
(Amounts in thousands, except per share amounts)
The following tables show the Company’s GAAP financial metrics reconciled to non-GAAP financial metrics included in this release.
| Three Months | Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income | $ | 3,644 | $ | 4,605 | $ | 10,202 | $ | 10,279 | ||||||||
| Add back: | ||||||||||||||||
| Depreciation and amortization expense | 959 | 430 | 2,612 | 1,123 | ||||||||||||
| Interest expense | 1,347 | 295 | 2,664 | 716 | ||||||||||||
| Provision for income taxes | 5,320 | 3,211 | 10,668 | 6,904 | ||||||||||||
| Stock-based compensation expense | 656 | 116 | 1,048 | 251 | ||||||||||||
| Change in fair value of preferred stock warrant liabilities | 4,653 | 673 | 9,458 | 1,162 | ||||||||||||
| Adjusted EBITDA | $ | 16,579 | $ | 9,330 | $ | 36,652 | $ | 20,435 | ||||||||
| Three Months | Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP net income (loss) attributable to common stockholders | $ | 972 | $ | 1,453 | $ | (37,007 | ) | $ | 6,922 | |||||||
| Add back (deduct): | ||||||||||||||||
| Income attributable to dilutive convertible preferred stock | - | - | - | 1,218 | ||||||||||||
| Preferred stock modification | - | - | - | (3,793 | ) | |||||||||||
| GAAP net income (loss) attributable to common stockholders-diluted | 972 | 1,453 | (37,007 | ) | 4,347 | |||||||||||
| Add back (deduct): | ||||||||||||||||
| Stock-based compensation expense | 656 | 116 | 1,048 | 251 | ||||||||||||
| Change in fair value of preferred stock warrant liabilities | 4,653 | 673 | 9,458 | 1,162 | ||||||||||||
| Liquidation fee related to prior debt facility | 750 | - | 750 | - | ||||||||||||
| Premium on repurchase of convertible preferred stock | - | - | 47,209 | - | ||||||||||||
| Income attributable to convertible preferred stock | 2,672 | 3,152 | - | 7,150 | ||||||||||||
| Income attributable to dilutive convertible preferred stock | - | - | - | (1,218 | ) | |||||||||||
| Adjustment for income taxes | (300 | ) | - | (300 | ) | - | ||||||||||
| Non-GAAP net income attributable to common stockholders-diluted | $ | 9,403 | $ | 5,394 | $ | 21,158 | $ | 11,692 | ||||||||
| GAAP weighted average shares outstanding-diluted | 17,064 | 14,231 | 11,461 | 16,586 | ||||||||||||
| Add back: | ||||||||||||||||
| Convertible preferred stock | 21,119 | 22,110 | 20,880 | 19,320 | ||||||||||||
| Dilutive stock options to purchase common stock | - | - | 4,549 | - | ||||||||||||
| Dilutive ESPP shares | - | - | 2 | - | ||||||||||||
| Dilutive stock warrants | 430 | 602 | 484 | 515 | ||||||||||||
| Non-GAAP weighted average shares outstanding-diluted | 38,613 | 36,943 | 37,376 | 36,421 | ||||||||||||
| GAAP diluted EPS attributable to common stockholders | $ | 0.06 | $ | 0.10 | $ | (3.23 | ) | $ | 0.26 | |||||||
| Non-GAAP diluted EPS attributable to common stockholders | $ | 0.24 | $ | 0.15 | $ | 0.57 | $ | 0.32 | ||||||||
Contact Information:
Investors
Chris Toth
ir@thetradedesk.com
310-334-9183
Media
Alexis Roberts
Blast PR for The Trade Desk
alexisr@blastpr.com
805-886-8511