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| 8-K - FORM 8-K - Trade Desk, Inc. | f8k_110917.htm |
EXHIBIT 99.1
The Trade Desk Reports Third Quarter Financial Results
LOS ANGELES, Nov. 09, 2017 (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, 2017.
“Our third quarter results continue to highlight the growing programmatic movement and the success that an objective, independent, data-driven software platform can have in the marketplace. We again saw strength across all channels in our business, including mobile, audio and connected TV, that contributed to strong revenue growth and adjusted EBITDA” said Jeff Green, founder and CEO of The Trade Desk. “We also are seeing measurable increases in marketshare around the world. Spain, France, Singapore, Germany, Korea and Indonesia, all grew by over 100% in Q3 compared with a year ago.”
Third Quarter 2017 Financial Highlights:
The following table summarizes our consolidated financial results for the quarters ended September 30, 2017 and 2016 ($ in millions, except per share amounts):
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| GAAP Results | ||||||||
| Revenue | $ | 79.4 | $ | 53.0 | ||||
| Increase in revenue year over year | 50 | % | 84 | % | ||||
| Net Income | $ | 10.2 | $ | 3.6 | ||||
| Diluted EPS(1) | $ | 0.23 | $ | 0.06 | ||||
| Non-GAAP Results | ||||||||
| Adjusted EBITDA | $ | 24.4 | $ | 16.6 | ||||
| Adjusted EBITDA Margin | 31 | % | 31 | % | ||||
| Non-GAAP Net Income(1) | $ | 15.3 | $ | 9.4 | ||||
| Non-GAAP Diluted EPS(1) | $ | 0.35 | $ | 0.24 | ||||
(1) Attributable to common stockholders-diluted.
Third Quarter and Recent Business Highlights Include:
· Continued Omni-channel Growth: Omni-channel solutions remain a strategic focus for The Trade Desk as the industry continues shifting toward transparency and programmatic buying. Specific channel highlights include:
- Mobile (In-App, Video and Web) increased to 40% of total spend for the quarter highlighting the growing importance of this channel to advertisers.
- Mobile In-App grew 77% from Q3 2016 to Q3 2017.
- Mobile Video grew 140% from Q3 2016 to Q3 2017.
- Connected TV grew 159% from Q3 2016 to Q3 2017.
· Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for the previous 15 quarters.
· New Products and Features: The Trade Desk recently released many new product features and enhancements to its platform including:
- Released our Connected TV (CTV) audience targeting, retargeting, and measurement products which gives our customers the same functionalities as all the other channels in our platform.
- Re-launched auto-optimization enhanced by our team of data scientists so customers see even better performance when they choose to let the algorithm optimize to their campaign goals.
- Announced new data partnerships giving our customers access to declared age and gender data from premium third-party providers.
- Provided first-to-market in-app viewability measurement capabilities to enhance transparency and aid in inventory discovery.
· Combatting Invalid Traffic: Partnered with White Ops to become the first advertising platform to block invalid impressions before they are purchased.
· Cross Device Expansion: On October 24, 2017, The Trade Desk acquired certain assets of Adbrain Ltd. Combined with existing deterministic cross-device data sets, Adbrain’s technology gives The Trade Desk a proprietary device graph to match a user’s identity across different devices, driving better results for marketers and the best possible ad experience for consumers.
Fourth Quarter and Revised Full Year 2017 Outlook:
Mr. Green added, “We believe we have a strong business model that benefits from faster revenue growth than the programmatic industry and we are excited about the momentum we have as we close out the year and enter 2018. For the full year, we are raising our revenue guidance and adjusted EBITDA guidance. We now expect revenue to be about $306 million and adjusted EBITDA for 2017 to be about $90 million.”
The Trade Desk is providing its financial targets for the fourth quarter of 2017 and targets for its fiscal year 2017. The Company’s financial targets are as follows:
Fourth Quarter 2017:
- Revenue of $101 million
- Adjusted EBITDA of $34 million
Full Year 2017:
- Revenue about $306 million, revised from $303 million
- Adjusted EBITDA about $90 million, revised from $88 million
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 this 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 Condensed Consolidated Statements of Operations of The Trade Desk, Inc. (the Company) 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 depreciation and amortization, stock-based compensation, interest expense, secondary offering costs and changes in fair value of preferred stock warrant liabilities. A tax rate on the tax deductible portion of the stock-based compensation expense approximating 40% has been used in the computation of non-GAAP Net loss and non-GAAP diluted EPS attributed to common stockholders. Since 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 Company’s IPO of all then-outstanding shares of convertible preferred stock into one third of one share of common stock using the as-if-converted method, as of January 1, 2016, 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 and may be different from non-GAAP financial measures used by other companies.
Third Quarter Fiscal Year 2017 Results Webcast and Conference Call Details
- When: November 9, 2017 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 866-682-6100. For international callers, please dial 1-404-267-0373. 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 beginning about two hours after the call. To listen to the replay in North America, please dial 877-481-4010 (replay code: 22001). International callers, please dial 1-919-882-2331 (replay code: 22001). The audio replay will be available via telephone until November 16, 2017.
About The Trade Desk
The Trade Desk™ (Nasdaq: TTD) 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 North America, 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, including statements relating to the industry and market trends, and the Company’s financial targets such as revenue and Adjusted EBITDA. 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. These forward-looking statements involve risks, uncertainties and assumptions, including those related to the Company’s limited operating history, which makes it difficult to evaluate the Company’s business and prospects, the market for programmatic advertising developing slower or differently than the Company’s expectations, the demands and expectations of clients and the ability to attract and retain clients. 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 Form 10-K and any subsequent filings on Forms 10-Q or 8-K, 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. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Amounts in thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 79,413 | $ | 52,956 | $ | 205,569 | $ | 130,516 | ||||||||
| Operating expenses: | ||||||||||||||||
| Platform operations | 17,397 | 10,422 | 45,097 | 26,617 | ||||||||||||
| Sales and marketing | 16,200 | 11,600 | 42,842 | 31,282 | ||||||||||||
| Technology and development | 13,181 | 7,292 | 35,777 | 17,694 | ||||||||||||
| General and administrative | 14,227 | 8,591 | 41,815 | 21,442 | ||||||||||||
| Total operating expenses | 61,005 | 37,905 | 165,531 | 97,035 | ||||||||||||
| Income from operations | 18,408 | 15,051 | 40,038 | 33,481 | ||||||||||||
| Total other expense, net | 2,354 | 6,087 | 4,449 | 12,611 | ||||||||||||
| Income before income taxes | 16,054 | 8,964 | 35,589 | 20,870 | ||||||||||||
| Provision for income taxes | 5,825 | 5,320 | 1,602 | 10,668 | ||||||||||||
| Net income | $ | 10,229 | $ | 3,644 | $ | 33,987 | $ | 10,202 | ||||||||
| Net income (loss) attributable to common stockholders | $ | 10,229 | $ | 972 | $ | 33,987 | $ | (37,007 | ) | |||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | 0.25 | $ | 0.08 | $ | 0.85 | $ | (3.23 | ) | |||||||
| Diluted | $ | 0.23 | $ | 0.06 | $ | 0.77 | $ | (3.23 | ) | |||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 40,700 | 12,629 | 39,977 | 11,461 | ||||||||||||
| Diluted | 44,245 | 17,064 | 43,919 | 11,461 | ||||||||||||
| STOCK-BASED COMPENSATION EXPENSE | ||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Platform operations | $ | 818 | $ | 75 | $ | 1,543 | $ | 114 | ||||||||
| Sales and marketing | 1,500 | 200 | 3,277 | 318 | ||||||||||||
| Technology and development | 1,990 | 216 | 3,981 | 330 | ||||||||||||
| General and administrative | 1,585 | 165 | 3,605 | 286 | ||||||||||||
| Total | $ | 5,893 | $ | 656 | $ | 12,406 | $ | 1,048 | ||||||||
| THE TRADE DESK, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Amounts in thousands) | ||||||||
| (Unaudited) | ||||||||
| As of | As of | |||||||
| September 30, 2017 |
December 31, 2016 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 132,798 | $ | 133,400 | ||||
| Accounts receivable, net | 470,452 | 377,240 | ||||||
| Prepaid expenses and other current assets | 12,712 | 5,763 | ||||||
| Total current assets | 615,962 | 516,403 | ||||||
| Property and equipment, net | 17,396 | 14,779 | ||||||
| Deferred taxes, net | 1,778 | 1,778 | ||||||
| Other assets, non-current | 7,495 | 4,636 | ||||||
| Total assets | $ | 642,631 | $ | 537,596 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 370,532 | $ | 321,163 | ||||
| Accrued expenses and other current liabilities | 25,405 | 22,973 | ||||||
| Total current liabilities | 395,937 | 344,136 | ||||||
| Debt, net | 27,000 | 25,847 | ||||||
| Other liabilities, non-current | 4,435 | 3,233 | ||||||
| Total liabilities | 427,372 | 373,216 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | — | — | ||||||
| Additional paid-in capital | 196,090 | 179,198 | ||||||
| Retained earnings (accumulated deficit) | 19,169 | (14,818 | ) | |||||
| Total stockholders' equity | 215,259 | 164,380 | ||||||
| Total liabilities and stockholders' equity | $ | 642,631 | $ | 537,596 | ||||
| THE TRADE DESK, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Amounts in thousands) | ||||||||
| (Unaudited) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 33,987 | $ | 10,202 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 5,157 | 2,612 | ||||||
| Stock-based compensation | 12,406 | 1,048 | ||||||
| Change in fair value of preferred stock warrant liabilities | — | 9,458 | ||||||
| Bad debt expense | 3,943 | 384 | ||||||
| Other | (1,312 | ) | 426 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (95,215 | ) | (82,322 | ) | ||||
| Prepaid expenses and other assets | (7,296 | ) | (2,425 | ) | ||||
| Accounts payable | 51,855 | 94,352 | ||||||
| Accrued expenses and other liabilities | 3,506 | 5,252 | ||||||
| Net cash provided by operating activities | 7,031 | 38,987 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | (8,357 | ) | (3,516 | ) | ||||
| Capitalized software development costs | (2,479 | ) | (1,796 | ) | ||||
| Net cash used in investing activities | (10,836 | ) | (5,312 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from line of credit | — | 75,847 | ||||||
| Repayment on line of credit | — | (40,000 | ) | |||||
| Repayment of term debt | — | (30,000 | ) | |||||
| Payment of debt financing costs | (153 | ) | (976 | ) | ||||
| Payment of financing obligations | (677 | ) | (326 | ) | ||||
| 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 | 1,768 | 433 | ||||||
| Proceeds from employee stock purchase plan | 2,294 | — | ||||||
| Taxes paid related to net settlement of restricted stock awards | (29 | ) | — | |||||
| Payment of stock repurchase costs | — | (155 | ) | |||||
| Payment of Series C convertible preferred stock offering costs | — | (129 | ) | |||||
| 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 | ) | |||||
| Net cash provided by financing activities | 3,203 | 86,246 | ||||||
| Increase (decrease) in cash and cash equivalents | (602 | ) | 119,921 | |||||
| Cash and cash equivalents—Beginning of period | 133,400 | 4,047 | ||||||
| Cash and cash equivalents—End of period | $ | 132,798 | $ | 123,968 | ||||
The following tables show the Company’s GAAP financial metrics reconciled to non-GAAP financial metrics included in this release.
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| (in thousands) | ||||||||||||
| Net income | $ | 10,229 | $ | 3,644 | $ | 33,987 | $ | 10,202 | ||||
| Add back: | ||||||||||||
| Depreciation and amortization expense | 1,968 | 959 | 5,157 | 2,612 | ||||||||
| Stock-based compensation expense | 5,893 | 656 | 12,406 | 1,048 | ||||||||
| Interest expense | 513 | 1,347 | 1,290 | 2,664 | ||||||||
| Secondary offering costs | — | — | 1,523 | — | ||||||||
| Change in fair value of preferred stock warrant liabilities | — | 4,653 | — | 9,458 | ||||||||
| Provision for income taxes | 5,825 | 5,320 | 1,602 | 10,668 | ||||||||
| Adjusted EBITDA | $ | 24,428 | $ | 16,579 | $ | 55,965 | $ | 36,652 | ||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| GAAP net income attributable to common stockholders -diluted | $ | 10,229 | $ | 972 | $ | 33,987 | $ | (37,007 | ) | ||||||||
| Add back (deduct): | |||||||||||||||||
| Stock-based compensation expense | 5,893 | 656 | 12,406 | 1,048 | |||||||||||||
| Secondary offering costs | — | — | 1,523 | — | |||||||||||||
| Premium on repurchase of convertible preferred stock | — | — | — | 47,209 | |||||||||||||
| Income attributable to convertible preferred stock | — | 2,672 | — | — | |||||||||||||
| Change in fair value of preferred stock warrant liabilities | — | 4,653 | — | 9,458 | |||||||||||||
| Liquidation fee related to prior debt facility | — | 750 | — | 750 | |||||||||||||
| Adjustment for income taxes | (846 | ) | (300 | ) | (1,772 | ) | (300 | ) | |||||||||
| Non-GAAP net income attributable to common stockholders-diluted | $ | 15,276 | $ | 9,403 | $ | 46,144 | $ | 21,158 | |||||||||
| GAAP weighted average shares outstanding-diluted | 44,245 | 17,064 | 43,919 | 11,461 | |||||||||||||
| Add back: | |||||||||||||||||
| Convertible preferred stock | — | 21,119 | — | 20,880 | |||||||||||||
| Dilutive stock options to purchase common stock | — | — | — | 4,549 | |||||||||||||
| Dilutive ESPP shares | — | — | — | 2 | |||||||||||||
| Dilutive stock warrants | — | 430 | — | 484 | |||||||||||||
| Non-GAAP weighted average shares outstanding-diluted | 44,245 | 38,613 | 43,919 | 37,376 | |||||||||||||
| GAAP diluted EPS attributable to common stockholders | $ | 0.23 | $ | 0.06 | $ | 0.77 | $ | (3.23 | ) | ||||||||
| Non-GAAP diluted EPS attributable to common stockholders | $ | 0.35 | $ | 0.24 | $ | 1.05 | $ | 0.57 | |||||||||
Contact
Investors
Chris Toth
Vice President Investor Relations, The Trade Desk
ir@thetradedesk.com
310-334-9183
Media
Austin Rotter
Associate Vice President, 5WPR
arotter@5wpr.com
646-862-6866