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The Trade Desk (TTD) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

The Trade Desk TTD is set to release third-quarter 2019 results on Nov 7.

For third-quarter 2019, the company expects revenues of $163 million. The Zacks Consensus Estimate for revenues is currently pegged at $164.3 million, indicating 38.2% growth from the year-ago quarter reported figure.

Moreover, the Zacks Consensus Estimate for earnings has remained unchanged at 67 cents over the past 30 days and suggests growth of 36.7% from the figure reported in the year-ago quarter.

In the last reported quarter, earnings of 95 cents per share beat the Zacks Consensus Estimate by 39.7% and jumped 58.3% year over year.

Revenues surged 42.9% year over year to $160 million and surpassed the consensus mark of $155 million.

The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 51.6%.

Let’s see how things have shaped up prior to this announcement.

The Trade Desk Inc. Price and EPS Surprise

The Trade Desk Inc. Price and EPS Surprise

The Trade Desk Inc. price-eps-surprise | The Trade Desk Inc. Quote

Factors to Consider

The Trade Desk has been benefiting from increasing adoption of its unified ID solution. Supply side platforms (SSP), publishers, demand side platforms (DSP), data management platforms (DMP) and data providers opt for this solution to enhance their digital match rates, improve coverage and deliver more relevant advertising.

Companies like Prebid.org, Throtle, Factual, Tapad and Yieldone partnered with The Trade Desk to adopt the company’s unified ID solutions in the second quarter, which is likely to have contributed to third-quarter revenues.

Additionally, the company’s top line in the third quarter is expected to have significantly benefited from momentum in programmatic ad buying. This is expected to have benefited from The Trade Desk’s continuous focus on Omni channel solutions, particularly mobile in-app spend and mobile video, which grew 63% and 50% year over year, respectively in the last reported quarter.

Moreover, shift in the advertising budget from linear TV to Connected TV (CTV) is likely to have accelerated growth in the to-be reported quarter. Notably, CTV spend grew more than 2.5X year over year in the last reported quarter.

The emergence of digital content has boosted the usage of the company’s inventory across all forms of CTV. Notably, media companies like CBS, ABC, ESPN, and AME among others are expected to have been the primary drivers of The Trade Desk’s CTV inventory during the third quarter.

Continued strength in customer retention is also expected to have boosted the company’s revenues during the quarter. The Trade Desk’s customer retention rate has remained more than 95% in the previous 23 quarters.

Among other initiatives in CTV, in the third quarter, the company partnered with Amazon’s AMZN Amazon Publisher Services (APS) to bring programmatic demand to third-party premium TV content providers. This is expected to have improved advertiser confidence and driven demand for the platform in the third quarter.

Advertisers on the platform thus gained access to 100% of Amazon’s third-party content providers like Discovery, NBC, and ESPN apps available on Amazon Fire Stick that led to quality inventory of premium content. Third-quarter top-line are expected to reflect the impact of these partnerships.

Internationally, the company has been working directly with some of the biggest media companies, such as RTL Group, ProSieben, Mediaset, and others. Across Asia, The Trade Desk has access to many OTT video streaming services such as TVB, HOOQ, iflix, Viu and LINE TV among others.

Across all these relationships, the company’s focus has been on monetizing premium ad-funded content.

The Trade Desk has access to Thailand’s top TV digital platforms, Channel 7 and Channel 3 alongside TrueID TV, which is the second-largest broadcaster in Thailand. In Vietnam, the company has partnered with the largest free TV station, VTV.

Moreover, The Trade Desk’s partnerships with Baidu, iQIYI, Alibaba and Tencent are likely to have resulted in expanded market share in China in the to-be-reported quarter.

Notably, through its partnerships, the company has been helping advertisers reach premium audiences globally. Additionally, its clients can tap the China market using the same platform they use for the rest of the world. This is expected to have attracted advertisers and boosted ad spends.

However, higher operating expenses, particularly selling & marketing, are likely to have hurt margins.

What Our Model Says

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of an earnings beat.

The Trade Desk has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release:

iHeartMedia IHRT has an Earnings ESP of +3.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Liberty Broadband LBRDK has an Earnings ESP of +5.75% and a Zacks Rank #2.

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