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Trade Desk (TTD) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

The Trade Desk TTD is set to report fourth-quarter 2018 results on Feb 21.

The company delivered average four-quarter positive earnings surprise of 80.4%. In the last reported quarter, the company's earnings of 65 cents per share topped the Zacks Consensus Estimate of 49 cents per share. The figure increased 85.7% from the year-ago quarter.    

Net revenues increased 49.6% from the year-ago quarter to $118.8 million, beating the consensus mark of $117 million.

For the fourth quarter, Trade Desk expects revenues of $147 million.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 79 cents, up 46.3% year over year. Further, the consensus mark for revenues is pegged at $148.2 million, up roughly 44.4% from the year-ago quarter.

Let’s see how things are shaping up for the upcoming announcement.

The Trade Desk Inc. Price and EPS Surprise

The Trade Desk Inc. Price and EPS Surprise | The Trade Desk Inc. Quote

Factors Likely to Influence Q4 Results

Trade Desk witnessed a record increase in “spend” in the mobile platform which accounted for 46% of the company’s total spend, indicating the growing importance of this channel to advertisers.

Moreover, cross-device spend increased three times in the last reported quarter. We believe increased mobile spending as well as strong cross-device spending will be beneficial for the company in the to-be-reported quarter.

In the last reported quarter, the company witnessed solid momentum in Connected TV (CTV) business, which witnessed growth of 10 times year over year. Moreover, the number of advertisers running on CTV increased 100% year over year. Notably, the transition in advertising budget from Linear TV to CTV is likely to accelerate growth.

The Trade Desk continues to win advertisers, which is evident from the fact that it signed up three more Ad Age's top 200 global advertisers in the last reported quarter. The company also stated that half of Ad Age’s top 200 brands increased spend by more than 50% year over year.     

The company is working with some of the biggest publishers like Google, Alibaba, Pandora, Spotify, CBS, Dish Network, Discovery and DirecTV, which contributed to the company’s top line in the last-reported quarter.

Additionally, The Trade Desk also announced its partnership with Tencent and ITE Taiwan in the last reported quarter, which is expected to boost the company’s share in China.

Further, to provide multinational advertisers access to premium audiences in China, the company also announced partnerships with Baidu Exchange Services, iQIYI, Tencent Social Ads, and Youku in the to-be reported quarter.
 
In the last reported quarter, Trade Desk witnessed higher international spend compared to domestic spend, which indicates the growing popularity of Trade Desk’s offerings worldwide.

The company is benefiting from portfolio strength supported by the launch of innovative products including Nielsen On-Target-Percentage and Custom cost-per-acquisition in the last reported quarter. This is helping the company retain users, which remained above 95% in the third quarter.

Trade Desk is also benefiting from the growing adoption of its unified ID solution. Notably, companies like Sharethrough and PubMatic integrated the company’s solution on their respective platforms in the to-be reported quarter.

However, increased investments in technology and development are expected to keep margins under pressure in the to-be-reported quarter. Stiff competition from the likes of Amazon  in the CTV space does not bode well for Trade Desk.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

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 With a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Square, Inc. SQ has an Earnings ESP of +5.95% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gogo Inc. GOGO has an Earnings ESP of +9.46% and a Zacks Rank #3.

Discovery, Inc. DISCA has an Earnings ESP of +4.72% and a Zacks Rank #3.

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The Trade Desk Inc. (TTD) : Free Stock Analysis Report
 
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