Business Wire | Feb 18, 2021 04:01PM EST

The Trade Desk Reports Fourth Quarter and Fiscal Year 2020 Financial Results

Feb. 18, 2021

LOS ANGELES--(BUSINESS WIRE)--Feb. 18, 2021--Global advertising technology leader The Trade Desk (Nasdaq:TTD) today announced financial results for its fourth quarter and fiscal year ended December 31, 2020.

"While 2020 was a uniquely challenging year, it was also a turning point for our industry and our company. We won more share in our fastest growing channels such as CTV and Audio, which helped drive record ad spend of $4.2 billion on our platform in 2020," said Co-Founder and CEO of The Trade Desk, Jeff Green. "Perhaps just as important, in 2020 we saw several years of advertising disruption and innovation compressed into a few months. Marketers are being more deliberate and data-driven in everything they do, and as a result, they are gravitating to the advertising opportunities of the open internet. With CTV now offering a data-driven alternative to linear, with brands seeking a scalable and brand-safe alternative to user-generated content, and with new identity tools that provide a common currency for the open internet as well as enable better cross channel measurement, the industry is gravitating to the open internet and standardizing on our platform."

Fourth Quarter and Full Year 2020 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters and fiscal year ended December 31, 2020 and 2019 ($ in millions, except per share amounts):

Three Months Ended Year Ended

December 31, December 31,

2020 2019 2020 2019

GAAP Results

Revenue $ 319.9 $ 215.9 $ 836.0 $ 661.1

Increase in revenue year over 48 % 35 % 26 % 39 %year

Net Income $ 151.9 $ 50.9 $ 242.3 $ 108.3

Diluted EPS $ 3.05 $ 1.06 $ 4.95 $ 2.27



Non-GAAP Results

Adjusted EBITDA $ 152.9 $ 83.5 $ 283.7 $ 213.9

Adjusted EBITDA Margin 48 % 39 % 34 % 32 %

Non-GAAP Net Income $ 184.8 $ 71.6 $ 335.6 $ 176.3

Non-GAAP Diluted EPS $ 3.71 $ 1.49 $ 6.85 $ 3.69

Fourth Quarter and 2020 Business Highlights Include:

* Continued Share Gain: 2020 gross spend on the platform was approximately $4.2 billion, a 34% increase from a year ago.

* Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for each quarter, the previous 6 years.

* Continued Industry-Wide Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0, a new industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. The ID is an upgrade and alternative to third-party cookies. Partnerships in 2020 include: Nielsen Holdings, a global measurement and data analytics company Criteo S.A., a global technology company that powers world marketers LiveRamp Holdings, the leading data connectivity platform Magnite, the world's largest independent sell-side advertising platform Index Exchange, a large global advertising marketplace where premium digital media companies sell their ad impressions The Washington Post, a large American daily newspaper published in Washington, D.C. Pubmatic, a leader in developing and implementing online advertising software and strategies for the digital publishing and advertising industry. Neustar, a leading technology company that provides real-time information and analytics for the Internet and digital performance. MediaVine, one of the largest ad management companies in the U.S. OpenX, a programmatic advertising technology company that combines ad server and a real-time bidding exchange with a standard supply-side platform

* Expanded Partnerships in 2020: In Q1, The Trade Desk and TikTok, the leading destination for short-form mobile video, announced a new advertising partnership covering key Asia Pacific markets. The partnership will allow advertisers to directly access premium TikTok inventory across the Asia-Pacific region via The Trade Desk platform. TikTok is the first short-form video platform to integrate its ad offerings with The Trade Desk, making this a unique industry-leading development for brands in the region. Also in Q1, The Trade Desk and Samba TV, the leading provider of consumer cross screen television insights and analytics, expanded their U.S. partnership to international markets beginning in Australia. In Q2, The Trade Desk and FreeWheel, a Comcast company expanded its partnership in connected TV. The Trade Desk now can access FreeWheel's unified decisioning capability that enables buyers and sellers to seamlessly transact across both direct sold and programmatic advertising.

* Industry Awards: For the fourth consecutive year, The Trade Desk was named a Best Medium Workplace(tm) 2020 by Great Places to Work(r). The Trade Desk was also named a Best Workplace in Asia(tm), a Best Workplace in UK(tm), a Best Workplace in Hong Kong(tm) and a Best Workplace in New York(tm). The Trade Desk won Best Overall Adtech Solution at the MarTech Breakthrough Awards, won for the Best Overall Technology for Programmatic Trading at The Drum Digital Advertising Awards (US) and was named Marketing Technology Company of the Year at the B&T 2020 Awards (Australia). The Trade Desk was also a Leader in the Gartner Adtech Magic Quadrant, 2020.

Impact of COVID-19 on our Outlook:

Our business has been impacted by the COVID-19 pandemic that has significantly impacted advertiser demand. Like many companies that are ad-funded, we are facing a period of higher uncertainty in our business outlook. We expect our business performance could be impacted by issues beyond our control, such as changing economic conditions or additional shelter-in-place orders that may or may not occur. Assuming that the economy continues to recover and we do not have any major COVID-19 related setbacks that may cause economic conditions to deteriorate, we estimate the following:

First Quarter 2021 outlook summary:

* Revenue range between $214 million and $217 million * Adjusted EBITDA of at least $55 million

We have not provided outlook for GAAP Net income or reconciliation of adjusted EBITDA guidance to net income, the closest corresponding U.S. GAAP measure, because net income outlook 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 the non-GAAP financial measures of Adjusted EBITDA, Non-GAAP net income and Non-GAAP diluted EPS that supplement the Consolidated Statements of Income of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before depreciation and amortization, stock-based compensation, interest expense (income), net, and provision for (benefit from) income taxes. Non-GAAP net income excludes charges and the related income tax effects for stock-based compensation. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 30% have been used in the computation of non-GAAP net income and non-GAAP diluted EPS. 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 Consolidated Statements of Income. 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.

Fourth Quarter and Fiscal Year 2020 Results Webcast and Conference Call Details

* When: February 18, 2021 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 888-506-0062. For callers outside the United States, please dial 1-973-528-0011. Participants should reference the conference call ID code "510840" 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 the United States, please dial 877-481-4010 (replay code: 39926). Outside the United States, please dial 1-919-882-2331 (replay code: 39926). The audio replay will be available via telephone until March 4, 2021.

The Trade Desk, Inc. uses its Investor Relations website ( http://investors.thetradedesk.com/investor-overview), its Twitter feed (@TheTradeDesk), LinkedIn page ( https://www.linkedin.com/company/the-trade-desk/), and Facebook page ( https://www.facebook.com/TheTradeDesk/), and Jeff Green's Twitter feed (@jefftgreen) and LinkedIn profile ( https://www.linkedin.com/in/jefftgreen/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to The Trade Desk's press releases, SEC filings, public conference calls and webcasts.

About The Trade Desk

The Trade Desk(tm) is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns across ad formats and devices. 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 Pacific. To learn more, visit thetradedesk.com or follow us on Facebook, Twitter, LinkedIn and YouTube.

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 relatively 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 INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)



Three Months Ended Year Ended

December 31, December 31,

2020 2019 2020 2019

Revenue $ 319,905 $ 215,944 $ 836,033 $ 661,058

Operating expenses (1):

Platform operations 51,645 47,267 178,812 156,180

Sales and marketing 58,740 42,931 174,742 132,882

Technology and 48,723 32,803 166,654 116,752 development

General and 54,365 40,293 171,617 143,048 administrative

Total operating 213,473 163,294 691,825 548,862 expenses

Income from operations 106,432 52,650 144,208 112,196

Total other expense (529 ) (1,045 ) 305 (4,024 )(income), net

Income before income 106,961 53,695 143,903 116,220 taxes

Provision for (benefit (44,941 ) 2,750 (98,414 ) 7,902 from) income taxes

Net income $ 151,902 $ 50,945 $ 242,317 $ 108,318

Earnings per share:

Basic $ 3.24 $ 1.13 $ 5.24 $ 2.43

Diluted $ 3.05 $ 1.06 $ 4.95 $ 2.27

Weighted average shares outstanding:

Basic 46,917 45,036 46,287 44,533

Diluted 49,754 48,034 48,988 47,806



(1) Includes stock-based compensation expense as follows:



STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)



Three Months Ended Year Ended

December 31, December 31,

2020 2019 2020 2019



Platform operations $ 3,335 $ 1,456 $ 8,794 $ 5,350

Sales and marketing 11,177 7,675 29,726 20,769

Technology and 12,327 7,974 36,672 26,553 development

General and 11,185 7,285 36,583 28,086 administrative

Total $ 38,024 $ 24,390 $ 111,775 $ 80,758



THE TRADE DESK, INC.



CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)



As of As of

December 31, December 31, 2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 437,353 $ 130,876

Short-term investments 186,685 124,112

Accounts receivable, net 1,584,109 1,166,376

Prepaid expenses and other current assets 102,170 27,857

Total current assets 2,310,317 1,449,221

Property and equipment, net 115,863 64,012

Operating lease assets 248,143 173,449

Deferred income taxes 50,168 18,950

Other assets, non-current 29,154 23,129

Total assets $ 2,753,645 $ 1,728,761



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 1,348,480 $ 868,618

Accrued expenses and other current 88,335 47,178 liabilities

Operating lease liabilities 37,868 14,577

Total current liabilities 1,474,683 930,373

Operating lease liabilities, non-current 254,562 174,873

Other liabilities, non-current 11,255 10,998

Total liabilities 1,740,500 1,116,244



Stockholders' equity:

Preferred stock - -

Common stock - -

Additional paid-in capital 538,778 380,079

Retained earnings 474,367 232,438

Total stockholders' equity 1,013,145 612,517

Total liabilities and stockholders' equity $ 2,753,645 $ 1,728,761

THE TRADE DESK, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



Year Ended December 31,

2020 2019

OPERATING ACTIVITIES:

Net income $ 242,317 $ 108,318

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 28,632 21,662

Stock-based compensation 111,775 80,758

Deferred income taxes (31,218 ) (10,490 )

Allowance for credit losses on accounts 3,149 2,702 receivable

Noncash lease expense 33,269 21,894

Other 2,190 (1,939 )

Changes in operating assets and liabilities:

Accounts receivable (418,054 ) (331,369 )

Prepaid expenses and other assets (66,655 ) (19,597 )

Accounts payable 481,313 191,763

Accrued expenses and other liabilities 35,446 6,845

Operating lease liabilities (17,095 ) (10,342 )

Net cash provided by operating activities 405,069 60,205

INVESTING ACTIVITIES:

Purchases of investments (230,759 ) (212,776 )

Maturities of investments 167,602 89,539

Purchases of property and equipment (74,061 ) (35,693 )

Capitalized software development costs (6,053 ) (4,911 )

Net cash used in investing activities (143,271 ) (163,841 )

FINANCING ACTIVITIES:

Proceeds from line of credit 143,000 -

Repayment on line of credit (143,000 ) -

Payment of debt financing costs - (6 )

Proceeds from exercise of stock options 76,146 29,874

Proceeds from employee stock purchase plan 21,671 16,746

Taxes paid related to net settlement of (53,138 ) (19,334 )restricted stock awards

Net cash provided by financing activities 44,679 27,280

Increase (decrease) in cash and cash equivalents 306,477 (76,356 )

Cash and cash equivalents-Beginning of period 130,876 207,232

Cash and cash equivalents-End of period $ 437,353 $ 130,876



Non-GAAP Financial Metrics (Amounts in thousands, except per share amounts)

The following tables show the Company's non-GAAP financial metrics reconciled to the comparable GAAP financial metrics included in this release.

Three Months Ended Year Ended

December 31, December 31,

2020 2019 2020 2019



Net income $ 151,902 $ 50,945 $ 242,317 $ 108,318

Add back:

Depreciation and 7,855 6,416 28,632 21,662 amortization expense

Stock-based compensation 38,024 24,390 111,775 80,758 expense

Interest expense (income), 84 (956 ) (656 ) (4,719 )net

Provision for (benefit from) (44,941 ) 2,750 (98,414 ) 7,902 income taxes

Adjusted EBITDA $ 152,924 $ 83,545 $ 283,654 $ 213,921



Three Months Ended Year Ended

December 31, December 31,

2020 2019 2020 2019

GAAP net income $ 151,902 $ 50,945 $ 242,317 $ 108,318

Add back (deduct):

Stock-based compensation 38,024 24,390 111,775 80,758 expense

Adjustment for income taxes (5,119 ) (3,783 ) (18,460 ) (12,768 )

Non-GAAP net income $ 184,807 $ 71,552 $ 335,632 $ 176,308



GAAP diluted EPS $ 3.05 $ 1.06 $ 4.95 $ 2.27

Non-GAAP diluted EPS $ 3.71 $ 1.49 $ 6.85 $ 3.69



Weighted average shares 49,754 48,034 48,988 47,806 outstanding-diluted



View source version on businesswire.com: https://www.businesswire.com/news/home/20210218005895/en/

CONTACT: Investors Chris Toth Vice President Investor Relations, The Trade Desk ir@thetradedesk.com 310-334-9183

CONTACT: Media Ian Colley Vice President Public Relations, The Trade Desk ian.colley@thetradedesk.com 914-434-3043