Business Wire | Aug 9, 2021 08:30AM EDT

The Trade Desk Reports Second Quarter Financial Results

Aug. 09, 2021

LOS ANGELES--(BUSINESS WIRE)--Aug. 09, 2021--The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its second quarter ended June 30, 2021.

"Revenue more than doubled year-over-year to $280 million in the second quarter. Our growth speaks to The Trade Desk's position as the default DSP for the open internet. Nowhere is this more apparent than in Connected TV, as more premium streaming inventory becomes available to meet growing marketer demand for data-driven TV advertising," said Jeff Green, founder and CEO of The Trade Desk. "From a customer perspective, more of the world's leading brands, and their agencies, joined our platform, or expanded their relationship with us. This, and our robust international growth in the second quarter, gives us tremendous optimism moving forward. We also recently launched our new trading platform, Solimar, the biggest product launch in our company's history. Solimar allows advertisers to take advantage of many opportunities in front of them today, with features such as simple and secure onboarding of first-party data; the industry's most advanced cross-channel measurement marketplace; and advanced, multi-level goal-setting which allows our KOA AI technology to optimize campaigns for the trader."

Second Quarter 2021 Financial Highlights:

The following table summarizes our consolidated financial results for the three and six months ended June 30, 2021 and 2020 ($ in millions, except per share amounts):

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

GAAP Results

Revenue $ 280.0 $ 139.4 $ 499.8 $ 300.0

Increase in revenue year over 101 % (13 ) 67 % 7 %year %

Net Income $ 47.7 $ 25.1 $ 70.3 $ 49.2

Diluted EPS $ 0.10 $ 0.05 $ 0.14 $ 0.10



Non-GAAP Results

Adjusted EBITDA $ 117.9 $ 14.6 $ 188.4 $ 53.6

Adjusted EBITDA Margin 42 % 10 % 38 % 18 %

Non-GAAP Net Income $ 88.2 $ 44.8 $ 158.2 $ 88.2

Non-GAAP Diluted EPS $ 0.18 $ 0.09 $ 0.32 $ 0.18

Second Quarter and Recent Business Highlights Include:

* Strong Customer Retention: Customer retention remained over 95% during the quarter, as it has for the previous 7 years * Launched our new trading platform Solimar Features include: Upgraded UI to help set better campaign goals The platform's AI engine Koa(tm) then uses these goals as a guide to optimize media spend, helping the advertisers to achieve goals faster and more efficiently than ever before Enables onboarding and activating first-party data easier than ever Growing an audience without sacrificing control over consumer experience by utilizing an interoperable Unified ID 2.0 with some of the biggest names in identity The most powerful measurement marketplace in the market today providing marketers the ability to measure the impact of campaigns across every channel and optimize in real time * Continued Industry-Wide Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0 (UID2), 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. Recent pledges of support and integration with UID2 include: Global provider of marketing solutions, Interpublic Group Global media, marketing and corporate communications holding company, Omnicom Group AMC Networks, an American entertainment company Blockgraph, a technology company that makes the future of data-driven TV advertising possible OpenAP, an advanced advertising company bringing simplicity and scale to audience-based campaigns in television Snowflake, an enabler for organizations to mobilize their data with Snowflake's Data Cloud * Industry Recognition: The Trade Desk was named one of the Top 100 Software Companies of 2021 by The Software Report and won Adweek Readers' Choice: Best of Tech awards for both Demand Side Platform and Innovator of the Year categories. Additionally, The Trade Desk was included in this year's Forbes Global 2000 list. And for the fifth consecutive year, The Trade Desk was selected as both a FORTUNE 2021 Best Medium Workplace and a Best Workplace in New York by Great Places to work.

Financial Guidance:

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:

Third Quarter 2021 outlook summary:

* Revenue at least $282 million * Adjusted EBITDA approximately $100 million

We have not provided an 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 25% to 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.

Second Quarter Financial Results Webcast and Conference Call Details

* When: August 9, 2021 at 8:30 A.M. Pacific Time (11:30 A.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 "705293" 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 1-877-481-4010 (replay code: 42356). Outside the United States, please dial 1-919-882-2331 (replay code: 42356). The audio replay will be available via telephone until August 23, 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 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 and the impact of COVID-19 on the Company and its customers and partners, 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 Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenue $ 279,967 $ 139,355 $ 499,778 $ 300,015

Operating expenses (1):

Platform operations 50,809 42,133 101,309 82,341

Sales and marketing 61,755 37,071 117,519 71,365

Technology and 53,536 40,058 107,454 76,852 development

General and 51,919 35,865 103,764 74,463 administrative

Total operating 218,019 155,127 430,046 305,021 expenses

Income (loss) from 61,948 (15,772 ) 69,732 (5,006 )operations

Total other expense, 398 194 90 611 net

Income (loss) before 61,550 (15,966 ) 69,642 (5,617 )income taxes

Provision for (benefit 13,853 (41,077 ) (697 ) (54,785 )from) income taxes

Net income $ 47,697 $ 25,111 $ 70,339 $ 49,168

Earnings per share:

Basic $ 0.10 $ 0.05 $ 0.15 $ 0.11

Diluted $ 0.10 $ 0.05 $ 0.14 $ 0.10

Weighted average shares outstanding:

Basic 475,512 461,356 474,172 458,184

Diluted 496,987 486,537 497,449 484,834

_______________________

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



STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Platform operations $ 4,091 $ 2,358 $ 9,106 $ 3,820

Sales and marketing 14,579 6,319 28,263 11,633

Technology and 13,974 7,844 30,068 16,434 development

General and 12,553 7,413 30,114 15,012 administrative

Total $ 45,197 $ 23,934 $ 97,551 $ 46,899



THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)



As of As of

June 30, December 31, 2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 476,907 $ 437,353

Short-term investments, net 228,150 186,685

Accounts receivable, net 1,527,651 1,584,109

Prepaid expenses and other current assets 114,558 102,170

Total current assets 2,347,266 2,310,317

Property and equipment, net 124,809 115,863

Operating lease assets 245,674 248,143

Deferred income taxes 45,124 50,168

Other assets, non-current 30,075 29,154

Total assets $ 2,792,948 $ 2,753,645



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 1,222,220 $ 1,348,480

Accrued expenses and other current liabilities 66,759 88,335

Operating lease liabilities 39,594 37,868

Total current liabilities 1,328,573 1,474,683

Operating lease liabilities, non-current 252,995 254,562

Other liabilities, non-current 9,034 11,255

Total liabilities 1,590,602 1,740,500



Stockholders' equity:

Preferred stock - -

Common stock - -

Additional paid-in capital 657,640 538,778

Retained earnings 544,706 474,367

Total stockholders' equity 1,202,346 1,013,145

Total liabilities and stockholders' equity $ 2,792,948 $ 2,753,645

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



Six Months Ended June 30,

2021 2020

OPERATING ACTIVITIES:

Net income $ 70,339 $ 49,168

Adjustments to reconcile net income to net cashprovided by

operating activities:

Depreciation and amortization 21,017 13,260

Stock-based compensation 97,551 46,899

Allowance for credit losses on accounts receivable 239 2,384

Noncash lease expense 19,553 15,825

Deferred income taxes 5,044 (11,697 )

Other 9,065 (2,372 )

Changes in operating assets and liabilities:

Accounts receivable 49,802 293,577

Prepaid expenses and other assets (6,812 ) (31,368 )

Accounts payable (133,510 ) (214,396 )

Accrued expenses and other liabilities (22,852 ) (7,418 )

Operating lease liabilities (23,995 ) (4,735 )

Net cash provided by operating activities 85,441 149,127

INVESTING ACTIVITIES:

Purchases of investments (164,031 ) (90,080 )

Sales of investments 4,539 -

Maturities of investments 116,769 85,183

Purchases of property and equipment (18,499 ) (37,720 )

Capitalized software development costs (2,675 ) (2,317 )

Net cash used in investing activities (63,897 ) (44,934 )

FINANCING ACTIVITIES:

Proceeds from line of credit - 143,000

Repayment on line of credit - (1,000 )

Payment of debt financing costs (1,852 ) -

Proceeds from exercise of stock options 26,339 41,969

Proceeds from employee stock purchase plan 22,758 15,035

Taxes paid related to net settlement of restricted (29,235 ) (7,729 )stock awards

Net cash provided by financing activities 18,010 191,275

Increase in cash and cash equivalents 39,554 295,468

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

Cash and cash equivalents-End of period $ 476,907 $ 426,344



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 Six Months Ended

June 30, June 30,

2021 2020 2021 2020



Net income $ 47,697 $ 25,111 $ 70,339 $ 49,168

Add back:

Depreciation and 11,006 6,783 21,017 13,260 amortization

Stock-based compensation 45,197 23,934 97,551 46,899

Interest expense 194 (158 ) 239 (975 )(income), net

Provision for (benefit 13,853 (41,077 ) (697 ) (54,785 )from) income taxes

Adjusted EBITDA $ 117,947 $ 14,593 $ 188,449 $ 53,567



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

GAAP net income $ 47,697 $ 25,111 $ 70,339 $ 49,168

Add back (deduct):

Stock-based compensation 45,197 23,934 97,551 46,899 expense

Adjustment for income (4,682 ) (4,248 ) (9,689 ) (7,901 )taxes

Non-GAAP net income $ 88,212 $ 44,797 $ 158,201 $ 88,166



GAAP diluted EPS $ 0.10 $ 0.05 $ 0.14 $ 0.10

Non-GAAP diluted EPS $ 0.18 $ 0.09 $ 0.32 $ 0.18



Weighted average shares 496,987 486,537 497,449 484,834 outstanding-diluted

View source version on businesswire.com: https://www.businesswire.com/news/home/20210809005222/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