The Trade Desk Gears Up for Strong Q3 Results Amid Industry Growth
The Trade Desk TTD is set to release its third-quarter 2024 results on Nov. 7.
TTD estimates third-quarter 2024 revenues to be at least $618 million, suggesting growth of 25% on a year-over-year basis.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $619.89 million, indicating year-over-year growth of 25.67%.
The consensus mark for earnings is pegged at 40 cents per share, unchanged over the past 60 days, suggesting 21.21% year-over-year growth.
TTD has outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 8.91%.
Analyzing The Trade Desk’s Recent Performance
The Trade Desk price-eps-surprise | The Trade Desk Quote
Explore the most recent EPS estimates and surprises on Zacks Earnings Calendar.
Positive Trends Supporting TTD’s Earnings
TTD has been seeing an increase in clients. Over the past year, the company’s platform has been utilized by the world’s largest 200 advertisers for their ad campaigns.
Customer retention was above 95% in the second quarter of 2024, a trend likely to continue into the third quarter.
In Q2 2024, TTD reported revenues of $585 million, a 26% increase year over year, largely due to the popularity of its CTV, retail media, Kokai, and UID2 solutions.
The upcoming quarter is expected to show similar benefits from robust spending in the CTV and retail media sectors. Currently, CTV is TTD’s fastest-growing channel, reaching over 90 million households and more than 120 million CTV devices.
By the end of Q2 2024, TTD had bolstered its partner network through strategic collaborations, setting the company up for ongoing success in Q3.
Netflix NFLX has selected TTD as a key programmatic partner, which enhances its advertising reach. Meanwhile, Fox FOXA expanded its collaboration with TTD by integrating UID2 and OpenPath across its brands and the AdRise platform. CBC also made its Olympics inventory available via TTD programmatically.
E.W. Scripps was the first CTV publisher to adopt TTD’s OpenPass, aimed at enhancing its programmatic ad buying process.
TTD Stocks Outperforming the Industry
TTD shares have grown by 64.4%, significantly surpassing the returns of the Zacks Computer & Technology sector at 23.5% and the Zacks Internet Services industry, which saw a 19.2% increase.
Year-to-Date Performance Chart
Image Source: Zacks Investment Research
However, TTD’s Value Score of F suggests that its valuation may be stretched, presenting a risk for more cautious investors.
Currently, TTD stock trades at a premium with a forward 12-month Price/Sales ratio of 20.12X compared to the industry average of 5.9X.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
Continued Strong Demand for CTV Boosts TTD
Growing interest in digital and programmatic advertising is benefitting TTD. The total advertising addressable market is climbing towards $1 trillion, presenting significant growth potential for the company. Expanding its international presence also positions TTD for future successes.
TTD’s initiatives, UID2 and OpenPass, which focus on identity and authentication in a post-cookie environment, are gaining traction and increasing demand for its services.
The company’s strong partner collaborations, which include major names like Disney DIS, Comcast’s NBCU, Walmart, Amazon, Roku, Fox, VerticalScope Holdings, foodpanda, and LG Electronics, have driven growth.
Integration with Disney’s real-time ad exchange, which covers Hulu and Disney+ through TTD’s OpenPath technology, has been particularly beneficial. Furthermore, FOXA-TTD’s partnership includes integrating UID2 and OpenPath across Fox’s AdRise platform.
TTD’s liquidity position remains robust. As of June 30, 2024, the company had cash, cash equivalents, and short-term investments totaling $1.5 billion.
In Q2, free cash flow reached $57 million, supporting TTD’s ongoing share buyback program, with $575 million authorized for repurchases as of June 30, 2024.
Conclusion
The Trade Desk’s growing portfolio and partner network have proven to be assets. However, the company’s stretched valuation may be a concern for potential investors.
Currently holding a Zacks Rank #3 (Hold), it might be prudent for investors to wait for a better entry point in TTD’s stock.
Research Chief Names “Single Best Pick to Double”
From a multitude of stocks, five Zacks experts have selected their favorites that could see a +100% surge in the coming months. Among these, the Director of Research Sheraz Mian identifies one that stands out for explosive growth potential.
This company targets millennial and Gen Z markets, generating nearly $1 billion in revenue last quarter. A recent pullback may make this an opportune time to invest. While not all selections are guaranteed winners, this one might outperform earlier Zacks picks like Nano-X Imaging, which rose +129.6% in just over nine months.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Download 5 Stocks Set to Double now.
Netflix, Inc. (NFLX) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
Fox Corporation (FOXA) : Free Stock Analysis Report
The Trade Desk (TTD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
