Advertising software maker The Trade Desk (NASDAQ:TTD) reported first-quarter 2024 results that beat Wall Street analyst expectations, with revenue up 28.3% year over year to $491.3 million. Revenue expectations for next quarter were also better than expected, at $575 million at the midpoint, 1.4% above analyst estimates. It posted non-GAAP earnings of $0.26 per share, an improvement from earnings of $0.02 per share in the same quarter last year.
Is Now the Time to Buy The Trade Desk? Find out in our full research report.
Highlights of the Trade Desk (TTD) Q1 CY2024:
-
Gain: $491.3 million vs. analyst estimates of $480.5 million (2.2% better)
-
EPS (non-GAAP): $0.26 vs. analyst estimates of $0.22 (20.7% better)
-
Revenue guidance for the second quarter of 2024 is in the middle at $575 million, above analyst estimates of $567.1 million
-
Gross margin (GAAP): 78.9%, compared to 77.8% in the same quarter last year
-
Free cash flow of $176.3 million, an increase of 176% from the previous quarter
-
Market capitalization: $43.81 billion
The Trade Desk (NASDAQ:TTD), founded by former Microsoft engineers Jeff Green and Dave Pickles, offers cloud-based software that uses data to help advertisers better plan, place and target their online ads.
Advertising software
The digital advertising market is large, growing and becoming increasingly diverse, both in terms of audience and media. As a result, there is a growing need for software that allows advertisers to use data to automate and optimize ad placements.
Sales growth
As you can see below, The Trade Desk’s revenue growth has been very strong over the past three years, from $219.8 million in the first quarter of 2021 to $491.3 million this quarter.
This quarter, The Trade Desk’s quarterly revenue increased again by a very solid 28.3% year-on-year. However, the company’s revenue declined by $114.5 million in the first quarter, compared to the increase of $112.5 million in the fourth quarter of CY2023. Either way, we’re not too concerned as The Trade Desk’s sales appear to be following a seasonal pattern and management indicates that sales will recover in the coming quarter.
Guidance for next quarter shows that The Trade Desk expects revenue to grow 23.9% year-over-year to $575 million, in line with the 23.2% year-over-year increase recorded in the same quarter last year was recorded. Looking ahead, before the earnings results were announced, analysts who follow the company expected revenue to grow 21.2% over the next twelve months.
Here at StockStory, we certainly understand the potential of thematic investing. Several winners, from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST), could all have been identified as promising growth stories with a megatrend driving growth. So in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, which is available to you for FREE at this link.
Money is king
If you’ve been following StockStory for a while, you know that we emphasize free cash flow. Why do you ask that? We believe that ultimately cash is king and you can’t use accounting profits to pay the bills. The Trade Desk’s free cash flow was $176.3 million in the first quarter, about the same as last year.
The Trade Desk generated $542.6 million in free cash flow over the last twelve months, an eye-popping 26.4% of revenue. This robust FCF margin stems from its asset-lite business model, economies of scale and strong competitive position, giving the company the ability to return capital to shareholders or reinvest in its operations, while maintaining a healthy cash balance.
Key takeaways from The Trade Desk’s first quarter results
It was encouraging to see The Trade Desk exceed analyst expectations. We were also pleased that revenue exceeded Wall Street expectations this quarter. On the other hand, gross margin decreased. Zooming out, we think this was still a decent quarter, showing that the company remains on track. The stock is up 1.4% after reporting and is currently trading at $87.3 per share.
So should you invest in The Trade Desk now? When making that decision, it is important to take into account the valuation, the business qualities and what happened in the last quarter. We cover that in our useful full research report which you can read here. It is free.