The Trade Desk, Inc. · NASDAQ:TTD
The Trade Desk — Q2 2018 Earnings Presentation
41 slides from The Trade Desk's earnings presentation, Aug 9, 2018
Slide 1: Second Quarter 2018 Investor Presentation
Second Quarter 2018 Investor Presentation, August 9, 2018
Slide 2: Statement of Caution Under the Private Securities Litigation Reform Act of 1995
Statement of Caution Under the Private Securities Litigation Reform Act of 1995 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
Slide 3: What we do
What we do We provide a platform for ad buyers. Most buyers are ad agencies or other technology companies. 3
Slide 4: Milestones and profitability since 2013
May 2011 $.08 Day*. 2012 First $1MM Month*. 2014 First $1MM Day*. 2015 First $2MM and $3MM Day*. 2016 First $100MM Month* 2017 First $5MM Day and $200MM Month* We’ve been profitable since 2013. 2015: $114MM in Revenue, $16MM in Adj. Net Income and $39MM in Adj EBITDA. 2016: $203MM in Revenue, $35MM
Slide 5: By the numbers
Column1 by the numbers Revenue (1) Gross Spend (2) ($ in millions) $456 E ($ in millions) 48%E $1,556 52% 52% $308 $1,027 86% 78% $203 161% $552 156% $114 $45 $211 FY2014 FY2015 FY2016 FY2017 FY2018E FY2014 FY2015 FY2016 FY2017 2009 $308 MM $1.556 BB $70 MM $95.5 MM 713 founded 2017 Revenue (2) 2017
Slide 6: The most effective advertising is targeted.
The most effective advertising is targeted. 6
Slide 7: Illustrative consumer day of ads
937 desktop ads 461 mobile 180 facebook ads 33 video/TV ads 7 ads audio 4 search clicks 0 print ads * Slides 7 and 8 present a hypothetical illustrative example of what an average consumer might experience during an average day and are based upon information from The Trade Desk, public sources, and
Slide 8: Example: How spend is divided.
Example: How spend is divided. Digital Video/TV 5% Audio 1% Desktop 20% Desktop Nearly all of the purchase data used Mobile Mobile 10% was on products she Search already bought. Audio Search 64% Digital Video/TV * Slides 7 and 8 present a hypothetical illustrative example of what an average consumer
Slide 9: There is a fundamental shift happening in advertising.
There is a fundamental shift happening in advertising. And it’s bigger than just a move to digital. 9
Slide 10: The market.
The market. 10
Slide 11: Price discovery enables healthy markets.
Price discovery enables healthy markets. 11
Slide 12: We are targeting a massive market
We are targeting a massive market ~$704B Total Global Ad Spending ~$250B We believe advertising will Linear Television be transacted digitally. “ ~$50B Display The future of all media is digital “ and programmatic… eventually all media will be digital and it will be transacted by machines. 12 Source
Slide 13: The pie is getting bigger while waste is being pushed out.
The pie is getting bigger while waste is being pushed out. $1.00 Advertisers / Agencies Self Serve Demand Side Platform (DSP) Managed Service DSPs and Ad Networks Networks Exchange Display Mobile Social TV+ Ad Server Data Platform Supply Side Platform & Yield MGMT Publishers / Sellers / Content Owne
Slide 14: What we do
What we do Provide a self-service platform to agencies who deliberately pick from over 500 billion digital ad opportunities a day. 95%+ of our spend comes through MSAs 14
Slide 15: We provide agencies a software platform.
We provide agencies a SOFTWARE PLATFORM. We create room for their proprietary advantage. We are an enabler, not a disruptor. 15
Slide 16: We align agencies and their brands.
We align agencies and their brands. PUBLISHER ADVERTISER SELL-SIDE MARKETPLACE BUY-SIDE TECHNOLOGY SERVICE 16
Slide 17: We are omnichannel.
We are omnichannel. CTV, mobile, video, audio, display, social, native. 17
Slide 18: We buy advertising and data.
We buy advertising and data. We power some of the largest brands in the world… …through their agencies and digital solutions companies. 18
Slide 19: The Trade Desk is global.
The Trade Desk is global. BELLEVUE SAN FRANCISCO LONDON SAN JOSE MADRID HAMBURG CHICAGO VENTURA SEOUL PARIS BOULDER NEW YORK SINGAPORE LOS ANGELES TOKYO SHANGHAI ALISO VIEJO HONG KONG JAKARTA SYDNEY
Slide 20: We buy the whole internet.
We buy the whole internet. Even media that isn’t digital will be transacted digitally, using the internet. 20
Slide 21: We need to access their data to help them.
We need to Agencies (and their access their data brands) need a to help them. technology partner We are the to trust with their alternative to the data. conflicted platform providers. 21
Slide 22: We buy data to make better decisions.
We buy data to make better decisions. We focus on being the best partner for our data providers. 22
Slide 23: Our technology.
Our technology. © theTradeDesk’
Slide 24: We built a data management platform first.
We built a data Our decisioning technology management platform first. 3rd PARTY (data warehouse) DATA LiveRamp, TTD Data BlueKai, IXI, etc. The buyer with the most data can make the 1ST PARTY DATA Site-based, CRM, most intelligent bid. Tier 1/2/3 DMP 24
Slide 25: Expressiveness is central to our technological advantage.
Expressiveness is central to our technological advantage. 25
Slide 26: We're Built Differently Than Everyone Else in the Industry.
26 We're Built Differently Than Everyone Else in the Industry. LINE ITEMS VS. BID FACTORS ae Limits reporting granularity, The only structure that allows optimization options and ability for expressiveness and fine to activate data. grain reporting.
Slide 27: Goal: The most transparent and most detailed reporting.
Goal: The most transparent and most detailed reporting. Simplified User Interface “expressiveness” at work 27 Transparent Reporting
Slide 28: Bid Multiplier
TTD + Agency reduced client’s booking costs by half. 3.5 3.0 1.75x bid for stores 2.5 within 5 miles Bid Multiplier 1x bid for stores 2.0 outside 5-15 miles 1.5 0x (no bid) outside 15 miles 1.0 0.5 0.0 Start 30m 2h 24h 2d 4d 7d 14d 30d Time since last site visit Expressiveness = 15,360 Bid Permutati
Slide 29: Our platform approach wins more of the budget.
Our platform approach wins more of the budget. An example media plan. Agency 40% 20% 10% 10% 10% 10% Agency Marketing and Managed Service Advertising Data and Promotion Programmatic Software Solution Technology Trading Desk Solution Company Partner Company Company Company Powered by 29 Illustrative
Slide 30: Large brands have just started in programmatic.
Large brands have just started in programmatic. Large advertiser total media spend (2017) Large advertiser programmatic media spend (2015-2017) $9.0 $9B $140M $8.0 $8.0 $8B $120M $120M $7.0 $7B $100M $6.0 $6B $5.0 $5B $80M $70M $4.0 $4B $60M $3B $3.0 $40M $2B $2.0 $30M $2.0 $1B $20M $1.0 $0B $- $M T
Slide 31: The future of TV is ad funded.
The future of TV is ad funded. The cost of no ads is too great for most consumers. 31 (Cable costs are according to the Leichtman Research Group, Inc.).
Slide 32: The view into our future.
The view into our future. 1. Connected TV 2. Global expansion 3. Expand the use of our APIs with more technology-centric companies. 4. Launched new User-Experience, Planning tools and AI in 2018. Continue to provide a platform where buyers can objectively and precisely buy ads. 32
Slide 33: How Do We Manage Our Business?
How Do We Manage Our Business? • Client Retention • Spend Growth • Diversification • Efficiency 33
Slide 34: Loyal and stable client base
Loyal and stable client base Annual Cohort Growth (Annual Gross Spend) ~50% gross spend expansion in 2017 from existing customers 95%+ customer retention 34 The Trade Desk reports Cohort Growth on an annual basis
Slide 35: Customers and industries are broadly diversified.
Customers and industries are broadly diversified. Customer Concentration Industry Concentration 14% 18% Technology & Computing Food & Drink Health & Fitness In 2017, our 3 largest customers 5% 13% Automotive accounted for 22%, 11% and 10%, 5% Personal Finance respectively, of our Gross Billings. Bus
Slide 36: Strong financial model.
Strong financial model. • Exceptional top line growth • MSA-based model with ongoing, established customer relationships • Self-serve software model drives strong operating leverage • Proven profitability 36
Slide 37: Robust revenue growth…
Robust revenue growth… Revenue(1) 78% 5-year Estimated CAGR ($ in millions) Column1 $116.0 E 48%E $456E $112.3 $102.6 52% $85.7 $79.4 $308 $72.4 $72.8 78% $203 $53.0 $53.0 $47.2 $42.7 156% $28.8 $30.4 $114 $24.5 $18.5$18.0 $45 $6.5 $8.4 $11.2 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q4
Slide 38: Robust operating model…
Robust operating model… 120 (% of Revenue) Operating Income Margin and Expenses 100 Investments for Investments for future growth future growth 31pt Margin 80 Expansion 60 40 20 0 2014 2015 2016 2017 Platform Operations Sales and Marketing Technology and Development General and Administrative Operat
Slide 39: …delivering substantial profitability
…delivering substantial profitability Adj. EBITDA ($ in millions) GAAP Net Income ($ in millions) $39.5 $36.9 $18.8 $19.3 $29.7 $16.8 $25.3 $24.4 $16.6 $19.8 $11.1 $18.7 $10.2 $15.7 $9.1 $7.6 $9.3 $5.7 $4.6 $3.6 $4.9 $7.4 $3.9 $6.3 $3.7 $4.3 $1.8 -$1.0 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q2
Slide 40: Investment highlights.
Investment highlights. 1. 95%+ of our spend coming through MSAs and is relatively predictable. 2. We’re self-service omnichannel (all decisioned digital). 3. Our revenue grew by 52% y/y in 2017, 78% in 2016 and 156% in 2015. 4. Our tech is measurably better at decisioning. 5. We have a massive TAM.
Slide 41: Supplemental Non-GAAP Information
Supplemental Non-GAAP Information Non-GAAP Financial Metrics (Amounts in thousands, except per share amounts) The following tables show the Company’s GAAP financial metrics reconciled to non-GAAP financial metrics included in this presentation. Three Months Ended Six Months Ended June 30, June 30, 2