The Trade Desk, Inc. · NASDAQ:TTD
The Trade Desk — Q2 2023 Earnings Presentation
52 slides from The Trade Desk's earnings presentation, Aug 9, 2023
Slide 1: Investor Presentation Second Quarter 2023
INVESTOR PRESENTATION SECOND QUARTER 2023
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 WE PROVIDE A PLATFORM FOR AD BUYERS. DO MOST BUYERS ARE AD AGENCIES, BRANDS, OR OTHER TECHNOLOGY COMPANIES.
Slide 4: We've been profitable since 2013
WE’VE BEEN PROFITABLE 2016 First $100M month 2021 SINCE 2013 $203M in revenue, $35M in adj. net income, and $65M in adj. EBITDA 2020 First $1B+ revenue year First $1.5B quarter $1,196M in revenue, $836M in revenue, $336M $456M in adj. net income, and $503M in adj. EBITDA MAY 2011 in adj. net income,
Slide 5: The Trade Desk by the numbers
The Trade Desk by the numbers GROSS SPEND1 25% REVENUE2 32% ($ in millions) 47% ($ in millions) 43% 34% $7,741 26% $1,578 33% $6,172 39% 51% 55% $1,196 52% $4,198 52% $836 86% 78% $3,130 $661 $2,351 $477 $1,556 $308 $1,027 $203 $552 $114 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2015
Slide 6: The most effective advertising is targeted
THE MOST EFFECTIVE ADVERTISING IS TARGETED
Slide 7: There is a fundamental shift happening in advertising
THERE IS A AND IT’S BIGGER FUNDAMENTAL SHIFT THAN HAPPENING IN ADVERTISING JUST A MOVE TO DIGITAL
Slide 8: The Market
THE MARKET
Slide 9: Price discovery enables healthy markets
PRICE DISCOVERY ENABLES HEALTHY MARKETS
Slide 10: We are targeting a massive TAM ~$830B
We are targeting a massive TAM ~$830B “ We believe advertising will be transacted digitally. The future of all media is digital and programmatic… TOTAL GLOBAL AD SPENDING Eventually all media will be digital, and it will be transacted by ~$165B machines. LINEAR TELEVISION ~$135B – CEO OF A GLOBAL ME
Slide 11: The pie is getting bigger while waste is being pushed out
The pie is getting bigger while waste is being pushed out Managed-service DSPs and ad networks Networks exchange Supply-side Publishers/ Self-serve Advertisers/ platform (SSP) Sellers/ $1.00 Agencies Demand-side platform (DSP) Display Mobile Social TV+ and yield Content $0.55 management Owners Ad se
Slide 12: What we do: self-service platform for agencies and brands
WHAT WE DO Provide a self-service platform to agencies and brands that deliberately picks from over 500 billion digital ad opportunities a day. 95%+ OF OUR SPEND COMES THROUGH MASTER SERVICE AGREEMENTS (MSAS)
Slide 13: 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
Slide 14: We align agencies and their brands
We align agencies and their brands PUBLISHER ADVERTISER SELL SIDE MARKETPLACE BUY SIDE TECHNOLOGY SERVICE
Slide 15: With hundreds of different players
With hundreds of different players ADVERTISER AGENCY DATA MANAGEMENT PLATFORM DSP Plus hundreds of independent agencies AD EXCHANGE SSP PUBLISHER
Slide 16: Omnichannel platform with global reach
Omnichannel platform with global reach Connected TV Online video Display Native Mobile/tablet Digital out-of-home Audio
Slide 17: We power some of the largest brands in the world
WE BUY ADVERTISING AND DATA We power some of the largest brands in the world… …through their agencies and digital solutions companies.
Slide 18: Diversified across all major verticals
Diversified across all major verticals 2021 SPEND BY INDUSTRY 2022 SPEND BY INDUSTRY Health and fitness 20% Health and fitness 16% Food and drink 13% Food and drink 16% Automotive 10% Automotive 11% Technology and computing 8% Technology and computing 9% Shopping 8% Shopping 7% Personal finance 8% H
Slide 19: A strong global presence
A strong global presence Our global footprint provides our clients with localized marketplace expertise NAMER EMEA APAC United States: Hamburg, Germany North Asia: Boulder, CO London, U.K. Hong Kong Chicago, IL Madrid, Spain Seoul, South Korea Denver, CO Milan, Italy Shanghai, China Detroit, MI Pari
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.
Slide 21: We are the alternative to conflicted platform providers
AGENCIES WE NEED TO ACCESS THEIR DATA (AND THEIR BRANDS) TO HELP THEM. NEED A TECHNOLOGY WE ARE THE ALTERNATIVE PARTNER TO TRUST TO THE CONFLICTED PLATFORM WITH THEIR DATA. PROVIDERS.
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.
Slide 23: Our Technology
OUR TECHNOLOGY
Slide 24: We built a data management platform first
OUR DECISIONING TECHNOLOGY We built a data management THIRD-PARTY OUR DATA platform first DATA FIRST-PARTY The buyer with the most data can make the DATA most intelligent bid. DMP
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
We’re built differently than everyone else in the industry LINE ITEMS BID FACTORS versus Limits reporting granularity, optimization The only structure that allows for options, and ability to activate data. expressiveness and fine-grain reporting.
Slide 27: Goal: the most transparent and most detailed reporting
GOAL: The most transparent and most detailed reporting SIMPLIFIED USER INTERFACE REPORTING GRAINS “Expressiveness” at work Report out on over 200 performance measures ✓ Conversion touch ✓ Win rate ✓ Player skip ✓ View-through ✓ Total seconds in view ✓ Small player conversion ✓ Partner viewable CPM i
Slide 28: Bid multiplier and expressiveness
The Trade Desk and agency EXPRESSIVENESS = 15,360 BID reduced client’s booking PERMUTATIONS costs by half 3.5 3 BID MULTIPLIER 2.5 1.75× bid for stores within 5 2 miles 1.5 1× bid for stores outside 5 to 15 miles 1 0× (no bid) 0.5 outside 15 miles 0 Start 30m 2h 24h 2d 4d 7d 14d 30d TIME SINCE LAST
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 trading Marketing and Managed-service Advertising software Data and technology promotion solution programmatic partner solution company company desk company company POWERED BY
Slide 30: The what and why of UID2
The what and why… We collaborate with industry organizations to operate Unified ID 2.0 (UID2) for the open internet. We built an open-source technology to convert email address to anonymized IDs. We dedicated internal resources to build the technology. We believe the open internet must continue to t
Slide 31: Because the future of identity matters
IDENTITY MATTERS Because the future of identity matters A better foundation for identity IDENTIFY ACTIVATE Represents an upgrade, not a cookie replacement. • Consistent identifier across devices and browsers RampID • Interoperable Your CRM data + Other IDs SECURE AND OPEN-SOURCE TRANSPARENCY INDEPEN
Slide 32: Significant growth drivers
SIGNIFICANT GROWTH DRIVERS
Slide 33: Connected TV and us
CONNECTED TV AND US THE CONVERGENCE OF THE INTERNET AND TELEVISION
Slide 34: 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.
Slide 35: Our story in Connected TV is resonating
Our story in Connected TV is resonating You are missing out on a core audience if you’re only buying broadcast TV.
Slide 36: Our reach in CTV is huge
OUR REACH IN CTV IS HUGE 90M+ HOUSEHOLDS 120M+ CTV DEVICES
Slide 37: Decisioning improves TV buying and increases CPMs for publishers
Decisioning improves TV buying and increases CPMs for publishers TRADITIONAL TV BUYING CONNECTED TV BUYING $10 CPM $20 CPM Currently targeting broad metrics, i.e., DSP targeting includes one-to-one targeting designated market areas (DMAs), schedule, of valuable customers and dayparts. and their hous
Slide 38: Connected TV measurement
KEY REPORTING METRICS INCLUDE: • Reports across video screens (over-the-top, Connected TV measurement desktop, mobile) • Attribution across devices • Impressions delivered Measure and analyze the impact of • Reach and frequency your Connected TV (CTV) campaigns to • Video completion rates inform fut
Slide 39: Growth outside North America
GROWTH OUTSIDE NORTH AMERICA
Slide 40: About two thirds of global advertising spend is outside North America
ABOUT TWO THIRDS OF GLOBAL ADVERTISING SPEND IS OUTSIDE OF NORTH AMERICA
Slide 41: Top worldwide advertising markets
Top 20 worldwide advertising markets ~90% TTD spend in North America1 ~10% (in 2022) 33% TTD spend Internationally1 (in 2022) of all ad dollars spent in North America2 67% of all ad dollars spent outside North America2 1 FY2022 percent of spend provided at The Trade Desk’s conference call for the pe
Slide 42: Shopper Marketing
"> SHOPPER MARKETING ad @theTradeDesk
Slide 43: Activating retail data today
Activating retail data today DSP Data from #1 Tech from #1 retailer + independent DSP AUDIENCES MEASUREMENT AUDIENCES MEASUREMENT FAMILIAR TOOLS & WORKFLOWS HOLISTIC FREQUENCY CONTROL 1P DATA SHARING
Slide 44: Retail data is the solution marketers have been waiting for
Retail data is the solution marketers have been waiting for Deterministic and future-proof Customer lifetime data Increase market share Manage frequency holistically
Slide 45: Our focus for the future
Our focus for the future… 1. Connected TV 2. Shopper Marketing 3. Kokai 4. Global Expansion 5. UID2 6. Data marketplace 7. Supply Path Optimization OBJECTIVE. INDEPENDENT. TRANSPARENT. 45
Slide 46: How do we manage our business?
HOW DO WE MANAGE OUR BUSINESS? WE FOCUS ON: Culture Customer retention Spend Efficiency growth
Slide 47: Strong financial model
Strong financial model Exceptional top-line growth Joint Business Plan and MSA-based model with ongoing, established customer relationships Self-serve software model drives strong operating leverage Proven profitability Significant free-cash-flow
Slide 48: Robust revenue growth
Robust revenue growth… REVENUE ($ IN MILLIONS) $600.0 $1,578 $464 $500.0 $1,196 $400.0 $836 $300.0 $661 $200.0 $477 $308 $203 $100.0 $114 $45 $0.0 Source: The Trade Desk SEC filings.
Slide 49: With substantial profitability
…with substantial profitability ADJ. EBITDA ($MILLIONS) NON-GAAP NET INCOME ($MILLIONS) $300.0 $250.0 $250.0 $200.0 $180 $200.0 $139 $150.0 $150.0 $100.0 $100.0 $50.0 $50.0 $0.0 $0.0 Source: Company filings. Adjusted EBITDA excludes depreciation and amortization expense, interest expense, income tax
Slide 50: Investment highlights
1. Q2 revenue grew 23% YOY, accelerating sequentially. • Significant outperformance vs ad-funded peers and high growth companies over the last 12 months. 2. In addition to high growth, strong EBITDA margins and free cash flow generation. 3. Total advertising TAM heading toward $1 trillion. 4. CTV is
Slide 51: Q2 2023 GAAP Financial Information
Q2 2023 GAAP Financial Information
Slide 52: Supplemental Non-GAAP Information
Supplemental Non-GAAP Information