The Trade Desk (TTD) is surging to all-time highs for the second quarter in a row after showing Wall Street that its leadership in the programmatic advertising market portends very well for its future.
The Trade Desk reported quarterly results well above guidance and raised its outlook significantly for the second quarter in a row.
The company has consistently beaten Wall Street's expectations and its own forecasts.
However, investors had been skeptical of the ad-tech stock despite the company's stellar results because the sector was notorious for capital destruction.
The Facebook and Google digital advertising duopoly made it extremely difficult for smaller ad-tech firms to reach scale and sustain profitable growth.
The shift to programmatic advertising is in its early stages. Programmatic means using data to target consumers and price ads efficiently and effectively, much like algorithms do in financial markets.
The Trade Desk is the independent leader in the space, taking share in an advertising market that will reach $1 trillion in the coming years.
Unlike Facebook and YouTube, The Trade Desk is objective in that it doesn't sell ads on its own user generated content. That represents a competitive advantage as advertisers have understandably been turned off by salacious content and data privacy concerns at the duopoly.
Recent changes at both Google and Facebook strengthen The Trade Desk's value proposition for advertisers. Facebook stopped selling third party data and Google stopped sharing DoubleClick Ids with ad buyers.
Data spend on The Trade Desk was a record in the second quarter and a key reason for accelerating growth.
The Trade Desk allows advertisers to target consumers across digital channels like mobile, in-app, audio and connected TV. Cross device spend doubled year-over-year.
The connected TV space represents a massive opportunity. The convergence of internet and TV represents a generational shift as more content is streamed online and consumers cut the cable cord. Connected TV ad spend on the Trade Desk doubled sequentially after growing 2000% in the first quarter. Connected TV inventory comes from ad funded channels like Hulu, skinny cable bundles like SlingTV and media companies like CBS, Fox and Discovery going direct-to-consumers (DTC).
The Trade Desk rolled out The Next Wave last month -- its biggest new product launch ever. Management said platforms new user interface, artificial intelligence capabilities and and upstream media planner significantly increases the technological lead over the competition.
On the call, Founder, CEO and advertising pioneer Jeff Green said the best explanation the company's accelerating growth is the programmatic secular tailwind. He said The Trade Desk is well positioned as he expects programmatic industry growth to accelerate in the years ahead.
The company now sports a $5.7 billion market cap with the stock up ~175% year-to-date.