The Trade Desk (TTD 125.37, +3.17, +2.59%) opened modestly lower despite reporting
strong third quarter results last night.
The leading independent programmatic advertising platform beat third quarter estimates and issued upside guidance for the fourth quarter.
However, investors had grown accustomed to more pronounced upside.
Third quarter sales grew 50% to $118.8 mln, beating estimates by ~1% and guidance by ~2%. The company had exceeded estimates on the top line by 17% and 8% in the first quarter and second quarter, respectively.
Management forecast fourth quarter revenue to growth to accelerate to 43% from 42% one year ago, but the $148 mln guidance was only ~1% above estimates.
The Trade Desk expects revenue to grow at least 51% this year with EBITDA up 52%.
Co-founder and Chief Executive Jeff Green is more bullish than ever heading into 2019 as the company continues to take market share in the early innings of the burgeoning programmatic ad market.
Ad spend growth on The Trade Desk remains robust across channels: Mobile (in-app, video, and web) grew 65% to a record 46% mix; Connected TV grew over 10X; Audio grew 192%; Mobile video grew 98%; Mobile in-app grew 90%; Data grew 70%; cross-device spend grew 3x. Meanwhile, most international markets are growing by triple digits.
The company remains well positioned in the connected TV market, which has massive potential.
The Trade Desk also announced a partnership with Tencent (TCEHY) on the conference call. The company is already working with Baidu (BIDU) and Alibaba's (BABA) Youku, so it is one of the few software companies with potential in China.
Everything is going well for the company, which boasts SaaS industry leading margins, but it appears that the stock (valuation) got ahead of itself this year as valuations in the enterprise software space became stretched before correcting last month.
With a valuation near $5 bln, the stock trades at just over 10x sales or 7.5x 2019 sales estimates and 40x 2019 EPS estimates.
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