Trade Desk, Inc. Q4 FY2024 earnings call

• 2024 was record-breaking with over $12B spend and $2.4B revenue, but Q4 missed expectations due to execution missteps. - Major changes include the largest reorg in company history, emphasis on internal effectiveness and scalability, increased resource allocation to brands (with JBPs growing 50% faster), and revamped product development to agile teams. - Initiatives: Ventura OS for CTV, acquisition of Sincera to improve supply chain, investments in AI, moving 100% clients to Kokai, simplifying retail offering, and hiring senior leadership.

In Q4, revenue was $741 million, a 22% year-over-year increase. For 2024, total spend on the platform exceeded $12 billion, revenue surpassed $2.4 billion (a nearly 26% year-over-year growth). Video (including CTV) represented a high-40s percentage share of the business and continues to grow. Mobile had a mid-30s percentage share, Display a low-double digit percent share, and Audio around 5%. Geographically, North America accounted for about 88% of spend and International 12%, with International growth outpacing North America for the eighth quarter in a row.

• Q1 2025 revenue expected at least $575 million (17% Y/Y growth), adjusted EBITDA ~$145 million. - 2025 expects a modest increase in operating expense growth, leading to modest deleverage, with CapEx expected to be approximately 5% of total revenue.

• Execution missteps that led to Q4 miss. - Potential impact of Google exiting the open internet. - Amazon's DSP improvements and its competitive implications. - Political spending variability affecting the advertising landscape.

Q: Can you talk about what went wrong in the fourth quarter where you guys came in below your expectations?

A: Jeff Green stated they missed due to a series of small execution missteps while preparing for the future, including reorg, product process changes, client-facing team restructuring, and focusing on long-term vs short-term.

Q: What factors impacted the shortfall in Q4 like polarized political environment, lower Q4 GDP print or product rollout issues?

A: Jeff Green said macro wasn't the main factor, but Kokai rollout was slower than anticipated but deliberate for long-term gain.

Q: How do you view the company's potential to sustain a 20% plus compound growth rate over the next several years?

A: Jeff Green talked about obsessing over making the open Internet better than walled gardens, focusing on scale, Google exiting open internet, promoting objectivity, improving supply chain, growing CTV and audio, JBPs, and shipping product for the future. Laura Schenkein discussed investments in infrastructure and talent with modest deleverage.

Q: How do you view Amazon in the competitive landscape?

A: Jeff Green said Amazon has an objectivity problem, but Prime Video could join the premium open Internet, and long-term partnership is possible.

Q: Can you talk about OpenPath and the acquisition of Sincera?

A: Jeff Green said OpenPath is set for steep growth in 2025 as content owners integrate directly, and Sincera helps improve supply chain visibility. Laura Schenkein talked about EBITDA expectations.

Q: Can you brief on senior leadership hiring and factors for reacceleration in revenue?

A: Jeff Green mentioned hiring a world-class COO for operational efficiency. Factors for reacceleration include large TAM, CTV growth, audio opportunity, and supply chain inefficiencies being addressed.