Trade Desk, Inc. Q1 FY2025 earnings call

Macro Environment: Q4 had volatility, Q1 saw client concerns, but the team showed resilience. Programmatic advertising's agility and data-driven nature help in uncertain times. ### Open Internet Shifts: Google and Meta faced antitrust scrutiny, Spotify gained direct payment relationships, Google reversed cookie erasure plan. These shifts create a fairer market, benefiting The Trade Desk. ### Upgrades at The Trade Desk: Kokai adoption accelerated, with ~two-thirds of clients using it, and Koa AI tools driving campaign performance. Sincera acquisition closed in Q1, OpenPath gaining adoption improving supply chain visibility. Organizational changes: New COO Vivek Kundra hired, with experience at Salesforce.

Q1 revenue was $616 million, a 25% increase year-over-year. Video (including CTV) represented a high 40s percentage share of the business and continues to grow. Mobile represented a mid-30s percentage share, display a low double-digit share, and audio around 5%. Geographically, North America was about 88% of spend, international about 12%, with international growth outpacing North America for the ninth quarter in a row. Vertically, most verticals saw double-digit growth, with technology/computing and healthy living strong, while home/garden and personal finance were below average.

For Q2, expects revenue to be at least $682 million (17% y-o-y growth, lapping political ad spend), adjusted EBITDA approximately $259 million. Plans to be opportunistic with share repurchases while investing in core areas for long-term growth.

Economic volatility, antitrust outcomes impacting market dynamics, macro uncertainties affecting client spending and market competition.

Q: Can you elaborate on the progress from product and go-to-market changes implemented towards end of last year?

A: Jeff Green mentioned Kokai adoption accelerated, over 100 scrums shipping product weekly, strong JBP pipeline. Product and engineering teams more collaborative, campaign performance on Kokai improved with lower cost per conversion and acquisition.

Q: What are downstream implications if Google de-emphasizes open internet businesses?

A: Jeff Green said Google's focus shift to core business (search, Gemini, YouTube) makes market fairer, benefits The Trade Desk as competition lessened in open internet.

Q: How did you think about Q2 guidance with large brands' uncertainty?

A: Jeff Green stated focus on helping clients navigate uncertainty, strong product upgrades, and open internet's positive macro environment position them to grab land or accelerate growth.

Q: Thoughts on Amazon's DSP and competitive landscape?

A: Jeff Green said Amazon's focus on Prime Video ads isn't objective like The Trade Desk's, and other publishers need partners like The Trade Desk to compete effectively.

Q: Progress on OpenPath and Upfront expectations?

A: Jeff Green said OpenPath improved supply chain visibility with examples like Arena Group and New York Post seeing fill rate and revenue increases. Upfronts expected to be weaker for linear and stronger for programmatic due to uncertainty.

Q: Thoughts on DV360 and Q1 sequential decline?

A: Jeff Green said DV360's focus on YouTube limits its objective open internet buying, Laura Schenkein noted Q1 strength due to Kokai adoption and business upgrades, not political spend.