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The Trade Desk shares plunge after posting Q2 revenues of $694 million
The public markets can be a cold, unforgiving place, with The Trade Desk’s fortunes on the Nasdaq alone this year a prime example of their unpredictability.
The industry’s largest independent demand-side platform posted Q2 revenues of $694 million, up 19% year-on-year, beating analysts’ earlier expectations, with The Trade Desk also naming a new chief financial officer, Alex Kayyal, and board member Omar Tawakol.
However, The Trade Desk’s stock price dropped markedly in the early hours after making the disclosure, with certain market observers labelling the Q2 performance as “lackluster,” even with revenue guidance of “at least $717 million” in the coming quarter.
As part of the tri-partite announcement, The Trade Desk announced that its current CFO, Laura Schenkein will transition out of her current role, and remain as a non-executive director, with Kayyal (existing board member) set to take over the new role on August 21.
Meanwhile, Rembrand CEO Tawakol, who founded data management platform BlueKai before its 2014 sale to Oracle, has been appointed to The Trade Desk’s board of directors, with CEO Jeff Green highlighting the serial entrepreneur’s AI credentials in a prepared statement. “As the next frontier of AI and advertising continues to take shape, I look forward to contributing my experience,” said Tawakol in a statement.
A key “misstep” that led to The Trade Desk’s Q4 earnings miss was Kokai pacing behind in its earlier forecasted update, per Green’s earlier assessment, although he claimed that “around three-quarters of all client spend” is now running through Kokai. And in the company’s Q2 trading update, Green claimed that the DSP’s Koaki is “helping advertisers drive better results by integrating more data into every decision, using AI as a co-pilot, and unlocking the full potential of first-party data.”
Speaking on the company’s subsequent earnings call, Green underlined how the company was making progress on his earlier pledges to fix its Q4 revenue miss, a development that saw the S&P 500 company’s stock price drop precipitously after its Q4 earnings disclosure in February.
“We are signing more and more JBPs, or joint business plans, than ever before with leading agencies and brands,” he said, adding that this number has reached an all-time high, with 100-plus already in the pipeline.
Green went on to emphasize how the company’s current approach is based on his opinion that it doesn’t mean they are in competition with media agencies. “And while many of our JBPs are signed directly with brands, we are working hand in hand with their agencies in almost every case,” he added, “It is not an either or.”
Turning to its ongoing supply-path optimization efforts, Green claimed that its OpenPath efforts were not an attempt to encroach on yield management, i.e., the trend of DSPs and their partners on the supply side of the industry encroaching on others’ traditional territory.
“OpenPath is a canary in the coalmine and a stalking horse,” he said on the company’s earnings call. “We don’t expect 100% of spend to flow through OpenPath, but we do expect it to, one way or another, make the supply chain better and more efficient.”
“We’re now at another inflection point,” he said. “The digital advertising landscape is evolving rapidly, with ongoing regulatory scrutiny of walled gardens, the rise of AI, and growing demand for transparency and independence. We believe the next decade will be pivotal in determining the winners and losers in our space.”
Furthermore, The Trade Desk noted how it expects Q3 revenues to be at least $717 million, reflecting a 14% year-over-year increase.
Simultaneously, ad verification company Integral Ad Science disclosed Q2 revenues of $149.2 million, an increase of 16% year-on-year, rounding off a week when multiple companies in the space issued their results.
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