The Trade Desk missed its revenue target for the first time, here’s how CEO Jeff Green pledged to fix it
The Trade Desk saw its stock price plunge by as much as 26% after it issued its first-ever quarterly earnings miss, i.e., its market capitalization lost billions of dollars of value despite double-digit growth.
It was the first in its eight-year run on the public markets, with CEO Jeff Green keen to show his company was grabbing the nettle by outlining a “15-point action item list” on The Trade Desk’s subsequent earnings call.
The independent ad tech talisman posted Q4 revenues of $741 million – its earlier guidance was for $756 million – representing a 23% revenue increase (full-year revenues were $2.4 billion, up 26%), but its stock price dipped from just above $122 to $92 per share in the minutes after this disclosure.
“The reality is that we stumbled into a series of small execution missteps,” Green said, “as companies grow and become increasingly complex, they need recalibration to unlock new opportunities.”
Below is an outline of some of the key areas identified by Green and The Trade Desk’s leadership as they seek to return the outfit to its earlier growth acceleration, with company leadership claiming this pursuit involved the biggest organizational overhaul in its history recently.
Increase brand-direct efforts
Recent structural changes have seen the company streamline its reporting structure, with its priorities including more face-time with brands. “Some teams focus on brands, while others focus on agencies,” said Green. “Our commitment to agencies remains strong, but we are also expanding brand direct relationships, particularly through joint business plans.”
Pursuing joint business plans or “JBPs” directly with brands is a public change that will likely require a political balancing act given its core customer constituency of media agencies, many of whom are eager to guard their powerbroker status on Madison Avenue.
“They [JBPs] grow about 50% faster than the rest of our business,” added Green. “Brands will generally continue to work with agencies, but they also understand that programmatic is becoming a larger and more important element of their campaign plan. As a result, programmatic decision-making is happening at a higher and higher level within brands.”
AI and platform investments
Part of the “missteps” that caused the Q4 miss was the slower-than-expected uptake of its Kokai platform, a panel that media planning teams use to execute campaigns, i.e., spend their ad dollars on The Trade Desk.
Green pointed out how “this slowed us down,” noting the drag on its Q4 performance as clients moved away from its legacy platform more slowly than it had anticipated, meaning it effectively had two platforms to support. The coming year will see accelerated migration efforts from The Trade Desk to reduce this duplication.
Elsewhere, The Trade Desk’s leadership spoke of how its continued investment in technology, with the term “AI” used liberally at this juncture, presumably for Wall Street investors eager to hear such buzz phrases.
More specifically, Green mentioned how its planned TV OS Ventura was intended to “create a better supply chain for all,” including media owners and advertisers.
Furthermore, it offered more insight into its planned purchase of Sincera, adding how the “metadata company” will aid its quest further to hone its buying activities on the open internet. “Our work with Sincera will accelerate a cleaner supply chain for the open internet and accelerate the work of Openpath,” added Green.
Green is certain Google will ‘exit the open internet’
Given that much of the narrative that helped The Trade Desk reach its multi-billion dollar valuation, comparisons with Google are often made.
Speaking with analysts, Green moved to assuage investor anguish by reminding them how his team believed verdicts in its multiple pending ad tech antitrust trials would see it slide out of its competitive purview (to a large extent) in the near future.
“We are preparing for a world where Google exits the open internet,” he said. “I’m confident that one way or another, Google will exit the open; I think they should; most of their antitrust and regulatory problems come from the draconian ways they have engaged with the open internet in the past.”
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