Oh my, oh my.
“For the first time in 8.5 years as a public company, our results came in below expectations,” The Trade Desk CFO Laura Schenkein told investors during the company’s Q4 and full-year 2024 earnings reports on Wednesday.
“It was on us,” she said.
When the company sets revenue guidance, as opposed to Wall Street analyst expectations, “I view that as a commitment,” said Jeff Green, the Trade Desk Founder and CEO.
And investors were not willing to shrug off The Trade Desk’s first-ever earnings miss as a one-off. Shares dropped by 27% in after-hours trading.
On the other hand, the report itself is not incriminating, if you don’t know the context of The Trade Desk having missed its own guidance. Its revenue in Q4 was $741 million, up from $606 million in Q3 2023. Although, the company’s forecast last year called for Q4 revenue of at least $756 million.
The Trade Desk’s net profit line almost doubled year over year from $97 million in Q4 2023 to $182 million last quarter.
Why the miss?
Green is also not willing to shrug off a poor Q4.
“It’s understandable in a moment like this for those outside the company, especially shareholders, to be wondering, what does this mean?” he responded to one investor who asked about the Q4 results. “And I just want to be super clear, we missed because we had a series of small execution missteps.”
What kind of missteps, specifically?
“Many of them involve people mistakes that aren’t appropriate to discuss publicly, especially when people are already learning from their mistakes,” Green said. (Sounds like a story or two.)
He said TTD already underwent a major restructuring in December. Not only were there layoffs, but many people’s reporting structure changed, and the company refocused more around accounts by category, such as brand, agency or business vertical.
The DSP will also do more than it ever has in terms of going directly to brands, said Green.
“Our commitment to agencies remains strong, but we are also expanding brand direct relationships,” Green said. Though he was careful to note on two occasions that TTD is trying to do more brand-direct work as joint business plans (JBPs, for those who collect three-letter acronyms) in tandem with the agency and brand.
Accounts with JBPs grow about 50% faster than the rest of the business, he said.
The opportunities
Green laid out some familiar and some new potential growth channels for The Trade Desk.
CTV is a pillar for every quarter at this point. TTD doesn’t break out CTV specifically, but video now accounts for a high-40% share of the company’s revenue, he said.
But audio remains “the most on-sale corner of the internet,” he added. Digital audio is about 5% of TTD’s budget mix, he said, and remains a great deal for the attention and scale.
The other two big opportunities come from the nature of its two main competitors: Google and Amazon.
When it comes to Google’s third-party ad tech business: “We are preparing for a world where Google exits the open internet,” Green said.
Some of Google’s main antitrust disputes and biggest headaches in general come from its open-web DSP and ad network, he argued. And the non-Google network business has been declining for the past couple of years, as new products like Gemini and the Google Cloud suite become more important.
Voluntarily or at a judge’s order, “I’m confident that, one way or another, Google will exit the open internet,” he said.
And Amazon is even more challenged in terms of objectivity.
“Amazon is asking advertisers, big and small, for their advertising budget,” he said. “Meanwhile, Amazon competes with most of the Fortune 500 companies in some way, whether we’re talking about Microsoft in cloud, P&G in CPG products, or UPS, or Nike, or all the rest.”
