The Trade Desk Stock Climbs After Quarterly Results

By Rick Munarriz Markets Fool.com

The machines are taking over Mad Men's turf, andThe Trade Desk (NASDAQ: TTD)investors are cashing in. Shares of the pioneer in programmatic advertising moved sharply higher in Thursday after-hours trading after posting blowout financial results.

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Revenue clocked in at $53.4 million, 76% ahead of the prior year's first quarter. Adjusted earnings per share doubled to $0.18 a share. Back in February The Trade Desk was forecasting revenue of $43 million, a year-over-year growth of just 41%. It didn't put out a profit estimate, but it was targeting adjusted EBITDA to come in between a deficit of $2 million and a gain of $2 million. The Trade Desk wound up scoring $6.3 million in adjusted EBITDA.

Image source: The Trade Desk.

The medium is the message

The Trade Desk has been a market darling since going public at $18 in September. It has now surpassed expectations in all three of its quarterly reports since hitting the market.

Programmatic advertising -- where software chooses how marketing budgets are allocated -- is here to stay. Programmatic advertising is naturally expanding at a faster clip than traditional agency-based allocations, but The Trade Desk's 76% top-line surge shows that it's gaining market share even in its own niche.

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The Trade Desk is making major headway in mobile, which now accounts for more than a third of the gross spend. Its mobile video business more than tripled for the quarter and its connected TV spots nearly tripled. Mobile in-app ad spend rose by nearly 150%.

We've seen year-over-year revenue growth of 84%, 70%, and now 76% through The Trade Desk's first three quarterly reports as a public company. Clients hopping on the platform tend to stick around, as the customer retention rate has clocked in north of 95% for 13 consecutive quarters.

The Big Data-fueled platform is naturally jacking up its guidance for all of 2017. It now sees $291 million in revenue, up from the $270 million it was projecting three months ago. Its adjusted EBITDA goal is being bumped from $72 million to $78 million.

The Trade Desk is also initiating guidance for the current quarter, targeting revenue of $67 million and adjusted EBITDA of $14.5 million. Bulls will argue that it's probably another conservative forecast. Late last year, it was eyeing $62 million in revenue during the seasonally potent fourth quarter, and it cranked out $72.4 million on the top line. We've now gone through back-to-back quarters where revenue comes in $10.4 million on top of its guidance. Whether The Trade Desk is intentionally lowballing its outlook or business just keeps improving, both scenarios are favorable.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends The Trade Desk. The Motley Fool has a disclosure policy.