Why Trade Desk Inc. Stock Plunged Today
Shares of The Trade Desk Inc. (NASDAQ: TTD) were down 15.2% as of 2 p.m. EST Friday despite the programmatic advertising leader announcing better-than-expected third-quarter results and increasing its full-year guidance.
On the former, Trade Desk's revenue climbed 50% year over year to $79.4 million, while adjusted EBITDA grew 47% to $24.4 million. Both figures were well above the company's latest guidance for revenue of $76 million and adjusted EBITDA of $21 million. On the bottom line, that translated to 63% growth in adjusted net income, to $15.3 million, or $0.35 per share, which was also significantly higher than investors' expectations for adjusted earnings of only $0.27 per share.
The Trade Desk's growth was broad-based, with mobile in-app sales climbing 77%, mobile video rising 140%, and connected TV increasing 159%. The company also saw customer retention remain above 95% for the 15th consecutive quarter.
"Our third quarter results continue to highlight the growing programmatic movement and the success that an objective, independent, data-driven software platform can have in the marketplace," said The Trade Desk founder and CEO Jeff Green. "[...]We believe we have a strong business model that benefits from faster revenue growth than the programmatic industry and we are excited about the momentum we have as we close out the year and enter 2018."
More specifically, The Trade Desk expects current-quarter revenue of $101 million -- slightly below expectations for $101.6 million -- and adjusted EBITDA of $34 million. As such, The Trade Desk also raised its full-year outlook for 2017 revenue to arrive at roughly $306 million (up from $303 million previously), with adjusted EBITDA of $90 million (up from $88 million before).
Given its relative outperformance in the third quarter, however, Friday's decline indicates some disappointment that The Trade Desk didn't boost its full-year guidance even more -- though for what it's worth, the company has shown a propensity for under-promising and over-delivering. Shareholders should also keep in mind that shares of The Trade Desk are still up more than 80% so far in 2017, so it's not terribly surprising to see short-term oriented investors taking some profits off the table on Friday.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Trade Desk. The Motley Fool has a disclosure policy.