Trade Desk - $TTD - Earnings Analysis: Strong revenue growth of 26% year-over-year in 2024.

Business Model

The Trade Desk generates revenue primarily by providing a technology platform for ad buyers, such as advertising agencies and brands, to purchase digital advertising inventory across various channels.

Revenue Sources

• Revenue from fees charged to clients for using the platform to buy advertising inventory across channels like Connected TV (CTV), mobile, video, display, audio, and social media.

Revenue Distribution by Channel

• Video (including CTV) represented a high 40s percentage share of the business.
• Mobile represented a mid-30s percentage share of spend during the quarter.
• Display represented a low double-digit share of the business.
• Audio represented around 5% of spend.

Income Statement Analysis

• Revenue increased by 22.32% year-over-year in Q4 2024.
• Operating expenses increased by 18.28% year-over-year in Q4 2024.
• Income from operations increased by 35.24% year-over-year in Q4 2024.
• Net income increased by 87.28% year-over-year in Q4 2024.
• Diluted EPS increased by 89.47% year-over-year in Q4 2024.

Balance Sheet Analysis

• Total assets increased by 25.02% compared to the prior year.
• Total stockholders' equity increased by 36.27% compared to the prior year.
• Total liabilities increased by 16.09% compared to the prior year.

Cash Flow Analysis

• Net cash provided by operating activities increased by 23.61% compared to the prior year.
• Net cash used in investing activities increased by 46.42%, indicating higher investment in property and equipment.
• Net cash used in financing activities decreased by 82.82% due to lower share repurchases in 2024.
• Overall, there was a significant increase in cash and cash equivalents during the year compared to a decrease in the prior year.

Capital Allocation

The company continues to invest in key areas such as infrastructure and talent to support long-term growth. In 2024, the company repurchased approximately $235 million of its Class A common stock. The company announced an additional share repurchase authorization of $1 billion, indicating a focus on returning capital to shareholders while investing in the business. The company ended the year with approximately $1.9 billion in cash and no debt.

Management Commentary

In 2024, gross spend on our platform exceeded $12 billion—the highest in our history. Revenue for the year surpassed $2.4 billion, growing nearly 26% year-over-year.

While we are proud of these accomplishments, we are disappointed that we fell short of our own expectations in the fourth quarter.

We undertook a reorganization to accelerate opportunities across CTV, retail media, identity, supply chain optimization, and audio while forging ahead with innovations like Kokai and the Ventura Operating System.

There were a series of decisions we could have made to enhance the short-term performance of the company and neglect the long-term.

I am confident The Trade Desk will eventually resume acceleration and continue the path we've been on for over thirty-three quarters as a publicly traded company.

Overall Sentiment: Management remains optimistic about long-term growth prospects, despite short-term execution challenges.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.