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The Trade Desk Reports Fourth Quarter and Fiscal Year 2022 Financial Results; Announces $700 Million Share Repurchase Program

Q4 revenue grew 24% year over year to $491 million. 2022 revenue increased 32% year over year to $1,578 million.

The Trade Desk also announced its board of directors' authorization to repurchase up to $700 million of its Class A common stock.

The Trade Desk, Inc. (“The Trade Desk” or the “Company”) (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its fourth quarter and fiscal year ended December 31, 2022.

“The Trade Desk outpaced nearly all areas of digital advertising in 2022, with 32% revenue growth year over year, and a record $491 million of revenue in the fourth quarter alone. This performance was underscored by significant profitability and cash flow. In an unpredictable macro environment, our growing relationships with agencies and brands is testament to the value of the open internet over the limitations of walled gardens,” said Jeff Green, founder and CEO of The Trade Desk. “More of the world’s leading advertisers are gravitating to fast-growing channels such as Connected TV (CTV) and retail media, which offer premium value at scale. They are leveraging new identity tools, such as UID2, which allow them to make the most of their first-party data in a privacy-safe manner. These trends will accelerate in 2023 and we will continue to invest in our platform to help advertisers drive maximum value from these opportunities.”

Fourth Quarter and Full Year 2022 Financial Highlights:

The following table summarizes the Company’s consolidated financial results for the quarters and fiscal years ended December 31, 2022 and 2021 ($ in millions, except per share amounts):

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

GAAP Results

 

 

 

 

Revenue

$

491

 

$

396

 

$

1,578

 

$

1,196

 

Increase in revenue year over year

 

24

%

 

24

%

 

32

%

 

43

%

Net income

$

71

 

$

8

 

$

53

 

$

138

 

GAAP diluted earnings per share

$

0.14

 

$

0.02

 

$

0.11

 

$

0.28

 

 

 

 

 

 

Non-GAAP Results

 

 

 

 

Adjusted EBITDA

$

245

 

$

192

 

$

668

 

$

503

 

Adjusted EBITDA margin

 

50

%

 

48

%

 

42

%

 

42

%

Non-GAAP net income

$

190

 

$

208

 

$

522

 

$

456

 

Non-GAAP diluted earnings per share

$

0.38

 

$

0.42

 

$

1.04

 

$

0.91

 

 

Fourth Quarter and 2022 Recent Business Highlights

  • Continued Share Gains: 2022 gross spend of nearly $7.8 billion
  • Strong Customer Retention: Customer retention remained over 95% during the fourth quarter, as it has for the past nine consecutive years.
  • Continued Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0 (UID2), an industry-wide approach to identity that aims to preserve the value of relevant advertising on the open internet without reliance upon third-party cookies, while giving consumers transparency and control over their data. Recent partnerships and pledges of integration and support include:
    • Leading advertisers running campaigns on Disney’s UID2-powered audience graph report results 12 times more effective in reaching target audience.
    • Paramount Advertising announced its integration with UID2 to scale identity on its CTV inventory.
    • DRAKO, location-based marketing and analytics services company, announced its support of UID2.
  • Launched Galileo: Galileo can enable advertisers to onboard and activate their first-party data quickly and easily. It incorporates:
    • Seamless and direct onboarding integrations with all major customer relationship management (“CRM”), customer data platform (“CDP”), and other data and clean room providers, allowing advertisers to instantly begin matching audiences using UID2.
    • Audience matching across all publishers, platforms, devices, and channels — including CTV — which provides a true omnichannel identity environment.
    • Objective reporting and measurement of identity matching and advertising performance.
  • Industry Recognition (2022):
    • Customers’ Choice for Ad Tech on Gartner® Peer Insights™
    • BIG Innovation Award for Technology Product (Solimar)
    • Business Insider’s Hottest Ad Tech Companies of 2022
    • Sales and Marketing Technology Awards: Product of the Year for User Optimization Experience
    • Crain's 100 Best Places to Work in NYC 2022 (9th consecutive year)
    • Stevie Awards for Great Employers - Employer of the Year, Computer Software
    • Stevie Awards for Customer Service Success - Silver, Technology Industries
    • Forbes Global 2000
    • Samantha Jacobson, Chief Strategy Officer, named to AdAge 40 under 40
    • Samantha Jacobson, Chief Strategy Officer, named Adweek’s Digital & Tech Executive of the Year
    • Jed Dederick, Chief Client Officer, named to Adweek 50 List

Financial Guidance:

First Quarter 2023 outlook summary:

  • Revenue at least $363 million
  • Adjusted EBITDA of approximately $78 million

The Company has not provided an outlook for GAAP Net Income or reconciliation of Adjusted EBITDA guidance to Net Income, the closest corresponding U.S. GAAP measure, because Net Income outlook is not available without unreasonable efforts on a forward-looking basis due to the variability and complexity with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of our stock-based compensation expense that are directly impacted by unpredictable fluctuations in our share price. The Company expects the variability of the above charges could have a significant and potentially unpredictable impact on our future U.S. GAAP financial results.

Use of Non-GAAP Financial Information

Included within this press release are the non-GAAP financial measures of Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Diluted EPS that supplement the Consolidated Statements of Operations of the Company prepared under generally accepted accounting principles (“GAAP”). Adjusted EBITDA is earnings before interest expense (income), net; provision for (benefit from) income taxes; depreciation and amortization; and stock-based compensation. Non-GAAP Net Income excludes charges and the related income tax effects for stock-based compensation. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 25% to 30% have been used in the computation of non-GAAP Net Income and non-GAAP Diluted EPS. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Consolidated Statements of Operations. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company’s management believes that this information can assist investors in evaluating the Company's operational trends, financial performance and cash-generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for or superior to corresponding, similarly captioned, GAAP measures and may be different from non-GAAP financial measures used by other companies.

Fourth Quarter and Fiscal Year 2022 Financial Results Webcast and Conference Call Details

  • When: February 15, 2023 at 5:00 A.M. Pacific Time (8:00 A.M. Eastern Time).
  • Webcast: A live webcast of the call can be accessed from the Investor Relations section of The Trade Desk’s website at http://investors.thetradedesk.com/. Following the call, a replay will be available on the Company’s website.
  • Dial-in: To access the call via telephone in North America, please dial 888-506-0062. For callers outside the United States, please dial 1-973-528-0011. Participants should reference the conference call ID code “921638” after dialing in.
  • Audio replay: An audio replay of the call will be available beginning about two hours after the call. To listen to the replay in the United States, please dial 877-481-4010 (replay code: 47509). Outside the United States, please dial 1-919-882-2331 (replay code: 47509). The audio replay will be available via telephone until February 22, 2023.

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), Facebook page (https://www.facebook.com/TheTradeDesk/), Jeff Green’s Twitter feed (@jefftgreen) and LinkedIn profile (https://www.linkedin.com/in/jefftgreen/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to The Trade Desk’s press releases, SEC filings, public conference calls and webcasts.

Share Repurchase Program

The Company also announced that its board of directors approved a share repurchase program with authorization to purchase up to $700 million of its Class A Common Stock. The new share repurchase program is designed to help offset the impact of future share dilution from employee stock issuances. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion, depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. This program does not obligate the Company to acquire any particular amount of Class A Common Stock, and may be modified, suspended or terminated at any time at the discretion of the Company’s board of directors.

The Company expects to fund repurchases with existing cash and cash equivalents and short-term investments. As of December 31, 2022, The Trade Desk had cash and cash equivalents and short-term investments of $1,447 million.

About The Trade Desk

The Trade Desk is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns across ad formats and devices. Integrations with major data, inventory, and publisher partners ensure maximum reach and decisioning capabilities, and enterprise APIs enable custom development on top of the platform. Headquartered in Ventura, CA, The Trade Desk has offices across North America, Europe, and Asia Pacific. To learn more, visit thetradedesk.com or follow us on Facebook, Twitter, LinkedIn and YouTube.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody assumptions that may prove to have been inaccurate, including statements relating to the industry and market trends, the Company’s financial targets, such as revenue and Adjusted EBITDA and the amount, timing, and sources of funding for the Company’s share repurchase program. When words such as “believe,” “expect,” “anticipate,” “will,” “outlook” or similar expressions are used, the Company is making forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give readers any assurance that such expectations will prove correct. These forward-looking statements involve risks, uncertainties and assumptions, including those related to the Company’s relatively limited operating history, which makes it difficult to evaluate the Company’s business and prospects, the market for programmatic advertising developing slower or differently than the Company’s expectations, the demands and expectations of clients, the ability to attract and retain clients, changes in price and volume and the volatility of the Company’s Class A Common Stock and adverse developments affecting prices and trading of exchange-traded securities, including securities quoted on the Nasdaq Global Market, unexpected or otherwise unplanned or alternative requirements with respect to our capital investments. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond the control of the Company. These are disclosed in the Company’s reports filed from time to time with the Securities and Exchange Commission, including its most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K, available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.

 

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

Revenue

$

490,737

 

$

395,598

 

$

1,577,795

 

$

1,196,467

 

Operating expenses (1):

 

 

 

 

Platform operations

 

79,619

 

 

66,845

 

 

281,123

 

 

221,554

 

Sales and marketing

 

92,829

 

 

72,501

 

 

337,975

 

 

249,298

 

Technology and development

 

84,479

 

 

62,836

 

 

319,876

 

 

226,137

 

General and administrative

 

133,650

 

 

218,777

 

 

525,167

 

 

374,661

 

Total operating expenses

 

390,577

 

 

420,959

 

 

1,464,141

 

 

1,071,650

 

Income (loss) from operations

 

100,160

 

 

(25,361

)

 

113,654

 

 

124,817

 

Total other expense (income), net

 

(11,960

)

 

1,221

 

 

(13,716

)

 

2,781

 

Income (loss) before income taxes

 

112,120

 

 

(26,582

)

 

127,370

 

 

122,036

 

Provision for (benefit from) income taxes

 

40,933

 

 

(34,621

)

 

73,985

 

 

(15,726

)

Net income

$

71,187

 

$

8,039

 

$

53,385

 

$

137,762

 

Earnings per share:

 

 

 

 

Basic

$

0.15

 

$

0.02

 

$

0.11

 

$

0.29

 

Diluted

$

0.14

 

$

0.02

 

$

0.11

 

$

0.28

 

Weighted-average shares outstanding:

 

 

 

 

Basic

 

489,217

 

 

480,873

 

 

486,937

 

 

476,851

 

Diluted

 

500,432

 

 

500,314

 

 

499,925

 

 

498,540

 

___________________________

(1)

Includes stock-based compensation expense as follows:

STOCK-BASED COMPENSATION EXPENSE

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Platform operations

$

4,031

 

$

4,289

 

$

18,285

 

$

15,913

 

Sales and marketing

 

15,724

 

 

13,309

 

 

64,442

 

 

50,671

 

Technology and development

 

27,564

 

 

16,454

 

 

94,822

 

 

57,791

 

General and administrative (1)

 

80,212

 

 

171,351

 

 

321,093

 

 

213,038

 

Total

$

127,531

 

$

205,403

 

$

498,642

 

$

337,413

 

___________________________

(1)

Includes stock-based compensation expense related to a long-term CEO performance grant of $66 million and $262 million for the three and twelve months ended December 31, 2022, respectively, and $158 million for the three and twelve months ended December 31, 2021.

 
THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

As of December 31,

2022

 

As of December 31,

2021

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

1,030,506

$

754,154

Short-term investments, net

 

416,080

 

 

204,625

 

Accounts receivable, net

 

2,347,195

 

 

2,020,720

 

Prepaid expenses and other current assets

 

51,836

 

 

112,150

 

Total current assets

 

3,845,617

 

 

3,091,649

 

Property and equipment, net

 

173,759

 

 

135,856

 

Operating lease assets

 

220,396

 

 

234,091

 

Deferred income taxes

 

94,028

 

 

68,244

 

Other assets, non-current

 

46,879

 

 

47,500

 

Total assets

$

4,380,679

 

$

3,577,340

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

1,871,419

 

$

1,655,684

 

Accrued expenses and other current liabilities

 

105,474

 

 

101,472

 

Operating lease liabilities

 

52,430

 

 

46,149

 

Total current liabilities

 

2,029,323

 

 

1,803,305

 

Operating lease liabilities, non-current

 

208,527

 

 

238,449

 

Other liabilities, non-current

 

27,490

 

 

8,280

 

Total liabilities

 

2,265,340

 

 

2,050,034

 

 

 

 

Stockholders' equity:

 

 

Preferred stock

 

 

 

 

Common stock

 

 

 

 

Additional paid-in capital

 

1,449,825

 

 

915,177

 

Retained earnings

 

665,514

 

 

612,129

 

Total stockholders' equity

 

2,115,339

 

 

1,527,306

 

Total liabilities and stockholders' equity

$

4,380,679

 

$

3,577,340

 

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

Year Ended December 31,

 

 

2022

 

2021

OPERATING ACTIVITIES:

 

 

Net income

$

53,385

 

$

137,762

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

 

54,425

 

 

42,219

 

Stock-based compensation

 

498,642

 

 

337,413

 

Noncash lease expense

 

44,115

 

 

40,315

 

Allowance for credit losses on accounts receivable

 

3,203

 

 

1,456

 

Deferred income taxes

 

(11,507

)

 

(16,777

)

Other

 

622

 

 

5,803

 

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

(291,747

)

 

(444,342

)

Prepaid expenses and other current and non-current assets

 

50,655

 

 

1,648

 

Accounts payable

 

187,119

 

 

309,410

 

Accrued expenses and other current and non-current liabilities

 

8,168

 

 

7,596

 

Operating lease liabilities

 

(48,346

)

 

(43,990

)

Net cash provided by operating activities

 

548,734

 

 

378,513

 

INVESTING ACTIVITIES:

 

 

Purchases of investments

 

(553,295

)

 

(278,387

)

Sales of investments

 

1,977

 

 

4,539

 

Maturities of investments

 

338,829

 

 

253,444

 

Purchases of property and equipment

 

(84,160

)

 

(54,804

)

Capitalized software development costs

 

(7,725

)

 

(5,169

)

Business acquisition

 

 

 

(13,261

)

Net cash used in investing activities

 

(304,374

)

 

(93,638

)

FINANCING ACTIVITIES:

 

 

Payment of debt financing costs

 

 

 

(1,924

)

Proceeds from exercise of stock options

 

47,525

 

 

61,476

 

Proceeds from employee stock purchase plan

 

33,062

 

 

29,229

 

Taxes paid related to net settlement of restricted stock awards

 

(48,595

)

 

(56,855

)

Net cash provided by financing activities

 

31,992

 

 

31,926

 

Increase in cash and cash equivalents

 

276,352

 

 

316,801

 

Cash and cash equivalents—Beginning of year

 

754,154

 

 

437,353

 

Cash and cash equivalents—End of year

$

1,030,506

 

$

754,154

 

 

Non-GAAP Financial Metrics

(Amounts in thousands, except per share amounts)

The following tables show the Company’s non-GAAP financial metrics reconciled to the comparable GAAP financial metrics included in this release.

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Net income

$

71,187

 

$

8,039

 

$

53,385

 

$

137,762

 

Add back:

 

 

 

 

Depreciation and amortization expense

 

16,844

 

 

12,250

 

 

54,425

 

 

42,219

 

Stock-based compensation expense

 

127,531

 

 

205,403

 

 

498,642

 

 

337,413

 

Interest expense (income), net

 

(11,434

)

 

474

 

 

(12,755

)

 

1,030

 

Provision for (benefit from) income taxes

 

40,933

 

 

(34,621

)

 

73,985

 

 

(15,726

)

Adjusted EBITDA

$

245,061

 

$

191,545

 

$

667,682

 

$

502,698

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

GAAP net income

$

71,187

 

$

8,039

 

$

53,385

 

$

137,762

 

Add back (deduct):

 

 

 

 

Stock-based compensation expense

 

127,531

 

 

205,403

 

 

498,642

 

 

337,413

 

Adjustment for income taxes

 

(8,576

)

 

(5,314

)

 

(29,995

)

 

(19,619

)

Non-GAAP net income

$

190,142

 

$

208,128

 

$

522,032

 

$

455,556

 

 

 

 

 

 

GAAP diluted earnings per share

$

0.14

 

$

0.02

 

$

0.11

 

$

0.28

 

 

 

 

 

 

GAAP weighted-average shares outstanding—diluted

 

500,432

 

 

500,314

 

 

499,925

 

 

498,540

 

 

 

 

 

 

Non-GAAP diluted earnings per share

$

0.38

 

$

0.42

 

$

1.04

 

$

0.91

 

 

 

 

 

 

Non-GAAP weighted-average shares used in computing Non-GAAP earnings per share, diluted

 

500,432

 

 

500,314

 

 

499,925

 

 

498,540

 

 

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