“Over the first 9 months of the year, we have gained more market share than at any point in our history.” – Co-Founder/CEO Jeff Green

1. Demand

The Trade Desk beat its at least revenue guide by 2.5% and analyst estimates by 2.3%.

The 34% 3 year CAGR compares to 33.1% last Q & 37.6% 2 Qs ago.
Client retention has been over 95% for 8 years.
Video (includes Connected TV (CTV)) represents a low 40% of the company’s revenue which is stable QoQ.
- Disney+ launching ads next month (and Netflix) will fuel the CTV fire more.
- Mobile remains in the high 30% range in terms of revenue contribution.
Q3 2022 is comping vs. nearly 40% growth in Q3 2021 — significantly ahead of The Trade Desk’s run rate growth. It still managed to boast over 31% growth. Impressive.

2. Profitability

The Trade Desk beat its EBITDA guide by 16.5% and analyst estimates by 15.6%.
The Trade Desk beat analyst earnings per share (EPS) estimates of $0.20 by $0.03 or 15%.

Founder awards in connection with meeting several performance goals began vesting in 2021. That’s the source of the large difference between GAAP and non-GAAP margins. Most of the $600 million package is expected to finish vesting next year when GAAP margins will normalize. A small chunk will vest early 2024.
- CFO Blake Grayson told us that YoY stock comp growth would turn negative next quarter as we have lapped most of these awards.
The Trade Desk’s trailing 12 month FCF generation is up 53% YoY.
The sequential margin expansion was a positive surprise. Last quarter the company told us it would lean into operating expense growth starting this quarter and that, that would weigh on margins. Unit economics improved regardless.