Full reviews for both of these companies will be published alongside Coupang on Saturday.

NET trades for 152x forward EPS and 181x forward FCF. EPS is expected to grow by 6% this year and by 30% next year. FCF is expected to compound at a 40% clip for the next two years.

DraftKings trades for 23× updated 2025 FCF guidance. Free cash flow is expected to grow by 84% this year based on its guidance and by 77% next year based on that guide and 2026 estimates. Considering the FCF miss was related to bad luck, I don’t think 2026 FCF estimates will move much. 2025 estimates will fall to reflect the new guidance and the 84% growth projection.

As the review will lay out, all of the misses were based on historically bad outcome luck during March Madness. There was a stretch of over two rounds before the final 4 where not a single underdog one a game. Guidance would have been raised without this headwind. Just like terrible outcome luck during the NFL season. Structural (expected) hold (take) rate remains solid and bad luck will not last forever. It can easily lead to near-term volatility in results, as revenue and profit are byproducts of hold, but is not a structural concern to me. I care about thriving payer growth, market share gains, top-line expansion and OpEx control. If they’re executing in those places like they are, profits will follow when more normal outcome patterns come back. They are not changing anything about the odds structure of their bets, as again, this is not at all structural.

The Trade Desk is the leading buy-side player in open internet advertising. The firm’s two most compelling revenue segments are streaming, where it has relationships with most major players, and retail media, where it works with countless Fortune 500 vendors.

Its platform allows advertisers to bid on & purchase unique impressions with surgical precision, scale and open reporting. Purchases are essentially made on an impression-by-impression basis to uplift targeting efficacy and to double ad return metrics. Needed data is infused into every purchasing decision to ensure ads provide optimal value. No longer do advertisers need to commit millions at annual upfront events to reach audiences; they can commit to smaller purchases in real-time and with fantastic accuracy. No more guessing. They know where their most valuable consumers are; they know how to reach them and only them.

Kokai is the name of its data-driven, AI-copilot infused platform. It combines TTD’s leading open internet scale with its vast roster of 3rd parties to inject more data and signal into each decision. It tells advertisers who they should be targeting. Kokai does so through TTD’s decade of experience that allows it to essentially find groups of high-intent “copy-cat customers” with similar interests. Advertisers onboard their first-party data (what TTD calls “concentrated data seeds”) and The Trade Desk does the rest. Kokai allows buyers to focus on whichever variable, key performance indicator or campaign objective they’d like to. It allows all of this to be done in a self-serve fashion or in a fully managed environment. Up to them. Finally, Kokai emulates the ease of data onboarding that has made Alphabet and Meta so popular.

Unified ID 2.0 (UID2) is its open internet, omni-channel identifier. It uses hashed emails to responsibly ensure consumer and brand comfort. It knows exactly who is accessing what site or app. Kokai tells you who to target, while UID2 tells you where they are. 

Other products include:

OpenPath and UID2 are meant to support the sell-side rather than supplant it. TTD does not want to build a sell-side platform. It wants to exclusively represent the buy-side to eliminate conflict of interest. Helping sell-siders with identity and supply chain is meant to help its buyers enjoy more success.

“I think the team felt like they had something to prove in Q1, and I think we did it.”

Co-Founder/CEO Jeff Green

Beat revenue estimate by 7.1% & beat guidance by 7.1%. Gross retention has been over 95% for a decade. Its 26.6% 2-year revenue compounded annual growth rate (CAGR) compares to 22.9% Q/Q & 26.1% 2 quarters ago.

TTD trades for 34x forward FCF and maybe a turn or two higher given the outperforming profit and the positive share price reaction (if it holds). FCF is expected to compound at a 25% clip for the next two years.

Jeff Green is Always Charismatic:

As we work through this piece, you’ll read a lot of fiery things said about Alphabet, Amazon and Meta advertising practices. I think it’s important to keep in mind that Green always talks smack about these companies. And while he’s right about much of what he’s saying, none of that will change the fact that these three digital advertising kings will likely keep winning. They may just have to alter the way they do things, and they’re clearly willing. For example, Alphabet is already actively deprioritizing its open internet ad network to focus on its own properties.

Trade Desk can keep winning while these three companies keep thriving. And that’s my base case.

Looking Back on a Messy Q4 & the Successful Q1 Fixes:

Man was Q4 an adventure for TTD. As a reminder, it missed its guidance for the first time in nearly a decade and endured short-term disruption in its business model. The company had to delay the full launch of its Kokai platform, as things like demand forecasting and user experience still needed work. It left revenue on the table to prioritize debuting an elite product and maintaining its pristine reputation over meeting a quarterly number. It also had to completely overhaul its organizational structure to change product debut cadence. It was practicing occasional “waterfall moment” platform launches; this placed way too much pressure on every single launch. One mistake meant derailing an entire platform release instead of tweaking a simple piece of the user interface. They were moving too slowly and placing way too much pressure on single updates. Finally, it deprioritized direct brand work prematurely and suffered accordingly.

Many changes were made. The company embraced habitual, small product updates and split engineering teams into smaller groups to address the need to move more quickly. It separated go-to-market teams by brand and agency functions to drive more direct and intimate brand-level relationships. These logos wanted more control over their campaign design as the world moved from purchasing millions of impressions in advance, to one-by-one via programmatic bidding… so TTD pivoted. Finally, it came to terms with the fact that its leadership team was too small and created a talent bottleneck; for context, it didn’t even have a COO until recently. Green vowed to fix things expeditiously and his track record led me to be confident in that happening. And it did this quarter.

Fast forward to today, and the changes are already working. Vivek Kundra, a Salesforce EVP who helped scale their revenue base from $2B to $8B, was brought in as the firm’s new COO. The rollout of Kokai is now ahead of schedule once more, with plans for 100% client adoption by year’s end (already at 67%); teams are innovating more freely and implementing changes on a weekly cadence. “Business and product teams are more in sync than they’ve been in years.” Joint Business Plan (JBP) relationships with brands were a quarterly strength in Q1, with the pipeline setting new all-time highs. They’re “encouraged by the early impact of strategic updates, which “contributed to the outperformance.” That was quick; that’s Jeff Green.

An Evolving Regulatory Landscape:

There a lot happening in the ad-tech space. Alphabet has been declared an ad-tech monopoly based on its network business (DV360) practices; they’re already beginning to “turn off some of the illegal practices of their past. Meta and Alphabet are running into criticism for how they run their ad auctions. Meta’s blended price auction doesn’t match a second price auction in some cases like it’s supposed to. And for Alphabet, their requirement for network publishers to offer them right of first refusal for every impression is routinely leading to these publishers making less than other willing buyers would pay. They view Amazon almost identically to how they view Alphabet’s network business and do not think either can possibly have the objectivity needed to win the open internet. Amazon’s demand-side platform essentially functions to route buyers to its own streaming platform and marketplace. They’ll do very well selling sponsored listings and streaming placements, but TTD thinks mega-cap dominance won’t extend beyond their properties for much longer.

This is all giving TTD more confidence in their firm being the unbiased, non-conflicted open internet ecosystem to win the “lion’s share” of the (trillion dollar) opportunity. Even if he’s only kind of sort of right… that means years and years of continued compounding. As Green says constantly, they’ve been “winning in an unfair market” for over a decade. The market will eventually get a lot more fair. There will be many more legal appeals, but simply the signal of stronger control over walled gardens is already leading to behavioral changes.

“We are convinced that based on the current landscape and current competitive set, we are best positioned to win the lion's share of market share at the end state. We simply need to execute between here and there.”

Co-Founder/CEO Jeff Green

UID2:

Adoption of UID2 remains rock-solid – despite Google no longer phasing out 3rd-party cookies. As I’ve been saying for years, UID2 is not a cookies replacement. It’s an omni-channel (not just web) upgrade that unlocks a needed understanding of a company’s traffic and how to market to them. And it does so across audio, streaming and retail media – the three most important growth stories for this business.

This quarter Perion and Toyo Keizai (big publisher in Japan) added UID2 adoption while Piemme (large media platform in Italy) added support for EUID (European-compliant version).

“Nearly every scaled player has adopted UID2, and those that have not are under-monetizing their inventory.”

Co-Founder/CEO Jeff Green

OpenPath:

OpenPath also enjoyed a great quarter for new publisher adoption. Last Q, Green called 2025 an inflection year for OpenPath and its ability to clean up supply chains, uncover the leeches providing zero value, cut them out of the equation and expand the pie for everyone else. Importantly, this is not replacing the sell-side in yield management or actual ad placement.

They’re avoiding that conflict of interest (serving both sides) as they always do. OpenPath merely gives the sell-side a “much clearer view of willingness to pay” and exactly which key performance indicators to optimize for. And OpenPath therefore helps buy-side clients gain a “clearer line of sight into exactly what they’re buying.” TTD will always be a buy-side first platform and will never own inventory. But? It can help the sell-side take better care of its customers with better information. OpenPath accomplishes that and, in turn, creates richer publishers thanks to advertisers that can profitably spend more.

With all of that said, it makes sense that traction is rising and direct impacts are profoundly positive. It told us to expect this success, with optimism based on signed contracts rather than speculation. I’m glad we listened. After adding Disney, Vizio and several other players last year, Q1 is off to a great start. Warner Bros. Discovery, The Guardian and New York Post all added support. For New York Post specifically, this improved inventory fill rates by 760% and raised web display revenue by 97%. Arena Group (controls traffic for 100M monthly visitors) plugged into OpenPath to boost ad fill rates by 300% with a 79% boost to programmatic revenue. And “another major network” saw a 600% boost to fill rates with a 25% uplift to overall revenue. These case studies aren’t because the established, mature publishers are suddenly finding rapid growth. They’re because OpenPath makes them better. 

Macro:

The macro environment worsened for TTD throughout Q1 as budget hesitancy rose. Hard to tell from these results. It overcame these headwinds through its stellar value proposition. As I’ve said many times over the course of the last 5 years, TTD thrives most amid macro deterioration. That doesn’t immediately show up in accelerating revenue growth, as it isn’t immune to industry-wide slowing. But it does clearly show up in accelerated market share gains and more “land grabbing” to position it better than anyone else when things brighten. They did it during the pandemic; they’re doing it now.

TTD wins in helping companies “do more with less” by leveraging all of their data, more effectively identifying relevant customers and targeting them with unmatched granularity. It routinely doubles return on ad spend (ROAS), with countless case studies pointing to an ever sharper impact than that. And as we’ll see in the Kokai section below, those leads are growing. This is why the company has smoothly compounded in a cyclical industry across those noisy cycles. This is why the consistency of its results don’t look like anyone else’s in the space.

“Headwinds have historically accelerated the move to programmatic because of its data, its control, its agility, and its performance— but those same headwinds have also accelerated the market share gains of The Trade Desk.”

Co-Founder/CEO Jeff Green

CTV Market Dynamics:

CTV is becoming an increasingly favorable buyer’s market, as publishers race to add supply and more effectively monetize during the geopolitical chaos.

Kokai Platform Launch:

TTD listened. There were some pieces of the initial Kokai launch that weren’t loved by customers. As Jeff told us, the company constantly balances giving customers what they want with trying to push the industry forward. They might have pushed a bit too hard and they’ve since course corrected. The primary components of Kokai are now fully live, with some consistent tweaks (like a new deal performance evaluator) planned.

And boy is this working. Deutsche Telecom is using Kokai to 11x post click conversion with an 18x improvement in cost per conversion. And generally speaking, Kokai is delivering a 42% reduction in cost per reach, a 24% lower cost per conversion and a 20% lower cost per acquisition. This builds on the 2x ROAS advantage enjoyed under the old platform (Solimar).

Sincera:

The Sincera M&A closed and had an immaterial impact on the revenue outperformance. They plan to integrate its “metadata service that crawls the internet looking for supply chain insights and shines a light of transparency” into Kokai. This will be another key piece, alongside OpenPath, of its mission to clean up the supply chain. It will also debut “OpenSincera” this year as a retrofitting of their product for its platform.

The beats were somewhat of a byproduct of lowered expectations, but this was still quite the positive and gratifying quarter. I’ve spent the last three months defending this name and buying shares hand over fist (as the time-stamped portfolio updates explicitly show you). I was adamant that one hiccup amid a sea of years of flawless execution wasn’t a reason to turn on this team. I was passionate about the intentional delay of Kokai and the organizational reshuffles being the right decisions for the long term… despite costing them last quarter. I was highly optimistic that Q4 would be a blip on the radar as so many bears came out of hibernation to declare this company “dying.” I am not always right. But it looks like I was this time.

This is the structural compounder in ad-tech and the market share taker in any environment. This is the company that lets marketers get the most bang for their buck across the most parts of the open internet. This team is seemingly always one step ahead and always predicting where the puck is going. That didn’t change last quarter… their vision simply required making some tough decisions. They made them. They’re paying off.

With all of that said, the company is again succeeding but the stock is getting more expensive once again. It’s up 60% in a string of sessions and the multiple is up several turns as a result. I have been extremely aggressive in buying shares. It will probably open up tomorrow as one of my largest positions (if the pop holds) and at a higher growth multiple almost any other holding.

If it keeps running, I will again enter trim mode for this name as I have done in the past many times. I will keep lightening up into severe multiple expansion and keep doing the opposite into severe multiple contraction. I will do so while maintaining a long-term position in this name… the size of it will simply ebb and flow. Same exact thing as I do with Shopify. That’s my playbook. That’s my plan. I am not a trader, but I am also not willing to sit on my hands as this thing races back and forth between dirt cheap and super expensive.