The Trade Desk reported $53.4 million in total revenue during the first quarter of 2017, a 76% increase over the same period last year.
The company is increasing its revenue guidance for 2017 from $270 million to at least $291 million. Shares jumped from just under $40 when the market closed to more than $47 in after-hours trading.
CEO Jeff Green attributed the better-than-expected growth rate to consolidation among demand-side platforms (DSPs).
“It does seem like there are fewer competing in pitches,” he said, adding that it’s a sign of maturity for the ecosystem since stakeholders that extract more value than they add are being weeded from the supply chain. “We’re benefitting from the reality that most DSP competitors are smaller and not profitable.”
Mobile channels – in-app, video and web – accounted for more than a third of ad spending on the platform. Spending on native ads, first offered by The Trade Desk in Q2 of 2016, was higher in the first quarter of 2017 than all last year combined.
Connected TV, about which Green had previously been excited, grew 200% year over year.
“A year ago our team met with a large broadcasting company, and there was little interest on partnering on inventory and a programmatic strategy,” Green said. “Fast-forward to today, and they’re ready to partner on multiple opportunities in-app and OTT.”
The connected TV inventory available on the platform remains minimal, he said, “but we’ve all gotten a taste and now they have programmatic tests they can prove out.”
Green said it’s “inevitable” that the leading digital video advertising platforms – YouTube, Snapchat and Facebook – will eventually open their APIs to price-discoverable bidding, which would give control over inventory and pricing to the buyer, and not to the platform.
“I’m optimistic we can be a partner for (Snapchat), but currently it’s not an opportunity for us,” he said, due to the nontransparent inventory.
The Trade Desk, which entered an embattled public market for ad tech companies, has also won over some allies in the investment community. Kerry Rice, an analyst at the investment bank Jefferies, raised his price target from $32 to $48, while Susquehanna’s Shyam Patil “reiterated a positive rating and $41 price target,” reports Street Insider.
One investor asked about the technology and account integration process required for a brand like P&G, which left its long-time vendor AudienceScience last week in favor of deploying Neustar as a DMP and The Trade Desk and other unnamed DSPs for programmatic buying.
Green said he doesn’t expect significant dividends on the account this year because the brand won’t begin testing its new media pipes until the second half of the year.
If a blue-chip brand does begin putting more trust and budget in a vendor, “big companies by the nature of their size and process of ramping up will get stickier over time,” he said. “The way we look at this is that we have a lot to prove and a lot to win.”
