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On Friday, William Blair maintained an Outperform rating on The Trade Desk (NASDAQ:TTD), with analyst Ralph Schackart highlighting several positive developments within the company. According to Schackart, The Trade Desk has shown encouraging signs following recent strategic upgrades, expressing confidence in its ability to outperform the market and deliver relevant products to its customers. InvestingPro analysis indicates the stock is currently trading below its Fair Value, with a robust financial health score of 3.14 out of 5, rated as "GREAT." For deeper insights, InvestingPro offers 16 additional investment tips and a comprehensive Pro Research Report for TTD, available to subscribers.
The company’s core product, Kokai, is reportedly gaining momentum, with adoption surpassing expectations. Approximately two-thirds of The Trade Desk’s clients are currently using Kokai, and the company anticipates full client utilization by the end of the year. The benefits of Kokai include a 42% reduction in unique reach, a 24% decrease in the cost of conversion, and a 20% cut in the cost per acquisition. Additionally, Kokai campaigns are utilizing about 30% more data elements per impression, signaling increased efficiency.
Despite a stable fourth quarter, the first quarter of 2025 saw intensified macroeconomic pressures. Nevertheless, The Trade Desk has factored these conditions into its outlook for the second quarter of 2025. The company has also undergone organizational changes, hiring a new COO, Vivek Kundra, who has made an immediate impact. More than 100 scrums are now focused on weekly product shipping within the engineering department, and a simplified organizational structure is enhancing go-to-market strategies. The Trade Desk reports that its joint business plan pipeline and the number of contracts are at historically high levels.
The company’s quarterly results further underscored its robust performance, with revenue reaching about $616 million, a 25% increase year-over-year and surpassing analyst expectations by 7%. This growth was attributed to the successful adoption of Kokai. North America accounted for 88% of the company’s spend in the first quarter, while growth in international regions continued to outpace North America for the ninth consecutive quarter. The Trade Desk’s adjusted EBITDA was about $208 million, which was 41% above Street forecasts, resulting in a quarterly margin of 33.7%. The company maintains impressive fundamentals with an 80.1% gross profit margin and strong cash flows that adequately cover interest payments, according to InvestingPro data. Discover more detailed financial metrics and expert analysis in the comprehensive Pro Research Report, part of the premium subscription covering 1,400+ US stocks.
In other recent news, The Trade Desk reported a robust first-quarter performance, with revenue reaching $616 million, marking a 25% increase year-over-year and surpassing expectations by approximately $40 million. The company’s earnings per share (EPS) also exceeded forecasts, coming in at $0.33 compared to the anticipated $0.25. The Trade Desk’s adjusted EBITDA was reported at $288 million, representing a 34% margin, while free cash flow stood at $230 million. For the second quarter, the company projected revenue of $682 million, aligning with consensus estimates, and slightly higher than expected EBITDA of $259 million. Evercore ISI maintained an In Line rating for The Trade Desk, with a price target of $90, acknowledging the strong quarterly results but noting ongoing challenges such as competitive pressures and macroeconomic headwinds. The Trade Desk’s recent innovations, including the Kokai platform upgrade, were highlighted as key drivers of growth. The company maintains a strong financial position with $1.7 billion in cash and no debt, positioning it well for future opportunities.
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