Third Quarter 2018 Investor Presentation, November 8, 2018 - Investor Relations
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Third Quarter 2018 Investor Presentation, November 8, 2018
Statement of Caution Under the Private Securities Litigation Reform Act of 1995 This document 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 advertising strategies, needs and expectations of brands and agencies, industry and market trends, expectations regarding investment strategies, and the financial targets such as revenue, Adjusted EBITDA and Adjusted EBITDA margins of The Trade Desk, Inc. (the Company). 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 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 and the ability to attract and retain clients. 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. Included within this presentation are non-GAAP financial measures that supplement the Condensed Consolidated Statements of Operations of the Company prepared under generally accepted accounting principles (GAAP). Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this presentation and should be considered together with the Condensed 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. Information contained in this presentation concerning the industry and the markets in which the Company operates, including the Company’s general expectations and market position, market opportunity and market size, is based on reports from various third-party sources, assumptions that the Company has made based on information in such reports and the Company’s knowledge of the market for its platform. Although the Company believes such third-party sources to be reliable, the Company has not independently verified the information and cannot guarantee its accuracy and completeness.
What we do
We provide a platform
for ad buyers.
Most buyers are ad
agencies or other
technology companies.
3
May 2011 $.08 Day*.
2012 First $1MM Month*.
2014 First $1MM Day*.
2015 First $2MM and $3MM Day*.
2016 First $100MM Month*
2017 First $5MM Day and $200MM Month*
We’ve been profitable since 2013.
2015: $114MM in Revenue, $16MM in Adj. Net Income and $39MM in Adj EBITDA.
2016: $203MM in Revenue, $35MM in Adj. Net Income and $65MM in Adj EBITDA
2017: $308MM in Revenue, $70MM in Adj. Net Income and $24.4MM in Adj. EBITDA
* Total spend on platform
4 Adjusted Net Income and EBITDA typically excludes items such as depreciation and amortization expense, interest expense, income taxes, stock-based compensation, preferred stock
warrant liabilities and follow-on offering costs. Reconciliation for Adjusted Net Income and Adjusted EBITDA can be found in the Company’s SEC Filings at www.thetradedesk.com.
Column1
by the numbers
Revenue (1) $464 E
Gross Spend (2)
($ in millions) ($ in millions)
50%E
$1,556
52%
52%
$308
$1,027
86%
78% $203
161% $552
156% $114
$45 $211
FY2014 FY2015 FY2016 FY2017 FY2018E FY2014 FY2015 FY2016 FY2017
2009 $308 MM $1.556 BB $70 MM $95.5 MM 713
founded 2017 Revenue (2) 2017 Gross Spend (2) 2017 Adjusted 2017 Adjusted Global
Net Income (2) EBITDA (2) employees (2)
5 (1) FY2018E guidance of $464 million provided November 8, 2018, at The Trade Desk’s conference call for the period ended Sept. 30, 2018. The Trade Desk makes no commitment to update or refresh guidance after that date.
(2) Gross Spend, Revenue, Adjusted Net Income and Adjusted EBITDA from Company 10-K and Press Release issued on February 22, 2018. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules
accompanying this presentation.
The most
effective
advertising is
targeted.
6
937 desktop ads
461 mobile
180 facebook ads
33 video/TV ads
7 ads audio
4 search clicks
0 print ads
* Slides 7 and 8 present a hypothetical illustrative example of what an average consumer might experience during an
average day and are based upon information from The Trade Desk, public sources, and management estimates.
7
Example: How spend is divided.
Digital Video/TV 5%
Audio
1%
Desktop
20%
Desktop
Nearly all of the
purchase data used Mobile
Mobile
10%
was on products she Search
already bought. Audio
Search
64%
Digital Video/TV
* Slides 7 and 8 present a hypothetical illustrative example of what an average consumer might experience during an
8 average day and are based upon information from The Trade Desk, public sources, and management estimates.
There is a fundamental shift
happening in advertising.
And it’s bigger than just a move to digital.
9
The market. 10
Price discovery
enables healthy
markets.
11We are targeting a massive market
~$704B Total Global Ad Spending
~$250B We believe advertising will
Linear Television
be transacted digitally.
“
~$50B
Display
The future of all media is digital
and programmatic… eventually all
media will be digital and it will be
transacted by machines.
12 Source: IDC, Estimated 2018 Global Ad Spending - CEO of a Global Media Investment Management GroupThe pie is getting bigger while waste is being pushed out.
$1.00
Advertisers / Agencies
Self Serve Demand Side Platform (DSP)
Managed Service DSPs and Ad Networks
Networks Exchange
Display Mobile Social TV+
Ad Server
Data Platform
Supply Side Platform & Yield MGMT
Publishers / Sellers / Content Owners
$0.40/$0.50
13What we do
Provide a self-service
platform to agencies who
deliberately pick from
over 500 billion digital ad
opportunities a day.
95%+ of our spend comes through
MSAs
14We provide agencies a
SOFTWARE
PLATFORM.
We create room for
their proprietary advantage.
We are an enabler, not a disruptor.
15We align agencies and their brands.
SELL-SIDE MARKETPLACE BUY-SIDE
16We are omnichannel.
CTV, mobile, video, audio,
display, social, native.
17We buy advertising and data.
We power some of the
largest brands in the world…
…through their agencies and
digital solutions companies.
18The Trade Desk is global.
BELLEVUE
SAN
FRANCISCO
LONDON
SAN
JOSE
MADRID HAMBURG
CHICAGO
VENTURA SEOUL
PARIS
BOULDER NEW
YORK SINGAPORE
LOS
ANGELES TOKYO
SHANGHAI
ALISO
VIEJO
HONG
KONG
JAKARTA
SYDNEYWe buy the whole internet.
Even media that isn’t digital will be transacted digitally, using the internet.
20We need to
Agencies (and their access their data
brands) need a to help them.
technology partner
We are the
to trust with their alternative to the
data. conflicted platform
providers.
21We buy data to make better decisions.
We focus on being the best partner for our data providers.
22Our technology. 23
We built a data Our decisioning
technology
management
platform first. 3rd PARTY
(data warehouse) DATA
LiveRamp,
TTD Data
BlueKai, IXI, etc.
The buyer with the
most data can make the 1ST PARTY DATA
Site-based, CRM,
most intelligent bid. Tier 1/2/3
DMP
24Expressiveness is central to our
technological advantage.
2526
Goal: The most transparent and most detailed reporting.
Simplified User Interface
“expressiveness” at work
27
Transparent ReportingTTD + Agency reduced client’s booking costs by half.
3.5
3.0
1.75x bid for stores 2.5
within 5 miles
1x bid for stores 2.0
outside 5-15 miles
1.5
0x (no bid)
outside 15 miles
1.0
0.5
0.0
Start 30m 2h 24h 2d 4d 7d 14d 30d
Time since last site visit
Expressiveness = 15,360 Bid Permutations
28Our platform approach wins more of the budget.
An example
media plan. Agency
40% 20% 10% 10% 10% 10%
Agency Marketing and Managed Service Advertising Data and
Promotion Programmatic Software Solution Technology
Trading Desk Solution Company Partner Company Company Company
Powered by
29
Illustrative ExampleLarge brands have just started in programmatic.
Large advertiser total media spend (2017) Large advertiser programmatic media spend (2015-2017)
$9.0
$9B $140M
$8.0
$8.0 $8B $120M
$120M
$7.0 $7B
$100M
$6.0 $6B
$5.0 $5B $80M
$70M
$4.0
$4B
$60M
$3B
$3.0
$40M
$2B $2.0 $30M
$2.0
$1B $20M
$1.0
$0B
$- $M
Total Media Spend Digital spend 2015 2016 2017
30 Source: The Trade Desk estimates for a large multi-national advertiserThe future
of TV is
ad funded.
The cost of no ads is too
great for most consumers.
31
(Cable costs are according to the Leichtman Research Group, Inc.).The view into our future.
1. Connected TV
2. Global expansion
3. Expand the use of our APIs with more
technology-centric companies.
4. Launched new User-Experience, Planning
tools and AI in 2018.
Continue to provide a platform where buyers
can objectively and precisely buy ads.
32How Do We Manage
Our Business?
• Client Retention
• Spend Growth
• Diversification
• Efficiency
33Loyal and stable client base
Annual Cohort Growth
(Annual Gross Spend)
~50% gross spend expansion in
2017 from existing customers
95%+ customer retention
34
The Trade Desk reports Cohort Growth on an annual basisCustomers and industries are broadly diversified.
Customer Concentration Industry Concentration
14%
18% Technology & Computing
Food & Drink
Health & Fitness
In 2017, our 3 largest customers 5% 13%
Automotive
accounted for 22%, 11% and 10%,
5% Personal Finance
respectively, of our Gross Billings.
Business
5%
Style & Fashion
13%
8% Home & Garden
Travel
10% 10% (1)
Other
(Based on Gross Spend and our classification of the purchasers of advertising through our customers).
35 includes: Arts & Entertainment, Shopping, Family & Parenting, Education, Law, Gov’t & Politics, Hobbies & Interests, Pets, Sports,
1. Other
Careers, Real Estate, Science, Society, Religion & Spirituality, News and Other.Strong financial model.
• Exceptional top line growth
• MSA-based model with ongoing,
established customer relationships
• Self-serve software model drives strong
operating leverage
• Proven profitability
36Robust revenue growth…
Revenue(1)
79% 5-year Estimated CAGR ($ in millions)
Column1
$147.0 E
50%E $464 E $118.8
$112.3
$102.6
52%
$308 $85.7
$79.4
78% $72.4 $72.8
$203 $53.0 $53.0
$47.2
156% $42.7
$114 $28.8 $30.4
$24.5
$18.5$18.0
$45 $11.2
$6.5 $8.4
Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418E
FY2014 FY2015 FY2016 FY2017 FY2018E
37 (1) FY2018E guidance of $464 million and Q4FY2018E guidance of $147 million provided Nov. 8, 2018, at The Trade Desk’s conference call for the period ended Sept. 30,
2018. The Trade Desk makes no commitment to update or refresh guidance after that date.Robust operating model…
120
(% of Revenue) Operating Income Margin and Expenses
100
Investments for Investments for
future growth future growth
31pt Margin
80 Expansion
60
40
20
0
2014 2015 2016 2017
Platform Operations Sales and Marketing Technology and Development General and Administrative Operating Margin
38 (1) Company Sources. 10-K filed on February 22, 2018,…delivering substantial profitability
Adj. EBITDA ($ in millions) GAAP Net Income ($ in millions)
$36.9
$39.5
$20.3
$36.6
$18.8 $19.3
$29.7 $16.8
$25.3
$24.4
$16.6 $19.8 $11.1
$18.7 $10.2
$15.7 $9.1
$7.6
$9.3 $5.7
$4.6 $3.6 $4.9
$7.4 $3.9
$6.3
$3.7 $4.3
$1.8
-$1.0
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318
Source: Company Filings. Adjusted EBITDA excludes depreciation and amortization expense, interest expense, income taxes, stock-based compensation and
39 preferred stock warrant liabilities. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this
presentation.Investment highlights.
1. 95%+ of our spend coming through MSAs and is relatively predictable.
2. We’re self-service omnichannel (all decisioned digital).
3. Our revenue grew by 52% y/y in 2017, 78% in 2016 and 156% in 2015.
4. Our Q2 2018 and Q3 2018 y/y growth rates of 54% and 50% EQUALED the
growth rate of the prior year
5. Our tech is measurably better at decisioning.
6. We have a massive TAM.
7. We align our interests with our customer (buy-side only, not network).
8. We’ve been profitable since 2013.
TTD is an investment in the whole internet.
40Supplemental Non-GAAP Information
Non-GAAP Financial Metrics
(Amounts in thousands, except per share amounts)
The following tables show the Company’s GAAP financial metrics reconciled to non-GAAP financial metrics
included in this presentation.
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Net income $ 20,292 $ 10,229 $ 48,705 $ 33,987
Add back:
Depreciation and amortization expense 3,277 1,968 8,107 5,157
Stock-based compensation expense 11,417 5,893 27,958 12,406
Interest expense (income), net (237 ) 513 (113 ) 1,290
Secondary offering costs — — — 1,523
Provision for income taxes 1,813 5,825 7,728 1,602
Adjusted EBITDA $ 36,562 $ 24,428 $ 92,385 $ 55,965
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
GAAP net income $ 20,292 $ 10,229 $ 48,705 $ 33,987
Add back (deduct):
Stock-based compensation expense 11,417 5,893 27,958 12,406
Secondary offering costs — — — 1,523
Adjustment for income taxes (1,528 ) (846 ) (3,918 ) (1,772 )
Non-GAAP net income $ 30,181 $ 15,276 $ 72,745 $ 46,144
GAAP diluted EPS $ 0.44 $ 0.23 $ 1.07 $ 0.77
Non-GAAP diluted EPS $ 0.65 $ 0.35 $ 1.60 $ 1.05
Weighted average shares outstanding—diluted 46,576 44,245 45,460 43,919
41You can also read
