Advertising software maker The Trade Desk (NASDAQ:TTD) announced better-than-expected revenue in Q1 CY2025, with sales up 25.4% year on year to $616 million. Guidance for next quarter’s revenue was better than expected at $682 million at the midpoint, 0.8% above analysts’ estimates. Its non-GAAP profit of $0.33 per share was 33.2% above analysts’ consensus estimates.
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The Trade Desk (TTD) Q1 CY2025 Highlights:
- Revenue: $616 million vs analyst estimates of $575.6 million (25.4% year-on-year growth, 7% beat)
- Adjusted EPS: $0.33 vs analyst estimates of $0.25 (33.2% beat)
- Adjusted EBITDA: $207.9 million vs analyst estimates of $147.5 million (33.7% margin, 41% beat)
- Revenue Guidance for Q2 CY2025 is $682 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q2 CY2025 is $259 million at the midpoint, above analyst estimates of $254.1 million
- Operating Margin: 8.8%, up from 5.8% in the same quarter last year
- Free Cash Flow Margin: 37.3%, up from 23.9% in the previous quarter
- Market Capitalization: $27.75 billion
“We delivered strong results in the first quarter, growing revenue 25% year-over-year to $616 million,” said Jeff Green, Co-founder and CEO of The Trade Desk.
Company Overview
Founded by former Microsoft engineers Jeff Green and Dave Pickles, The Trade Desk (NASDAQ:TTD) offers cloud-based software that uses data to help advertisers better plan, place, and target their online ads.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, The Trade Desk grew its sales at a solid 25.8% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, The Trade Desk reported robust year-on-year revenue growth of 25.4%, and its $616 million of revenue topped Wall Street estimates by 7%. Company management is currently guiding for a 16.7% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 14.7% over the next 12 months, a deceleration versus the last three years. Still, this projection is commendable and implies the market is forecasting success for its products and services.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
The Trade Desk is extremely efficient at acquiring new customers, and its CAC payback period checked in at 4 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give The Trade Desk more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from The Trade Desk’s Q1 Results
We were impressed by how significantly The Trade Desk blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Looking ahead, Q2 guidance for revenue was roughly in line while EBITDA guidance beat, suggesting strong profitability trends. This was a strong quarter, especially considering the weak print last quarter that had investors worried. Zooming out, we think this was a solid print. The stock traded up 9% to $65.40 immediately after reporting.
The Trade Desk had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.