Trade Desk stock shoots 15% higher as ad-tech powerhouse’s sales, forecast top expectations

Analysts on average expected adjusted earnings of 20 cents a share on sales of $365 million, according to FactSet. Shares jumped to more than $61 in after-hours trading immediately following the release of the results, after closing with a 0.9% decline at $54.50.

Trade Desk has been under pressure amid a perceived slowdown in online-ad spending, which showed up in the earnings of big online-ad players like Facebook parent Meta Platforms Inc.
META,
-1.01%
and important Trade Desk clients like Roku Inc.
ROKU,
-6.58%.
Many of those fears have been supported by forecasts from those companies calling for a deceleration in ad spending as companies cut back amid fears of an economic recession.

“We believe the industry has entered into a modest ad recession, where the combination of tighter budgets, less time spent online, and inflation and FX headwinds is creating elevated pressure on companies,” KBCM analysts wrote in a preview of reports from Trade Desk and other ad-tech companies.

Trade Desk executives guided for third-quarter revenue of at least $385 million, while analysts on average were expecting $382 million, according to FactSet. Chief Executive Jeff Green said in a conference call that his company’s performance benefitted from strong connected TV ads as well as joint-business plans, or JBPs, with advertisers such as Walt Disney Co.
DIS,
-0.90%
and Albertsons Cos. Inc.
ACI,
+3.09%
despite a savage macroeconomic environment. He also mentioned fruitful discussions with Netflix Inc.
NFLX,
-1.52%,
which is readying an ad-supported platform for streaming subscribers with Microsoft Corp.
MSFT,
+0.71%.

“We delivered outstanding performance in the second quarter, growing 35% versus a year ago, significantly outpacing worldwide programmatic advertising growth,” he said, thanks to new, expanded customer agreements.

Green added that big brands also are increasingly ditching the “draconian” advertising “walled garden” of Alphabet Inc.’s Google
GOOGL,
-0.57%

GOOG,
-0.54%
for Trade Desk and others amid intensifying regulatory actions. Late Tuesday, Bloomberg News reported that the Justice Department is expected to file an antitrust lawsuit over Google’s ad-tech business.

Read more: Justice Department expected to file antitrust lawsuit against Google as soon as September: report

Google has lost favor with many marketers for delaying its elimination of third-party cookies until the second half of 2024, according to Green.

Trade Desk shares have declined more than 40% so far this year, as the S&P 500 index
SPX,
-0.42%
has dropped 13.5%.