Last week, digital-ad buying specialist The Trade Desk (NASDAQ: TTD) once again delivered quarterly results well ahead of management's guidance for the period. The company's revenue growth accelerated from a 41% year-over-year growth rate in Q1 to 42% growth in Q2. This upside was fueled by impressive performance in the company's mobile, audio, and connected TV channels. Adding icing to the cake, management used its second-quarter update as an opportunity to boost its outlook for both full-year revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
To fully appreciate The Trade Desk's momentum, investors may want to go beyond the company's second-quarter earnings release and hear what management had to say during its earnings call. In it, Green detailed two reasons investors can expect more strong growth in the quarters ahead.
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The market opportunity is huge
Capturing The Trade Desk's market opportunity at the highest level, Green provided some useful insight into the company's position within its total addressable market. As he said during the company's second-quarter earnings call:
Programmatic is still a relatively small part of total global advertising. It is estimated at around $34 billion in 2019. But it is growing five times faster than total advertising at around 20% year over year, according to Magna Global.
For context, IDC estimates total global advertising spend in 2019 will come in around $725 billion. The $35 billion spending on programmatic that Green cites, therefore, is currently only a fraction of total global advertising.
The CEO continued: "We maintain our prediction that before long, most advertising will be digital and nearly all of it will be transacted programmatically. This puts us in the fastest-growing segment of an expanding industry where we expect to continue to aggressively take share."
Connected TV is just getting started
A particularly notable opportunity in front of The Trade Desk is connected TV -- television streamed over the internet.
Indeed, much of The Trade Desk's second-quarter earnings call was a love letter to connected TV (CTV), as Green touted the enormous momentum with programmatic ads in the space.
One of the CEO's most bullish takes on CTV came when he shared the latest pulse on what the ad industry is talking about: "Every top advertiser wants to know how they can best access CTV inventory at scale and how they can apply programmatic to it. On the publisher side, all of the major premium TV content providers in the world want to know how they can make more of their premium content available for programmatic demand."
To this end, CTV ad inventory was up more than 300% in Q2, yet demand for this inventory was still exceeding supply, Green noted.
While there's more to The Trade Desk's growth story, these two topics help explain why the company has a long runway ahead of it.
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