The Trade Desk Inc. TTD reported fourth-quarter 2016 earnings (including stock based compensation) of 24 cents per share, which beat the Zacks Consensus Estimate by 4 cents. Excluding stock-based compensation, non-GAAP earnings increased 17.9% from the year-ago quarter to 33 cents.
Total revenue was $72.4 million, up 69.7% from the year-ago quarter, and exceeded the Zacks Consensus Estimate of $62 million quite comfortably.
Shares rose 3.4% in after-hours trading to close at $33.36 on Feb 16. Notably, shares of the company have outperformed the Zacks Internet Services industry over the last six months. While the industry gained 2.8%, the stock appreciated 5%.
The outperformance of the stock could be primarily attributed to strong adoption trend for the company's platforms among end users.
During fourth-quarter 2016, all mobile (including in-app mobile video) comprised nearly a third of Trade Desk's total business and witnessed phenomenal growth of 135% as compared with the mobile advertising industry's growth rate of only about 46%. Trade Desk's growth indicates that the adoption rate for its technologies is fast gaining traction in the market and this trend is likely to continue in the future as well.
Omni-channel solutions still remains the bread and butter segment for Trade Desk as the industry keeps gradually shifting to transparency and programmatic buying. Notably, native spend surged over 700% on a sequential basis. Mobile in-app witnessed growth of 400% on a year-over-year basis. Similarly, connected TV grew above 100% on a sequential basis.
In terms of customer traction and retention, Trade Desk had 566 active customers as of Dec 31, 2016 with 95% retention rate reported in the fourth quarter.
The Trade Desk platform also witnessed greater adoption during the holiday season as customers flocked to use the service offered by their advertising agencies.
Trade Desk launched a number of new product features and enhancements during the quarter. This includes new channels in native audio, new cross-device targeting capabilities and upgraded user interfaces.
The company expanded to new countries like Jakarta and Indonesia during the fourth quarter as demand for connectivity and mobile time is steadily increasing in these countries.
Adjusted EBITDA soared 52.6% year over year to $28.6 million.
Operating expenses, as a percentage of revenues, surged 900 basis points (bps) to 66.8% in the reported quarter, primarily due to higher general & administrative (G&A) expense as a percentage of revenues (up 370 bps year over year).
Further, technology and development (T&D) expense as a percentage of revenues increased 320 bps. These increases were partially offset by lower platform operations and sales & marketing (S&M) expenses, which inched up only marginally (110 bps and 100 bps, respectively).
As a result, operating margin contracted 900 bps from the year-ago quarter to 33.2%.
For first-quarter 2017, Trade Desk anticipates revenues of $43 million (that is marginally better than the Zacks Consensus estimate of $42.5 million) and adjusted EBITDA of breakeven (+/- $2 million).
The Trade Desk Inc. Price, Consensus and EPS Surprise
Zacks Rank & Key Picks
Trade Desk carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space include Aspen Group, Inc. ASPU sporting a Zacks Rank #1 (Strong Buy) and Bridgeline Digital, Inc. BLIN and HealthStream, Inc. HSTM , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Notably, the consensus estimate for Aspen's current year has narrowed down to a loss of 2 cents from a loss of 6 cents over the last 60 days.
Similarly, the consensus estimate for Bridgeline Digital's current year has narrowed down to a loss of 9 cents from a loss of 10 cents over the last 60 days.
Last but not the least, the consensus estimate for HealthStream's current year has remained stable at 21 cents over the last 60 days.
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