The Trade Desk's (NASDAQ:TTD) Posts Q4 Sales In Line With Estimates, Stock Soars

Petr Huřťák /
2023/02/15 6:05 am EST

Advertising software maker The Trade Desk (NASDAQ:TTD) reported results in line with analyst expectations in Q4 FY2022 quarter, with revenue up 24% year on year to $490.7 million. The company expects that next quarter's revenue would be around $363 million, which is the midpoint of the guidance range. That was in roughly line with analyst expectations. The Trade Desk made a GAAP profit of $71.2 million, improving on its profit of $8.04 million, in the same quarter last year.

Is now the time to buy The Trade Desk? Access our full analysis of the earnings results here, it's free.

The Trade Desk (TTD) Q4 FY2022 Highlights:

  • Revenue: $490.7 million vs analyst estimates of $491.8 million (small miss)
  • EPS (non-GAAP): $0.38 vs analyst estimates of $0.36 (5.95% beat)
  • Revenue guidance for Q1 2023 is $363 million at the midpoint, roughly in line with what analysts were expecting
  • Free cash flow of $122.8 million, roughly flat from previous quarter
  • Gross Margin (GAAP): 83.8%, in line with same quarter last year
  • Announces $700 Million Share Repurchase Program

“The Trade Desk outpaced nearly all areas of digital advertising in 2022, with 32% revenue growth year over year, and a record $491 million of revenue in the fourth quarter alone. This performance was underscored by significant profitability and cash flow. In an unpredictable macro environment, our growing relationships with agencies and brands is testament to the value of the open internet over the limitations of walled gardens,” said Jeff Green, founder and CEO of The Trade Desk.

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.

The digital advertising market is large, growing and becoming more diverse, both in terms of audiences and media. This as a result drives a growing need for a software that enables advertisers to use data to automate and optimize ad placements.

Sales Growth

As you can see below, The Trade Desk's revenue growth has been very strong over the last two years, growing from quarterly revenue of $319.9 million in Q4 FY2020, to $490.7 million.

The Trade Desk Total Revenue

Even though The Trade Desk fell short of revenue estimates, its quarterly revenue growth was still up a very solid 24% year on year. On top of that, revenue increased $96 million quarter on quarter, a very strong improvement on the $17.8 million increase in Q3 2022, which shows acceleration of growth, and is great to see.

Guidance for the next quarter indicates The Trade Desk is expecting revenue to grow 15.1% year on year to $363 million, slowing down from the 43.5% year-over-year increase in revenue the company had recorded in the same quarter last year.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. The Trade Desk's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 83.8% in Q4.

The Trade Desk Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.84 left to spend on developing new products, marketing & sales and the general administrative overhead. Significantly up from the last quarter, this is a great gross margin, that allows companies like The Trade Desk to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.

Key Takeaways from The Trade Desk's Q4 Results

With a market capitalization of $24.4 billion, more than $1.45 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

It was good to see The Trade Desk improve their gross margin this quarter. And we were also glad to see good revenue growth. On the other hand, it was unfortunate to see that The Trade Desk missed analysts' revenue expectations. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. The market reacted positively to the news of buyback and company is up 5.13% on the results and currently trades at $52.48 per share.

Should you invest in The Trade Desk right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.