What Happened:
Shares of advertising software maker The Trade Desk (NASDAQ:TTD) jumped 5.03% in the after-market session after the company reported first-quarter results that exceeded analysts' estimates for revenue, adjusted EBITDA, free cash flow, and earnings per share (EPS). Strength seemed driven by Connected TV (CTV) and broad based by geography. However, there was a deterioration in gross margin attributed to increased hosting and personnel costs to support customers' growing usage of the company's products. Moving forward, revenue guidance for the next quarter came in ahead of Consensus, while adjusted EBITDA guidance was also slightly better than expectations. The company announced the promotion of Laura Schenkein, who has been with the company for more than a decade, to Chief Financial Officer (CFO). After the initial pop the shares cooled down to $67.84, up 4.42% from previous close.
What is the market telling us:
The Trade Desk's shares are very volatile and over the last year have had 45 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 14 days ago, when the company gained 5.67% on the news that competitor Meta reported impressive first-quarter results that surpassed analysts' daily active users (DAU), revenue, operating profit, earnings per share (EPS), and free cash flow expectations. Sales climbed in the first three months of the year, snapping a cycle of three straight quarters of revenue drops. Additionally, advertising revenue surpassed Consensus expectations, which was a positive read-through for the current state of the digital ad market. The Trade Desk, which is a programmatic platform enabling digital ad placement, was one of the potential beneficiaries.
The Trade Desk is up 51.4% since the beginning of the year, but at $67.84 per share it is still trading 10% below its 52-week high of $75.41 from August 2022. Investors who bought $1,000 worth of The Trade Desk's shares 5 years ago would now be looking at an investment worth $8,810.
Is now the time to buy The Trade Desk? Access our full analysis of the earnings results here, it's free.