Q2 2021 Trade Desk Inc Earnings Call

August 9, 2021

[music].

Good day, ladies and gentlemen, and welcome to the trade desk of second quarter of 2021 earnings Conference call.

At this time, all participants have been placed on listen only mode and the share will be opened for questions and comments. After the presentation and it's now my pleasure to turn the floor over to your host Chris Toth, Vice President Vice President of Investor Relations at the trade desk, Sir the floor is yours.

Copy of our earnings press release can be found on our website at the trade desk Dot com and the Investor Relations section.

For he began and I would like to remind you that except for historical information some of the discussion and our responses and Q&A may contain forward looking statements, which are dependent upon certain risks and uncertainties and particular, our expectations around the impact of the COVID-19 pandemic on our business and results of operations are subject to change.

Should any of these risks materialize or should our assumptions prove to be incorrect actual financial results could differ materially from our projections for those implied by these forward looking statements.

And I encourage you to refer to the risk factors referenced in our press release and included in our most recent SEC filings. In addition to reporting of our GAAP financial results. We present supplemental non-GAAP financial data a reconciliation of the GAAP to non-GAAP measures can be found and our earnings press release, we believe that providing non-GAAP measures.

<unk> combined with our GAAP results provide the more meaningful representation of the company's operational performance I will now turn the call over the founder and CEO, Jeff Green Jeff.

Thanks, Chris and thank you all for joining us I'm pleased to report that the trade desk had a very strong second quarter of this year. Our revenue was up 101% from a year ago to $280 million significantly surpassing our own expectations.

Our growth was across all channels and speaks to our position as the leading DSP for the open Internet.

More of the world's top advertisers and their agency and signed up or expanded their use of our platform, which just continues to validate our business strategy. They are increasingly embracing the opportunities of the open Internet and contrast to the limitations of walled gardens.

Our performance this quarter and year to date is led by CTV and premium video and the move from broadcast and cable to digital on demand content is happening all over the world.

For each major media market and nation has different dynamics impacting the adoption rates every major market and the world.

Is heading towards consumption of premium TV and movie content over the internet because of our products, including our new platform solo Maher, our objectivity and market shifts.

<unk> as a percentage of our business continues to grow very rapidly and is by far our fastest growing channel.

Heading into the pandemic, our CTV growth had been driven by our leading position in the U S and Australia.

And we continue to enjoy outsized growth in these markets, but now we're starting to see our CTV strategy scale more broadly around the world.

For example, our CTV revenue and Europe was up more than tenfold in the second quarter I will expand on this and a moment, but I could not be more optimistic about our CTV business.

Overall, we fired on all cylinders and the second quarter and large part because we realize the value of the investments we have made and our business over the last few years just as important these investments leave us very strongly positioned for growth moving forward and of course, we continue to invest our latest platform launched Soma is the result of more of a.

And then 2 years of engineering work and it addresses many of the opportunities in front of agencies and brands today I will touch on this and a minute too and.

In order to provide some more color on these results and our optimism for the future I'd like to focus on 3 key areas for.

First is our strength and CTV.

Even as our overall business doubled over the second quarter of last year, our CTV business significantly outpaced that growth and I'd like to spend a moment on the various factors driving our progress there.

Second I wanted to touch on how major advertisers are thinking about the value of the open Internet and contrast to the limitations of walled gardens, especially in terms of how they think about identity first party data and performance measurement.

And third I'd like to focus on the international growth like last quarter, our international growth outpaced North America, and we are seeing some trend lines that give me great optimism for the years ahead, so first CTV.

Just to provide some context on our growth and CTV through just the first half of this year the number of brand spending more than $1 million and CTV on our platform has already more than doubled year over year.

And it's not just larger advertisers that are taking advantage of CTV anymore. The number of advertisers spending over $100000 has.

And so doubled in total we have nearly 10000 and CTV advertisers on our platform up over 50% compared to last year large and medium size advertisers alike are turning to us as the objective DSP for all of digital media, but especially CTV and premium video.

That exponential growth speaks to how rapidly the TV landscape is evolving and we've spoken before about the accelerated consumer shift to digital video, including CTV.

And that shows no signs of slowing down in fact, we reached more households via CTV and the U S today than our reachable through linear television.

Today, we reached more than 87 million households, those trends are now well established.

What is perhaps a little less appreciated is what's happening on the inventory side of TV and how advertiser demand for that inventory is also fueling the shift to CTV.

And Q1 and Q2 of 2020, nearly every major advertiser had to pause or rethink their advertising campaigns due to the global pandemic. Some adjusted and weeks. Some took months some are still adjusting.

Some companies grew faster because of the pandemic and of course, some companies are still below their growth and revenue levels pre pandemic.

Many companies such as CPG and pharma companies have enjoyed significant growth and that 1 year.

And they were able to adapt their businesses pivot their message and appeal to consumers as their lives were up and it and changed.

Others, such as those and the hotel crews and airline industries have been largely treading water because of the various new restrictions, we've all been living with.

But regardless of where our company is on the growth spectrum. We are seeing the same response today those companies that enjoyed accelerated growth now need to market effectively.

Sustaining that growth those of are struggling and hit the pause button are now playing catch up aggressively marketing to make up for lost time.

Brands are looking to the CMO to find value and advertising and that can help fuel new growth the only way to find advertising efficiency and this market is with the objective data driven technology.

And within that context, CTV offer some of the most effective advertising and the history of the space.

The combination of moving picture sound and data creates effectiveness and value that are unprecedented we.

Significant premium CTV inventory at scale via our platform and partnerships and CTV growth moves to Avon instead of the <unk> models the <unk>.

Early adoption and the category and.

Deep Moffat Nathanson recently reported that the AD supported video on demand market is growing from $4.4 billion and 2022 about $18 billion as early as 2025 and.

And the every major AD supported platform, whether it's the Disney's Hulu Peacock discovery, plus Viacom CBS is Paramount and Pluto Fox is <unk>, our <unk> TV and many others all of our reporting record viewership or AD spend figures and we see the rapid growth and a bought and our CTV spend every quarter.

And.

The shift from legacy TV connected TV was especially apparent and this year's upfronts, which wrapped up and the second quarter for the first time and the history of this annual process every major broadcast for included programmatic packages and Theres a wide range of reasons for that not least because CTV represents a greater percentage of the revenue than ever.

Before.

But perhaps most important broadcasters recognize that the traditional upfront the process is a mismatch it doesn't work and the digital world, where data and personalization are required to succeed.

The legacy upfront process is really hard to run and in an environment with lots of change and lots of uncertainty.

I believe that this year will mark a turning point and how the process is managed and today's fragmented TV environment linear audience has continued to erode linear supply is shrinking and the prices are rising simply because of the scarcity.

This year broadcasters use that scarcity to their advantage and lockup commitments as the demand for growth intensified, but it is becoming increasingly difficult to predict who will watch which show for which live sports events, which means linear viewership commitments are harder to make and standby advertisers will then have of re.

We think and then seek out greater value and a data driven spot market and a data driven forward market for.

For digital then the opacity and uncertainty of the legacy upfront market.

Take budget back fill demand and new conversation next year and broadcasters are adapting by making CTV and programmatic of more significant part of the process.

That conversation will also look at how to evolve the traditional focus on high gross rating points or <unk>.

And the chase for high <unk> as many advertisers are finding that they are under reaching some percentage of their target audience and way overreaching others more than ever.

The average may be and their target range, but the actual consumer experience at the edges is highly inefficient.

On the extreme overreach side brands are actually paying to make consumers dislike them showing the same ad over and over again to the same person on.

On the Underreach type showing the AD so rarely that it isn't notice or even the remembered.

As a result, more advertisers are demanding that the data driven the agility of CTV and become a larger component of the overall TV AD spend that includes more measurement precision.

<unk> has become less important and the digital environment. When you can have a direct interaction with the viewer and more precise measurement.

For example, we recently worked with for to help build the CTV campaign that directly targeted households that were in market for a new car that's very different from the traditional mass market linear TV campaign, where theres a great deal of waste.

It's the precision marketing and using custom audience tools that identify when the consumer is coming off of lease or buying the car for the very first time with CTV Board can then reach that audience with ads that are relevant to the time and place that the ads are being consumed.

This level of marketing precision is simply not possible on linear of broadcast television.

Just as important and this equation is the large and growing the CTV footprint. When you combine premium quality data and the inventory scale CTV becomes a very compelling proposition for advertisers and their agencies.

And that same work with Ford, we found that 48% of the households reached where incremental to anything the addressable through linear that means if you are limiting yourself the linear you're missing out on almost half of your potential target market. It was the same story with large pharma and of medical device company.

When compared to parallel linear TV ad campaigns.

CTV delivered of 51% incremental reach and the Forex improvement when analyzing cost per household reach these are not isolated cases, we are seeing many brand shipped TV budgets to the data driven precision of CTV and I expect this trend to accelerate through the next year's Upfronts.

1 major global food company is working with us the shift almost a quarter of its television budget to CTV by next year. So that they can better manage targeting and frequency of global Entertainment brand is doubling down on CTV with us because it allows them to measure of the full customer journey from exposure to purchased and a major telco as <unk>.

Joining measurable sales lift by shifting the significant portion of its television budget to decision the CTV on our platform.

The evolution of TV advertising is of great barometer for the advertising the industry overall and more and more brands want to be able to apply data to optimize their CTV and premium video advertising.

Want to be able to measure campaign performance across all channels. They are focused on the quality of the TV and supply chain and they want to ensure that their partners, including the trade desk are delivering more value than they are extracting we prove this and the U S and we're seeing markets around the world evolve Similarly, and I still believe we are merely at the vet.

The beginning of the CTV innovation cycle.

I can't put it any better than John Halverson, Vice President of consumer experience at the global food Giant monitor lease speaking last week without age he said and I quote and then positively surprised by the advancements that the trade desk and other partners and CTV have made versus digital platforms their focus on the advertisers need.

And for advanced targeting inventory management and guarantees are setting them apart from Youtube and the rest of the marketplace.

1 last point on CTV.

As the TV ecosystem gets more crowded and competitive our strategic focus on objectivity is more valuable than ever.

Some platforms that claim to be open and then primarily pushed their own content will lose favor with other content owners as the market progresses, we have great partnerships with content owners.

Because we bring them objective demand from our customers and we do not compete with them, we deliberately don't own or favor content.

Theres also brings me and my second point because CTV is also highly indicative of how advertisers are increasingly embracing the open internet both as an alternative to walled gardens and as a part of their digital media plans.

And I noticed this and various dimensions.

If you noticed some of the recent deals that we've signed and talked about publicly some of the world's largest advertisers have signed new contracts with us in recent weeks and months, increasing and extending their commitment to our platform.

We are just scratching the surface and demand for our platform is growing across industries around the world and as these brands work with us they are making the commitment to the open internet.

This may be summed up by something that of room Kumar Chief data officer of IPG said at and Adweek event with me a couple of weeks ago. He talked about how brands had relationships with consumers long before the major walled garden platforms came alone.

And how those brands are working harder than ever to preserve those direct relationships, even as platforms tried to dis intermediate them.

He believes there is so much collaborative innovation going on to support the open Internet precisely for this reason.

And he is also getting that there is a point that I think is often misunderstood about the motivations of brand advertisers most brands have decades long relationships with their consumers. These relationships have been nurtured and curated carefully over a wide range of interactions, including long term loyalty programs and many cases consumers.

On tier preference information and return for some kind of value.

Given the effort that they put into this over many years brands have no interest and jeopardizing. The trust. They have established with their customers brands want to provide of relevant and enjoyable advertising experienced that respect the relationship with customers and that experience is best manage and delivered across the open internet.

For the advertiser has more insight and flexibility.

In addition to managing their existing customer relationships for the long term brands also want to find the next generation of customers who share some of the same characteristics as their most loyal loans and that in a nutshell is why their first party data is so important.

<unk> know a lot of out their most loyal customers and they want to put some of that data to work to find the others like them or AD impressions that their prospects are most likely to interact with.

But unleashing the potential of that first party data requires a few things first it must respect the privacy of the customer and preserve the trusted relationship between the advertiser and the consumer second it has to be secure and not just from a data protection perspective, but also in terms of brands retaining control of their data.

And it must be easy you have to have simple integrations and on ramps and then lastly, as they put their first party data to work brands have to get some metric performance data back they have to know whether it's working and how their prospects are reacting each.

Each of these requirements is challenging and a walled garden, none more so than the asymmetrical data relationship any data of brand puts into a walled garden is often usable by that platform to as media owners. They will put that data to work to their own benefit as well as the advertisers.

And the advertiser won't get the same grain of data back on their campaign performance.

They'll get a report card and saying that the campaign was successful which is a bit like rate and your own homework.

But the results they get won't be the same kind of information that the brand can use to continue to refine their campaigns and thats why quarter after quarter brands are gravitating to our platform and to the open Internet walled gardens may provide easy access to scale.

You can reach a lot of people very quickly, but they don't provide the precision and decisioning that are becoming so vital to today's marketer and they don't provide much clarity on what content. The brand is showing up against what content. They are funding and supporting and how to refine their campaigns into the future.

On July 7th we launched a new version of our platform <unk>. It is the biggest release and the history of the company and the reception has been fantastic again and beat our own hopes and expectations and has great traction at.

And at the current pace of adoption by the beginning of next year. We expect the majority of the impressions on our platform to be bought using the <unk>. A few of you joined us at our launch event in New York and some of you joined the many thousands who watched online.

I believe the remarkable interest and these events speaks to how rapidly our industry has evolved over the last 18 months and how solar Maher is helping solve for many of the issues and opportunities in front of marketers today per.

Perhaps most important with solar <unk>. We believe we have created the industry's most advanced measurement marketplace not only can advertisers measure against traditional campaign performance metrics, but they can now integrate off site measurement performance and a way that is only possible on the open internet that means they can finally reached that Holy Grail of connecting.

And their AD spend to actual business goals, whether it's in store sales or foot traffic into a dealership or demand for tickets. So Omar has an ever growing roster of third party measurement data sources, including retailers, who are eager to leverage the value of their shopper data so that they can attract more advertise.

The demand.

But you don't get to build that kind of measurement marketplace without simple and secure data on boarding and without the ability of brands and partners to protect their data to make sure. It's only being used for the intended purposes and you don't get to real performance measurement without the ability to enter more precise campaign goals.

And solar Marr provides for all of that and much more.

We launched the Ole Martin of the time when <unk>..2 is also reaching critical scale and the market. This is important because <unk> allows advertisers and partners to onboard their data in a manner that provides more consumer control and protect their data and.

In recent months 3 of the major advertising holding companies approval.

Approval of this omnicom and IPG.

Have announced their support for <unk>..2 in addition, many of the major independent agencies such as Horizon are also now leveraging <unk>.

As well as the world's major agencies many of the world's leading brands are also starting to use it and we're also working with many of the world's leading tech platforms as they look at use cases for <unk> to.

The publishing titles also embracing the <unk> from a <unk> perspective major CTV industry consortiums, which are owned by the major networks, including block graph on the open AP are making their identifiers interoperable with <unk> II.

In addition to networks, such as AMC and <unk> TV, who are integrating directly and then traditional publishing groups, such as maven, who own sports illustrated and the street Dot Com and Newsweek have also embraced <unk>.

A couple of weeks ago, Snowflake announced that it would deploy UAV to this.

And this 1 is a little different but very indicative of the scale of that <unk> is achieving snowflake provides a cloud based data service that sits on the company's cloud infrastructure and enables data to be managed across clouds.

Snowflake axes of hub for many companies customer data their first party data and that data can now be activated by using the <unk> 2 identifiers.

What's really interesting about all of this momentum around <unk> is that it has accelerated since Google announced that it would delay the deprecation of cookies by at least 2 years you may remember that when Google first announced their intentions I was somewhat skeptical and that's because the fundamental value exchange of the internet free content and exchange for relevant advertising.

It's not going to change.

And what will change is how we give consumers more information about that value of exchange and how we provide better tools to pay off that exchange and a way that improves the experience for advertisers publishers and consumers.

And gives consumers more control.

And that's what the industry is creating <unk> as 1 leading the example, but more important is the way that the industry is mobilizing to create a better approach to identity..1 that reflects the fast moving cross channel nature of today's digital advertising in the landscape.

I cannot put this urgency any better than Joy Robbins, Chief revenue officer of the Washington Post organization, who spoke at our recent solar Mar event, and New York City the.

Post as you May know through <unk> platform also powers the AD tech stack for more than a 100 other publications across the U S, including many daily newspapers.

So Joyce perspective is very insightful to quote her directly she said we need to make sure. We're controlling our destiny. If we do nothing we give our AD revenue stream to the walled gardens.

And that sentiment across the industry and around the world Thats driving so much collaborative innovation and support of the open Internet the.

The last area that I want to touch on is our international growth once again, our international markets grew faster than the U S and the second quarter and this is particularly encouraging.

As this industry speeds towards a trillion Tam about 2 thirds of that will be outside the United States and we are investing to capitalize on that international growth and serve a global advertiser customer base.

Let me give just a couple of examples that put our investments and our growth into perspective.

We started planting the seeds of connected TV and in Europe, a few years ago, and we are now seeing the green shoots CTV and Europe is still relatively early and its lifecycle compared to the United States, but with the exponential revenue growth I mentioned earlier it won't stay small for very long.

In Europe, there is of significant consumer shift to streaming platforms, even for live sports European broadcasters of develop their own streaming platforms, which is driving the inventory scale of that is so important to advertisers. For example, we're working with Sky the largest media company in Europe as they make their own content available.

Over the Internet and fact, our partnership has significantly expanded this year Sky has a huge presence and the U K, but they also enjoy strong market share across Europe like so many broadcasters today Sky is also investing heavily and original content to attract new viewers. They are of dominant force and the European television.

Landscape and hold significant cloud with brands and agencies there.

Along with our existing partnership with channel for as well as premium content providers, and France, Germany, Spain, and Italy, our relationship with Sky gives us access to the majority of CTV AD impressions across the continent.

I want to again underline the significance of our objectives and our inventory partnerships as we expand around the world.

Because we don't own content, we are able to cleanly and clearly partner with the biggest content and broadcast companies around the world.

Let me also spend a moment on APAC and 1 new market and particular, India. We've only recently opened an office and India earlier this year, but we have already made some incredible progress it's worth reiterating how large this potential market is according to the research by Global Web Index Indians are spending an average.

<unk> of 8 hours a day on line most of it on the open Internet led by OTT content. These.

These dynamics are fueling the rapid expansion of the digital advertising market and India expected to exceed $7 billion by 2024 up more than tenfold since 2015.

The same market dynamics that informed our premium video and CTV first approach to India.

And this was somewhat atypical for us and nearly every other market. We have led with display so as we opened and India. The first thing. We did was strike important of inventory partnerships and CTV. These included of deal with Samsung ads, which gives us access to inventory on Samsung Smart TV devices, reaching $50 million.

Really covenant viewers, we also struck a partnership with Xiaomi.

The world's largest smartphone manufacturer of bigger than even Apple Xiaomi serves more than 10 billion AD impressions per day 2 of those devices all of which we have access to and addition to device manufacturers. We've also established relationships with the leading content providers, such as Disney plus Hot Star the leading the OTT streaming service and India.

And these partnerships are already yielding results brands such as GSK are working with us in India to drive more data driven precision and their AD campaigns, particularly with OTT content and seen significant performance improvements.

And our initial progress and India is starting from a small base, but it has been very rapid and over time, we will build on these relationships and scale our business and methodically just as we are doing across Asia and of course, the rest of the world. All of this progress gives us a great deal of optimism for the quarters and years ahead and this has.

And just been a snapshot.

And every market, where we operate North America, EMEA and Asia, and Australia, we are seeing significant growth. That's because we continue to innovate more quickly and efficiently than others and our industry, whether it's the future of television new approaches to identity.

Trading platforms that bring advertisers closer to the business results of their work, we are able to invest and the success of our advertising clients. We're not maximizing profit for the short term we have discipline around profitability. So that we can invest for the future of our business and theirs.

And this quarter more than ever we can see how our prior investments can yield impressive results and even as we make these investments we are still generating EBITDA at rates much higher than nearly all of our high growth software peers.

Yeah.

And the second half of the year. We expect this approach to show more of Green shoots as we expand our work and retail.

Walmart will launch of new DSP, which integrates Walmart shopper data and is built on our platform. This is a leading the example of how we are working with our advertising customers to help unlock the value of retail data estimated at $100 billion to $200 billion market.

Each retailer will approach this differently, but we are working with many of them both here and around the world, but 1 position. They do all share. They are all convinced that the value of their data is best realized on the open internet not within the confines of the walled gardens.

Our progress is also increasingly rooted and our ability to drive industry consensus around important issues that build overall trust and our industry.

Our strategy will raise all boats you are seeing that most clearly in the work we are doing around identity, but it's also present and how we approach the supply chain fraud management and CTV scale and many other areas. We remain convinced that the open Internet is the best platform for our customers to achieve their marketing goals.

And there is a large and growing coalition of advertisers publishers and partners, who not only share of that perspective, but who are actively working with us to realize it.

All of that contributed to a great second quarter, we have very strong momentum and with these investments and the hard work of the trade desk employees around the world I expect the wins to stay at our backs and for that reason as pleasing is the numbers are for the quarter I am even more excited about the future growth prospects now I'd like to turn the call over to Blake.

Before moving to Q&A Blake.

Thank you, Jeff and good afternoon, everyone.

As you have seen and our results Q2 was a very strong quarter revenue of $280 million was up 101% from a year ago exclude.

Excluding political spend related to the U S elections last year, which represented the low single digit percentage share of our business in Q2 of 2020 revenue increased around 103% year over year.

During the quarter, we benefited from continued improvement and the digital advertising environment from both the agencies and brands growth was broad based across all regions channels and verticals we.

And we saw continued strength from CTV, which again led our growth from the channel perspective, our year over year revenue growth rates benefited from lapping slower growth related to the pandemic during the second quarter of 2020.

With the continued strong topline performance from Q2, we generated $118 million and adjusted EBITDA were about 42% of revenue.

EBITDA continues to benefit from temporarily lower than expected operating expenses, partly driven by the virtual environment.

This includes items, such as travel and life company of events that up and we've just started to slowly resume.

I am proud of our sustained efforts to consistently generate meaningfully positive EBITDA, while continuing to invest and the critical areas of our business that can drive our future growth.

From a channel perspective.

Low audio and even display all of more than doubled in Q2 from a year ago.

Exiting Q2 mobile currently our largest channel represented the low 40 percentage share of our business.

Video, which includes CTV represented the high 30 percentage share of our business.

Video as a percentage of our mix continued to grow very rapidly the.

The increase and video was driven by CTV, which by a wide margin again led our growth during the quarter.

And finally display and audio represented about 15% and 5% of our business respectively.

Geographically North America represented 87% of spend and international represented 13% as the internationals faster growth year over year resulted in a rising share of spend.

And APAC, Shanghai, and Hong Kong spend growth were both very strong.

In terms of our overall growth Europe led the way growing well over 100% year over year and Q2.

All of our offices and Europe, London, Hamburg, Paris, and Madrid showed particularly strong growth.

And as Jeff highlighted the <unk>.

TV drove our EMEA performance growing over 10 fold year over year.

The <unk> more than doubled its relative share of spend and Europe.

While still small relative to the share of CTV spend produced in North America. We are optimistic about the trends we are seeing during the first half of 2021.

In terms of the verticals that represent at least 1% of our spend the majority of them at least doubled during the quarter.

Those verticals most impacted by Covid showed the most improvement overall, including travel shopping and Automotives.

Home and garden personal finance and food and drink were also very strong.

We believe that there is still a lot of recovery ahead of us some of these segments and we remain cautiously optimistic as we continue to see signs of improvement.

Operating expenses for $218 million in Q2 up 41% year over year.

The growth and operating expenses and the quarter was primarily driven by stock based compensation.

Operating expenses, excluding stock based compensation grew 32% year over year.

As we discussed last quarter, the majority of the growth and stock based compensation expense and the first half of the year was related to the company's employee stock purchase plan.

Our growth and operating expenses, excluding stock based compensation on a year over year basis is influenced not only by lower expense growth from the prior year associated with impacts related to Covid, but also by continued investments and our team, particularly in areas like sales and marketing technology and development and the team supporting that progress as we can.

And you just scale for longer term growth.

Income tax was $13.9 million for the quarter representing of tax rate of about 23 per cent.

Adjusted net income for the quarter was $88 million for 18 per fully diluted share.

Net cash provided by operating activities was $10.4 million and Q2.

This was driven by a change in working capital driven by strong sequential growth from Q1 for Q2.

I would like to remind you that the timing of cash collections and payments can significantly impact quarterly results.

So it's the exiting in Q2 were 82 days down 14 days from a year ago.

<unk> were 67 days down 8 days from a year ago the <unk>.

Resulting 15 day GAAP between Dsos and <unk> is the smallest and the company's history.

We exited Q2 was the strong cash and liquidity position, our balance sheet at $705 million of cash cash equivalents and short term investments at the end of the quarter, we have no debt on the balance sheet and.

June we refinanced the new revolving credit facility and currently have $443 million available under the facility.

In addition.

We also executed a 10 for 1 stock split.

Turning to our outlook for the third quarter, we estimate Q2 revenue to be at least $282 million, which would represent growth of 35% on a year over year basis, excluding the U S political election spend which represented a mid single digits per cent of the spend that we benefited from in Q3.2020.

Our estimated growth rate in Q3 of this year would be about 38% on the year over year basis, we estimate adjusted EBITDA to be approximately $100 million from Q3.

In closing, we're extremely pleased with our strong performance and the quarter, we continued to execute and build on our solid foundation and I could not be more excited about building on our progress and the second half of the year.

That concludes our prepared remarks, and with that operator, let's open up the call for questions.

Thank you ladies and gentlemen, the floor is now open for questions do you have any questions or comments. Please press star 1 on your phone at this time, we asked a lot of posing your question you. Please pickup your handset is listening on speaker phone to provide the optimum sand quality.

And again please press the star 1 if you have any questions and the <unk>.

First question is coming from Tim Nolan from Macquarie, Tim Your line of lives.

Thanks, very much and Jeff I'd like to talk about CTV a bit more if I could.

You mentioned your growth and Q2, I think you said significantly outpaced your overall growth I'm wondering if you could comment about how that difference looks and the second half and even into next year CTV versus overall trade desk growth and also Q2, you talked about the upfront Q2 was the quarter that the upfront market occurred.

Intrigued by your comments on and eventual decline and the role that the upfront will play for TV or at least certainly for linear television and my question is what did the trade desk do with advertisers and network groups and the upfront or should we think really of your roll more of its helping expand the scatter market, reaching all of those incremental households that are otherwise slipping.

[noise] away from linear and I guess, the scatter market, having been so strong going into the upfront and I guess, that's what most of supported your growth. So just want to understand how that continues from here. Thanks.

Thanks, Tim.

So so first on the on the macro related to CTV, so on a year, where nearly everything doubled year over year and this quarter over quarter basis.

<unk> once again led the way with massive growth.

And in the quarter, we just reported we of course expect CTV to continue to drive our growth over the next couple of years and beyond as as the leader as it relates to channel is in terms of what what's happening across everything and Digital's CTV is the lead for the open Internet.

No.

I do believe upfronts for driving more of the CTV as well I'll talk about that and as I answer. Your second question and just the second but 1 thing I want to highlight about CTV is that unlike any other channel. This is being driven by users.

And so when programmatic first got started and it was because of a bunch of <unk> companies like ourselves and wanted to create something more efficient.

For the Internet, that's very different and the trend that's happening and CTV, which as users are moving from from their cable subscriptions to the internet because it's better. It's on demand content is just a better way to consume that can watch what they want when they want.

And that's something that can't be stopped the secular tailwind that is going to benefit us.

And as far as I can see into the future.

And and then lastly on CTV trends before I talk about the upfront.

Yes, there is a lot of subscription fatigue, especially and as spot.

You know what.

And what has happened over the last year or 2 I think is fairly indicative of what most of us of experiences individuals' wishes, we consumed most of our CTV content from Netflix or Amazon on 3 or 4 years ago and now today, we have lost more choices lots more channels that we're going to and we're asking questions like that on this channel.

Or is it on that channel a lot more often than we did before when we're logging into our.

Of our our CTV.

And most of those incremental channels that we're adding are a bob so theres more and more inventory coming on line for 1 of the things that we're constantly saying the advertisers and whatever you thought you knew about scale and reach.

Of CTV.

6 months ago, well, it's changed dramatically and Thats underlined by the fact that we said 79 million households are reached on CTV, which is more than linear inside of.

Of.

Of linear or cable TV, so that's the <unk>.

<unk> has an edge that it didn't have a year ago. So I could go on and on but I want to answer your question about Upfronts.

So this is from was really interesting and the CPM and for the cost per unit went up and.

Because of scarcity. So despite the fact that youre, reaching fewer people.

The price went up and so.

We think that puts a lot of pressure on the Upfronts and.

And of setting us up for.

And some amount of under delivery.

Most of the forecast that were given to advertisers.

I'd say advertisers don't believe.

And they go into a skeptical and are saying.

We need to be prepared to be flexible and in fact, 1 of the large advertisers using our platform said, we are looking to go to an annual calendar and looking to take as much commitment out of the commitment as possible essentially maximizing flexibility I think that sort of summarizes what's happened and so as a result.

You are seeing people move into the scatter and spot market and we benefit tremendously from that so right now you can.

Theres the upfront market, which is.

And.

Historically Ben.

And I get together or a party, which is a relatively inefficient forward market and then there is the spot market and.

That is more and more move to be.

Our programmatic driven market.

I think there and some insights to be gleaned from the ratings that were reported on the Olympics, which are of course down 45% over past the Olympics.

And I don't think Thats because of NBC did anything wrong.

Just a question of discovery and just the nuance of the pandemic and whatnot, but that does make it. So people are asking the question.

What what can I expect out of shows and this environment and people are looking for more and more flexibility and.

And that.

And that maybe just brings me and my last point, which is maybe at the very heart of your question, which is what role we play and the Upfronts going forward 1 of the biggest opportunities that our company has and its future is to play a central role and a more sophisticated forward market that replaces the upfronts, whereas you.

Can put data to work and it's not.

And event or a party, where everyone gets together, but it is and always on forward market that is data driven and built on top of the spot market, where people can make commitments and forecasting is better than has ever been done on TV because of the data is available and that's something that we're working very closely with some.

Of the biggest names in TV and some of the biggest brands and the world and some of the biggest agencies on the world to make certain that we upgrade the upfronts, but that will make it. So the programmatic is no longer.

Primarily and the spot market, but it's also and the forward months.

Thanks, Tim.

Thank you.

And the next question is coming from the <unk>.

And he Cossio from Cannonball research your line of lives.

Thank you good morning, So Jeff you had highlighted growth in connected TV and outside of the U S. Can you talk a little more about the growth you're seeing in Europe, where I think you mentioned the over.

Over the 10 fold.

Rates of increases and would you characterize this growth is an inflection point there think of just the low base effect and as a follow up maybe you can talk about APAC a little more.

And especially about the premium video and CTV growth that you highlighted maybe you can explain to us and a little more detail of the difference between premium video, which I assume is mainly of mobile and connected to the over there. Thank you very much.

Absolutely. Thank you so.

Maybe 1 of the most bullish numbers that we shared in this report is that the CTV growth and EMEA grew 11 of X year over year.

And that numbers really astounding and really surpassed our own expectations.

I think 1 way to characterize what's happened for us and CTV is to say of the true.

Desk was leading and Australia, and the United States going into the pandemic.

And over the last 18 months or so everything and the World has changed consumption has changed we had 3.4 of 5 years' worth of change in.

Vision happen in that period of time.

And so when I say, it's 1 of the most bullish and things that we've reported in this report are and this quarterly reported it's because I do believe.

Those represent green shoots I do believe it's the start of a change and.

Where we were leading just and in the U S and Australia, where now the scene.

Amazing results in Germany, and the UK and in Scandinavia, and France and Spain.

And we continue to maintain that all of it will eventually be traded programmatically or bought programmatically because that is the data driven way that is more effective and it's the only way to preserve the amazing state of television around the World, which is you get premium content, you see fewer and more relevant ads.

And that creates a better user experience, which can fund more content that virtuous cycle can only be perpetuated with a data driven marketplace.

And because that's just the math.

The way that it works.

It's impossible for that not to take on everywhere around the world and we.

We're seeing that play out now.

And as it relates to the APAC APAC is a little bit different in that.

<unk>.

CTV.

And is not always the place where premium content starts that's much more comment on the U S, but because of its such a mobile region, where mobile phones are often the place where our content even premium content is consumed.

And to think of it as premium video and CTV kind of and 1 bundle, especially on that market, but I think it's great for look at our K.

The study there's so many markets that we could report on but.

Because we just started and India. This year seen us go into a market as big as ripe.

As India being the most populated country and the World and then see us create partnerships and really a matter of months with Samsung ads the xiaomi.

Of which has a huge presence in India.

And then Disney plus hop star to have those 3 content partnerships for premium content and to show ads on top of that.

The most populated market and the world after only being there for months is indicative of just the momentum as well as.

How we continue to grab land.

Around the world.

So the.

Really optimistic about what I'm seeing around the world and sort of been.

And that our playbook that we've tested and proven and the U S and Australia is applicable to many other regions and the world.

Thanks for selling.

Yes.

Thank you and the next question is coming from Sean <unk>.

From Sig Your line is less.

Hey, guys. Congrats on the quarter I had a couple of questions.

The first 1 Jeff can you talk a little bit more about CTV and what youre seeing in Europe. It seems like it could be inflicting and may.

And maybe a few years behind the U S would love your perspective on that and then just a quick follow up for for Blake.

I know youre not guiding beyond the third quarter, but when we look at the <unk> is there any color that you could offer.

And in terms of how to think about seasonality for the revenue. Thank you.

Yes.

Al.

You know I'll, just reiterate what I just said about.

CTV and EMEA, we had 11 X growth year over year, which was 1 of the most bullish metrics that we've shared in this report.

And we still feel like we are in early stages, but the green shoots that we're seeing.

Our indicative of more to come and our partnerships and content around the world, whether that's in London, or Germany, or Spain, or Italy or France.

Are all indicative of great things to come and Blake on the second part for sure and thanks for the question I think from.

I'll just talk a little bit of our Q3, and then I'll and then I'll.

And I tried to address what I can on your question for the rest of the year and Q4.

And with Q3, there is there's so many positive trends and momentum in the Q3 and you've heard Jeff kind of highlight some of those already CTV and leading the way and the fundamentals of the business are really strong the thing on Q3 as exclude.

Excluding political which which I would encourage people to think about it and part of how to evaluate the underlying strength of the business on the year over year basis, we're showing significant acceleration year on year and Q3, I think the we're talking about excluding election, and Q3 of around 38% year on year, and we were and the mid twenties.

For the Q3 and the prior year, so really excited about that.

As you think about and then moving on to the Q4.

Does have more difficult comps than we spoke of and we've seen in Q3, Youll recall last year and we've talked about this a couple of times political for US and Q4 of last year was the biggest quarter that we had as a company was of high single digit percentage of our business, so really meaningful on a year over year basis.

And so if you recall last year Q4 was driven not just by that high single digit political spend but we also had a rebound and digital advertising as well, but I would just say regardless of the comps. There's so much momentum for us and the fundamentals of this business.

So strong and I'm really optimistic about it.

Thanks, Sean.

Thank you and the next question is coming from Youssef Squali from <unk> Securities you Seth your line of lives.

Great. Thank you very much and good morning, guys. Congrats on the solid performance again 2 questions. Please Jeff maybe going back to sell them on I know, it's very early I think when we haven't had.

Had it out for maybe about a month now, but just wondering if.

You can share any early feedback from clients and.

Our improvement and campaign performance, so far relative to next way of at least we didn't do the customers that have used it for.

A few weeks now.

And any impact.

So far on overall spend again and I suspect not but just wanted to ask and then Blake.

Blake, maybe the outperformance on the buy and the bottom line was particularly impressive can you maybe just walk us through the biggest contributors to bottom line beat and whats the non repeatable as we go into second half of this year and the early next year. Thank you.

Yeah. So.

And I'm really glad you've asked this question and then and I don't mind.

Just being really open here, which is whenever you release of new.

And so we were really excited to ship <unk>, which is the biggest release and the history of the company, we had more engineering hours and and people on this release than anything we've ever shipped ever.

And to do most of that work during the pandemic, where it's a little bit harder to do all of those things like listen.

I was I was anxious to see how it would be received of course optimistic and were convinced we did the right thing, but you always want to see it and the numbers and that's exactly what we've seen we've seen amazing.

The amazing traction where nearly a month and.

And.

And the response has been fantastic.

It does represent a behavior change, though for the user so they have to re learn something.

But those that have taken the time to do it.

Have all given us fantastic feedback that it is the better experience, which is exactly what we expected and so because it is a better experience. That's why we're so optimistic that the.

The majority of our ads will be bought on this new platform by the beginning of next year.

And and that represents more efficiency for the user.

Especially excited about this going into Q4, because often what happens is Q4 and all of you know.

The biggest quarter of the year for us.

But it's also where you prove yourself.

Because met much.

Of the advertising.

<unk> is sort of determined by of calendar cycle. We're.

In Q4, you spend the most of the performed the most and.

And then in Q1 and you make the decision about where youre going to spend for the next year.

And so if we have a really strong Q4, it sets up our Q1.

And really nicely for next year, and so I'm optimistic.

The performance will set us up for next year.

So I couldnt be happier with the way so Lamar has gone so far it's very early as you as you highlighted and it represents a behavioral change.

But I'm convinced that that's going to happen over time and really excited about what that means for efficacy on our platform.

And then I'll just take the second part of that question on the on the beat on the bottom line for EBITDA and so.

More than half of the beat in the quarter on EBITDA was just really driven by the top line outperformance and the business.

As many of you know the we don't have a lot of variable costs associated with a higher top line and so when we see it come in and flows almost directly often down to EBITDA you see that we did have some expense benefit as well some of thats timing.

Broad based and there wasn't anything like that I would major call out a little bit lower platform ops expense, a little bit of timing on some fixed marketing expense, we had better bad debt the unexpected a little bit because of continued health of the receivables, but but nothing major though that I would call out.

Great.

Thank you and the next question is coming from Laura Martin from Needham and Laura Your line of lives.

Hey, there so Jeff you were talking about how the Cte open Internet consortium with integrating into 2 point of view and then you said <unk> was integrating directly in the 2 point out I was wondering how that affects your ability to target whether people are going indirect bike and affiliating versus like the about directly integrated into 2.

And then my second 1 is on the Walmart deal and we're still on track to be fully integrated with Walmart for Q and as your or do.

Do you get paid on that because of you get the 15% of platform is that how you make money on the Walmart deal when CPG spend money on your platform. Thank you.

You bet I appreciate the question so.

<unk>.

And as many May know.

1 of the things that is really important about preserving the the amazing state of CTV is to provide relevant ads.

On the shows that you are watching when it's when it's AD funded.

And.

Because of the nature of devices and CTV it requires a bit more of a collaboration between the content owners as well as those providing that.

And so what we've needed.

And many people talk about this on the context of cookies and browsing.

But that's not really what <unk> was designed for exclusively it was designed to create a better currency for the entire internet, especially for connected TV.

And so that a content owner.

And have the same understanding of the user pass that too.

<unk>.

And those of us representing the advertisers. So that then we have of common understanding and can provide relevant advertising as well as make certain that we don't show the same at 5 times and the same commercial break make certain that we don't show them and add that the relevant to them and that makes them more effective.

All of the all of the TV companies.

How different ways of integrating with unified I'd to point out.

Some of them have gone to coalitions like block crop or open AP and said Hey, you're a consortium.

And you are of technology consortium. So why don't you do the work for all of Us.

And there are others, who have said well working and a consortium can take too long and.

We want to make certain that it integrates directly and we have data that we want to put to work directly.

And so from our standpoint, we're indifferent whether a consortium does the work whether the content owners themselves through the work many of them put them on parallel paths, which is a commentary on how critically and strategically important it is for them and for us to get the Ids setup.

Setup, so that we can provide those relevant ads.

But.

For both moved to do it directly to me as <unk>.

Exciting.

Because they could access and in other ways, but the.

And they want to make certain that they do it as quickly as possible. We expect that trend to continue just because of the future.

Of television is dependent on it.

And then the second just the Walmart and Walmart.

So yes, Walmart is on track, we continue to have really fantastic discussions with them.

And as it relates to how it will be paid we're paid the same way that we would.

And with any other partnership.

We have.

Our standard platform.

Yes.

And then they put.

And their data exclusively to work and this version of their DSP, which is of course built on top of our platform.

Cool thanks, Laura so very much great numbers. Thank you.

Thank you and the next question is coming from Matt Swanson from RBC capital markets Your line of sight.

Yes. Thank you so much for taking the question.

I've got 2 as well, they're both going on kind of be follow ups to Laura for a second ago.

I mean, great traction on your idea of 2 point I'll add and you used the term critical scale could you just help us with the low more color on what you think of it as far as what is critical scale in terms of cookies and went away tomorrow, what you pick up the accuracy efficacy of the replacement and if theres any way to think about.

And maintenance of percentages of how far you away from kind of the ideal state.

And that would be really helpful.

The other on the Walmart example is just.

Are there ways that you can use this as kind of of POC proof of concept for other retailers and I'm sure with.

Amazon doing what they are with their DSP and it's becoming.

Increasing area of focus for other retailers, who maybe don't have the of turtle.

Tech platform that Amazon does and.

It seems like that's a great place for the trade desk to come in.

Okay.

Yeah. So.

And.

The term critical scale.

Hugh you pulled out I think of very important phrase that we used in our prepared remarks and.

On the earnings report.

Which I do think is indicative of the moment.

That we're in right now as it relates to the way that the internet is going to work.

So and then you asked about if cookies were to go away today, so to be clear Google announced that they don't expect cookies to go away before 2023 and they said.

And even then we'll just we'll see when we get there.

And so I've been maintaining from the very beginning that I'm not certain that it's in the best strategic interest for Google to get rid of cookies at all.

But that's not what this was about the Cree.

Creating UAV was not about replacing cookies and was about creating a better internet.

And that doesn't just apply to the browsing the internet, which as everyone knows.

A small minority of what the Internet is of.

Of course, your mobile devices and.

And the related apps as well as things like connected TV.

Which is some of the most effective advertising maybe the most effective advertising.

Ever been done.

And at scale, which is all dependent on different ideas, but when you get to a place where the currency is so widely accepted it becomes critical to doing business. So think of it like visa or Mastercard of currency that if you do not accept that currency and your local store you are going to <unk>.

And to get business.

And you might be able to say Oh, I won't accept American express or it might not accept the discovery, but but there are some currencies like either cash for visa or Mastercard that you have to accept and order to just keep the doors open.

And <unk>.

That's where I believe you ideas that that inflection point.

It's become so interoperable with other currencies.

And that making certain that you are interoperable, if there's something new or if you're a television company you will be operating at a disadvantage. If you are not interoperable.

With <unk>.

So when I say, it's of critical scale, that's what I mean that inflection point, where you can't afford not to be of part of it.

As it relates to the.

To retail and proof of concept, it's always great to partner first with the biggest retailer and the world.

And so and naturally that creates a bit of a case study and it lays down the gauntlet for everybody else.

That of course has been done.

And.

And would it would be strategically.

Suboptimal.

To say it nicely for us.

And to not be working on.

Bringing other retailers and and their data.

And to the platform.

Especially because of what I talked about on the prepared remarks, where.

We are.

We're trying to help the open internet.

And the Amazing contrast of wall startup.

And that means, especially and measurement.

And the way the results are created.

And measure.

And by making everything comparable to each other.

Make it on the open Internet is a much better place to spend the lion's share of your dollars than and walled gardens, where everything is opaque and you're totally dependent on them to tell you how you did.

So in that environment, and it becomes really important especially for companies that sell their products and stores.

And to have insights about how that performed and then of course, they want to see how it performed and Walmart.

But there's a bunch of other retailers are bunch of other stores that they also want to see where we're at transacted and Theres of course of bunch of other data about transactions that would help them discover what is actually working and that's what's really critical for the open Internet is that set of moment, where we can actually show, what's working and what.

It's not which is critical given it's so easy.

And to make ads on the Internet.

So which ones are working is the question that has to be answered.

Better than ever before because of what is riding on which is economic growth and recovery.

Thanks, Matt.

Thank you and the next question is coming from Brian Fitzgerald from Wells Fargo O'brien Your line of Flash.

Thanks, guys I wanted to go back to the.

So Lamar and you talked about some new capabilities specifically around on boarding.

And the marketplace just wondering if you could discuss the the revenue opportunities and the and the mechanics around those as well if the measurement of marketplace.

Is that going to be a take rate model and we will onboarding of of revenue component.

And if so is that going to be more volume than spend oriented just just.

And on the mechanics of it.

Yes, so both of those are making it easier to onboard your first party data as well as making it easier to measure of success.

Our non about making more money for us directly.

Okay.

Really like the Amazon metaphor of spinning the flywheel faster and there are some activities that you do on your business.

Make it so that your core.

Activity.

The goes better and that the value of exchange and even more obvious.

And so that your.

Your customers.

Spend more do more with you.

In both cases on boarding first party data and measurement marketplace. My ideal is that they are both free.

So there is not and incremental take rate for those of the exact features.

But if you get more spend on the platform you can make more money.

And if you produce better results and you get more spend and you make more money and.

And so I'm, absolutely after making more on this but not on those features directly by giving them away and we make efficacy on the platform better and we make the open internet better and we get more of that spend.

And that's that's the ideal there will be cases, and the measurement of marketplace, where people do pay and.

And that's good.

It's kind of like paid apps on your iPhone or of your Android.

Versus free ops, the both are important and.

And having some amount of paid apps, so that the really high quality.

And.

Yeah.

Create the most competitive marketplace possible.

<unk> are are.

Our important so.

All of them will be paid but I think the default maybe similar to on your phone should be for free because that creates more of the usage and creates a better experience.

Thanks, Brian and Paul we have time for 1 more question.

And the final question will be coming from Justin Patterson from Keybanc and Justin Your line of last.

Great. Thank you very much 2 if I can for.

Jeff could you expand on the Snowflake and <unk> integration it sounds like something that could broaden your reach from large advertisers.

That's question 1 and then question 2.

So you talked about efforts to simplify the supply chain could you talk about what that and sales and just how that creates new opportunities ahead. Thanks. So much.

You bet so.

I really appreciate the question because.

Yes.

I think <unk>.

Like adopting UAV too.

As 1 of the biggest headlines that has happened for <unk> 2.

To date.

And not enough has been said about it I don't think most people understand.

<unk>.

Why this is so big.

So first let me just remind everyone the UAV too.

No longer of trade desk product.

We did most of the early developing but it's owned by the community.

And together with the open Internet. It's open source at this point. So it is it is way bigger than us.

And some of the proof of that is adoption from companies like Snowflake. So if you don't know snowflake, what they do is they make it really easy for you to manage your data so on this.

Same way that <unk> made it really easy for companies to build websites.

It looks like it makes it really easy.

For companies to put their data to work now that are typically much bigger companies and those that.

The <unk> works with.

And that's part of what makes it so exciting is that if theyre trying to put data to work.

They of course need to be leveraging the currencies that have scale and so that makes it possible for that data to be more used and and protected.

And so that they can do the right thing by by consumers, whether they are on the content side of whether they are on the advertiser side.

So when a company who is so focused on making data actionable and listening to customers. So that you can.

You can make certain that youre doing what they're asking for.

The snowflake using this just underscores just how how much critical mass UAV 2 already has.

And then as it relates to some of our and its impact on the supply chain.

And so.

Well, what we have and are spending a tremendous amount of time doing.

And is trying to shed light on the supply chain.

And what we're what we're constantly asking.

And is.

Our people in the supply chain and adding more value than the extract that's what we expect our own company to do and Thats, what we expect everyone else and the supply chain to do and.

And that's not for us and decide on our own.

But we do want to provide transparency so that the market came decided especially because we represent so much demand.

And so we are working night and day to make certain that we're shining the light of transparency on the supply chain, so that anyone in the supply chain.

And as extracting more value on charging more than the value they create.

The that they'd be removed from the ecosystem.

By the market and not by us.

So the.

On the supply chain becomes more efficient and the reason why this is so critical because of the open market.

Has the compete with walled gardens and won 1 great.

And some ways of vantage walled gardens have.

Is that they have a shorter supply chain because they control at all.

And so we just need the market to do it the same and in order for it to do that.

It needs transparency.

Thanks, Justin and thanks for everyone for joining the call today, Paul and I'll leave it with you to close it out.

Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.

Yeah.

[music].

Good day, ladies and gentlemen, and welcome to the trade desk of second quarter 2021 earnings conference call at.

At this time, all participants have been placed on listen only mode and absorb will be opened for questions and comments. After the presentation and it's now my pleasure to turn the floor over to your host Chris Toth, Vice President Vice President of Investor Relations at the trade desk, Sir the floor is yours.

Thank you operator, Hello, and good afternoon to everyone and welcome to the trade desk second quarter 2021 earnings conference call on the call today are founder and CEO, Jeff Green and Chief Financial Officer, Blake, Great and a copy of our earnings press release can be found on our website at the trade desk dot com and the other.

That's the relations section before we begin and I would like to remind you that except for historical information some of the discussion and our responses and Q&A may contain forward looking statements, which are dependent upon certain risks and uncertainties and particular, our expectations around the impact of the COVID-19 pandemic on our business and results of operations are subject to.

And should any of these risks materialize or should our assumptions prove to be incorrect actual financial results could differ materially from our projections for those implied by these forward looking statements.

Encourage you to refer to the risk factors referenced in our press release and included in our most recent SEC filings. In addition to reporting of our GAAP financial results. We present supplemental non-GAAP financial data a reconciliation of the GAAP to non-GAAP measures can be found and our earnings press release, we believe the providing non-GAAP measures.

The combined with our GAAP results provide the more meaningful representation of the company's operational performance I will now turn the call over the founder and CEO, Jeff Green Jeff.

And to our position as the leading DSP for the open internet more of the world's top advertisers and their agencies signed up or expanded their use of our platform, which just continues to validate our business strategy. They are increasingly embracing the opportunities of the open Internet and contrast to the limitations of walled gardens.

Our performance this quarter and year to date is led by CTV and premium video and the move from broadcast and cable to digital on demand content is happening all over the world.

And each major media market and nation has different dynamics impacting the adoption rates every major market and the world.

Is heading towards consumption of premium TV and movie content over the internet because of our products, including our new platform <unk>, our objectivity and market shifts.

<unk> as a percentage of our business continues to grow very rapidly and is by far our fastest growing channel.

Heading into the pandemic, our CTV growth had been driven by our leading position and the U S and Australia.

And we continue to enjoy outsized growth in these markets, but now we're starting to see our CTV strategy scale more broadly around the world.

For example, our CTV revenue and Europe was up more than tenfold in the second quarter I will expand on this and a moment, but I could not be more optimistic about our CTV business.

And then 2 years of engineering work and it addresses many of the opportunities in front of agencies and brands today I will touch on this and a minute too and.

In order to provide some more color on these results and our optimism for the future I'd like to focus on 3 key areas for.

First is our strength and CTV.

Even as our overall business doubled over the second quarter last year, our CTV business significantly outpaced that growth and I'd like to spend a moment on the various factors driving our progress there.

And third I'd like to focus on international growth like last quarter our.

And all growth outpaced North America, and we are seeing some trend lines that give me great optimism for the years ahead, so first CTV.

Just to provide some context on our growth and CTV through just the first half of this year the number of brands spending more than $1 million and CTV on our platform has already more than doubled year over year.

And it's not just the larger advertisers that are taking advantage of CTV anymore. The number of advertisers spending over $100000 has also.

<unk> doubled in total we have nearly 10000 and CTV advertisers on our platform up over 50% compared to last year large and medium size of advertisers alike are turning to us as the objective DSP for all of digital media, but especially CTV and premium video.

That exponential growth speaks to how rapidly the TV landscape is evolving we've spoken before about the accelerated consumer shift to digital video, including CTV and.

And that shows no signs of slowing down in fact, we reached more households via CTV and the U S today than our reachable through linear television.

And we reached more than 87 million households, those trends are now well established.

And what is perhaps a little less appreciated is what's happening on the inventory side of TV and how advertiser demand for that inventory is also fuel and a shift to CTV.

And Q1 and Q2 of 2020, nearly every major advertiser had to pause or rethink their advertising campaigns due to the global pandemic.

Some adjusted and weeks some tough months some are still adjusting some companies grew faster because of the pandemic and of course, some companies are still below their growth and revenue levels pre pandemic.

Many companies such as CPG and pharma companies have enjoyed significant growth and that 1 year.

And they were able to adapt their businesses pivot their message and appeal to consumers as their lives were up and it and changed.

Others, such as those and the hotel crews and airline the industries have been largely treading water because of the various new restrictions, we've all been living with the.

But regardless of where our company is on the growth spectrum. We are seeing the same response today those companies that enjoyed accelerated growth now need to market effectively to sustain that growth those of.

We're struggling and hit the pause button are now playing catch up aggressively marketing to make up for lost time adverse.

Advertising and marketing matters more than ever and the formula for business success, the demand for growth regardless of where our company is on the recovery curve has major implications for advertising brands are looking to the CMO to find value and advertising that can help fuel new growth the only way to find advertising efficiency and this.

Market is with the objective data driven technology.

And within that context, CTV offer some of the most effective advertising and the history of the space the.

And the combination of moving picture sound and data creates effectiveness and value that are unprecedented we.

The significant premium CTV inventory at scale via our platform and partnerships and CTV growth moves to Avon instead of the <unk> models that powered early adoption and the category and.

Moffat Nathanson recently reported that the AD supported video on demand market is growing from $4.4 billion and 2022 about $18 billion as early as 2025 and every major AD supported platform, whether it's the Disney's Hulu Peacock discovery plus Viacom Tvs's.

Paramount and Pluto Fox is <unk>, our <unk> TV and many others all of our reporting record viewership or AD spend figures and we see the rapid growth and a bot and our CTV spend every quarter.

The shift from legacy TV connected TV was especially apparent and this year's upfronts, which wrapped up and the second quarter for the first time and the history of this annual process. Every major broadcast are included programmatic packages and there is a wide range of reasons for that not least because CTV represents a greater percentage of their revenue than ever but.

For.

But perhaps most important broadcasters recognize that the traditional upfront process is a mismatch and it doesn't work and the digital world, where data and personalization are required to succeed.

And the legacy upfront process is really hard to run and an environment with lots of change and lots of uncertainty.

I believe that this year will mark a turning point and how the process is managed and today's fragmented television environment linear audience has continued to erode linear supply is shrinking and the prices are rising simply because of the scarcity.

This year broadcasters use that scarcity to their advantage and lots of commitments as the demand for growth intensified, but it is becoming increasingly difficult to predict who will watch which show for which live sports events, which means linear viewership commitments are harder to make and standby advertisers will then have a <unk>.

Zinc and then seek out greater value in a data driven spot market and a data driven forward market for digital then the opacity and uncertainty of the legacy upfront market.

And they'll take budget back they'll demand of new conversation next year and broadcasters are adapting by making CTV and programmatic of more significant part of the process.

That conversation will also look at how to evolve the traditional focus on high gross rating points or <unk>.

And the chase for high ERP as many advertisers are finding that they are under reaching some percentage of their target audience and way overreaching others.

More than ever.

The average may be and their target range, but the actual consumer experience at the edges is highly inefficient on.

On the extreme overreach side brands are actually paying to make consumers dislike them showing the same ad over and over again to the same person on.

On the Underreach type showing the AD so rarely that it isn't notice or even remembered.

As a result, more advertisers are demanding that the data driven the agility of CTV and become a larger component of the overall TV AD spend that includes more measurement precision.

<unk> has become less important and the digital environment. When you can have a direct interaction with the viewer and more precise measurement.

It's the precision marketing and using custom audience tools that identify when a consumer is coming off of lease or buying the car for the very first time with CTV Board can then reach that audience with ads that are relevant for the time and place that the ads are being consumed.

This level of marketing precision is simply not possible on linear of broadcast television just as important and this equation is the large and growing the CTV footprint. When you combine premium quality data and the inventory scale CTV becomes a very compelling proposition for advertisers and their agencies.

And that same work with Ford, we found that 48% of the households reached where incremental to anything the addressable through linear that means if you're limiting yourself the linear you're missing out on almost half of your potential target market. It was the same story with large pharma and of medical device company.

When compared to parallel linear TV ad campaigns.

CTV delivered of 51% incremental reach and of Forex improvement when analyzing cost per household reach these are not isolated cases, we are seeing many brand shipped TV budgets to the data driven precision of CTV and I expect this trend to accelerate through the next year's Upfronts.

1 major global food company is working with us the shift almost a quarter of its television budget to CTV by next year. So that they can better manage targeting and frequency on global Entertainment brand is doubling down on CTV with us because it allows them to measure of the full customer journey from exposure to purchased and a major telco is and <unk>.

Joining measurable sales lift by shifting the significant portion of its television budget to decisions CTV on our platform.

Wanted to be able to measure campaign performance across all channels. They are focused on the quality of the TV supply chain and they want to ensure that their partners, including the trade desk are delivering more value than they are extracting we've proved this and the U S and we're seeing markets around the world evolve Similarly, and I still believe we are merely at the <unk>.

Every beginning of the CTV innovation cycle.

I can't put it any better than John Halverson, Vice President of consumer experience at the global food Giant monitor lease speaking last week without age he said and I quote I've been positively surprised by the advancements that the trade desk and other partners and CTV have made versus digital platforms and their focus on advertisers need.

And for advanced targeting inventory management and guarantees are setting them apart from Youtube and the rest of the marketplace.

1 last point on CTV.

As the TV ecosystem gets more crowded and competitive our strategic focus on objectivity is more valuable than ever.

Some platforms that claim to be open and then primarily pushed their own content will lose favor with other content owners as the market progresses, we have great partnerships with content owners.

Because we bring them objective demand from our customers and we do not compete with them, we deliberately don't own or favor content.

This also brings me and my second point because CTV is also highly indicative of how advertisers are increasingly embracing the open internet both as an alternative to walled gardens and as a part of their digital media plans.

And I noticed this and various dimensions.

If you've noticed some of the recent deals that we've signed and talked about publicly some of the world's largest advertisers have signed new contracts with us in recent weeks and months, increasing and extending their commitment to our platform.

We're just scratching the surface and demand for our platform is growing across industries around the world and as these brands work with us they are making the commitment to the open internet.

This may be summed up by something that of Rune Kumar Chief data officer of IPG said at and Adweek event with me a couple of weeks ago. He talked about how brands had relationships with consumers long before the major walled garden platforms came alone.

And how those brands are working harder than ever to preserve those direct relationships, even as platforms tried to dis intermediate them. He believes there is so much and collaborative innovation going on to support the open Internet precisely for this reason, but he is also getting out of there is a point that I think is often.

Misunderstood about the motivations of brand advertisers most brands have decades long relationships with our consumers. These relationships have been nurtured and curated carefully over a wide range of interactions, including long term loyalty programs and many cases consumers volunteer preference information in return for.

For some kind of value.

Given the effort that they put into this over many years brands have no interest and jeopardizing. The trust. They have established with their customers brands want to provide of relevant and enjoyable advertising experience that respect the relationship with customers and that experience is best manage and delivered across the open Internet order.

The advertiser has more insight and flexibility and.

To find others like them or AD impressions that their prospects are most likely to interact with.

The unleashing the potential of that first party data requires a few things first it must respect the privacy of the customer and preserve the trusted relationship between the advertiser and the consumer and <unk>.

Second it has to be secure and not just from a data protection perspective, but also in terms of brands retaining control of their data at.

It must be easy you have to have simple integrations and on ramps and then lastly, as they put their first party data to work brands have to get some metric performance data back they have to know whether it's working and how their prospects are reacting.

Each of these requirements is challenging and a walled garden, none more so than the asymmetrical data relationship any data out brand puts into a walled garden is often usable by that platform to as media owners. They will put that data to work to their own benefit as well as the advertisers.

And the advertiser won't get the same grain of data back on their campaign performance.

They'll get a report card and saying that the campaign was successful which is a bit like rate and your own homework.

But the results they get won't be the same kind of information that the brand can use to continue to refine their campaigns and thats my quarter. After quarter brands are gravitating to our platform and to the open Internet walled gardens may provide easy access to scale.

And you can reach a lot of people very quickly, but they don't provide the precision and decisioning that are becoming so vital to today's marketer and they don't provide much clarity on what content. The brand is showing up against what content. They are funding and supporting and how to refine their campaigns into the future.

At the current pace of adoption by the beginning of next year, we expect the majority of the impressions on our platform to be bought using solar Mar of few of you joined us at our launch event in New York and some of you joined the many thousands who watched online.

Their ad spend to actual business goals, whether it's in store sales or foot traffic into a dealership or demand for tickets. So lamar has an ever growing roster of third party measurement data sources, including retailers, who are eager to leverage the value of their shopper data so that they can attract more advertise.

The demand.

And you don't get to real performance measurement without the ability to enter more precise campaign goals and solar Marr provides for all of that and much more.

We launched the Ole Martin of the time when <unk>..2 is also reaching critical scale in the market. This is important because <unk> allows advertisers and partners to onboard their data in a manner that provides more consumer control and protect their data.

In recent months 3 of the major advertising holding companies approval.

<unk> Omnicom and IPG.

Have announced their support for <unk>..2 in addition, many of the major independent agencies such as Horizon are also now leveraging <unk>.

The publishing and tight is also embracing the <unk> from a CTV perspective major CTV industry text consortiums, which are owned by the major networks, including block graph and the open AP are making their identifiers interoperable with <unk>. That's in addition to networks, such as AMC and <unk> TV who are in.

Integrating directly and then traditional publishing groups, such as Maven, who own sports illustrated and the street Dot Com and Newsweek have also embraced <unk>.

A couple of weeks ago, Snowflake announced that it would deploy <unk>. This 1 is a little different but very indicative of the scale. The <unk> is achieving snowflake provides a cloud based data service that sits on the company's cloud infrastructure and enables data to be managed across clouds.

Snowflake axes of hub for many companies customer data their first party data and that data can now be activated by using the <unk> 2 identifiers.

It's not going to change.

And gives consumers more control.

And that's what the industry has created and <unk> is 1 leading the example, but more important is the way that the industry is mobilizing to create a better approach to identity..1 that reflects the fast moving cross channel nature of today's digital advertising landscape.

I cannot put this urgency any better than Joy Robbins, Chief revenue officer of the Washington Post organization, who spoke at our recent solar Mar event in New York City the.

Post as you May know through <unk> platform also powers the AD tech stack for more than 100 other publications across the U S, including many daily newspapers.

So Joyce perspective is very insightful to quote her directly she said we need to make sure. We're controlling our destiny. If we do nothing we give our AD revenue stream to the walled gardens.

And that sentiment across the industry and around the world that's driving so much collaborative innovation and support of the open Internet the.

The last area that I want to touch on is our international growth once again, our international markets grew faster than the U S and the second quarter and this is particularly encouraging.

Let me give just a couple of examples that put our investments and our growth into perspective.

We started planting the seeds of connected TV and Europe, a few years ago and we are now seeing the green shoots CTV and Europe is still relatively early and its lifecycle compared to the United States, but with the exponential revenue growth I mentioned earlier it won't stay small for very long and.

And Europe, there is of significant consumer shift to streaming platforms, even for live sports European broadcasters of develop their own streaming platforms, which is driving the inventory scale of that is so important to advertisers. For example, we're working with Sky the largest media company in Europe as they make their own content available.

The Internet and fact, our partnership has significantly expanded this year the sky.

<unk> has a huge presence and the UK, but they also enjoy strong market share across Europe like so many broadcasters today Sky is also investing heavily and original content to attract new viewers. They are of dominant force in the European television landscape and hold significant cloud with brands and agencies, there along with our existing.

And partnership with channel for as well as premium content providers, and France, Germany, Spain, and Italy, our relationship with Sky and gives us access to the majority of CTV AD impressions across the continent.

Want to again underline the significance of our objectives and our inventory partnerships as we expand around the world.

Because we don't own content, we're able to cleanly and clearly partner with the biggest content and broadcast companies around the world.

Of 8 hours a day online most of it on the open Internet led by OTT content.

These dynamics are fueling the rapid expansion of the digital advertising market and India expected to exceed $7 billion.

By 2024 up more than tenfold since 2015, it's those same market dynamics that informed our premium video and CTV first approach to India and this was somewhat atypical for us and nearly every other market. We have led with display so as we opened and India. The first.

And we did with strike important inventory partnerships and CTV.

These included of deal with Samsung ads, which gives us access to inventory on Samsung Smart TV devices, reaching 50 million highly covenant viewers. We also struck a partnership with Xiaomi.

The world's largest smartphone manufacturer of bigger than even Apple Xiaomi serves more than 10 billion AD impressions per day to those devices all of which we have access to and addition to device manufacturers. We've also established relationships with the leading content providers, such as Disney plus Hot Star the leading the OTT streaming service and India.

And over time, we will build on these relationships and scale our business and methodically just as we are doing across Asia and of course, the rest of the world. All of this progress gives us a great deal of optimism for the quarters and years ahead and this has just been a snapshot.

And we're trading platforms that bring advertisers closer to the business results of their work, we are able to invest and the success of our advertising clients. We are not maximizing profit for the short term we have discipline around profitability. So that we can invest for the future of our business and theirs.

And this quarter more than ever and we can see how our prior investments can yield impressive results and even as we make these investments we are still generating EBITDA at rates much higher than nearly all of our high growth software peers.

And the second half of the year. We expect this approach to show more of Green shoots as we expand our work and retail Walmart will launch on new DSP, which integrates Walmart shopper data and is built on our platform. This is a leading the example of how we are working with our advertising customers to help unlock the value of.

Data estimated at $100 billion to $200 billion market.

Each retailer will approach this differently, but we are working with many of them both here and around the world, but 1 position the do all share the.

And are all convinced that the value of their data is best realized on the open internet.

Within the confines of the walled gardens.

Our progress is also increasingly rooted and our ability to drive industry consensus around important issues that build overall trust and our industry.

Our strategy will raise all boats you are seeing that most clearly in the work we're doing around identity, but it is also present and how we approach the supply chain fraud management and CTV scale and many other areas. We remain convinced that the open Internet is the best platform for our customers to achieve their marketing goals.

And there is a large and growing coalition of advertisers publishers and partners, who not only share of that perspective, but who are actively working with us to realize it.

All of that contributed to a great second quarter, we have very strong momentum and with these investments and the hard work of the trade desk employees around the world I expect the wins to stay at our backs and for that reason as pleasing that the numbers are for the quarter I am even more excited about the future growth prospects now I'd like to turn the call over to Blake.

Before moving to Q&A Blake.

Thank you, Jeff and good afternoon, everyone.

And as you've seen and our results Q2 was a very strong quarter.

Revenue of $280 million was up 101% from a year ago, excluding political spend related to the U S elections last year, which represented the low single digit percentage share of our business in Q2 of 2020 revenue increased around 103% year over year.

During the quarter, we benefited from continued improvement and the digital advertising environment from both agencies and brands growth was broad based across all regions channels and verticals. We saw continued strength from CTV, which again led our growth from the channel perspective.

Our year over year revenue growth rates benefited from lapping slower growth related to the pandemic during the second quarter of 2020.

With the continued strong topline performance from Q2, we generated $118 million and adjusted EBITDA were about 42% of revenue.

The EBITDA continues to benefit from temporarily lower than expected operating expenses, partly driven by the virtual environment.

This includes items, such as travel and life company events that are and we've just started to slowly resume.

I am proud of our sustained efforts to consistently generate meaningfully positive EBITDA, while continuing to invest and the critical areas of our business that can drive our future growth.

From a channel perspective video audio and even display all more than doubled in Q2 from a year ago.

And Q2 mobile currently our largest channel represented the low 40 percentage share of our business.

Video, which includes CTV represented the high 30 percentage share of our business.

Video as a percentage of our mix continued to grow very rapidly the increase and video was driven by CTV, which by a wide margin again led our growth during the quarter and finally display and audio represented about 15% and 5% of our business respectively.

Geographically North America represented 87% of spend and international represented 13% as internationals faster growth year over year resulted in the rising share of spend.

And APAC, Shanghai, and Hong Kong spend growth were both very strong.

In terms of our overall growth Europe led the way growing well over 100% year over year and Q2.

All of our offices and Europe, London, Hamburg, Paris, and Madrid showed particularly strong growth.

And as Jeff highlighted the <unk>.

TV drove our EMEA performance growing over 10 fold year over year.

The TV more than doubled its relative share of spend and Europe.

While still small relative to the share of CTV spend produced in North America. We are optimistic about the trends we are seeing during the first half of 2021.

In terms of the verticals that represent at least 1% of our spend the majority of them at least doubled during the quarter.

Those verticals most impacted by Covid showed the most improvement overall, including travel shopping and automotive.

Home and garden personal finance and food and drink were also very strong.

We believe that there is still a lot of recovery ahead of us and these segments and we remain cautiously optimistic as we continue to see signs of improvement.

Operating expenses for $218 million, and Q2 up 41% year over year the.

The growth and operating expenses and the quarter was primarily driven by stock based compensation.

Operating expenses, excluding stock based compensation grew 32% year over year.

As we discussed last quarter, the majority of the growth and stock based compensation expense from the first half of the year was related to the company's employee stock purchase plan.

Our growth and operating expenses, excluding stock based compensation on a year over year basis is influenced not only by lower expense growth from the prior year associated with the impacts related to Covid, but also by continued investments and our team, particularly in areas like sales and marketing technology and development and the team supporting that progress as we can.

Continued to scale for longer term growth.

Income tax was $13.9 million for the quarter representing of tax rate of about 23%.

Adjusted net income for the quarter was the 88 million for <unk> 18 per fully diluted share.

Net cash provided by operating activities was $10.4 million and Q2.

This was driven by a change in working capital driven by strong sequential growth from Q1 to Q2.

I would like to remind you that the timing of cash collections and payments can significantly impact quarterly results.

And also as the exiting in Q2 were 82 days down 14 days from a year ago vs.

<unk> were 67 days down 8 days from a year ago the <unk>.

Resulting 15 day GAAP between Dsos and <unk> is the smallest and the company's history.

We exited Q2 of the strong cash and liquidity position, our balance sheet had $705 million and cash cash equivalents and short term investments at the end of the quarter, we have no debt on the balance sheet and.

June we refinanced the new revolving credit facility and currently have 443 million available under the facility.

In addition.

We also executed a 10 for 1 stock split.

Turning to our outlook for the third quarter, we estimate Q2 revenue to be at least $282 million, which would represent growth of 35% on a year over year basis, excluding the U S political elections, which represented a mid single digits per cent of the spend that we benefited from in Q3.2020.

Our estimated growth rate in Q3 of this year would be about 38% on the year over year basis, we estimate adjusted EBITDA to be approximately $100 million and Q3.

That concludes our prepared remarks, and with that operator, let's open up the call for questions.

Thank you ladies and gentlemen, the floor is now open for questions should you have any questions or comments. Please press star 1 on your phone at this time, we asked for a lot of posing your question you. Please pickup your handset and for listening on speakerphone and to provide optimal sound quality.

And again please press the star 1 if you have any questions on the <unk>.

First question is coming from Tim Nolan from Macquarie, Tim Your line of lives.

Thanks, very much and Jeff I'd like to talk about CTV a bit more if I could.

Intrigued by your comments on and eventual decline and the role that the upfront will play for TV or at least certainly for linear television and my question is what did the trade desk do with advertisers and network groups and the upfront or should we think really of your role more as helping expand the scatter market, reaching all of those incremental households that are otherwise slipping.

Away from linear and I guess, the scatter market, having been so strong going into the upfront I guess, that's what most of supported your growth. So just wanted to stay on how that continues from here. Thanks.

Thanks, Tim.

And so so first on the on the macro related to CTV and so on a year, where nearly everything doubled year over year and this quarter over quarter basis.

<unk> once again led the way with massive growth.

And in the quarter, we just reported we of course expect CTV to continue to drive our growth over the next couple of years and.

And beyond as as the leader as it relates to channel is in terms of what what.

It's happening across everything and Digital's CTV is the lead for the open Internet.

Net.

I do believe Upfronts are driving more of the CTV as well I'll talk about that and as I answer. Your second question and just the second but 1 thing I want to highlight about CTV is that unlike any other channel. This is being driven by users and.

And so when programmatic first got started and it was because of a bunch of <unk> companies like ourselves and wanted to create something more efficient.

And that's something that can't be stopped the secular tailwind that is going to benefit us.

For as far as I can see into the future.

And and then lastly on CTV trends before I talk about the upfront.

Yes, there is a lot of subscription fatigue, especially and as spot.

So what.

And what has happened over the last year or 2 I think is fairly indicative of what most of us of experiences individuals' switches, we consumed most of our CTV content from Netflix or Amazon and 3 or 4 years ago and now today, we have lots more choice of lots more channels that we're going to and we're asking questions like isn't on this channel.

And then on that channel a lot more often than we did before when we're logging into our our our CTV.

And most of those incremental channels that we're adding are a bob so theres more and more inventory coming online for 1 of the things that we're constantly saying the advertisers as well.

Whatever you thought you knew about scale and reach.

Of CTV.

The 6 months ago, well, it's changed dramatically and Thats underlined by the fact that we said 79 million households are reached on CTV, which is more than linear inside of <unk>.

Of.

Ah.

Of linear or cable TV so.

Television has an edge that it didn't have a year ago. So I could go on and on but I want to answer your question about Upfronts.

So this is from what's really interesting and the CPM and for the cost per unit went up and become.

As of scarcity. So despite the fact that you're reaching fewer people.

The price went up and so.

We think that puts a lot of pressure on the upfront.

And the setting us up for <unk>.

The amount of under delivery.

Most of the forecast that were given to advertisers I would say advertisers don't believe.

And they go into a skeptical and are saying.

I think that sort of summarizes what's happened and so as a result.

Seeing people moving into the scatter and spot market and we benefit tremendously from that so right now you can.

The upfront market, which is.

Historically Ben.

And I get together or a party, which is a relatively inefficient forward market and then there is a spot market.

And that has more and more move to be.

And our programmatic driven market.

I think there and some insights to be gleaned from the ratings that we reported on the Olympics, which are of course down 45% over past the Olympics.

<unk>.

And I don't think Thats, because NBC did anything wrong.

A question of discovery and just the nuance of the pandemic and whatnot, but that does make it. So people are asking the question.

What what can I expect out of shows and this environment and people are looking for more and more flexibility and that.

And that maybe just brings me and my last point, which is maybe at the very heart of your question, which is what role we play and the Upfronts going forward 1 of the biggest opportunities that our company has and its future and to play a central role and a more sophisticated forward market that replaces the upfronts where the.

You can put data to work and it's not on it.

Events or a party where everyone gets together, but it is and always on forward market that is data driven and built on top of the spot market, where people can make commitments and forecasting is better than has ever been done on TV because of the data is available and that's something that we're working very closely with some of the big.

First names and TV and some of the biggest brands and the world and some of the biggest agencies from the world to make certain debt, we upgrade the upfronts, but that will make it. So the programmatic is no longer primarily and the spot market, but it's also and the forward months.

Thanks, Tim.

Thank you.

And the next question is coming from Vasily <unk> from Cannonball Research your line of sight.

Thank you good morning, so Jeff.

You had highlighted growth and connected TV outside of the U S. Can you talk a little more about the growth you're seeing in Europe, where I think you mentioned.

And with 10 fold.

So the increases and would you characterize this growth as an inflection point there think of just the low base effects and as a follow up might be of can talk about APAC a little more.

And especially about the premium video and CTV growth that you highlighted maybe you can explain to us and a little more detail of the difference between premium video, which I assume it's mainly on mobile and connected Tvs overdraft and thank you very much.

Absolutely. Thank you so.

Maybe 1 of the most bullish numbers that we shared in this report is that the CTV growth and EMEA grew 11 of X year over year.

And that numbers.

Really astounding and really surpassed our own expectations.

I think 1 way to characterize what's happened for us and CTV is to say of the <unk>.

Trade desk was leading and Australia, and the United States going into the pandemic.

And over the last 18 months or so everything and the World has changed consumption has changed we had 3.4 of 5 years' worth of change.

And TV happened in that period of time.

And and so what I would say, it's 1 of the most bullish and things that we've reported in this report are and this quarterly reported it's because I do believe.

Those represent green shoots I do believe it's the start of a change and.

Where we were leading just and in the U S and Australia, where now the scene.

Amazing results in Germany, and the UK, and and Scandinavia, and France and Spain.

And that creates a better user experience, which can fund more content that virtuous cycle can only be perpetuated with a data driven marketplace.

And and because that's just the math.

The way that it works.

It's impossible for that not to take on everywhere around the world and we.

We're seeing that play out now.

As it relates to the APAC APAC is a little bit different in that.

And.

CTV.

And is not always the place where premium content starts that's much more comment on the U S. But because it is such a mobile region, where mobile phones are often the place where our content is even premium content is consumed.

And to think of it as premium video and CTV kind of and 1 bundle, especially on that market.

It's great for look at.

The study there's so many markets that we could report on but.

Because we just started and India. This year seen us go into a market as big as ripe.

As India being the most populated country and the World and then see us create partnerships and really a matter of months with Samsung ads the xiaomi.

Which has a huge presence in India.

And then Disney plus hop star to have those 3 content partnerships for premium content and to show ads on top of that.

And the most populated market and the world after only being there for months is indicative of just the momentum as well as.

And how we continue to grab land.

Around the world So.

And really optimistic about what I'm seeing around the world and some of bids.

That our playbook that we've tested and proven and the U S and Australia is applicable to many other regions and the world.

Thanks for the <unk>.

Thank you and the next question is coming from Shyam Patil from Sig. Your line is less.

Hey, guys. Congrats on the quarter I had a couple of questions.

The first 1 Jeff can you talk a little bit more about CTV and what youre seeing in Europe. It seems like it could be inflicting.

And then maybe maybe a few years behind the U S would love your perspective on that and then just a quick follow up for for Blake I know youre not guiding beyond the third quarter, but when we look at the <unk> is there any color that you could offer.

And just in terms of how to think about seasonality for the revenue. Thank you.

Yes.

Ill.

I'll just reiterate what I just thought about.

The CTV and EMEA, we had 11 X growth year over year, which is 1 of the most bullish metrics that we've shared in this report.

And we still feel like we are in early stages, but the green shoots that we're seeing.

I think are indicative of more to come and our partnerships and content around the world, whether that's in London, or Germany, or Spain, or Italy or France.

Are all indicative of great things to come and Blake on the second part for sure and thanks for the question I think.

I'll just talk a little bit of our Q3, and then and then ill.

And I'll try to address what I can on your question for the rest of the year and Q4.

With Q3, there is there's so many positive trends and momentum in the Q3 and you've heard Jeff kind of highlight some of those already CTV and leading the way of the fundamentals of the business are really strong the thing on Q3 is.

Excluding political which which I would encourage people to think about it it's part of how to evaluate the.

Underlying strength of the business on the year over year basis, we're showing significant acceleration year on year and Q3 I think the we're talking about excluding the election Q3 of around 38% year on year, and we were and the mid twenties.

For Q3 and the prior year, so really excited about that as you think about and then moving on to the Q4. It does have more difficult comps than we and we've seen in Q3 Youll recall last year and we've talked about this a couple of times political for US and Q4 of last year was the biggest quarter that we had as a company.

And as a high single digit percentage of our business, so really meaningful on a year over year basis.

Also if you recall last year Q4 was driven not just by that high single digit political spend but we also had a rebound and digital advertising as well, but I would just say regardless of the comps. There is so much momentum for us and the fundamentals of this business are so strong I'm really optimistic about it.

Thanks, Tom.

Thank you and the next question is coming from Youssef Squali from <unk> Securities Your line of lives.

Great. Thank you very much on and good morning, guys. Congrats on the solid performance again.

2 questions. Please Jeff maybe going back to solve and Mark I know, it's very early I think you've only having a.

And it out for maybe about a month now, but just wondering if you can share any early feedback from clients.

Any improvement and campaign performance, so far relative to next way of at least within those customers that have used it for a few weeks now.

And any impact.

So far on overall spend again and I suspect not but just wanted to ask and then Blake maybe the.

The outperformance on the buy and the bottom line was particularly impressive can you maybe just walk us through the biggest contributors to bottom line beat and whats the non repeatable as we go into second half of this year and the early next year. Thank you.

Yeah. So.

I'm really glad you've asked this question and I don't.

In mind.

And just being really opening here, which is whenever you release of new.

And essentially a new platform, there's always some amount of anxiety you do as much research as possible you test the market as much as possible you listen as much as possible and then you hope you got it right and so we were really excited to ship. So all of our which is the biggest release and the history of the company, we had more engineering hours.

And and people on this release than anything we've ever shipped ever and.

And to do most of that work during the pandemic, where it's a little bit harder to do all of those things like listen.

I was I was anxious to see how it would be received of.

Of course optimistic and were convinced we did the right thing, but you always want to see it and the numbers and that's exactly what we've seen we've seen.

Amazing traction where nearly a month and.

And.

And the response has been fantastic.

It does represent a behavior change, though for the users. So they have to re learn something.

But those that have taken the time to do it.

Of all given us fantastic feedback that it is a better experience, which is exactly what we expected and so because it is a better experience. That's why we're so optimistic that the.

The majority of our ads.

We'll be bought on the new platform by the beginning of next year.

And and that represents more efficiency for the user.

Especially excited about this going into Q4, because often what happens is Q4 and all of you know.

And it's the biggest quarter of the year for us.

But it's also where you prove yourself.

Because met much.

Of the advertising.

And sort of determined by of calendar cycle. We're.

In Q4, you spend the most of the performed the most and.

And then in Q1, and you make a decision about where youre going to spend for the next year.

And so if we have a really strong Q4, it sets up our Q1.

And really nicely for next year, and so I'm optimistic.

The performance will set us up for next year.

So I couldnt be happier with the way so Lamar has gone so far it's very early as you as you highlighted and it represents a behavioral change.

But I'm convinced that that is going to happen over time and really excited about what that means for efficacy on our platform.

And then.

And I'll just take the second part of that question on the on the beat on the bottom line for EBITDA and so more than half of the beat in the quarter on EBITDA was just really driven by the top line outperformance and the business.

As many of you know the we don't have a lot of variable cost associated with higher top line. So when we see it come in and flows almost directly often down to EBITDA. So you see that we did have some expense benefit as well some of that the timing.

It was broad based and there wasn't anything like that I would major call out a little bit lower platform ops expand a little bit of timing on some fixed marketing expense, we had better bad debt the unexpected a little bit because continued health of the receivables, but nothing major that I would call out.

Great.

Thank you and the next question is coming from Laura Martin from Needham Laura Your line of lives.

Hey, there. So just you were talking about how the Cte open Internet consortium with integrating into 2 point of and then you said <unk> was integrating directly and to 2 point out I was wondering how that affects your ability to target whether people are going indirect bike and affiliating versus like the about directly integrated into 2 point of.

And then my second 1 is on the Walmart deal and we're still on track to be fully integrated with Walmart for Q and as you are or do you get paid on that because you get the 15% of platform fee is that how you make money on the Walmart deal when CPG spend money on your platform. Thank you.

You bet I appreciate the question so.

As as many May know.

1 of the things that is really important about preserving the the amazing state of CTV is to provide relevant ads.

And on the shows that Youre watching when it's when it's AD funded.

And.

Because of the nature of devices and CTV it requires a bit more of a collaboration between the content owners as well as those providing that.

And so what we've needed.

And many people talk about this on the context of cookies and browsing.

But that's not really what <unk> was designed for exclusively it was designed to create a better currency for the entire internet, especially for connected TV.

And so that a content owner.

And have the same understanding of the user past that too.

<unk>.

Those of us representing the advertisers so that.

And then we have of common understanding and can provide relevant advertising as well as make certain that we don't show the same AD 5 times and the same commercial break make certain that we don't show them and assets of relevant to them and that makes them more effective.

So all of the all of the TV companies.

And how different ways of integrating with unified I'd to point out.

Some of them have gone to coalitions like block graft or open AP and said Hey, you're a consortium.

And your technology consortium, So why don't you do the work for all of Us.

And there are others, who have said well working and a consortium can take too long and.

And we want to make certain that and integrates directly and we have data that we want to put to work directly.

And so from our standpoint, we're indifferent whether of consortium does the work whether the content owners themselves do the work many of them put them on parallel paths, which is a commentary on how critically and strategically important it is for them and for us to get the Ids setup.

Setup, so that we can provide those relevant ads.

But.

<unk> moved to do it directly to me as <unk>.

Exciting.

Because they could access and in other ways.

And they want to make certain that they do it as quickly as possible. We expect that trend to continue just because of the future.

Of television is dependent on it.

And then the second just Walmart and Walmart.

So yes, Walmart is on track, we continue to have really fantastic discussions with them.

And as it relates to how we'll be paid we're paid the same way that we would.

And with any other partnership.

We have our standard platform for.

And then they put.

The data exclusively to work and this version of their DSP, which is of course built on top of our platform.

Thanks, Laura Thank you very much great numbers. Thank you.

Thank you and the next question is coming from Matt Swanson from RBC capital markets Your line of sight.

Yes. Thank you so much for taking the question.

I've got 2 as well, they're both kind of kind of be follow ups to Laura for a second ago I mean, great traction on your idea of 2 point I'll add it.

And you used the term critical scale.

And you just help us with the low more color on what you think of it as far as what is critical scale in terms of cookies and went away tomorrow, what you pick up the accuracy of efficacy of the replacement and if theres any way to think about.

And maintenance of percentages of how far you away from kind of of the ideal state that.

And that would be really helpful.

The other on the Walmart example is just are there ways that you can use this as kind of of POC proof of concept for other retailers and I'm sure with.

You know Amazon doing what they are with their DSP and it's becoming.

Increasing area of focus for other retailers, who maybe don't have the internal.

Pac platform that Amazon does and it seems like that's a great place for the trade desk to come in.

Yeah. So.

<unk>.

The term critical scale.

You pulled out I think the very important phrase that we've used in our prepared remarks and in the earnings report.

Which I do think is indicative of the moment.

And that we're in right now as it relates to the way that the internet is going to work.

So and then you asked about if cookies were to go away today, so to be clear Google announced that they don't expect cookies to go away before 2023 and they said.

And even then we'll just we'll see when we get there.

So and I've been maintaining from the very beginning that I'm not certain that it's in the best strategic interest for Google to get rid of cookies at all.

But that's not what this was about the Cree.

Creating new IV was not about replacing cookies and was about creating a better internet.

And that doesn't just apply to the browsing the internet, which as everyone knows.

A small minority of what the Internet is of.

Of course, your mobile devices and.

And the related apps as well as things like connected TV.

Which is some of the most effective advertising may be the most effective advertising.

Ever been done.

And to get business.

You might be able to say Oh, I won't accept American express or it might not accept the discovery, but but there are some currencies like either cash for visa or Mastercard that you have to accept in order to just keep the doors open.

That's where I believe you ideas that that inflection point.

And it's become so interoperable with other currencies.

And that making certain that youre interoperable, if there's something new or if you're a television company you will be operating at a disadvantage. If you are not interoperable.

<unk>.

So when I say, it's of critical scale, that's what I've seen that inflection point, where you can't afford not to be of part of it.

As it relates to the.

And 2 retail proof of concept, it's always great to partner first with the biggest retailer and the world.

And so and naturally that creates a bit of a case study and it lays down the gauntlet for everybody else.

And that of course has been done.

And.

It would it would be strategically.

Suboptimal.

To say it nicely for us.

And to not be working on.

Bringing other retailers and.

And their data.

And to the platform.

Especially because of what I talked about on the prepared remarks, where.

We are.

We're trying to help the open internet.

And Amazing contrast, the walled gardens.

And that means, especially and measurement and the way the results are created.

And measure.

And by making everything comparable to each other.

Make it some of the open internet, it's a much better place to spend the lion's share of your dollars than and walled gardens, where everything is opaque and you're totally dependent on them to tell you how you did.

So in that environment, and it becomes really important especially for companies that sell their products and stores.

And to have insights about how that performed and then of course, they want to see how it performed and Walmart.

But there is a bunch of other retailers are bunch of other stores that they also want to see where it transacted and theres of course of bunch of other data about transactions that would help them discover what is actually working and that's what's really critical for the open Internet is it set of moment, where we can actually show, what's working and what.

It's not which is critical given it's so easy.

And to make ads on the Internet.

So which ones are working is the question that has to be answered.

Better than ever before because of what is riding on it which is economic growth and recovery.

Thanks, Matt.

Thank you and the next question is coming from Brian Fitzgerald from Wells Fargo O'brien Your line of glass.

Thanks, guys I want to go back to the.

So Lamar and you talked about some new capabilities, specifically around Onboarding and.

And the marketplace just wondering if you could discuss the the revenue opportunities and the and the mechanics around those as well as the measurement of marketplace.

Is that going to be of take rate model and will onboarding of the revenue component.

And if so is that going to be more volume than spend oriented just just.

And on the mechanics there.

Yes, so both of those making it easier to onboard your first party data as well as making it easier to measure of success.

Are not about making more money for us directly.

Yes.

Really like the Amazon metaphor of spinning the flywheel faster and there are some activities that you do on your business.

Make it so that your core.

Activity.

The goes better and that the <unk>.

Value exchange is even more obvious and.

And so that your.

Your customers spend.

Spend more do more with you.

And both cases, Onboarding and first party data and measurement marketplace. My ideal is that they're both free and so.

So there is not and incremental take rate for those exact features.

But if you get more spend on the platform you make more money.

And if you produce better results and you get more spend and you make more money and.

And so I'm, absolutely after making more on this but not on those features directly by giving them away and we make efficacy on the platform better we make the open internet better and we get more of that spend.

And that's that's the ideal there will be cases, and the measurement marketplace, where people do pay and and that's good.

And it's kind of like paid apps.

On your iPhone or of your Android.

Versus free apps, both are important and.

And having some amount of paid apps, so that they're really high quality.

And.

The.

Create the most competitive marketplace possible.

<unk> are.

Our important so.

Some of them will be paid but I think the default maybe similar to on your phone should be for free because that creates more usage and creates a better experience.

Thanks, Brian and Paul we have time for 1 more question.

Certainly at the <unk>.

Final question will be coming from Justin Patterson from Keybanc and Justin your line of glass.

Great. Thank you very much 2 if I can.

First Jeff could you expand on the Snowflake and <unk> integration it sounds like something that could broaden your reach from large at the site.

So that's question 1 and then question 2.

So you talked about efforts to simplify the supply chain could you talk about what that and sales and just how that creates new opportunities ahead. Thanks. So much.

You bet.

No.

Uh huh.

And I really appreciate the question because.

I think.

Snowflake adopting UAV too.

As 1 of the biggest headlines that has happened for <unk>.

To date.

And not enough has been said about I don't think most people understand.

Why this is so big.

So first let me just remind everyone the UAV too and.

There is no longer of trade desk product, we did most of the early developing but it's owned by the community.

Work together with the open Internet.

Open source at this point so it is it is way bigger than us.

And some of the proof of that is adoption from companies like Snowflake. So if you don't know snowflake, what they do is they make it really easy for you to manage your data so on.

And the same way that <unk> made it really easy for companies to build websites.

Snowflake makes it really easy.

And for companies to put their data to work now that are typically much bigger companies and those that wish.

<unk> works with.

But thats part of what makes it so exciting is that if theyre trying to put data to work.

They of course need to be leveraging the currencies that have scale and.

And so that makes it possible for that data to be more used and.

And and protected.

So that they can do the right thing by by consumers, whether they are on the content side of whether they are on the advertiser side.

So when a company who is so focused on making data actionable and listening to customers. So that you can.

And you can make certain that youre doing what they are asking for.

Snowflake using this just underscores just how and how much critical mass of <unk> 2.

And already has.

And then as it relates to solar bar and <unk>.

The impact on the supply chain.

And so.

Well, what we have and are spending a tremendous amount of time doing.

And is trying to shed light on the supply chain.

And what we're what we're constantly asking.

Is.

Our people in the supply chain and adding more value than the extract that's what we expect our own company to do and that's why we expect everyone else and the supply chain to do and.

And that's not for us and decide on our own.

But we do want to provide transparency so that the market came decided especially because we represent so much demand.

So we are working night and day to make certain that we're shining the light of transparency on the supply chain, so that anyone in the supply chain.

As of extracting more value of our charging more than the value they create.

The that they'd be removed from the ecosystem.

Yes.

By the market and not by us.

So the.

On the supply chain becomes more efficient and the reason why this is so critical because of the open market.

Has the compete with walled gardens and won 1 great.

And some ways of vantage walled gardens have.

Is that they have a shorter supply chain because they control at all.

And so we just need the market to do it the same and in order for it to do that.

It needs transparency.

Thanks, Justin and thanks for everyone for joining the call today, Paul and I'll leave it with you to close it out.

Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.

Q2 2021 Trade Desk Inc Earnings Call

Request a DemoDemo

TTD

Trade Desk

Earnings