Q1 2025 Trade Desk Inc Earnings Call
Greetings and welcome to the trade desk first quarter 2025 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being.
Recorded I would now.
Chris: I'll turn the conference over to your host Chris.
Chris: You may begin.
Operator: Operator, Hello, and good afternoon to everyone and welcome to the trade desk first quarter 2025 earnings conference call on the call today are co founder and CEO, Jeff Green and Chief Financial Officer, Laura Shanghai, a copy of our earnings press release is available on our website in the Investor Relations section at the trade desk Dot Com. Please note that aside from historical information today.
Operator: Discussion and our responses during the Q&A may include forward looking statements. These statements are subject to risks and uncertainties and reflect our views and assumptions as of the date such statements are made actual results may vary significantly and we expressly disclaim any obligations to update the forward looking statements made.
Operator: Today, if any of our beliefs or assumptions prove incorrect actual financial results could differ materially from our projections or those implied by these forward looking statements for a detailed discussion of risks, including the most recent economic volatility. Please refer to the risk factors mentioned in our press release.
and Jeff Bezos.
Operator: Thanks Chris and good afternoon everyone. Thank you for joining us today. As many of you know, in 2-4 we experienced the setback as we undertook the most significant company upgrade in our 16-year history.
Operator: I won't revisit the details today, but as company scale and complexity increases, changes and upgrades become necessary to unlock the next wave of growth.
Operator: That's exactly what we did and now we are beginning to see encouraging signs that the changes we made were the right ones.
Operator: As you've seen from the press release, despite increasing economic uncertainty, we showed incredible resilience, growing revenue 25% year over year, far surpassing our own expectations
Operator: We continue to grow at a rate significantly higher than the broad digital marketing industry and gain market share. As you know, we have a long history of setting goals and hitting them. We're happy to report that we did it again. We also have a long history of growing faster than all of the other scaled players in our industry, and we did that again too.
Operator: Today, I want to focus on just three topics. First, the macro environment, second, the open internet, and some of the significant changes and market shifts that have happened recently, and third, all of the upgrades we've made at TTD, including the latest updates to Kokai.
Operator: First, the macro environment. As I mentioned before, Q4 was relatively stable. Those signs of volatility were building beneath the surface amid a contentious election cycle. [inaudible]
Operator: That pressure intensified in Q1 with growing concern among clients. As you know, our primary clients are the largest brands in the world and the agencies that serve them.
Operator: All of whom are navigating increasing volatility so far in 2025. This makes us especially proud of our performance in Q1.
Operator: Our team clearly demonstrated that we're committed to growing our business in any environment and in this environment. We aim to be a source of vision and stability for our clients.
Operator: We knew that we had something to prove in Q1, and we are proud to once again say, we beat our own expectations.
Operator: Amount of advertising is extremely agile because our technology buys one impression at a time and evaluates every single impression. We can adjust quickly. We also can be more data driven than the other forms of advertising.
Operator: In an environment when CMO and Cfos are trying to do more with less we can provide them with the tools and the results that they're looking for.
Operator: Most cmo's and most cfos are planning for a range of macro scenarios and we are often a trusted partner in helping them strategize.
Operator: When the large brands are facing comparatively tough times, we are focused on grabbing land and macro environments with headwinds are short term success is better measured in how much land. We grab in this environment, we want to win market share from our competitors. We did the same thing during the pandemic while consumer state.
Operator: Home to stay safe. They also accelerated their move to streaming we adjusted our business to work from home and we grabbed land in other words, we won share from everyone else headwinds have historically accelerated the move to programmatic because of its data is control its agility and a.
Operator: Of course, its performance, but those same headwinds have also accelerated the market share gains of the trade desk, which is a good segue to topic number two.
Operator: So, let's now talk about the open Internet and its recent changes I want to share something that we put in the trade desk business planned 16 years ago.
Operator: Before we had written even a single line of code.
Operator: We argued to potential investors than data and stay there will be 10 or less scaled dsp's. We think most of them will be conflicted.
Operator: We thought that that most DSP would compromise their objectivity with buyers in order to promote their own content.
Operator: Walled gardens bias their own content at the expense of media buyers, who look to seek value and performance across the entire ecosystem.
Operator: Olive garden business models are inherently flawed.
Operator: Because over the long term their fiduciary duty to grow for shareholders is at odds with what is in the best interest of the agencies and advertisers, which is to objectively buy media from all over our competitive massively scaled digital media landscape, where no single company can pause.
Operator: Probably all of the good media.
Operator: The trade desk is pointed at the entire open internet and nearly all of global advertising will be transacted programmatically at end state. We are convinced that based on the current landscape and current competitive set we are the best positioned to win the lion's share of market share at end state.
Operator: We simply need to execute between here and there.
Operator: But so far this year there have been some massive shifts that have significantly upgraded the prospects of the open internet and the trade desk here are a few of them.
Operator: Google has been declared an illegal monopoly in two separate instances in 2025 by the U S. Court of course, the same has happened in various government cases, all over the world.
Operator: Google doesn't matter have both been under scrutiny for auction mechanics, and the recent lawsuit filed against matter. The complaint argues that I used a flawed blended price auction process to price and implement advertisements instead of the second price auction process it purported to use.
Operator: And the Google trial, the judge concluded that part of the violation of antitrust laws was the result of the implementation of first look that required publishers, who use doubleclick for publishers or DSP to offer Google's AD exchange Alex are right.
Operator: First refusal for each ad impression.
Operator: This had the effect of allowing the annex advertisers to win auctions, even when the advertisers on rival exchanges were willing to pay higher prices for the impression.
Operator: They concluded that the use of last look was also problematic and illegal for Google to use in their deceptively named product open bidding.
Operator: Just a few days ago U S. Federal judge ruled that Spotify can have a payment relationship directly with the consumer that is not mediated via Apple.
Speaker Change: As associate director of Communications and government relations of Spotify put it after nearly a decade. This will finally allow us to freely show clear pricing information and links to purchase.
Speaker Change: There is more work to do but today represents a significant milestone for developers and entrepreneurs everywhere.
Speaker Change: It's a build and compete on a more level playing field.
Speaker Change: In our opinion this creates a very significant boundary for the draconian tactics.
Speaker Change: Of walled gardens.
Speaker Change: Fourth Google announced that it is not going to eradicate cookies from its market leading chrome browser.
Speaker Change: So naturally you may ask what do all these changes mean for the trade desk and the open Internet first we've been winning share in the DSP rates year after year and quarter after quarter.
Speaker Change: And we've done that in an unfair market.
Speaker Change: We think the signal that comes from all of these shifts is one that points to a more fair and more competitive market.
Speaker Change: Which is what we built our business for our model is designed to compete.
Speaker Change: As we've said before if we can win share in an unfair market against the biggest tech players in the world.
Speaker Change: As we have over the last 15 years imagine what we can do in a fair market.
Speaker Change: As it relates to cookies. The reversal is helpful for display advertising and browser based advertising, but that is a small percentage of our business at this point.
Speaker Change: The more important take away from that shift is that our view of the world and vision for the future is getting closer and was validated once again, Google used privacy as a shield to do anti competitive things. We responded and found a way to win anyway 2025 may have some macro headwinds.
Speaker Change: But the open Internet has never been in a better place than it is today.
Speaker Change: Many have asked what the likely impact of the most recent Doj victory over Google will be.
Speaker Change: I think the courts are slow however, I do expect most walled gardens to behave differently.
Speaker Change: Google is already beginning to turn down and turn off some of the draconian and illegal practices of the past.
Speaker Change: This will create a fair marketplace, while these changes impact the buy side less than the sell side I expect that the supply chain will be more competitive which is good for both the buy and the sell sides of the supply chain.
Speaker Change: The restraints and changes in behavior that we're already seeing from these companies are expected to continue and as a result, ssp's will finally be able to compete and the net effect of these changes is a healthier ecosystem and a thriving open internet.
Speaker Change: As I mentioned on these calls before I have long believed that Google essentially acts as the defendant the plaintiff the judge the jury the court reporter and the bailout and many add transactions. This conflict of interest is clearly not in the interests of advertisers who want to bid on and buy AD impressions in a fair.
Speaker Change: An open marketplace.
Speaker Change: While decisions regarding remedies may take some time I believe its imperative that Google relinquish some of the roles that they currently play in the marketplace doing so will significantly improve competition transparency and fairness and the AD market for all participants.
Speaker Change: We continue to believe that Google will stop trying to monetize the open internet and instead focus more on their destinations I expect that Amazon will continue on the same path DB 360 is primarily technology to buy Youtube Amazon's DSP is primarily a product built to buy Amazon Prime video.
Speaker Change: Which is a good segue to my last point about the open Internet before I discuss and focus on the trade desk.
Speaker Change: Because of the pressure on consumers over the last two quarters CTV and streamers have invested more into advertising, we're seeing more supply than demand in all forms of advertising, but that is especially important in CTV in general.
Speaker Change: This dynamic makes for more of a buyer's market, but additionally, this is having a great impact on market dynamics.
Speaker Change: As a result, and general CPG companies are once again, leading the supply dynamics of the open internet. They are plugging directly into our demand. They are also describing their supply in greater detail than ever nearly every scaled player has adopted <unk> and those that have not are under monetizing there.
Speaker Change: Inventory, we expect that the market dynamics are going to create the best AD funded television experience for consumers in the history of television.
Speaker Change: They will see fewer ads they will be personally relevant and these fewer ads will make more money for content owners than linear and broadcast ever did and they will perform better for advertisers per dollar than spray and pray ever did.
Speaker Change: Let's not forget something that we've asserted for the entirety of this decade CTV is the kingpin of the open Internet and the open Internet is where all of the most beloved content of the Internet exist. The open internet monetize as movies television journalism music and sports.
Speaker Change: This change in market supply and demand is a good transition to the things that are happening at the trade desk.
Speaker Change: One of the most important upgrades, we're making at TCT as to the supply chain and programmatic itself.
Speaker Change: Innovations such as open path are very important to the future of the open Internet open path is gaining wider adoption across the industry and as a result advertisers are getting clearer line of sight into exactly what they are buying and it also provides publishers with a much clearer view of what advertisers are willing.
Speaker Change: To pay we're seeing example, after example of the benefits that open path is providing.
Speaker Change: Arena grew publishers major titles, such as men's journal and parade, they boast more than 100 million visitors per month with open path. They were able to increase their fill rates by forex and improved programmatic revenue by 79% all because they are able to provide advertisers are clients.
Speaker Change: With clear visibility into what they're buying.
Speaker Change: I can list dozens more examples the New York post saw its digital advertising bill rate increase more than eight acts and programmatic revenue increased 97% with open path in.
Speaker Change: In the world of CTV Vizio sides programmatic revenue increased 39% and another major network saw their fill rate increased seven acts leading to a revenue increase of over 25% to be clear open path does not represent the trade desk getting into the supply side of the market.
Speaker Change: Open path is not built to help publishers with yield management or AD, serving we're very hopeful that innovations like open path will prompt supply chain innovation and efficiencies across the industry and if we accomplish that we will help our clients to put more AD dollars to work.
Speaker Change: We don't expect open path to be the only supply chain for us we don't expect it to even be the primary one, especially given the fact that ssp's now have a better chance to compete than they did before the Google verdict how.
Speaker Change: However, open path of the Canary in the coal mine that helps us better understand the supply chain and often the games and tactics of op Eustachian, our best discovered through some form of AB testing open path is keeping exchanges and SSP in check so that we don't have to wait on government to untangle curve.
Speaker Change: Practices like those recently exposed at Google.
Speaker Change: Another massive upgrade we have made to improve the supply chain was the acquisition of sincerity.
Speaker Change: Most outside of AD Tech don't know the company. So for the uninitiated since Sarah is our metadata company that Crosby Internet looking for insights about the supply chain of advertising and seeks to shine a light of transparency on that supply chain.
Speaker Change: Following the acquisition, we have been working to invest and Sarah data across Coca So our clients can have as much data and signal as possible about ad performance.
Speaker Change: But it doesn't stop there in the coming months, we plan to relaunch their product for the AD Tech community and offer a new version of <unk>, Sarah called opened since era. This product will be free to advertisers to agencies to AD tech companies to sellers and to publishers, who want to better understand the <unk>.
Speaker Change: Fly chain and how to make it more efficient.
Speaker Change: Let's talk now about our progress on Cotai.
Speaker Change: Core of cocoa has been delivered and adoption is now ahead of schedule around two thirds of our clients are now using it and the bulk of the spend in our platform is now running through Cotai, we expect all clients to be using it by the end of the year.
Speaker Change: One thing about Cotai that I would like to underline whenever we go through our platform overhaul like this and this is the biggest in our history, we're always trying to balance giving clients exactly what they want versus pushing the industry forward.
Speaker Change: We're in a tremendously privileged position of being the largest platform pointed at the open internet looking across roughly 17 billion AD opportunities a second along with the most premium inventory and data sources in the world from that vantage point, we know how marketers can get the most out of their <unk>.
Speaker Change: In paint and we know how to help them utilize the power of programmatic, bringing a broader more strategic perspective to media buying has always been central to our approach, helping our clients and industry innovate and move forward I'm confident that by the end of this year, we will reflect on cotai as them.
Speaker Change: Most powerful buying platform the industry has ever seen precisely because it combines client needs with the strong point of view.
Speaker Change: On where value is shifting and how to deliver the most efficient return on ad spend.
Speaker Change: He will introduce the final major components of Coca, including a revolutionary new approach or understanding and managing the performance of deals one of the most important things we do to realize the value of programmatic. We will also continue to improve the Polish the navigation and usability.
Speaker Change: But to be clear Coke has already proven itself and the results are fantastic the injection of our industry, leading koa AI tools across every aspect of our platform has been a game changer and we're just getting started.
Speaker Change: Let me outline a conundrum that marketers are currently facing and I hear this from CMO and agency leaders.
Speaker Change: Almost daily basis.
Speaker Change: Walled gardens are easy to use and marketers can use them for easy access to what I would call cheap reach or put another way, let me reach as many people as possible as quickly and cheaply as possible.
Speaker Change: All as measured by those walled gardens themselves.
Speaker Change: The problem begins when the metrics provided by those walled gardens don't lineup with the actual business outcomes over time. So for example, walled garden measurement may tell an advertiser they've accounted for 1 million toothbrush sales this quarter.
Speaker Change: But they only actually sold half a million.
Speaker Change: Those measurement disparities overtime create misalignment for marketers and the businesses, they're supporting all because of the attraction of cheap reach.
Speaker Change: This trend is a major driver of demand for open internet alternatives, but compared to the ease of walled gardens, where the supply chain is controlled by one company. The internet is more complex, but the outcomes.
Speaker Change: When we help marketers manage that complexity are exponentially better more and more marketers are recognizing this and they are embracing <unk> as a way to unlock the full value and performance potential of the open internet.
Speaker Change: One Great example is Deutsche Telekom Theyre running the streaming TV service called Magenta television and they use our platform to try to grow their subscriber base working with their agency imitrex.
Speaker Change: Using <unk> data from their existing customers Deutsche Telekom was able to use the advanced AI tools in our cocoa platform to find new customers and to find the right out impressions across display and CTV most relevant to reaching those new customers successfully and the results were very impressive.
Speaker Change: They saw an 11 X improvement in post click conversions attributed to advertising and then 18 X improvement in the cost of those conversions.
Speaker Change: <unk> Telecom is now planning to use co cai across more campaigns a transition that is fairly typical as clients move from our previous platform solo Maher to our newer more advanced AI fueled platform okay.
Speaker Change: They begin by testing Coca on several initial campaigns seen meaningful performance improvements and then expand Coca is used across all of their campaigns and across all verticals clients that are adopting hawkeye are realizing major benefits.
Speaker Change: For example on average clients that have shifted over had seen a 42% reduction in cost per unique reach we're also working with clients beyond typical brand and reach metrics co. Cai is delivering on lower funnel, kpis, including 24% lower cost per conversion and 20%.
Speaker Change: Your cost per acquisition.
Speaker Change: These improvements are helping unlock performance budgets from new and existing clients.
Speaker Change: And thanks to the work, we've done and our data marketplace to increase the discover ability of third party data campaigns on Coke I'd use roughly 30% more data elements per impression all of these efficiencies mean more dollars can be reinvested and put to work.
Speaker Change: Lastly, I mentioned in our last call that we've made significant upgrades across the company and engineering. We now have over 100 Scrums all shipping product every week, we've overhauled the product process and as a result business in product and engineering are more in sync than they've been in years, we Sim.
Speaker Change: <unk>, our go to market teams and their org structures. While it is still early we are already seeing green shoots are GBP pipeline and the number of JV fees in active contract negotiations are at all time highs.
Speaker Change: We've hired a new COO Vivek kundra.
Speaker Change: He joined the company as our new Chief operating officer does that may be a well known name to many of you as he was the first ever Chief information officer for the United States Federal government back in 2009.
Speaker Change: But perhaps most relevant to us he spent several years at Salesforce and is a key driver of growth at a time when they were pretty much the same size and scale as we are now.
Speaker Change: These kind of appointments will help us achieve our very own high growth expectations in the years ahead.
Speaker Change: So let me close by reiterating that we are highly encouraged by the improvements to our business that led to our outperformance in the first quarter as we continue to progress and improve as a company. We are confident in our ability to continue to outpace the market moving forward, but our eyes are on the horizon and we made.
Speaker Change: The assertion that we put in our business plan and 16 years ago.
Speaker Change: The largest independent and objective DSP will command a lion's share of market share at end state today.
Speaker Change: Today, we control less than 2% of the global advertising Tam, leaving us with an extraordinary runway for growth in front of us. So.
Speaker Change: So far this year walled gardens have been put in check from governments, regardless of the actual remedies I believe this is a very important moment for the open internet not just because of the remedies may lead to a substantially fair marketplace in which the trade desk and everyone else competes on a more level footing, but also because of this process.
Speaker Change: Has done a great deal to shine a light on the power of the open Internet in contrast to the limitations of walled gardens, we've been winning in an unfair market. We're even more confident we can win in a fair market, while we can't control the macro environment, we continue to grow at a healthy pace and.
Speaker Change: Consistently generate strong EBITDA and free cash flow.
Speaker Change: The pace at which we're increasing our pipeline and signing new joint business plans indicates that we are becoming an indispensable partner and our clients' business growth and we anticipate grabbing land over the rest of this year, depending on what the macro environment throws at us, we'll either grab land where accelerate.
Speaker Change: Growth, but either way the destination on the horizon is the same it's why we will never stop innovating Coca is perhaps our biggest engineering achievement, yet and it is helping clients get the full value of the open internet and manage the complexity of the open internet at the same time ease.
Speaker Change: Even as all of the features of Coca are fully launched we will continue to iterate and ship product every week.
Speaker Change: As I said Coca adoption now represents the majority of our spend almost two thirds a significant acceleration from where we ended 2024 and clients are seeing major campaign improvements as a result, we continue to innovate and make the supply chain more efficient through products like open path.
Speaker Change: Enhancements, we've started launching throughout our platform with the acquisition of since era.
Speaker Change: Our CTV and retail business continued to gain momentum and brands are continuing to see tremendous value with the Walmart DSP.
Speaker Change: I know I said this earlier, but I want to say it again and be Super clear I have never been more optimistic and excited about the future of the open Internet major trends are making the open ended up more attractive to advertisers than ever and the trade desk is bringing to market the kinds of innovations that will help marketers truly unlock.
Speaker Change: The value in a way that will drive business growth and differentiation for them and with that I'll pass the baton to Laura who will give you more color on the quarter.
Laura Shanghai: Thank you Jack and good afternoon, everyone.
Laura Shanghai: We have started 2025 on a strong note.
Laura Shanghai: Great. We made at the end of 'twenty 'twenty four are beginning to deliver results, putting us in a better position to capture a expanding market opportunities.
Laura Shanghai: So great adoption accelerated exiting December and our product and engineering teams are shipping updates faster than ever.
Laura Shanghai: CTV growth remain strong fueled by the continued shift away from linear TV and expanding programmatic capabilities of the world's largest media companies.
Laura Shanghai: And advertisers are increasingly using Rachel data for our marketplace to tie us bench railroad cells.
Laura Shanghai: Our independence and objectivity continue to be key differentiators, especially in times of uncertainty as brand seek trusted results for new partners.
Laura Shanghai: Turning to our results Q1 revenue was $616 million or 25% increase year over year.
Laura Shanghai: We generated $208 million of adjusted EBITDA during the quarter, representing a 34% marking our sincere acquisition closed in Q1 and there is no revenue as a result of this acquisition.
Laura Shanghai: Our strong growth in Q1 was broad based in terms of geography channel and verticals.
Laura Shanghai: <unk> growth was strong once again as it remains our largest and fastest growing advertising channel.
Laura Shanghai: In Q1 video, which includes CTV, representing a high 40 percentage share of our business and continues to grow as a percentage of our mix.
Laura Shanghai: Mobile represented a mid 30 percentage share of spend during the quarter, while display represented a low double digit share in audio representing around 5%.
Laura Shanghai: Geographically North America represented 88% of spend and international represented about 12% spent on the first quarter.
Laura Shanghai: International growth again outpaced North America for the ninth quarter in a row.
Laura Shanghai: We continue to execute our growth playbook internationally led by CTV.
Laura Shanghai: We remain optimistic that our business outside North America continue to be a strong contributor to our overall growth this year and in the years to come.
Laura Shanghai: In terms of verticals that represent at least 1% of our spend we saw double digit growth in the majority of our verticals with particularly strong growth in technology and computing and healthy living.
Laura Shanghai: Home and garden and personal finance were below average.
Laura Shanghai: Continue to see significant opportunities for us to gain share in all of the vertical we serve.
Turning now to expenses Q.
Laura Shanghai: Q1 operating expenses, excluding stock based compensation were 433 million or 23% from a year ago.
Laura Shanghai: During the quarter, we continued to make investments in our team and platform, particularly in areas like packaging operations at the AI and machine learning tools embedded in Cotai continued to drive greater campaign performance.
Laura Shanghai: Income tax expense was $25 million for the first quarter, driven primarily by our profitability and stock based awards.
Laura Shanghai: Adjusted net income for the quarter was $165 million or 33 cents per fully diluted share.
Laura Shanghai: Net cash provided by operating activities was $291 million in free cash flow was $230 million in Q1.
Laura Shanghai: DSO was exiting the quarter were 85 days down one day from a year ago.
Laura Shanghai: We're 70 days consistent with a year ago.
Laura Shanghai: Our balance sheet had about $1 7 billion in cash cash equivalents and short term investments at the end of the quarter.
Laura Shanghai: We have no debt on the balance sheet.
Laura Shanghai: In Q1, we repurchased $386 million of our class a common stock via our share repurchase program.
Laura Shanghai: Given our strong balance sheet and consistent cash flow generation, we plan to continue opportunistic share repurchases, while also offsetting dilution from employee stock issuances.
Laura Shanghai: As we charge for our second quarter outlook, we want to acknowledge the volatile macro backdrop, particularly its impact on large global brands.
Laura Shanghai: That said, we are encouraged by the strength of our underlying business driven by continued progress on Cotai.
Speaker Change: He admits for engineering and go to market teams and its strong pipeline of joint business plans.
Speaker Change: We remain confident in the fundamental drivers of our revenue growth, especially given our track record of gaining market share during periods of economic volatility.
Speaker Change: Assuming the macro environment remains stable and we do not see deterioration in economic conditions. In Q2, we expect revenue to be at least $682 million, reflecting 17% year over year growth.
Speaker Change: Our Q2 growth estimates also reflect the lapping of political AD spending which contributed approximately 1% for Q2 2024 right.
Speaker Change: We estimate adjusted EBITDA to be approximately $259 million in Q2.
Speaker Change: We continue to take a thoughtful approach to managing our investments and expect to remain opportunistic with our share repurchases.
Speaker Change: We are investing in our core areas like infrastructure and talent to support long term growth.
Speaker Change: Our focus is on maintaining a balanced and efficient expense base, allowing us to stay agile and well positioned to capture share while retaining flexibility should narrow conditions evolve.
Speaker Change: We remain the leading independent platform in a rapidly growing industry delivering profitable growth.
Speaker Change: With strong execution across key initiatives, such as CTV retail media International markets. Okay. You adhere to an open house, we are confident in our ability to outpace the market and capitalize on the significant opportunities ahead.
Speaker Change: That concludes our prepared remarks, and with that operator, let's open up the call for questions.
Speaker Change: At this time, we will be conducting a question and answer session.
Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Once again, please press star one if you have a question or a comment. The first question comes from Sean Patel with Susquehanna. Please proceed.
Speaker Change: Hey, guys.
Speaker Change: Yes, congrats on a very strong quarter very strong start to the year.
Speaker Change: I had just one question can you elaborate on the progress that you're seeing from the product and go to market changes.
Speaker Change: That you implemented toward the end of last year I mean, it sounds like those efforts are beginning to gain traction and contributed pretty meaningfully to the strong start.
Speaker Change: Thanks, Sean.
Speaker Change: Absolutely so first.
Speaker Change: Of course, Q Q1 was a very strong quarter for us.
Speaker Change: We showed our resilience I think the team felt like they had something to prove and I think we did it.
Speaker Change: I'm really proud of how well the team has executed.
Speaker Change: The upgrades that we made to our business did help contribute to our outperformance.
Speaker Change: And of course, we are always making changes is always trying to improve but we did so with with a lot more.
Speaker Change: <unk> said more upgrades more changes than usual they were not easy, but they definitely were worth it.
Speaker Change: In the current environment, we continue to be a source of vision and stability for our clients as they are trying to navigate.
Speaker Change: The uncertainty that's in front of them.
Speaker Change: But a couple of other just green shoots that we're seeing that I just wanted to highlight.
Speaker Change: Co high adoption accelerated as we were exiting December and now about two thirds of our clients are now using co Chi which is ahead of schedule.
Speaker Change: Of course part of what we've talked about in our last earnings report is a lot of effort to inject AI across the platform and we've done that with a bigger step forward in the last.
Speaker Change: Quarter than we ever have at any point in our company history before Youll remember that we started introducing koa and 2017.
Speaker Change: But as a result of these investments.
Speaker Change: And upgrading our platform altogether and Coca campaign performance on Coca continues to be exceptional Coca is delivering on lower funnel, kpis, including 24% lower cost per conversion at 20% lower cost per acquisition.
Speaker Change: And these improvements are helping unlock performance.
Speaker Change: And performance budgets from existing clients, but also from new clients that are a bit more focused on the performance side of things our product and engineering teams are more collaborative and effective than they've been in years.
Speaker Change: And we now have as I mentioned in the prepared remarks over 100, Scrums and they're all shipping product weekly.
Speaker Change: The new reporting structures are working.
Speaker Change: And they are leading to more engagement with brands and agencies. We still have work to do we have not realized all of the fruits of those upgrades there is still more to come on that.
Speaker Change: But the trend line is awesome and it's good enough to validate that we've made the right choices.
Speaker Change: Also validating in that same way as our strong Jamie peace pipeline as.
Speaker Change: As we've highlighted before.
Speaker Change: Over 40% of our spend is now under <unk>.
Speaker Change: And then you can think of JV piece is partnerships with long term commitments and vision for what we'll do together and that continues to grow 50% faster than <unk>.
Overall spend so when we put those together our business grows faster and so naturally we are focused on more of those.
Speaker Change: But all in all of these changes put us in a better position to win market share this year and in the years ahead.
Speaker Change: There is more work to do but I could not be more excited about our performance in Q1 and I'm, even more excited about the opportunities ahead and as I mentioned in our prepared remarks, our eyes on the horizon. So.
Speaker Change: Very excited about.
Speaker Change: Our future and the opportunity of the open Internet.
Speaker Change: Thanks, John next question.
Speaker Change: Next question comes from facility care Cif. Please proceed.
Speaker Change: Thank you good afternoon, Jeff. Thank you very much for your comments regarding the guilty verdict in the Gogo trial.
Speaker Change: Obviously, there is a long process and we don't know how long that will be but in the meantime, if Google does deemphasize their open internet businesses as you posited what exactly do you think will be the downstream implications for DSP is like good trade as a species and all other is made.
Speaker Change: Numerous participants since the open internet value chain.
Speaker Change: Absolutely. Thanks, so much for the question so first.
Speaker Change: Let me just set the table a little bit.
Speaker Change: As we mentioned there have been two substantial verdicts.
Speaker Change: For Google.
Speaker Change: An anti trust trials, where in both of them. They were found guilty on some portion of the charges. The most.
Speaker Change: Significant one for US was the most recent one where they were.
Speaker Change: Found guilty of monopolizing, the AD server and the SSP markets.
Speaker Change: As we said they've been judged Jerry Bela.
Speaker Change: Court reporter everything.
Speaker Change: And.
Speaker Change: They will have to quit.
Speaker Change: All of those jobs at least.
Speaker Change: And that is going to make a more fair market.
Speaker Change: I would summarize the 2025 has been a very rough year for for Google, but even for walled gardens as a whole.
Speaker Change: The news yesterday about apples decision to focus more on AI search engines, rather than Google's as a result of the remedy of that first trial is as significant as anything and it tells you what's to come.
Speaker Change: Which is.
Speaker Change: Yes.
Speaker Change: Google has got to focus on its core business.
Speaker Change: And as they focus on the core business, which is largely about search and that includes Gemini and also Youtube.
That means they are going to be less focused on the open internet.
Speaker Change: And that means for us that we can go participate in the open internet with less competition.
Speaker Change: Even more significant than less competition is there.
Speaker Change: <unk>.
Speaker Change: <unk> has been disrupting the competitive market that we would have thrived even more so I stand by what I've said again, and again and put it in the prepared remarks that we were winning and an unfair market and the market is getting fair already.
Speaker Change: And as a result, we believe that we can compete even better and a fair market.
Speaker Change: We think that this is a major victory for the open Internet.
Speaker Change: As I mentioned in the prepared remarks about Spotify and.
Speaker Change: And is there sort of viewed with Apple if you will I think again and again we're seeing.
Speaker Change: Walled gardens, and draconian tactics around auctions being put in check.
Speaker Change: So that the market is more fair.
Speaker Change: And I believe that that is very good for the open Internet and I don't believe theres any players that better represents the interests of the open internet and the trade desk and I don't think there is a company that will benefit more from these changes than us as well.
Speaker Change: Thanks for the question.
Speaker Change: Thank you.
Speaker Change: The next question comes from Justin Patterson with Keybanc. Please proceed.
Speaker Change: Alright, Thanks for the question and I appreciate all the details.
Speaker Change: Regarding our quarter just on the Q2 guidance with many large brands seeking to increased uncertainty in their reports.
Speaker Change: If you think about that in your Q2 guidance. How are you managing the business into the back half of the year, where visibility is undoubtedly more clouded than it was at the start of the year. Thank you.
Speaker Change: Thanks, Josh I appreciate the question. So so first.
Speaker Change: In order to talk about Q2 guide I have to just first point to what we just reported about Q1 and I'm just so proud of our team's performance there.
Speaker Change: Their execution.
Speaker Change: Like I said I felt like they went into this quarter feeling like they had something to prove in they did.
Speaker Change: I'm, just really proud of our team.
Speaker Change: Yeah.
Speaker Change: As I mentioned before Q4 was relatively stable, although there were some signs of volatility.
Speaker Change: Okay.
Speaker Change: Starting and ending with the.
Speaker Change: Contentious election cycle right.
Some pressure has intensified in Q1 with some growing concerns about macro uncertainty from some of our clients.
Speaker Change: But of course, we have our eye on the horizon and we believe that we will grab land.
Speaker Change: And the rest of the year or accelerate growth and potentially bolt.
Speaker Change: So.
Speaker Change: We think that for the rest of the year, our focus has to be.
Speaker Change: Recognizing the large brands are facing comparatively tough times, and we need to be there to help them navigate that and be a source of strategic consulting for them as they are trying to figure out how to navigate what is <unk>.
Speaker Change: Certainly unprecedented.
Speaker Change: But because of our objectivity and because of the fact that we've aligned our interest with them in a bad building trust for years, we're in a very strong position.
Speaker Change: And with the macro environment as it relates to the open internet being more positive than it's ever been.
Speaker Change: Those together plus what's happening in streaming which is also another secular tailwind that we've talked about extensively we think that puts us in a good position.
Speaker Change: Grab land or accelerate growth of course, we also have to talk about our focus on upgrading our product across the board there.
Speaker Change: Still.
Speaker Change: Lost lots of exciting theme coming out of Cotai and things that we continue to upgrade.
Speaker Change: So there are a few few major pieces left that we expect to ship in the very near future.
Speaker Change: So we're extremely excited about all the upgrades that are coming in all the things that we're building.
Speaker Change: Honestly, our excitement has gone up as we see a more competitive landscape in an opportunity for us to compete and put product in market to compete.
Speaker Change: Of course, that's not.
Speaker Change: Independent of what I would even call it third category, which is supply chain and there is just because of this increased competition.
Speaker Change: And a better ecosystem.
Speaker Change: Just so much opportunity to innovate and make the supply chain more efficient.
Speaker Change: Especially when we continue to invest in AI products Theres, just so much that the.
AI investments can do to capitalize on improving supply chain. So there's just so much there so as long as the market is competitive and it's heading in that direction. We believe at the end state.
Speaker Change: <unk> focused DSP will have the lion's share of market share and we believe that's what we're heading auto we just got to keep executing thank you.
Speaker Change: Next question comes from Matt Swanson with RBC. Please proceed.
Matt Swanson: Yeah. Thank you for taking my questions. Congrats on the quarter I'm sure. It felt really good to get this press release out.
Speaker Change: Jeff on Amazon, it's gotten a lot of attention recently, both in our investor meetings, but also in the press specifically around its DSP and the push into Prime video ads I guess, maybe broadly how are you thinking about the competitive landscape right now and then specific to Amazon are you seeing any noticeable shifts in.
Speaker Change: Now Amazon showing up as a competitor and then maybe a half question off that does Amazon and their datasets in CTV increase the need for other publishers to find and work more closely with a partner like trade desk to compete effectively.
Thanks, So much for the question Ryan I, especially like the last part of it because.
Speaker Change: I think the premise of the question is just spot on.
Speaker Change: So let me just talk a little bit about Amazon and our competition with Amazon So first.
Speaker Change: <unk> is massive and there will be lots of.
Speaker Change: <unk>.
Speaker Change: Our players that I think have room to do well in this space.
Speaker Change: So I don't think anybody is going to own all of that Tam.
Speaker Change: So I think there is opportunity for healthy competition, but as I mentioned in the last comment as well.
Speaker Change: In the prepared remarks, I believe the objective DSP that alignment of interest with buyers well win the lion's share of market share and there is no way that is Amazon.
Speaker Change: Our CTV growth is faster than Amazon's advertising growth.
Speaker Change: And we're very clear on what Amazon's playbook, so it's actually very similar to the Google Playbook goes.
Speaker Change: Google is primarily focused on search slash Gemini and Youtube.
Speaker Change: <unk> hundred 60 has largely become a tool to buy Youtube that is their their focus that is there a bias.
Speaker Change: In terms of their incentives as well as what moves the needle on our P&L as big as Google's.
Speaker Change: Amazon.
Speaker Change: You can debate, whether they are core businesses retail are their core business is AWS.
Speaker Change: But in either case.
Speaker Change: Prime video supports retail.
Speaker Change: And it poses a threat to their core business to be to focus on the open internet and to spend on anything Besides prime video.
Speaker Change: They are building this product to sell more prime video ads.
Speaker Change: That's not objective and then of course, you have to add to the fact that they compete with most advertisers on something so unlike Google where they don't have products that compete with all of them and especially when you look at so many companies that are in CPG or other things.
Speaker Change: And a lot of advertising Amazon is competing.
Speaker Change: I think it puts them in a very difficult position because of the amount of the fortune 500 companies across food retail cloud delivery and so many others and then especially in big test of competing with all of them and then there is already a big concern about the amount of data that exist.
Speaker Change: Inside of AWS, and how much data to put at risk and so that's why I say when you say when you when you recognize that as our U S may be their core business.
Speaker Change: Not at risk over advertising dollars to buy in the open Internet.
Speaker Change: Not likely to happen.
Speaker Change: Which is why in a way I don't really consider them a competitor while they do call. It a DSP that DSP is really there is a buying tool for prime video I.
Speaker Change: I do think it's very reasonable to expect that at some point Prime video will open up its inventory to additional demand because it's a little bit different than Youtube, where theres. So much supply and its lower quality Prime video is obviously more professional content that Mike welcome additional demand.
Speaker Change: But to the last part of your question I think it's really important to consider that which is.
Speaker Change: Why would another content.
Speaker Change: We're always talking about how the real promise of the open Internet is the fact that all the greatest stuff on the open internet, whether it's all of the world's music or whether it's all the world's movies or TV or journalism or sports all of that is monetize in the open internet.
Speaker Change: Those players why would a disney or a P top for a parallel who is also competing with them on making content.
Speaker Change: Partner with a company that is also trying to put it all adds ahead of that.
Speaker Change: I, absolutely believe that those content companies are leaning into our partnerships with them in part because we don't compete with them one of the ways that we've been so successful is that all the different places that people that we can partner with partner with us because they know who we are and what we do and what we stand for.
Speaker Change: Those that are in some cases being more duplicitous or self service.
Speaker Change: There are so many things that I would be doing differently. If I were running the DSP and Amazon and focused on the open internet and it's so clear that that is not their focus which is why in a way I don't consider competition.
Speaker Change: Of course, all of the advertising space, it's a massive Tam we're going to go chase. The lion's share. We think will earn it we just have to keep executing but that's that's going to mostly be up to us and continuing to execute.
Speaker Change: The things that we're focused on rather than getting distracted by somebody like Amazon. Thank you.
Speaker Change: Next question comes from Jessica Reif Ehrlich with Bank of America. Please proceed.
Speaker Change: Thank you.
Speaker Change: Jeff The Upfronts Nick is next week and you work with most of these publishers. Some via open path can you talk about the progress that you're seeing in open path I noticed several new names in today's press release.
Speaker Change: And the improvement that you're seeing from both sides, both you and the publishers.
And maybe give us your overall expectations for how the upfront will play out.
Speaker Change: Thank you.
Speaker Change: So let's start with the upfront.
Speaker Change: Yes.
Speaker Change: First.
Speaker Change: Right now we're facing a degree of uncertainty.
Speaker Change: That is unique to upfronts over the past.
Speaker Change: Of course Covid.
Speaker Change: Lots of ways was much much worse, but aside for a moment like that where there is where there is uncertainty when you go into the upfront and there is a higher degree of uncertainty is harder to want to commit to.
Speaker Change: To put dollars to work at a certain rate.
Speaker Change: For the course of an entire year.
Speaker Change: So instead, what happens at the Upfronts as people go in with a commitment to try or to put dollars in in a more agile setting and there is nothing more agile or more data driven than programmatic. So we anticipate that this upfront will be a little bit weaker for linear and a little bit stronger for <unk>.
Speaker Change: <unk> and digital as a result of the.
Speaker Change: The uncertainty that the world is facing right now so we think all of that is very good for us.
Speaker Change: I do believe that youre going to see more and more move towards.
Speaker Change: A more forward market light way of doing things that is more sophisticated than than the upfronts that were invented in the 19 sixties and haven't progressed that much as it relates to the specifics of the way linear deals are done.
Because I believe that digital ecosystem is so much more conducive to a healthy and sophisticated forward market.
Speaker Change: We are laying groundwork and coca for those types of things and one of the big products that remains for us to ship and where.
Speaker Change: Where we're releasing very shortly as a product called deal desk that will lay groundwork for us to get more forward market like deals and create a lot more sophistication and a lot more performance.
Speaker Change: Out of Upfronts or forward market than that what currently exist in the upfronts.
Speaker Change: As it relates to open path itself.
Speaker Change: It's been pretty amazing.
Speaker Change: <unk> been in market for a couple of years now, but we've been obsessed with improving the visibility and transparency of our supply chain.
Speaker Change: And.
Speaker Change: Really what we're trying to do is make certain that the supply chain is efficient. So if you just zoom out.
Speaker Change: All we're trying to do is make it so that there aren't so many middleman so many taxes, especially those that don't add more value than they extract.
Speaker Change: So that the open internet isn't operating at a disadvantage because we always look at this is to a large extent. This is the open internet competing against walled gardens.
Speaker Change: And walled gardens lose objectivity, they lose on transparency, but in some cases, they've won on supply chain efficiency, because they control well.
Speaker Change: So even with really large take rates, but they all have.
Speaker Change: Cost of goods sold is so low.
Speaker Change: They can make very healthy margins and then they have short supply chains, because they control those too.
Speaker Change: So in order to compete with that we need a supply chain that is quite efficient.
Speaker Change: So even though.
Speaker Change: We're just early in the process and we're using that to some extent.
Speaker Change: As a stocking horse as well as a Canary in the coal mine. If you will the results have been phenomenal. So the arena group increased their fill rate by Forex and their revenue by 79% on open path.
Speaker Change: Europe posted increases fill rate by <unk> of their revenue by 97%.
Speaker Change: And we have some large players like Spotify at Fox that are integrating right now and we have hundreds of others like Reuters, the Washington Post op asheboro to so many others.
Speaker Change: And we don't need to open path to be 100% of inventory to get all the benefits.
Speaker Change: We just need the visibility from it so that we can make certain that we're steering the supply chain.
Speaker Change: In the right way so it is doing its job absolutely.
Speaker Change: One way or another we will make certain that the supply chain gets more efficient so that the open internet and market competition wins over the walled garden way of doing business and because of all the all the changes that have happened in our space in the last few months, we think we're in a better position.
Speaker Change: To capitalize on a more efficient supply chain than we ever have in the past.
Speaker Change: And whether that's because of Google verdict, whether that's because of our own efforts with open path, whether that's because of the injection of AI into our core product type tokai oriented things like <unk>.
Speaker Change: Supply path optimization and open path all of those are paying fruits and when they work together the open internet in a better position than I think any walled garden.
Jessica: Thanks Jessica.
Next question comes from Mark Kelley with Stifel. Please proceed.
Mark Kelley: Great. Thanks very much.
Speaker Change: The first question I.
Speaker Change: I appreciate the commentary on the Amazon competition I did want to ask you about D V 360, because it does seem like they continue.
Speaker Change: Continue to invest in that product.
Speaker Change: With more retail media functionality and things like that.
Speaker Change: I guess do.
Speaker Change: Do you see like a byproduct of the Doj suit.
Speaker Change: Being Google kind of stepping on the gas on the DSP side, maybe or just would love to get your thoughts there.
Laura Shanghai: And then Laura.
Speaker Change: In Q1, the sequential decline was.
Speaker Change: A lot better than what we typically see in Q1.
Speaker Change: Would it be possible to give us.
Political in Q1.
Speaker Change: Because that's obviously a healthy healthy sequential decline given the election cycle. Thank you.
Speaker Change: Great well I'll take the first part and then.
Speaker Change: Or you can.
Speaker Change: Figure out first of all.
Speaker Change: A portion.
Speaker Change: As it relates to GBP 360.
Speaker Change: Okay.
Speaker Change: I just look at that through a strategic lens.
Speaker Change: And especially what we learned from what was made public during.
Speaker Change: The trials that they recently went through.
Speaker Change: The majority of their spend is going to buying media on Youtube.
Speaker Change: And to me that makes sense for them because their cost of goods sold and Youtube is close to zero.
Speaker Change: An amazing asset for them, but.
Speaker Change: But it's not the open internet.
Speaker Change: Certainly they are not in a position to objectively by the rest of the open internet.
Speaker Change: So when you talk about like bringing retail data on our retail partnership that's all about trying to monetize in my view, that's about trying to monetize that.
Speaker Change: Almost unlimited supply that they have in Utah and Youtube.
Speaker Change: And so if they if they are able to monetize that better by adding retail media they will.
Speaker Change: But.
Speaker Change: We're not that far away from DB 360, just being a buying tool for Youtube.
Speaker Change: And if I were them, that's what I would seriously consider doing all the antitrust headaches, Tom from participating in the open Internet.
Speaker Change: Pretending to be objective about what you buy.
Speaker Change: I just feel like Facebook can say.
Speaker Change: Our properties are awesome, and the best and we're just going to focus on monetizing those.
Speaker Change: I think theres, a very high probability that that's where they end up and then we'll monetize the open internet and they'll monetize Youtube.
Mark Kelley: I think that's almost what it is already to your point in Florida, Yeah. Thanks, Mark really appreciate the question.
Mark Kelley: I would say, we're really proud of what we delivered in Q1. It was such a strong quarter for us and I would attribute the strength to the uptake in Coke high adoption in the early momentum from the upgrades that we talked about earlier in the year related to our business that we made in Q4 I wouldn't say that the Q4 to Q1 sequential strength was driven by political.
Mark Kelley: Simply because we exited a presidential cycle in the U S entered 2025, when we're not in an off cycle and don't have much contribution. So it's more just strengths in the changes, we're making to the business.
Speaker Change: Perfect. Thank you Mark.
Mark Kelley: Thanks Mark.
Speaker Change: We have reached the end of the question and answer session.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: Yeah.