fourth quarter 2020 investor presentation, february 18, 2021
TRANSCRIPT
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Fourth Quarter 2020 Investor Presentation, February 18, 2021
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Statement of Caution Under the Private Securities Litigation Reform Act of 1995
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody assumptions that may prove to have been inaccurate, including statements relating to the advertising strategies, needs and expectations of brands and agencies, industry and market trends, expectations regarding investment strategies, and the financial targets such as revenue, Adjusted EBITDA and Adjusted EBITDA margins of The Trade Desk, Inc. (the Company). When words such as “believe,” “expect,” “anticipate,” “will”, “outlook” or similar expressions are used, the Company is making forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give readers any assurance that such expectations will prove correct. These forward-looking statements involve risks, uncertainties and assumptions, including those related to the Company’s limited operating history, which makes it difficult to evaluate the Company’s business and prospects, the market for programmatic advertising developing slower or differently than the Company’s expectations, the demands and expectations of clients and the ability to attract and retain clients. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond the control of the Company. These are disclosed in the Company’s reports filed from time to time with the Securities and Exchange Commission, including its most recent Form 10-K and any subsequent filings on Forms 10-Q or 8-K, available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not intend to update any forward-looking statement contained in this press release to reflect events or circumstances arising after the date hereof.
Included within this presentation are non-GAAP financial measures that supplement the Condensed Consolidated Statements of Operations of theCompany prepared under generally accepted accounting principles (GAAP). Reconciliations of GAAP to non-GAAP amounts for the periods presentedherein are provided in schedules accompanying this presentation and should be considered together with the Condensed Consolidated Statements ofOperations. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. TheCompany's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, andcash generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company’s financial performance using someof the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for or superior tocorresponding, similarly captioned, GAAP measures and may be different from non-GAAP financial measures used by other companies.
Information contained in this presentation concerning the industry and the markets in which the Company operates, including the Company’s generalexpectations and market position, market opportunity and market size, is based on reports from various third-party sources, assumptions that theCompany has made based on information in such reports and the Company’s knowledge of the market for its platform. Although the Company believessuch third-party sources to be reliable, the Company has not independently verified the information and cannot guarantee its accuracy andcompleteness.
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What we do
We provide a platform for ad buyers.
Most buyers are ad agencies or other
technology companies.
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May 2011 20122014201520162017201820192020
$.08 Day* First $1M Month*First $1M Day*First $2M and $3M Day*First $100M Month*First $5M Day and $200M Month*First $10M Day*First $1B Quarter*First $1.5B Quarter*
We’ve been profitable since 2013. 2015: $114M in Revenue, $16M in Adj. Net Income and $39M in Adj EBITDA.
2016: $203M in Revenue, $35M in Adj. Net Income and $65M in Adj EBITDA2017: $308M in Revenue, $70M in Adj. Net Income and $95M in Adj. EBITDA
2018: $477M in Revenue, $124M in Adj. Net Income and $159M in Adj. EBITDA2019: $661M in Revenue, $176M in Adj. Net Income and $214M in Adj. EBITDA
2020: $836M in Revenue, $336M in Adj. Net Income and $284M in Adj. EBITDA 4
* Total spend on platformAdjusted Net Income and EBITDA typically excludes items such as depreciation and amortization expense, interest expense, income taxes, stock-based compensation, preferred stock warrant liabilities and follow-on offering costs. Reconciliation for Adjusted Net Income and Adjusted EBITDA can be found in the Company’s SEC Filings at www.thetradedesk.com.
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$211
$552
$1,027
$1,556
$2,351
$3,130
$4,198
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
5
$335 MM2020 Adjusted Net Income (2)
2009founded
$4.20 BB2020 Gross Spend (2)
$284 MM2020 Adjusted
EBITDA (2)
1,545Global
employees (2)
Gross Spend (2)
($ in millions)
$836 MM2020 Revenue (2)
by the numbers
$45
$114
$203
$308
$477
$661
$836
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
Column1
78%
156%
(1) FY2020 revenue provided February 18, 2020, at The Trade Desk’s conference call for the period ended Dec. 31, 2020 and in SEC filings. (2) Gross Spend, Revenue, Adjusted Net Income and Adjusted EBITDA from Company 10-K and Press Release issued on February 19, 2020. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules
accompanying this presentation.
Revenue (1)
($ in millions)
161%
86%
52%
55%
52%
26%
51%
39%
33%
34%
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The most effective
advertising is targeted.
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There is a fundamental shift happening in advertising.
And it’s bigger than just a move to digital.
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The market.
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Price discovery enables healthy
markets.
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We are targeting a massive market
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~$725B
~$230B
~$50B
Total Global Ad Spending
Linear Television
Display
Source: IDC, Estimated 2019 Global Ad Spending
The future of all media is digital and programmatic… eventually all media will be digital and it will be transacted by machines.
- CEO of a Global Media Investment Management Group
We believe advertising will be transacted digitally.
“ “
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Advertisers / Agencies
Self Serve Demand Side Platform (DSP)
Managed Service DSPs and Ad Networks
Networks Exchange
TV+Mobile SocialDisplay
Ad Server
Data Platform
Supply Side Platform & Yield MGMT
$1.00
Publishers / Sellers / Content Owners
$0.50/$0.55
The pie is getting bigger while waste is being pushed out.
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What we do
Provide a self-service platform to agencies who
deliberately pick from over 500 billion digital ad
opportunities a day.
95%+ of our spend comes through
MSAs
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We provide agencies a
SOFTWARE PLATFORM.
We create room for their proprietary advantage.
We are an enabler, not a disruptor.
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TE
CH
NO
LO
GY
BUY-SIDEMARKETPLACESELL-SIDE
SE
RV
ICEPUBLISHER
We align agencies and their brands.
ADVERTISER
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We are omnichannel.CTV, mobile, video, audio,
display, social, native.
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We power some of the largest brands in the world…
…through their agencies and digital solutions companies.
We buy advertising and data.
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Diversified Across All Major Verticals
In 2020, Others above 1% of spend includes Style & Fashion, Family & Parenting, Travel, Hobbies & Interests, Education, Pets, SportsIn 2019, Others above 1% of spend includes Travel, Education, Family & Parenting, Sports, Hobbies & Interests, Pets, Careers, Government & Politics,, Real Estate
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BELLEVUESAN
FRANCISCO
ALISOVIEJO
SAN JOSE
VENTURA
LOS ANGELES
CHICAGO
NEW YORK
LONDON
MADRID HAMBURG
PARIS
SYDNEY
TOKYO
SEOUL
SINGAPORE
JAKARTA
The Trade Desk is global.
SHANGHAI
HONGKONG
TORONTO
BOULDER
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Even media that isn’t digital will be transacted digitally, using the internet.
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We buy the whole internet.
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Agencies (and their
brands) need a technology partner to trust with their
data.
We need to access their data
to help them.
We are the alternative to the
conflicted platform providers.
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We focus on being the best partner for our data providers.
We buy data to make better decisions.
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Our technology.
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The buyer with the most data can make the
most intelligent bid.
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We built a data management platform first.
(data warehouse)
1ST PARTY DATASite-based, CRM,
Tier 1/2/3
DMP
TTD Data
3rd PARTY DATA
LiveRamp, BlueKai, IXI, etc.
Our decisioning technology
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Expressiveness is central to our technological advantage.
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Simplified User Interface“expressiveness” at work
Transparent Reporting26
Goal: The most transparent and most detailed reporting.
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0x (no bid) outside 15 miles
1x bid for stores outside 5-15 miles
1.75x bid for stores within 5 miles
TTD + Agency reduced client’s booking costs by half.
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Expressiveness = 15,360 Bid Permutations
Time since last site visit
Bid
Mu
ltip
lier
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Our platform approach wins more of the budget.
Agency Trading Desk
10%20% 10%
Agency
10%40% 10%
Powered by
Illustrative Example
28
An example media plan.
Managed Service Programmatic Partner Company
Advertising Software Solution Company
Data and Technology Company
Marketing and Promotion Solution Company
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Unified iD2.0
The what and why…
Collaborating with industry organizations to operate UID2 for the open internet
Built an open-sourced technology to convert email address to anonymized IDs
Dedicated internal resources to build the technology
Believe the open internet must continue to thrive
UID2 is non-proprietary and available to advertisers, publishers, DSPs, SSPs, SSOs, CDPs, CMPs, identity provider and data and measurement providers that are in compliance with a code of conduct.
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Significant Growth Drivers
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The convergence of the internet and television
CTV and TTD
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The future of TV is
ad funded. The cost of no ads is too
great for most consumers.
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(Cable costs are according to the Leichtman Research Group, Inc.).
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The future of TV is
ad funded. The cost of no ads is too
great for most consumers.
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You are missing out on a core audience if you’re only buying broadcast TV.
Our story in CTV is resonating
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The future of TV is
ad funded. The cost of no ads is too
great for most consumers.
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120+ million CTV devices
Our reach in the US is
HUGE
80+ million households
Source: The Trade Desk estimated reach in the US for the full year 2020E from Q12020 conference call script May 7, 2020
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The future of TV is
ad funded. The cost of no ads is too
great for most consumers.
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Decisioning improves TV buying
Targeting is limited to DMA, schedule and dayparts
1:1 targeting of valuable customers & their households in real time
Traditional TV Buying Connected TV buying
$10 CPM $20 CPM
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The future of TV is
ad funded. The cost of no ads is too
great for most consumers.
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Connected TV Measurement
TV & Cross-Platform Metrics and Reporting
Measure and analyze the impact of your Connected TV campaigns to inform future strategies.
Key Reporting Metrics Include:
• Video Completion Rates
• Audience Reporting
• Nielsen GRPs / DAR
• Sales lift driven by CTV
• Report across video screens (OTT, desktop, mobile)
• Attribution across devices
• Impressions Delivered
• Reach and Frequency
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Growth Outside North America
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Top 20 Worldwide Advertising Markets
~88% of spend(1)
(through 2020)
33% of all ad
dollars spent In North America(2)
~12% Spend(1)
(through 2020)
67% of all ad dollars
spent outside North America(2)
1: FY2020 percent of spend provided February 18, 2020, at The Trade Desk’s conference call for the period ended Dec. 31, 2020 and in SEC filings. 2: Source: IDC Global Advertising Spend
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Non NA grew from 6.5% to 12% of our business from 2015 to 2020
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Shopper Marketing
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1ST PARTY DATASite-based, CRM,
Tier 1/2/3
DMP
TTD Data
3rd PARTY DATA
LiveRamp, BlueKai, IXI, etc.
Our decisioning technology
Part of Walmart Initiative to launch a Media Business
Enables brands to power ad campaigns with shopper audiences
Ability to measure the impact of in-store and online sales
TTD marketplace not limited to Walmart.
Worldwide, shopper marketing budgets estimated at over $200b
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1. Unified iD 2.0
2. Connected TV
3. Global expansion
4. Shopper marketing
5. 2021 Platform Update: “Solimar”
• New “goal-based” User-Experience
• Upgrading AI tools
• Measurement marketplace
Objective, Independent, Transparent
Our focus for the future...
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• Focus on culture
• Customer Retention
• Spend Growth
• Efficiency
How Do We Manage Our Business?
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Strong financial model.
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• Exceptional top line growth
• Master Services Agreement -based model with ongoing, established customer relationships
• Self-serve software model drives strong operating leverage
• Proven profitability
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$6.5 $8.4 $11.2
$18.5
$18.0 $24.5 $28.8 $42.7
$30.4
$47.2 $53.0
$72.4
$53.0
$72.8 $79.4
$102.6
$85.7
$112.3
$118.8
$160.0
$121.0
$159.9 $164.0
$215.9
$160.7
$139.4
$216.1
$319.9
Column1
Robust revenue growth…
Revenue(1)
($ in millions)
45 (1) Source TTD SEC Filings
$45
$114
$203
$308
$477
$661
$836
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
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…delivering substantial profitability
GAAP Net Income ($ in millions)
46
Adj. EBITDA ($ in millions)
Source: Company Filings. Adjusted EBITDA excludes depreciation and amortization expense, interest expense, income taxes, stock-based compensation and preferred stock warrant liabilities. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this presentation.
$3.7$7.4$9.3$18.7
$4.3
$15.7
$16.6
$29.7
$6.3
$25.3
$24.4
$39.5
$19.8
$36.9
$36.6
$67.1
$24.7
$58.0$47.8
$84.0
$39.0
$14.6
$77.0
$152.9
$1.8$3.9
$4.6
$5.7
-$1.0
$7.6$3.6
$11.1
$4.9
$18.8
$10.2$16.8
$9.1
$19.3
$20.3
$39.4
$10.2
$27.8
$19.4
$51.0
$24.0
$25.1$41.2
$151.9
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Investment highlights.
4747
1. Q4 revenue grew 48% y/y
• Political spend was a high single digit percent of spend
2. 2020 revenue grew 26% y/y (impacted by Covid)
• CTV more than doubled; Political spend was mid-single digits
3. 95%+ of our spend coming through MSAs and is relatively predictable.
4. We’re self-service omnichannel (all decisioned digital).
5. Our tech is measurably better at decisioning.
6. We have a massive TAM only getting bigger.
• Eligible for shopper marketing budgets starting Holiday Season 2021
7. We align our interests with our customer (buy-side only, not network).
8. We’ve been GAAP profitable since 2013.
TTD is an investment in the whole internet.
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Q4 and FY2020 GAAP Financial Information
4848
THE TRADE DESK, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2020 2019 2020 2019
Revenue $ 319,905 $ 215,944 $ 836,033 $ 661,058
Operating expenses (1):
Platform operations 51,645 47,267 178,812 156,180
Sales and marketing 58,740 42,931 174,742 132,882
Technology and development 48,723 32,803 166,654 116,752
General and administrative 54,365 40,293 171,617 143,048
Total operating expenses 213,473 163,294 691,825 548,862
Income from operations 106,432 52,650 144,208 112,196
Total other expense (income), net (529 ) (1,045 ) 305 (4,024
Income before income taxes 106,961 53,695 143,903 116,220
Provision for (benefit from) income taxes (44,941 ) 2,750 (98,414 ) 7,902
Net income $ 151,902 $ 50,945 $ 242,317 $ 108,318
Earnings per share:
Basic $ 3.24 $ 1.13 $ 5.24 $ 2.43
Diluted $ 3.05 $ 1.06 $ 4.95 $ 2.27
Weighted average shares outstanding:
Basic 46,917 45,036 46,287 44,533
Diluted 49,754 48,034 48,988 47,806
STOCK-BASED COMPENSATION EXPENSE
(Amounts in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2020 2019 2020 2019
Platform operations $ 3,335 $ 1,456 $ 8,794 $ 5,350
Sales and marketing 11,177 7,675 29,726 20,769
Technology and development 12,327 7,974 36,672 26,553
General and administrative 11,185 7,285 36,583 28,086
Total $ 38,024 $ 24,390 $ 111,775 $ 80,758
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Supplemental Non-GAAP Information
4949
Non-GAAP Financial Metrics (Amounts in thousands, except per share amounts)
The following tables show the Company’s GAAP financial metrics reconciled to non-GAAP financial metrics
included in this presentation.
Three Months Ended Year Ended
December 31, December 31,
2020 2019 2020 2019
Net income $ 151,902 $ 50,945 $ 242,317 $ 108,318
Add back:
Depreciation and amortization expense 7,855 6,416 28,632 21,662
Stock-based compensation expense 38,024 24,390 111,775 80,758
Interest expense (income), net 84 (956 ) (656 ) (4,719 )
Provision for (benefit from) income taxes (44,941 ) 2,750 (98,414 ) 7,902
Adjusted EBITDA $ 152,924 $ 83,545 $ 283,654 $ 213,921
Three Months Ended Year Ended
December 31, December 31,
2020 2019 2020 2019
GAAP net income $ 151,902 $ 50,945 $ 242,317 $ 108,318
Add back (deduct):
Stock-based compensation expense 38,024 24,390 111,775 80,758
Adjustment for income taxes (5,119 ) (3,783 ) (18,460 ) (12,768 )
Non-GAAP net income $ 184,807 $ 71,552 $ 335,632 $ 176,308
GAAP diluted EPS $ 3.05 $ 1.06 $ 4.95 $ 2.27
Non-GAAP diluted EPS $ 3.71 $ 1.49 $ 6.85 $ 3.69
Weighted average shares outstanding—diluted 49,754 48,034 48,988 47,806