Advertising software maker The Trade Desk (NASDAQ: TTD) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 18.7% year on year to $694 million. The company expects next quarter’s revenue to be around $717 million, close to analysts’ estimates. Its non-GAAP profit of $0.41 per share was in line with analysts’ consensus estimates.
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The Trade Desk (TTD) Q2 CY2025 Highlights:
- Revenue: $694 million vs analyst estimates of $685.9 million (18.7% year-on-year growth, 1.2% beat)
- Adjusted EPS: $0.41 vs analyst estimates of $0.41 (in line)
- Adjusted EBITDA: $270.8 million vs analyst estimates of $261 million (39% margin, 3.7% beat)
- Revenue Guidance for Q3 CY2025 is $717 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q3 CY2025 is $277 million at the midpoint, above analyst estimates of $274.4 million
- Operating Margin: 16.8%, in line with the same quarter last year
- Free Cash Flow Margin: 16.8%, down from 37.3% in the previous quarter
- Market Capitalization: $43.8 billion
“Q2 was a strong quarter for The Trade Desk, with revenue growing to $694 million, up 19% year-over-year, as we continue to outpace the digital advertising market,” said Jeff Green, CEO and Co-Founder, The Trade Desk.
Company Overview
Founded by former Microsoft engineers Jeff Green and Dave Pickles, The Trade Desk (NASDAQ: TTD) offers cloud-based software that uses data to help advertisers better plan, place, and target their online ads.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, The Trade Desk grew its sales at a solid 24.5% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, The Trade Desk reported year-on-year revenue growth of 18.7%, and its $694 million of revenue exceeded Wall Street’s estimates by 1.2%. Company management is currently guiding for a 14.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.2% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is admirable and implies the market is baking in success for its products and services.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
The Trade Desk is extremely efficient at acquiring new customers, and its CAC payback period checked in at 4.7 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give The Trade Desk more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from The Trade Desk’s Q2 Results
It was encouraging to see The Trade Desk beat analysts’ revenue and EBITDA expectations this quarter. We were also glad its EBITDA guidance for next quarter slightly exceeded Wall Street’s estimates. On the other hand, the company's CFO announced she was stepping down - this adds fuel to the fire, given investors have put TTD in the penalty box ever since its Q4 2024 results. Overall, this print had some key positives, but the C-suite transition is spooking the market. The stock traded down 26.5% to $64.97 immediately following the results.
Is The Trade Desk an attractive investment opportunity right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
