TTD - Earnings call transcript Q4 2017

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Operator

Greetings and welcome to The Trade Desk Fourth Quarter and Full-Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a remainder, today's conference is being recorded. I would now like to turn the conference over to your host, Chris Toth, Heat of Investor Relations.

Chris Toth

operator. you, Thank afternoon. good Hello and Welcome to earnings and XXXX fourth Trade call. Desk conference quarter full-year The

On are Financial call release thetradedesk.com Officer, A the in today of can Rob Chief Jeff copy Relations our Perdue; Operating be Green; the found and website earnings Investor Chief our Officer, on Ross. Founder Paul press and at CEO, section.

which like that are our except filings. for be the matters we Before and be encourage that, forward-looking upon uncertainties. we factors release SEC historical you to dependent you in statements, begin, certain risks to and to remind our press recent I the will will would included describing I most information, risk refer

of GAAP results, results Founder measures with non-GAAP regarding over reporting GAAP now measures to present combined the our providing to Jeff can be operational our addition our turn found performance. Company's In representation press non-GAAP financial a Non-GAAP will and believe the Jeff? Green. release. I in GAAP more meaningful We call CEO, the provides to A we reconciliation earnings supplemental financial data.

Jeff Green

Thanks rate is the surpassed increase outstanding double of Chris. in XXXX, annual Trade This to to the total for thanks Good we which is where Magna billion $XXX XX%, $X.XX and according joining almost everyone million, an In the terrific we again revenues achieve. XX% we spend, Desk a programmatic resulting of Global. in growth industry's year-over-year. capstone year quarter the to The was QX exceeded afternoon, us today. out for goals and an to set of

EBITDA that our EBITDA reflects in we investments agencies on for $XX.X is of the growing programmatic XXXX gain, strong expect serving advertisers have QX was than as share million margin believe generated an over XXXX of and XXXX years we XX%. focus of business adjusted million and made that This in margin heading aggressively from anyone. which year, The an the adjusted and we $XX.X we XXXX. adjusted channels, $XX.X QX as Desk up $XXX.X in years. products, objectively. an Just global a for of price and to XX% invested continued we share previous and business gain expanding QX the momentum reflects several million will We into our EBITDA deliver growth, The we came were ROI our even more Trade million adjusted past advertising discoverable record the did leverage. demonstrating XX.X% XXXX, revenues for coming EBITDA operating developing again

As we have each quarter we since our have once exceeded our IPO, again guidance.

the While they tell are of part great, these story. only numbers

We in team's because during in impacted our outpouring execution especially to such QX significantly other this together way. for and our time. also awe team California. headquarters record-breaking that Ventura but during the ripped Our came mudslides through were QX Southern and and and only a the by close as another time, out challenging fires each not our help is also to meaningful generosity, team to community, I together for Desk. at for that partners of resilience, investors customers support thank The this courage, Desk a am like of the Trade in their everyone and and thank pulling Trade and powerful I'd

growth years. that will update couple drive progress first There's on you XXXX. the I'd because illuminate will from the the the year the I'd second that Day. I last the we it next about think Investor why of growth we so have like momentum to key half and for some of XXXX, of - highlights outlined talk Before XXXX of of so discuss in to much into like much initiatives our we heading confidence especially our five

omnichannel way TV rehearsal is online Traditional during for Being we First, to to believe, everything all on a but Connected I we win will from significant on our progress to the XXXX. TV front focus QX migration and this ultimately dress across In only the video. channels. growing discuss is want minute, spend a

our we Second, brands to must service be biggest global, the China. which into expansion requires

Third, as we fifth lead identity an best don't can to which an - independent player we industry-wide at own meaning our footprint, the necessary is initiative. media, be

elaborate our tools our initiative and to to strategic the data revolutionize fourth initiatives. buying. Our on is media, progress build of and these on our initiative all to I'll is offering a fifth bit planning five increase

in X% will preface, a which advertising As their like by $XXX is from estimates billion XXXX, global that projection be from to I'd up IDC highlight that XXXX.

programmatic years. expects this rates, important these to vision. by to so will industry trillion-dollar maintain global have that all growth RTB eventually to be in you growth a current us, initiatives less To Additionally, Magna XX why are will transacted our grow advertising year. advertising XX% Global programmatically. understand advertising understand than With be We

transactions to making programmatic choices. advertising is vision it data-driven better by make all Our

We expect for growth. are in to important industry is can into to future, meaningfully far we faster the the mode, than why a we grow see which initiatives these our land-grab as so and as are

our is a offering by strong multiple first long-term in devices channels. omnichannel initiative our and growing to omnichannel advertise in coordinated and Our way. We growth strategy objective channels across see validated

by represented we channels buys. had XXXX, such platform This XXX% the our to audio growing XX%. directed milestone. QX major In advertising, surpassed For Display time. in channel largest year. display but in in-app of continues advertising many channels grew of on we the channel mobile XX% as the grew a massive by XX% been than which or XXXX%, to” toward “go native on grew alone, over the audio, native the which longer XXXX, mix first in growth broader for and in previous spend media we platform be video, seeing brands, a is or much Mobile hit for as expansion much a a and was their we're have

and mobile the about on is we any in in TV lifetimes, than of networks Connected while content. rewards rare. transition with again spending, prospects see our early mobile, I'm made and mobile through and today about app-based leading change according all And of investments channels. through trickle thing this the very the of streamed the content only into we smart traditional in The positive will to shifting world's these advertising the a convergence think dollars bullish ago, like linear worldwide a devices. TV along beyond TVs display, magnitude annual A our providing billion is As $XXX years flow perhaps IDC, nearly is are I'm passionate the content don't reaping I only we ad this the XX more TV. internet, channels that but are in the internet of more of TV TV.

XXXX, from The XXXX, CTV, QX seen When XXXX%, last platform we are was to develop And Trade we the have committed the inventory stated available our two which these increased Desk Connected grew Then, XXX%. by could to and CTV invested our I number XXXX about We building CTV XXXX at CTV. most partnerships. in spend QX solid we over share on the inventory QX in to established our years. QX trends formed bullish then, platform foundation the time from and we TV we in supply initial

bullish of XXXX, our XXXX%. almost In even we most was December the higher This growth fact, at probably rate the can in XXXX. month the over the share of is performance month fact December XXXX about

We data, strategy. omnichannel our inventory targeting integrate grow and partnerships, continue audience, into to CTV add attribution, refine our overall

closer double at are of growth, CTV we this beyond least large to emerging upside tremendous see to we and expecting During move streaming in as spend publishers And we phase XXXX. services. that

for growth together sets be opportunity confident by as demand Trade CTV such on partnering as continue that the cannot of focus market monetize as with are business to up phenomenal possible is that another so our ignored. massive efficient The advertisers success way publisher for we Desk optimally We an objective it to in China. and to most ours for as brings inventory also expand get The many much any platform us

It grab is on land Our second initiative this time to initiative grow is than more strategic growth ever. internationally.

faster of in class China American we Company. are the a solid CTV CTV opportunity place and of where States. which all Trade ad-funded, opportunity programmatic two growth is long-term in established beauty primarily ahead growth. we building why maybe our trust CTV at is is major United a debate fastest-growing in international office our plans. long-term according so a key our relationships and China, about long-form the it in investing is almost the the is the piece China. tremendous XXXX, Shanghai The are biggest why to year based in year, middle our business in to only compared China no place is global strengthening in in-country in from evolution million growth users history. We is is the on and where that XXXX expected overlap; our to Desk's the the and it international million eMarketer, than China In There of rate United China only is last The China growing and heavily gives leadership is that North a team. business, reach XXX advertisers is of content States, That CTV While XXX international initiatives for biggest have China growing U.S. nearly double represents perspective, a to to

We partnership of our year most continue highlighted the with and last Alibaba's with some with our YouKu. to firms prominent China, grow partnership partnerships Baidu by in recent

views Advertising revenue. represents to the in is provider Digiday, largest China, YouKu online unique of month. XXX according about per with over XX% million video its

in our We measurement will especially find, firm. relationships Trade that the effective Miaozhen, China advertising The Trade Desk platforms has refine with to on which users optimization The about of in the its provide always The and is business been leading strategies. insights strategy key can China's in data-driven partnership cultivating market. haul, are audiences every most long new growing Desk's target, and The advertising help also hone for and digital excited

only and media also in relationships Because have region. will build markets the our importance form foundation to of more our than the spend success ever time XXXX, of that in Shanghai, expect I the on these I region. six centers Asia in the team the major strategic have in for in the future, ground The China are but Trade to Asia-Pacific in We Desk's not other to

are in” We opportunity. on “all this

expand Desk In growth. revenue was over QX, and we international worldwide revenues Trade on Over America. we spend advertising trend the X the over the rate While China on as we markets two-thirds are that that and these revenue times America, international North expect grew North outside our In Trade reflect that The at international X.X of growth Desk's American are is the of markets. bullish just of to equally Asia-Pacific, of XX% for long-term. bullish rest XXXX, times rate North revenue The

We XXX% also our their saw especially increased by office every region markets, or more. strong European that growth where in in business

over In German both and XXX% and into for business our plans region grew its for QX. we Our strong look in key continuing forward expansion. XXXX. We've business our as developments to growth office business by such GPDR see a international driver as the Asia Europe, incorporated

strategic create growth that to industry with is in the even garden” “walled third initiative Our working other broader footprint an the in marketplace. is the than biggest far identity approaches companies

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platform wins every very best to data data our measurable committed is with we data driving wherever initiative a aggregating guessing, opportunity. Our our down XXXX, fourth firmly and represents When Data offering. The to either is we growth grew find results. by In time. get campaigns Trade the believe it agencies comes Desk brands or to data can large, XX%. untapped increase spend it so data on that

XXXX We to can do have surface every what products data certain single only with and used scratched are significantly on data impression. the more implementing initiatives in of make is we several

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next and few also unveil will now significant live robust the go model data We beta will optimum tools media over months. leverage planning will Both campaigns. of to that private releases in our are these

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us so platform always with Another they highlight The biggest high on advertisers platform. into from they brands our was, ROI QX, of million deliver with some nearly brands from to more of spent bringing $X least at realize Desk in collaboration our agencies goal XXX our value Exiting global than is partners, XXXX our platform. to the agency the the and expend. world half in top close Trade that the spend using It

happens, with and builds this more Desk more agencies The Trade the As and share wins advertisers. credibility

transparency, our brands these objectivity, solid model earn and continue As business scale with trust, us. up to

We plans. are Trade in significantly Desk The as spend growing seeing their is into XXXX built media their

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retention continue of customer We a XX%. to over rate have

XXXX, our Our In of and the be ever-evolving million. market product to needs. continue we tools deploy in billion gross in to revenues at develop the teams over platform expect $XXX resulting rapidly $X.X spend least

similar is to and growth. size of to consistently our high-growth software-as-a-service a use few prudently intend one companies We are of and in strength vigorously profitable, that invest we that

We and key have the value ahead proven investing and in getting of early to markets channels.

programmatic reaping With global such a years of the growth the investments expansion, a we are making are today, $XX rewards $XX we year additional Connected safer come as million of TV, high-opportunity incremental investments as to result. the million anticipate increasing we in areas and making to in In creating environment. revenue ahead, mobile,

importance critical to All customers. deepening areas are of with grabbing these engagement and and share strategic our our

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our business lead effort global where a partnership, international spending. and safer respond Trade such has to being us Desk other as ad invest Open the The rapidly creating place to only not in markets, the lets in and growing, to teams safest Ads.txt, digital dollars, such ad Unified existed. scaled to to building initiatives ID ad commitment trends programmatic is ever that marketplace but WhiteOps China Investments Our as

XXXX operating we for revenue. to as leverage, to EBITDA be Since We time adjusted historically this invest. expect a proven have our our of see XX% we

aiming and for the of over best this but we long-term. ultimate thing the profit doing the growth believe We to our are not year, business are maximize the profitability

in momentum expect We continue QX. had our QX into the we to

to QX and any is adjusted the in position. EBITDA tailwind expect in as did to past We expect Since strong drop can EBITDA has revenue upside, Desk be much $X.X that XXXX we million. upside Trade as secular to $XX a see did we line million to is in QX the adjusted should year. fortunate down biased revenue revenue of and to The it been XXXX, be our we this

hasn't have a and changed have whose We product business strong continued model we momentum. inception, since

well. executing We are

year. and XXXX poised growth, was an are for We excellent

We expect even XXXX to better. be

Now to Rob call his on the I'd operational comments our like over to for performance. turn

Robert Perdue

and good afternoon, Jeff, Thanks, everyone.

trajectory which and increased Our with the mobile and XX%. Total quarter, in increase channel Mobile is it momentum. business year-over-year, our we fourth-quarter revenue XX% continued grew its led spend largest our in by exited fourth strong strong XXXX. total XXXX channel, we expect now further by to

approach, of year; grew TV this and indicators ready amazing for improving the advertising had over of and December, focus business finance, those channel agencies an being on put retail, Jeff Our QX, advertisers we spend their in our through large was automotive, which and marketing increase CPGs, came native, major global from holiday many growth network Native grew example of advertiser time is and spend the in delivered from one display, mobile, prior global technology, objectives, a our quarter best Connected and of find to the to in TV browsers hiring company base our expanding or users we our in is first mentioned, considering platform this year, our all on over agency across operational devices. employees bigger structure, SMBs. to generated and is the on November goal of and where same channel. and and off advertisers saw spend that able TV, channels the from features video, during audio ad XXX% amazing, Connected XXX%; the a from spend to in our many a Connected and of November. our our their year-ago. and our omnichannel in achieve highlights our omnichannel the XXX% dollar our their also of grew a for By more channel An platform, things native goals, of adding increase our was increasing building video the over growing many quarter. ad part from strongest XX%; multiple initiated QX, that our of from We dramatically included across our their XXX% industries, lot spend as the scale XXX% newest emergence with on the seasonally significant channel audio, infrastructure, the scale to technology December. presence push increase breakout goals Expanding advertiser's our November and management Throughout some like deliver significantly a This out multi-million key we the was the including results quarter,

I the as for are an to footprint. want our Now, international half during build is continue combined over over customers; and priorities. focus scaled, our operational the with The quarter, to and of our customers our focus only goal emphasize focused presence; the the by core active year of XXX the with XXXX on fully the quarter objective, for describe and people, and the half software rate our XX,XXX our that higher-volume industry. row exited remaining and grow to a Trade three three, trusted our every the customer trained customers' of advise year. Trust Starting in independent platform. to XX% retention We Desk for contribute buy-side self-service, we XX is success from new a ready I continued starts we objective growth trust to one, to on is advertisers the customers with our item, partner cohort achieved platform on year. a that employee number XX% each remain to and partners each We first perspective, growing the objective and the two, efforts year, and truly so second hiring dedicated omnichannel first and independent. in Number with and in

team with terms year United achieve these XXXX, $XXX the employees XXX nearly brought of is help onboarding onboarded year new XXX customers of our had spend. who in To ending the now XX% worldwide. outside employees We the States. results, also in million biggest new in we ever in

Our programmatic historically and of marketing Based with team, They day it, their Trade QX agencies are many a trust large benefits not that by Desk ours. restaurant advertisers marketing global great also had by earns competitor our platform, a we the repeat campaigns the chain of came large highlight every example run from of opportunity. testing campaigns purchases the recommended results. measurable review of proving customer-facing, were insights, referencing but by The our deep with in we of of test so customers. the of continually A whom only with and this open optimizing and the goals, their to frequency seized on to

as difference cost ROI conversions That worked increase XX%, versus by approach to by it's those representative it acquire on is time the competitor, the at enabled customer and while day. number in their Our customers a decreasing same of advertiser to every spend the does their massive XX%. incumbent what marketing our team of their

to model headcount Even per employee continues at increased propel revenue and our out on in and and $XXX,XXX, service have our we provide growing size. growth, which how stand the designed per about execute to metric strongly efficiently shows best industry. revenue amongst to peers we to support pace was at the key industry SaaS other employee our of maintained scale that is our our continue as a and annualized while our we we Annualized that business customer front,

in performance our firmly marketing presence. type multiple on our coordinated across of to buying supports way combined advertisers. channels, growing across across I for any that commitment to makes the with view in Next, focus industries when intelligent evidence, a want a meaningful goal Empirical and advertising targeting, omnichannel difference campaign

developed on have expand many seen built have their platform. channels robust our delivering offerings and results, mobile, and through trust video, spend omnichannel across advertisers we display we As

our collectively we mature promising use up XX% XXXX. in-app grew our our In see year-over-year, advertisers we channels. mobile significantly overall spend exit in the in result, platform advertising most made half mobile spend, mobile of up QX, channels including channels was represented a growth our business multiples ago. million XX% our all strong which grew which our XXXX all $XXX emerging platform faster in expected As audio, while and of year their campaigns, Connected native, from total total from XX% more over a TV, and to as video, grow larger than and to share over XXXX, very in These ad mobile channels At than channels on the more Today, industry by of is on the about dollars XX%, incremental according into Zenith. times programmatic the we rate, to of our growth the moving over continue gain to of two ad specifically. and

on We in-app them mobile to world through around continue. mobile and expect advertisers day their browsers. are more to this advertising, spending time people reach the shifting and trend more video, are budgets devices, Every mobile their

fantastic traction seeing channel. our also Connected are in We TV

While over ago. still year Connected infancy, its in TV Xx grew with well a compared

their more incorporate closely customer-facing TV to to buying and from teams have trading into call few want agency programmatic overall with a working stories QX. been Our Connected clients' I out success teams strategy,

The a our the media platform. spend adopters large first They is biggest are due XXX% in to spend their mainly company Connected increased one of has year-over-year, that digital on on TV. increases

few marketplace in One our inventory examples. or Hulu, access has of variety on that providers like a sources enabled including growth and factors the key scaled was cite content our private a Apple Roku, TV, just their of to to

how campaigns make for how successfully. could and support the activated us platform, TV Connected can run campaigns count on they our strategic client appreciated on to also be their and Our sure easily technical

where their success TV that into had more been Connected and audience Another now ad to OTT their they Trade moving on around campaign access is story Through use linear traditionally both from TV performance advertising. measurement turned allows and to linear And our of impact They to the TV. and to and their amount Connected a buys. Nielsen platform audiences. The agency, premium spend new Connected performance touch data a goals. Desk broader targeting spent used and to brand's well-known because TV channel centered part dollars large, of CTV our programmatic us. their were measure inventory metrics audience This advertising expansion, We inventory, tools, targeting, measurements is advertising on a the precise is reaching on-target strategy little much better a won believe differentiator of we also represents for brand a that TV them major exceed spending adding partnerships. core key versus I is partnerships core from want new large they that spend.

TV launched these than You talking inventory adding are but regularly audio inventory Roku, We partnerships year Spotify. hear about such DIRECTV, Hulu, as new Sling, partners. a or with more us ago, Connected we constantly

digital week, a we announced with scale partnership Pandora this Just for inventory. new audio

board new a recently. offer use more the platform XXXX, use have and platform which the targeting inventory on in where data access partners, are of more The are to repeatable through that brought in our enables TV ad few inventory about inventory companies a This process world. data Exiting built our then campaigns. sources we including better Network, performance just to many excited us add We've The we XX partners integrations, Connected we have and platforms. all The new also our supply-side inventory data on We customers over for can NFL their and more new are and TNT, than to FX and Travel quickly XXX than of quality examples These Channel.

of and inventory XXXX used combined. result, on all a than access data during XXXX had our and platform addressable to more more XXXX, As advertisers

XXXX move by outpaced grew that XXXX. years. for the Today, international to third U.S. spend programmatic that the the year-over-year XX% more every of expanding fastest ad the some growth Asia In than total about and XXXX. globally. is of as one offices is and about geographic XXX% Malaysia, Xx. we programmatic forward our the mobile spend XX% the eMarketer on priority Singapore, China of full-year partnerships with ad in expanding just which While in total inventory the we compared defines business is the expected our of one-third Exiting over expected footprint. Vietnam is of of Asia Indonesia, which data, Philippines, are eMarketer Thailand, In with and with coming amounted spend global in our QX, grew about U.S. XX% our our also XX% of digital U.S. forward pushing see the spend by year, outside Southeast nearly Nearly in estimates to international growth

is market We large meaningful the with first of extremely and in Asia. many We believe is agencies in a on the digital Europe growth Programmatic XX% and to for where we Germany eMarketer. the Asia. that have to increase to relationships have global the UK built products also only rapidly. grow presence will expected we with year-on-year, come. bullish But specifically XX% according are in from growth spend in each Asia are expected not region area throughout we ad deep the is believe

mobile that than our inside walled and whole advertisers more customers of one of only growing universe being customers Connected rates is ad on across well. times been one share at the are large from have as digital where that places just and at Trade from it markets gardens. our at Desk budgets or times scale increased audio X TV X and new from each platforms can objectively doing platform of scale, channels sophisticated locked faster And The buy those else. the We seeing without the in to other than are anywhere gains to

greatest our ads we for and worldwide leverage platform, which consumers our the quality dramatically for to to add ads will objectivity more continue asset we efficacy improve of and the and features advertisers. of is As inventory

business, strategy, of in our the are XXXX. our ahead We in the very of opportunities confident and us direction

call Paul to the am turn discuss going our to I to over financials. Now

Paul Ross

Rob, and afternoon, good everyone. Thanks,

continued proud results solid deliver We extremely growth and GAAP and while to our XXXX, we our reach. in execute XX% all continuing net our are in financial global grew and We year-over-year, future critical We income of metrics. our expanding as did XX% as to performance revenue aggressively against invest adjusted key XXX% year-over-year. year-over-year, such this engineering talent adding to areas EBITDA

year-ago. first a and approximately platform, was increasing the from was market share, gain to greater the XXXX spend year primary XX%, billion mobile billion on Mobile than continued driver our that over in We year $X.XX total marked growth, our ending spend spend of up the display. with $X

$XXX.X million our addition the revenue Now new Approximately us for of advertising by customers year-over-year, was a for year-over-year. revenue $XXX corresponding XX% our are came million, in fourth from year in XX% spend XXXX given revenue existing basis, On financials, spend an the with seasonal Adjusted who million, $XX.X coming have from the spend. customers up with reflects of the EBITDA margin both one year. gross XX% XX% our fourth up plus been expansion Margins quarter of existing This the customers. quarter of to typically was the QX. customers. quarter for annual strength existing during was with growth spend over of XX% of turning fourth gross strongest fiscal

QX, and margin stock-based For our plan. performance, the full-year, purchase million, over adjusted from an XX% product, primarily was of EBITDA for compensation the which was global prior In investments result a as increased stock the million, expansion. our increase employee $XX.X people, quarters, $X.X revenue Company's was in reflecting even we

was million stock-based the just or revenue. $XX.X compensation under of year, For X%

XX.X%. net was tax tax rate full-year effective per the of fully-diluted effective QX our XXXX Our share. fourth GAAP or for million $XX.X for rate quarter XXXX, the and income was $X.XX was XX% for

was increased fourth of GAAP and share. diluted XXXX positive net $XX.X income compared income. XXX% income per For or GAAP million net XXXX marked $X.XX year GAAP year-ago the a our consecutive to full-year, net

compared $X.XX share fourth was for the $X.XX per the prior quarter year. with earnings adjusted Our in

our compared million cash. the cash year. prior operating provided closed we $XXX in the earnings XX% by Net $X.XX For activities year million with adjusted and was $XX was with share for XXXX, year, up per the

also As on approximately have our available $XXX of revolver. today, million we

can operations operations widely seasonality from flow positively. to cash receivables, continues basis payables and of While fluctuate from the XX-month from due cash to trend a quarter-to-quarter timing trailing on our and

working at capital. Our ups manage position net year-end the our is than revolver of more of our $XXX cash million and sufficient and downs to

and initiatives payables XXXX were is the XXX days, has The a our year ended of result our DPOs and at is DPOs lowest and XX-day exiting it and to receivables. ever the internal align DSOs Our spread better our days. for between XXX been XXXX DSOs for

first and our for to Finally, share I would quarter guidance XXXX. the full-year like

as dev XXXX, to EBITDA deliver up spend full total and of million in we adjusted be in EBITDA revenue. million Asia. infrastructure, incremental to we million such build our in million. We believe on our as million $XXX product Connected $XX of spend revenue and be front revenue dollars account of to QX, For areas, operations us. sales of such for planning teams forecasted year $XXX tech $XX invest our especially to In million be our we billion and over as the out are XX% high-growth marketing $X.X and be expect $XX adjusted about reserves or revenue and XX% scale opportunities we to in EBITDA as And we at as adjusted platform to areas TV teams, provides in expect mobile; in gross adequate to on $X.X the to and growth XXXX,

XXXX investment for our that As in we revenue down EBITDA. of that could upside in relative into again the plan, XXXX, we drop any to much adjusted to expect see

and Our re-invest these growth generate is future to us opportunities. model prudent in advantageous really put the massive and position, business potential for profitability it a now we

for full-year XX%. about expenses $X to expect We other be our the year million we rate and be tax about total expect to

comments Jeff million and and, for $XX depreciation finally, XXXX. count We be expect And and for million stock-based compensation to investments over million Jeff? to the exit year. back $XX expect capital as expense for the our to million final expenses I amortization will total about about course, Q&A. of XX now $XX about to we in expected is and be call year the about share turn we

Jeff Green

potential Thanks, that, we closing, more Paul. excited current we The Desk's let are for reiterate see Trade even In about while performance, me the future.

Desk the worldwide be programmatic. faster and programmatic. segment the to it tend see As move Programmatic When to advertising, than trillion, we market to we growing to surprises, they is The advertising in is anyone $X will fastest-growing Trade of grows believe the upside.

invest Now will Trade for do open operator revenue XXXX grab to prepared market afternoon to up in beyond. is and Desk That the it remarks and questions. concludes and now share and this will time our The to so

Operator

a Instructions] Squali, Please Our [Operator first At conducting SunTrust. proceed comes from session. be this time, with question question. question-and-answer Youssef we your will

Youssef Squali

I call or the Two may. taking if the taking for for question. Thanks

just do end looking Jeff you the piggybacking of First, said on towards the to that XXXX. call in you something that are the investment

margin the would growth there pressure As implied coming perpetual certainly the to expense you deterioration. $XX the XXXX and you spend, Should continue margin can suggest lower? are you. the maybe the in in looks you guidance And under out starting year? XXXX, looking at the at considering great. what Thank we continue to should start your $XX to of above the absolute we of take then you'll expectation rates see investment guidance, kind rate state of than XXX% look be plus like an additional as somewhat agencies the trying expense you just but take the it at are second, taken into that TV clarity million to to is with that XXXX in or any potentially million to some regards all gives be drive Just understand this ad not the the account original were the of number a at Connected margins. long of XXXbps as as affairs of spend, topline that confidence And your spoke dollars, less compression,

Jeff Green

You bet.

in of question, global and the for growing advertising, more is little focus will a represents bottom pie In the want in be like again know to to bottom to would thanks don't time we or line, I question. paper and on transactions. miss just the than so we and price It we are advertising out super grab believe first focused which one margin that clear. ever to growth discoverable on on grab compression of less a I transactions land. trillion relation lunches a line, we're be any the from land is experiencing be and a First problematic martini than X% opportunity, are XX on deal where there'll And going now years. which focus digital transition the think is I that pieces $X inefficient handshake

So that our is focus.

really we One invest can. what about because That's our much as in as capable that that possibly model. at of business us difficult be beneficial That as business investing our to we what advertently to built times so leverage want we happened the operating want as exposed exactly to, and showcase for leverage aggressively into that's things the in think is so operating that that though QX. is been model we're even just there's of we much

are question, the of a about that you second hey the On lower. being rate of any change take little bit worried

couple we grow So that to it just as to. our but we one can as business as possibly care optimize rate be not relates something a to that we to is possibly do want things number course number as of We're take we big about can. we revenue as that fast trying and

that me of continued to matter and as as rather I'd and are EBITDA much long operating revenue as margin of highest a XX.X% as bigger one software number as we number to growing we the be that XX% have industry. revenue So the doesn't service be it and and instead taking we're whatever of can a leverage

change agency that number do expected why revenue see concerned building that going that is to XXXX. of of small go which the than about more model that's that if is it prime the is our of going which of ever time and that that we we keep our give as as especially between we XX% you that we you're or as again do We've of biggest at and why question last features range we we're we shipping are to rate our and good XX% rate business I possibly this feel from long consumer line the in our in an surplus inception doing our and no inside We models we there number because been there in All add is functions compression feel anything doing. business is ship But we the as business see number customers because higher extract that so we're what the for and take that thing value right happening XXXX. amount as we is and far consumer dental of is being to margin much said that and than comfortable lower surplus stay compression we're television, we're compression and there's about grow can look And margin in into I'll The all we the graphic to in don't product next some how think talk can. aggressively we concept say and that we the just as focused cost. take and our at forward. think inside retention

and thing more to at look eye tiny for of that we which to can do really your it essentially in products recognizing a at our and add be is our it that one. client distracted very the business we think per get Operator Instead take product So rate as surplus in amount the question. spend more little ball we retention next again suite for consumer we're we more get that the can off and same or it that easy the area. more creating moves Thanks creating get and customer in charge best

Operator

next Fitzgerald, Jefferies. with Brian from Our question your question. proceed Please comes

Brian Fitzgerald

of in we to to model your backdrop have previously as impact in starting start during one inventory to was ad see of playing to as tech serve stack? remarks as Thank potential cost ramp own additional greater and would up XXXX one coming for prepared talking was well as down soiled? walled to continue out cost gardens we've Twitter And a Do third inventories? your building party does and the data terms access customers? you to think Jeff, telcos had spend that you. you then about will the with you overall Thanks. how inventory, service terms With that their business seen greater you that you how highlighted work access DSPs

Jeff Green

You bet.

it's in bigger smaller relate especially Google essentially question and into it was access the position A to we're really and is by Amazon we're we XXXX. a as exciting And be those think unique which that. super inventory to in The in will first and or we So open. to our it excited than expand China, intents Facebook markets in discussions where in those how Alibaba you see of about and with and there are and XXXX equivalence with Facebook. many we $X.XX the can think be and a you world are very give most business that. fact And in this AT&T with company of aggressive especially more those TV are by and is with partners Google is don't both XU both TV that as you company two that core company's see and partner the We can sale can and Comcast getting side. and Disney

be available XXXX. inventory there will then inventory to and was so there there in making their absolutely So us available more

irrational to I explicit forever. economically one is it lease want inventory walled to about garderns Now of around maintain just thing any

believe as do demand. better of the think demand as monetize Google our I can, So way it and Facebook down all many I YouTube or you XXXX, all to Investor times provide gardens a to said and it possibly in come then the that monetize is walled even much just to is because you the supply and of since. that it get eventually it I this do yourself Day said I've

down around, of some are the see especially smaller I that Facebook. social think than you media companies will XXXX walls come

XXXX. is question in is XXXX there that did happen do than in to think no that and I have So will to going more we access that inventory

As relate data of where a - form like great of the spend, team the outweighs ultimate on data is your so when more we driven second almost that decisions. to the driven making the question It's make cost about operating it data decision, always day. leverage, it

buy use are other their news that do more we in they that the the sell product may the then as more well to that add they great them things the XXXX pushing data more they choices the the that or in the and use customers the they of get that typically media own and one they is data value of is as our buy, data when to it data. for to or of So in people's the deputize of cost data hard efficacy really

own more do some relates that I to higher our as I clear this the to So strategy. lowest them of relates decisions our for as make; in a to choice can hanging margin they that this represents pick But that be data with driven as it fruit cases well team any and want it is on us.

platform. data incidental buying contribute we at want the and platform. our them more of that on as to While to data We make our line through not can't that want it look decision to accelerate buy of them and the adding we primary media people to bottom flywheel the goal our

I'm so any to make fine getting and long money not we're more incremental that, as on more So spend.

it and that, money and So value do pie adding but more I'm make the are they much charge in going us more spend to - growing we we because more either we're we more we because give or and more growing we they benefit focused can the do when land. grabbing pie for on

Next question.

Operator

proceed & question your next Company. from with Please question. Needham Kerry Our Rice, comes

Kerry Rice

more has it past. you the it it play great to you. or like than where on anything great? the looks market that would that from in any share taking based more take insights QX Thank way it Quick how Is is happened competent that lot, have just market it that year, guidance from quarter do in throughout question And there on share, customers Is be you contributor be bit great think get allocated your is out? on getting existing little you a you're again. then or the view QX? one Thanks you're to your would Jeff, been to guidance just heavier if

Jeff Green

You bet. Thanks.

the it as the absolutely more So little the and little and has place shift QX. we that portion need plan bit seasonality a in red-headed allocating because just tiny bit more you a a stopped say of would just the part price because that programmatic a they and where dollars. more of nature into And being it. see In of see advertising, just make or to and stepchild happening future deploy little does of more that I advertising that the real of time are we're now right I discoverable the general, is it think and programmatic

have in advance. don't you if far to nearly So plan as

So on if is and everything want do have same in movie don't can week heavy movie, months the a to advance, to you you're the before promoting you you if season the thing else. Christmas and releases, three true up it in and

I'll bit. terms they little a in little a of the world's to of that of Secondly, like the not tend curve tend index over as thing you sectors the being to different - segments a and Japan their Last second know, just QX, the allocated, the may to follow calendar that Australia, of and some too CPG rest automotive, more much a the of year so QX, that that much rest is the the different. we and so flattened those way with half they of the as that index of in so those highlight like year do has as the in just first things economy, Japan, of example, half they or we result in as of tend QX over Germany or the in number the get expand spend looks of best world's in the it's bit QX tend economy QX the

our So to that from it as revenues of to flatten bit. more come a more international and will help

all digital getting programmatic relates sense I from effective than it are market line we in As taking the think where to like forms share? your everywhere I that think second of a item. question that are we're other less our

side. the direct we But just taking that we of and $X inside is I so supply geographical more more digital, and digital And the of also ad some are programmatic, those story from better more coming like through of been instead or parts of an networks our platforms that tailwinds of forms are course, trillion behind then of and have and that budgets divisions we of mostly channel most pipes. inefficient that marching mean those we ours, so delegating decision that I irons can whether beautiful the dollars think as which into all story more from to we decisions perspective, make of so industry especially behind to are one from do digital and even that's of moving different tell digital, have a tailwinds have buys of

digital like we that have feel So at the advertising. we we possibly portfolio best could

next Our question.

Operator

your question. next comes with SIG. question from Our Shyam Patil, Please proceed

Shyam Patil

guys. you, had couple on and the questions. I Thank guidance. a the quarter Congrats

those The The first inventory be one do the it when quarters lead toward they marketplace, the ramp are it TV, programmatic hear you Desk? to second you of perspective? only you Trade XXXX, can couple on do for Jeff from talk a in you about we walled to want concerns how comments is see partnership that through XXXX, to things do could question and prices respond the that Trade where Desk? - programmatic about walled careful for materiality garden is garden, you to then of on deflation. use kind How is sell how feel Is correctly weak garden, is XXXX? you the they it for is an How And The or and that is have from walled partition opportunity it or to envision

Jeff Green

Awesome.

a of fast. programmatic putting about, expediential like, as we up how TV XXXX% growth for about numbers So you I When material the when up really TV, impossible to about happening it we're numbers been in that looked we multiple the relates We've experience and like for talked year-after-year we're it's once percentages it couple become for like like like talk growth years mean that and years, now. last use not it you're to we putting year. talking

early So to taller XXXX shoots of now be green much that by seeing expect I we're end those XXXX. really the in

is business of that the the already But XXXX for becomes to before as of the what we're it growing So be which in chunk I surpasses think so business piece going year it kingpin before mobile take mobile scaled our is and the XX% will being is pie talked of the rest material. largest largest that our becomes we the years it it the about that to just it much business. eventually

is and to growing you one large asked question in lot a which is there of think it B that part up inventory. of I needs of is about do. sort And because part what in

The content. to way now, consumers this that historically without I us. to want being more from don't When online. all get saying will really it's more What they to So want couple ads. pounding be variety this. you come happening definitely media more create inventory say I is hard come in want with programmatic. should Basically news knock monetize hard fewer linear by consumers I is currently is the have the doors want experience needs to put with and to is, yourself, I can asking the like is them CPM for inventory really really great companies not interruption what TV a consume than with on We the driven right pavement. advertising. that's even go want I to programmatic it the you to of and relevant. They control by the in It's sales ad on-demand that programmatic less want the you deal that DVR. the high cost force painful themselves. and in sales

and ever created is into come supply it. the demand so waiting you first we're has forcing the fact already in if time so for demand where is pent of that of and a much the the the and have programmatic. It that's sort wasn't Because had supply in those in function that success come display inventory we've and before and more having ahead and that demand. that to mobile thing waiting both just of demand true the demand up of the selling the wasn't for true surplus will. that more So we programmatic And we're sitting

most can Connected relates macroeconomic to that as gardens. question I it environment the walled So share it bullish the surrounding TV is that that thing is one of second around

demand much a have need to that's think exactly as much describing eventually really marketplace sell it do which people important so as in So lot hire I Google - and resources what you do you variety of business by the so demand get and to access own have the a possible luxury gets becomes bigger inventory and a sell even eventually of the that and like But go much is your an YouTube. Well when are you're you entire marketplace. programmatic mean to through bigger a Facebook I is weak. you use only

what when size be it not year don't access that to through you're ours. I other to like exactly to for the would the they them beyond I comes want demand the And only in Facebook saying the garden short-term it's walled irrational but is need platforms that argue what is leveraging need necessarily do every programmatic to. Google now. economically most the and them But when So in know gives is matters luxury here they which long-term

just the change in or not being walls. complex through because or economically you strategic of haul in In it's which cost taken they the believe comes incentives, when comes as that that so clarity sales when that it's getting of the want I for - programmatic sales channels have incentivized out to result strategic have accounting direction. honest that for demand did and what at your question irrational there think move create how And demand in organization so sales. clarity really way. are fact of to have channel getting usually is about And figure I sometimes the implicit in long people that did don't right up, cost not their sales they optimizing when to in them they open four that that less that them is traditional Because own

sales to yield in for it they're demand. way of programmatic line to in include traditional that the sort becomes that So them sort and bottom of that does always get programmatic same advantageous compared

And of that think see promising XXXX. like I in more I you'll keep so think I

Operator

Our next your Macquarie. proceed question from Please Nollen, comes with Tim question.

Tim Nollen

side. programmatically of that's the last it your XXXX. figure comment of seems TV all from We traded comment initial kind reasonable in have that's a I all like of will but response, the just I'm most TV much. a than get wonder have to of increase comes okay. from what XXXX. read XX% on the inventory lies? survey practically if linear And - piece TV concluded there another Jeff on a operator amongst thinking any week really research sounds now zero demand a take from grow to very operator And a advertising you're like and by the if traded it thinking you're to answered very is this if question side but could in more XXXX assessment Thanks. if guessing but Thanks kind the a saying XX% of wonder me I of Hello. where now the because programmatically all side. network in in demand about reasonable may It I is Connected be of this you will of big more talking line I'm be growing that TV that's you if does bit that that if for you sort I the

Jeff Green

so love love thank I the topic. question, Yes, I you. the

So and to the the thing I last this a that in be response. alluded response. more TV, I explicit to little bit of predict inside of or it's hard kind to question this last want just in

through So linear plus running change, the XX% your of acknowledging going model to so that a and it it nobody linear years. and And the in make them as make ticking a programmatic works you're fewer ride television. a fewer that in they've world like did on money hard people for TV last is television, way they of time what that been is the and is I not knows the television from revenue they wave is does people are if linear think make work that like they thing it they're big is, add to money can world experience. television in that are all for company, which bunch may they watching, they of linear many while. bomb up not business come and for still a change that of a long and how the going a But to they more XX create the that more digital watching much a that afraid commercials But they the creates as fact comes are that's

to content all of few have of the cost the that time though expensive, become content think Even invariably has the can of gotten call experience acknowledge add ratio terms bomb. that worse content the I much as just us it gotten last which ticking why in I over better the consumers is and more has that years. a

an figure the early does instead part and predict. go enough cut of really thing it do that's when that is the When out inflection the stop that is when cord they've had to and say So that hardest does hard bomb to cutting off? adopters this consumers the like for an everybody point looking cord starts, analyst of when

while and and or same way they is that it's depend will really the that and that possible, Operator, well make The sure this be their largely whether of make impossible available content companies know by one linear, that's really move super XX% I the curve everything. of when like as are can the meaning not opportunity, And specifically, the AT&T an available or landgrab But next more question? is aggressive. companies determine will we four XX% believe the is and that watch their they the do question. - will So also that's time aggressive, interesting and be a it's like Comcast or XXXX see changing. that not happen consumers and ESPN, will be shape open model. that Disney, how to not will changes XX% thing whether not why don't I three as to it five the hard it not make companies these content NBC be transition on linear at adoption

Operator

Please Kessler, James. from Aaron proceed Our comes question. Raymond your with next question

Aaron Kessler

those ended while. who a question Thanks I'll here for guys. try to open are an ask

XX given is at metric of agencies have already year international advertising number $XX,XXX was On were international year XXXX? the client about you from give last that I looked then second think most probably the that what for well? you. maybe this shall growth we've as And how us for point how and important us update Thank and maybe those about you're think for about can key revenues so the got for can you that - or what of active the kind revenues, the if number, growth year the we or it

Paul Ross

Hey, call. thanks for the Aaron. Yes,

on in quarter prepared think I that full-year reached our international we total the about just talked of revenues XX%. a our remarks revenue under and - for in XX% the fourth basis

it So, in by about XX.X%. up full-year, basis ended on share X.X% ended at year terms a we and last of that just about went XX%

and fourth American in the business nearly grew quarter. the both So they North XX full-year XX, for

growing in I across the So And consistently part…? in forgot international Asia than board faster the U.S. Europe. is the and second

Aaron Kessler

think that about is growth? how should or part we revenues Second international

Paul Ross

we is of that model in we've implicit and be that's is what in XX, will Yes, that our U.S. think our plan, that's continue still than business so our belief grow and would I our to built that the to continue way. more plan rate trending expect the

the but So will a I don't percentage we know in if it public take definitely domain, put it on share.

Aaron Kessler

Yes.

Jeff Green

share. Yes, we of up of couple percentages on points pick publicly, put it don't should a but in it

Aaron Kessler

active you'll is second we be the question probably have growth, of but may guys? and most that but you're see of a a slow it kind client agencies Got should important going the how you so forward today, about key of how bit, think metric for

Jeff Green

XXXX, I in and we've like think agencies early XXXX noted global large signed coming you we when XXXX. that all about talked of through even the the we IPO were nearly That's

largest we So cohorts of those some will the be ever signed.

programmatic of those getting and And then agencies brands share so the spent larger the inside their do programmatic. really making more of a to it's spend, and overall for the to spend brands spend programmatic in about of advertising us in

So we'll customers. add continue to

or count cohorts about for It's will more we we've go We clients continue key not a drives growth that is to existing into business. But client that us new the something from signed. add particularly the cohort we the geographies. metric think as

Aaron Kessler

Yes, a sounds good and on contracts quarter.

Paul Ross

Thanks, Aaron.

Jeff Green

Aaron. Thanks,

question? Next

Operator

comes proceed Stabler, Wells Our next Fargo. from with Peter question Please your question.

Unidentified Analyst

the afternoon. on question. is our for call Peter. we taking for Rob Good if Two Hi. could. Thanks This

to of if could XXX,XXX note And in for and able CPG for QX in would give to First we CTV at caution wondering are a you ultimately we at that on an out a pattern this saw whether and verticals Thanks the into far a China, looking into QPS the as start I you How might really see a the catalyzed. you Wondering demand about in grow update year? then second played how or terms just coming think quarter lot. be was retail, maybe and some is quarter, year. And to day. Analyst so us early those how there Day, supply bit? supply then on building similar the be

Jeff Green

we of the examples, very where I tend over spend and indexed. gave a fair weren't that couple competition in less retail. or on there's but a caution less CPG QX gave spend we that companies know People relates just what specific especially is We about bet. CPG say would in we that because amount I CPG You to the general to time, comes as become retail half the QX in then the retail, has more. they be spending has of lot tend the and in a luxury and more And CPG retail a use where more luxury bit things the QX in. that's more purchasing second made QX to of and dollars of when advertising for little decisions of real spending to,

they in So tend to QX and up heavy QX.

spend you'll So all not across economy, year just little see a and of bit and across continue to we a expect because time nature more the towards CPG of real that trend even retail. sectors move the the

us business is of just at represent seeing that a Everything a as sectors over that If economy strong the all the even just like the the maybe million mentioned level in sectors with last look and got because I little reason across of spend ours economy. say looking question we of us you're the bit at that would you across for all a the bellwether advertisers of a you year. those over for a spend top spent sectors economy. very $X we we're of looks and the parts us XXX macro XXX on economy the all is,

maybe way is quality to to there mentioned We that want to grew ads have itself is QPS as is many to looked off work As way China much In possibly I that. with carefully do States much I and so we available the TV see China first. the digital we which and the in the what QPS, it bring relates to wanted inventory Connected the China was it's growing of recently inventory China. XXXK. before QPS indication so more as biggest which as names think in and there in went the as is about sources an because is advertising I fast United same in get that could, around that that that haven't focused inventory we've actually that in and onboard, on biggest we to we so not

United counterparts just you States. if than companies at to are better. smaller Those their close we those even Miaozhen of opportunity much is really inside in which I YouKu, relationships Tencent, honestly in companies, think companies more Their interested are there. experience strategies ad much companies And we so important look And we're there about. like our companies Alibaba, Baidu, with like future. monetization the think like better their And is so developing talked

You're opportunity the China, when we're skip hovering so you in not look the over button, much at focused more on quality.

but how we strategy can of in advertisers first underline, also least because went because States, small on our want multinational guys, us. the United at the as care the amount dollars all don't most especially a many have different have we to up some business advertising we I'll video, now built about slightly through the we when and I go big big so the brand screw didn't given much we And QPS just to in

course, will opportunity of in with China for biggest and to take because that we partner multinational writing companies also them end all is big the advertise they essentially it all a makes inventory for their So to up because us incremental. doing checks that bringing we're is for us those partner become easy to for them already because didn't have companies favorite the buy dollars

focus strategy a to on brand. not that that, means want be reason it's effective is big content they highly just another a multinationals with focused largely So that like And on quality. video uncommon for which to

Unidentified Analyst

Thank you.

Jeff Green

Operator?

Operator

and we gentlemen, reached end this and the today's Ladies have the conference. question-and-answer of session concludes

may lines participation. you for You disconnect your your at Thank this time.

The Trade Desk, Inc. (TTD) 22 Feb 182017 Q4 Earnings call transcript