Advertising software maker The Trade Desk (NASDAQ:TTD) reported Q2 CY2025 results topping 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 Operating Income: $245.7 million vs analyst estimates of $102.7 million (35.4% margin, significant 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 $274.6 million
- Operating Margin: 16.8%, in line with the same quarter last year
- Billings: $3.49 billion at quarter end, up 20.9% year on year
- Market Capitalization: $26 billion
StockStory’s Take
The Trade Desk’s second quarter results came amid a significant negative market reaction, despite revenue and non-GAAP profit metrics aligning with or exceeding Wall Street expectations. Management cited ongoing strength in connected TV (CTV) and retail media, as well as rapid adoption of the Kokai AI-driven platform, which is now used for the majority of client spend. CEO Jeff Green noted that some large advertiser categories, especially auto and consumer packaged goods, experienced volatility due to tariff and macroeconomic pressures, which created short-term challenges in spend allocation across the platform.
For the coming quarters, The Trade Desk’s outlook is shaped by expectations for continued expansion of Kokai and Deal Desk, as well as persistent advertiser caution in certain sectors. Management highlighted that the company’s focus on programmatic, measurable advertising and its independence from walled gardens are key differentiators. Green stated, “Programmatic is at its best when advertisers are deliberate and performance-driven,” but he also cautioned that ongoing trade policy uncertainty and macro headwinds among large global brands could affect near-term growth trends.
Key Insights from Management’s Remarks
Management attributed Q2 performance to rapid innovation in AI-powered advertising, deepening relationships with large brands, and shifting industry dynamics favoring open Internet channels over walled gardens.
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Kokai platform adoption: The company’s AI-powered Kokai platform now accounts for about three-quarters of client spend. Management emphasized Kokai’s impact on campaign performance, highlighting a 20%+ improvement in key metrics for early adopters and increased client spend among those shifting the majority of their budgets to the platform.
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CTV and retail media momentum: Connected TV (CTV) remained the fastest-growing channel, with strong demand from major media partners such as Disney, NBCU, and Roku. The Trade Desk also reported increased traction in retail media, fueled by expanded partnerships with companies like Instacart and Ocado, allowing for more granular measurement of purchase outcomes.
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Supply chain efficiency initiatives: Initiatives like OpenPath and the recent Sincera acquisition were cited as improving digital advertising supply chain transparency and efficiency. OpenPath enables direct publisher integration, and Sincera’s data is being embedded to optimize impression valuations and reduce inefficiencies for buyers.
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Shift in advertiser behavior: Management noted a preference among large advertisers for flexibility and performance-driven spending, especially in an uncertain macro environment. They highlighted the growing number and scale of joint business plans (JBPs) as evidence that leading brands are consolidating spend with The Trade Desk.
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Leadership transitions: The company announced that Alex Kayyal will succeed Laura Schenkein as CFO, and Vivek Kundra has recently joined as COO. Green praised the expanded leadership team’s experience and strategic alignment in executing the company’s long-term vision.
Drivers of Future Performance
The Trade Desk’s near-term outlook is anchored in further Kokai adoption, resilient CTV and retail media demand, and ongoing macroeconomic caution among large advertisers.
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Full Kokai rollout: Management expects all clients to transition to the Kokai platform by year-end, which they believe will enhance campaign performance and drive higher spend from existing and new customers. The company sees continued AI-led innovation as central to future gains.
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CTV and retail media growth: The company anticipates ongoing strength in CTV and retail media, supported by new partnerships and the shift of advertising budgets from linear TV and traditional retail channels to digital. However, management cautioned that flexibility in spend commitments may persist, reflecting advertiser caution.
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Large advertiser headwinds: Executives flagged uncertainty among Fortune 500 advertisers, particularly in auto and consumer packaged goods, due to tariffs and global economic pressures. The company’s reliance on large brands, while normally a strength, could present short-term risk if macro headwinds persist.
Catalysts in Upcoming Quarters
Looking forward, our team will watch (1) the pace and breadth of client migration to Kokai and the associated uplift in spend, (2) further expansion and monetization of CTV and retail media channels, and (3) how major advertiser behavior shifts in response to tariff policies and macroeconomic conditions. We will also monitor the impact of new leadership and organizational changes on execution and strategy.
The Trade Desk currently trades at $53.19, down from $88.37 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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