On Thursday, programmatic digital ad-buying platform The Trade Desk (NASDAQ: TTD) will report its fourth-quarter and full-year results. Given the company's track record of surprising to the upside when it comes to both revenue and earnings per share, investors will be watching the report closely.
For the first three quarters of 2018, The Trade Desk's business saw incredible growth: Revenue surged 54% year over year, driven by strong momentum in mobile and extraordinary growth in connected TV and audio. Can the ad-buying platform keep impressing investors when it reports fourth-quarter results later this week? Here's an overview of some key areas to watch.
The Trade Desk makes a point with a full-page ad in a newspaper. Image source: The Trade Desk.
The Trade Desk's revenue has been soaring -- in the third quarter, it jumped 50% year over year to $118.8 million. This easily beat management's guidance for $116 million.
For Q4, management guided for revenue of $147 million, or 43% year-over-year growth, but the company has a consistent track record of outpacing its forecasts on revenue.
Non-GAAP earnings per share
Profitability has also been a strength for the company recently. Non-GAAP earnings per share in Q3 were $0.65, up from $0.35 in the year-ago quarter.
Investors should look for more strong earnings growth in Q4. Analysts, on average, expect The Trade Desk to report non-GAAP EPS of $0.80, up from $0.54 in the year-ago quarter.
Mobile ad spend growth
Customer spend for mobile ads has been a major driver for The Trade Desk. Total spending on mobile ads increased 65% year over year in Q3. To give you an idea of how important this catalyst is to the business, mobile accounted for 46% of total gross spend on the platform during the quarter.
Look for mobile ad spend to grow at a similarly robust rate in Q4.
Audio ad spend growth
Customers continue to ramp up their spending on audio ads. Audio ad spend during the quarter increased 192% year over year in Q3. Given that this was about in line with the 191% growth it generated Q2, investors should expect another triple-digit growth period in Q4.
Connected TV ad spend growth
There's no catalyst The Trade Desk is more excited about than connected TV, which CEO Jeff Green called "the biggest opportunity we've ever seen [and] probably ever will," during the company's Q3 earnings call.
Connected TV ad spend in Q3 2018 was more than 10 times greater than what it was in Q3 2017. Did that wild growth continue in Q4? We'll find out when the Trade Desk reports its results after market close on Thursday.
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