8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2020

THE TRADE DESK, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-37879	27-1887399
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

42 N. Chestnut Street

Ventura, California 93001

(Address of principal executive offices) (Zip Code)

(805) 585-3434

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.000001 per share	TTD	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02
Results of Operations and Financial Condition.

On May 7, 2020, The Trade Desk, Inc. (the “Registrant”) issued a press release announcing its financial results for the quarter ended March 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits.

(d) The following exhibit is being filed herewith:

Exhibit No.	Description
99.1	Press release of the Registrant, dated May 7, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 

	THE TRADE DESK, INC. (Registrant)
Date: May 7, 2020
	By:	/s/ Blake J. Grayson
		Blake J. Grayson
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-99.1

Exhibit 99.1

The Trade Desk Reports First Quarter Financial Results

LOS ANGELES--(BUSINESS WIRE)--May 7, 2020--The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its first quarter ended March 31, 2020.

“Despite the Covid-19 pandemic, our team delivered a strong March quarter. We delivered 33% year-over year revenue growth and strong EBITDA margins. We generated robust cash flow in the quarter and ended March with a strong cash position and balance sheet. This financial discipline allows us to continue to invest in our platform,” said Founder and CEO of The Trade Desk, Jeff Green. “This will be key as the world’s leading brands and agencies look to leverage advertising to gain share as we emerge from this current environment. While the timing is unpredictable right now, we can be certain that advertisers will increasingly value measurability in their campaigns, and that they’ll use data-driven strategies to drive precision and value across all channels. And nowhere will this be more apparent than the accelerated shift from linear to connected TV.”

First Quarter 2020 Financial Highlights:

The following table summarizes our consolidated financial results for the quarters ended March 31, 2020 and 2019 ($ in millions, except per share amounts):

	Three Months Ended
	March 31,
	2020			2019
GAAP Results
Revenue	$	160.7		$	121.0
Increase in revenue year over year		33	%		41	%
Net Income	$	24.1		$	10.2
Diluted EPS	$	0.50		$	0.21
Non-GAAP Results
Adjusted EBITDA	$	39.0		$	24.7
Adjusted EBITDA Margin		24	%		20	%
Non-GAAP Net Income	$	43.4		$	23.1
Non-GAAP Diluted EPS	$	0.90		$	0.49

First Quarter and Recent Business Highlights Include:

• Continued Omnichannel Spend Growth: Omnichannel solutions remain a strategic focus for The Trade Desk as the industry continues shifting toward transparency and programmatic buying. Specific channel highlights from Q1 include:
  • Total Mobile (in-app, video, and web) spend grew 38% from Q12019 to Q12020
  • Mobile Video spend grew 74% from Q12019 to Q12020
  • Mobile In-App spend grew 55% from Q12019 to Q12020
  • Connected TV spend grew 100% from Q12019 to Q12020
  • Audio spend grew 60% from Q12019 to Q12020
    
• Strong Customer Retention:Customer retention remained over 95% during the quarter, as it has for the previous 5 years.
  
• Expanding Partnerships in Asia:
  • The Trade Desk and TikTok, the leading destination for short-form mobile video, announced a new advertising partnership covering key Asia Pacific markets. The partnership will allow advertisers to directly access premium TikTok inventory across the Asia-Pacific region via The Trade Desk platform. TikTok is the first short-form video platform to integrate its ad offerings with The Trade Desk, making this a unique industry-leading development for brands in the region.
  • The Trade Desk and Samba TV, the leading provider of consumer cross screen television insights and analytics, expanded their US partnership to international markets beginning in Australia.
    
• Revamped The Trade Desk “Edge” Academy learning platform:
  • The Trade Desk revamped its industry-leading digital advertising courseware and certification platform, and is making it available free of charge for the first time until the end of 2020. In addition, the learning platform will be open to all users, from advertising industry professionals to those looking to build the required skills to enter the field.
    

• Industry Awards: The Trade Desk was recently ranked #7 for Best Workplaces™ Asia 2020 for the small/medium company category and was named a Best Workplaces™ in Greater China 2019 by Great Places to Work®. The Trade Desk won for the Best Demand Side Platform at the ClickZ Marketing Technology Awards 2019 and Best Demand-Side Technology in the 2019 AdExchanger Awards. The Trade Desk was also named Best Medium Workplace by Great Place to Work™ and Fortune for the third year in a row.

Financial Guidance:

As a result of the impact of the Covid-19 pandemic on economic activity and advertiser demand, The Trade Desk is not providing financial guidance for revenue or Adjusted EBITDA for the second quarter of 2020. In addition, the Company is withdrawing its outlook for gross spend, revenue and Adjusted EBITDA for the full year 2020.

Use of Non-GAAP Financial Information

Included within this press release are the non-GAAP financial measures of Adjusted EBITDA, Non-GAAP net income and Non-GAAP diluted EPS that supplement the Consolidated Statements of Income of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before depreciation and amortization, stock-based compensation, interest income, net, and benefit from income taxes. Non-GAAP net income excludes charges and the related income tax effects for stock-based compensation. Tax rates on the tax-deductible portions of the stock-based compensation expense approximating 30% have been used in the computation of non-GAAP net income and non-GAAP diluted EPS. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Consolidated Statements of Income. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for or superior to corresponding, similarly captioned, GAAP measures and may be different from non-GAAP financial measures used by other companies.

First Quarter Financial Results Webcast and Conference Call Details

• When: May 7, 2020 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time).
• Webcast: A live webcast of the call can be accessed from the Investor Relations section of The Trade Desk’s website at http://investors.thetradedesk.com/. Following the call, a replay will be available on the company’s website.
• Dial-in: To access the call via telephone in the United States, please dial 844-407-9500. For callers outside the United States, please dial 1-862-298-0850. Participants should reference the conference call ID “The Trade Desk Call” after dialing in.
• Audio replay: An audio replay of the call will be available beginning about two hours after the call. To listen to the replay in the United States, please dial 877-481-4010 (replay code: 34433). Outside the United States, please dial 1-919-882-2331 (replay code: 34433). The audio replay will be available via telephone until May 14, 2020.

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/investor-overview), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), and Facebook page (https://www.facebook.com/TheTradeDesk/), and Jeff Green’s Twitter feed (@jefftgreen) and LinkedIn profile (https://www.linkedin.com/in/jefftgreen/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to The Trade Desk’s press releases, SEC filings, public conference calls and webcasts.

About The Trade Desk

The Trade Desk is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns across ad formats and devices. Integrations with major data, inventory, and publisher partners ensure maximum reach and decisioning capabilities, and enterprise APIs enable custom development on top of the platform. Headquartered in Ventura, CA, The Trade Desk has offices across North America, Europe, and Asia Pacific. To learn more, visit thetradedesk.com or follow us on Facebook, Twitter, LinkedIn and YouTube.

Forward-Looking Statements

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 industry and market trends, and the Company’s financial targets, such as revenue and Adjusted EBITDA. 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 relatively limited operating history and the impact of COVID-19 on the Company and its customers and partners, 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.

THE TRADE DESK, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
(Unaudited)
	Three Months Ended
	March 31,
	2020			2019
Revenue	$	160,660		$	120,987
Operating expenses (1):
Platform operations		40,208			33,651
Sales and marketing		34,294			22,737
Technology and development		36,794			25,312
General and administrative		38,598			33,617
Total operating expenses		149,894			115,317
Income from operations		10,766			5,670
Total other expense, net		417			333
Income before income taxes		10,349			5,337
Benefit from income taxes		(13,708	)		(4,814	)
Net income	$	24,057		$	10,151
Earnings per share:
Basic	$	0.53		$	0.23
Diluted	$	0.50		$	0.21
Weighted average shares outstanding:
Basic		45,501			43,906
Diluted		48,313			47,314
(1) Includes stock-based compensation expense as follows:
STOCK-BASED COMPENSATION EXPENSE
(Amounts in thousands)
(Unaudited)
	Three Months Ended
	March 31,
	2020			2019
Platform operations	$	1,462		$	1,056
Sales and marketing		5,314			3,227
Technology and development		8,590			4,936
General and administrative		7,599			6,650
Total	$	22,965		$	15,869

THE TRADE DESK, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
	As of		As of
	March 31, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	325,211	$	130,876
Short-term investments, net		120,625		124,112
Accounts receivable, net		947,973		1,166,376
Prepaid expenses and other current assets		48,002		27,857
Total current assets		1,441,811		1,449,221
Property and equipment, net		78,877		64,012
Operating lease assets		200,242		173,449
Deferred income taxes		18,950		18,950
Other assets, non-current		27,324		23,129
Total assets	$	1,767,204	$	1,728,761
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	663,410	$	868,618
Accrued expenses and other current liabilities		48,437		47,178
Operating lease liabilities		22,527		14,577
Total current liabilities		734,374		930,373
Operating lease liabilities, non-current		204,688		174,873
Debt, net		143,000		—
Other liabilities, non-current		11,108		10,998
Total liabilities		1,093,170		1,116,244
Stockholders' equity:
Preferred stock		—		—
Common stock		—		—
Additional paid-in capital		417,769		380,079
Accumulated other comprehensive income		158		—
Retained earnings		256,107		232,438
Total stockholders' equity		674,034		612,517
Total liabilities and stockholders' equity	$	1,767,204	$	1,728,761

THE TRADE DESK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
	Three Months Ended March 31,
	2020			2019
OPERATING ACTIVITIES:
Net income	$	24,057		$	10,151
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,477			4,456
Stock-based compensation		22,965			15,869
Allowance for credit losses on accounts receivable		1,310			224
Investment credit loss		275			—
Noncash lease expense		7,402			4,421
Other		3,209			379
Changes in operating assets and liabilities:
Accounts receivable		210,552			127,232
Prepaid expenses and other assets		(15,791	)		(6,580	)
Accounts payable		(205,967	)		(138,886	)
Accrued expenses and other liabilities		892			(4,489	)
Operating lease liabilities		(2,673	)		(3,066	)
Net cash provided by operating activities		52,708			9,711
INVESTING ACTIVITIES:
Purchases of investments		(35,705	)		(73,950	)
Maturities of investments		39,180			—
Purchases of property and equipment		(18,310	)		(6,085	)
Capitalized software development costs		(965	)		(1,417	)
Net cash used in investing activities		(15,800	)		(81,452	)
FINANCING ACTIVITIES:
Proceeds from line of credit		143,000			—
Payment of debt financing costs		—			(6	)
Proceeds from exercise of stock options		19,320			9,502
Taxes paid related to net settlement of restricted stock awards		(4,893	)		(1,146	)
Net cash provided by financing activities		157,427			8,350
Increase (decrease) in cash and cash equivalents		194,335			(63,391	)
Cash and cash equivalents—Beginning of period		130,876			207,232
Cash and cash equivalents—End of period	$	325,211		$	143,841

Non-GAAP Financial Metrics
(Amounts in thousands, except per share amounts)
The following tables show the Company’s non-GAAP financial metrics reconciled to the comparable GAAP financial metrics included in this release.
	Three Months Ended
	March 31,
	2020			2019
Net income	$	24,057		$	10,151
Add back:
Depreciation and amortization		6,477			4,456
Stock-based compensation		22,965			15,869
Interest income, net		(1,092	)		(997	)
Credit loss expense on available-for-sale securities		275			—
Benefit from income taxes		(13,708	)		(4,814	)
Adjusted EBITDA	$	38,974		$	24,665
	Three Months Ended
	March 31,
	2020			2019
GAAP net income	$	24,057		$	10,151
Add back (deduct):
Stock-based compensation expense		22,965			15,869
Adjustment for income taxes		(3,653	)		(2,917	)
Non-GAAP net income	$	43,369		$	23,103
GAAP diluted EPS	$	0.50		$	0.21
Non-GAAP diluted EPS	$	0.90		$	0.49
Weighted average shares outstanding—diluted		48,313			47,314

Contacts

Investors
Chris Toth
Vice President Investor Relations, The Trade Desk
ir@thetradedesk.com
310-334-9183

Media
Ian Colley
Vice President Public Relations, The Trade Desk
ian.colley@thetradedesk.com
914-434-3043

XML

Document and Entity Information	May 07, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 07, 2020
Entity Registrant Name	THE TRADE DESK, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-37879
Entity Tax Identification Number	27-1887399
Entity Address, Address Line One	42 N. Chestnut Street
Entity Address, City or Town	Ventura
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	93001
City Area Code	805
Local Phone Number	585-3434
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001671933
Title of 12(b) Security	Class A Common Stock, par value $0.000001 per share
Trading Symbol	TTD
Security Exchange Name	NASDAQ