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): November 9, 2022

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:

☐
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 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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 November 9, 2022, The Trade Desk, Inc. (the “Registrant”) issued a press release announcing its financial results for the quarter ended September 30, 2022. 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 exhibits are being filed herewith:

Exhibit No.	Description
99.1	Press release of the Registrant, dated November 9, 2022.
104	Cover Page Interactive Data File (formatted as Inline XBRL)

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: November 9, 2022
	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 Third Quarter 2022 Financial Results

LOS ANGELES--(BUSINESS WIRE)--November 9, 2022--The Trade Desk, Inc. (NASDAQ: TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its third quarter ended September 30, 2022.

“Q3 was another strong quarter for The Trade Desk with 31% growth that significantly outpaced the market. This performance underlines the value of decisioned media buying on The Trade Desk as the world’s largest advertisers seek to maximize return on every campaign dollar,” said Jeff Green, founder and CEO of The Trade Desk. “Nowhere is this more apparent than in the rapidly growing market for Connected TV advertising, as more of the world’s leading CTV platforms partner with us to bring advertising demand to their inventory. Additionally, more of the world’s top retailers are working with us to help our clients unleash retail data to tie campaign activity to actual retail sales. In both CTV and retail data, we are helping our clients pioneer new approaches to identity that preserve the value of relevant advertising while improving consumer privacy.”

Third Quarter 2022 Financial Highlights:

The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2022 and 2021 ($ in millions, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
GAAP Results
Revenue	$	395		$	301		$	1,087		$	801
Increase in revenue year over year		31	%		39	%		36	%		55	%
Net income (loss)	$	16		$	59		$	(18	)	$	130
GAAP diluted earnings (loss) per share	$	0.03		$	0.12		$	(0.04	)	$	0.26
Non-GAAP Results
Adjusted EBITDA	$	163		$	123		$	423		$	311
Adjusted EBITDA margin		41	%		41	%		39	%		39	%
Non-GAAP net income	$	129		$	89		$	332		$	247
Non-GAAP diluted earnings per share	$	0.26		$	0.18		$	0.66		$	0.50

Third Quarter and Recent Business Highlights:

• Strong Customer Retention: Customer retention remained over 95% during the third quarter, as it has for the past eight consecutive years.

• Continued Collaboration and Support for Unified ID 2.0: The Trade Desk is building support for Unified ID 2.0 (UID2), an industry-wide approach to identity that preserves the value of relevant advertising, while putting user control and privacy at the forefront. UID2 is an upgrade and alternative to third-party cookies. Recent partnerships and pledges of integration and support include:
  • In September, Procter & Gamble, one of the world's largest advertisers, announced its support and adoption of UID2. P&G noted the urgency for advertisers and publishers to implement a consumer-centric identity solution that will raise the bar on privacy and improve consumers' experiences with advertising.
  • MediaMath, a demand side platform that works with over 3,500 advertisers, announced it will support UID2 on its platform, allowing advertisers to perform enhanced targeting and measurement by matching UID2s to first-party data.
  • Narrative, a data commerce platform that makes it easy for organizations to build audience segments from their first party data, announced a partnership with The Trade Desk. The partnership enables Narrative's customers to match their first party data with UID2 and make audience segments available for advertisers on The Trade Desk platform.
  • FuboTV, which became the first CTV platform to adopt UID2 in February of 2021, reported ad revenues increasing 113% faster than impression growth on its platform for campaigns transacted using UID2 over the past year. Ad spend on FuboTV also increased by 61% year over year and ad prices rose on a CPM basis for campaigns using the open identity framework.

• Industry Recognition (2022):
  • Customers’ Choice for Ad Tech on Gartner® Peer Insights™
  • BIG Innovation Award for Technology Product (Solimar)
  • Sales and Marketing Technology Awards: Product of the Year for User Optimization Experience
  • Crain's 100 Best Places to Work in NYC 2022 (9th consecutive year)
  • Stevie Awards for Great Employers - Employer of the Year, Computer Software
  • Stevie Awards for Customer Service Success - Silver, Technology Industries
  • Forbes Global 2000
  • Samantha Jacobson, Chief Strategy Officer, named to AdAge 40 under 40

Financial Guidance:

Fourth Quarter 2022 outlook summary:

• Revenue at least $490 million
• Adjusted EBITDA of approximately $229 million

We have not provided an outlook for GAAP Net Income or reconciliation of Adjusted EBITDA guidance to Net Income, the closest corresponding U.S. GAAP measure, because Net Income outlook is not available without unreasonable efforts on a forward-looking basis due to the variability and complexity with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of our stock-based compensation expense that are directly impacted by unpredictable fluctuations in our share price. We expect the variability of the above charges could have a significant and potentially unpredictable impact on our future U.S. GAAP financial results.

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 Condensed Consolidated Statements of Operations of The Trade Desk, Inc. (the Company) prepared under generally accepted accounting principles (GAAP). Adjusted EBITDA is earnings before interest expense (income), net; provision for income taxes; depreciation and amortization; and stock-based compensation. 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 25% to 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 Condensed Consolidated Statements of Operations. 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.

Third Quarter 2022 Financial Results Webcast and Conference Call Details

• When: November 9, 2022 at 5:00 A.M. Pacific Time (8:00 A.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 North America, please dial 877-545-0320. For callers outside the United States, please dial 1-973-528-0002. Participants should reference the conference call ID code “843070” 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: 46916). Outside the United States, please dial 1-919-882-2331 (replay code: 46916). The audio replay will be available via telephone until November 16, 2022.

The Trade Desk, Inc. uses its Investor Relations website (http://investors.thetradedesk.com/), its Twitter feed (@TheTradeDesk), LinkedIn page (https://www.linkedin.com/company/the-trade-desk/), Facebook page (https://www.facebook.com/TheTradeDesk/), 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, 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2021		2022			2021
Revenue	$	394,773		$	301,091	$	1,087,058		$	800,869
Operating expenses (1):
Platform operations		70,124			53,400		201,504			154,709
Sales and marketing		85,038			59,278		245,146			176,797
Technology and development		79,915			55,847		235,397			163,301
General and administrative		130,892			52,120		391,517			155,884
Total operating expenses		365,969			220,645		1,073,564			650,691
Income from operations		28,804			80,446		13,494			150,178
Total other expense (income), net		(1,698	)		1,470		(1,756	)		1,560
Income before income taxes		30,502			78,976		15,250			148,618
Provision for income taxes		14,633			19,592		33,052			18,895
Net income (loss)	$	15,869		$	59,384	$	(17,802	)	$	129,723
Earnings (loss) per share:
Basic	$	0.03		$	0.12	$	(0.04	)	$	0.27
Diluted	$	0.03		$	0.12	$	(0.04	)	$	0.26
Weighted-average shares outstanding:
Basic		487,963			478,101		486,168			475,496
Diluted		500,300			498,912		486,168			497,942

___________________________
(1)	Includes stock-based compensation expense as follows:

STOCK-BASED COMPENSATION EXPENSE
(Amounts in thousands)
(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Platform operations	$	3,517	$	2,518	$	14,254	$	11,624
Sales and marketing		14,861		9,099		48,718		37,362
Technology and development		22,641		11,269		67,258		41,337
General and administrative (1)		79,984		11,573		240,881		41,687
Total	$	121,003	$	34,459	$	371,111	$	132,010

___________________________
(1)	Includes stock-based compensation expense related to a long-term CEO performance grant of $66 million and $197 million for the three and nine months ended September 30, 2022, respectively.

THE TRADE DESK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
	As of September 30, 2022		As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	994,656	$	754,154
Short-term investments, net		326,745		204,625
Accounts receivable, net		2,026,929		2,020,720
Prepaid expenses and other current assets		67,033		112,150
Total current assets		3,415,363		3,091,649
Property and equipment, net		166,078		135,856
Operating lease assets		230,917		234,091
Deferred income taxes		67,640		68,244
Other assets, non-current		43,956		47,500
Total assets	$	3,923,954	$	3,577,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,651,447	$	1,655,684
Accrued expenses and other current liabilities		82,768		101,472
Operating lease liabilities		51,025		46,149
Total current liabilities		1,785,240		1,803,305
Operating lease liabilities, non-current		215,728		238,449
Other liabilities, non-current		8,698		8,280
Total liabilities		2,009,666		2,050,034
Stockholders' equity:
Preferred stock		—		—
Common stock		—		—
Additional paid-in capital		1,319,961		915,177
Retained earnings		594,327		612,129
Total stockholders' equity		1,914,288		1,527,306
Total liabilities and stockholders' equity	$	3,923,954	$	3,577,340

THE TRADE DESK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
	Nine Months Ended September 30,
	2022			2021
OPERATING ACTIVITIES:
Net income (loss)	$	(17,802	)	$	129,723
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		37,581			29,969
Stock-based compensation		371,111			132,010
Non-cash lease expense		32,554			29,914
Allowance for credit losses on accounts receivable		2,961			520
Deferred income taxes		604			5,044
Other		3,694			6,730
Changes in operating assets and liabilities:
Accounts receivable		24,905			(48,637	)
Prepaid expenses and other current and non-current assets		42,913			20,627
Accounts payable		(68,758	)		(44,105	)
Accrued expenses and other current and non-current liabilities		(18,778	)		(14,790	)
Operating lease liabilities		(35,731	)		(31,886	)
Net cash provided by operating activities		375,254			215,119
INVESTING ACTIVITIES:
Purchases of investments		(379,206	)		(233,427	)
Sales of investments		1,977			4,539
Maturities of investments		252,699			192,077
Purchases of property and equipment		(36,394	)		(43,920	)
Capitalized software development costs		(4,833	)		(3,684	)
Business acquisition		—			(13,261	)
Net cash used in investing activities		(165,757	)		(97,676	)
FINANCING ACTIVITIES:
Payment of debt financing costs		—			(1,924	)
Proceeds from exercise of stock options		42,712			39,559
Proceeds from employee stock purchase plan		25,547			22,758
Taxes paid related to net settlement of restricted stock awards		(37,254	)		(38,273	)
Net cash provided by financing activities		31,005			22,120
Increase in cash and cash equivalents		240,502			139,563
Cash and cash equivalents—Beginning of period		754,154			437,353
Cash and cash equivalents—End of period	$	994,656		$	576,916

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 September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net income (loss)	$	15,869		$	59,384		$	(17,802	)	$	129,723
Add back:
Depreciation and amortization expense		12,957			8,952			37,581			29,969
Stock-based compensation expense		121,003			34,459			371,111			132,010
Interest expense (income), net		(1,741	)		317			(1,321	)		556
Provision for income taxes		14,633			19,592			33,052			18,895
Adjusted EBITDA	$	162,721		$	122,704		$	422,621		$	311,153
	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
GAAP net income (loss)	$	15,869		$	59,384		$	(17,802	)	$	129,723
Add back (deduct):
Stock-based compensation expense		121,003			34,459			371,111			132,010
Adjustment for income taxes		(8,284	)		(4,616	)		(21,419	)		(14,305	)
Non-GAAP net income	$	128,588		$	89,227		$	331,890		$	247,428
GAAP diluted earnings (loss) per share	$	0.03		$	0.12		$	(0.04	)	$	0.26
GAAP weighted-average shares outstanding—diluted		500,300			498,912			486,168			497,942
Non-GAAP diluted earnings per share	$	0.26		$	0.18		$	0.66		$	0.50
Non-GAAP weighted-average shares used in computing Non-GAAP earnings per share, diluted (1)		500,300			498,912			499,754			497,942

_________________________
(1)	Includes an additional 13.6 million of dilutive securities for the nine months ended September 30, 2022, which are not included in GAAP diluted weighted-average shares outstanding due to the Company's net loss position for the nine months ended September 30, 2022.

Contacts

Investors
Jake Graves
Manager, Investor Relations
The Trade Desk
ir@thetradedesk.com
312-620-0806

Media
Melinda Zurich
VP, Communications
The Trade Desk
melinda.zurich@thetradedesk.com
201-320-9398

XML

Document and Entity Information	Nov. 09, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 09, 2022
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
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
Entity Information, Former Legal or Registered Name	Not Applicable