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): February 16, 2017
THE TRADE DESK, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware | 001-37879 | 27-1887399 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
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)) |
Item 2.02. Results of Operations and Financial Condition.
On February 16, 2017, The Trade Desk, Inc. (the “Registrant”) issued a press release announcing its financial results for the quarter and year ended December 31, 2016. A copy of the press release is being 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 (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 or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits 99.1 Press release dated February 16, 2017 of the Registrant, announcing its financial results for the quarter and year ended December 31, 2016.
SIGNATURE
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. | ||
Date: February 16, 2017 | By: | /s/ Paul E. Ross |
Paul E. Ross | ||
Chief Financial Officer (Principal Financial and Accounting Officer) | ||
Exhibit Index
Exhibit No. | Description | |
99.1 | Press release dated February 16, 2017 of the Registrant, announcing its financial results for the quarter and year ended December 31, 2016. |
EXHIBIT 99.1
The Trade Desk Reports Fourth Quarter and Fiscal Year 2016 Financial Results
LOS ANGELES, Feb. 16, 2017 (GLOBE NEWSWIRE) -- The Trade Desk, Inc. (NASDAQ:TTD), a provider of a global technology platform for buyers of advertising, today announced financial results for its fourth quarter and fiscal year ended December 31, 2016.
To summarize the year, founder and CEO of The Trade Desk, Jeff Green, said, “We surpassed $1 billion in gross spend on our platform, grew revenue 78% to more than $200 million, generated $75 million of net cash from operating activities and completed a successful IPO. 2016 was a massive year for The Trade Desk. Our mission has always been to change the way all of advertising is bought. Today advertisers are wasting billions of dollars overloading consumers with uncoordinated or irrelevant messaging because media buying is done through multiple uncoordinated specialty targeting shops or with media companies directly. We are the only purely independent demand side platform buying media at scale, objectively, across all digital channels and devices. We are still early in our growth trajectory and we expect 2017 to be another record year for the company as we continue to see great momentum from our customers in the adoption of programmatic advertising on our platform and our global offerings.”
Fourth Quarter and Fiscal Year 2016 Financial Highlights:
The following table summarizes our consolidated financial results for the quarter and fiscal year ended December 31, 2016 and 2015 ($ in millions, except per share amounts)
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
GAAP Results | |||||||||||||||
Revenue | $ | 72.4 | $ | 42.7 | $ | 202.9 | $ | 113.8 | |||||||
Increase in revenue year over year | 70 | % | 131 | % | 78 | % | 156 | % | |||||||
Net Income | $ | 10.3 | $ | 5.7 | $ | 20.5 | $ | 15.9 | |||||||
Diluted EPS(1) | $ | 0.24 | $ | 0.13 | $ | (1.46 | ) | $ | 0.39 | ||||||
Non-GAAP Results | |||||||||||||||
Adjusted EBITDA | $ | 28.6 | $ | 18.7 | $ | 65.2 | $ | 39.2 | |||||||
Adjusted EBITDA Margin | 39 | % | 44 | % | 32 | % | 34 | % | |||||||
Non-GAAP Net Income(1) | $ | 14.2 | $ | 10.6 | $ | 35.3 | $ | 22.3 | |||||||
Non-GAAP Diluted EPS(1) | $ | 0.33 | $ | 0.28 | $ | 0.89 | $ | 0.61 | |||||||
(1) Attributable to common stockholders-diluted. |
Fourth Quarter and Fiscal Year 2016 Business Highlights Include:
Full Year 2017 and First Quarter Outlook:
Mr. Green added: “The industry is continuing to see ad dollars shift to programmatic and our customers are expecting to spend significantly more with us than they did in 2016. For 2017, we expect gross spend on our platform to be at least $1.45 billion and revenue to be over $270 million. In the year ahead, we are opening new offices globally and are making aggressive investments in high growth areas such as mobile, video and globally to grab share and deepen our engagement and strategic importance with our customers. This will cause our expenses to grow at a faster rate in 2017 and as a result we expect our adjusted EBITDA to be about $72 million. In 2017, growing and winning market share are more important than extracting profits. Focusing on growth at least through the rest of this year will ultimately maximize profitability over the long-term.“
The Trade Desk is providing its financial targets for the fiscal year 2017 and first quarter of 2017. The Company’s financial targets are as follows:
Full Year 2017
First Quarter 2017:
Reconciliation of adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure 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 non-GAAP financial measures that supplement the Company's Condensed Consolidated Statements of Operations prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company's actual results prepared under GAAP by excluding charges for stock-based compensation, changes in fair value of preferred stock warrant liabilities and a liquidation fee related to a prior debt facility that became due upon the IPO. A 40% tax rate on the liquidation fee has been used in the computation of non-GAAP EPS, and as the other excluded charges are non-taxable, a tax effect for those charges was not included. Also included in these non-GAAP financial measures are adjustments to diluted earnings per share amounts, as applicable, to reflect the conversion upon the IPO of all then-outstanding shares of convertible preferred stock voting together as a single class on an as-converted to common share basis of each outstanding convertible preferred share into one third of one share of common stock using the as-if-converted method, as of January 1, 2015, or the date of issuance, if later. 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.
Annual Report on Form 10-K
The company expects to file its annual report on Form 10-K for the fiscal year 2016 with the Securities and Exchange Commission on Thursday February 16, 2017. This report will be available for viewing and download at http://investors.thetradedesk.com/.
Fourth Quarter and Fiscal Year 2016 Results Webcast and Conference Call Details
About The Trade Desk
The Trade Desk (Nasdaq:TTD) is a technology company that empowers buyers of advertising. Through its self-service, cloud-based platform, ad buyers can create, manage, and optimize more expressive data-driven digital advertising campaigns across ad formats, including display, video, audio, native and, social, on a multitude of devices, such as computers, mobile devices, and connected TV. 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 the United States, Europe, and Asia.
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. These forward-looking statements involve risks, uncertainties and assumptions. 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. 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 S-1 report and 10-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 OPERATIONS | |||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | Year Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Revenue | $ | 72,410 | $ | 42,658 | $ | 202,926 | $ | 113,836 | |||||
Operating expenses: | |||||||||||||
Platform operations | 13,259 | 7,357 | 39,876 | 22,967 | |||||||||
Sales and marketing | 14,774 | 8,264 | 46,056 | 26,794 | |||||||||
Technology and development | 9,619 | 4,312 | 27,313 | 12,819 | |||||||||
General and administrative | 10,721 | 4,740 | 32,163 | 13,276 | |||||||||
Total operating expenses | 48,373 | 24,673 | 145,408 | 75,856 | |||||||||
Income from operations | 24,037 | 17,985 | 57,518 | 37,980 | |||||||||
Total other expense, net | 1,073 | 5,313 | 13,684 | 8,125 | |||||||||
Income before income taxes | 22,964 | 12,672 | 43,834 | 29,855 | |||||||||
Provision for income taxes | 12,684 | 7,022 | 23,352 | 13,926 | |||||||||
Net income | $ | 10,280 | $ | 5,650 | $ | 20,482 | $ | 15,929 | |||||
Net income (loss) attributable to common stockholders | $ | 10,280 | $ | 1,828 | $ | (26,727 | ) | $ | 8,764 | ||||
Earnings (loss) per share: | |||||||||||||
Basic | $ | 0.27 | $ | 0.17 | $ | (1.46 | ) | $ | 0.85 | ||||
Diluted | $ | 0.24 | $ | 0.13 | $ | (1.46 | ) | $ | 0.39 | ||||
Weighted average shares outstanding: | |||||||||||||
Basic | 38,588 | 10,579 | 18,280 | 10,290 | |||||||||
Diluted | 43,023 | 14,564 | 18,280 | 16,779 | |||||||||
STOCK-BASED COMPENSATION EXPENSE | ||||||||||||
(Amounts in thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Platform operations | $ | 642 | $ | 20 | $ | 756 | $ | 71 | ||||
Sales and marketing | 1,389 | 39 | 1,707 | 127 | ||||||||
Technology and development | 1,183 | 32 | 1,513 | 85 | ||||||||
General and administrative | 794 | 32 | 1,080 | 91 | ||||||||
Total | $ | 4,008 | $ | 123 | $ | 5,056 | $ | 374 | ||||
THE TRADE DESK, INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Amounts in thousands) | |||||||
(Unaudited) | |||||||
As of | As of | ||||||
December 31, | December 31, | ||||||
2016 | 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 133,400 | $ | 4,047 | |||
Accounts receivable, net | 377,240 | 191,943 | |||||
Prepaid expenses and other current assets | 5,763 | 3,812 | |||||
Total current assets | 516,403 | 199,802 | |||||
Property and equipment, net | 14,779 | 6,625 | |||||
Deferred taxes, net | 1,778 | 1,171 | |||||
Other assets, non-current | 4,636 | 2,633 | |||||
Total assets | $ | 537,596 | $ | 210,231 | |||
LIABILITIES, CONVERTIBLE PREFERRED STOCK | |||||||
AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 321,163 | $ | 108,461 | |||
Accrued expenses and other current liabilities | 22,973 | 10,439 | |||||
Total current liabilities | 344,136 | 118,900 | |||||
Debt, net | 25,847 | 44,888 | |||||
Convertible preferred stock warrant liabilities | - | 6,927 | |||||
Other liabilities, non-current | 3,233 | 1,170 | |||||
Total liabilities | 373,216 | 171,885 | |||||
Convertible preferred stock | - | 24,204 | |||||
Stockholders' equity: | |||||||
Preferred stock | - | - | |||||
Common stock | - | - | |||||
Additional paid‑in capital | 179,198 | 1,039 | |||||
Retained earnings (accumulated deficit) | (14,818 | ) | 13,103 | ||||
Total stockholders' equity | 164,380 | 14,142 | |||||
Total liabilities, convertible preferred stock and stockholders' equity | $ | 537,596 | $ | 210,231 | |||
THE TRADE DESK, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Amounts in thousands) | ||||||||
(Unaudited) | ||||||||
Year Ended | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ | 20,482 | $ | 15,929 | ||||
Adjustments to reconcile net income to net cash provided by (used in) | ||||||||
operating activities: | ||||||||
Depreciation and amortization | 3,798 | 1,828 | ||||||
Stock‑based compensation | 5,056 | 374 | ||||||
Change in fair value of preferred stock warrant liabilities | 9,458 | 5,961 | ||||||
Deferred income taxes | (607 | ) | 338 | |||||
Other | 3,050 | 718 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (187,736 | ) | (114,170 | ) | ||||
Prepaid expenses and other assets | (2,675 | ) | (3,040 | ) | ||||
Accounts payable | 209,483 | 50,021 | ||||||
Accrued expenses and other liabilities | 14,722 | 5,481 | ||||||
Net cash provided by (used in) operating activities | 75,031 | (36,560 | ) | |||||
INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (6,884 | ) | (5,128 | ) | ||||
Capitalized software development costs | (2,337 | ) | (1,799 | ) | ||||
Redemption of short-term investment | - | 551 | ||||||
Net cash used in investing activities | (9,221 | ) | (6,376 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Proceeds from line of credit | 75,847 | 30,000 | ||||||
Repayment on line of credit | (65,000 | ) | (15,000 | ) | ||||
Proceeds from term debt | - | 15,000 | ||||||
Repayment of term debt | (30,000 | ) | - | |||||
Payment of debt financing costs | (976 | ) | (190 | ) | ||||
Payment of financing obligations | (550 | ) | (109 | ) | ||||
Proceeds from issuance of Series C convertible preferred stock | 60,000 | - | ||||||
Repurchase of preferred stock and common stock | (54,000 | ) | - | |||||
Proceeds from exercise of stock options | 488 | 166 | ||||||
Proceeds from employee stock purchase plan | 4,224 | - | ||||||
Payment of stock repurchase costs | (155 | ) | (39 | ) | ||||
Payment of Series C convertible preferred stock offering costs | (129 | ) | - | |||||
Proceeds from the issuance of Class A common stock in initial public offering, | ||||||||
net of underwriting commissions | 78,120 | - | ||||||
Payment of offering costs—initial public offering | (4,326 | ) | (160 | ) | ||||
Net cash provided by financing activities | 63,543 | 29,668 | ||||||
Increase (decrease) in cash | 129,353 | (13,268 | ) | |||||
Cash—Beginning of the year | 4,047 | 17,315 | ||||||
Cash—End of the year | $ | 133,400 | $ | 4,047 | ||||
Non-GAAP Financial Metrics
(Amounts in thousands, except per share amounts)
The following tables show the Company’s GAAP financial metrics reconciled to non-GAAP financial metrics included in this release.
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Net income | $ | 10,280 | $ | 5,650 | $ | 20,482 | $ | 15,929 | ||||
Add back: | ||||||||||||
Depreciation and amortization expense | 1,186 | 705 | 3,798 | 1,828 | ||||||||
Interest expense | 411 | 425 | 3,075 | 1,141 | ||||||||
Provision for income taxes | 12,684 | 7,022 | 23,352 | 13,926 | ||||||||
Stock-based compensation expense | 4,008 | 123 | 5,056 | 374 | ||||||||
Change in fair value of preferred stock warrant liabilities | - | 4,799 | 9,458 | 5,961 | ||||||||
Adjusted EBITDA | $ | 28,569 | $ | 18,724 | $ | 65,221 | $ | 39,159 | ||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
GAAP net income (loss) attributable to common stockholders | $ | 10,280 | $ | 1,828 | $ | (26,727 | ) | $ | 8,764 | ||||||
Add back (deduct): | |||||||||||||||
Income attributable to dilutive convertible preferred stock | - | - | - | 1,624 | |||||||||||
Preferred stock modification | - | - | - | (3,793 | ) | ||||||||||
GAAP net income (loss) attributable to common stockholders-diluted | 10,280 | 1,828 | (26,727 | ) | 6,595 | ||||||||||
Add back (deduct): | |||||||||||||||
Stock-based compensation expense | 4,008 | 123 | 5,056 | 374 | |||||||||||
Change in fair value of preferred stock warrant liabilities | - | 4,799 | 9,458 | 5,961 | |||||||||||
Liquidation fee related to prior debt facility | - | - | 750 | - | |||||||||||
Premium on repurchase of convertible preferred stock | - | - | 47,209 | - | |||||||||||
Income attributable to convertible preferred stock | - | 3,822 | - | 10,958 | |||||||||||
Income attributable to dilutive convertible preferred stock | - | - | - | (1,624 | ) | ||||||||||
Adjustment for income taxes | (118 | ) | - | (444 | ) | - | |||||||||
Non-GAAP net income attributable to common stockholders-diluted | $ | 14,170 | $ | 10,572 | $ | 35,302 | $ | 22,264 | |||||||
GAAP weighted average shares outstanding-diluted | 43,023 | 14,564 | 18,280 | 16,779 | |||||||||||
Add back: | |||||||||||||||
Convertible preferred stock | - | 22,110 | 16,268 | 19,320 | |||||||||||
Dilutive stock options to purchase common stock | - | - | 4,518 | - | |||||||||||
Dilutive ESPP shares | - | - | 36 | - | |||||||||||
Dilutive stock warrants | - | 640 | 363 | 547 | |||||||||||
Non-GAAP weighted average shares outstanding-diluted | 43,023 | 37,314 | 39,465 | 36,646 | |||||||||||
GAAP diluted EPS attributable to common stockholders | $ | 0.24 | $ | 0.13 | $ | (1.46 | ) | $ | 0.39 | ||||||
Non-GAAP diluted EPS attributable to common stockholders | $ | 0.33 | $ | 0.28 | $ | 0.89 | $ | 0.61 | |||||||
Contact Information:
Investors
Chris Toth
ir@thetradedesk.com
310-334-9183
Media
Alexis Roberts
Blast PR for The Trade Desk
alexisr@blastpr.com
805-886-8511