The Trade Desk (TTD -8.62%)
Q3 2022 Earnings Call
Nov 09, 2022, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, ladies and gentlemen, and welcome to The Trade Desk’s third-quarter 2022 earnings conference call. At this time, all participants have been placed on a listen-only mode. And we will open up the floor for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chris Toth, vice president, investor relations.
Sir, the floor is yours.
Chris Toth — Vice President, Investor Relations
Thank you, operator. Hello, and good day to everyone. Welcome to The Trade Desk third-quarter 2022 earnings conference call. On the call today, from our Singapore office, our founder and CEO, Jeff Green; chief financial officer, Blake Grayson; and our chief revenue officer, Tim Sims.
A copy of our earnings press release can be found on our website at thetradedesk.com in the Investor Relations section. Before we begin, I would like to remind you that except for historical information, some of the discussion and our responses in Q&A may contain forward-looking statements, which are dependent upon certain risks and uncertainties. These forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. Actual results may vary significantly, and we expressly assume no obligation to update any forward-looking statements.
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Should any of our beliefs or assumptions prove to be incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. I encourage you to refer to the risk factors referenced in our press release and included in our most recent SEC filings. In addition to reporting our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures can be found in our earnings press release.
We believe that providing non-GAAP measures, combined with our GAAP results, provides a more meaningful representation of the company’s operational performance. With that, I’ll now turn the call over to founder and CEO, Jeff Green. Jeff.
Jeff Green — Founder and Chief Executive Officer
Thanks, Chris, and thank you all for joining us. As Chris mentioned, I’m thrilled to be speaking with you today from our Singapore office, our South Asia headquarters. This is the first time that I have been in Asia since January of 2020 due to the global pandemic. And it’s been great to reconnect with our team, our clients, and our partners here in person this week.
Asia, as a whole, is crucial to our long-term growth, and it’s always inspiring to spend time here. More on that later, but first, on to our results. As you’ve seen in the release, The Trade Desk posted another very strong quarter with revenue growth up 31% year over year. We continue to gain share as advertisers embrace vision and relevance of data-driven advertising on the open internet via our platform.
Throughout 2022 and in particular, in Q3, The Trade Desk has significantly outperformed seemingly all other forms of digital with a significant contrast to walled gardens in our ability to win advertising budgets. It is very clear that under the current operating conditions, we are significantly outpacing the market regardless of the macro environment. Our vision and business strategy continues to be validated by our advertising clients. Nearly every single major advertiser wants a world where the open internet thrives, where competition and price discovery thrive.
They want great measurement that works across the web so that they can compare the performance of each site app or destination to all the others. They want an internet where relative value can be found. As we’ve predicted, CTV is a catalyst for massive change on the internet. When possible, the power balance is shifting to the open internet away from opaque walled gardens and systems that aren’t comparable to others.
In short, more and more, our clients embrace the value of the open internet compared to the limitations of walled gardens, and they are embracing The Trade Desk as the default platform to execute on the open internet. This is resulting in closer relationships with the largest brands and agencies in the world. Our client relationships are stronger than ever because they are based on shared values and goals, a strong buy-side road map, and internet where relative value and objective measurement can thrive with data-driven empowerment for brands and advertisers rather than a tech company who is just asking the brand or agency to outsource media buying to them and send their first-party data down a one-way street. Because of this contrast, we are signing joint business plans with brands at a record pace.
Some of the largest JBPs signed this year represent spend of over $1 billion in the future. In this way, not only do these JBPs position The Trade Desk for future growth, but they also create environment for joint programmatic innovation. JBPs represent strong alignment with brands that only come as a result of not owning media. Whether it’s decision CTV, new approaches to identity, unleashing first-party data, advanced data and retail marketplaces, our clients are working with us to pioneer the future of digital advertising.
With this context, hopefully, you can see why we continue to outperform the industry and gain share and why we are confident that our future growth outpaces the projections of almost everyone else in our industry. Just one more data point on the market overall and how we are performing. WPP’s GroupM predicted worldwide advertising will increase 8.4% in 2022, and we are growing at more than three times that rate. CTV continues to be a key growth driver, and our shopper marketing initiatives are yielding very encouraging results.
While still early, it’s only our third full quarter, total shopper marketing spend increased nearly 3x from Q2 to Q3. As we said at Investor Day, we believe that more than 80% of the largest retailers in the United States partner with The Trade Desk, and more of the world’s leading retailers are also now following suit. The cores of retailers making retail measurement available is furthering the power and benefits of an open, competitive internet. While CTV may be the biggest force of change for the open internet, perhaps, retail media and its accompanying data is a close second.
Political also continues to perform well. Midterm election — over midterm election, we have exponentially grown our business. We’re proud of the work we do in political advertising, particularly our focus on helping provide a better advertising process for all political candidates. We are an objective and independent platform, open to registered candidates on both sides.
With all of this in mind, I believe that through the first nine months of the year, we have gained more market share, grabbed more land than at any point in our history. To provide more color on why, I’d like to touch on three areas. First, is the growing importance of programmatic on the open internet even in a volatile macro environment. Second, is the transformational role of CTV in showcasing that value.
And last, is the critical mass of support that is growing Unified ID 2 and why this is so important in building the new identity fabric of the internet. So, first, in terms of the macro environment, increasingly, advertisers view programmatic as one of the most effective ways to drive relevance and differentiation, especially in times of market volatility. And perhaps even more importantly, they believe that the open internet is the best place to create that value compared to the limitations of the walled gardens. You only have to look at a couple of comments made by the CFO of P&G during the most recent earnings call a couple of weeks ago.
As you may know, Procter & Gamble is one of the world’s largest and most progressive advertisers. He said, and I quote, “It is difficult to describe media sufficiency in dollars, especially when we are actively shifting our spending from linear nontargeted TV into programmatic and into digital spend that is a lot more targeted and a lot more precise in terms of delivering reach and quality of reach where we need it.” We now have more than 50% of our media spend in digital. We are increasing our first-party data and our digital capabilities to increase precision of reach, not only in the U.S. or in Europe but around the world, and that is allowing us to drive significant productivity while increasing reach — while increasing quality of reach and while more precisely targeting our consumers.
Back in early 2020, as we entered that short-lived COVID dip, I talked about how easy it was for large brands to turn off programmatic with the first hand of uncertainty. But what you’re hearing from P&G there and what I hear from major brands around the world every day now is that programmatic is a central and critical component of any campaign. The world’s most sophisticated advertisers understand that as they get more pressure from their CFOs to demonstrate the value and return of every advertising dollar, one of the best places to do that is on our platform. We provide objective, transparent measurement.
We provide precision and relevance. We allow advertisers to optimize based on…
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