The Trade Desk, Inc. (NASDAQ:TTD) reported its second-quarter financial results after Thursday’s closing bell.
Below are the transcripts from the Q2 earnings call.
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OPERATOR
Greetings welcome to the Trade Desk second quarter 2025 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Chris Toth. You may begin.
Chris Toth
Thank you Operator hello and good afternoon to everyone. Welcome to the Trade Desk second quarter 2025 earnings conference call. On the call today are CEO and Co Founder Jeff Green and Chief Financial Officer Laura Schenkine. A copy of our earnings press release is available on our website in the Investor relations section@thetradedesk.com Please note that aside from historical information, today’s discussion and our responses during the Q and A may include forward looking statements. These statements are subject to risks and uncertainties and reflect our views and assumptions as of the date such statements are made. Actual results may vary significantly and we expressly disclaim any obligations to update the forward looking statements made today. If any of our beliefs or assumptions prove incorrect, actual financial results could differ materially from our projections or those implied by these forward looking statements. For a detailed discussion of risks, including the most recent economic volatility caused by tariffs, please refer to the risk factors mentioned in our press release and our most recent SEC filings. In addition to our GAAP financial results, we present supplemental non GAAP financial data. A reconciliation of the GAAP to non GAAP measures is available in our earnings press release. We believe that presenting these non GAAP measures alongside our GAAP results offers a more comprehensive view of the company’s operational performance. With that, I will now turn the call over to CEO and Co Founder Jeff Green.
Jeff Green (CEO and Co-Founder)
Jeff thanks Chris and good afternoon everyone. Thank you for joining us today. As you’ve seen from our press release, we again posted strong growth in the second quarter. Our revenue grew about 19% compared with Q2 last year and we continue to outpace the digital advertising market driven by the innovation and value we deliver to our clients every day. CTV continues to be our fastest growing channel with no signs of slowing down. Partners like Disney, NBCU, Walmart, Roku, LG, Netflix and many others are deepening their relationships with us around the growing decision programmatic opportunity in CTV which delivers the most effective and highest return on ad spend compared to insertion order or programmatic campaign guaranteed buying. I could not be more excited about our position in CTV and the size of the growth opportunity for us in the years ahead with our leadership in CTV as well as other areas such as retail, media, digital audio, identity, measurement and data, we are winning more business with both new and existing customers. We are signing more multi year JBPs or joint business plans than ever before with leading agencies and brands. In fact, the Number of live JBPs is at an all time high and we continue to see spend under JVPs significantly outpace the rest of our business. What’s even more encouraging is the strength of our JVP pipeline. With nearly 100 Jbps in progress, many of them in the late stages of development. And while many of our JVPs are signed directly with brands, we are working hand in hand with their agencies almost in every case to bring these partnerships to life. It is not an either or. I want to start by giving you an update on our business, but I also want to take the time to describe our vision and where we’re heading. We see clearly what is on the horizon for our space and we’re convinced we’re the best positioned company in ad tech to accelerate our growth in 2026. But it is important we share the opportunity we see because we think aligning our vision and efforts with our team, our clients, our partners and our investors will maximize our ability to capture the unprecedented and unique opportunity in front of us. So first, an update on the business. There are several key areas of progress to highlight here. First, we are delivering on Cokai, our most significant platform upgrade to date and one that represents a new frontier in digital advertising trading. Cokai gives advertisers unprecedented power to drive precision and relevance in everything they do, all powered by the industry’s most advanced AI technology, koa. We have injected AI into so many parts of the system that clients that have adopted Cokai have seen tremendous performance improvements. Samsung was able to drive a 43% improvement in reaching its target audience for an omnichannel campaign in Europe, Cash Rewards saw a 73% improvement in cost per acquisition for campaigns in Asia using Cokai. In the aggregate, we are seeing more than a 20 point improvement across key KPIs for campaigns running in Cokai. What’s even more encouraging is the clients who have transitioned the majority of their spend on Cokai are increasing their overall spend on the trade desk by more than 20% faster than those who have not. This is precisely what we believed was possible when we launched Cokai. Advertisers are getting meaningfully better returns on their ad dollars and they are doubling down on the open Internet and on us. As a result, around 3/4 of all client spend is now running through Cokai, and we expect all of our clients to be using Cokai by the end of this year. Second, we are trying to create the most efficient supply chain possible for digital advertising and we are seeing great progress with OpenPath. OpenPath allows publishers to directly integrate with the Trade Desk if they choose to, and it enables publishers to see more clearly how much our clients are willing to pay for their ad impressions. And it gives our clients a direct line of sight into what they are buying. And today, a material amount of spend on our platform is now flowing through OpenPath, and it is doing exactly what we expected. Openpath is both a canary in the coal mine and a stalking horse. We don’t expect 100% of spend to flow through OpenPath, but we do expect it to, one way or another, make the supply chain better and more efficient. And the benefits have been exceptional, not just for our clients, but for the publishers too. By providing our clients with clearer signal, they have more confidence in what they’re buying and they’re typically willing to buy more. We have a long standing partnership with News Corp For example, and the New York Post has been one of the pioneers of Openpath, and they’ve seen a 97% boost in their programmatic display revenue as a result. Also in the journalism field, Hearst Newspapers have adopted Open Path and has seen a 4x improvement in their fill rate since deploying it. As Amanda Gomez, SVP of Revenue Operations and Ad Technology at the New York Post said, and I quote, the New York Post is always striving for ways to simplify our connection to advertisers to help fill our ad spots more efficiently and transparently. We partnered with the Trade desk to test OpenPath to help achieve this goal with great success over the past year, ultimately helping to fuel programmatic revenue growth. OpenPath is not an attempt by the Trade Desk to get into the supply side of digital advertising. We’re not getting into the yield management business. Our clients are exclusively the buyers. Open Path is simply an effort to improve the quality of the supply chain for everyone in the ecosystem. Key to our supply chain work is our Sincera acquisition earlier this year. We have already made a tremendous amount. Of supply chain data available to the ecosystem. Ecosystem for free via OpenSincera. There anyone can log in and see the quality of advertising on thousands of publisher sites. Since launching OpenSincera just a few weeks ago, we’ve already had many publishers contact us to say they didn’t realize some of the quality dynamics of the ad experience on their own destinations, and they are improving those ad experiences as a result. But as important as OpenSincera is, I’m even more excited to embed the full scope of Sincera data across our platform as one of the most important metadata sources and signals for the way that we value individual impressions and work on behalf of the buyers. For instance, we might see the same ad impression from hundreds of supply paths. We don’t want to burden our clients with figuring out which one is best, and it is not efficient to manage that challenge by defaulting to deals. Instead, COCAI does that work for our clients, leveraging AI and data from sources like Sincera so advertisers can obsess about buying the right impression rather than the delivery mechanism. But I do want to talk about deals for a second One additional innovation that will help accelerate our supply chain work is Deal Desk. It is one of the major final pieces of Cokai and it is in beta now. Deal Desk leverages AI, especially AI forecasting, to reshape how we think about deals between advertisers and publishers and intermediaries such as SSPs. It helps advertisers and publishers understand how deals are performing, how they are pacing, whether the right impressions are being delivered, and so on. But perhaps just as important, when deals are underperforming, Deal Desk will help those deals get back on track and it will showcase open market and premium Internet alternatives. We are seeing very strong appetite for Deal Desk across both advertisers and publishers. Everyone recognized the limitation of deals and wants innovation that can help improve them. Disney is one of the first publishers to lean into Deal Desk. Jamie Power at the Walt Disney Company has said several times over the past couple of years that they intend to shift 75% of their ad revenue to biddable programmatic by 2027. I’m thrilled that our innovation will help them achieve this goal. And she said when talking about Deal Desk and I quote, as more buyers shift toward biddable activation, we’re focused on ensuring they have the tools, access and flexibility they need to drive results. Our relationship with the trade desk reflects our commitment to meeting advertisers where they are and evolving how we transact to deliver greater efficiency and performance. The third area I’d like to focus on is work we’ve been doing to advance objectivity in everything we do and across the ad tech ecosystem. If the Google antitrust trial taught us one thing, it’s that big tech walled garden advertising platforms have a vested interest in guiding spend to their owned and operated media. So with Google, it’s YouTube, with Amazon, it’s Prime Video. And of course they can make it seem really cheap from a platform perspective because they make up that cost and much more on the other side of the transaction because they own the media. But if you want to reach your audience with objectivity and with no thumb on the scale across the best of the Internet, you’re more likely to come to the trade desk. We’re seeing more and more clients understand the importance of objectivity and the power of the premium open Internet to reach their target audience as precisely and cost efficiently as possible. Live sports is a great case study. It’s where advertisers get to act with precision and objectivity and in reaching their audience where they are most engaged. A few years ago, just after the pandemic, I was on an industry panel in New York City where many of my peers on stage made the argument that live sports would be the linchpin that keeps viewers on linear TV for years to come. I think many of you may have even been at that event if you fast forward through the impact of a global pandemic. Now, all live sports are available via streaming TV and represent one of the most valuable pillars of the open Internet. And we continue to innovate with our partners to bring the full value of live sports to our clients. One of the promises of live sports in a biddable CTV environment is that advertisers can target key moments like overtime in an NBA game or the PKs at the end of a soccer game when the audience is most leaned in well. Now we will be offering this capability with new tooling in COCAI and partnerships with companies such as Disney, SkyTV and Omnicom, which we announced at Cannes a few weeks ago. Another major pillar of objectivity on the open Internet is the ability to measure business outcomes of marketing campaigns with precision. Cokai already has the industry’s most advanced retail media marketplace, but we’ve recently launched expanded partnerships with leaders such as Instacart and Ocado to provide even more granular data on actual consumer purchases so advertisers can measure with even greater precision. Again, objectivity is a major factor here. Unlike others in the market, our goal is to drive the use of retail data across as many advertiser campaigns as possible. We do not compete with retailers, and only an independent, objective partner like us can truly help advertisers unlock this opportunity. In Q2, a record amount of spend was influenced by retail data both on our platform and on the Walmart DSP. As More shopper marketing budgets flow into programmatic and fourth, I’d just like to reiterate that underpinning all of our success this year is is a strong focus on operational rigor. This includes strengthening our leadership team. As you know, Vivek Kundra joined us as our COO in March. I’m also pleased to announce here that Alex Kiel will be joining as our new cfo. You may know Alex as he’s on our board, but his relationship with this company spans over a decade. Initially as an early investor in 2014, he’s also been a leader in the digital space for more than two decades. I’m thrilled that he’s agreed to join our leadership team as I believe there are few in our industry who have Alex’s experience and strategic mindset in finance in a way that incense and drives growth for the organization. This shift has been made possible by Laura working with Alex to facilitate this transition. She will remain in the seat until August 21st and then stay on the team through the end of the year. I have worked with Laura for more than a decade and I have nothing but tremendous respect and admiration for her work and her expertise. We wouldn’t be here without her contribution to this point. Laura’s contribution and passion will live in the trade desk for the entire future of of its existence. I love that we joined the S&P 500 during her last full quarter. What a milestone and what a note to end on. We are also enhancing the Board of Directors and I couldn’t be more excited to announce that Omar Tawakal will also be joining the board. Over the years Omar has been one of the real innovators in ad tech. Whether it was founding Blue Kai in 2007 or more recently founding Rembrandt, one of the leaders in creative AI and advertising. I look forward to his innovators vision as a part of our board work. In addition to strengthening our leadership team, we have improved the structure and clarity of our go to market organization, particularly in how our media traders, account management and business development teams work together. This ensures that our clients experience the full power of our platform with clear roles and responsibilities across our teams. Lastly, I think this is a unique and important moment to remind our investors, our clients, our partners and the rest of our industry about our mission, our vision and our collective opportunity. Global advertising is a trillion dollar industry today and that TAM is all up for grabs. Additionally, AI is changing everything and creating new opportunities. Quality AI requires quality data and to trust AI driven buying long term requires objectivity, a black box that just sells owned and operated media will struggle far beyond what ad networks have struggled with for decades. Our vision is to define clearly the category of a DSP. Access is not at the core of our value proposition. Simply getting access to inventory, database decisioning and measurement is at the core of our offering. Some have mistakenly thought our ambitions are about display. Some have mistakenly thought our ambitions were only about CTV or branding budgets. Our goal is to buy the entire open Internet objectively for buyers big and small. We’ve started with the biggest and we serve them well. We think we’ve done the best job in the history of ad tech of aligning our interests with buyers. This enables them to trust us with their data. On that topic, one of the biggest. Flaws with walled gardens is that they. Measure their own performance. We believe it is in the best interest of every retailer, including Amazon, to have the measurement of the open Internet based on something more auditable, more independent and more transparent than what happens today. We partnered already with hundreds of retailers around the world to measure in this more objective way. Our retail partnerships play a very significant role in making it so that the premium open Internet gets the first dollar of budget and not the last dollar. There are a tremendous number of inefficiencies in the open Internet supply chains for both media and data, and we have big plans to change those. AI is currently changing the world. It is also changing the world of advertising and media buying. Advertising and media buying. There are so many specific tasks where AI can massively level up the status quo. What is an impression worth to a specific brand? What is the price that this auction is likely to clear at? What is the best supply chain to maximize transparency and minimize unnecessary costs? These applications of AI are already in our product. KOA is what powers Cokai’s forecasting, which is predicting the reach and performance of a campaign before a single dollar is spent. Distributed AI is foundational in Cokai, and this is only the beginning. There are many tasks where agents can improve performance, in part because they’re always on. As you consider the power of AI in these specific applications, you can see how winning the trust of buyers is so critical. It is a buyer’s market and as a result, premium inventory matters more than ever. Again, our value add isn’t that we merely have access to the best of the Internet, which is what we refer to as the Big five. These Big five are the best of tv, the best of movies, the best of music, the best of journalism and the best of sports. …