The Trade Desk falls short of revenue target for the first time

The Trade Desk faced a significant setback as its stock price plummeted by nearly 26% following a surprising revenue shortfall in its latest earnings report. Despite demonstrating strong double-digit growth, the independent ad tech giant posted lower-than-expected quarterly earnings, marking the first time it had missed its revenue target since going public.

CEO Jeff Green addressed investors with a detailed strategy aimed at regaining momentum, outlining a comprehensive 15-point plan to steer the company back on course. The Trade Desk reported Q4 revenues of $741 million—falling short of its earlier guidance of $756 million—while still achieving a 23% year-over-year revenue increase. Its full-year revenue climbed 26% to $2.4 billion. However, this performance failed to reassure investors, leading to a sharp decline in stock value from $122 to $92 per share.

Green acknowledged the company’s challenges, citing a series of operational missteps that slowed growth. He emphasized the need for a recalibration to navigate the complexities of a rapidly evolving market, ensuring The Trade Desk remains a dominant force in the programmatic advertising space.

In response to the earnings miss, The Trade Desk has restructured its internal operations to prioritize direct relationships with brands. While agencies have traditionally been the company’s primary partners, Green highlighted the growing importance of joint business plans (JBPs) with brands, which have demonstrated significantly faster growth rates.

“Our agency partnerships remain a critical part of our business,” Green stated, “but we are also expanding our direct brand engagements. JBPs have grown 50% faster than the rest of our business, and we see this as a crucial area for future growth.”

This shift reflects broader industry trends, as more brands recognize the increasing role of programmatic advertising in their media strategies. While brands will continue working with agencies, they are also taking a more active role in programmatic decision-making, necessitating closer collaboration with platforms like The Trade Desk.

One of the key missteps Green pointed to was the slower-than-anticipated adoption of The Trade Desk’s new Kokai platform, which impacted Q4 performance. The transition from its legacy system did not proceed as quickly as planned, forcing the company to support both platforms simultaneously—a costly and inefficient situation. Green assured investors that the company would accelerate the migration process to streamline operations and drive greater efficiencies.

In addition to platform enhancements, The Trade Desk is making significant investments in artificial intelligence. AI is becoming an increasingly central focus for the company, not only in automating ad buying but also in optimizing performance for clients. Green emphasized that AI-powered innovations will help The Trade Desk remain competitive in an industry where efficiency and automation are key differentiators.

Another major initiative in The Trade Desk’s strategy is the development of Ventura, its planned TV operating system. Green described Ventura as a solution designed to create a more efficient and transparent supply chain for both advertisers and media owners.

Additionally, The Trade Desk’s recent acquisition of Sincera is expected to further refine its programmatic advertising ecosystem. Green highlighted how Sincera would contribute to cleaning up the open internet’s ad supply chain, improving transparency, and bolstering the company’s OpenPath initiative—a move aimed at reducing intermediaries in digital ad transactions.

Amid broader industry changes, Green also addressed growing concerns about Google’s dominance in digital advertising. He reiterated his belief that regulatory pressures and antitrust scrutiny would eventually lead Google to exit the open internet advertising space.

“We are preparing for a world where Google steps away from the open internet,” Green asserted. “Their regulatory challenges stem from their restrictive practices, and I believe it’s only a matter of time before we see a major shift.”

Green’s remarks suggest that The Trade Desk is positioning itself as the leading alternative in a potential post-Google digital advertising landscape, reassuring investors that regulatory changes could ultimately benefit the company in the long run.