Trade Desk, Inc. Q2 FY2025 earnings call

• Strong Q2 growth: Revenue grew 19% Y/Y, outpacing the digital advertising market, with CTV as the fastest-growing channel.
• Kokai platform: Delivering significant performance improvements, with 3/4 of client spend running through it, and expected full client adoption by year-end. AI integration in Kokai has led to notable improvements in KPIs for clients like Samsung and Cashrewards.
• Supply chain initiatives: OpenPath is improving supply chain efficiency, with publishers like The New York Post and Hearst Newspapers seeing positive results. Sincera acquisition has provided supply chain data via OpenSincera, and Deal Desk (in beta) uses AI to reshape deal management.
• Objectivity focus: Emphasizing the importance of objectivity in adtech, especially in live sports and retail media, with partnerships like Instacart and Ocado providing granular data for precise measurement.
• Leadership and organizational changes: Strengthened leadership team with Vivek Kundra as COO, Alex Kayyal joining as CFO, and Omar Tawakol joining the Board. Improved go-to-market organization for better client experience.

The Trade Desk reported revenue of $694 million in Q2 2025, representing 19% year-over-year growth. Excluding political spend related to the 2024 U.S. elections, revenue grew ~20% Y/Y. Video (including CTV) was a high 40s percentage share of the business and continues to grow. Mobile represented a mid-30s percentage share of spend, display a low double-digit share, and audio around 5%. Geographically, North America accounted for about 86% of spend, while international was 14%. Vertically, the majority of segments saw double-digit growth, with technology/computing and medical health showing strong growth, while home and garden and style and fashion were below average. Over 70% of spend was on Kokai, the company's significant platform upgrade.

• Q3 revenue is expected to be at least $717 million, representing 14% year-over-year growth. Excluding the benefit of U.S. political ad spend in Q3 2024, growth would be ~18% Y/Y.
• Adjusted EBITDA for Q3 is estimated to be approximately $277 million.

• Tariff uncertainties: Large global brands facing pressure due to tariffs and inflation, which could impact ad spend. The company's business is concentrated on large global advertisers, making them more directly affected by these macroeconomic factors.

Q: As we look into the back half of this year and into next year, what gives you the most confidence as you think about how the digital ad environment is evolving and how you're positioned to lead through it?

A: Jeff Green cited themes like uncertainty as an opportunity to gain market share, programmatic being measurable and agile, advertisers being more performance-driven, supply-demand imbalance in their favor, a valuable data asset combined with AI, and consumers spending more time on the premium open Internet despite more ad spend going to walled gardens.

Q: From your vantage point, how are you evaluating the evolving competitive landscape with Amazon's advertising efforts?

A: Jeff Green stated that The Trade Desk's strategy is focused on giving marketers transparency, objectivity, and access to the entire Internet. Amazon's bias makes it hard to buy the open Internet objectively, and The Trade Desk competes with a tiny division of Amazon, seeing major brands reallocating spend toward them due to independence and objectivity.

Q: Could you please elaborate on the progress with Kokai, both from a product perspective and from the engineering changes?

A: Jeff Green mentioned Kokai is the most significant platform upgrade, with AI integrated into forecasting, campaign optimization, etc. Clients using Kokai see dramatic performance improvements, like Samsung and Cashrewards. Deal Desk (in beta) uses AI to reshape deal management, with strong interest from advertisers and publishers like Disney.

Q: You talked about home and garden and style and fashion being underperforming. Any color on why?

A: Laura Schenkein said home and garden is ~8% of business, more seasonal, and style and fashion is ~4% of business, with some categories above/below corporate rate, these were the two highlighted as underperforming in the midst of the call