Jeff Green, CEO, The Trade Desk

Scott Mlyn | CNBC

Shares of Trade Desk fell about 30% in after-hours trading on Thursday after the ad tech company issued fourth-quarter revenue forecast that fell well short of analysts’ estimates.

Third quarter results beat estimates. This is how the company did it:

  • Earnings per share: 33 cents, adjusted from 29 cents expected from LSEG, formerly known as Refinitiv
  • Revenue: $493 million versus LSEG’s expected $487.04 million

According to LSEG, Trade Desk forecast revenue of at least $580 million for the December period, below the $610 million expected by analysts.

A Trade Desk spokesperson told CNBC that the company’s fourth-quarter guidance was “slightly below consensus, primarily due to temporary restraint from advertisers in certain industries such as U.S. automotive and media/entertainment due to the strikes.” .”

Laura Schenkein, chief financial officer of The Trade Desk, said during a call with analysts that the company “experienced more macroeconomic uncertainty early in the fourth quarter.”

Trade Desk CEO Jeff Green added to Schenkein’s comments, saying, “Starting around the second week of October, we began to see some temporary reluctance among certain advertisers.”

“For example, we have seen some decline in brand spending in industries such as automotive and consumer electronics, particularly mobile phones and media and entertainment,” Green said. “Some of these industries have recently been affected by strikes, such as the US auto industry.”

“In the first week of November, spending has stabilized and we are very confident that we will continue to outperform our industry and deliver market gains,” Green said.

Green went on to say that the company’s business is “largely based on the biggest brands in the world,” meaning: “If a little caution is warranted due to the macroeconomic uncertainty that everyone is facing, of course we will not be immune to that in the short term.” .” .”

“But we believe that today’s macroeconomic pressures represent land grabbing opportunities that will bear fruit or continue to pay off in years to come,” Green said. “The fundamentals of our long-term business are as solid as ever.”

Third-quarter sales rose 25% from $493 million a year earlier, according to the Trade Desk. Net income rose to $39 million, or 8 cents per share, from $16 million, or 3 cents, a year earlier.

The stock fell to $53.49 in extended trading after closing at $76.81 on Thursday. Before the after-hours move, shares were up 71% for the year.

Trade Desk’s technology helps brands reach relevant prospects across the internet and is proven in the world of streaming and online video. While most independent ad tech companies have struggled to compete with Google’s systems, Trade Desk has built a company that was worth $38 billion before its earnings report, largely by helping companies Shifting advertising budgets from traditional television to the connected television market.

Meta, Snap and Pinterest all noted a slowdown in the digital advertising market in their recent earnings reports, partly due to the war between Israel and Hamas.

Susan Li, Meta’s chief financial officer, said the company had expanded its forecast due to the unpredictability surrounding the Middle East crisis, while Snap said it would not issue an official forecast “due to the unpredictability of the war.”

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