Trade Desk shares dropped 28% in premarket trading after the advertising technology company reported second-quarter revenue that missed Wall Street’s expectations.
The company reported adjusted earnings of 34 cents per share on $715 million in revenue, which was a 3% increase from last year. Analysts surveyed by FactSet had expected 18 cents per share in earnings and $752.6 million in revenue.
Chief executive Jeff Green admitted the quarter did not meet the company’s standards but said it strengthened their confidence in the long-term strategy. He explained that management understands what affected performance and is taking steps to improve execution, upgrade the platform, and focus its strategy.
These disappointing results added to a tough period for the stock, which had already dropped 80% over the past year before falling another 28% ahead of Friday’s open.
Adjusted earnings before interest, taxes, depreciation, and amortization were $241 million, down from $271 million a year ago. Trade Desk also gave a weak outlook for the third quarter, expecting at least $650 million in revenue, which is much lower than the $806.5 million analysts expected, and projected adjusted Ebitda of $160 million.
Evercore ISI said in a note that such a large shortfall, even after resolving a major agency conflict earlier in the quarter and expecting a boost from political advertising, likely means there is significant pricing pressure or major market-share losses. The firm also suggested that the increasing role of AI on the open web could be another factor.
KeyBanc said that pricing pressure on Trade Desk’s Kokai AI platform compared to competitors, a tough economic environment, and mistakes in execution all made this quarter especially difficult. The firm noted that big advertisers seem to be moving to cheaper options, which is causing market-share losses, and said the stock’s value could stay under pressure for now, though it kept a neutral rating on the shares.
