• by Wayne Friedman , February 13, 2025

After 33 consecutive earning periods in which it met or exceeded financial expectations, The Trade Desk missed on revenues in the fourth quarter versus analyst expectations, taking in $741 million -- about 2% below estimates.

The demand-side advertising platform, which places a strong focus on connected TV advertising growth, saw its stock crushed in early morning Thursday trading -- down 32% to $83.73.

Michael Nathanson, media analyst/co-founder of MoffettNathanson Research, worries that consolidation of the connected TV space could be an issue going forward.

He says business could suffer if streamers like Peacock, Max and Paramount+ would be forced to merge, and where third-party advertising partnerships could be cut back -- also, that retail media giants like Amazon and Walmart are now becoming more competitive in CTV advertising space. “These moves could end up shifting ad dollars out of DSPs and into more direct pockets,” Nathanson says.

One reason for these results could be that The Trade Desk's new Kokai platform was at a lower penetration into media agency and brand systems.

“Clearly, some clients that were expected to be pushed to the platform were not or done slower than expected, and it’s possible that disrupted their spending (or similarly, disrupted expected increases in spend),” says Dan Salmon, media analyst of New Street Research.

Salmon says The Trade Desk expects 100% of clients to be transitioned to Kokai by the end of the year.

Brian Wieser, media analyst of Madison & Wall, points to external factors putting the pressure on the platform. “Competition has been intensifying in the DSP space. We regularly hear anecdotes of Yahoo’s progress in building out its DSP offering, and Amazon is doing the same. Meanwhile, Google retains its incumbency as the largest player in this space, eating up much of the market.”

Because of this, Wieser says, The Trade Desk has fallen short of its focus, pursuing business in the “open internet.” Those are the areas where websites/digital platforms are not controlled by big social media (Meta Platforms) or search engines (Google), places where advertisers have more freedom to choose where to place their ads and get access to user data.

The Trade Desk now says $12 billion of advertising billings are running through its system.

Wieser estimates that open internet advertising is at $53 billion, with slow growth of 5% in 2024.

Salmon also speculates that challenges remain in transitioning larger advertisers to a direct relationship with The Trade Desk rather than going through their media agency partners.

The Trade Desk itself touted that fourth-quarter revenue still grew 22% (to $741 million), with net income 25% higher to $182 million.

For the full 2024 year, revenue was 26% higher to $2.4 billion. Cash flow (earnings before interest, taxes, depreciation and amortization, at over $1 billion and free cash flow at $600 million.

The company’s first-quarter revenue guidance is $575 million.