The Trade Desk, Inc. Net Income jumped on 124% and Revenue surged on 26.5%
02/18/2021 • About The Trade Desk, Inc. (
$TTD) • By InTwits
The Trade Desk, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- The Trade Desk, Inc. is a fast growth stock: 2020 revenue growth was 26.5%, 5 year revenue CAGR was 49.0% at 2020 ROIC 14.1%
- The Trade Desk, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's in pair with industry average of 14.0%
- CAPEX is quite volatile: $80m in 2020, $41m in 2019, $25m in 2018, $13m in 2017, $9m in 2016
- The company has highly profitable business model: ROIC is 14.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 26.5%. Revenue growth showed acceleration in 20Q4 - it increased 48.1% YoY. Revenue decline was accelerating on average at -11.7 pp per annum in 2016-2020. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.4 pp from 10.7% to 7.2% in 2020.
SG&A as a % of Revenue showed almost no change in 2020.
Net Income margin jumped on 12.6 pp from 16.4% to 29.0% in 2020. Net Income margin followed a growing trend at 3.8 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 9.6% in 2020. The Trade Desk, Inc. showed CAPEX/Revenue growth of 5.3 pp from 4.2% in 2017 to 9.6% in 2020. It's average level of CAPEX/Revenue for the last three years was 7.0%. CAPEX as a % of Revenue followed a growing trend at 1.2 pp per annum in the last 5 years.
Return on investment
The company operates at high and attractive ROE (29.8%) while ROIC is a bit lower (14.1%). ROIC decreased on 5.4 pp from 19.6% to 14.1% in 2020. ROE increased on 8.3 pp from 21.5% to 29.8% in 2020. ROIC declined at -6.6 pp per annum in 2016-2020.
Leverage (Debt)
Debt level is -0.7x Net Debt / EBITDA and 1.4x Debt / EBITDA. Debt surged on 54.4% while cash jumped on 234%.
The Trade Desk, Inc. has no short term refinancing risk: cash is higher than short term debt (1,154.9%).
Valuation and dividends
The company's trades at EV/EBITDA 149.2x and P/E 130.8x.
Management team
Jeff Green is a the company's CEO. Jeff Green has spent 12 years with the company. The Trade Desk, Inc.'s CFO is Blake Grayson. Blake Grayson has 1 year tenure at the company.
Financial and operational results
FY ended 12/31/2020
The Trade Desk, Inc. ($TTD) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 202.9 | 308.2 | 477.3 | 661.1 | 836.0 | 26.5% |
| SG&A | 78.2 | 119.8 | 172.0 | 275.9 | 346.4 | 25.5% |
| EBITDA | 61.3 | 76.6 | 119.1 | 160.8 | 211.5 | 31.5% |
| EBIT | 57.5 | 69.4 | 107.3 | | | |
| Tax | 23.4 | 12.8 | 17.6 | | | |
| Net Income | 20.5 | 50.8 | 88.1 | 108.3 | 242.3 | 123.7% |
| Stock Based Compensation | 5.1 | 21.3 | 42.2 | | | |
Balance Sheet
|
|---|
| Cash | 133.4 | 156.0 | 207.2 | 130.9 | 437.4 | 234.2% |
| Accounts Receivable | 377.2 | 599.6 | 834.8 | | | |
| Accounts Payable | 321.2 | 490.4 | 669.1 | | | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 14.6 | 37.9 | 159.8% |
| Long Term Debt | 25.8 | 27.0 | 0.0 | 174.9 | 254.6 | 45.6% |
Cash flow
|
|---|
| Capex | 9.2 | 13.1 | 25.2 | 40.6 | 80.1 | 97.3% |
Ratios
|
|---|
| Revenue growth | 78.3% | 51.9% | 54.9% | 38.5% | 26.5% | |
| EBITDA growth | 54.0% | 24.9% | 55.6% | 34.9% | 31.5% | |
|
|---|
| EBITDA Margin | 30.2% | 24.8% | 25.0% | 24.3% | 25.3% | 1.0% |
| EBIT Margin | 28.3% | 22.5% | 22.5% | | |
| SG&A, % of revenue | 38.5% | 38.9% | 36.0% | 41.7% | 41.4% | -0.3% |
| SBC, % of revenue | 2.5% | 6.9% | 8.8% | | |
| Net Income Margin | 10.1% | 16.5% | 18.5% | 16.4% | 29.0% | 12.6% |
| CAPEX, % of revenue | 4.5% | 4.2% | 5.3% | 6.1% | 9.6% | 3.4% |
|
|---|
| ROIC | 42.1% | 30.0% | 32.2% | 19.6% | 14.1% | -5.4% |
| ROE | -29.9% | 24.8% | 27.5% | 21.5% | 29.8% | 8.3% |
| Net Debt/EBITDA | -1.8x | -1.7x | -1.7x | 0.4x | -0.7x | -1.0x |
People
|
|---|
| Insider ownership | 1.5% | 1.5% | 1.5% | | | |
| Employees | | | 944 | | | |
| Revenue/Employee, th. $ | | | 506 | | | |
The Trade Desk, Inc. ($TTD) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 161 | 139 | 216 | 320 | | 32.8% | -12.9% | 31.6% | 48.1% |
| EBITDA | 26 | 1 | 60 | 125 | | 72.0% | -98.4% | 66.2% | 84.4% |
| Net Income | 24 | 25 | 41 | 152 | | 137.0% | -9.7% | 112.4% | 198.2% |
Balance Sheet
|
|---|
| Cash | 325 | 426 | 434 | 437 | | 126.1% | 226.5% | 150.4% | 234.2% |
| Short Term Debt | 23 | 31 | 35 | 38 | | 55.9% | 86.6% | 117.9% | 159.8% |
| Long Term Debt | 348 | 348 | 277 | 255 | | 433.5% | 384.7% | 65.5% | 45.6% |
Ratios
|
|---|
| EBITDA Margin | 16.1% | 0.5% | 27.8% | 39.0% | | 3.7% | -25.7% | 5.8% | 7.7% |
| Net Income Margin | 15.0% | 18.0% | 19.1% | 47.5% | | 6.6% | 0.6% | 7.3% | 23.9% |
Peers in Application Software
Below we provide The Trade Desk, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.1% | 19.4% | 14.5% |
|---|
| The Trade Desk, Inc. ($TTD) | - | 51.9% | 54.9% | 38.5% | 26.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (90 companies) | 64.0% | 64.4% | 65.7% | 68.2% | 70.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 2.7% | 6.8% |
|---|
| The Trade Desk, Inc. ($TTD) | 30.2% | 24.8% | 25.0% | 24.3% | 25.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| The Trade Desk, Inc. ($TTD) | 4.5% | 4.2% | 5.3% | 6.1% | 9.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.8% | -11.8% | -10.6% | -4.5% | -2.2% |
|---|
| The Trade Desk, Inc. ($TTD) | 42.1% | 30.0% | 32.2% | 19.6% | 14.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.6x | 0.4x | 0.3x |
|---|
| The Trade Desk, Inc. ($TTD) | -1.8x | -1.7x | -1.7x | 0.4x | -0.7x |
