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Yahoo
20-06-2025
- Business
- Yahoo
The Trade Desk vs. PubMatic: Which Ad-Tech Stock Is the Better Pick?
Both The Trade Desk TTD and PubMatic PUBM play pivotal roles in the programmatic advertising ecosystem, but at opposite ends of the spectrum. TTD operates a leading demand-side platform (DSP), which helps advertisers focus on data-driven ads. PubMatic, on the other hand, is a sell-side platform (SSP) that helps publishers across the open internet to control access to their inventory and boost monetization. Since both firms having massive exposure to the booming CTV and retail media trends, this makes for an intriguing comparison for investors. So, which stock makes a better investment pick at present? Let's deep dive into the pros and cons for each company. TTD is confident in its ability to outpace the market and seize future opportunities owing to solid execution across key initiatives — connected TV (CTV), retail media, international expansion, Kokai, UID2 and OpenPath. The acquisition of Sincera, a leading digital advertising data company, will aid in enhancing its programmatic advertising platform by integrating Sincera's actionable insights on data quality. It recently unveiled the OpenSincera application to offer Sincera's rich advertising metadata to the ad tech ecosystem. The company's Kokai platform is being used by two-thirds of the clients, much ahead of schedule. The platform is delivering on lower funnel KPIs, including 24% lower cost per conversion and 20% lower cost per acquisition, per TTD. 100% adoption by clients is expected to be completed by this year's end. The integration of Koa AI tools was highlighted by management as a 'game changer' for the Kokai platform. It recently introduced Deal Desk, an innovation within its Kokai platform designed to enhance how advertisers and publishers manage one-to-one deals and upfront commitments. First-quarter revenues of $616 million jumped 25% year over year and surpassed management's guidance of at least $575 million. Adjusted EBITDA was $208 million (34% margin) compared with $162 million (33% margin) in the year-ago quarter. Video, which includes connected TV or CTV, represented a high 40 percent share of digital spend, while mobile had a mid-30 percent share. Display constituted a low double-digit share, and audio represented around 5%. Customer retention was over 95% for the quarter reported. Nonetheless, increasing macroeconomic uncertainty and escalating trade tensions do not augur well for TTD, as these could squeeze ad budgets. TTD highlighted the impact of the volatile macro backdrop, particularly on the large global brands. If macro headwinds worsen or persist into the second half of 2025, revenue growth may face further pressure due to reduced programmatic demand. The intensely competitive nature of the digital advertising industry, dominated by industry giants like Alphabet and Amazon, continues to put pressure on TTD's market position. While CTV remains a strong revenue driver, the market is increasingly fragmented and competitive. Heavy reliance on CTV for growth is a concern, as any adverse impact on this segment could weigh heavily on the company's overall performance. Moreover, TTD derived 88% of its revenues from North America, while only 12% came from international markets. A weak international footprint limits TTD's total addressable market expansion potential. Excluding the drag from a large DSP client and political ad revenues, PubMatic's underlying business grew 21% year over year in the first quarter of 2025. The strong momentum is being driven by secular tailwinds in CTV, SPO (Supply Path Optimization) and emerging revenue streams. Importantly, these growth drivers now comprise 70% of total revenues, signaling a diversified business that is less dependent on legacy display advertising. Like TTD, PUBM is gaining from growth in the CTV business, which bolsters its strategic positioning in the high-growth programmatic video. PUBM is expected to gain from the continuing shift of ad dollars from linear TV to streaming, especially in a market favoring programmatic spot buys with flexibility over heavy upfront commitments. PubMatic has already secured over 80% penetration among the top 30 streamers. In the last reported quarter, CTV revenues surged over 50% year over year, while omni-channel video revenues grew 20% and represented 40% of total revenues. PubMatic is also heavily investing in Activate for SPO, Convert for commerce media, and Connect for curation to drive growth and create sticky customer engagement. Strategic partnerships like Spectrum Reach and TCL in live sports augur well. PubMatic is embedding AI across its portfolio to enhance both efficiency and outcomes. It has launched a GenAI-powered end-to-end platform that offers buyers direct access to the open internet almost entirely. This technology aids in optimizing the entire stage of the media buying process, including inventory discovery and performance optimization. PubMatic is scaling across international markets. The company is witnessing strong performance in India, Europe, Australia and Japan. The recent expansion of its collaboration with BBC and other traditional broadcasters indicates growing recognition of PUBM's platform for streaming monetization. Given these factors, PUBM forecasts $66-$70 million in revenues, assuming over 15% year-over-year growth of the underlying business. The competitive landscape and the ongoing macro uncertainty and cautious advertiser behavior are concerning. One of PubMatic's major DSP clients also revised the bidding approach, affecting PUBM's top line. In the last reported quarter, revenues declined 4% year over year despite strength in the underlying business. Year to date, PUBM and TTD have lost 24.7% and 41.6%, respectively, amid macroeconomic uncertainties and effects of tariffs and inflation surrounding the industry. Image Source: Zacks Investment Research Valuation-wise, TTD is overvalued, as suggested by the Value Score of F, while PUBM has a Value Score of B. Image Source: Zacks Investment Research In terms of the forward 12-month price/earnings ratio, TTD shares are trading at 10.87X, higher than PUBM's 1.74X. Analysts have made significant downward revisions for PUBM's bottom line. Image Source: Zacks Investment Research For TTD, there is a relatively lower downward revision. Image Source: Zacks Investment Research TTD and PUBM currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Trade Desk, driven by its leading DSP position, rapid innovation through platforms like Kokai and OpenPath, and strong execution in high-growth areas like CTV and retail media, emerges as a stronger investment case. While PubMatic shows potential, significant downward estimate revision and declining revenues keep us on the sidelines. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Trade Desk (TTD) : Free Stock Analysis Report PubMatic, Inc. (PUBM) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Campaign ME
15-05-2025
- Business
- Campaign ME
The Trade Desk offers free access to OpenSincera for insights on ad quality
Global advertising technology company The Trade Desk has provided free and open access to OpenSincera, a new application that provides the ad tech ecosystem with rich advertising metadata to reveal deeper insights on advertising quality and health of the digital advertising supply chain. Accessible to all participants across the entire advertising industry, OpenSincera will provide metrics on the ad experience such as ads-to-content ratio, page weight, average ads-in-view, and ad refresh rate. Jeff Green, Founder and CEO, The Trade Desk, said, 'Sincera has arguably the industry's richest, most unique data on digital advertising supply chains. We are embedding the full scope of that data across our Kokai platform so our clients can have as much information as possible on what they are bidding on.' Green added, 'With OpenSincera, we are opening much of this data to anyone in the industry that has an interest in improving the health of digital advertising, including our competitors. This is just the latest example of The Trade Desk offering a service to the industry that can help the industry build transparency, trust and growth that raises all boats and improve the open internet.' Agencies could use it to maintain and update blocklists, while publishers might understand how their own sites appear from the buy-side perspective. The OpenSincera API should also be useful for custom bidding algorithms startups, SSPs, DMPs and other DSPs. The Trade Desk acquired Sincera earlier this year. In launching OpenSincera, The Trade Desk is extending the access of Sincera digital advertising data, making it more widely available to the industry than ever before. In addition, OpenSincera will launch alongside a new, first-of-its-kind API, a service that will enable ad-tech companies to build services based on the data easily and intuitively. Mike O'Sullivan, GM, Product, The Trade Desk., said, 'Making OpenSincera available to everyone was critical for us to help improve the health of the advertising supply chain.' 'We're opening the door for everyone who wants to make advertising more transparent and efficient. The more data we can put into the hands of everyone in the advertising ecosystem the better it is for everyone and the open internet.'
Yahoo
13-05-2025
- Business
- Yahoo
Should You Hold or Sell The Trade Desk Stock Post Q1 Earnings?
The Trade Desk (TTD) shares have plunged 32.5% year to date. Though the company's better-than-expected first quarter results offered some respite, with shares jumping 32.6% since May 8. Revenues were up 25%, implying strong demand trends. On the other hand, heightened macro uncertainty is expected to squeeze ad budgets, which does not bode well for TTD. So now the question is, should investors think of buying TTD stock at the moment? Let's address this question by evaluating the company's latest quarterly performance and long-term prospects. TTD reported revenues of $616 million, up 25% year over year and surpassing management's revenue guidance of at least $575 million. Adjusted EBITDA stood at $208 million (34% margin) compared with $162 million (33% margin) in the year-ago quarter. Video, which includes connected TV or CTV, represented a high 40s percentage share of digital spend, while mobile had a mid-30 percent share. Display constituted a low double-digit share, and audio represented around 5%. Customer retention stood at over 95% for the quarter reported. TTD reported net cash provided by operating activities of $291.4 million, and free cash flow was $230 million. Adjusted earnings per share came in at 33 cents, up 27% from the year-ago quarter. The Trade Desk price-consensus-eps-surprise-chart | The Trade Desk Quote The company also noted that its Kokai platform was now being used by two-thirds of the clients, much ahead of schedule. The platform is now delivering on lower funnel KPIs, including 24% lower cost per conversion and 20% lower cost per acquisition, added TTD. 100% adoption by clients is expected to be completed by the year-end. The integration of Koa AI tools was highlighted by management as a 'game changer' for the Kokai platform. TTD also completed the acquisition of Sincera, a leading digital advertising data company. This buyout will help enhance its programmatic advertising platform by integrating Sincera's actionable insights on data quality. Unified ID 2.0, the company's flagship identity solution and an alternative to third-party cookies, is witnessing increasing adoption. For the second quarter of 2025, revenues are expected to be $682 million. Increasing macroeconomic uncertainty and escalating trade tensions do not augur well for TTD, as these could squeeze ad budgets. TTD highlighted the impact of the volatile macro backdrop, particularly on the large global brands. If macro headwinds worsen or persist into the second half of 2025, revenue growth may face further pressure due to reduced programmatic demand. The intensely competitive nature of the digital advertising industry, dominated by industry giants like Alphabet GOOGL and Amazon AMZN, as well as players like Magnite MGNI, continues to put pressure on TTD's market positioning. Growing regulatory scrutiny around data privacy and evolving consumer data practices also threaten to disrupt the established audience-targeting methods. While CTV remains a strong revenue driver, the market is increasingly fragmented and competitive. Heavy reliance on CTV for growth is a concern, as any adverse impact on this segment could weigh heavily on the overall performance. Moreover, TTD derived 88% of its revenue from North America while only 12% came from international markets. A weak international footprint limits TTD's total addressable market expansion potential. Increasing costs are likely to weigh on profitability. In the last reported quarter, total operating costs surged 21.4% year over year to $561.6 million. Expenses soared on account of continued investments in boosting platform capabilities, particularly platform operations. Higher costs can prove a drag on margins, especially if the revenue growth does not keep pace. Given all these factors, analysts remain bearish on the stock, as evident from the downward estimate revision in the past 30 days. Image Source: Zacks Investment Research TTD stock's plunge of 32.5% YTD is steeper than the 13.7% decline of the Internet Services industry and the 1.3% decline of the Zacks S&P 500 composite. Image Source: Zacks Investment Research The company has underperformed its digital advertising peers, including Alphabet and Amazon and Magnite. Alphabet and Amazon shares have plunged 16.3% and 4.9%, respectively, in the same time frame. Magnite has gained 1.3% YTD. Magnite is a supply-side platform that helps publishers manage and sell their ad inventory across various formats like streaming, online video, display and audio. From a valuation perspective, TTD is quite expensive. The stock is trading at a premium with a forward 12-month Price/Sales of 12.99X compared with the industry's 4.75X. Image Source: Zacks Investment Research Despite strong first-quarter results, The Trade Desk faces significant headwinds from macroeconomic uncertainty, rising costs, and fierce competition. Its heavy reliance on CTV and North America limits growth flexibility. Steep stock decline YTD, downward estimate revision activity and expensive valuation are other concerns. With a Zacks Rank #4 (Sell), investors would be better off if they offloaded this stock from their portfolios. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report The Trade Desk (TTD) : Free Stock Analysis Report Magnite, Inc. (MGNI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
