The Trade Desk, Inc.

Good day, ladies and gentlemen, and welcome to the Trade Desk Third Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open up the floor for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chris Toth, Vice President, Investor Relations. Sir, the floor is yours.

Thank you, Operator. Hello and good day to everyone. Welcome to the Trade Desk third quarter 2022 earnings conference call. On the call today from our Singapore office, our founder and CEO Jeff Green, Chief Financial Officer Blake Grayson, and our Chief Revenue Officer Tim Sims. A copy of our earnings press release can be found on our website at thetradedesk.com in the investor relations section. Before we begin, I would like to remind you that except for historical information, Some of the discussion and our responses in Q&A may contain forward-looking statements which are dependent upon certain risks and uncertainties. These forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. Actual results may vary significantly, and we expressly assume no obligation to update any forward-looking statements. Should any of our beliefs or assumptions prove to be incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. I encourage you to refer to the risk factors referenced in our press release and included in our most recent SEC filings. In addition to reporting our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures can be found in our earnings press release. We believe that providing non-GAAP measures combined with our GAAP results provide the more meaningful representation of the company's operational performance. With that, I'll now turn the call over to founder and CEO Jeff Green. Jeff.

Thanks, Chris, and thank you all for joining us. As Chris mentioned, I'm thrilled to be speaking with you today from our Singapore office, our South Asia headquarters. This is the first time that I have been in Asia since January of 2020 due to the global pandemic. And it's been great to reconnect with our team, our clients and our partners here in person this week. Asia as a whole is crucial to our long-term growth, and it's always inspiring to spend time here. More on that later, but first onto our results. As you've seen in the release, the Trade Desk posted another very strong quarter with revenue growth up 31% year over year. We continued to gain share as advertisers embraced the precision and relevance of data-driven advertising on the open internet via our platform. Throughout 2022, and in particular in Q3, The Trade Desk has significantly outperformed seemingly all other forms of digital with a significant contrast to Walt Gardens in our ability to win advertising budgets. It is very clear that under the current operating conditions, we are significantly outpacing the market regardless of the macro environment. Our vision and business strategy continues to be validated by our advertising clients. Nearly every single major advertiser wants a world where the open internet thrives. where competition and price discovery thrive. They want great measurement that works across the web so that they can compare the performance of each site, app, or destination to all the others. They want an internet where relative value can be found. As we've predicted, CTV is a catalyst for massive change on the internet. When possible, the power balance is shifting to the open internet away from opaque walled gardens and systems that aren't comparable to others. In short, more and more, our clients embrace the value of the open internet compared to the limitations of walled gardens, and they are embracing the trade desk as the default platform to execute on the open internet. This is resulting in closer relationships with the largest brands and agencies in the world. Our client relationships are stronger than ever because they are based on shared values and goals, a strong buy side roadmap, an internet where relative value and objective measurement can thrive with data-driven empowerment for brands and advertisers, rather than a tech company who is just asking the brand or agency to outsource media buying to them and send their first-party data down a one-way street. Because of this contrast, we are signing joint business plans with brands at a record pace. Some of the largest JVPs signed this year represent spend of over a billion dollars in the future. In this way, not only do these JVPs position the trade desk for future growth, but they also create an environment for joint programmatic innovation. JVPs represent strong alignment with brands that only come as a result of not owning media. Whether it's decision CTV, new approaches to identity, unleashing first-party data, advanced data and retail marketplaces, our clients are working with us to pioneer the future of digital advertising. With this context, hopefully you can see why we continue to outperform the industry and gain share, and why we are confident that our future growth outpaces the projections of almost everyone else in our industry. Just one more data point on the market overall and how we are performing. WPP's Group M predicted worldwide advertising will increase 8.4% in 2022, and we are growing at more than three times that rate. CTV continues to be a key growth driver, and our shopper marketing initiatives are yielding very encouraging results. While still early, it's only our third full quarter. Total shopper marketing spend increased nearly 3x from Q2 to Q3. As we said at Investor Day, we believe that more than 80% of the largest retailers in the United States partner with the Trade Desk. and more of the world's leading retailers are also now following suit. The chorus of retailers making retail measurement available is furthering the power and benefits of an open, competitive internet. While CTV may be the biggest force of change for the open internet, perhaps retail media and its accompanying data is a close second. Political also continues to perform well. Midterm election over midterm election, we have exponentially grown our business. We're proud of the work we do in political advertising, particularly our focus on helping provide a better advertising process for all political candidates. We are an objective and independent platform open to registered candidates on both sides. With all of this in mind, I believe that through the first nine months of the year, we have gained more market share, grabbed more land than at any point in our history. To provide more color on why I'd like to touch on three areas. First is the growing importance of programmatic on the open internet, even in a volatile macro environment. Second is the transformational role of CTV and showcasing that value. And last is the critical mass of support that is growing around unified ID too, and why this is so important in building the new identity fabric of the internet. So first, In terms of the macro environment, increasingly advertisers view programmatic as one of the most effective ways to drive relevance and differentiation, especially in times of market volatility. And perhaps even more importantly, they believe that the open Internet is the best place to create that value compared to the limitations of the walled gardens. You only have to look at a couple of comments made by the CFO of P&G during the most recent earnings call a couple of weeks ago. As you may know, Procter & Gamble is one of the world's largest and most progressive advertisers. He said, and I quote, it is difficult to describe media sufficiency in dollars, especially when we are actively shifting our spending from linear, non-targeted TV into programmatic and into digital spend. That is a lot more targeted and a lot more precise in terms of delivering reach and quality of reach where we need it. We now have more than 50% of our media spend in digital. We are increasing our first-party data and our digital capabilities to increase precision of reach, not only in the US or in Europe, but around the world. And that is allowing us to drive significant productivity while increasing reach, while increasing quality of reach, and while more precisely targeting our consumers. Back in early 2020, as we entered that short-lived COVID dip, I talked about how easy it was for large brands to turn off programmatic with the first hint of uncertainty. But what you're hearing from P&G there and what I hear from major brands around the world every day now is that programmatic is a central and critical component of any campaign. The world's most sophisticated advertisers understand that as they get more pressure from their CFOs to demonstrate the value and return of every advertising dollar, one of the best places to do that is on our platform. We provide objective, transparent measurement. We provide precision and relevance. We allow advertisers to optimize based on real-time performance. And we provide access to the world's most advanced data marketplace, including many of the world's biggest retailers. CMOs and CFOs are carefully watching costs and spend at this moment. It is why we are particularly excited by the growth on our platform this quarter. This moment is also a time when advertisers have clear goals and our objective partnership is really important to them achieving those goals. We recently ran a campaign for Clarins, one of the world's largest multinational cosmetic companies. They wanted to reach career women with a specific new product in the UK. They wanted to do it cost effectively with minimal waste, with optimal precision. Using our platform, they were able to launch a multichannel campaign, including mobile, CTV, digital out-of-home, and audio. They were able to pivot based on channel performance and retarget based on engagement. As a result, they were able to drive significant new traffic to their website, 8% of whom purchased the product, driving an exponential sales increase. All as part of a highly-decision campaign that was automatically optimized on the fly to maximize performance and minimize waste. In an environment with ROI scrutiny of every advertising dollar, this is exactly the kind of campaign optimization that CMOs are looking for. And as a result, they are increasingly gravitating to our platform. Nowhere is this more apparent than CTV, the second area I want to cover. Once again, CTV was our fastest growing channel, and it has rapidly become our largest. For years now, we've been talking about how the English speaking markets have been leading the adoption of CTV advertising. The US and Australia have been great leaders and case studies for the world, both benefiting from the fragmented and competitive nature of content in their markets. But now CTV adoption is going global. Perhaps the most bullish statement I'll make this year. is that our CTV spend grew in the majority of our international markets faster than it did in the United States. I've said previously that the US and Australia are leading the way on CTV and that markets like the UK and France are following fast. But that pace is picking up in all corners of the world, especially as advertisers look for more relevance and precision in their biggest campaign category. Let me give you a couple of quick examples. When Mercedes launched a new C-Class model in Australia this year, they wanted to lift brand awareness among the key demographics. Working with us, they were able to deploy a CTV strategy that reached 1.5 million households with precision and which ultimately increased brand awareness 11% among their key targets. ViewSonic is a multinational electronics company headquartered in Taiwan. They wanted to launch a new monitor aimed at gamers in key markets such as India. the Philippines, Germany, and UK. Working with us, they launched a CTV campaign, which was constantly optimized via COA on our platform, letting them iterate based on campaign performance and engagement. They saw significant improvements in all aspects of the campaign performance from reach to cost effectiveness compared to industry benchmarks. They were also able to link thousands of new engagements on their product website directly to the campaign. Back in the U.S., Lexus wanted to reach a new generation of millennial buyers for their luxury cars, most of whom have abandoned linear TV and moved in mass to streaming platforms. They were able to target key audiences with little to no waste and effective frequency management. They were able to reach 15 million potential new customers, driving five times more website traffic than the previous year, with an astonishing 67% improvement in purchase intent among key targets. Our success in CTV is multifaceted. On our platform, we have built the optimization tools that enable advertisers to drive these kind of results with precision as part of an omnichannel strategy. But on the inventory side, we have developed very close working partnerships with pretty much every premium CTV provider worldwide. While much has been said about Netflix moving to advertising, and we are excited about what that opportunity means for our industry and our business, There are many leading content providers that are driving innovation in CTV. Not enough has been said in recent months about what is happening from the content creators who have long histories in advertising and what they're doing to continue to innovate. Disney will launch advertising on the Disney Plus platform in December, and they are incredibly progressive in how they are enabling advertisers to leverage their own first-party data via UID2. We are very proud to be their partner. Transaction volume will grow over time and their standards on ad load and the use of UID2 will put pressure on the rest of the industry to think about CTV in a way that maximizes advertiser value and optimizes the consumer's experience. Peacock is one of our longest standing CTV partners. As with many broadcasters who begin the CTV journey, much of our work with them was initially in a fixed price context, testing the market. But I'm thrilled to report today the vast majority of Peacock inventory that flows through our system is fully decision and biddable. And as a result, CPMs have increased significantly, while advertisers are spending more and, of course, seeing more value. CTV providers that understand the benefits and gains of fully biddable and decision inventory will win over time. They will maximize revenue by helping advertisers drive precision and relevance. UID2 is rapidly emerging as a key new CTV identity currency, as I predicted it would. Let's remember that cookies are not present in CTV. There's nothing about the role of UID2 in CTV that is a response to the deprecation of cookies. Rather, it is recognition among CTV leaders that they need a way to provide advertisers with relevance in a way that protects consumer privacy as part of omnichannel campaigns. One of the first CTV platforms to embrace UID2 was Fubo, and the results they've seen have been incredibly impressive. Fubo itself has seen ad revenues on our platform increase 113% faster than impression growth. Advertising spend on Fubo on our platform has increased more than 60%, and CPMs are up significantly. And with UID2, they are also able to deliver more value to advertisers. one e-commerce retailer saw a 25% improvement in conversion rate and a 14% improvement in return on ad spend. There is a tremendous amount of transformation happening in our industry and on our platform. The adoption of UID2 by the infrastructure of the internet is transforming the open internet and where marketers put their very first dollar. In the coming quarters, we will talk more about all the amazing changes happening in identity, often driven by CTV. 2023 will likely have more market changes that create secular shifts in our direction with more data, more decisioning, better results, and the best CTV experience consumers could ever have. One of the key factors in our progress with UID2 has been our success with the world's leading data aggregators, such as AWS, Snowflake, Salesforce, Adobe, and many, many others. Put simply, these companies house the first-party data of the world's leading advertisers. With UID2, advertisers can transact on that data without it ever leaving home. Because of this progress, I predict that more than half of the data inventory flowing through our platform by early next year will be UID2 tagged. With more and more of our publishers' inventory also UID tagged, that means the value of advertiser first-party data increases exponentially on our platform, more than 10x next year compared to this year. With this progress, the strategic value of UID2 in helping advertisers drive relevance in a privacy-centric manner becomes undeniable. While most of our advertisers are already transacting on UID2, on our platform in some way. I expect they will fully embrace it next year. Because we've done the hard work on the data and inventory side, advertisers now have every incentive to fully unleash the first party data in a way that will supercharge their campaigns. They will finally be able to realize the value of their first party data to model and understand where their next generation and most loyal customers are and reach those customers with precision. And of course, do that more effectively than ever. This gives me tremendous confidence for 2023 and beyond. I'd like to close by just touching on our business here in Asia, as I've spent time with our teams here over the last few days. We are seeing great momentum across the region. We have recently posted some of the biggest months ever in offices such as Melbourne and New Delhi, as we have benefited from new JVPs and MSAs across the region. We have built strategic partnerships with major inventory players in all of our key markets here as i said during investor day most publishers i speak with complain that they do not believe that they are getting their fair share of spend today relative to the waltz gardens that's true here in asia too i met with one of the largest publishers here and they understand they need to maximize revenue on their digital content but they need greater access to global advertiser demand many inventory partners in asia are facing the same problem as a result they are looking to partner with the Trade Desk, a partner they can trust to be objective and transparent in delivering maximum advertiser value. On the demand side, Asia is witnessing the emergence of the largest middle class population in history. It is essential for brands to reach these consumers through the channels they use most. And in Asia, that means CTV or OTD or mobile and, of course, premium video on mobile. Because we made investments early, across the Asia Pacific region and in many key channels such as mobile OTT and digital out of home. We are in a great position to build on those investments in the years ahead. To come back to where I started in Asia and around the world, the biggest brands in the world increasingly appreciate the value of data driven advertising on our platform. We have established trust with advertisers and their agencies that we can deliver growth for their business in any macroeconomic environment. many of them are now trusting us with significant multi-year partnerships this means we have very high client retention rates it means we can innovate with our clients to deliver premium value our focus on profitability funds that innovation and ensures that we will remain at the bleeding edge of our industry and that we never have to compromise our beliefs as a result We are one of the few high-growth technology companies that consistently generate strong adjusted EBITDA and free cash flow. While I don't often comment on competitors' performance, I do think it's worth noting again that in an environment where many of our competitors have contracted or grew in the single-digit range, we grew 31%. That shows that we are outperforming the market and that we're gaining share, even in what many are calling a challenging macro environment. While we will never be immune from those macro challenges, we are confident that we will continue to outperform. I could not be more confident and excited about how we are positioned for 2023 and beyond. Our business has many growth drivers, as we've discussed today, and we will continue to innovate to lead the market. And I'm confident that the world's leading advertisers will continue to default to our platform as they seek to drive their own business growth via advertising. With that, I'll hand the call over to Blake, who will give you more color on the quarter.