The Trade Desk, Inc. 2026 Q2 Earnings Call

You may begin. Thank you, operator.

Hello. Good afternoon to everyone. Welcome to The Trade Desk second quarter 2026 earnings conference call. On the call today are Chief Executive Officer and co-founder, Jeff Green, and our new Chief Financial Officer, Nate Olmstead. A copy of our earnings press release is available on our website in the investor relations section at thetradedesk.com. Please note that aside from historical information, today's discussion and our responses during the Q&A may include forward-looking statements. These statements are subject to risks and uncertainties and reflect our views and assumptions as of the date such statements are made. Actual results may vary significantly, and we expressly disclaim any obligations to update the forward-looking statements made today. If any of our beliefs or assumptions prove incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements.

For a detailed discussion of risks, please refer to the risk factors mentioned in our press release in our most recent SEC filings. In addition to our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures is available in our earnings press release and investor presentation. We believe that presenting these non-GAAP measures alongside our GAAP results offers a more comprehensive view of the company's operational performance. With that, I'll now turn the call over to Chief Executive Officer and co-founder, Jeff Green.

Jeff? Thanks. Good afternoon, everyone.

Thank you for joining us. I want to start by sharing some of the same perspectives that I've shared with our team over the past several weeks. Next month, we will celebrate 10 years as a public company. Over that time, we have grown revenue at roughly a 34% CAGR. Our annual net income has increased 20x, and our team has grown from just over 400 people at the time of our IPO to thousands. Over the last 16 years, The Trade Desk have made a number of industry-changing accomplishments. Throughout that entire time, we have always tried to learn as much from our mistakes as we do from our successes.

We spend a lot of time at The Trade Desk reviewing the pivotal decisions that we've made over the years, understanding what worked and what didn't, and how we can become a better company. As we continue to map out plans to grow our position and improve our revenue growth, we reflect on what we have learned from past quarters and especially from this last one. Our revenue growth is below our expectations and below the standard we hold ourselves to. These numbers are not a reflection of our company or the long-term opportunity in front of us. We underperformed our own expectations for two main reasons. First, the macro conditions have made it more difficult for some of the world's largest brands to grow. Of course, this is bigger than advertising, and it's bigger than our company. In this economic environment, there are pressures on lower-income consumers.

As a result, some affected advertisers have become more focused on buying cheap media rather than the best media. Secondly, we didn't execute as well as we could have, which I'll elaborate on in just a minute. First, let's start with the macro. We continue to see a unique blend of macro pressures on several categories of advertising. Of course, our business is very unique among the large advertising-focused platforms. Our business is largely a sophisticated buying platform for the biggest brands and advertisers. Almost all of the spend on our platform comes from large Fortune 500 companies and their brands. Over the long term, our focus on large advertisers is both a strength and a moat. We have partnered with the biggest, most resilient, and most loved brands in the world. Nevertheless, some of them are experiencing difficult times right now.

All of our customers are operating in a fundamentally different environment than they were even a year ago. CPGs and FMCGs are experiencing unique pressures. These categories were once the biggest in advertising, and they are still one of the biggest. P&G has described the environment as volatile and challenging and recently stated on their earnings call, "We anticipate continued pressure from commodity and related costs to the crisis in the Middle East. If the conflict eases and oil comes down, trade lanes open up. That will help. If it goes the other way, it will hurt." CPGs and Autos are two of the sectors of the economy that are most overrepresented on our platform. Around 25% of our business is generated by those two categories alone. Autos and CPG have both been set back by tariffs and oil prices.

General Motors described a multi-billion dollar impact from tariffs in addition to plans to onshore production to avoid future tariff risk. Both of these categories of advertisers, almost unanimously, have described the change in the macro, where the consumer wealth bifurcation is creating a squeeze on their customers that is highly uneven consumer behavior, where the high-income consumers are doing well and the lower-income consumers are not. For CPGs, this is causing change across everything from packaging to advertising allocations, promotion strategy, and of course, go-to-market. This uneven consumer pressure is impacting autos remarkably. Both Ford and General Motors highlighted in recent earnings reports the growing dependence of auto sales on affluent consumers. Industry research from Oxford Economics shows earners in the top 20% of households currently represent more than 50% of new vehicle sales. Both categories are having to create new approaches to advertising.

In some cases, budgets have been temporarily reduced as they formulate new plans to go to market. In other cases, some brands are falling prey to low-cost, low decisioning methods like Programmatic Guaranteed and fixed price. Doing so essentially means buyers will give away their decisioning in a great buyer's market to the sellers in exchange for lower cost of transactions. This approach is often deliberately short-sighted. Still, we continue to see the growing market leaders in every category optimize for business outcomes, not simply the lowest cost buying platform or the lowest cost media. It is important not to overstate the impact of these dynamics on our business. While these are affecting some of our largest categories and clients, most of our clients are performing well and growing. In fact, many categories are experiencing secular tailwinds.

Financial services, some parts of technology, and pharma are growing well and thriving, and we are seeing most of the leading brands in those categories deepen their partnerships with us. One of the leading indicators we watch most closely is our Joint Business Plans or JBPs. We had JBPs with 217 clients as of Q2, representing 38% growth year-over-year. Most importantly, revenue under JBPs grew at a rate of six times higher than overall revenue. JBPs are much more than commercial agreements. They create a structured framework for brands, their agencies, and The Trade Desk to plan, innovate, and measure success together. These partnerships grow faster than the rest of our business because they are built on long-term alignment rather than just individual campaigns. Additionally, the majority of our top 100 accounts are growing double digits year-over-year.

Outside of our top 500 advertisers, the remainder are growing over 50% year-over-year, year to date, which represents green shoots from smaller up-and-coming and challenger brands. Our EMEA and APAC regions both have grown almost 30% year to date. China is growing over 100% year to date. Some of our clients are experiencing headwinds, but the majority are growing. Even in CPGs and autos, about half of them are growing very well with us, even if they are all experiencing cyclical pressures. While there are unique macro pressures, we are very focused on the things that we can control, and we continue to grow our customer base, including high growth among midsize businesses and agencies. Starting with our product, I am extremely excited about our roadmap and the innovations we are building to make media buying better.

We say all the time that every product we ship has to be better for our clients, it has to be better for us and our shareholders, and it has to be better for the ecosystem. Through that lens, let me share a few of our plans, starting with the products that we are pointing at what might be the biggest problem in our industry, measurement. Real brand building, which is required for categories like autos and CPGs, cannot thrive while measurement standards are broken. As long as last click and last view are the standard of measurement, brands will struggle to understand what drives their growth, and the most premium parts of the open internet will always look expensive and ineffective.