The Trade Desk is expanding in China and Wall Street loves it

Wall Street seems to be adorable during the incursion of the Trade Desk in China.

The company, founded by Jeff Green and Dave Pickles in 2009 and launched in 2016, provides technology that helps brands and agencies target and reach audiences, regardless of format and support.

Its clients include brands such as Procter & Gamble and agency portfolio companies such as the Omnicom Group, and indicates that the "vast majority" of the S & P 500 has launched advertising campaigns on its platform. It's profitable, earning $ 88 million on revenue of $ 477 million last year. And it is growing – first-quarter sales increased 41 percent over the previous year, with profits up 12 percent.

It has also attracted investors, who have been mostly disappointed by advertising technology companies in recent years. At the close of Thursday, the Trade Desk title was up nearly 74% this year to $ 201.89, giving it a market capitalization of $ 9 billion. That's over 270% in the last two years. It was down 2.4% in the precommercial Friday.

In a research note published this week, Michael Levine, an badyst at Pivotal Research, called the Trade Desk "a real badet, growing at the fastest rates in the industry as they seize the opportunities of programmatic advertising." He also said that this product offers "a rare combination of high growth and profitability (unlike most SAAS peers)".

Levine also called on the company's management team and two "huge stages of potential growth": China and connected TV.

The installation of the Trade Desk in China comes as the country prevents citizens from using the services of other technology giants based in the United States, such as Google, Facebook and Twitter.

The company recently launched its programmatic ad buying platform in China, enabling marketers to use their own internal data on the company's platform and access partnerships with companies in China. Chinese media such as Tencent and Baidu Exchange Services.

For example, instead of having to work with a Chinese advertising agency, a multinational advertiser working for a Western agency could easily buy ads in China.

The Trade Desk plans to make China one of its top three markets over the next five years. The company says international sales currently account for about 15 percent of sales, but it is expected to reach about two-thirds of its total revenue as the program sector evolves.

It will not happen overnight. The company said it will probably take years to see the material contributions of this market. "We think China needs to play the game in the long run," Green said during the conference's first quarter results.

DA Davidson badysts said in a note early this month that "in some ways, TTD is effectively curtailing its short-term opportunities in China by focusing solely on providing additional funding by advertisers to Chinese publishers, rather than to target existing advertising spending in China perceived as another "ad tech" fee paid by publishers) "

The company also relies on connected TV, adding inventory and expenses. The Trade Desk claims that its expenses increased by 300% from the first quarter of 2018 to the first quarter of 2019 and that the number of advertisers using connected TV on its platform has increased by 100% over the last year.

In a recent investor presentation, the company said its goals for the next five years were to make connected TV and video its main channel.

Some badysts predict potential turbulence in the field of connected TV. Analysts at Rosenblatt Securities wrote in a note in mid-May that they expected Google and Amazon to have competing capabilities in this area as early as the fourth quarter. Analysts said this could create a "significant" resetting of supply and demand in the connected TV advertising market and present headwinds for the results of The Trade Desk the year. next.

Levine said the Trade Desk had made it indispensable for the agencies that used it and told them that it saved them time and money. As for their use, "it would take something of seismic to change it".

The company claims that its customer retention during the quarter remained above 95% (it states that this has been the case for the previous 21 quarters).

Levine said in his note that agencies and advertisers are looking for alternatives to the digital advertising duopoly of Google and Facebook, and that the independence of the Trade Desk "has been and will continue to be the key to their success".

The Trade Desk also considers that the future of advertising is essentially digital and is done mainly through programming. In April, eMarketer estimated that US advertisers would spend close to $ 60 billion this year in programmatic signage, predicting that by 2021, nearly 88% or $ 81 billion of all US dollars in digital signage would be traded by programming.

Analysts did not seem too worried about the impact of Chrome's privacy changes on The Trade Desk's business.

"We do not expect any significant change in our business, and we welcome most of these changes as they will improve our business and all those who shrug their shoulders do not have any impact." negative on our results. " our business at all, "Green said on the company's recent call for results.

"Overall, it's a very positive change for us. It's good for the industry. When I spoke to Google yesterday, my very first question is: is there more, or is it the biggest? And they said: More details to come on these things, but in big headlines, that's it. "

In a note, D.A. Davidson badysts said that "the company's ability to get rid of the changes made soon to Google's Chrome browser underscores the resilience of TTD's business."