Shares of Trade Desk Inc. (TTD) plummeted 27.67% in after-hours trading on Thursday following the release of its second-quarter earnings report and the announcement of a significant leadership change. The steep decline came despite the ad-tech company reporting revenue and adjusted earnings that met or slightly exceeded analyst expectations.
Trade Desk reported Q2 revenue of $694 million, surpassing the estimate of $685.3 million, and adjusted earnings per share of $0.41, in line with expectations. However, investors were disappointed by several factors:
1. September quarter guidance: The company's outlook for Q3 revenue of at least $717 million and adjusted EBITDA of $277 million merely met analyst expectations, failing to provide the upside investors were hoping for given the stock's recent strong performance.
2. Slowing growth: Revenue growth slowed to 19% year-over-year, down from 25% in the previous quarter and 26% in the same period last year. This deceleration raised concerns about the company's ability to maintain its growth trajectory in the competitive digital advertising market.
3. CFO transition: Trade Desk announced that Laura Schenkein would be stepping down as Chief Financial Officer after more than a decade with the company. Alex Kayyal, a board member with experience leading Salesforce's venture operations, was named as her successor effective August 21.
The sharp stock decline suggests that investors may be reassessing Trade Desk's valuation and growth prospects in light of these developments. While the company continues to outpace the broader digital advertising market, the combination of in-line guidance, slowing growth, and a major leadership change has clearly spooked investors in the near term.