Date: 2026-04-03 Quarter: Q4 FY25 (Oct-Dec 2025), reported February 25, 2026 Market cap: $10.8B | EV/TTM Rev: 3.3x | Revenue growth: 14.3% YoY (+19% ex-political)
TTD delivered record profitability on decelerating revenue. Q4 revenue of 847M(+14.3400M, 47.3%), and FCF ($285M) all set records. But the growth trajectory is the story: five consecutive quarters of deceleration (25.4% to 14.3%) with Q1 FY26 guided at just 10%. Management explicitly attributed weakness to CPG/auto verticals (>25% of revenue), offered an ex-political 19% figure, and expressed highest-ever confidence in the long-term opportunity. The market disagrees -- the stock is down 76% from its 52-week high. At 3.3x EV/Revenue and 11.9x EV/FCF, the market prices permanent growth impairment. Jeff Green's $148M insider purchase post-earnings is the strongest counter-signal. The cyclical vs structural debate is unresolved. Conviction: 3/5 -- watchlist, Q1 FY26 earnings (May 8) is the critical test.
| Criterion | Threshold | TTD Q4 FY25 | Pass/Fail |
|---|---|---|---|
| Revenue YoY growth | >30% (>40% preferred) | 14.3% (18.4% FY25) | FAIL |
| Gross margin | >60% (>70% preferred) | 80.7% | PASS |
| Revenue per quarter | >$50M | $846.8M | PASS |
| Data availability | 4+ quarters | 16 quarters | PASS |
| Share dilution | <10% annual | -4.8% (buyback reduction) | PASS |
| GAAP profitability | Improving or positive | $443M FY25 net income, op margin at all-time high | PASS |
Gate result: FAIL on growth. Analysis proceeds because this is a requested earnings review on a company with compelling characteristics at a historically depressed valuation, and the growth inflection question is the central analytical question.
| Factor | Rating | Detail |
|---|---|---|
| Growth | Weak | 14.3% Q4 YoY; FY25 at 18.4%; guided to 10% for Q1 FY26. Ex-political Q4 ~19%. |
| Trajectory | Decelerating | Five consecutive quarters: 25.4% -> 18.7% -> 17.7% -> 14.3% -> guided 10%. Gross spend growth decelerated to 11.7% YoY. |
| Margins | High | GM 80.7%, GAAP Op 30.3% (ATH), EBITDA 47.3% (ATH), FCF 33.7%. SBC declining to 13.2% of Q4 revenue. All-time highs across the board. |
| Dominance | Strong | Largest independent DSP. 95% retention for 12 years. UID2 becoming industry standard. But: Amazon DSP at 46% market adoption vs TTD gaining from DV360; holdco defections; Kokai AI quality questions. |
| Valuation | Cheap | 3.3x EV/Rev, 11.9x EV/FCF, 12.4x P/Non-GAAP E. Historically unprecedented -- traded at 15-25x revenue in 2019-2021. |
| Special | Present | $148M founder insider buy at $23-25 (March 2026). DOJ antitrust ruling vs Google. OpenAI partnership talks. $500M buyback authorization. Ventura OS. |
| | Q1_23 | Q2_23 | Q3_23 | Q4_23 | Q1_24 | Q2_24 | Q3_24 | Q4_24 | Q1_25 | Q2_25 | Q3_25 | Q4_25 | | | Mar-23 | Jun-23 | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |---|---|---|---|---|---|---|---|---|---|---|---|---| | Rev ($M) | 383 | 464 | 493 | 606 | 491 | 585 | 628 | 741 | 616 | 694 | 739 | 847 | | YoY % | 21.4 | 23.2 | 24.9 | 23.5 | 28.3 | 25.9 | 27.3 | 22.3 | 25.4 | 18.7 | 17.7 | 14.3 | | QoQ % | -22.0 | 21.3 | 6.2 | 22.8 | -18.9 | 19.0 | 7.4 | 18.0 | -16.9 | 12.7 | 6.5 | 14.5 | | GM % | 77.8 | 81.3 | 81.1 | 83.4 | 78.9 | 81.1 | 80.5 | 81.7 | 76.8 | 78.2 | 78.1 | 80.7 | | Op Mg % | -6.1 | 9.0 | 7.6 | 23.8 | 5.8 | 16.2 | 17.3 | 26.4 | 8.8 | 16.8 | 21.8 | 30.3 | | EBITDA Mg % | 28.4 | 38.7 | 40.5 | 46.8 | 32.9 | 41.4 | 40.9 | 47.2 | 33.8 | 39.0 | 42.9 | 47.3 | | Net Mg % | 2.4 | 7.1 | 8.0 | 16.1 | 6.5 | 14.5 | 15.0 | 24.6 | 8.2 | 13.0 | 15.6 | 22.1 | | EPS (GAAP) | 0.02 | 0.07 | 0.08 | 0.19 | 0.06 | 0.17 | 0.19 | 0.36 | 0.10 | 0.18 | 0.23 | 0.39 | | FCF ($M) | 178 | 121 | 187 | 66 | 178 | 59 | 225 | 179 | 232 | 120 | 158 | 285 |
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Revenue ($M) | 1,946 | 2,445 | 2,896 |
| YoY % | +23 | +26 | +18 |
| Gross Spend ($B) | 9.6 | 12.0 | 13.4 |
| Take Rate | 20.3% | 20.4% | 21.6% |
| EBITDA ($M) | 772 | 1,011 | 1,196 |
| EBITDA Margin | 39.6% | 41.3% | 41.3% |
| GAAP Net Income ($M) | 179 | 393 | 443 |
| FCF ($M) | 551 | 641 | 796 |
| SBC ($M) | 492 | 495 | 491 |
| SBC % Revenue | 25.3% | 20.2% | 16.9% |
| Diluted Shares (M) | 500 | 507 | 483 |
Going into Q4 FY25, I expected TTD to modestly beat the $840M guide (consistent with their pattern of low-single-digit beats), and for growth to decelerate from Q3's 17.7% due to lapping 2024 election-year political spend. I expected margins to expand seasonally in Q4.
| Metric | Expected | Actual | Verdict |
|---|---|---|---|
| Revenue | $850-860M (+15-16% YoY) | $846.8M (+14.3%) | Slight miss vs my estimate, in-line with guide. Ex-political ~19% is better than feared. |
| EBITDA margin | ~46% (seasonal high) | 47.3% | Better than expected -- all-time record. |
| GAAP Op margin | ~26% (match Q4 FY24) | 30.3% | Meaningfully better -- all-time high by 3.9pp. Operating leverage exceeding expectations. |
| FCF | ~$200M (Q4 variability) | $285.3M | Significantly better -- record quarter. Cash generation is accelerating. |
| Beat magnitude | +2-3% vs guide | +0.8% | Narrowest beat in history. Concerning trend. |
| Q1 FY26 guide | ~$700M (+13% YoY) | >=678M (+10%) | Materially below expectations. This is the headline disappointment. |
| Vertical color | Broad-based | CPG/auto explicitly weak; Tech/Health/Travel strong | Expected some softness; didn't expect >25% of revenue in challenged verticals with "continued into Q1" language. |
| Kokai narrative | Continued adoption wins | Near-100% adoption but AI quality complaints emerging | Mixed -- adoption metric strong, field quality questionable. |
| Ventura OS | Expected update | Barely mentioned | Conspicuous absence. Was a centerpiece in Q4 FY24. |
Three surprises matter:
Q1 FY26 guidance at +10% was the negative surprise. I expected ~13% and the market expected similar. The 678MfloorwithTTD′srecent1 − 7690-710M actual, which would be 12-15% growth. But the guide itself signals management sees near-term headwinds persisting. The "visibility remains somewhat lower" and "prudent approach" language is new.
The profitability expansion is the positive surprise. GAAP operating margin at 30.3% was 3.9pp above Q4 FY24 on 14% revenue growth. This demonstrates operating leverage that the market is undervaluing. SBC fell to $112M in Q4 (13.2% of revenue) -- the lowest ratio in TTD's public history. The business is becoming structurally more profitable even as revenue growth decelerates.
Take rate expansion to 21.6% was unexpected. From 20.4% to 21.6% in one year, the first meaningful step-up in three years. Double-edged: better monetization per dollar of spend (bullish for near-term revenue), but masks underlying gross spend volume deceleration from 25% to 11.7% (bearish for long-term platform health). If take rate expansion stalls and gross spend stays at ~12% growth, revenue growth converges to ~12%.
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Gross Spend Growth | -- | +25% | +11.7% |
| Revenue Growth | +23% | +26% | +18.4% |
| Gap | -- | -1pp | +6.7pp |
Revenue outpacing gross spend by 6.7pp in FY25, entirely from take rate expansion (20.4% to 21.6%). This divergence is a bearish leading indicator: volume growth has decelerated faster than revenue, with pricing masking the slowdown. Take rate expansion has natural limits -- advertisers will push back if effective CPMs rise too far above alternatives. Not sustainable beyond 1-2 years.
JBPs now >50% of business, pipeline doubled YoY. First time quantified -- meaningful leading indicator introduction. Provides multi-year revenue visibility and direct brand relationships that bypass holdco gatekeepers. Management: "we have not harvested most of those seeds" -- conversion timing uncertain but pipeline is bullish.
| Quarter | Beat vs Guide |
|---|---|
| Q1 FY25 | +7.1% |
| Q2 FY25 | +1.8% |
| Q3 FY25 | +3.1% |
| Q4 FY25 | +0.8% |
Narrowing beats. Historical pattern with Q1 FY26 guided conservatively at +10% suggests actual $690-710M (+12-15%). But shrinking beat margin leaves less room for positive surprise.
CTV (~50%) grew faster than overall business despite lapping political CTV spend. Audio (~6%) highest growth rate of any channel. International (~16%) outpaced US. All secular growth vectors, not cyclical. Headline deceleration concentrated in US CPG/auto advertisers, not broad-based platform decay.
| Metric | Current | 1Y Ago (est.) | Ad-Tech Peer Median | Assessment |
|---|---|---|---|---|
| EV/TTM Revenue | 3.3x | ~12x | ~3.0x | At peer level for first time ever. |
| EV/TTM Gross Profit | 4.2x | ~15x | ~5-6x | Below peer median on margin-adjusted basis. |
| EV/TTM FCF | 11.9x | ~45x | ~15-20x | Cheapest in peer set on cash flow basis. |
| P/E (Non-GAAP) | 12.4x | ~50x | ~20-25x | Deep value for 80% GM, 47% EBITDA. |
| Market cap | $10.8B | ~$40B | -- | 73% drawdown from 52-week high. |
| FCF Yield | 10.6% | ~2% | ~5-7% | Highest FCF yield in ad-tech peer set. |
Never been this cheap in its 10-year history. Market prices single-digit perpetual growth -- inconsistent with 95% retention, expanding TAM, secular tailwinds.
Capital allocation: $1.4B on buybacks at 52.60avginFY25 − −nowworth 584M (58% value destruction). $500M new authorization at current prices would be far more accretive.
Four secular trends: (1) CTV migration (~50% of revenue, growing faster than total), (2) post-cookie identity (UID2 becoming industry standard), (3) AI optimization (Kokai near-100% adoption, agentic AI framework announced for 2026), (4) retail media data (>50% of global retail sales via partnerships).
True platform with multi-product stack: DSP (Kokai) + identity (UID2) + supply chain (OpenPath/OpenAds) + CTV OS (Ventura) + data marketplace (Audience Unlimited) + publisher tools + developer portal (OpenTTD).
TAM: $13.4B gross spend is ~4.5% of $300B programmatic market. Revenue at <1% of $700B digital ad market. Significant runway.
Analysis by Atlas | 2026-04-03 | No position held