How Should You Play The Trade Desk Stock Going Into Q2 Earnings?

The Trade Desk, Inc. TTD will report its second-quarter 2025 results on Aug. 7, after market close.

The Zacks Consensus Estimate for the bottom line in the to-be-reported quarter is pegged at 42 cents compared with 39 cents reported in the prior year quarter. The estimate has been unchanged in the past 60 days. The consensus estimate for total revenues is pinned at $684.46 billion, implying a 17.1% year-over-year increase.

TTD expects revenues to be at least $682 million, indicating 17% year-over-year growth. This includes the lapping of political ad spend, which contributed nearly 1% to the prior year quarter’s revenues.

TTD beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with an average earnings surprise of 11.14%.

What Our Model Predicts for TTD’s Q2

Our proven model does not conclusively predict an earnings beat for TTD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

TTD has an Earnings ESP of 0.00% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Focus on Ahead of TTD’s Q2 Earnings

Increasing digital spending in key areas, such as Connected TV (CTV), is expected to have cushioned TTD’s topline performance in the to-be-reported quarter. In the last reported quarter, Video advertising, which includes CTV, represented a high-40s percentage share of total business. TTD is looking to capitalize on the shift from linear to programmatic CTV. TTD referred to CTV as the “kingpin of the open Internet” on the last earnings call, underscoring the company’s strategic view of CTV as a key driver of both revenues and competitive edge.

It also highlighted that supply is outpacing demand in the current ad landscape, especially in CTV, making it a buyer’s market. Major CTV players are not only “plugging directly” into TTD’s demand but also adopting key innovations like UID2 and OpenPath. This bodes well for TTD.

Apart from CTV, momentum in retail media, international expansion, the Kokai platform, and efforts to strengthen go-to-market capabilities are likely to have acted as tailwinds.

Two-thirds of the clients are using the company’s Kokai platform, much ahead of schedule. The platform is delivering on lower funnel KPIs, including 24% lower cost per conversion and 20% lower cost per acquisition, per TTD. Full client adoption is expected to be completed by this year. The integration of Koa AI tools was highlighted by management as a “game changer” for the Kokai platform. It introduced Deal Desk, an innovation within its Kokai platform designed to enhance how advertisers and publishers manage one-to-one deals and upfront commitments in June 2025.

The Trade Desk Price and EPS Surprise

The Trade Desk price-eps-surprise | The Trade Desk Quote

While North America accounts for 88% of advertising spend, TTD is steadily expanding its global footprint, driven by faster-growing international markets. This increasing global presence offers clients localized marketplace expertise across key regions.

Increasing macroeconomic uncertainty and escalating trade tensions do not augur well for TTD, as these could squeeze ad budgets. On the last earnings call, TTD highlighted the impact of the volatile macro backdrop, particularly on the large global brands.

The intensely competitive nature of the digital advertising industry, dominated by industry giants like Alphabet GOOGL and Amazon AMZN, as well as players like Magnite MGNI, continues to put pressure on TTD’s market positioning. Magnite is a supply-side platform (SSP) that helps publishers manage and sell their ad inventory across various formats like streaming, online video, display and audio.

Analysts have kept their earnings estimates for second quarter unchanged for TTD’s bottom line over the past 60 days.

TTD Stock Plunges

TTD shares have plunged 25.2% over the past six months. It has significantly underperformed the Internet Services industry and the Zacks S&P 500 composite gains of 5.1% and 4.8%, respectively.

Price Performance

The company has underperformed compared with its digital advertising peers, including Alphabet (up 5%), Amazon (down 6.7%), and Magnite (up 5.7%).

Key Valuation Metric for TTD

TTD stock is also not so cheap, as its Value Style Score of F suggests a stretched valuation at this moment.

The stock is trading at a premium with a forward 12-month Price/Sales of 13.52X compared with the industry’s 5.3X.

AMZN, GOOGL and MGNI are trading at a forward 12-month Price/Sales multiple of 3.05X, 6.58X and 4.47X, respectively.

Investment Thesis for TTD Stock

The Trade Desk’s strong portfolio and expanding partner base serve as key strengths. TTD is also driving its growth through strategic maneuvers, including full client migration to its Kokai platform, increased CTV and retail media penetration, and a larger push into AI-powered programmatic enhancements.

However, macroeconomic uncertainty and the competitive landscape of the digital advertising industry remain concerns. Increasing regulatory scrutiny around data privacy and evolving consumer data practices also threaten to disrupt the established audience-targeting methods.

End Note

Given its healthy fundamentals but looming macro and competitive pressures, TTD seems to be treading in the middle of the road, and new investors could be better off if they trade with caution. However, a single quarter’s results are not so important for long-term stakeholders and investors already owning the stock could stay put. 

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This article originally published on Zacks Investment Research (zacks.com).

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