Can The Trade Desk's CTV Momentum Fend Off Rising Competition?

The Trade Desk’s TTD Connected TV or CTV business continues to gain momentum. Total revenues for the second quarter of 2025 grew 19% year over year to $694 million, outpacing the broader digital ad market. CTV once again emerged as the fastest-growing channel, driven by expanding partnerships with major media players, such as Disney, NBCU, Netflix, Roku and Walmart. Video advertising, which includes CTV, represented a high-40s percentage share of total business in the second quarter.

TTD is looking to capitalize on the shift from linear to programmatic CTV. TTD had earlier referred to CTV as the “kingpin of the open internet.” On the recent earnings call, management highlighted that programmatic CTV continues to deliver the “most effective and highest return on ad spend,” strengthening TTD’s position in the CTV market.

The company’s AI-powered Kokai platform further strengthens its competitive moat. More than 70% of clients are now using the company’s Kokai platform, with full client adoption 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, as it can deliver significant gains in campaign precision, efficiency, and outcomes.

Campaigns, across the board, running on Kokai are delivering more than 20-point improvements in key performance indicators compared with legacy ones, added TTD. Those performance gains are likely to translate directly into deeper wallet share. Management highlighted that advertisers transitioning the majority of spend to Kokai are increasing their overall spend on the platform more than 20% faster than those who still have not.

TTD is also focused on gaining share in the lucrative live sports streaming area. TTD is looking to offer advertisers the full value of live sports by allowing them to bid on key moments in live games, such as NBA overtime or soccer penalty shootouts, when engagement peaks. This type of precision targeting highlights the advantages of programmatic CTV and expands opportunities for advertisers to connect with audiences in real time. The partnerships with Disney, Sky TV, and Omnicom and new tools in Kokai will aid TTD in providing such bids to advertisers.  

Intense Competition Remains a Concern for TTD

Competition from walled gardens like Google and Amazon will remain a challenge. Beyond big tech, independent ad-tech companies, such as Magnite MGNI and PubMatic PUBM, are expanding their presence in CTV and retail media and competing for ad dollars.

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. Magnite is strengthening its CTV business through partnerships with Roku, Netflix, LG, Warner Bros. Discovery, and Paramount. MGNI moved its combined CTV platform (which includes streaming and ad serving) to general availability under the SpringServe brand. Management added that this unified platform offers a competitive advantage and internal efficiency gains for MGNI, supporting both share capture and margin expansion. CTV contributions excluding traffic acquisition costs increased 14% year over year in the second quarter of 2025.

PubMatic is also an SSP. Momentum is driven by secular tailwinds in CTV, SPO (Supply Path Optimization) and emerging revenue streams (Activate, sell-side data targeting and commerce media). CTV revenues surged more than 50% year over year in the second quarter, driven by geographic expansion and innovative formats. It is increasing investment on the buy-side. platform and highlighted that buying activity on Activate more than doubled sequentially in the second quarter, as advertisers seek improved performance, control, and transparency compared with legacy platforms.

Diversification of DSP mix is expected to shield PUBM from exposure to any single platform change while bringing demand diversity, buyer resilience and platform stickiness. In the second quarter of 2025, the company reported a 19% increase in revenues from the underlying business (excluding affected DSP & political advertising), signaling core health, while reported revenues grew 6%.

Amid an intensifying competition for ad dollars, TTD’s ability to gain market share will hinge on sustaining innovation in Kokai and deepening strategic media partnerships.

TTD Price Performance, Valuation and Estimates

Shares of TTD have lost 54.8% year to date compared with the Internet – Services industry’s gain of 10.2%.

In terms of forward price/earnings, TTD’s shares are trading at 26.45X, higher than the Internet Services industry’s ratio of 20.64X.

The Zacks Consensus Estimate for TTD’s earnings for 2025 has been unchanged over the past 30 days.

TTD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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