greetings welcome to the trade desk first quarter 2024 earnings conference call at this time all participants are in a list and only mode a question and answer session will follow the formal presentation if anyone should require operator assistance during the conference please press star zero on your telephone keypad please note this conference is being recorded I will now turn the conference over to your host Chris to you may begin thank you operator hello and good afternoon to everyone welcome to the trade desk first quarter 20124 earnings conference call on the call today are founder and CEO Jeff Green and Chief Financial Officer Laura Shen Kine a copy of our earnings press release can be found on our website at the trades.com in the investor relations section before you begin I would like to remind you that except for historical information some of the discussion and our responses and Q&A may contain forward-looking statements which are dependent upon certain risks and uncertainties these forward-looking statements represent our beliefs and assumptions only as of the day such statements are made actual results May Vary significantly and we expressly assume no obligations to update any of our forward-looking statements should any of our beliefs or assumptions prove to be incorrect actual Financial results could differ materially from our projections or those implied by these forward-looking statements I encourage you to refer to the risk factors referenc in our press release and included in our most recent SEC filings in addition to reporting our Gap Financial results we present supplemental non-gaap financial data a Reconciliation of the Gap to non-gaap measures can be found in our earnings press release we believe that providing nonap measures combined with our Gap results provide a more meaningful representation of the company's operational performance with that I'll now turn the call over to founder and CEO Jeff Green Jeff thanks ch and thank you all for joining us today as you have seen from the press release we are off to a very promising start once again this year for the first quarter Revenue grew 28% compared with last year marking strong Revenue growth acceleration on both a sequential and a year-over-year basis outpacing the industry for a quarter or two is a great accomplishment but I'm so proud of our team for now having outpaced the digital advertising industry for a couple of years straight I believe our Revenue growth acceleration in the first quarter speaks to The Innovation and value that we're delivering to our clients with kokai it also reflects growing awareness among the world's leading advertisers of the value and power of the best of the open internet to put a finer point on this more than 90% of the ad AG top 200 the largest 200 advertisers in the world have run advertising campaigns on our platform over the last 12 months even with its considerable size CTV continues to be our fastest growing Channel over the past few months industry giants like Disney nbcu Walmart Amazon and now Roku and LG Electronics have all made deeper pivots into CTV many of them in partnership with us bringing more opportunity for advertisers uid 2 has become ubiquitous across the premium parts of the open internet and along with greater first-party data deployment and advances in emerging data markets especially retail data we are building the new identity and authentication fabric of the internet in doing so the open internet is getting replumbed and revalued especially in contrast to the value offered by Wald Gardens and the Innovations in our Kai platform will help our clients take advantage of this revaluation and fully leverage datadriven buying to fuel their own business growth as a result I've never been more optimistic about the future of the open internet and our ability to gain more than our fair share of the nearly $1 trillion advertising tan let me dig into this a little deeper I'd like to frame my remarks with just a little context on how our industry has advanced over the years at least in part because of some of the significant and disruptive events today I think this framing is important because I believe we may be in the midst of another period of major disruption right now and perhaps most important I believe our ability to anticipate and innovate in these moments positions us very well moving forward I've often said that the programmatic industry as we know it today came to life as a result of the global financial crisis just over 15 years ago at that time there was tremendous pressure on all businesses to do more with less and to find new ways to differentiate automate and grow more efficiently with those pressures the Precision and value of programmatic became more immediately apparent to major brand advertisers and this proved to be a fertile environment for our business and so many others similarly the rapid rise of CTV as the driving force of programmatic would not have happened so quickly were it not for the covid pandemic with stay-at-home directives around the world consumers shifted in Mass to the convenience of streaming and the media world hasn't been the same since TV has always been the central element of major brand advertising campaigns so the shift from linear to CTV was always going to be disruptive what's perhaps more important is how quickly the TV industry has evolved as a result CTV is now a driving force in how we think about things like authentication identity the use of retail data relevance and attribution in advertising and while it may not be as apparent as a global financial crisis or a global pandemic I believe we're now in the middle of another great disruption in our industry this disruption is very different because it is driven from major tectonic shifts within our own industry instead of from macroeconomic and pandemic forces today's shift is largely driven from the conflict Apple and Google are having with government and Domino effects that are coming from new Draconian policies and tactics coming from wounded big tech for the last couple of years now we've delivered consistent durable Revenue growth over 20% significantly outpacing the broader Market including the major wal Gardens and it's because the contrast between the best of the open internet what you might call the premium internet and the content and characteristics of Wal Gardens has never been more apparent the details of the Texas Attorney General suit against Google and the approaching trial of the Department of Justice versus Google have shined a light on a few themes inside of Google but it's created a lot of clarity on themes outside of Google as well there is a wider understanding of a few immediate themes facing advertising first there is a broader understanding of the role that Walt Gardens are playing as major purveyors of lowgrade made for adver iing inventory second there is a much wider understanding of how bad add to content ratios within wal Gardens and the brand suitability risk of user generated content or ugc this is in part due to the stark contrast that premium content has right now to ugc the industry has growing awareness that consumers spend most of their quality time with premium content on the open internet versus the wal Gardens at advertisers are making better use of their first-party data and Retail data as they explore contemporary cross Channel alternatives to cookies and lastly in advertising and marketing like in many other sectors there is a broad industry frenzy around Ai and what it means for our industry taken together I don't know that I've ever seen the industry in such a state of transition in some corners of our industry I also sense some panic and confusion about what to do next but for us this gives context to our recent outperformance as well as our conviction for why I'm so confident about the opportunity in front of us in 2024 and the years ahead one Insight that reinforces this ship that is happening is found in where I'm spending my time over the last six months or so I have been spending more and more of my time with CEOs CMOS and heads of media companies helping them make sense of the issues that I just outlined and the bottom line across all of these discussions there is consensus that the value is Shifting to the open internet but perhaps I should be more specific it's shifting to the best of the open internet what we might call the premium internet it won't all happen overnight but it is starting in 2022 that marked the first year in a decade that the majority of digital ad spending took place outside of meta and Google with the proliferation of CTV retail media that Trend accelerated last year and I believe the trend will only continue moving forward the role of CTV and digital audio in all of this should not be understated for many people movie TV and audio consumption is a very important part of their daily lives it's premium quality content that captivates consumers who spend significant amounts of time engaging with it no one watches Mandalorian or Curb Your Enthusiasm or March Madness casually no one listens to their favorite podcast passively I found in every aspect of my life I can't talk to anyone about premium CTV content or the best of music without people sharing a passion for some form of those mediums we are all highly invested in it that's very different than how consumers engage or talk about social media content which is often short form ugc video such as cat videos or 14-year-olds filming themselves falling off of bicycles however people spend much more time with premium content such as streaming TV and digital audio than they do with ugc our research shows consumers spend about 60% of their online time on the open internet the add to content ratios are much better and therefore the experience is much better but wal Gardens still command the bulk of digital advertising spend because those Tech Giants have made made it super easy to reach consumers at Mass scale and the performance results are equally simplified hey look your ads did great we told you so so it must be true but that's changing advertisers now have scaled alternatives on the open internet one of the major Innovations in kokai is the sellers and Publishers 500 plus this is a curated Marketplace that represents the best of the open internet the premium internet where consumers spend the majority of their time online it's live sports events such as March Madness where we saw a 200% increase in spend compared to a year ago it's the latest movies and hot TV shows it's music and podcasts on platforms like Spotify it's trusted journalism now our advertisers can access that premium Marketplace at scale easily and with confidence in doing so they don't have to seed control of their valuable first-party data they get to measure effectively and they can be sure that their ads are showing up against high quality content that's consistent with their brand advertisers now have a scaled way to control their own future of course our ability to buy the best of the open internet is based on close working relationships with the world's leading Publishers across the board Publishers are working with us to make Advertiser access to their inventory as attractive as possible which means making it as transparent and objective as possible you only have to look at the list of expanded Partnerships that we've signed over the last few weeks we are integrating directly with the Disney realtime ad exchange which includes Hulu and Disney plus via our open path technology for the first time ever nbcu will make the Olympics available programmatically to advertisers and is doing so with the trade disc LG Electronics has adopted uid Vio and Cox Media Group are connecting with us via open paath tf1 and M6 two of the largest broadcasters in France have integrated EU ID as they make their content available programmatically and just a week ago Roku announced that it is expanding its demand strategy to include the trade desk or its premium content just to go one click deeper on Roku I think it makes a ton of sense for Roku to embrace the open internet with their premium content early on when CTV inventory was scarce it made sense for many of the premium CTV streamers to sell most of the inventory themselves with the proliferation of CTV content over the last couple of years those same companies now need to find ways to maximize Advertiser demand and that means opening up to a broader range of demand sources such as the trade desk and embracing Solutions such as uuid2 which help advertisers find their target audience as accurately as possible we are excited to be roku's partner in this and we believe this move is a win winwin for Roku for advertisers and for the trade desk as a reminder last year on 66 we started shipping kokai this platform launch is different for us because 66 last year marked just the beginning and we've been shipping new features ever since we are quickly approaching some of the biggest ux and product rollouts of kokai that nearly all of our customers will begin to use and see benefits from over the next few quarters including a game-changing AI fueled forecasting tool another major Innovation that we're bringing to Market with Kai is a completely new approach to audience-based buying we're able to do this because of the broad availability of new identifiers such as uid 2 along with easier honor ramps for first-party data this means advertisers can now take what they know about their most loyal customers and find new customers who look just like the loyal ones and find them anywhere across the open internet advertisers no longer have to use content as a proxy for audience instead of Simply advertising against the NBA Playoffs to reach Pizza Lovers advertisers can find Pizza Lovers wherever they are across all digital channels in Asia un Libra and their agency PhD leveraged our retail partnership in kokai with food Panda to increase sales of their nor food sauces Unilever was able to onboard its own first-party data on our platform then do look like modeling for food pandas retail conversion and loyalty data to Target new customers more precisely on the open internet this new audience-based approach resulted in a 2 29% Improvement in customers adding nor products to their shopping B and an 81% Improvement in customer conversion just like Unilever more and more advertisers are prioritizing ad opportunities where they can be sure they are reaching their target audience and increasingly that means activating their first party data effectively and leveraging AD Impressions where uuid2 is present this is the new identity fabric of the internet taking shape and it's revaluing the internet in the process recently Target Australia and their agents OMD worked with us to upload their first-party customer data into our platform then targeted new customers using uuid2 their conversion rate improved 66% versus using traditional identifiers and their cost per action decreased 36% and there are huge benefits to Publishers who offer transparency and authenticated audience data to advertisers unwind media is one of the world's leading gaming platforms they recently report reported that they saw a 47% Improvement in the value of add Impressions when deterministic identifiers such as uuid2 are present and 107% Improvement when users are authenticated with ssos such as open pass let me also spend a moment on AI not because we're trying to get on the bandwagon we've been deploying AI in our platform since we launched Kaa in 2016 given the frenzy around AI I think it's important to talk about how it is actually helping Advance the work of programmatic advertising too much discussion on AI today is about AI in the abstract instead of practical details about implementation we're starting to get better at explaining how our AI investments will actually help people do their jobs better to that end we've known since before our company existed that the complexity of assessing millions of AD opportunities every set second along with hundreds of variables for each impression is beyond the scope of any individual human we have always thought about AI as a co-pilot for our Hands-On keyboard Traders and with kokai we are bringing the power of AI to a broader range of key decision points than ever whether it's in relevant scoring forecasting budget optimization frequency management or upgraded measurements AI is also Incorporated into a series of new indices that score relevance which advertisers can use to better understand the relevance of different ad impressions in reaching their target audience for example US Cellular worked with their agency haralan media to leverage our TV quality index to better reach new customers their conversion rates improved 71% they reached 66% more households by optimizing frequency management and their cost per acquisition decreased 24% I think it's important to understand how we're putting AI to work in kokai because this kind of tech dislocation will bring new innovators we see that now where major Tech players are inviting scrutiny because they're behind the Innovation curve on AI and more agile players and I would include the trade desk in that bucket are figuring out how to apply it to help humans make better more datadriven decisions we are also developing AI branded with COA to make data driven refinements on its own within the confines of human defined guard rails let me close by trying to bring all of this together and help you understand why I believe this positions the trade desk so well going forward I can't explain it any better than Jamie power the SVP of addressable sales at Disney who spoke at our recent forward 24 event in New York City Disney is one of the pioneers of CTV technology and Jamie talked about how uuid2 is helping Disney offer Advertiser match rates that are three to four times higher than when uuid2 is not present and higher cpms are clearly following higher match rates that's a pretty astonishing statement about where the internet is heading Disney deals with an authenticated audience and they're leveraging uuid2 so advertisers can find the right customers with much more Precision in TV than ever before against what many would consider some of the most premium content on the open internet with the growing ubiquity of uuid2 with new approaches to authentication with better deployment of first-party data with easier access to the premium internet and with major advances in AI the ability for advertisers to reach the Right audience at the right time in the right place and convert those customers has never been greater and all of that's happening in our platform and all of that happen s with the advertiser in control of their data understanding more precisely where their dollars are going how they should optimize and how those ads are performing in service of their kpis none of what I just ran through is really possible in a wall Garden I might not go as far as to say we're seeing the early days of the fall of Rome but the current macro and Tech forces are creating an important moment of the Reckoning for everyone in our industry an advertising ERS are shifting more dollars to us as a result advertisers want a competitive market with price Discovery because they want to own their own future it is easier than ever for advertisers to understand who is delivering value at all points of the digital advertising supply chain and they will increasingly gravitate to those who are helping them make the most of every advertising dollar with transparency and objectivity of course this is all made possible by our profit able business model which generates significant cash flow which in turn allows us to invest in the major platform upgrades that characterize kokai so while I believe 2024 will be remembered as a year of Great Tech driven disruption in our industry I also believe it is a year that the trade desk will continue to differentiate itself from its competitors and continue to outpace the market as the industry races is toward a trillion dollar T we are incredibly well positioned to take more than our fair share with that I will hand it over to Laura who will take you through more of the financial details thank you Jeff and good afternoon everyone the trade death delivered another strong quarter as Revenue was 491 million a 28% increase year-over-year our growth is further evidence of the durable value that the trade Des brings our clients and we continue to outperform the industry as a result all of our progress in areas such as CTV retail media Kai and uid 2 helped deliver another quarter of consistently strong growth in profitability to start 2024 in addition to strong Topline performance I am proud of the $162 million of adjusted evido we generated during the quarter representing a margin of 33% our strong growth in q1 was broad-based in terms of geography and channel deacy strength and CTV continued as the channel LED our growth from a scale Channel perspective once again we also continue to see strong momentum in retail media as we continue to win Shopper marketing budgets and as more of our existing clients utilize thirdparty retail data for targeting and measurements uid 2 is being deployed by Major advertisers and Publishers at a larger scale than ever and we continue to see the benefits from strengthening our relationships with Major Brands and their agencies from a scale Channel perspective in q1 video which includes CTV represented a mid- 40s per share of our business and continued to grow as a percent of our mix mobile represented a mid-30s per share of spent during the quarter display represented a low double digit percent share of our business and audio represented around 5% geographically North America represented about 88% of spend and international represented about 12% of spend for the first quarter we saw strong consistent year-over-year growth across all of our regions in q1 with International growth outpacing North America for The Fifth Quarter in a row we continue to execute our growth Playbook internationally led by CTV and Retail media we remain optimistic that our business outside North America can continue to be a strong contributor to our overall growth this year and for years to come in terms of verticals every category greater than 1% of spend grew double digits in q1 it's exciting to deliver such consistent growth across the business and we're proud to see the value of the open internet or premium internet resonating with clients for many industri R turning now to expenses q1 operating expenses excluding stock based compensation were 352 million up 20% year-over-year we continue to make investments in our team and platform particularly in areas like sales and marketing of platform operations as we position the organization for long-term growth income tax expense was 14 million in the first quarter driven primarily by our profitability and non-deductible stock-based compensation adjusted net income for the quarter was 131 million or 26 per fully diluted share net cash provided by operating activities was 1885 million and free cash flow was 176 million in q1 dfo's exiting q1 were 86 days down two days for me year ago dpos were 70 days down two days from a year ago we exited q1 with a strong cash and liquidity position Cash Cash equivalents and short-term Investments ended the quarter at 1.4 billion we have no debt on the balance sheet finally in q1 we repurchase 1.5 million shares of class a common stock for an aggregate amount of 125 million the company will continue to approach the repurchase program opportunistically depending on market conditions and capital priorities now turning to our outlook for the second quarter we continue to see strong spend in our key areas such as CTV and Retail media we estimate Q2 Revenue to be at least $575 million which would represent growth of appr o imately 24% on a year-over-year basis we estimate adjusted EA to be approximately $223 million in Q2 in closing we are encouraged about the momentum of our business we're executing on large long-term growth drivers including CTV International expansion retail media our recent platform upgrade in kokai uuid2 as well as the upcoming US election cycle we continue to generate strong free cash flow grow our headcount efficiently and maintain a balanc sheet that positions us to continue investing in achieving durable growth we remain optimistic about the prospects for our business in the remainder of 2024 and beyond that concludes our prepared remarks and with that operator let's open up the call for questions thank you at this time we will be conducting a question and answer session if you would like to ask a question please press star one on your telephone keypad a confirmation tone will indicate your line is in the question Q you may press start two if you'd like to remove your question from the queue for participants using speaker equipment it may be necessary to pick up your handset before pressing the star Keys one moment please while we Poll for questions once again please press star one if you have a question or comment first question comes from Justin Patterson with KeyBank please proceed great thank you very much and good afternoon uh Jeff at the last investor day you spoke about connected TV forming a tidal wave we're now starting to see Disney Roku and even NBC with the Olympics leaning more on programmatic suggesting that CTV won't be just a wild Garden World here uh it'll actually be more open so where do you think you are right now and just that that Tipping Point from linear TV spend flowing into connected TV and how are you thinking about the right right investment level to seize that opportunity thank you oh thanks chess appreciate the the question uh so uh first I think it's just important to take a step back and just look at where we've come from it's been a few years uh uh it wasn't that long ago that people were saying oh Cable's got a long life it's not going to be that long and then the pandemic accelerated everything then we started talking about a new currency like uid 2 and there was a fair amount of well are you sure you can get adoption on that it seems like CTV has a lot of of uh defenses or or ways that it's uh going to be reluctant to adopt something new and you look at it now and every streaming service has an avod operating except for Apple you know we've been saying for almost 10 years that Netflix would be showing ads and of course they are today in the last month we've talked about how Disney plus uh the Olympics are coming uh to NBC but they're also coming to programmatic for the first time and they're doing that via the trade desk uh and then of course a Roku partnership that I think even during the height of the pandemic people would not have predicted that we would be uh in the place that we are those three big announcements our Disney plus announcement being to integrate directly with them have all come in roughly the last month uh uh and then of course uid 2 is the primary currency of connected television and so with that backdrop I think we're in a a phenomenal position and once again the consumer is leading in the sense that as they move away from traditional television cable and and uh uh and linear television they're moving in uh uh to streaming and connected TV and all of those are filled with ad options so the content owners in the streaming Wars are more dependent on programmatic than ever as we're seeing you know things like profitability and Hulu and Disney Excel that's in large part because of them leaning into programmatic and we're super proud of our partnership there and and across the board as I said last quarter I believe there will be an increase in inventory this year I think we've heard that theme from from most of the content owners throughout the uh the year and the the scale of identity is going to continue to go up and that's in part because of that inventory going up uh and I think all of that uh uh tips the scales even more towards a buyer's market there is going to be more Supply uh and it makes it so that buyers can be more selective in what they buy that makes it more important for everything to be layered with uuid2 it also makes it more important for them to be very deliberate about what they're buying a and uh most of the streamers have to rely on programmatic so that they don't add to the ad load and therefore shrink or slow their growth uh so I think this puts us in a tremendous uh uh place to thrive and we're seeing more and more pressure on anybody who tries uh uh to create a wall Garden like strategy in CTV so I think you're going to see more and more of the open internet led by connected television um and I I think this year so far even just the headlines from this year so far are are underline underlining that point thanks Justin okay the next question comes from shamp pel with SG please proceed hey guys congrats on another really strong quartern Outlook I had a a two-part question um Jeff I guess following up on the first question how do you think about the impact of Amazon's at supported Prime video offering from a competitive perspective and then for the second part um this is related uh Disney called out in their earnings call that there's a lot more Supply in the market as a result of a competitor entering the ad supported tier and I think everyone's assuming that that's Amazon and there are just some concerns out there that you know a massive influx of CT inventory at lower cpms could depress the ctd market overall uh without necessarily driving more demand so I'm just curious kind of your thoughts on how all of this affects you guys and the industry uh you bet uh uh so uh uh um can you remind me of the first part of your question so how does the increase in Supply I get on the second part remind me of the first part of your question yeah yeah I know that's a long one uh yeah the the first part was just um just how how you're thinking about the impact of Amazon's uh as supported Prime video offering um from a competitor perspective yeah so uh uh so today we we don't buy uh Amazon Prime video that's only available from Amazon selling it themselves and as you point out I believe they're adding a significant amount of Supply but then only selling it themselves uh which does put some pressure on the objectivity problems that that their DSP in particular has uh and when I say the objectivity problem I mean it is very difficult to go to a buyer and say give me your money and I will help you objectively figure out where to put it and by the way I own a lot of it uh uh and so I would of course bias toward selling my own everybody who does that uh uh tends to have a a a problem when they're repping other people's inventory uh it makes it difficult for them to partner with but their objectivity problem that I just described is could also be similar to a Google or somebody else but they take it even one step further which is that at Google they don't make uh products that compete with all of these people people that are selling uh uh and because they white label soap and baby wipes and diapers and whatever else at at Amazon that also competes with many of the cpgs who are doing all the advertising and so it makes it even diff even more difficult so when you have more Supply than you have demand and you have an objectivity problem uh uh I I I I think it puts a fair amount of pressure on them what I do think is likely to happen over time though and we're seeing this happen inside of Amazon is them uh uh creating more separation between their different entities I I don't think it's good for Amazon or Amazon users uh uh for the ad experience to be inferior simply because they own a DSP and that what I anticipate will happen over time is that they will make their inventory available to everyone that's what I would love to see I would love to have access to the inventory and I would love for them to adopt U id2 and tell them I believe they're operating an anemic Market I think they are going to struggle because uuid2 has become a ubiquitous currency for everyone in the CTV space because advertisers want to bring their own data to the table and they want to buy very deliberately and make certain that it's going to work and with the objectivity problem I just described they are going to struggle to get the high cpms and the datadriven high cpms that could come if they were operating a more objective ecosystem so I'd love to see them evolve actually not too dissimilar from what we've seen from Roku to see them evolved to a place where they embrace the open internet uh Embrace those common currency so that advertisers can bring their own data to bear and then they would get higher cpms they could have a lighter ad load they could have a better ad experience and all of that would be good for Prime video customers uh but there's a lot that has to happen until that happens I actually don't think they're that competitive and I think all the other players have a much more competitive offering to the most premium advertisers which is what television is really all about so until then I think uh uh the the premium Supply uh uh doesn't have quite as much of a surplus as there could be if Amazon embraced that and I think we're going to take see it take a little while before we get there thanks Tom okay the next question comes from Brian Fitzgerald with Wells Fargo please proceed thanks Jeff it it looks like third C third party cookies uh won't be going away now for at least until 25 um what what are your thoughts on the cookie dication delay once again and and how if at all it impacts the industry and and maybe secondarily um could you could you could the continued delays have any impacts positive or negative on uid 2.0 adoption um great uh um so uh first I'm glad to get this question on cookie deprecation not because I haven't heard it before uh but in an effort to hopefully put it to bed uh for at least a little while until the next headlines hit I've been blown away by how much in trade press there has been discussion about cookies and maybe it's because I I felt like it was a very important topic to talk about two or three years ago uh uh that uh I I just feel like we already had all these conversations uh uh so I was on record I remember during the pandemic of saying I think it is a strategic mistake for Google to or for Google to to deprecate cookies I I don't think the risk reward is worth it for them and I would not be surprised to see them delay this again and again uh as they continue to buy more time I I think that's exactly what we saw because we weren't surprised by this we predicted this we have just been sort of quick to move on uh um I I I do want to give Google a little bit of credit though I mean Apple took away cookies and said nothing gave no announcement offered no Alternatives Google said we're going to take away cookies they gave some head start now they moved the date a bunch both forward and backward which to me didn't make any sense uh but they did at least try to propose something else which was a privacy sandbox the unfortunate thing was what they proposed was Half Bake and not a good solution uh uh and so the industry has just been criticizing it us included for the better part of a year because those criticisms I think were pretty unanimous even from industry bodies like the iib that I never expected to take such a strong position on on privacy sandbox it I think it forced Google's hand to to delay uh cookie deprecation uh so we were not surprised by it the net effect of that is that it gives uh the open internet a bit more Runway to adopt things like uuid2 uh uh and come up with authentication and identity strategies so that they can Thrive an environment outside of cookies uh I I think this is very good for some of those that move slow some of the Legacy Media companies especially those in journalism I mean journalism is being hit from so many sides especially in big big Tech sort of pulling away from them which makes it harder and harder for them to monetize and they had a whole pile of problems before their cpms went down so I do think that this delay makes it so that things will function a little bit longer but I don't think it actually slows down uuid2 adoption we haven't seen any of that and the reason why I don't think it slows it down is because the world knows they're serious the world knows that it's not going to last forever they are looking for a way to get out of this uh uh and so I I think the average publisher is saying exactly what we were saying four or five years ago that while we think it's a strategic mistake for c for Google to get rid of cookies we also also think it's a strategic mistake for all the rest of us to do nothing and so everyone else I think has bought into that that uh uh that strategic fact that everyone has to be uh uh moving and operating and adjusting so I uh uh I do think this prevents any sort of dips or drop offs where uh uh you know some 20% of slow adopters get meaningfully hurt I think it helps give them a bit more Runway uh but I don't think it uh decelerates the adoption of uuid2 in any way in part because uuid2 adoption has been uh uh led by CTV and CTV providers are are competing with each other and that is a way that they differentiate from one another is do I make it easy for the biggest brands in the world to put their own data to work as they buy my media and if I do that I will get higher cpms all of them need that at streamer X Y and Z irrespective of of what happens at the New York Times or the LA Times or anywhere else like that so hopefully that answers a question on cookie deprecation I'm I'm excited to be moving on from this thank you yeah thanks thanks Brian next question John absolutely the next question comes from facil kav with Cannonball research please proceed thank you Jeff I would like to ask you to talk about the your deeper partnership with Roku that was announced last week uh we heard some um commentary from Roku and from your perspective what would you highlight for us that is significant for the street to know um and in addition as this progresses I think the timeline is a couple of quarters out um can this can this lead to increased volume of CTV advertising for the trade desk and if so how would that mechanics work uh thank you yeah thanks uh so uh it's early days in the specifics of our partnership but we're very excited about the long-standing relationship that we've had with Roku and seeing it finally materialized into something uh uh meaningful and I do believe this is something meaningful uh the Roku channel has grown tremendously over the last couple years so as they've become more and more in into content and that includes having uh uh more ads we're excited to have uh uh access to those uh in large part because we view Roku as a key premium publisher in the connected television space um a couple things that that I think are incremental about the partnership uh uh we anticipate their adoption of uuid2 so we think that'll be important uh uh our relationship has strengthened during the most recent discussions and we believe that we will play the role as their most strategic demand partner uh uh I think for the first time ever advertisers can get access to roku's ACR data directly in the trade desk platform and perhaps as significantly as any of those things I think us getting access to biddable inventory is a very big deal too much of TV is still sold on a programmatic guaranteed basis or a fixed rate basis and that is becoming increasingly undesirable as more inventory comes online buyers want the option to pick and choose that is why they will pay a premium that is the way to get a premium and that requires a strong persistent uh sense of identity or identity currency uh uh and that also means making the inventory biddable so uh uh the uh the strength of the partnership and the relationship is the best that it's ever been with Roku I'm really excited about the change that this represents uh for them uh and we're excited at the partnership uh and excited for what it means for the future thank you thanks vcil next question John the next question comes [Music] from James Keeny with Jeff please proceed great thank you for taking the question um can you just talk more about the expanded open path partnership with Disney's streaming properties curious how this impacts just the amount of CTV inventory that you're now able to access compared to what you had before thank you uh you bet so uh um Let me let me just take a step back to explain what open path is um o o over the years uh uh the supply path in in digital advertising has gotten more and more convoluted and sometimes it's because of the tactics used in companies like Google where uh where the double click ad exchange was once a purer thing and then they introduced things like open bidding and open bidding is really the backdrop whereby they created a lot of funky auctions that are described in the Texas Attorney General's complaint uh uh so uh I think there's been a whole bunch of that have made the supply chain complicated not least of which is Google but also the incentives that that has created for ssps uh uh and the way that they process auctions in an effort to make the supply chain more efficient uh we created an offering called open path which is essentially going to the largest Publishers in the world often in Connected television but but in in any channel where they want to plug in directly with us so I want to be super clear we are not in the yield management business that is a function for uh uh uh uh Publishers and their technological Representatives we are representing the buyers but we're willing to give them visibility into our demand directly uh uh so that an intermediary can't make it more convoluted more opaque uh uh and in some cases uh uh charge more than they're adding in value so uh uh We've connected open path this pure pipe of of visibility into our demand directly into uh uh to Disney's uh Drax uh uh so that they have uid pipe directly to them and we have better visibility into the way that the auction Works uh we expect uh uh 100% visibility eventually at Disney we're moving in that direction uh uh uh we they said on stage at forward 24 by the way that 50% of the business is automated and the address and by 2027 they expect that to be 75% so we're we're on the path towards 100% but that is all made possible by us plugging in directly and having a clear sense of of where is uid present where is it not how can we think make things more addressable and how do we make the connection between us or said another way how do we make the supply path as clean clear transparent and efficient as possible and by us plugging in directly with Disney uh uh I think we're setting yet another model for the way that the most optimal Integrations can be done in Connected television so very excited to be doing that with one of the biggest in the space so thanks for the question thanks James uh next question John next question John I we lose John oh sorry about that technical difficulties the next question comes from Jason helstein with Oppenheimer your line is live um thanks I want to ask a question about social video um it seems that it it's been gaining share um and as linear dollars are kind of leaving linear um like it's it's definitely competing with CTV for a share of those dollars um just any thoughts about how you think about that and how you you can kind of you know utilize that channel for your your customers and then um it also seems to be perhaps pushing CTV to embrace more data um to try to be competitive with that um and so maybe comment on that agree disagree Etc thank you you bet so uh um in the move from from offline advertising which of course pre- internet with everything and and in the world of digital everything has been shifting towards digitization and eventually we think all advertising will be transacted digitally even for the small minority of that that is not actually executed digitally so we'll we'll use digital pipes even if we're going to run an ad in print for instance uh so everything is moving to digital as it's been moving to digital it's gone in there have been sort of two poles or two centers of gravity one is around user generated content that has exponentially more Supply than demand orders of magnitude more Supply than demand because they're uploading you know thousands of hours every second or whatever whether it's on Tik Tok or or or YouTube uh uh the amount of content is is off the charts uh and what those platforms have often done really well is made it really easy for you to spend money and then they often report the results on their own in other words grading their own homework to tell you how they did when you use those metrics and partly because of the supply demand the reach is really cheap and when you contrast that to premium content uh uh it can seem very cheap especially when you're uh uh uh when you're relying on the metrics that are provided by the companies that are selling you the inventory we have focused all of our efforts on the premium side of the internet and more and more you will hear us talk about our goal is to monetize the premium side of the internet in large part because that's where people spend all their time we mentioned in the prepared remarks that the add to content ratio in US user generated content is worse than it's ever been we think that is going to continue to get worse even though the amount of inventory goes up and that as a result you're seeing more more advertisers sort of flee to safety I want to be associated with premium content and I want to be associated with ads that I know are getting visibility and as they're getting to be more and more of those ads it makes it easier for them to say I want to be associated with those where I know I'm getting a 30 second spot I know I'm getting people's attention I know they're not skipping it I know they don't hate my ad in front of that 14-year-old P falling off of something uh uh so increasingly you'll see us talk about the premium side of the internet because we know that that's where uh the most premium advertisers in the world want to go and there's more and more question about ugc as it becomes more and more the epicenter for hate speech and all the worst parts of the internet uh uh so I expect that that separation to continue it doesn't mean that there won't be budgets going there uh uh but I think the majority of the growth is is going to go to the premium side of the internet because the premium side of the internet is getting so much better at making those available in a data driven way which uh kind of gets to the second part of your question you're exactly right actually that one advantage to these uh uh uh uh to sort of the social media video as you put it is that the supply chain is one company end to end in large part so they go get demand and then they execute it themselves and so while they're while we can criticize them for not having objectivity we have to like praise them to some extent for making it super easy a a and and it's easier when your ecosystem is really just one company because now we're doing Integrations like the one we just talked about with Disney we're making the supply chain of the open internet so much more effective that when you couple that with the most premium content whether we're talking about in music or in journalism or especially in CTV all of those things uh uh make the premium internet more accessible to the most premium advertisers in the world and as the amount of inventory goes up in that world we also expect more of the dollars to do that uh to move in that direction so I think all of this is good for for us but I just wanted to paint a picture of that contrast there are those two centers of gravity they will continue to get spend but the one that is growing most I believe is the premium side of the Internet thanks Jason um next question John please next question comes from Laura Martin with NM please proceed hey Jeff I I believe that great leadership creates Great Value and I really appreciate your leadership for the open internet so I wanted to say that first um my question is on my my question is on CTV full funnel so it feels to me like with W your deal with Walmart on the RN and them buying Vio and Amazon turning all of its 200 million uh Prime video advertising driven it feels like the Tam expansion going on in CTV is bottom of funnel which is making connected television an omn funnel Channel not just top of funnel which was sort of the historical thesis my question is is part of your growth this 28% industry-leading growth you're reporting because you actually have a full funnel option in connected television uh the short answer is yes uh so uh uh it is true that the easiest dollars to move over are top of funnel because that is of course where the biggest advertisers in the world have historically spent uh uh and so they are moving over budgets that previously they had put in linear and those would come over to CTV they're taking the same assets and in some cases even the same way of thinking about it they'll improve the metric a bit and then they improved the targeting a lot and there in is the new uh uh sort of ported over uh uh TV budgets however as you point out you don't have to spend that way very long to say now what do we do next how can we improve on that and that's where bringing retail data to Bear uh really is is just showing Amazing advantages for those that have historically sold in brick and mortar stores that have historically had difficulty getting data online that now they can partner with many of the biggest retailers in the world who are also trying to compete with big Tech and in in large part they're trying to compete with the Amazon of the world uh so all of them are saying how can I put my data to work so that we can sell more product at a Walgreens or Dollar General or or a Walmart or a Target or or so many others Albertson so many others Kroger so many that uh if if they can sell more in their stores by making their data uh available on our platform then the advertiser is getting a bit more bottom of the funnel the retailer is is being able to provide proof uh that their data is actually selling more product in their own four walls and that makes it easier for them holistically to spin their flywheel faster which is exactly the way they think about it at places like Amazon so it ends up being a win-win between the retailer as well as the advertiser as they get data and insight and efficiency that they haven't had before uh and that is by its very nature a bit more bottom of the funnel I think we merely scratched the surface on what's possible there I think there's so much ahead for that not dis similar from what we were just talking about in Supply chains there's a lot of work we need to do to unlock that data to make it easier there's way too many manual processes today uh we I had a meeting with a very large uh uh uh uh data today about just uh uh making certain that the pipes are very uh uh connected uh so that we can make it easier for the biggest advertisers in the world to use their own data to keep it safe to do only things that they would want to do with it that are are respecting the very sacred relationship that they have with consumers uh uh so that they can leverage that data top and bottom of the funnel to be more efficient and the amount of unlock and things that are that are possible in large part started by retail media are just things that we hadn't even imagined even just a couple years ago so it's a really exciting time thanks Laura next question John next question comes from Mark zodo with the Benchmark Company please proceed thank you uh good evening Jeff uh just maybe a followup to Jason's question on social wall Gardens if you look at uh your mix across you know all of your ad categories it's it's been you know relatively unchanged since December of 22 um you know this quarter you indicated mobile dropped from a high 30% um to mid-30s um but we haven't seen video move up from the mid 40s since uh December 22 so I'm just curious what's sort of driving that Dynamic uh would I guess expect to see a video uh mix moving higher as all these CTV initiatives are in play thanks um honestly I don't spend that much time on on measuring the mix of course I'm I'm very interested in seeing uh uh CTV continue to grow and I am interested in the overall growth rate but because when you're looking at the growth rates against each other uh uh when one is doing really well it doesn't necessarily mean the other is doing badly e even though the the the slice of the pie goes down because the pie is getting bigger we're excited about that growth a a across the board so whether it's high 30s to mid-30s and mobile and whatnot we're still heading in an amazing Direction o of growth a and honestly we spend a lot of time trying to actually properly categorize inside of things like video uh uh and sometimes small moves like people watching video on on phones or offline versus watching them on TTV have uh uh a uh an effect on what we describe as growth in CTV versus video or otherwise when the content is almost the same it's just a device and so creating distinction between premium content and devices can sometimes muddy the waters and the numbers which is not ever what we intend to do we're simply just trying to show the value of Premium content we know that that Trend overall is very good irrespective of what devices they're used on uh uh and in fact even if you look at it on a device basis the Trends are also very good so I the the small uh uh uh changes that you're describing I honestly don't spend that much time thinking about it yeah and Mark this is Laura I would just add that video does continue to increase we just don't break out the uh exact percentages cool thanks Mark uh next question John absolutely the next question comes from Mark mahany with evercore please proceed the fall of R analogy uh there's been rising regulatory scrutiny of Google I think and uhu I know and uh and meta for a couple of years but it's really kind of come home uh this year you mentioned some of the stuff that's been disclosed you've got two trials that will probably have decisions between now and the end of the year so is that actually causing a notable material acceleration or shift of AD budgets away from Google towards the trade desk have you actually seen that now that uh you know we're the the whatever whatever their analogies the chickens have come home to roost thank you yeah thanks Mark I really appreciate the question so uh uh it you know when you get an incremental dollar it's sometimes hard to figure out why you got it or where it came from but uh uh so it it's hard for us to attribute how much of that is coming from uh from people's fear of Google I mean I know that we win money uh from uh Google's DSP all the time uh sometimes we think that's because our product is better sometimes I think it's because our objectivity is better uh uh sometimes it's because uh we're not going to spend most of your money on YouTube there's a whole bunch of reasons why that's the case uh uh and uh regulatory scrutiny is one of those uh but I I will speak to the sentiment which I think is just easier to to speak to as I have more and more conversations uh uh with seed at some of the biggest companies in the world and talk about it in the context of either partnership or uh uh uh seeking their advertising dollars the the acknowledgement that handing over your data and your money to Google a and hoping for the best and especially when that is a critical part of your future is increasingly viewed as as a risky strategy uh that uh people have to take their own fate in their own hands and that's one of the things that I think is so compelling about our offering right now is that we are not saying trust us instead of them and we will do the same thing they do just with more Focus because we uh uh uh we don't own YouTube that that is not what we do we actually tell them we will give you the details of all of your performance it's your data you take it with you you own it and that way you learn and you always own your future that part where advertisers want to own their own future it feels like that is more important to them than it ever has been and I do believe that the regulatory scrutiny and all that you know there are a lot of people that have read the Texas Attorney General's complaint and have thought about the effects that that has on the ecosystem and it does make them uh uh want to be more deliberate about where they spend and it does make them in many cases I think a better partner for us and it it it helps us to see what kind of partner we want to be to them uh uh but I I do believe it has contributed to our growth but it's really hard to quantify it's the short answer thanks for the question mark thank you Jeff thanks Mark and then one last question John and our last question comes from Matt Swanson with RBC Capital markets please proceed Matt yeah great thank you so much for squeezing me in um Jeff I I feel like we've spent a lot of time on the call kind of thinking through CTV Publishers and why strategically it makes sense for them to open up more but I I guess thinking of it from The Advertiser side as CTV continues to scale and just the complexity of buying um gets larger how important is it for them to get back to a single pane of glass and you've used this term currency AB bunch in terms of data consistency and kind of how can that drive more programmatic versus direct as maybe advertisers start to pressure those Publishers uh when you say single paint of blast can you elaborate what what do you mean just spending on CTV sorry yeah so in CTV as opposed to the idea of you know when you're budgets are small direct might seem more feasible and as CTV budgets grow and the complexity grows and the number of suppliers grow how much more important it is to them to start to create more automated processes I see uh uh uh I I love this question thank you uh um so uh uh when you you know it wasn't that long ago that as consumers we were just using one or two apps on on a Roku uh where at least five six seven maybe 10 years ago I just used the Amazon and and and Netflix and now there's a lot more options and almost all of them have ads it wasn't that long ago that it was one or two and then it was only a few others and then most of them had limited ads uh uh and now there's a lot more and they all have ads so if you're an Advertiser you can't just go to one company and say I want to buy some ads and then have an understanding of the way of frequency caps in particular will be used you have to be thinking across all these apps and you have to think about how many times am I showing the same user this ad IR perspective of what show or what profile or what app they're using to watch it on and so as the number of options goes up and the amount of AD inventory goes up the need to automate and be data driven and have a persistent a a sense of anonymized identity is greater than it's ever been before and that's partly because the ad prices haven't gone down and in fact uh uh for the premium stuff for the things they really want they've gone up and that's not necessarily any longer because of scarcity the scarcity has actually gone away the amount of inventory has gone gone up but there is scarcity when it relates to having uh uh all the metadata that you want in order to make an informed decision and there will to some extent always be scarcity around the exact audience that people want to reach and and so by making that more available that's how you get the premium and so all of the streamers have figured this out this is the way to get the premium and I think they're they're all on a path that to me makes sense like all of them are doing the right things and that is one of the things that we have said about CTV really from the beginning is that it's perfectly fragmented it it is fragmented enough that no one could be Draconian and create a w Garden people doubted us when we said that initially and I think that's proven to be true uh uh but it it also is Consolidated enough that you have very uh uh smart people running those and they're going to be hyper rational and as a result we're seeing them all do in my view what is uh the right thing some of them are at different parts of the of the sort of adoption or or innovation curve they're on different parts of the journey different places in the journey but uh but they're all on the right path uh so I'm I'm very excited about the state of CTV I really do think it has huge implications onto the on the entire open internet I do think it's leading the open open internet as it relates to the premium content and I'm optimistic uh that uh digital audio is right behind it there are lots of leaders in digital audio that are doing more than what CTV has done but uh there's still a lot of catching up to do as well and I'm super optimistic about what that means for for things like journalism as they're really starting to think about it the right way uh uh but um very optimistic about the open internet led by CTV really appreciate the question thanks so much Matt you can close out the call now John thank you thank you this concludes today's conference and you may disconnect your lines at this time