Greetings. Welcome to The Trade Desk Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Chris Toth, you may begin..

Thank you, operator. Hello and good afternoon to everyone. Welcome to The Trade Desk fourth quarter 2024 earnings conference call. On the call today are Co-Founder and CEO, Jeff Green and Chief Financial Officer, Laura Schenkein. A copy of our earnings press release is available on our website in the Investor Relations section at thetradedesk.com.

Please note that, aside from historical information, today’s discussion and our responses during the Q&A may include forward-looking statements. These statements are subject to risks and uncertainties and reflect our views and assumptions as of the date such statements are made.

Actual results may vary significantly, and we expressly disclaim any obligations to update the forward-looking statements made today. If any of our beliefs or assumptions prove incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements.

For a detailed discussion of risks, please refer to the risk factors mentioned in our press release and our most recent SEC filings. In addition to our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures is available in our earnings press release.

We believe that presenting these non-GAAP measures alongside our GAAP results offers a more comprehensive view of the company's operational performance. With that, I'll now turn the call over to Co-Founder and CEO, Jeff Green.

Jeff?.

data-driven buying is better than guessing. Across all parts of our platform, we are using AI to help clients make better decisions, whether it is making sense of complex data in real-time, when it may have previously taken weeks – or bringing retail conversion data to bear more often in enriching bid requests.

Thirteen, as I said at the beginning, we will focus on Joint Business Plans or JBPs. JBP’s are joint innovation partnerships where agencies and brands collaborate with us to grow our relationship and drive programmatic innovation. They grow about 50% faster than the rest of our business.

Brands will generally continue to work with agencies, but they also understand that programmatic is becoming a larger and more important element of their campaign planning.

As a result, programmatic decision-making is happening at a higher and higher level within brands, and this presents a tremendous opportunity for The Trade Desk to grow our brand relationships and share. Number fourteen on our action item list, we have already revised and will continue to revise our product process.

As we grow, it’s essential that our product development process remains agile, even as it has to ingest more inputs from more stakeholders. We’ll do this with a clearer focus on what we’re delivering, week by week, which continues to be at the bleeding edge of ad-tech innovation.

And lastly, number fifteen, we will hire senior leadership to take us to the next level. I believe that over the next few years we will double the number of senior leaders in the company, at VP level and above especially, including some key very senior level appointments in my org. This is a natural part of a high-growth company’s journey.

We want to scale The Trade Desk significantly in the years ahead, and that means ensuring we have the right kind of leadership rigor, across the company, while preserving the best elements of what we’ve done so well so far. To wrap up, the opportunity is bigger than ever.

We need to keep evolving our company’s structure to meet that opportunity and realize our potential and the potential of the open internet. We’re obsessing about ways to drive differentiation and growth. We’re constantly innovating our platform in order to do that -- most recently with constant upgrades to Kokai.

We’re able to make these investments because of the profitability of our business model. That focus on constant innovation ensures that we are always prioritizing value for our clients and never standing still.

We will always have a long-term view of where the value in our industry is shifting, and how we can then innovate to deliver that value to our clients as rapidly as possible.

I believe 2024 will be remembered as a pivotal year for our industry, where the premium open internet was beginning to transform as the clear choice for advertisers seeking data-driven precision and performance.

But we have only just turned the corner on this shift and it is why we are adjusting the company to be bigger and move the market in positive ways.

I am not happy with our results in the fourth quarter but there is so much opportunity in 2025 and the years ahead to help our clients take full advantage of data-driven advertising on the premium internet, to drive growth and brand loyalty for their businesses.

And that’s why I’m confident, The Trade Desk will eventually resume acceleration and continue the path we’ve been on for over 33 quarters as a publicly traded company. We are also the clear leader in the DSP race and perhaps the leader of the open internet. Thank you, and with that, I’ll hand it over to Laura to discuss our financials..

Thank you Jeff. Before discussing our results, I want to expand on Jeff’s sentiments about some of the significant strides we made over the past year, positioning us well for the future. 2024 was a year of landmark partnerships, particularly in CTV, where we saw outsized growth.

Retail media continued its rapid expansion, establishing a material foundation for the years ahead. International growth accelerated, showing promising momentum beyond the U.S.

Additionally, 2024 marked our largest and most successful year ever for political ad spend, the biggest year for UID2 since its launch four years ago, and a leap forward for digital audio in programmatic.

When I look across our list of growth drivers, most of them are still in their early stages compared to where we expect them to be in the next 5 years to 10 years. CTV advertising remains a small fraction of total TV ad spend relative to linear.

Retail media is scaling rapidly, evolving from an emerging trend into a core digital advertising channel as brands are recognizing its ability to drive both performance and measurement. And in most global markets, decisioned programmatic is still in early stages of adoption, with tremendous long term growth potential.

Turning to our results, Q4 revenue was $741 million, a 22% year-over-year increase. We generated $350 million of adjusted EBITDA during the quarter, representing a 47% margin. However, for the first time, in our 8.5 years as a public company, excluding the first quarter of 2020, our results came in below our expectations.

As a company, we take great pride in our ability to forecast accurately, and we take full ownership of this shortfall. Importantly, this miss was not due to lack of opportunity or increased competition, it was on us.

We are implementing the strategic changes Jeff outlined in our business and I believe that will give us an opportunity to continue delivering strong revenue growth throughout this year and beyond. For 2024, we ended the year with $12 billion in spend on our platform and $2.4 billion in revenue, representing a 26% increase in revenue year over year.

Full year adjusted EBITDA margin was above 41% and full year free cash flow was over $630 million. As expected, our take rate in 2024 once again remained within a very consistent historical range. The shift of advertising dollars to CTV continues to be a core driver of our business.

From a scaled channel perspective in Q4, video which includes CTV, represented a high-40s percentage share of our business and continues to grow as a percentage of our mix. Mobile represented a mid-30s percentage share of spend 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 fourth quarter. International growth again outpaced North America for the eighth quarter in a row. CTV growth across international regions was particularly strong during the fourth quarter, and throughout 2024.

In terms of verticals that represent at least 1% of our spend, growth was broad based again this quarter. We saw strong performance in the majority of our verticals, particularly in Automotive, Shopping, and Technology & Computing. Political spending was also strong in Q4, as expected. Home & Garden and Pets were both below average.

We continue to believe there is significant opportunity for us to gain share in all of the verticals we serve. Turning now to expenses. Q4 operating expenses, excluding stock-based compensation, were $416 million, up 23% from a year ago.

During the quarter, we continued to make investments in our team and platform, particularly in areas like sales & marketing, and technology & development, as we position the organization for long term growth. Income tax expense was $39 million in the fourth quarter driven primarily by our profitability and stock-based awards.

Adjusted net income for the quarter was $297 million or $0.59 per fully diluted share. Net cash provided by operating activities was $199 million and free cash flow was $177 million in Q4. DSOs exiting Q4 were 97 days, down 4 days from a year ago. DPOs were 80 days, down 3 days from a year ago.

We ended the year with a strong cash and liquidity position. Our balance sheet had about $1.9 billion in cash, cash equivalents and short-term investments at the end of the quarter. We have no debt on the balance sheet. In Q4, we repurchased $57 million of our Class A common stock via our share repurchase program.

As you saw in our press release, we announced an additional authorization under our share repurchase program bringing the total to $1 billion, inclusive of the amount remaining from the existing authorization.

Given our strong balance sheet and consistent cash flow generation, we plan to continue opportunistic share repurchases, while also offsetting dilution from employee stock issuances. Now turning to our outlook for the first quarter. We expect revenue to be at least $575 million reflecting 17% year-over-year growth.

Our Q1 growth estimates also reflect the impact of lapping the extra day from the 2024 leap year, as well as political ad spend, which contributed approximately 1% of our Q1 2024 revenue. We estimate adjusted EBITDA to be approximately $145 million in Q1. Turning to our expense outlook for the year.

While we are not providing a full year expense guidance, we anticipate a modest increase in the growth rate of our operating expenses in 2025 compared to previous years. As a result, we would expect modest deleverage for the year. Our investments are focused on key areas such as infrastructure and talent.

Our incremental investments align with the recalibration efforts Jeff outlined in his remarks. Our capital intensity remains low, and we expect CapEx to be approximately 5% of our total revenue. We expect another strong year of cash flow generation.

We continue to manage the business with a balanced perspective that allows us to weigh investment opportunities while retaining flexibility for margin improvement. In closing, while the back half of 2024 did not end exactly as we had hoped, our long-term trajectory remains strong. I’m optimistic about 2025.

We continue to lead in a rapidly growing industry, delivering profitable growth and gaining significant market share.

Our momentum is fueled by a strong set of growth drivers, including the ongoing secular shift to CTV, enhanced measurement through retail data, international expansion, a robust identity framework, supply chain improvements, and the ability to drive long-term leverage in our model.

As we look ahead, we remain confident in our ability to sustain this growth and capitalize on the opportunities before us. While we are not providing a full-year 2025 revenue outlook, we expect that our recalibration efforts and strategic investments will position us for continued strong growth throughout 2025 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. [Operator Instructions] The first question comes from Shyam Patil with SIG. Please proceed..

Hi, Jeff, as you know, I've been covering you guys since you've been public and following the company long before that. And until now, for over eight years, you guys have had an amazing run where you've hit your guidance every single time.

Just wondering, can you just talk about what went wrong in the fourth quarter where you guys came in below your expectations. Thank you..

Yes. Thanks, Shyam. Really appreciate the question. So first, let me own that we missed and that we missed our own expectations, as you point out, which is in my mind, very different from missing Wall Street's expectations. So when we set our guide and set our expectations, I view that as a commitment.

It's understandable in a moment like this for those outside the company, especially shareholders to be wondering what does this mean? Is the opportunity not as big as The Trade Desk claims? Or is it different than what they thought? Is the company not executing? Is there something wrong, if so, is it big or is it small? And I just want to be super clear, we missed because we had a series of small execution missteps.

We needed to execute while simultaneously trying to prepare for our future, and we made a number of small mistakes, but -- and trade-ups that compounded. To, again compare it to a pro sports team, we have a championship team.

We've proven that for the last eight years as a public company, but we turned over the ball too many times in this game, and that's why we lost the game. The opportunity is not smaller than we thought. In fact, it's the opposite.

My focus the last quarter and now is about recalibrating the company to become a bigger company because we are facing a bigger opportunity faster than we thought. So I just want to reiterate some of the changes that we've made and we're making those to make certain that this doesn't become a pattern. So here is a couple of those.

First, for most people in the company, we provided a much clearer view of roles and responsibilities and that also meant a change in reporting structure in what was the biggest reorg in the history of The Trade Desk.

Second, in engineering, we've reviewed the way that we ship product, our overall product process, and we've implemented a process of smaller agile teams who ship product every week. Some teams had drifted to be a little bit too waterfall-like as we strive for big milestone releases like Kokai and we've structured to be more agile again.

And in most cases, we've created 2 [ pieces of] (ph) teams that ship product every week. As I mentioned before, these are roughly 100 scrum teams, very small teams to be very agile that are shipping frequently. We've historically been one of the most focused and most productive engineering teams ever pointed at ad tech.

I think we still are, but we can be more efficient than we are today. Third, we also restructured our client-facing teams. As we've grown, we've started to overlap between our agency and brand teams, and that's become complicated and in moments not very helpful or useful. As a result, we simplified.

Some people focus on brands, some people focus on agencies. We've created much clearer engagement between them. And relatedly, I want to reinforce that we are loyal to the agencies and our strategy to support them and partner with them continues into our future. We will continue to be great partners to the agencies.

But we also will continue to expand our brand direct conversations and continue to focus on JBPs and especially given that JBPs grow about 50% faster than the rest of our business, we naturally want more of those and this is one of the pockets where we're investing most with new people.

And then fourth, in December, January, we've spent more time discussing what we can do to improve than ever in the history of the company. For most of the last 15 years, we focused most of our efforts on addressing the opportunity on the horizon. Lately, we've been discussing how to make our own people, operation more efficient and more scalable.

The process has been very good for our long-term, and it's also highlighted that we need to continue to hire very senior people who can help our company's scale. On a final note, on your question, Shyam for much of 2024, we were faced with some big strategic decisions, honestly more than usual.

And some of these were questions where the long-term and the short-term were at odds. Do we focus on the short-term revenue or build the long-term? And I just want you all to know that my bias is always towards capturing the long term opportunity. I'd rather miss a quarter than to trade a long term.

Kokai enhancements continue to inject more AI, more sophisticated buying techniques and massive enhancements to the supply chain, which is the motivation for acquiring Sincera, a metadata company that will start being accretive to Trade Desk before the end of this year. As you know, this is only the third acquisition in the history of the company.

And while we never want to get distracted with acquisitions to make headlines and then never integrate the way so many others do, we will look for companies that enhance our long-term opportunity. That's why we made this acquisition, and that's why we're so optimistic about what it can do for our future. Shyam, I really appreciate the question.

Thank you..

The next question comes from the Vasily Karasyov with Cannonball Research. Please proceed..

Thank you. I wanted to follow up on the first question. So going into your earnings report, there were a lot of concerns I heard about weaker brand spend post-election, no budget flush then issues with Kokai rollout pace. But then other ad-funded companies haven't reported anything results similar to yours.

So can you probably share a little more detail about what you observed about the difference between you and the industry? And to what extent did factors like polarized political environment, for example, The New York Times called them out quite a lot, lower Q4 GDP print or any product rollout issues impacted the shortfall in Q4..

Thanks, Vasily for the question. I just want to point out, in 2022 macro was a factor. The advertising was sharply decelerating. And yet, we were agile then, and we were efficient. And we still significantly outperformed the market and beat expectations, our own specifically.

I bring that up to say that we've had challenging environments before and we still outperformed. The GDP, unusual election uncertainty, continued pricing pressure on some consumers and some companies doesn't create an ideal environment. And this one wasn't a perfect environment.

But we've outperformed in environments like this one before, as I pointed out in 2022, but we didn't this time. Political put some advertisers on the sidelines, that's absolutely true. But it also brings out budgets, especially, of course, the political budgets. And on the net, was it a positive or a negative? To me, it's too close to call.

The environment wasn't perfect, but we knew that when we guided even if it was slightly harder than we thought, we've navigated that before. So you are right.

And I know there is going to be 1,000 questions, a bunch of you -- well, we actually started a couple of them, and I know there will be more because we've done so well for so long at setting expectations.

And when we talk about the missteps specifically, many of them involve people, mistakes that aren't appropriate to discuss publicly, especially when people are already learning from these mistakes. One of those -- you're right, that Kokai rolled out slower than we anticipated. But much of that was for good reason.

We've seen moments and places to inject AI like improving the foundation of our forecasting and performance models. That is a short-term negative for sure, but it is a long-term negative. We are working -- I'm sorry, it's a long-term positive, sorry. We are working really hard to get the deals right and lay groundwork to move the upfront to digital.

Again, long term, I think this is amazingly good for us. And I'm confident we are building the right things. In other words, in some cases, the slower Kokai rollout was deliberate, a quicker rollout would result in more short-term spend, and we don't always build what the customers want. Instead, we are trying to understand what the customer needs.

Elevating us and them together is a much harder task than simply taking orders. So as it relates to the internal changes, I think it is best to operate a company with our talent and the opportunity that we're facing to build the org and the team of the future, as fast as possible so that we capture the most market share possible at end state.

As I said in the prepared remarks, from the beginning, I've argued that the objective independent focused DSP is the one that should get the largest market share, the lion's share. Not the walled gardens who are full of conflict of interest. We're fighting hard to get there first. Our focus, our objectivity and our agility are essential to win.

I want to get bigger, and I don't want to slow down, but to do that requires us to change. The silver lining, if you want to call it that, and I do, is that we believe that this is in our control. It's ours to lose and we will be a better company, as a result of the changes that we're making, and it will be a long-term positive..

Thank you..

The next question comes from Justin Patterson with KeyBanc. Please proceed..

Great. Thank you very much. Jeff, really appreciate that degree of detail. I guess as you step back and move through this recalibration period, how do you view the company's potential to sustain a 20% plus compound growth rate over the next several years? I know you don't provide annual guidance or long-term targets.

But I think that would be just helpful for us to kind of think through what the business looks like as you come out of this period. And then Laura separately, how should we think about the investments required to get us to that point? Thank you..

Justin, thanks for the question. I really appreciate actually all the questions. I feel like we're getting to the heart of the issues. So this is honestly giving me a platform to talk about the things that I think matter most. So on this one, I think it really comes down to how we approach our business.

In my view, we have to obsess about making the open Internet better than walled gardens. Walled gardens have cheap inventory. And I think there is a lot of people that are chasing cheap even if it doesn't help them in the long-term. But we have the best of the entire open Internet on our side and via our platform.

Our supply chains are very different from others, especially the walled gardens. They control their small ecosystems. But I think, we have something way better going for us. If you just look at any trade media today, you'll see that brands are increasingly wary of the dangers of cheap reach.

Meanwhile, we have access to all the media that people love most. CTV, movies, journalism, all of music that's all the premium Open Internet.

And while we don't control the supply chain end-to-end the way walled gardens do by the nature of walled gardens, I think that's a way better long-term for us and for the market, because competitive markets become more efficient over time. The competition of our markets are working for us, and we are in a very strong position being on the buy side.

but there is so much to do to make the supply chain more efficient and to make our company more efficient. I just want to remind everybody that last quarter, I outlined 10 macro factors or secular tailwinds that are driving our business. Those have not changed.

We believe that while our share has been growing faster than any of our scaled competitors, I also believe the opportunity is growing, too, and that's why we are recalibrating now. I believe that we can reaccelerate our growth again. For us, we need to focus on what we're doing about it, and that's the 15 themes that we outlined.

And just to summarize a couple of those. We need to focus on scale. We need to focus on the whole that Google and Facebook are leaving as they turn their attention away from the open Internet. We need to promote our objectivity against cheap reach. We need to improve the supply chain, in fact, we are obsessing about it. We need to grow CTV.

And right behind that, we need to grow audio, while CTV may be the biggest opportunity. Audio might be one of the most untapped and I continue to argue it's the most on-sale corner of the Internet.

We need to grow our JBPs or, in other words, get closer to brands and maintain our closeness with the agencies we have proven for years now that we can do both, and we need to ship product for the future, and that includes AI, that includes getting Kokai to 100% before the end of the year.

So we have a lot of work to do, and we are incredibly focused on it. We are all in agreement on what needs to happen in order for us to take the company to the next level. But Laura, I know there is a lot that you can elaborate on Justin's second part of his question from the financial perspective.

Laura?.

Yes. Thanks, Justin. On the investments required for 2025, first just looking back at 2024, we delivered an incredibly strong year in terms of profitability and cash flow generation. And we exited the year with a strong balance sheet.

So as I mentioned in the script, we anticipate a modest increase in the growth rate of our operating expenses in 2025 compared to previous years. And as a result of that, we would expect some deleverage for the year.

Our investments are going to focus on key areas such as infrastructure and talent and those incremental investments align with the recalibration efforts Jeff outlined in his prepared remarks. So we continue, as we always have, to be very deliberate about our investments in our hiring. Our capital intensity also remains low.

We expect CapEx to be approximately 5% of total revenue. And when I look across our growth drivers frankly, I believe nearly all of them are still in their early stages compared to where they will be in 5 to 10 years. So if we generate significant revenue gains, we'll continue investing.

And if not or if the current environment significantly changes, we'll have the flexibility to adjust our investment pace accordingly. I also just want to point out that today, we announced an additional share repurchase authorization, bringing the total to $1 billion. As of the end of 2024, approximately $464 million remained on the authorization.

So as I've always said, we take an opportunistic approach to our share repurchase program. We are guided by market conditions on our capital priorities. So that's how I would summarize our 2025 investments. Operator, we can move on to the next question..

Thank you. The next question comes from Youssef Squali with Truist Securities. Please proceed..

Awesome. Thank you guys for taking the question. So Jeff, I'm very curious about your Google comments. So are you already observing a significant shift in an advertiser sentiment? Or is the transition occurring at a much more gradual and measured manner.

And if it is, how do you frame and size that lower term opportunity? And then Laura, just quickly, what was the political contribution in Q4, please? Thank you..

Thanks for the question. So I'll try to be a little more brief on this one. So Laura can answer, we can continue on. But let me just frame what I think is happening with Google and first start by just talking about what's happening right now and has for the last little while. The network business at Google has been shrinking on shrinking for years.

And to me, this is evidence of the de-prioritization. Google continues to focus on Gemini and Cloud and AI and Search and YouTube, I think that makes sense for them to do if you look at where the money comes from. I think the network and open Internet business is way less important to them than it has ever been.

So as a result, I'm confident that one way or another, Google is going to exit the open Internet. And I think that makes sense actually for them.

If you think about it, most of their antitrust and regulatory problems come from the ways that they have managed the open Internet in the past, and that has created a lot of baggage for them today, especially as it relates to interactions with governments and markets around the world, as they look to really grow in places like Gemini and Cloud and AI and Search and YouTube.

So if you then look more closely at where we compete specifically. And I've often said, we don't compete with big Google. We compete with the 27th highest priority at Google, which was once DV360. And now I believe that has been downgraded when you compete with something like the 47th highest priority at Google.

But that is less and less becoming a competitor because the majority of spend that is going through DV360 seems to be routed to YouTube or at least that's what the evidence suggests. So I believe that regardless of what happens with the pending trial, Google will distance itself from the open Internet.

The trial could make it so that they leave quickly and with some sort of announcement or they could keep backing away slowly. But either way, the trend suggests that there is a whole and it is getting bigger. I think Google will leave a very big hole eventually, and that is a big opportunity for the rest of us in the open Internet.

I think it makes this possible to continue to service the open Internet and their de-prioritization creates more room for us. I think we can benefit from it more than any other company.

But in my humble opinion, Google has been the biggest hindrance to the effective supply chain of the open Internet than any other company and abrupt change could happen this year or next, and that would be good for us. But at the same time, we have to be positioned well to capture the opportunity. I do believe that opportunity is getting bigger.

And if you ask me what I lose sleep over, I lose sleep over missing the opportunity of being ready for that opportunity.

And it is part of the reason why I'm actually excited about all the changes that we're talking about today because I believe that the changes that we're making are helping to make this company more scaled, so that we can respond to the hole that's being left from these very big companies paying less and less attention to the open Internet.

Laura, the second part of the question?.

Yes. Thanks, Youssef. Just quickly on political. It was about 5% of the business in the fourth quarter, and that was a peak. So for the year, it was in the low single digits..

Yeah. Thank you..

Okay. The next question comes from Jason Helfstein with Oppenheimer. Please proceed..

Thanks for taking my question. So Jeff, I just wanted to ask a bit about Amazon. It's gotten a lot of investor attention, a lot of trade press as far as the company making improvements to their DSP, getting aggressive with Prime Video ads.

Just how do you view them in the competitive landscape? Did you see any kind of change in the fourth quarter? And just, I guess, how do you think about them as a competitor going forward? Thank you..

You bet. Thanks for the question. So of course, when you go through a recalibration and you're in a moment like this, I think it calls for a reflection of retrospection. And I've spent a lot of time thinking about sort of what are we sure of, what are the bets that we doubled down on.

And as I wrote in the first business plan and I've been saying for 15 years, at end-state, there's only going to be a handful of DSPs, I think one of them, probably one, maybe two. But with today's visibility, I would say there's likely to be one is going to be an independent and objective DSP. And that should get the lion's share.

As it relates to Amazon's DSP, objectivity matters more than it ever has. Every day that goes by, it matters more and more. and Amazon's objectivity problem is way worse than Google's because Amazon competes with nearly every company in the Fortune 500 or at least the majority of them.

But I know there's a lot of focus that goes to Amazon as it relates to advertising. And I think, it is really important that investors parse out the three roles that Amazon plays in advertising. The biggest one by far is that they are a search engine, competing with Google's core business if you will.

And that is the biggest source of revenue for them in advertising. The second is probably Prime Video. And I think, that one is very interesting because I think that the right way to look at them is somebody like Paramount or like Box. They are creating premium content, and they created a lot of ads as a result of that.

But I see no reason why that shouldn't join the premium open Internet and that we shouldn't partner with them on that. And I do think long-term, that's in their best interest and ours as they think to monetize that.

And as we've talked about before, I believe Amazon tends to look at things separately and try to get every department to be profitable on their own. And I do think that, that creates a big opportunity for us. As it relates to the DSP itself again, they have an objectivity problem that's a much, much smaller business than the other two.

And I think that particularly the second one represents an opportunity for partnership. The third is a competitor that I don't view nearly the competitor that most of the other players in the space are simply because of their objectivity problem that over time, I think gets worse for them.

So I'm excited about what that means for us and for our future and our prospects to compete in what I think will be a more and more competitive market as the TAM gets bigger. Thanks Jason..

The next question comes from Jessica Reif Ehrlich with BA Securities. Please proceed..

Thank you. One for Jeff and one for Laura, if it's okay. Jeff, it seems like OpenPath is at a tipping point this year, and it was one of your top 5 priorities or focus.

Can you just talk a little bit about the details, the plans for the coming year and also how the acquisition of Sincera will contribute to OpenPath adoption? And just for Laura, I just -- can you give us some color on the expense ramp? Your Q1 guide implies a pretty significant margin compression.

So is that indicative of a full year margin deleveraging as you said, or is Q1 kind of the biggest impact in the operating expense ramp?.

Thanks, [Laura] (ph). I appreciate the question. So let me just first remind everybody what OpenPath is, basically we made it possible for the biggest content owners in the world to integrate with us directly. So if they choose to do their own yield management or build it themselves, they don't need to use an SSP.

They can be an SSP themselves if they'd like to. We expect that many of the biggest content owners in the world will take this route, especially in CTV and audio, because it's financially worth it for them to do it, and they want to control their own fate as it relates to yield optimization. So we've made it possible for them to plug into us directly.

It's taken a little bit of time to get them to do so because we've historically not partnered on that level, as well as mostly it's because they have to build technology in order to do that on their own. But we've had that option available for a couple of years.

As streaming wars and competition heats up, as well as the fact that SSP's business models have become more and more at odds with CTV content owners and with streamers of all kinds, including audio. It makes it so that they are all interested in doing a direct integration with us and managing their own yield management.

And so because of the number of deals that we've signed recently, we are extremely confident that 2025 will be the year that we enter the steep part of the S-curve and that we've been paying our dues for years and that this will pay off this year. As it pays off this year, we think that means a more effective supply chain.

And in order to ensure that -- that happens, we also bought Sincera, the metadata company that helps us evaluate what's happening across the entire supply chain to make certain that we have visibility as well as we provide visibility to the open Internet, so that they can know what changes to make in order to make the supply chain more effective.

It's not something we're trying to keep for ourselves but to use to make certain that everybody in the ecosystem knows how to make a more effective supply chain.

This is what I was talking about before, where I believe that we have a more difficult burden than other players in the space in the sense that we are leading the open Internet and can make the entire supply chain more effective if we play the right role.

And I think we found a way to do that with the Sincera acquisition, which will create more price discovery, create better standards and we'll make it so that we are only buying the inventory from those who describe it best and describe it accurately. And if they don't, we won't buy it.

And that is a luxury that we have as the supply-demand imbalance grows everything day.

Laura your part of that?.

Yes. Jessica, with regard to your question about Q1 EBITDA, I did mention in the script that we do anticipate a modest increase in the growth rate of our operating expenses in 2025 and that we'd see some deleverage for the year. I wouldn't recommend thinking about it linearly.

Typically, in our business, EBITDA improves as the year progresses, which is just driven by our investment choices and seasonality in business..

Thanks, Jessica. And John, we have time for one more question..

Our last question comes from Mark Mahaney with Evercore. Please proceed..

Okay. Thanks. I don't know of another company that's 32 for 33, so you've obviously been doing something right. Two questions I wanted to ask. Jeff, you mentioned senior leadership that you want to hire. So can you brief on that a little bit? Like in what areas? And then second, you mentioned resuming acceleration in revenue.

So at a high level, forget about the numbers and the specific timing, what factors like could you triage, what factors would most contribute to a reacceleration in revenue at some point? Thanks a lot..

Thanks, Mark. Really appreciate it. I'll highlight one of the areas where I think that we can hire. I appreciate the compliment. I am super proud of the fact that we have done this 32 quarters in a row. And while I'm disappointed that we didn't do it this time, we knew at some point we would have to miss.

And as I've said to the team, I'm excited for the opportunity to prove to the world what happens next that we know that people will be responding or looking to see how we respond. And I'm actually grateful for [this process] (ph).

So on that level, I think one of the things that we have to do is we have to keep adding to our team and looking to how we can enhance our go-to-market.

One thing -- we make this sport analogies, but one thing that's very different about that is if you're playing basketball, you put 5 guys on the court, that's different in business where you can just add to the team. And I think there are some opportunities for us to get more efficient. We've done all of this without a COO for some time.

There is absolutely no reason why we shouldn't add a world-class COO to the team. And then, of course, as we're looking to be operationally more rigorous, we want somebody to come help us do that. That's an area that I think is fairly obvious for us to have.

There are others as well -- but I just offer that as a suggestion where we can definitely level up in our operational efficiency.

On the second part of the question?.

Factors that could cause reacceleration?.

Yes, the factors that cause acceleration. There are so many, and it's really hard to sort of put coefficient on all of the 15 things that we set in this quarter and all of the 10 that we highlighted in terms of secular tailwinds from before. But big picture here. We have $1 trillion TAM. We currently control a little over 1% of it.

We think we have 98% of the TAM left and the CTV should be fast-growing outside the United States should be growing faster than the United States for obvious reasons. Audio is untapped. I think Spotify highlighted this in their earnings. I think there's a tremendous opportunity for them and for us and for the open Internet. That can come from that.

I think there's a lot of inefficiencies in the supply chain, but now we're just at the right size where we can change it, where we're big enough to create changes. And those are four of them, but honestly, I think I'm leaving out a whole bunch of them..

Okay, thank you..

Thanks, Mark. And John, we can close out the call..

Thank you. We have reached the end of the question-and-answer session. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation..