Chris Toth – Investor Relations Jeff Green – Founder and Chief Executive Officer Rob Perdue – Chief Operating Officer Paul Ross – Chief Financial Officer.

Shyam Patil – Susquehanna Mark Kelley – Citigroup Brian Fitzgerald – Jefferies Kerry Rice – Needham Youssef Squali – SunTrust Mark Mahaney – RBC Capital Markets Aaron Kessler – Raymond James & Associates Andrew Boone – UBS.

Good day, ladies and gentlemen, and welcome to The Trade Desk Third Quarter Fiscal Year 2017 Earnings Conference Call. All lines have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation.

[Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Chris Toth, Investor Relations. Sir, the floor is yours..

Thank you, Operator. Hello and good afternoon. Welcome to The Trade Desk third quarter 2017 earnings conference call. On the call today are Founder and CEO, Jeff Green; Chief Financial Officer, Paul Ross; and Chief Operating Officer, Rob Perdue.

A copy of our press release can be found on our website at thetradedesk.com in the Investor Relations section. Before we begin, I would like to remind you that except for historical information, the matters that we will be describing will be forward-looking statements that are dependent on certain risks and uncertainties.

I encourage you to refer to the risk factors included in our press release and in our most recent SEC filings. In addition to reporting our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures can be found in our earnings press release.

We believe providing non-GAAP measures combined with our GAAP results provides a more meaningful representation regarding the Company’s operational performance. Lastly, I would like to highlight our participation in the following investor relations event in early December, we will be at the Raymond James Technology Conference in New York.

I will now turn the call over to Founder and CEO, Jeff Green.

Jeff?.

One, leveraging our data; two, building our own identity products; and three, building a marketplace. Concerning our own data, we believe that we are sitting on one of the greatest assets on the Internet. As we speak, we receive over 9 million ad requests per second.

We get to listen to most of the websites in the world and learn millions of things every second. We learn things about users by just doing our job every day. In fact, our machines are running 24/7.

Because of those numbers, we estimate that we serve ads to almost every Internet user in all the markets we’ve invested in, which is over 100 countries in the world. But today, we’ve only had a few resources mining this data. We have only scratched the surface of using this data. We think we can use it exponentially more than we do today.

We can use it for targeting, for insights and also as a basis to tie together activity for the same user on multiple devices. With the over 9 million touches every second across the Internet, we have the fabric. Now we need to sew it together. To capitalize on this massive data asset, we made two additional investments.

First, we’ve invested millions of dollars in 2017 getting access to hundreds of millions of anonymized user IDs. This provides a bridge to connect devices to the same user because when they log into multiple devices, we now have a way to sew together the data from different – two different devices for the same user.

This also serves as a true set for probabilistic methodologies, which leads to the second investment. A few weeks ago, we acquired the assets of a small company, Adbrain, and hired most of its 20 employees. This is the first acquisition we’ve ever made as a company.

Adbrain is a cross-device technology that stitches together activities of the same user from all of their devices. This acquisition will help our customers better reach a user with unified messaging across all devices a user is using, whether it be a mobile phone, a desktop, web browser, connected TV or any other identifiable device.

Financially, it is about breakeven from an EBITDA perspective and is expected to be accretive sometime next year. The company did not have much revenue, but we acquired Adbrain for the technology and the people, not the revenue. Adbrain’s value is much higher to us than it was as a stand-alone company.

This will not have a noticeable impact either in a positive or negative direction in Q4. We expect that the start paying dividends in the second half of next year after we improve the technology and integrate it into our business in the first half of next year.

We acquired Adbrain for a few reasons, but the primary one was to make sure our data marketplace has a vibrant offer in identity to connected devices. We believe no one in advertising, including the walled gardens, have a cross-device identity solution that is sufficiently scaled and sufficiently accurate. And this is a problem.

As a result, we have a third part to our strategy, a data marketplace. This cross-device identity problem is not likely to be solved by one company. We think this is – it takes a village sort of problem. So we provide a marketplace where other companies can sell their data.

I recently spoke with the management teams of these cross-device vendors such as Tapad, Oracle, Drawbridge and LiveRamp Acxiom. My main message is that this transaction should not make it so that we do less business together but, in fact, more business together.

All of us need to better understand our users’ anonymized identity and a privacy-safe way for the consumer and work together if we want a solution to be scalable globally and always accurate. Now moving onto our global expansion opportunity. I recently spoke at RTB China event in Shanghai.

I was surprised to learn how well-known our company is in China. I was also excited to learn how much companies want to partner with us. The China and U.S. media and advertising markets are more similar to each other than any two markets in the world.

Both are very fragmented media markets and both heavily rely on markets to optimally monetize as a result. There are some differences though. Regarding programmatic advertising, the China market is much more nascent than the United States. It will take several years to catch up in terms of scale.

However, China is also the only media market in the world that is both larger and more fragmented than the U.S. media market.

Since most Chinese ad tech and digital media companies of all sizes have had something of a go it alone strategy regarding digital monetization, market consolidation and competition has made every digital player much more open to partnership.

The OTT video and connected TV markets in China are also exciting for us because this is where all of our biggest initiatives for growth intersect, connected TV, mobile and international. The ad funded OTT market is much more mature in China than it is in the U.S.

and most media people in China believe linear TV have even fewer years of life left in China than in the United States. This represents a huge opportunity for us in China, given that we represent so many multinational companies. Because the U.S.

market has been built on Netflix and Amazon primarily, the ad-funded apps are behind in adoption to ad-free subscriptions, but they are experiencing explosive growth, because the consumers are now preferring ads to pay more to get rid of them, which is the way it’s always been in China.

Because most consumers are more price-sensitive in China, the explosive growth of ad-funded OTT has already happened. But publishers are looking for better ways to monetize and fund more premium content. Interestingly, in both the U.S.

and China markets, programmatic advertising provides the ad variety, the CPMs, the user experience and the cost of sales that are critical parts of growth of connected TV and video. In our view, programmatic is inevitable as the primary method of monetizing the future of TV in both markets.

We think we have the potential to become the best global partner of many Chinese media companies. Because China is one of the two largest media markets in the world, it is important to note that we’re one of the few companies that can objectively buy media for global brands from around the world. The overall market opportunity in China is amazing.

According to GroupM China media industry 2017 forecast, ad spending in China is expected to hit $81 billion this year, up nearly 4% from 2016. China currently has 731 million Internet users, which is more than half of China’s population according to official Chinese figures.

That’s a huge number, more than twice the entire population of the United States. And mobile there is going strong. In smartphone-addicted China, mobile Internet has become the main engine propelling Internet advertising spending into the future according to the GroupM report.

An astounding 95% of all Chinese Internet users went online through mobile devices at the end of 2016 according to official data from China’s government. But to make the most of this opportunity, we have a lot of work to do.

It starts with building out the team on the ground in Shanghai and Hong Kong and focusing on inventory and data integrations before we can aggressively go after the largest demand in the world. We do expect some incremental demand next year, but 2018 will be all about integrating inventory and data and building trust with the agencies in China.

We approach the China market the same way we have entered all major media markets around the world. We invest ahead, we build trust, we demonstrate our value add, and then we see those investments start to pay dividends over time as the market adapts programmatic. It has worked in the U.S. and in any other worldwide location.

We expect it to work in China, too. We are off to a great start. We are already partnered with Baidu, and we continue to have good dialogue with other major publishers in China. We expect that we will have many important partners there early in 2018.

As we continue to expand globally, we’ve been watching carefully what impact Apple’s intelligent tracking is having on our business. Since its launch in September, we have seen no impact in our mobile spend as a result of Apple’s intelligent tracking prevention.

In fact, although it has always been a very small portion of spend on our platform, we actually saw desktop Safari increased during the month of October, the first full month of ITC implementation. Finally, I’ll take a minute to talk about the rest of the year and then give some thoughts on the things we’re excited about as we enter 2018.

As I’ve stated many times before, we believe our business model is exceptional, benefiting from faster revenue growth than the programmatic industry at large, strong profitability and strong operating leverage. We expect to continue to see this for the foreseeable future.

In Q3, our financial performance, both in terms of revenue growth and our adjusted EBITDA was better than we estimated. In Q3, the U.S. business had its biggest quarter ever, growing multiples faster than the industry. For Q3, we continue to have some of our international markets break out.

Keep in mind that two-thirds of the global advertising pie comes from outside the U.S. and breakout internationally represent land grabbed in market share. For Q3, Germany grew 131%. The U.K. grew 82% and Southeast Asia grew 123% year-over-year. You may recall we are now doing business in France and Spain, opening offices there earlier this year.

Those investments are already paying dividends as brands grew over 600% compared with last year. For 2017, we are raising our revenue guidance and adjusted EBITDA guidance for the year. We expect our Q4 to be about $101 million and our revenue for the year to be about $306 million.

We expect our Q4 adjusted EBITDA to be about $34 million or 34% and adjusted EBITDA for the year to be about $90 million or 29%. As a result, we expect 2017 to finish with over 50% growth compared with 2016. We believe the slowdown in spending we are seeing from some large advertisers is transitory.

These sophisticated marketers are becoming more deliberate about the way that they spend, and that’s a good thing. Large advertisers recognize using the data-driven approach with both first and third-party data as the way to deliver the most effective advertising programs and so are becoming more invested in programmatic and The Trade Desk.

As we exit Q4 and enter 2018, we are focused on several areas that make us extremely positive for the future. First, brands and agencies are being forced to make more data-driven choices to stay competitive. This is good for us. In the long run, all moves to data-driven choices lead people to global omnichannel like ours.

Second, we carefully monitor which global advertisers are the biggest spenders of the $700 billion advertising pie. Two of the top four biggest ad spending brands just started spending with us in 2017. In fact, six of the top nine have only begun spending with us in the last 24 months.

We think 2017 has mostly been a year of winning trust with these big advertisers. Perhaps the most bullish step I can share from this quarter about our hope for 2018, is that in Q3, we added three large global brands that collectively spent over $3 billion in the U.S. on ad spending last year according to Ad Age. And of course, they’ve only just began.

We view most of their current spend as small tests relative to what we expect to do with them in 2018. The third area for 2018 is connected TV. 2017 has been a year of adding supply. We expect to spend in connected TV to increase by well over 100% in 2018. Fourth, global expansion. And most notably, in China.

We expect international growth to be at least double the U.S. business again next year. Fifth, we expect the amount of third-party data usage to increase in 2018. We think our partnerships with companies like Oracle, Acxiom, Lotame and others will experience outsized growth next year. The total dollars will increase.

The amount of data per impression will increase significantly. Our percentage of revenue coming from data will also increase, and 2018 will be a great year for data. Additionally, we will progress the cross-device segment, fueling a competitive marketplace with multiple partners and enriching the Adbrain assets we’ve acquired.

Sixth, we spend about 1/3 of our development resources in 2017 on media, planning, products and improved customer experiences that have just barely entered a private data. We significantly improved our product, and it will lead beta and be available to all of our clients in the first half of 2018.

We anticipate that we will see those dividends start paying off in Q2 of 2018. Finally, seventh, we expect to maintain a client retention and client expansion that has fueled its business since inception. We expect to continue to offer the best scaled objective media-buying platform in the world.

Now I’m going to turn the time over to Rob to discuss our quarter in more detail..

Thanks, Jeff, and good afternoon, everyone. Our business continues to deliver outstanding results and we delivered another all-time record in the September quarter with $79.4 million in revenue. Nearly every office outside the U.S.

set records in Q3, and they were led by Seoul, which grew 260% year-over-year; our German office at 131%; and Singapore, which grew by 123% year-over-year. Overall, during the quarter, our international business grew more than two times faster than our North American business.

From a channel perspective, our growth was again driven in part by our mobile video channel, which grew 140% on a year-over-year basis; and connected TV, which grew 159% year-over-year. Our native channel spend was also very strong in Q3, surpassing all 2016 native spend on our platform combined.

If you recall, native was launched for us in the second quarter of 2016. As Jeff mentioned previously, mobile reached 40% total spend in the quarter for the first time while display remained at less than 40% of spend as media continues to fragment and our omnichannel strategy continues to drive spend growth.

Also, in Q3 and even early into Q4, we have won a significant amount of new business and brought large global brands onto our platform. These wins come from a diverse group of verticals, including brands in the health and beauty sector, in food and beverage, automotive and several large e-commerce companies.

These wins came a little later in the year than we have seen in the past. And while we did see some incremental spend in Q3 and into Q4, we expect that all of these brands to be much bigger contributors in 2018 than in 2017 as they ramp up on our platform.

Now as I described before, from an operational perspective, we have three core priorities that we focus on. One, remaining the objective and independent partner for our clients; two, growing our omnichannel presence; and three, expanding our international footprint.

I regularly highlight how hard we work to win new business, train our clients on the platform and become their trusted independent partner. And this is why we’ve maintained a 95% client retention rate for now, 15 quarters in a row. One example of this work is that with a large brand we recently won on our platform in Q3.

It started with persistence in staying in front of mind and getting our foot in the door to run a small test campaign, which allowed us to prove our value head-to-head with the competitor through both performance on the platform and the service from our team.

Our team delivered and working closely with the agency, we not only won the test, but we launched a fully omnichannel campaign with a very fast turnaround. It will take some time to fully ramp up, but we expect this advertiser to be a meaningful revenue contributor in 2018.

As many of you have seen in person or on the webcast at our Investor Day last month, we hosted a client panel that included Barry Lowenthal, the President of the Media Kitchen; and Gabe Cowen, who is now running teams on many large brands inside of Starcom, the large global agency.

When responding to what differentiates The Trade Desk, they each talked about our global footprint, our agility and especially our technology. However, they both very emphatically stressed that our service is what makes The Trade Desk special because we help enable their teams to scale and their teams to become experts in the programmatic space.

This is exactly how we built trust and add value in the eyes of these agency executives, by empowering their teams and helping them to deliver better marketing outcomes for their brands. We grow our business by helping our clients shine. Next, I want to focus on our growing our omnichannel presence.

The strong growth we’ve seen in mobile and video has enabled our clients to have a higher level of coordination and consolidation of their marketing spend across the whole marketing funnel, from brand awareness to consideration to purchase. But now, we’ve also added connected TV into the mix.

In Q3, we released our connected TV audience targeting and measurement products, which gave our clients as same functionality as other channels in our platform.

Advertisers can now seamlessly launch targeted TV buys through Internet connected TVs, including smart TVs and streaming devices to reach their desired audiences on the biggest screen in the home. Our connected TV product enables media buyers to target viewers using both first and third-party data.

They can also measure the impact of connected TV advertising using both digital and traditional TV metrics, including video completion rate, gross rating points or GRPs and attributing view through conversions.

We also provide the ability to retarget households that view connected TV commercials across other devices, which makes our omnichannel approach even more compelling for advertisers. Our client-facing teams have been working closely with agency trading teams to incorporate more connected TV buying into their client’s overall programmatic strategy.

There is a lot of trust to build on this new channel, but our team is delivering and we are winning significant tests with major brands in connected TV across many verticals that we believe will really pay off in the years to come. One last area I want to touch on in our channel mix is both native and audio.

Our native channel again saw robust growth as media buyers continue to use more native ad formats on our platform. Native, in many ways, is replacing desktop display and proving to be a much more effective format to engage consumers.

We continue to focus on training media buyers at agencies on how to incorporate native into their ad campaign strategies, and we’ve really only scratched the surface of what eMarketer estimates to be a $22 billion native market. The same is true in audio.

There is a large and upcoming market there as well with over $3 billion in that market today according to PwC digital radio estimates. And in terms of pure percentage growth, it continues to be one of our fastest-growing channels.

We continue to integrate new sources of audio inventory and expect to see broader adoption of this channel by advertisers in 2018 as audio regularly delivers very high performance metrics.

For example, one international digital agency added audio campaigns to their omnichannel approach for a large automotive client, and they were able to extend the scale and reach of their campaign, but also achieved a near 100% completion rate across all audio impressions that we serve.

The final priority we are focused on is extending our geographic footprint, and we are continuing to break new ground. In Q3, international growth was over 100% and grew more than 2 times faster in the U.S.

Now last quarter, we talked about how our German office broke to win more significant spend with the larger agencies, and that momentum has continued in Q3 to show results as Hamburg grew by 131% compared with a year ago.

In Asia, all of our offices are posting very strong growth numbers and our client teams are regularly testing and winning new business with large global brand. One recent example comes from the Philippines, where we recently won spend from a major global restaurant business that has been in our pipeline in Southeast Asia for a while now.

Even outside of Europe and Asia, we continue to look for opportunities to expand programmatic with our agency partners. As one recent example, a large global agency has already awarded a spend in South Africa and in Turkey starting in 2018.

Now those markets still need education on programmatic, and we are helping to grow these markets a by training local digital programmatic specialists from our existing offices in EMEA. It’s encouraging because they are fast-growing emerging markets where programmatic is still in a very of early, early stages of adoption.

Overall, we feel great about what we accomplished in the third quarter and the momentum we have entering 2018.

We have secured big wins with new advertisers this year, many later in the year than we have seen historically, and we are consistently gaining incremental spend from existing clients and regularly winning business head-to-head when we go up against other large DSPs.

Despite some of the challenges the industry is facing, which Jeff alluded to earlier, we are very confident in the trajectory of our business. With that, I’m now going to turn over the call for Paul to discuss our financials..

Thanks, Rob, and good afternoon, everyone. As you’ve seen in the numbers, we had terrific third quarter across all of our key metrics. Q3 revenue was up 50% year-over-year.

Adjusted EBITDA increased 47% year-over-year, and adjusted net income was $15.3 million, a 63% increase from a year ago, all while investing aggressively back into our business and areas critical to our future growth.

Revenue for the third quarter was $79.4 million, which was above our expectations and reflects both the expansion of our share of spend by our existing customers plus the addition of new customers and advertisers.

For the quarter, approximately 85% of our third quarter gross spend came from existing customers, whom we defined as existing customers that have been with us over a year. Our operating expenses scaled with the growth of our business to $61 million in Q3 of 2017 from $38 million during the same period in 2016.

The increase in operating expenses was primarily due to, A, our increased investments in personnel, primarily in technology and development; B, an increase in platform operations expenses, which reflects hosting costs to support the increasing use of our software platform; and C, G&A expenses, which reflects public company costs, which did not exist for much of Q3 a year ago.

Total other expense was $2.4 million net and income tax expense was $5.8 million in the quarter. GAAP net income was $10.2 million for the third quarter of 2017 or $0.23 per fully diluted share.

Our non-GAAP adjusted net income was $15.3 million for the third quarter or $0.35 per fully diluted share, compared with non-GAAP adjusted net income of $9.4 million or $0.24 per share in the comparable period a year ago.

Adjusted EBITDA was $24.4 million with a corresponding margin of 31% of revenue during Q3 2017 as compared to adjusted EBITDA of $16.6 million or 31% of revenue during the same time last year.

The increase in adjusted EBITDA dollars reflects growth of our topline and the leverage of our business model, all while we continue to invest in product, people and global expansion in addition to incurring public company expenses compared with a year ago. Net cash provided by operating activities was $19 million for Q3 2017.

Over the past trailing 12 months, we generated $43.1 million and $28.3 million of operating cash flow and free cash flow, respectively. Our DSOs at the end of Q3 were 102 days, and our DPOs were 83 days.

The Delta of 19 days represents the smallest we’ve seen in some time and the improvement reflects our continuing efforts to match up our receivables and payables cycles as closely as possible. Our net cash position increased to $105.8 million from $89 million last quarter.

For Q4, we are expecting revenue of $101 million and adjusted EBITDA of $34 million. Updating full year 2017 expectations, we now expect revenue to be approximately $306 million and adjusted EBITDA to be $90 million or 29% of revenue.

Total other expense net is expected to be approximately $6 million, and our income tax rate for the full year is expected to be approximately 25%, reflecting the discrete benefits we received during the first half of the year. With that, I will hand it back over to Jeff for final comments and, of course, Q&A.

Jeff?.

Thanks, Paul. In closing, we have made significant progress throughout the year, but are continuing to work hard to better enable media buying for both agencies and brands and empower a thriving marketplace within our platform.

The programmatic revolution that is fueled by data-driven decisioning continues to gain momentum in the market and The Trade Desk remains the clear independent industry leader as we move forward. I have never been more bullish on programmatic and on the future opportunities for The Trade Desk, and I’m looking forward to the road ahead.

So with that, we look forward to your questions. Operator, let’s begin..

Thank you. The floor is now open for questions. [Operator Instructions] Okay, our first question comes from Shyam Patil. Please state your question..

Hey, guys. I had a couple of questions. First one, there’s been a lot of talk about Facebook and Google taking incremental ad dollars and Internet. Yet this is, I think, the fifth straight quarter you guys say in public where you accorded pretty strong year-over-year growth.

Can you just talk about that a little bit and just kind of how you think about 4Q? And then second, Jeff, I know you probably can’t comment too much on supply partners, but it looks like Twitter is opening up its walled gardens to DSPs.

Can you just talk about generally what you’re seeing with walled gardens? And is it happening – is that opening up happening faster than you originally thought? Thank you..

Awesom. Thanks, Shyam for the question. So let me start with walled gardens, because I do think there are a lot of miss around sound bite that we keep hearing, whether that’s all the digital spent is moving towards Google and Facebook or they’re getting a 100% of incremental share and I want to put a couple of the miss to bed.

But before I do, let me first just say Google and Facebook are amazing growth stories. They’re amazing companies, they’ve done an amazing job. At times, I’ve been a shareholder because I believe in their ability to monetize Google.com and Facebook.com.

But as digital continues to shift, not only our dollars moving from traditional advertising into digital but, of course, digital dollars are moving into programmatic.

And as we’ve been taking share away from ad networks and other less efficient ways of digital, to me, the most important metric to keep an eye on is how things are moving into programmatic.

And the reason for that is because the only real price discovery that’s happening inside of advertising is what’s happening in what we called price discoverable programmatic.

So if I can inspect that impression and understand using metadata, what every single ad opportunity is worth, then – and only then can I figure out the right price and then I can grade everything on a relative basis. Walled gardens do not enable that relative basis.

And so to me, the most important thing especially if you believe like I do that eventually, what is now the $700 billion pie, which in 10 years will be approximately $1 trillion, which is the advertising industry, that eventually all of that will be transacted programmatically, then watching very closely what Magna Global measures as the size of the price discoverable programmatic, which is RTB programmatic.

If you look at what our percentage is in 2014, we had 2.7%. In 2015, we had just short of 5%. In 2016, we have just shy of 7%. And in 2017, we’ll finish somewhere between 8% and 9% market share. That to me is the most important metric to track in all of advertising. How are you gaining market share in the portion of this that will last long term.

It’s hard to switch gears to the Twitter question and sort of implicit in there, there’s also a question about Snapchat, which is – first, I can’t really comment on partners like Twitter who have certainly said programmatic a lot lately. I can’t say that we’ve been a partner of mobiles for a long time and therefore, sort of indirectly with Twitter.

And I’m a big believer in their strategy. And I do believe that eventually, there will be no walled gardens because it’s economically irrational to monetize your inventory without getting as much demand as you possibly can.

I know you didn’t ask explicitly about Snap, but because you’re asking about walled gardens in there and I’ve been asked a million times in the last couple of days about Snapchat. I just want to comment that Snap made a bunch of comments about programmatic in general. First, we don’t do anything with Snapchat. We don’t work with them today.

And that’s because we think there’s a difference between price discoverable programmatic, which is where we can examine an impression opportunity, look at all the metadata and to decide whether we want to buy it or not.

In price discoverable programmatic, I’ll just highlight something we said earlier in this call, which is that mobile video grew for us by 140%. Roku just put up an amazing quarter where we’ve been an amazing partner of Roku’s. And that’s largely because there’s a shortage of demand upgrade inventory in video, including on mobile video.

So when people talk about weakness in mobile video because of programmatic or because of our programmatic option, one, I think it’s more commentary on not enabling price discoverable programmatic; and two, I think it’s a commentary on the walled garden strategy does not work outside of Google and Facebook and, long-term, won’t work for anybody..

Thanks, Shyam. Next question please..

Okay. Our next question comes from Mark Kelley. Please state your question..

Hi, guys. Thanks a lot for taking my questions. You talked a lot about some of the objectives for next year. Can you just help us think about how all these growth drivers and the moving pieces will translate into the financials? Any higher levels thoughts going into 2018 will be helpful.

And then second, you talked a lot about the importance of data, again particularly next year. Can you just expand on that a bit? Talk about what percent of your revenue or spend, however you want to frame it, comes from data today and where that goes over time..

You bet. So first on 2018, and especially just what’s happened in 2017. First, I’ll just comment that more than half of our revenue comes from agencies and I think this has been a little bit of a tough year for agencies. They have been transitioning a lot.

And I think a lot of people have questioned their staying power in the future and I think that’s a mistake. I really do believe the agencies have a tremendous amount of staying power. They’re just in the transition, and their roles will transition.

Now that said, there’s no question that we also have to get closer to brands as well as closer to our agency partners and we are getting closer to brands arm-in-arm with agencies.

And so perhaps the most optimistic things that we’ve shared at least today on our 2018 plan or the fact that two of the top four brands we signed in just the last 12 months. In fact, we signed three large global brands in Q3 that represent over $3 billion in spend. Six of the top nine brands we’ve signed just the last 24 months.

And if you combine that with our retention rate – those of you that have studied our cohort analysis, which we made public since of the IPO, there’s a very high probability that we’re going to continue to grow those brands, and we think we’ve just scratched the surface in terms of what’s possible.

So in 2018, especially with the trend line we have in mobile and in international and in connected TV, we’re super optimistic that we’re going to continue to outpace the growth of our industry. And it’s the trust that we’ve been working really hard to build in 2017 with brands like P&G that we weren’t quite about winning earlier this year.

We’re super excited to expand with those and obviously, thousands of other brands. So when you have over 18,000 brands on your platform like we do, it seems like there will be some winners and some losers, but we represent so many of them that we think that we’re going to win no matter what.

And just to remind you that advertising is going to continue to grow. So we have secular tailwinds that should not be dismissed as an industry as a whole marches towards $1 trillion industry. As it relates to data, so data represents a very small minority of the revenue that we create today. Nearly all of it is attached to media in some way.

And part of that strategic because we look at data as making more informed choices about what media to buy, and we want to get that flywheel spinning and that is the way that we think about it, which is the more people are making data-driven decisions about what they buy, the better choices that they’ll make.

So it represents a small percentage of our revenue today. We do think that that percentage will go up, but will also increase the consumer surplus that we provide to both brands and agencies as we do that.

So this is one of those scenarios where we think our strategic efforts in 2018 and all the things we talked about on the call today as it relates to data will actually be a win, win, win, where brands and agencies will be better off, the data companies will make more money, and we’ll make more effective decisions because there is that much room and efficiency left as we continue to expand and monetize all of the Internet and television..

Great. Thanks Jeff..

Next question please..

Okay. Our next question comes from Brian Fitzgerald. Please state your questions..

Thanks guys. Jeff, I want to know if you can walk us through how you think the dynamics of implementing Ads.txt will impact the business in the near-term.

And maybe even looking longer down the road, you’ve heard that publishers are seeing rising CPMs as their impressions are valued better and it removed some of the impressions that are aren’t validated and moving the bad impressions. So I want to know how you see that playing out.

Do you think the spend from your ad partners is going to remain at the same levels, but focused on those higher-quality ads. Thanks..

You bet. So for those aren’t familiar, let me just give a 30-second primer on what Ads.txt is. And so earlier in the year, a few of us of the larger players in advertising technology got together and decided to roll out together this program, which is Ads.txt. And us and Google were among the first to roll out this program.

It’s very simple, which is you ask every publisher in the world to create a text file just publicly on their domain, so you can type in any publisher name like Google.com/ads.txt, and then you can see which SSPs and exchanges are authorized to sell their inventory.

And this becomes really important if you’re a premium publisher like CNN or something where there are people that are actually spoofing your domain and pretending to be you so that they can monetize your inventory. So it gets rid of any doubt as to who is authorized to wrap the inventory.

And by asking every publisher in the world to do this, we’re effectively telling CNN, if you make very clear to us who’s authorized, then we’ll make sure to only buy from those that you tell us to buy from.

It gets rid of some of the indication and resellers and resellers where things can be misrepresented and then in the small cases, where there’s actually fraud. So we started broadcasting earlier in the year, the publishers adopt this. It’s been one of the most unbelievable programs that I’ve ever been a part of.

It’s been great to be working with Google on this so that together, we’re promoting the adoption of the. Of the top 500 publishers, almost 80% of them have to have some forms of ads.txt public so that we then can eliminate those that are unauthorized and make certain that they don’t make any money from it.

The effect is that CPMs, four of things like CNN, have gone up. And that’s good because publishers should make more money and we should actually make certain that we’re buying inventory only from those that are authorized so that we are certain that we get the quality inventory. So overall, it just makes the entire ads ecosystem better.

But because the efficacy of those ads are obviously going to be so much better than anybody who is misrepresenting it or subs indicating it, by doing that, whatever the increased price is, it’s overcome by the increased efficacy.

So overall, everything is better for the Internet and for our business, which is the reason why we promoted its adoption so much. So we’ve begun blocking already. We’re going to make a huge move in blocking all the unauthorized traffic in the middle of next week actually as we announced earlier this week.

And what that means is that there will be some adjustments on some publishers, but we don’t expect the marketplace effect to be substantial. So overall, we think it’s good for quality. But in terms of revenue our financial applications, we think it will have very little changes to our business and certainly won’t have any impact in our forecast..

Thanks, Jeff..

Okay, our next question comes from Kerry Rice. Please state your question..

Thanks. Maybe a couple questions on guidance. It was a little bit lower than what we were expecting. And I don’t know, Jeff, if this is what you’re alluding to from maybe some slower – so much slower ad spend from CPG in retail. And that’s maybe taking a little bit off the top there.

If there’s anything else to maybe conclude from your Q4 guidance? And then maybe on visibility, when you think about – when you’re entered the quarter, how much visibility do you have into that quarter? And I think if I remember correctly, that kind of varies depending on seasonality like Q1 maybe a little bit less than maybe Q4..

Yes. So first, let’s see big picture for just a second. So we gave guidance for the year. We increased our guidance for the year to match exactly what we had done before. And as we said before, for us, the first four, five quarters have been about gaining trust with Wall Street. And we beat and raise every single time including today.

So we’re super happy with the performance and we think that the fact that we’ve been able to do that while most of the agencies posted weaker quarters in Q3. It is a commentary on how everything is moving to programmatic. It’s just – to also just big picture just for one more minute, we talked a little bit about this on Investor Day.

It is absolutely true that there is more pressure on retail and CPG than there had been in the past, their margins and their business models. And business models are having to change and evolve. But big picture, it is easier to buy stuff than it has ever been before and people are buying more stuff than ever before.

Advertising is growing and it is the biggest industry that it’s ever been and it’s only going to get bigger. And I would argue with that the coefficient on success of any business is more dependent on advertising and branding and winning hearts and minds in a more noisy space than ever before.

And therefore, the need for advertising is greater than it’s ever been before and that’s only going to continue. And so if you look at those secular tailwinds and everything that’s moving towards this discoverable programmatic, all of that is great news for us.

But businesses do have to create a transition, and when your margins are being cut as a traditional CPG company or as the big companies that have often fueled most of advertising, as they have you transitioned their businesses, it’s not unexpected that they’ll pause or rethink what they’re doing on any individual campaign.

We haven’t experienced anything meaningful in that regard. So yes, Toys“R”Us will got a business, but we literally power companies that are spending more at selling toys than Toys“R”Us ever did work with us.

And that’s – to us, what we think is a sort of the great part of our business model, which is that by powering so much of advertising space, we think that we’re sure to win. So I don’t expect there’s anything in terms of seasonality that’s negatively impacting our business.

I don’t think those pressures on CPG or retail would have any long-term effect in our business. It is hard to tell what effect it will have in the short term, but as you can see from the results, it hasn’t had any material impact on it today. You mentioned about the seasonality in terms of visibility.

It is true that we have – there’s always a little bit of a reset on the calendar years. So advertising does tend to follow the calendar year.

But that is the reason why those numbers that we’ve given concerning this quarter, which are that three major brands has spent over $3 billion sign in the last quarter and then in 2017, two of the top four advertisers joined our platform in the last 24 months, six of the top nine advertisers just started spending on our platform because all of those represent significant upside to us in 2018.

And we think based on our track record, it’s a pretty safe bet to assume that our outpace growth will continue..

Thank you..

Okay, our next question comes from Youssef Squali. Please state your question..

All right. Thanks and good afternoon. Just following up on the prior question. Can you guys help us maybe quantify or at least give a range of the importance of CPG and retail on a global level for you guys as a percentage of growth spend or revenues for any way – any color there will be helpful? And for 2018, 2017 was definitely an investment year.

As you go into 2018, help us understand a little bit the investment intensity that you see in the business and the potential impact on margins, meaning you expect 2018 to also be an investment year and see some pressure on margins the way we saw in 2017? Or is there enough leverage on the top line to kind of create some positive margin leverage there? Thanks..

Yes. So as our business matures, it’s harder and harder for any one industry to outpace another one. And it’s just because basically, the percentage of spend that we get is basically reflecting the pie of all industries.

So in other words, the way that a GDP is divided among automotive, CPG or any other channel, it basically is the same that’s reflected in our platform. The only exceptions are that we’re under indexed a bit in retail and over indexed a bit in CPG.

So when you put those two things together, we’re basically mapping the global economy and that’s going to continue to look more and more like the global economy as time goes on.

When you talk about like investing and are we going to invest and put pressure on margins, I don’t fully understand what you’re saying because you’ll recall that we have EBITDA margins that are higher than basically every publicly traded SaaS company out there.

And there was one quarter this year that – I felt like I was apologizing for producing too much EBITDA. As we basically produce EBITDA around the 30% mark, I am just constantly looking for ways to deploy that capital to continue to grow. So, right now, its land grab time. 2017 was land grab time. 2018 is land grab time.

We’re going to continue to look for opportunities to deploy capital as aggressively as we can and as we put up growth of over 50%.

It certainly gives us the luxury to reinvest, but it’s rare that you have the sort of growth that we’ve had and the sort of EBITDA that we have, which just creates the luxury for us to say let’s grow as deliberately as we possibly can.

So I just want to remind everybody, who’s listening, the only reason we haven’t deployed more of our EBITDA is because we want to grow responsibly and deliberately and we don’t want to put the rest of our business at risk.

I wish that I were telling you that our EBITDA was lower than it actually is because I wish I could deploy more of that because I’m just looking at all the land we could be grabbing and I want to take more. So we’re investing as aggressively as we possibly can, and we’re going to look at 2018 to do that again.

We’re super excited at the infrastructure that we’ve created especially by hiring some really key people in 2017, because we think that will make it easier for us to do more in 2018, and things like the Adbrain acquisition are good examples of places where we might be more aggressive.

I’m not predicting that we’ll more M&A, but I’m just saying that we will be opportunistic in deploying capital as aggressively as we can..

All right, thanks Jeff..

Our next question comes from Mark Mahaney. Please state your question..

Great, thanks. Can you talk a little bit more about the international traction that you’re getting and how are you getting that? So you’ve got some pretty good growth rates. I understand that’s up a low base.

But were you able to do that just directly going to new agencies, new advertisers in those markets? Or are you just – and/or are you able to leverage the existing kind of global agency relationships you have, and that makes the international expansion just at the margin more efficient? Just talk about that go-to-market and international markets and how that differs from the U.S.? Thank you..

You bet. Thanks Mark. So first, I know I said this before, but I just – I can’t emphasize it enough. The global advertising pie is two thirds of it. It’s outside of the United States. So to keep our eye on the ball, we absolutely have to continue to grow internationally.

And so I mentioned that some of the wins with brands with us going arm and arm with the agencies are some of the most bullish numbers that I could share.

If I could pick the second, most bullish numbers that we’ve shared, it’s all the international growth because that is the lion’s share that is the two thirds of the pie that we want to be getting next.

And the thing that is so beautiful about the growth that we’re seeing in international is that it comes sometimes from the brands saying, oh well, this is working.

And then they insist that their agencies, which sometimes are not even the same agencies they use in the United States, but they insist that our agencies in other markets use The Trade Desk. And then there’s other times, in fact, this is more common when the agency says, oh well it’s working in New York.

Let’s just drop a quick note to the team in Sydney or the team in Germany or the team in Tokyo or the team in Singapore or the team in Spain and let’s make certain that we deploy the exact same thing.

So it’s been a really beautiful thing on our side to sit on coordination calls where there are people from all over the world, sometimes at ungodly hours for them, coordinating the global spend for some of the biggest multinational brands.

Or to see the look of relief from a multinational brand when they said, oh, you have a team in Singapore, all can we get them involved? And an e-mail later, we’re kicking off the new campaign.

So the fact that we have so many ways to connect with these brands, it is the reason why we’re so confident in our international growth and it’s the reason why we’ve opened so many offices around the world because we can look at it in a lot of ways as lower hanging fruit than in the United States because there’s less competition and we do get to piggyback on the growth of the groundwork that we’ve already laid in the United States..

Thank you, Jeff..

Thank you..

Okay, our next question comes from Aaron Kessler [Raymond James & Associates]. Please state your question..

Great, hey, guys. Congrats on the quarter, a couple of questions. First is on your user tracking initiative.

Can you talk about maybe going it on your own as you mentioned versus it sounds like there’s an open-source kind of data consortium being formed? So thoughts going on your own versus partnering? And then on China, other companies have had challenges in the past, other ad tech companies especially getting some of the local China companies to share data there.

Can you talk about how The Trade Desk approach may be different than some of these companies in the past? Thank you..

Aaron, just one clarification.

On the identity, are you talking about deterministic? Or are you talking more about the anonymous like cookie IDs?.

Yeah, more I kind of deterministic or, I guess, just sharing kind of anonymous data to try to obviously better track that user..

Sure. So….

I think Avnet, this is putting together a consortium as an example..

Yeah, okay. So, let me separate the two issues just a little bit. So there are deterministic IDs, which are basically anonymizing logins so that you can connect together device IDs that are also anonymize, but they are for specific devices.

And there are efforts for companies to use these deterministic IDs to thread together all these different devices so that you are essentially having an ID built around the user, an anonymous ID built around the user.

And then there is also these efforts to make certain that people are pooling cookies, so that there is a common understanding of users especially on desktop and devices where they’re using cookies.

So we have – we’ve made a really bold move in 2017, which was to go to all of our supply partners and effectively ask them to merge their IDs pools or databases if you will with ours.

And by merging those we make it so we all have a common understanding of the user and we make it so that everyone in internet advertising has a common understanding of the user in a customer stake, privacy stake anonymized way and it makes us that we all have better match rates and The Trade Desk then is way more competitive especially with the walled gardens you have so many consumer touches.

By making that move earlier this year, we think especially in 2018, we’ll have a much better ID footprint on the device side.

On the deterministic side or weaving together all those devices using IDs and identities around a person and not just around the device, we think that it’s impossible for any one company to solve that optimally for the entire Internet. It doesn’t matter how big you are. It doesn’t matter if you’re Google, Facebook, AT&T, Verizon.

It doesn’t matter who you are. We think that in order to do that well, you’re going to have to work in sort of a marketplace fashion.

And so, what we’ve done is created a marketplace where all of those companies can make available to us that data again in a consumer-safe way, so that we can have a common understanding of the user across all of their devices.

And by creating that marketplace, we and many of the cases of the cross-device vendors, we have become their single largest partner to multiple of those companies who got all they focus on. And so we’re really bullish on the fact that we managed to creat such a strong partnership.

We’re one of the few companies who said, we want our marketplace that been approach instead of just to go to loan like we’re going to build the best algo and aggregate as much data as possible in our own and said we created a marketplace, and we think that’s the only way to win in this game. So that’s our strategy around data..

Okay. Our next question comes from Andrew Boone. Please state your question..

Hi, good afternoon. Thanks for taking my question.

So to piggyback on your answer to your question earlier, can you just help us rank or can you help us by ranking the investments as you think about their priorities into 2018 kind of beyond, where you’ve most focused? And then as we think about some of the larger clients you’ve got at this quarter, Procter & Gamble has been publicly acknowledged as a client.

Can you just remind us about how they move spend on to The Trade Desk and kind of their cadence of there? Thanks..

Sure. So in terms of investment opportunities, first and foremost, I was just saying it’s improving on the base that we’ve already built. So it’s not to say that it isn’t important for us to expand in mobile or expand in TV or we have massive amounts of resources assigned to those. We expect to increase those investments in 2018.

We’ll continue to grow in those channels. But first and foremost, it’s to make certain that we keep the clients that we have happy. Because of the fact that we have 95%-plus client retention and have since we’ve ever publicize those numbers. We’ll continue to maintain our customer client retention.

But that’s where we have to make the investments first and foremost. Second, we have to make certain that we get more insight into the hands of brands, and we’ll do that again arm in arm with the agencies.

But there is a bunch of things that we can do to get insight into the hand of brands because we believe sincerely that we created the most transparent, most robust reports and all of advertising.

And when we contrast our reporting with those of the walled gardens, we think that the level of transparency as well as the level of objectivity as well as the level of media access that we provide in our platform, the only thing that stands between us and gaining market share even faster is for us to really help brands understand exactly the data around the choices that we’re making.

As we do that, we’ll continue to win market share. We, of course, will continue to invest I would it a product as we highlighted today, a huge opportunity for us. I would list that alongside with connected TV and mobile as big opportunities. I also mentioned the low-hanging fruit of international.

I don’t think it takes as much investment or over as much risk of capital because that sort of goes into the business as usual categories. But there’s so much incremental spend for us to win around the world that, of course, that, too, will be a priority.

Was there a second part of your question that I didn’t answer?.

Yes, just how larger your advertisers move onto the platform just over time. Just kind of give an answer..

Yes. That’s right. So it’s different for every brand. And so one thing that we’ve never tried to be is like the pushy partner who is like, when are you going to give me all your money? When are you going to give me all your money? That’s not the way that we partner with any of these companies.

The same way that we said to Wall Street, our goal is to create trust and we enter for the long game. Of course, that’s the exact same thing that we’re saying to brands. We’re here to gain trust.

As you might imagine, there’s a number of players in ad tech who have made it hard for companies like Procter & Gamble to trust, and so it’s really important for us to move at their pace. And every brand moves at their pace. And every brand moves at their own pace.

And the good thing is because of all transition that’s happening in just the world at large and largely because of the advent of digital, there is pressure that makes it so that all those businesses are moving as fast as they possibly can to make more data-driven decision. And as they do that, we’re there. We’re there partner.

We’re always there, always on, always taking calls, always responding. But we’re going to do some extent at their pace. It doesn’t mean that we don’t lead. It doesn’t mean that we don’t have lots of advice. We certainly do. But we’re in the business of winning trust and we’re in it for the long haul.

So it’s almost impossible to talk about the formula to move over from the biggest brands because every big brand moves in a different pace different strategy, different thoughts and approach..

And this is our final question. It comes from Shyam Patil. Please state your question..

Hi, guys, thanks for the follow-up. Just really quickly. I know you haven’t guided to next year and you mentioned some of the large ones you guys have for this year. Just wondering, can you help us think about seasonality for next year particularly for the top line? Just kind of think about that for the year? Thank you..

Hey, Shyam, it’s Rob. Sure, I’ll start and sure Jeff will echo. Just like nearly every other year, you can think about our revenue seasonality. It’s just like the advertising industry, right? So roughly 15% in Q1; sort of low 20s, Q2; mid-20s Q3 and then 35%, 38% in Q4.

And just to add, when you’re thinking about 2018 in particular, remember, we had a really blowout quarter in Q1 of 2017 when we benefited from YouTube’s brand safety issues. And we just had a lot of monster wins, so we had a monster Q1 last year. And so when we think about going into next year, I would think about that normal sort 15% for Q1..

You mean 2017..

Sorry – earlier this year. So when you think about the comparable..

Exactly. So in terms of seasonality or in terms of anything that we can provide on 2018, of course, we’re going to give guidance as we wrap up Q4. Beyond the fact that we’ve won so many advertisers in this year, I’m extremely optimistic about our Q4, which is why we, of course, have given the guidance that we have.

The long term, and this is I think the most important thing to keep your eye on is the market share of programmatic because eventually, all $700 billion and eventually, that will be $3 trillion will all be transacted programmatically.

And are you winning share in programmatic? And so to us, the thing that we are constantly getting our team focused on is make sure that you’re winning as much as possible above programmatic.

And particularly as you’re looking at what are going to be a large land grab opportunities in 2018, I think you’ll see in international, there’s huge land grab opportunities. And that’s why when we talk about what we’ve done this year, it gives you some visibility into what we’re expecting for next year in terms of land grab.

But also, the moves that are happening in television, we started the Q&A by talking about Google and Facebook. And I don’t think enough has been said about the fact that the biggest media companies in the world are looking for alternatives to monetize beyond walled gardens. And, in fact, they’re looking for partners on the demand side.

So many of the biggest media companies in the world are having conversations with us saying, can you be our biggest demand source as we transition? And so particularly as they’re thinking about distribution on their own, more and more of them are coming to us. And that gives us a huge amount of optimism for 2018.

So just a couple of the things that we’re thinking about as we think about the future..

Thanks guys..

And that was our final question. Thank you. This concludes today’s call. Thank you for joining. You may now disconnect..