The massive global advertising industry is still expanding, and digital ads are gobbling up market share. However, a number of snags held up progress this year. Amidst heightened economic uncertainty, many brands are tapping the brakes on marketing. And Apple‘s privacy updates — which allow users to opt out of app activity tracking — have lowered the value of digital ads on the lucrative iOS operating system.
Nevertheless, digital advertising technology will continue to advance for many years to come. Two particular standouts this year that are shaking off industry woes are The Trade Desk (TTD -0.58%) and DoubleVerify (DV -1.56%). Here’s why they’re both a great buy right now.
The Trade Desk: Really in a league all its own
The Trade Desk has been a best-in-class player in the advertising ecosystem for years. A demand-side platform that helps marketers purchase ads from publishers, the company champions the “open internet.” It doesn’t compete with its customers in the way that Alphabet‘s Google and other internet and media conglomerates do.
In addition, many of its ad marketplace and software solutions are open source, allowing marketing agencies and the brands they represent to build their own proprietary systems atop The Trade Desk’s platform.
The company’s strategy is showing its merits via financial outperformance. While many ad software companies have been hit hard in 2022, The Trade Desk is still going strong. Revenue in Q3 was up 31% year over year, compounding the 39% year-over-year increase in the same period of 2021.
Granted, not all was perfect. Stock-based compensation has jumped significantly this year, particularly surrounding executive pay packages. Stock-based comp was a drag on earnings per share (EPS) last quarter as it totaled $121 million (compared to $34.5 million last year). Resulting EPS was $0.03, down from $0.12 a year prior.
Nevertheless, The Trade Desk remains highly profitable. Free cash flow has been a robust $339…
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