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The Trade Desk shares surged around 15.5% to USD 14.93 after the advertising technology company reported third-quarter revenue of USD 736 million, beating market forecasts despite a slight annual decline. Stronger earnings, new artificial intelligence tools and an upbeat fourth-quarter outlook supported the rally. Investors also responded to the company's efforts to improve its advertising platform and expand partnerships. Still, lower profits showed that its recovery faces challenges.
The Trade Desk reported adjusted earnings of 33 cents per share, above analysts' expectations of 25 cents. Revenue reached USD 736 million, compared with market estimates of around USD 651 million. The result also exceeded the company's earlier expectations.
Despite the revenue beat, sales declined 0.5% from the same quarter last year. The drop reflected continued pressure on growth as the company worked to strengthen its advertising business. Even so, the better-than-expected results helped address concerns about its recent performance.
Profitability remained weaker than a year earlier. Net income fell to USD 38 million from USD 116 million. Adjusted EBITDA also declined to USD 266 million from USD 317 million, while the margin narrowed from 43% to 36%.
The figures showed a gap between the company's revenue performance and earnings growth. Meanwhile, management continued to focus on improving operations and restoring stronger business momentum.
Chief Executive Jeff Green identified artificial intelligence as an opportunity to improve digital advertising. The company has expanded its agentic AI tools to help advertisers manage campaigns, refine targeting, and reduce routine tasks.
Its Audience Unlimited initiative combines artificial intelligence with third-party data to identify potential customers. Early tests showed that advertisers reduced customer acquisition costs by more than 30%. Advertising costs also declined by 14% during those tests.
The company also introduced Kokai Zuma, an upgraded version of its advertising platform. The system offers a simpler interface and expanded AI capabilities. These changes aim to help advertisers automate routine activities and manage campaigns more efficiently.
The expansion also includes a stronger relationship with Netflix. From November, advertisers can use first-party and third-party data for audience targeting on Netflix through Kokai. The companies also expect to introduce measurement tools within the platform.
Its latest results showed progress against forecasts, while its annual figures continued to reflect weaker profitability.
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Beyond its technology investments, The Trade Desk maintained customer retention above 95% during the September quarter. The company has sustained that level for more than a decade, reflecting continued relationships with advertisers.
The company also increased its share repurchase authorization by USD 731 million. This raised the total amount available for future buybacks to USD 1 billion. The authorization gives management additional capacity to repurchase shares.
Looking ahead, The Trade Desk expects fourth-quarter revenue of at least USD 755 million. It also forecasts adjusted EBITDA of at least USD 280 million. The revenue outlook exceeded analysts' expectations and followed the stronger third-quarter performance.
Nevertheless, the company acknowledged that revenue growth remains below its longer-term ambitions. Its recovery efforts continue to center on AI advertising, connected television, and stronger advertiser relationships.
The share rally followed a period of weaker investor sentiment. The stock had traded near historically low earnings valuation levels, with its price-to-earnings ratio around 18. The latest earnings report provided new financial figures for investors assessing its turnaround.
The Trade Desk's 15.5% share rally followed stronger-than-expected third-quarter revenue and earnings. AI advertising upgrades, expanded Netflix integration, and fourth-quarter guidance supported the market response. Still, declining profits and weaker annual revenue growth remain challenges as the company works to improve its financial performance.