Notes from The Trade Desk S-1 IPO Filing

The Trade Desk, a demand side advertising platform, just filed their S-1 IPO filing to go public. Demand side advertising is where ads are purchased to be then served by supply side advertising platforms. One of the big benefits is having one system to buy ads that then integrates with dozens of other systems.

Now, let’s take a look at the S-1 from their recent filings. Here are a few notes:

• Our platform provides access to approximately 3.2 million ad spots on average every second for our clients to bid on across millions of different scaled media sources—websites, shows, channels, stations and streams. (pg. 1)
• In 2015, approximately $14.2 billion was transacted in the 1 Table of Contents programmatic advertising spot market via real-time marketplaces, according to Magna Global. (pg. 2)
• Financials (pg. 2)
  • Revenue
    • 2015 – $113.8 million
    • 2014 – $44.5 million
  • Net income
    • 2016 1H – $6.6 million
    • 2015 – $15.9 million
    • 2014 – $5,000
  • Gross billings (pg. 11)
    • 2015 – $530 million
    • 2014 – $201 million
• Trends (pg. 3)
  • Media is Becoming Digital
  • Fragmentation of Audience
  • Shift to Programmatic Advertising
  • Automation of Ad Buying
  • Increased Use of Data
• Approximately 389 clients, including the advertising industry’s largest agencies, as of December 31, 2015 (pg. 5)
• Clients can easily buy targeting data from over 80 sources through our platform (pg. 5)
• Average days sales outstanding, or DSO, of 88 days, and average days payable outstanding, or DPO, of 64 days at June 30, 2016. (pg. 18)
• Approximately 7% of our gross spend in 2015 was derived from outside of the United States. (pg. 29)
• Access to borrow up to $125.0 million aggregate principal amount of revolver borrowings (pg. 31)
• Accumulated deficit of $28 million (pg. 48) (Note: it’s really impressive to achieve this scale and growth rate on this relatively small accumulated deficit).
• Between our inception in November 2009 and June 30, 2016, we generated aggregate proceeds of $88 million from the sale of convertible preferred stock (pg. 68)
• Ownership (pg. 124):
  • VCs – 34%
  • Founder / CEO – 26.7%
  • Founder / CTO – 1.5%

Congratulations to The Trade Desk for building a great business in seven years and for heading towards an IPO as their next milestone. This IPO will be well received based on scale, growth rate, and profitability.

What else? What are some other thoughts on The Trade Desk IPO filing?