Investors in Bureau (Nasdaq: TTD) They saw red on Thursday as the stock was immersed, but they were also green with envy.
As the stock office shares collapsed more than 30%, colleague Adtech Titan Applovin (Nasdaq: App) He rose in his profit report, jumping over 20% of his fourth quarter results, as he again broke the ratings.
For the shareholders of the commercial desk, it was obviously a disappointing reversal of events and seeing Applovin Soar’s shares only added an insult to the injury, as Applovin surpassed the sales desk as the biggest ADTECH company on a market cap.
The fourth quarter was rare for the commercial desk. The revenue increased by 22% to $ 741 million, which was well below the consensus of $ 759.6 million, and also missed the management’s own guidance.
Jeff Green’s executive director was directly about disappointing results. In the call for a profit, he said, “I want to admit to the fact that for the first time out of 33 quarters as a public company, we were unable to cope with our own expectations.” Green said he was not interested in Wall Street’s missing estimates, but he looked at the company’s lack of guidance as a violation of investor confidence.
In the third quarter, the leadership called for revenue of at least $ 756 million in the fourth quarter and adjusted profits before interest, taxes, depreciation and depreciation (EBITDA) of $ 363 million.
The Trade Bureau also missed this target with $ 350 million in a corrected EBITDA. Its corrected profit per share has increased from $ 0.41 to $ 0.59, which canceled Wall Street consensus to $ 0.57.
Image source: Getty Images.
Companies miss ratings for a number of reasons. Usually poor performance, poor customer search, macroeconomic winds or competitive change are one of the most large factors in profit shortages.
Green blamed the disappointing results of the weak performance and added: “This did not happen because the possibility is not as big as we thought. In this case, this is not because of our competition. ” Instead, he quoted “a series of small wrong steps of performance while preparing for the future.”
Among these wrong steps was that Kokai, its new artificial intelligence platform (AI) for customers, has spread more slowly than expected, although the management expects to upgrade 100% of its customers from Solimar to Kokai this year. He also had his biggest reorganization in December, and that could slow down the business. Finally, she made some intentional decisions to focus on the long -term opportunity, not short -term revenue.
Green did not discuss any competitive threats in the conversation, and the Commercial Bureau and other DSPs usually do not fit into the company’s calculus, as it tends to focus instead of dominant advertising platforms such as AlphabetS Google, Meta platforms., Amazonand AppleWhich he calls as wall -mounted gardens, which he believes, will eventually open to platforms like the Commercial Bureau.
The Trade Bureau has long been the largest independent DSP on the market, but Applovin has already taken this crown. Applovin reported a 75% increase in advertising revenue to $ 3.22 billion in 2024, before $ 2.44 billion revenue at the trading desk at 26% growth.
Applovin and the Trade Bureau are not close competitors. Applovin historically focuses on mobile game applications and helps developers provide revenue from applications. The Trade Bureau, on the other hand, is aimed at large brands and agencies, applying and optimizing advertising campaigns in multiple channels.
As Applovin is growing, it is focused on new markets to nourish its expansion. It has been expanded to the Direct-to-Consumer (DTC) brands and aims to add more businesses to the digital economy this year. In 2025, he plans to launch an AI self -service dashboard, similar to what the Commercial Bureau offers, and aims to “explore” the advertising of connected television (CTV) this year. This is important because the video, including CTV, now represents nearly 50% of the business office business, and the company sees CTV as a major growth opportunity.
The next largest market at the Commercial Bureau is the Mobile Base of the Applovin-which represents the mid-30% percentage of advertisements for advertisements for the platform of the Commercial Bureau.
If Green is correct, the shortage of his company may owe more to his mistakes than an external factor such as Applovin’s competition, but Applovin’s plans for 2025 and his growth of blowing show that the two Adtech platforms are on a collision.
Business often uses more than one DSP, so the two companies can grow by grabbing a market share elsewhere and taking advantage of a growing pie. But in the end, they fight for a piece of the same pie, although the advertising market is massive.
Given its star experience and reputation of Green Sterling, the company’s reasoning for missing guidance deserves to be taken at nominal value, and a quarter of the results are not enough proof to conclude that something has changed with the commercial Bureau.
The company deserves at least another quarter to fix things, but another Miss guide will crush the shares and point out that it can be a competition that reduces the growth of the company, not internal errors.
Also keep track of customers’ retention numbers at the Commercial Bureau. The company has reported customer detention of over 95% every quarter in the last 11 years. If that changed, it would be a big red flag.
So far, I intend to keep my shares from the Commercial Bureau and I think there is a good opportunity for recovery, especially in the trade in shares in the price-profile ratio of only 50 on the basis of the corrected profit per share. Keep in mind that 22% are still an excellent rate of revenue growth. The Trade Bureau was just punished because he missed his guidance. Missing guidance is usually a signal for the market that the action is already overestimated and that expectations must be reset on the basis of updated revenue and guidance from management.
However, with the increase of Applovin, there is a risk now that a competitive landscape can be more complicated than Green recognizes and investors should not ignore it. We have to get a clear answer sometime this year.
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John Maki, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the Board of Directors of Motley Fool. Randy Zuckerberg, a former director of the Facebook Development Market and a sister of Meta Platforms CEO Mark Zuckerberg, is a member of the Board of Directors of Motley Fool. Susan Frey, CEO of Alphabet, is a member of the Board of Directors of Motley Fool. Jeremy Bauman has positions on Amazon, Meta platforms and the commercial desk. Motley Fool has positions and recommends Alphabet, Amazon, Applovin, Apple, Meta Platforms and the Trade Bureau. Motley Fool has a policy of disclosure.
The shares of the Commercial Bureau are disintegrated. Applovin is the culprit? Originally published by Motley Fool
