Quick Read
- The Trade Desk reported Q2 2025 revenue of $694 million, exceeding expectations but saw its stock drop 25% post-earnings.
- Operating margins fell to 39%, raising concerns about profitability despite revenue growth.
- Laura Schenkein will step down as CFO, with Alex Kayyal taking over the role effective August 21.
- Strategic focus remains on retail media and connected TV (CTV), but macroeconomic challenges persist.
- Investors are closely watching The Trade Desk’s ability to balance innovation with operational efficiency.
The Trade Desk (NASDAQ: TTD), a prominent player in the global advertising technology sector, has faced a turbulent week following the release of its second-quarter 2025 earnings report on August 7. Despite reporting year-over-year revenue growth of 18.6% to $694 million, the company’s shares plummeted 25% in after-hours trading. This stark reaction from investors highlights concerns over the company’s operating margins, modest EBITDA growth, and a cautious forward outlook.
Q2 Results: Growth Amid Margin Compression
The Trade Desk posted mixed results for Q2 2025. Revenue of $694 million exceeded analyst expectations of $686.03 million, marking an 18.6% year-over-year increase. However, non-GAAP earnings per share (EPS) of $0.41 met, but did not surpass, projections. Adjusted EBITDA margins fell from 41% in Q2 2024 to 39%, signaling a 200 basis point decline that left analysts and investors questioning the scalability of the company’s operating model.
Key innovations like the AI-powered platform Kokai, which has now been adopted by two-thirds of the company’s clients, contributed to the revenue growth. Kokai has shown promise, delivering improved campaign performance and reducing cost per acquisition by 20%, according to CEO Jeff Green. Nevertheless, concerns about operating leverage overshadowed these technological advancements, as highlighted by 24/7 Wall St..
CFO Transition: A New Chapter with Alex Kayyal
Adding to the week’s drama, The Trade Desk announced the departure of Laura Schenkein, its long-serving Chief Financial Officer (CFO), who will transition to a non-executive role by year-end. Alex Kayyal, a seasoned financial leader with prior roles at Salesforce and Lightspeed Venture Partners, will assume the CFO position effective August 21. Kayyal, who also serves on The Trade Desk’s Board of Directors, is expected to bring a fresh perspective to the company’s financial and investment strategy.
CEO Jeff Green praised Schenkein’s contributions, stating, “We would not be where we are today without Laura’s vital contributions.” Meanwhile, Kayyal expressed enthusiasm for his new role, emphasizing his belief in The Trade Desk’s ability to deliver innovative solutions in the digital advertising ecosystem. According to Stock Titan, Kayyal’s diverse experience is seen as a strategic asset as the company aims to navigate a challenging market environment while pursuing long-term growth.
Strategic Pillars: Retail Media and Connected TV (CTV)
The Trade Desk has positioned itself as a leader in retail media and connected TV (CTV), two critical growth areas for the company. Partnerships with major players like Walmart and the integration of OpenPath technology have strengthened the company’s market presence. Retail media, in particular, has gained traction, with The Trade Desk distinguishing itself from competitors like Amazon by offering a more open and transparent ecosystem.
In the CTV space, Jeff Green referred to it as “the kingpin of the open Internet,” underscoring its importance to the company’s strategy. While the company continues to gain market share, macroeconomic uncertainties and tighter advertising budgets have introduced volatility in client spending. Analysts remain optimistic about The Trade Desk’s ability to maintain its leadership in these sectors but note that profitability remains a key concern.
Market Reaction and Investor Concerns
The post-earnings selloff has reignited investor scrutiny of The Trade Desk’s business model. Despite strong top-line growth, the company’s inability to expand margins at a commensurate rate has raised questions about its operational efficiency. As Seeking Alpha reported, the light EBITDA guidance for Q3 2025 and modest sequential growth projections have further dampened investor sentiment.
Jeff Green’s emphasis on AI-driven innovation and client-focused solutions, while promising, has not fully alleviated concerns about near-term profitability. The Trade Desk’s adjusted EBITDA for Q3 is projected at $277 million, a slight increase from $271 million in Q2. Revenue guidance for Q3 has been set at $717 million, reflecting cautious optimism amid a competitive and uncertain advertising landscape.
As The Trade Desk navigates this transitional period, its ability to balance innovation with operational efficiency will be critical in restoring investor confidence and achieving sustained growth.