-- Trade Desk's (TTD) second-quarter guidance trailed Wall Street's projections as the ad-buying software maker faces growth challenges from broader industry shifts and the impact of the Middle East conflict, KeyBanc Capital Markets said in a note emailed Friday.
Trade Desk expects revenue of at least $750 million and adjusted earnings before interest, taxes, depreciation and amortization of about $260 million, it said late Thursday. The sales guidance came in below KeyBanc's expectations of $758 million and the Street's view that the brokerage put at $771 million.
The adjusted EBITDA outlook also missed KeyBanc's and market estimates, according to the brokerage.
"Our sense is the combination of Middle East turmoil, ad agency tensions, and changes to industry structure are pressuring growth," KeyBanc analysts, including Justin Patterson, said. "While the first two factors could eventually reach a resolution, we do not see the competitive factor changing any time soon."
The brokerage downgraded its rating on Trade Desk to sector weight from overweight.
"Global economic pressures, wars, and tariffs have created an environment that is harder for some brands and some brand categories to grow," Chief Executive Jeff Green said on an earnings conference call, according to a FactSet transcript. "Still, this environment also creates lots of opportunity for change and upgrade."
Trade Desk shares were down 5.8% intraday Friday. The stock is down 42% year to date.
"The macro conditions plus (artificial intelligence) innovations are making the global advertising ecosystem as dynamic and changing as ever," Green told analysts. "We are in the best position to benefit from this current environment."
For the quarter ended March 31, non-GAAP EPS fell to $0.28 from $0.33 a year earlier, while net sales climbed 12% to $688.9 million. Wall Street's views were for $0.32 and $678.9 million, respectively.
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