Greetings. Welcome to The Trade Desk Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Chris Toth. You may begin.

Thank you, operator. Hello and good afternoon to everyone. Welcome to The Trade Desk, fourth quarter 2023 earnings conference call. On the call today are Founder and CEO, Jeff Green and Chief Financial Officer, Laura Schenkein. A copy of our earnings press release can be found on our website at thetradedesk.com in the investor relations section. Before we begin, I would like to remind you that except for historical information, some of the discussion and our responses in Q&A may contain forward-looking statements which are dependent upon certain risks and uncertainties. These forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. Actual results may vary significantly and we expressly assume no obligations to update any of our forward-looking statements. Should any of our beliefs or assumptions prove to be incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. I encourage you to refer to the risk factors referenced in our press release and included in our most recent SEC filings. In addition to reporting our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures can be found in our earnings press release. We believe that providing non-GAAP measures combined with our GAAP results provides a more meaningful representation of the company's operational performance. With that, I'll now turn the call over to Founder and CEO, Jeff Green. Jeff?

Hello, and thank you everyone for joining us. Today, I'm really excited to discuss our strong finish to the year in Q4, reflect on the progress we made in 2023, and explain why I'm so confident about our growth prospects in 2024 and beyond. Total spend on our platform in 2023 was almost $10 billion, a record for us. Revenue in the fourth quarter topped $600 million, the first time we have ever crossed that mark in a single quarter. This record spend helped drive revenue growth of 23% for the year, once again, significantly outpacing the broader digital advertising market. And of course, we had solid growth in an uncertain market in 2022, when many of our competitors were exiting that year comparatively flat. In fact, in Q4 of 2022, we grew by 24% year-over-year. So, 23% growth in 2023 on top of very strong growth in 2022 is once again leading the market. We generated adjusted EBITDA of over $770 million in 2023 and $543 million of free cash flow. This relentless focus on profitability and growth allows us to keep investing in innovation, ensuring we are always bringing the best possible value to our clients, whether it's our game-changing Kokai launch or new approaches to identity and authentication for the open internet. While there is much to celebrate about 2023, I'm even more excited about 2024 and beyond. I've never felt more confident heading into a new year. I believe we are uniquely positioned to grow and gain market share, not only in 2024 but well into the future, regardless of some of the pressures that our industry is facing, whether it's cookie deprecation, growing regulatory focus on walled gardens, or the rapidly changing TV landscape. These industry shifts represent tremendous growth opportunities for us. Shifts in our nearly $1 trillion global advertising market are not dissimilar from shifts in all large markets, including the equities markets. When macro changes come to the equities markets, caused by economic velocity changes, Fed moves, or governmental changes, these sorts of macro shifts force the smart money to rotate. Or said another way, macro changes almost always force a revaluing of the market. Every investment is scrutinized and adjusted. Similarly, the Internet is being revalued once again. We've seen this many times before. During the pandemic, people streamed more and we got more inventory, and the value of choice in CTV helped create better performance, so the value of CTV went up. Things shifted. We saw it again in 2021 when Apple made changes to limit relevant advertising in its operating system, impacting their browser and their mobile environments. We simply adjusted and we bought two segments of the ecosystem with better price discovery and performance, which were still at times inside the Apple ecosystem, but often were not. Often, people looking at our massive global industry continually overlook significantly different strengths, weaknesses, and opportunities for different types of companies. Some wrongly think only big companies win, and smaller companies like us don't. That paradigm is completely wrong. In general, the current shifts will help companies with authenticated users and traffic, which also sit beside a large amount of advertiser demand. These macro changes hurt those, especially content owners and publishers who don't have authentication. This year, CTV and audio have big opportunities ahead, and the rest has pockets of winners and losers. But nearly everyone will be either better off or worse off. I believe 2024 is a year of volatility for the global advertising market. And for those who are prepared, like The Trade Desk, it is an opportunity to win share. Our platform is set up to make the most of any signal that can help advertisers drive relevance and value. Our platform now sees about 15 million advertising impression opportunities per second. And we effectively stack rank all those impressions better than anyone else in the world based on probability of performance to any given advertiser without the bias or conflict of interest that plague most walled gardens. With UID2, Kokai, and advances in AI in our platform, we now do this more effectively than ever before. Our work in areas such as CTV, retail data, and identity are helping build a new identity and authentication fabric for the open internet. Regardless of how the environment evolves around us, we will always be able to help advertisers find the right impressions for them. A great example of this is the work we are doing with HP. They initially started to think about new approaches to identity because of the imminent cookie deprecation in Chrome. But while the conversation started there, it quickly turned to how new identifiers, such as UID2, could help manage campaigns across all channels, especially channels with high levels of user authentication. HP started using UID2 for CTV campaigns on Disney and Hulu, Disney being a notable and early adopter of UID2. HP started with their first-party data that consumers had consented to provide after making a purchase. That data was then matched with UID2s on our platform. As a result, HP segmented its audience into specific groups, allowing better targeting and measurement of specific product campaigns with more accuracy. HP was then able to link ad exposure data from UID2 identifiers with the device registration data in its CDP to connect consumers with actual online conversions and sales. That measurement proved to be more effective than the multi-touch attribution model that HP had been using, according to Caitlin Nardi, their head of programmatic for North America. This is a great example of how we're improving advertising outcomes for a major global brand by integrating new approaches to identity, authenticated audiences in high-growth channels such as CTV and retail sales conversion data. It all started with a conversation about cookie deprecation, but the answer was something much more advanced, which speaks to the way that most major advertisers are innovating with us. And it's why we're embedding these innovations into Kokai. As I've said before, walled gardens are not an optimal competitive environment for the open internet. The open internet will continue to challenge the walled gardens as the place where the very first advertising dollar is spent because for the most part, premium content is outside of the walled gardens, and all the questionable user-generated content is inside of the walled gardens, from cat videos to political rants to hate speech to cyberbullying. Walled gardens simply use self-reported numbers in an increasingly opaque black box. Meanwhile, retail data and premium content are making the open internet more compelling than ever. I predict this trend will accelerate during this year, which, of course, is an election year. I think it's worth spending a bulk of my time unpacking the transitions we are seeing in the industry, as it will highlight why we continue to outperform and why I'm so confident about our growth potential moving forward. To do that, I'd like to cover three main areas. First, how advertising channels such as CTV, retail media, and even digital audio are helping replumb the internet from an advertising perspective. Second, what the future of relevance in advertising looks like as the identity landscape evolves. And third, why Kokai helps us advance our growth opportunity in the context of all of this. In order to understand some of the more interesting drivers of our business, I think it's important to note the macro environment we're dealing with. For nearly all of 2023, there was uncertainty, particularly around economic growth rates and recessionary fears. In that environment, CMOs became much more reliant on their CFOs, and CFOs needed to make sure that every dollar spent was in service of growth, which means CMOs had to focus more than ever on where they could achieve efficacy and deliver strong and provable return on ad spend. That pressure came at the same time that many CTV content owners around the world were seeing how much more valuable ad viewing subscriptions were to them than the higher-priced ad-free subscribers. It is not a coincidence that our growth in 2023 was driven by ongoing strength in CTV and continued leadership through strong and expanding partnerships in retail and retail media. In each of these markets, advertisers can really put data to work and drive precision because they have a greater sense of confidence and who they are actually reaching. In CTV and other emerging channels such as digital audio, there's a logged-in authenticated user base. In retail media, our platform works with actual authenticated sales data. CTV continues to be the fastest-growing channel at scale for The Trade Desk. There's a ton of speculation right now about the future of the TV industry, but every major TV trend is good for us. Linear is shrinking and users are streaming instead. We have built our business around streaming premium content. Subscriptions are moving to ad-funded models and both consumers and content owners want that. As the industry oscillates back and forth from fragmentation to consolidation in all scenarios, we're partnering to provide demand from the biggest advertisers in the world. But one thing is clear through all of this, ad-supported streaming is going to be an essential strategy for any successful TV provider moving forward. Nearly every major streamer has stated that they make more money from their ad-supported tiers than from their subscription only, and was reported pretty extensively in recent weeks with the price of subscription models continuing to rise, consumer fatigue is settling in. There's only so much disposable entertainment money to go around. According to the Wall Street Journal, 25% of US streaming subscribers have canceled at least three subscriptions over the last two years, up from 15% for their prior two-year period. In fact, by hiking the cost of the no-ad subscription services, streamers are pushing viewers to the cheaper ad-supported options, because they are more lucrative. There is only one way for the CTV ecosystem to mature. Content owners in CTV and audio must present clear choices to consumers: pay for access to content by seeing a few relevant ads or pay more money to avoid them, or some kind of hybrid of those two. Consumers will have choice, and CTV and audio will find their coveted incremental users. Some want to pay with time and some want to pay with money. There's enough pressure to fund the CTV content machines that all of them have to get focused on a light ad load with high CPMs to create the best experiences for their users. While there is more than enough pressure on TV content owners to expand relevant ad programs, there is probably even more pressure on big players of audio. 2024 will be a big year for audio, depending on the strategic choices that those players make. Just like CTV, digital audio benefits from a highly authenticated, logged-in audience. Also like CTV, digital audio listeners are highly engaged. Advertisers have a captive audience that is engaged with quality, professional content, whether it's a podcast or your favorite music. Engagement is high. We are spending more time with audio streaming leaders in part because I believe they are in the early innings of seeing the value of data-driven advertising and about to embark on the journey that CTV companies began years ago. Another area of strong growth for us in the fourth quarter was retail media. Again, a major reason for this is that advertisers got to work with their first-party data. In the fourth quarter, we saw major new shopper marketing budgets shift to The Trade Desk as more advertisers started to move from a non-decision insertion order strategy, which has long been typical in the retail space, to one that's highly decision-making and leveraging retail media. A great example of an advertiser leaning into retail media is Samsung in Canada. A large percentage of Samsung's device and appliance sales take place through carriers and retailers. To understand how advertising influences consumer purchases in those channels, they needed a way to unlock their first-party data and combine it with retail data. Working with their agency, Starcom, we helped Samsung develop what they call the Samsung sales measurement tool on our platform. When buyers make a purchase, they are prompted to open an account with Samsung and opt to engage in marketing. With the right permissions, Samsung can then look back through their marketing activations across a large number of consumers and start to attribute campaign activities to different stages of the purchase funnel. This helps Samsung be much more precise with their campaign activities moving forward. Working with us, they can attribute the effectiveness of marketing directly on sales 19 times more effectively than they were previously. I spend time on these growth drivers not only to give you a sense of why I'm so confident in our prospects this year but also to underscore how major advertisers are thinking about identity and authentication. Which brings me to my second point or topic, the evolving world of identity. I don't think it's an understatement to say that there's considerable thrash in the industry driven by Google's recent decision to accelerate the deprecation of third-party cookies. It had previously been scheduled to begin deprecation at the end of March of this year but moved up to the beginning of the year in January. I want to be clear on one point: for all of the industry debate caused by these changes, The Trade Desk stands to benefit. As I said a few minutes ago, we see approximately 15 million ad impression opportunities every second on our platform, and the vast majority of the ad impressions that we value don't have anything to do with third-party cookies. When considering the fastest-growing channels of digital advertising, such as CTV or digital audio, they have never relied on cookies. Retail data does not rely on cookies. What our clients care about is reaching their audiences with precision and relevance. We help them do that using whatever signal is available to us. Increasingly, as I've discussed, the post-cookie world combines authentication, new approaches to identity, first-party data activation, and advanced AI-driven relevance tools, all to create a new identity fabric for the internet that is much more effective than cookies ever were. The internet is being replumbed, and our product offerings create the best outcome for all of the open internet. The offerings of the walled gardens often benefit them more than anyone else. Let's also remember that we've seen this movie before. Today, cookies have already been deprecated for around a third of all display impressions. Browsers such as Firefox and Safari made the transition several years ago. Neither of those shifts meaningfully affected our business. In fact, quite the opposite; we continue to innovate in a full range of ways for our clients to understand the relevance value of every advertising impression and price them accordingly. The value we add to advertisers and agencies has gone up with all these changes. Those shifts make it important to consider buying different impressions, and so we do. We're constantly helping buyers to know where to find value and performance. As the relative value of ads shifts somewhere else, we shift too. One example is the work we're doing with Unilever in Thailand. They were looking to raise awareness for their new detergent product, as well as test new identifiers that could advance addressability in a post-cookie environment. Using their first-party data as a seed, they leveraged UID2 to target relevant audiences and measured against Unilever's traditional audience-targeting methods. The results showed a marked improvement over these traditional methods, which include cookies across key areas of measurement such as click-through rate, brand awareness, and cost per completed view. Interestingly, this work relied on UID2s created from encrypted phone numbers, a big part of the identity fabric in Asia. This UID2 work with Unilever is now expanding into additional markets in Southeast Asia. I know you're going to ask me specifically about Privacy Sandbox because nearly everyone else does, so I'll touch on it here. I've written fairly extensively on it on our news platform, The Current, so you can see my thoughts in more detail. But the short version is that I believe Google has missed an opportunity to build something better. Increased complexity with decreased functionality is hardly a compelling offering. To publishers, they are effectively saying, do more work and make less money. I believe Privacy Sandbox is an incredibly complex product, understood fully by very few people, which will likely degrade the Chrome user experience for publishers and brands, but especially for users. User personalization will break more often, and users will begin to be required to log in seemingly everywhere. Browser-based publishers, including mobile, will likely have to do what so many e-commerce sites already do—ask for an email address when you arrive. Consumers will experience a weaker experience for a while, and publishers will make less money until they change. However, this has less impact on advertisers, especially those with quality first-party data, and it is more likely to help The Trade Desk than to hurt us. For many reasons, we will be better off; a few of those include: First, we're on the buy-side, representing most of the Fortune 500 brands. We invested in UID2 many years ago, and in AI as well. Our business is increasingly built around CTV audio and environments that are almost always authenticated. Fewer cookies don't really matter a ton for us. It doesn't stop our work because we've been busy with other open internet pioneers building something much better. Where there is real risk is on the publisher side of the ad ecosystem, especially browser-based publishers. Others have reported that declines in publisher CPMs in Chrome, where cookies have been deprecated, are around 30%. That's potentially devastating for publishers, of course, not so much for advertisers who continue to have millions of choices a second on where to spend their ad dollars. But this threat to publishers comes as there are daily reports of journalism outlets laying off major swaths of their newsrooms amid a really tight business climate. While there are many reasons for the struggles that journalism outlets are having, one of the dirty secrets of the industry is that authentication rates there are surprisingly low. This means that they don't have any sense of who is visiting their destinations, and they've been reliant on cookies until now to create relevance for advertisers. Without either cookies or publisher authentication, advertisers won't value those ad impressions nearly as much. This is a wake-up call for publishers. The math is obvious; $1 CPM turns into $0.70 with cookie deprecation. We're often seeing $1 CPM turn into $1.30 when UID2 is layered on it. When publishers contrast $1.30 versus $0.70, the math is more obvious than ever. Some cases, they only recently started looking at the math when the dollar suddenly turned into $0.70. So, 2024 has started off as a year of action for our industry. On the positive side, we're seeing more publishers lean into single sign-on authentication tools that they control. For example, we've seen a major uptick in publishers deploying Openpath. These include Snopes, OK Magazine, Radar Online, and many others. We expect many more to deploy this in the months ahead. All of this brings me to my third point: our new Kokai platform. Much of what I've been talking about today is embedded into Kokai. In particular, Kokai represents a completely new way to understand and score the relevance of every ad impression across all channels. It allows advertisers to use an audience-first approach to their campaigns, targeting their audiences wherever they are on the open internet. Our AI optimizations are now distributed across the platform, helping optimize every element of the ad purchase process. Kokai is now live and, similar to Nxtwave and Solomar, it will scale over the next year. It's our largest platform overhaul in our company's history, and I could not be more proud of the incredible work of our product and engineering teams. In Q4, I and our product team personally visited four continents and met with hundreds of clients in each location. After spending half a day in each location with almost a thousand clients in total, almost every single one of our clients believes that Kokai is a major upgrade to our platform and the ecosystem. We have never launched a product with this much change, and we've never launched a product with this much confidence that what we have represents a major advance in advertiser performance and that it is going to be enthusiastically adopted. So, let me wrap up. I've covered a lot of ground, but there's a lot going on in our industry. And I thought it was important to reiterate why I feel so confident about our position and our prospects. In closing, I'd like to just summarize a few key points. First, agencies and brands are becoming more deliberate with their campaign budgets. They are shifting ad dollars to where they can be more data-driven and precise in everything they do, driving them to sign joint value partnerships with us at a record pace. Exiting last year, over a third of our business fell under a joint value partnership. Second, we are reinforcing our position as the ad tech AI leader. We've been embedding AI into our platform since 2016, so it's nothing new to us. But now it's distributed across our platform so our clients can make better choices among the 15 million ad impression opportunities per second, understanding which of those ads are most relevant to their audience segments at any given time. Third, connected TV continues to be the fastest-growing channel of our business at scale and the key driver of overall omnichannel growth. It's not just here in the US; we're seeing strong CTV growth across EMEA and Asia as more CTV inventory comes online. CTV companies are driving a ton of innovation in our industry, particularly around identity, and it’s no coincidence that they have been among the earliest and most enthusiastic adopters of UID2. Fourth, retail media has become one of the fastest-growing areas of our business, and we expect this to continue in 2024. Retail partnerships and retail media are revolutionizing the way many advertisers think about connecting advertising to actual consumer actions. More and more of the world's leading retailers are now active on our platform. Fifth, global expansion. We've made significant investments outside the US over the last few years in CTV, retail media, and in our overall go-to-market strategy. Our business outside the US grew at a much faster pace than here in the US last year. We believe we are in a position to accelerate our international growth in many of the markets we serve. Sixth, we've seen a rapid uptick in adoption of UID2 and EUID as a new identity currency for the open Internet from advertisers, publishers, and everyone who serves them. Perhaps even more encouraging, we're seeing significant performance improvements for advertisers who are using UID2, and this is accelerating adoption. Seventh, of course, 2024 stands to be a major year for political spending here in the United States. Since 2016, The Trade Desk has been a vital platform for leading political advertisers. This year, we expect to gain more share in this segment, and we believe political spending will increase as the year progresses. The Trade Desk is very well-positioned as the advertising industry evolves. We built our business model on the belief that objectivity and aligning our interests with buyers would matter more and more over time. Objectivity matters more now than it ever has before, and that trend will continue as walled gardens continue to grow their conflicts of interest faster than ever. We are executing well and poised for growth. 2023 was an excellent year, and we expect 2024 to be even stronger. Now I'm going to turn the call over to Laura to discuss our financials.

Thank you, Jeff. Before I go through the details of the quarter, I want to build on Jeff's sentiments regarding the strides we've made in 2023 and emphasize the consistency in our strong execution. Over the course of 2022 and 2023, The Trade Desk delivered revenue growth over 20% every quarter, against what many would say were challenging two years for the digital advertising industry. Whether it's our work in areas such as CTV, retail data, our platform upgrading Kokai, AI advances in our platform, or helping build a new identity and authentication fabric for the open internet, The Trade Desk remains resilient, and we continue to execute efficiently. Now onto our results. We ended the year with a strong Q4 and our teams have carried the momentum into the start of the year. Q4 revenue was $606 million, a 23% increase year-over-year. Excluding political election spending, which was a mid-single-digit percent of revenue in Q4 2022, revenue grew 27% year-over-year. I am particularly proud of the $284 million of adjusted EBITDA we generated during the quarter, representing a margin of 47%, which helped drive full-year adjusted EBITDA margin to about 40% and full-year free cash flow of over $540 million. Our results in both Q4 and for the full year 2023 were another example of our ability to grow our top line and gain share while simultaneously investing in our business and platform to support future growth. For 2023, we ended the year with $9.6 billion in spend on our platform and about $1.9 billion in revenue, representing 23% revenue growth. As expected, our take rate in 2023 once again remained within a very consistent historical range. We continue to execute on the model set out at the company's inception of keeping take rate consistent while substantially increasing the value that our platform provides. We remain focused on our proven strategy of being the default demand-side platform for the open internet, representing only the buy side and avoiding conflicts prevalent in our industry. The shift of advertising dollars from linear to connected television continues to be a core driver of our business. In Q4, CTV again represented our fastest growing channel at scale around the world, with particularly strong growth internationally. We saw strong momentum in retail media as we won incremental shopper marketing budgets, and more advertisers continue to utilize retail data in their campaigns. We continue to see positive results from increased utilization of first-party data, as the enhancements we've made throughout the year are helping deliver better outcomes for advertisers. From a scale channel perspective in Q4, video, which includes CTV, represented a mid-40s percentage share of our business and continues to grow as a percentage of our mix. Mobile represented a high 30s percentage share of spend during the quarter. Display represented a low double-digit percent share of our business, and audio represented around 5%. Geographically, North America represented about 88% of spend and international represented about 12% of spend for the fourth quarter. It's worth noting international growth again outpaced North America for the fourth quarter in a row. As I mentioned, CTV across international regions was particularly strong during the fourth quarter and throughout 2023. Turning now to expenses. Q4 operating expenses, excluding stock-based compensation, were $340 million, up 29% from a year ago. During the quarter, we continued to make investments in our team and platform, particularly in areas like sales and marketing and technology development, as we positioned the organization for long-term growth. Income tax expense was $63 million in the fourth quarter, driven primarily by our profitability and non-deductible stock-based compensation. Adjusted net income for the quarter was $207 million or $0.41 per fully diluted share. Net cash provided by operating activities was $91 million, and free cash flow was $64 million in Q4. Days sales outstanding exiting Q4 were 101 days, down three days from a year ago. Days payable outstanding were 83 days, also down three days from a year ago. We ended the year with a strong cash and liquidity position, with our balance sheet having about $1.4 billion in cash equivalents and short-term investments at the end of the quarter. We have no debt on the balance sheet. Finally, we repurchased $220 million of our Class A common stock via our share repurchase program during Q4. As you have seen during our press release, today we announced new authorization under our share repurchase program of up to $700 million, which includes $53 million remaining in the existing authorization. Given the strength of our balance sheet, coupled with the consistent cash flow generation of our business model, we plan to continue opportunistically repurchasing shares and offsetting dilution from employee stock issuances. Now turning to our outlook for the first quarter. We continue to see strong spend in our key areas such as CTV and retail media. We estimate Q1 revenue to be at least $478 million, which would represent growth of 25% on a year-over-year basis. We estimate adjusted EBITDA to be approximately $130 million in Q1. In terms of our operating plan, we plan to continue to invest in our business and grow headcount efficiently. Similar to 2023, we expect to grow headcount at a rate slower than revenue growth. Considering our unique ability to generate both strong top-line growth and profitability, we continue to manage the business with a balanced perspective that allows us to seize investment opportunities while retaining flexibility for margin improvement. In closing, I'm very pleased with our performance in 2023 and our setup in 2024. We are executing to capture growth within key secular drivers like CTV and shopper marketing. We're amassing industry support and partnerships for UID2 and OpenPass. Our international business is poised to continue driving our growth. We continue to gain share within the political vertical heading into the US presidential election cycle. We're adding more value for our customers with our biggest product release ever with Kokai, and we continue to innovate our platform. We enter 2024 in a strong position to grow and gain more share. We remain optimistic about the prospects for our business this year and in the years to come. That concludes our prepared remarks. And with that, operator, let's open up the call for questions.

Thank you. And the first question comes from Shyam Patil with SIG. Please proceed.

Hey, guys. Great job on the quarter and the results. I just had one question. Jeff, you talked about this a little bit in your prepared remarks and Laura did as well, but could you just talk maybe a little bit more detail about how you view the state of the digital ad market today relative to how it was when you last reported your competitive positioning and how investors should be thinking about your growth in 2024? Thank you.

Absolutely. First, Shyam, thanks so much for the question. Second, before I just jump into the answer, I just want to give a shout out to Bryce, my Chief of Staff and his wife Julie, who are listening to this call right now from the hospital where they're about to induce labor for their first child. Just wanted to say, thank you for listening, thanks for all you do, and I wish you the very best. With that, let me jump in to answer your question. So the current ad environment is really fantastic for The Trade Desk because, first of all, it is a buyer's market. Our competitive position cannot be better because we focus on the buy side. When looking at 15 million ad impression opportunities every second, we do so with objectivity. The fact that we don’t own any media allows us to objectively figure out what to buy. When you couple that with our technology and client service, both are the best they’ve ever been, consistent credit has been given to us as being the best in the space. This has enabled us to perform as we have, achieving over 20% growth each quarter for the last eight quarters. I don’t think any scaled ad-funded company or walled garden, large or small, can say that. Moreover, we have unique tailwinds helping our environment that are also benefiting us. For one, CTV's shift continues to accelerate, and there’s more involvement in ad-funded TV, where subscribers that used to focus on subscription services, without ads, are now adopting ads at an unprecedented pace. I anticipate that we will see similar dynamics play out in the premium sectors of audio over the next year or two. Concurrently, growth in retail media is also robust. Macro trends making it harder for growth outside the United States are showing improvements as well, including green shoots in many international markets. In the US, this year is an election period, adding more political spending to the mix. Discussions about cookie deprecation and the turmoil in journalism are catalyzing a realization of the need for consumer-friendly opt-in authenticated traffic so that CPMs can maintain or improve. We’re seeing remarkable tailswind regarding UID2, and we're launching the most sophisticated and extensive product we’ve ever built in Kokai, anticipating a strong Q1 and an ongoing outperform against the digital advertising landscape.

Thanks, Shyam.

Awesome. Thank you for taking the questions and congrats on the solid print. So Jeff, just as a follow-up to your ad-supported TV commentary, how do you think about the impact of Amazon's ad-supported Prime Video offering on the CTV market in general and Trade Desk’s growth in particular? There are fears out there that just a massive influx of CTV inventory at a lower CPM could depress CPMs across the segment without necessarily driving more demand. So just how do you think about that for the industry and for you guys in particular? Thank you.

You bet. Thank you. I don’t believe the pool of inventory will be enormous. I think it will be meaningful, though, and will further expand the supply. However, instead of creating a huge imbalance, I feel it will slightly tip the scale, making it a buyer's market where supply outweighs demand. But overall, this situation is good for the ecosystem and creates opportunities for us. It means that CTV companies will need to compete more intensely for attention and subscribers, which will require them to improve ad experiences and reduce the number of ads while making them more relevant. The only way to do that is through programmatic methods. This is likely one reason why every major streaming service that offers ads has adopted UID2 for better performance. It does mean that the market is shaping to grant more wins to companies that allow for UID2 and facilitate more relevant advertising. In my view, Amazon's move will move towards this direction. They are adding a greater volume of inventory but facing a dilemma; unlike Netflix, which can raise prices easily, Amazon's bound to their Prime service. Consequently, they have to adjust the volume of ads accordingly. Ultimately, this will enhance the ad experience for users, more clearly defining competition among streaming services and facilitating auctions that include our participation.

Thanks, Youssef.

Okay. Thanks a lot for taking my question. Jeff, could you please comment on just your view or revised views? There is one on cookie deprecation. We read your blog post on The Current a few weeks ago. Basically, there is a healthy level of debate on the impact cookie deprecation could have on Trade Desk, especially as the year continues. Could you help us think through the puts and takes of that and why Trade Desk may not be as impacted or how much it would be impacted? Thanks a lot.

You bet. Thanks, Shweta. I appreciate the question. I was hoping we would get asked this question so that we could discuss the topic. There’s been so much written about cookie deprecation and Google’s Privacy Sandbox, which are two separate issues. Cookies are being deprecated, making it a bit harder to create personalization if you do nothing. Some will be better off, while others will be worse off; publishers are most affected. Publishers with almost 100% authentication, like many in CTV, won’t face significant challenges from cookies. Looking at 15 million ad opportunities every second, while authentication covers around half of that, we might see a decrease of approximately 10%. So instead of looking at 7 to 7.5 million, it will fall to 6.5 million, which won't tremendously shift our overall business. People often misunderstand this, but it represents a reevaluation of the internet, where sites will be more or less valuable. The rolling out of advertising opportunities gives buyers a chance to determine value and perform well, which is beneficial for us.

Thanks, Shweta.

Thank you, good afternoon. Jeff, thank you for the helpful color on the cookie deprecation issue. In a related topic, can you set the record straight on Privacy Sandbox? What is your view, and what is Trade Desk testing there? What does it even matter to you? Because there's been some discussion in the industry press. There is some confusion, I would say. Thank you so much.

Thanks, Vasily. I appreciate the question. As mentioned before, I've written extensively on Privacy Sandbox on our news platform, The Current. If anyone wants to read more details, it's available there. To be clear, we see cookie deprecation happening along with Google’s Privacy Sandbox, which is a series of APIs. I believe that Google has missed an opportunity to build something more effective; they’re increasing complexity and simultaneously deprecating existing solutions. I don’t think any good product makes things more complicated while removing established tools. While we may seem critical, we will still test it. I believe Google’s product will likely deteriorate the user experience on Chrome, making it more complex. Publishers may struggle, but this will relatively benefit The Trade Desk. We’ve built our business around authenticated environments. So, we’re in a good place regardless of the sandbox's challenges for advertisers, especially with quality first-party data. UID2 gives us a stronger market presence.

Thanks, Vasily.

Okay, great. Thanks. Good afternoon, everybody. I've got two questions. Jeff, you mentioned your single sign-on initiative, OpenPass, in the press release and your prepared remarks for the first time in recent memory. Could you talk a little bit more about that initiative? It's important to your identity and authentication strategy? And even more specifically how it works together with UID2? The second question is just maybe for Laura on this one, but also in the prepared remarks, Jeff mentioned that JVPs now represent one-third of your business. Can you give us any more detail on how that breaks down between agencies and direct client relationships? Thank you.

You bet. Let me explain OpenPass. This is in a closed invite-only beta, and you're right, we haven't talked about it much. We've experienced scoops in the past where others discuss before we get a chance. OpenPass makes signing into websites easier, much like Shopify’s user-friendly checkout experience. The first time you use it, you may not realize the benefit, but after subsequent visits, it becomes evident how quick and secure it is. This is the opposite of Google's product, which complicates everything. We’re excited about the early results, and the flywheel effect on ad relevance is compelling. Laura, the second part of the question is yours.

Yeah, thanks, Dan. The joint value partnerships (JVPs) indeed continue to be a key driver of spend growth in our business. As we noted, about a third of our spend was under a JVP exiting 2023, and we had over 45 JVPs with a robust pipeline of additions. Those JVPs represent billions of dollars of future spend. They create a win-win for The Trade Desk, agencies, and brands by enabling opportunities that drive ROI for marketing budgets. While we don’t break down the percent from agencies versus brands, our relationships with agencies have never been stronger. We recognize and appreciate their key role in executing brand strategies, and we focus on getting closer to all parties involved in our platform’s spending.

Thanks, Dan.

Hi, everybody. Thanks for taking the questions. I have two. The first one is just on the conversation with advertisers. At the time you guided to the fourth quarter, I think you had seen, at least in certain verticals, some brand spend weakness through October and November, but obviously the quarter came in significantly ahead of your guidance at that time. So, how did the conversations evolve with advertisers? Where did you see them lean in, in ways that you didn't expect? And how has that trended through the beginning of 2024? The second question is just on the growth outside the US. I think there’s a comment before about seeing green shoots there and continued faster growth than in the US. Are there specific ways that advertiser behavior or the inventory are changing that you would call out? Thank you.

You bet. Thank you for the questions. Early in Q4, there was increased hesitation in the landscape, driven by macroeconomic pressures. Overall, the angst in the CFO's office has increasingly correlated with that of the CMO's. As the quarter progressed, some advertisers leaned in while others remained more cautious, leading to variability in spending across the board. Ultimately, our spending increased beyond expectations. Regarding the international outlook, we’re witnessing significant shifts in the macro environment that make it easier outside the US to thrive. That said, markets like the UK and Germany are experiencing CTV growth at a much faster pace than the US. They are slightly behind in ad-funded models but are now showing signs of robust growth. It's a similar trend to what we witnessed in the US a few years ago and is encouraging for our international strategy.

Thanks, Matt.

Thank you. I'll add my congratulations to you guys on the quarter and congratulations, Bryce, on his baby if you're still listening. So, Jeff, I think from the product event when we were talking about Kokai, one thing that really intrigued investors was this idea of being able to deliver attribution and KPIs and segment it throughout the funnel, not just providing it to the last click. Can you discuss what excites your customers about Kokai? What’s driving adoption and how this new attribution approach could change spending patterns longer-term?

You bet. Thanks for the question. There’s so much to discuss inside Kokai. We went on a world tour this Q4 across four continents to meet with customers about the product we're launching. I was initially concerned about the reluctance to adopt due to the amount of change; however, reception was phenomenal. They are really excited about our streamlined reporting and increased speed. Some reports, previously taking several minutes, now generate almost instantly. We’ve also integrated AI in forecasting, allowing better predictions before purchasers make decisions. This prevents mistakes that could limit spending efficiency. We’ve placed data and decisions side by side in a new way, simplifying attribution methodologies and reporting. We're empowering users while avoiding complexity increases, which has made them very eager to adopt Kokai down the line—adding immense confidence regarding our future performance.

Yes. Hey, it's Tim O'Shea on for Brian. Thanks for taking my question. Look, we've spoken about the impact of cookie deprecation, but what about timing and readiness? You work with many advertisers and agencies. Do you believe advertisers are prepared for Google to deprecate the remaining cookies in 2024? If not, what needs to be done? And what is being done to prepare them? Additionally, what happens to the ad market if Google decides to deprecate right before the holidays and the US presidential election? I'm curious, will there be a pause? Will there be a pullback? I know Jeff spoke about what happened when Apple made similar policy changes in the past. Thank you for taking my question.

You bet. I love this question. The answer is some are ready, while others are not. I believe The Trade Desk is in a phenomenal position. Much of our technology stack revolves around an identity graph that is incredibly robust—thanks to our efforts on UID2 launched before the pandemic. Most advertisers aren't working as much as they could be, but companies are increasingly pressured to act quickly. The reality is they want to respect consumer privacy while still being able to use first-party data effectively, but many internal meetings could expedite their processes. What worries me more is the publisher side; 90% of publishers are not prepared for this change. If Google accelerates changes in cookies, publisher CPM prices will drop as advertisers can’t effectively advertise on those sites. This could noticeably impact the election cycle if publishers struggle to monetize or maintain their news content quality.

Thanks for the question. And John, can you close out the call, please? Thanks.

Absolutely. Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.