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April 11, 2025
The Lithography Inflection Point - How Two Different Approaches to EUV Could Reshape the Semiconductor Industry
By
Kristal Investment Desk
Beyond the Headlines: The Trade Desk, the Open Internet, and the Future of Advertising
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There's a story Jeff Green, co-founder and CEO of The Trade Desk (TTD), likes to tell about the early days. It wasn't about landing a Fortune 500 client, though those would come. It was about a seemingly small partnership, back in 2012, with a then-obscure mobile ad exchange called Nexage.
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Access to a burgeoning mobile inventory that the walled gardens of the time – Google and the nascent Facebook ad platform – largely ignored.
That partnership, built on the principle of openness rather than control, was a microcosm of the bet TTD was making: that an independent, objective platform, serving the buy-side of the advertising equation, could thrive in a world increasingly dominated by giants.
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For eight-plus years, that bet paid off. Quarter after quarter, TTD didn't just meet guidance; it exceeded it. A culture of under-promising and over-delivering became ingrained. Investors, initially wary of any ad-tech company after the dot-com bust and the rise of Google, began to trust. TTD was the anti-walled garden, the champion of the open internet, and the numbers consistently backed up the narrative.
Then came Q4 2024.
The numbers, on their own, weren't catastrophic. Revenue of $741 million, up 22% year-over-year.
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Q1 2025 guidance was also soft, with revenue growth projected at 17% and a significant miss on EBITDA. The market, accustomed to TTD's consistent outperformance, reacted swiftly and harshly. The stock plunged.
The immediate reaction was predictable.
Analysts downgraded ➡️ The narrative shifted.
But to understand whether this is a fleeting stumble or a sign of deeper issues, we need to look beyond the immediate numbers and consider the context.
The digital advertising world is in constant flux. Privacy regulations are tightening. Apple's IDFA changes and Google's (eventually) phasing out of third-party cookies are reshaping how advertisers target and measure campaigns.
Competition is intensifying, not just from the usual suspects (Meta, Google, Amazon) but also from a growing number of retail media networks (Walmart, Kroger, etc.) and even from brands themselves, some of whom are bringing more of their advertising operations in-house.
🔑 Unified ID 2.0 (UID2): is its answer to the cookie-less future, offering a privacy-conscious, open-source identifier
🔗 OpenPath: is its attempt to streamline the supply chain, connecting publishers directly to TTD's platform.
🤖 Kokai: its new AI-powered platform, is designed to be the brain of the operation, optimizing bids, targeting, and measurement in a world of increasing complexity.
Kokai is central to understanding the Q4 miss. The platform represents a significant upgrade, promising more data-driven decision-making and greater efficiency. But launching a new platform while maintaining an existing one is, to put it mildly, challenging.
TTD found itself running two parallel systems – the legacy platform and Kokai – for longer than anticipated. This created friction, both in terms of operational costs and revenue generation.
Faced with a few lingering issues – perfecting the user interface, fine-tuning AI-powered forecasting – TTD opted to prioritize product quality over hitting a quarterly revenue number. This is, in itself, admirable. But it also raises questions.
Was the delay purely strategic, or were there underlying adoption challenges? Is Kokai, for all its power, too complex for some users? Are agencies, accustomed to the relative simplicity of walled gardens, hesitant to fully embrace a new, more intricate system?
This is where the analysis gets tricky. Are TTD's problems execution problems, solvable with internal adjustments? Or are they structural problems, indicative of a deeper shift in the market?
The execution argument is compelling. Green himself admitted to "execution missteps and tradeoffs." The company has undertaken a major internal reorganization, splitting engineering teams into smaller, more agile units, and refocusing sales teams on direct brand relationships. They're hiring senior leadership to address a perceived "talent bottleneck." These are all actions within TTD's control.
But the structural concerns are harder to dismiss. Consider:
🌱 The Walled Garden Resurgence: Meta's blowout Q4 results suggest that advertisers, in a period of economic uncertainty, might be prioritizing the perceived safety and scale of established platforms. Even if walled gardens are more expensive and less transparent, they offer a known quantity.
🛍️ Retail Media's Rise: Retail media networks are siphoning off ad dollars that might otherwise have flowed to the open internet. TTD is participating in this trend, but it's not clear they're benefiting as much as the retailers themselves.
⚖️ The Objectivity Paradox: TTD's core value proposition is its objectivity – its lack of conflict of interest. But in a world increasingly dominated by vertically integrated giants, is objectivity enough? Can TTD compete with the sheer scale and data advantages of Google, Meta, and Amazon?
📺 The CTV Conundrum: Although the company is betting big on CTV, the supply and demand have not yet matched.
🔍 The pressure from analysts and investors: TTD has always been under the microscope, more scrutiny will be placed on following quarters.
Despite these concerns, there are reasons for optimism. Connected TV (CTV) remains a massive, largely untapped opportunity. TTD's partnerships with Disney, Netflix, Roku, and others position it well to capture a significant share of this growing market.
Retail media, while competitive, is still in its early stages. And TTD's commitment to the open internet, while perhaps idealistic, could ultimately prove to be a winning strategy if advertisers and publishers tire of the walled gardens' control. Moreover, TTD's international revenue remains relatively small.
Green's framing of the situation is telling. He emphasizes that the miss was due to internal factors, not external forces.
He insists that TTD is playing the long game, prioritizing product quality and strategic partnerships over short-term gains. He's betting that, in the end, objectivity and transparency will win out.
🌟 Best-Case Scenario:
TTD quickly resolves its execution issues ➡️ Kokai gains widespread adoption, driving increased efficiency and better results for advertisers ➡️ The company's investments in CTV and retail media pay off ➡️ International expansion accelerates ➡️ The stock resumes its upward trajectory. 📈
⚠️ Worst-Case Scenario:
The Q4 miss signals deeper issues ➡️ Persistent operational problems continue ➡️ Intensifying competition pressures TTD ➡️ Ad spending shifts to walled gardens and retail media networks ➡️ Market share erodes, margins compress ➡️ The stock becomes a value trap. 📉
Remember that small partnership with Nexage? It wasn't about dominating the market overnight. It was about building a foundation, about creating a different kind of ad-tech company. TTD, at its core, is still that company. It's still betting on openness, on transparency, on empowering the buy-side.
The question is whether that original DNA, that willingness to prioritize long-term value over short-term gains, is still strong enough. The signals to watch in the coming quarters are clear:
The Q4 miss was a wake-up call.
It exposed vulnerabilities and challenged the narrative of uninterrupted success. But it wasn't, in itself, a death knell. TTD has a strong foundation, a differentiated platform, and a clear vision for the future.
The next few quarters will be telling. The market will be watching, not just for numbers, but for a renewed sense of purpose and execution. The open internet, and TTD's place within it, hangs in the balance.
Disclaimer:
The views in the blog post are for for informational purposes only and should not be considered as investment advice. Please contact your RM or Kristal.AI for investment advise.
By
Kristal Investment Desk
March 1, 2025
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April 11, 2025
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We are licensed in Singapore, Hong Kong and India. Kristal Advisors (SG) Pte. Ltd. presently operates under the CMS license by the Monetary Authority of Singapore (MAS). Kristal Advisors (HK) Ltd is licensed and regulated by the Securities and Futures Commission (SFC) to carry out Type 4 and Type 9 regulated activities and is not involved in the discretionary management of any collective investment scheme. Kristal Advisors Private Ltd. presently operates as a Registered Investment Advisor under the jurisdiction of the Securities and Exchange Board of India (SEBI).
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