Regarding the topic of the article, I'm curious about the long-term impact of AI on TTD's data-driven model, especially with the walled gardens tightening. How do you see that playing out? Your analysis on their open internet position is truely insightful.
Great question. A few quick thoughts below. Overall, I don’t think AI pushes the landscape in a new direction — it mainly reinforces the same forces already at play: who has the strongest data, who can ship the fastest, and how much advertisers value neutrality.
Thoughts:
1. Speed of execution still matters.
TTD has a long track record of shipping early (UID2, retail media integrations, CTV measurement). If AI turns into a rapid-iteration race, their ability to move quickly becomes a real advantage.
2. AI quality depends on data quality.
AI is only as good as the data it learns from. If UID2 adoption slows, or if open-internet signals weaken, walled-garden AI will improve faster simply because they have richer, closed-loop data to train on.
3. AI lowers the barrier but also raises expectations.
TTD’s AI stack (Koa → Kokai) reduces the skill and resource burden, allowing them to serve smaller advertisers who historically lacked data science capabilities. But Meta and Google (and increasingly Microsoft) are exceptional at packaging AI into simple, fully automated workflows. That convenience could pull SMBs inward unless TTD keeps its own workflow just as easy to use.
We believe the market is currently pricing in a meaningful slowdown in revenue growth to below 15% over the medium to long term, which explains the depressed valuation. In our view, if TTD can demonstrate sustained growth of 15% or more, its valuation should revert toward the trend line shown in the scatter plot—consistent with how the market prices peers delivering similar growth.
To cross-check this view, we ran a simplified DCF analysis. Our calculations suggest that a 10x multiple is justified under assumptions of a 15% revenue CAGR and a 30% free cash flow margin over the next 20 years, followed by a gradual decline thereafter.
Regarding the topic of the article, I'm curious about the long-term impact of AI on TTD's data-driven model, especially with the walled gardens tightening. How do you see that playing out? Your analysis on their open internet position is truely insightful.
Great question. A few quick thoughts below. Overall, I don’t think AI pushes the landscape in a new direction — it mainly reinforces the same forces already at play: who has the strongest data, who can ship the fastest, and how much advertisers value neutrality.
Thoughts:
1. Speed of execution still matters.
TTD has a long track record of shipping early (UID2, retail media integrations, CTV measurement). If AI turns into a rapid-iteration race, their ability to move quickly becomes a real advantage.
2. AI quality depends on data quality.
AI is only as good as the data it learns from. If UID2 adoption slows, or if open-internet signals weaken, walled-garden AI will improve faster simply because they have richer, closed-loop data to train on.
3. AI lowers the barrier but also raises expectations.
TTD’s AI stack (Koa → Kokai) reduces the skill and resource burden, allowing them to serve smaller advertisers who historically lacked data science capabilities. But Meta and Google (and increasingly Microsoft) are exceptional at packaging AI into simple, fully automated workflows. That convenience could pull SMBs inward unless TTD keeps its own workflow just as easy to use.
Why does 15% revenue growth imply a valuation of 10x revenues?
We believe the market is currently pricing in a meaningful slowdown in revenue growth to below 15% over the medium to long term, which explains the depressed valuation. In our view, if TTD can demonstrate sustained growth of 15% or more, its valuation should revert toward the trend line shown in the scatter plot—consistent with how the market prices peers delivering similar growth.
To cross-check this view, we ran a simplified DCF analysis. Our calculations suggest that a 10x multiple is justified under assumptions of a 15% revenue CAGR and a 30% free cash flow margin over the next 20 years, followed by a gradual decline thereafter.