The Trade Desk stock surges 18% on strong Q1 2025 results, AI-led ad platform Kokai gains traction

Why Did The Trade Desk Stock Surge 18%? A Deep Dive into Q1 2025 Results and Investor Sentiment

The Trade Desk, Inc. (NASDAQ: TTD) saw its stock rally 18.60% to close at $71.04 on May 9, 2025, following the release of its first-quarter results. The jump in share price reflects renewed investor confidence driven by strong revenue growth, accelerating adoption of its AI-driven ad platform Kokai, and management’s sharp positioning against walled gardens amid intensifying regulatory scrutiny. Despite broader digital advertising budget pressures, the company managed to outperform expectations, gaining market share and reaffirming its long-term growth thesis.

How Did The Trade Desk Perform Financially in Q1 2025?

The Trade Desk reported revenue of $616 million for the quarter ended March 31, 2025, marking a 25% year-over-year increase compared to $491 million in Q1 2024. GAAP net income rose to $51 million from $32 million, translating to a net income margin improvement from 6% to 8%. Diluted GAAP earnings per share (EPS) climbed to $0.10, while non-GAAP EPS stood at $0.33—up from $0.26 a year earlier.

Adjusted EBITDA reached $208 million, delivering a 34% margin, slightly higher than the 33% recorded in the same period last year. Free cash flow for the quarter was robust at $230 million, and the company ended Q1 with $1.7 billion in cash, cash equivalents, and short-term investments. Notably, The Trade Desk repurchased $386 million of its Class A stock during the quarter, underlining confidence in its long-term valuation.

What Role Did Kokai and OpenPath Play in The Trade Desk’s Outperformance?

A key contributor to the company’s operational strength was the accelerated adoption of its AI-enhanced Kokai platform. CEO Jeff Green noted that Kokai is already being used for nearly two-thirds of all ad spend on the platform and is on track to reach full adoption by year-end. The platform’s machine learning capabilities—powered by the Koa AI engine—have helped clients achieve material cost efficiencies, including a 42% reduction in cost per unique reach and a 24% drop in cost per conversion.

One case study involving Deutsche Telekom’s MagentaTV revealed an 11x improvement in post-click conversions and an 18x improvement in conversion cost efficiency. These tangible outcomes are increasingly convincing clients to transition from Solimar, the company’s legacy system, to Kokai for full-funnel media optimization.

Meanwhile, OpenPath, The Trade Desk’s supply path optimization initiative, is gaining broad industry traction. Publishers such as The Guardian, Warner Bros. Discovery, and NY Post have integrated with OpenPath, realizing significant revenue uplifts and fill-rate improvements. According to management, OpenPath’s transparency benefits have helped the NY Post grow programmatic revenue by 97% and improve inventory fill rates by 8.6 times within a year.

The recently completed acquisition of Sincera, a metadata company focused on illuminating the advertising supply chain, further strengthens Kokai’s capabilities. Integration of Sincera’s analytics is underway, with plans to reintroduce the product as OpenSincera—offered free to agencies and publishers for supply chain transparency.

How Is The Trade Desk Positioned in the Regulatory and Competitive Landscape?

In his remarks, Jeff Green stressed that regulatory headwinds facing major walled gardens like Google and Meta are structurally benefiting the open internet—and by extension, The Trade Desk. U.S. courts have recently ruled that Google is an illegal monopoly in two separate cases in 2025, and further lawsuits are spotlighting anti-competitive auction mechanisms used by Meta and Google’s ad tech stack.

Green characterised the legal setbacks for Google as pivotal for levelling the playing field in digital advertising. He argued that The Trade Desk’s business model—built around objectivity, transparency, and neutrality—places it in an advantageous position to absorb market share as regulatory scrutiny dismantles practices like “last look” and “blended auctions.”

These developments follow Google’s decision to delay phasing out third-party cookies in Chrome, which, while not a primary revenue stream for The Trade Desk anymore, underscores the alignment between regulatory evolution and the company’s strategic direction. As governments globally move to limit the monopolistic tendencies of closed ad ecosystems, The Trade Desk is doubling down on its role as the leading demand-side platform (DSP) for the open internet.

What Were the Geographic and Channel Trends in Q1?

CTV (connected TV) continued to be the company’s fastest-growing and largest channel, representing a high-40s percentage of The Trade Desk’s total ad spend. The trend reflects the secular shift from linear TV to streaming and ad-supported video on demand (AVOD). Mobile advertising accounted for a mid-30s percentage of spend, while display and audio comprised a smaller share.

Geographically, North America accounted for 88% of Q1 spend, with international markets contributing 12%. However, international growth outpaced North America for the ninth consecutive quarter, driven largely by rising CTV adoption and expanding programmatic capabilities.

How Are Investors Reacting to The Trade Desk’s Outlook?

Investor sentiment turned bullish following the company’s Q1 results and second-quarter guidance. The Trade Desk expects Q2 2025 revenue of at least $682 million, implying 17% growth year-over-year. Management also forecast adjusted EBITDA of approximately $259 million, reflecting stable margin expansion despite ongoing macroeconomic uncertainty.

While acknowledging that volatility persists, especially with global brands reassessing digital ad budgets, the company underscored its resilience and adaptability. CFO Laura Schenkein highlighted Kokai’s contribution to campaign performance and reiterated the firm’s disciplined approach to investment, particularly in AI, engineering talent, and global operations.

What Does This Mean for the Future of Programmatic Advertising?

The Trade Desk’s Q1 2025 earnings point to accelerating disruption in the adtech space. Its AI-powered tools, enhanced transparency via OpenPath and UID2, and strategic hiring of industry leaders such as Vivek Kundra (formerly of Salesforce and the U.S. federal government) signify a platform that is not only scaling but reshaping the digital advertising ecosystem.

The broader industry context is also changing. Major brands are increasingly pushing for cost-effective ad delivery on the open internet, as skepticism grows toward opaque attribution models used by dominant walled gardens. The Trade Desk’s focus on measurable outcomes, supply chain integrity, and real-time adaptability uniquely positions it to capitalize on this transition.

Management remains focused on long-term growth. With current market penetration under 2% of global advertising TAM, The Trade Desk believes it has a long runway ahead, especially as advertisers seek alternatives to fragmented and biased ecosystems.

What Lies Ahead for The Trade Desk?

Looking forward, investors will be closely monitoring Kokai’s continued rollout, OpenSincera’s market reception, and evolving regulatory decisions involving the tech giants. The trajectory of CTV and retail media will also be pivotal in sustaining The Trade Desk’s momentum through the rest of 2025.

The company has demonstrated the ability to adapt and thrive through macroeconomic pressures, digital ad realignments, and regulatory shifts. If current trends hold, The Trade Desk is poised not just to ride the wave of programmatic advertising, but to help define its future architecture.