Good day, ladies and gentlemen, and welcome to The Trade Desk First Quarter 2022 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Chris Toth, Vice President of Investor Relations. Sir, the floor is yours.

Thank you, operator. Hello, and good afternoon to everyone. Welcome to The Trade Desk First Quarter 2022 Earnings Conference Call. On the call today are Founder and CEO, Jeff Green; and Chief Financial Officer, Blake Grayson. 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. In particular, our expectations around the impact of the recent pandemic on our business and results of operations in addition to potential supply chain disruptions or other macro events that could disrupt advertising spend are all subject to change. Should any of these risks materialize or should our 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 our risk factors referenced in our press release and 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 results 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. I will now turn the call over to Founder and CEO, Jeff Green. Jeff?

Thanks, Chris, and thank you, everyone, for joining us today. As you've seen from the press release, we are off to a great start once again this year. For the first quarter, revenue grew 43% compared with last year, our fastest first quarter growth rate in the last 4 years. Our strong growth is a testament to a variety of factors that I want to touch on today and which give us significant optimism for the future. Our performance is especially encouraging because annual advertising budgets are often being reset and reconsidered in Q1, making them historically harder to predict. And this year, the macro environment was challenging with the ongoing global pandemic, war in the Ukraine and the higher rates of inflation around the world. Despite those challenges, we again exceeded our own expectations. I believe we are now firmly established as the default DSP for the open Internet and that we are very well positioned to grow and grab share regardless of the macro environment. We now have over 1,000 customers, representing tens of thousands of advertisers spending on our platform across the open Internet. We continue to see a steady stream of new agencies and brands starting to work with us for the first time as well as existing customers increasing their spend with us. We are seeing strong momentum around key initiatives such as Connected TV, Shopper Data, UID2, OpenPath and our game-changing new data marketplace. In each case, we are working with our advertising clients to drive maximum value from their campaign dollars. And this, in turn, helps us grow our trusted relationships with the world's leading brands and agencies, many of whom are signing long-term strategic partnerships with us. As a CEO, it's always important for me to look at how we are performing relative to the industry. For example, the IAB and PwC predict digital advertising will increase approximately 8% in 2022. Publicis Group's Zenith estimates the increase at about 14%. But either way, we continue to grow at a pace well ahead of industry estimates, which means we are gaining share and adding significant value. I continue to be extremely optimistic in part because of the combination of our exceptional 95% plus retention rate and our significant growth rate. There are macroeconomic forces, which have changed the media and technology landscape dramatically in the last few months, especially in CTV, which also gives me optimism. As many of you know, I have spent many of the last 10 years publicly predicting that Netflix and nearly everyone else would eventually show out. Netflix recently announced that they are likely to make ads a part of their future. This and so many other great things are happening in CTV. In fact, I can't think of a time that the TV landscape has had more positive changes in a short period of time than what has happened in Q1 of this year. I want to spend the biggest lot of time on that. But in order to discuss the significance of what's happening in CTV, we first need to discuss what's happening with 2 foundational initiatives: first, our work on a new identity framework for the Internet; and second, our work to make the supply chain more efficient. So first, identity. The Internet has been operating on a quid pro quo since it became commercial, but the Internet has been a suboptimal Internet. And by that, I mean we've used cookies as a make-shift technology to enable relevant advertising. But due to a series of events and choices, cookies are going away. Currently, Google has the majority of the browser market share around the entire Internet outside of China. So they decided when this transition is going to take place, and they currently targeted the end of Q1 2023. This has created a very unique community to upgrade the Internet. Indeed, without those many circumstances, this opportunity wouldn't exist. We are upgrading from an opt-out Internet to an opt-in Internet. The open Internet is scrambling to coordinate and collectively upgrade. Many different opt-in IDs are being created. Some of them will scale and survive, some won't. However, those that scale will be distributed, encrypted and interoperable. We don't believe IDs can or will scale if they don't upgrade the experience for consumers. With this in mind, we developed and launched UID2. This is the second version of UID, version 2 being e-mail and phone number-based instead of cookie-based. This allows consumers to take their privacy settings and controls with them all over the Internet without loss of control or a false sense of security. Some of the privacy protection that has been promised to consumers by large technology companies with billions of log-ins have misled some consumers to believe that they control privacy, opt-in and the quid pro quo of the Internet across CTVs, mobile environments and computer browsers. UID actually does enable consumers to set preferences and restrictions for each Web publisher, mobile app and CTV app. They choose who they trust and can change their mind. Their preferences are tied to an encrypted, hashed, salted ID based on e-mail address or phone number that a consumer can take with them. Because this move to an upgraded opt-in Internet is scheduled to happen in about 10 months based on the date Google deprecates third-party cookies in Chrome, the entire open Internet ecosystem is thinking about identity, and we continue to make significant progress with UID2. And I'd like to spend a few minutes talking about this progress and the various innovations that are driving that progress. In terms of the number of unique IDs, we are now measuring UIDs on billions of devices. With every passing month, we are posting new all-time highs. That comes as more advertisers activate on UID2 and as more publishers adopt it. Let me give you one quick example, which is particularly illustrative of the business value of UID2. MediaVine is a company that manages advertising for more than 8,500 independent publishers. Those include some large publishers like the Hollywood Gossip and some very niche publishers like Steamy Kitchen. They're big. They are a comScore top 5 lifestyle media platform with more than 130 million monthly viewers and 17 billion monthly ad impressions. MediaVine has now adopted and deployed UID2. Their publishers have seen CPMs increase more than 100%. With UID2, they can create privacy safe identifiers for their readers, pass those on safely to advertisers who can then serve relevant advertising without ever knowing anything directly identifiable about the reader. Better opt-ins and more sign-ins, including new lightweight SSOs, is what a post-cookie Internet is going to look like. And pioneering advertisers, publishers and CTV providers are building that Internet now. Momentum is amazing, but we're still in the early stages, simply because the Internet is so big. This work is both inevitable and essential. Without relevant advertising, CPMs will [crater]. That's the fundamental value exchange of the Internet, relevant advertising in exchange for free content. That's why so many publishers are implementing UID2 with many already reporting strong CPM growth. The ecosystem of UID partners also continues to expand. InfoSum, a leading data collaboration platform, recently signed up as another closed operator of UID2. Many leading advertisers and their agencies, including Omnicom, already use InfoSum to activate their first-party data and are excited about this partnership as they look to unlock the value of that data while maintaining control over it using UID2. AppLovin also recently joined the UID ecosystem. AppLovin is one of the world's leading mobile in-app ad exchanges, and our advertisers now have access to ad opportunities across more than 140,000 apps and 1.8 billion devices with the precision and relevance that UID2 creates. The solutions such as UID2 allow us to manage that value exchange in a way that improves the experience for all parties. I believe this new approach will ultimately result in an upgrade to the Internet. We also recently announced that we are launching a version of UID2 that will be tailored for the European market called EUID. To understand the connection between UID2 and EUID, consider an analogy to Chrome and Chromium. Chromium is a free open-source development platform for Web browsers. Many browsers use core elements of Chromium, including Google Chrome, which uses Chromium as a foundation, but which is enhanced and adapted by Google. Essentially Chrome is one iteration built on top of Chromium. In the same way, UID2 is an open-source project and EUID is a version of it, developed for Europe that meets the specific needs of that market, especially the legislative requirements. Building this specific version also allows us to build in the features that give our partners reassurance that data will not leave Europe, even for international companies that do business and have data in Europe. With this approach, we believe that EUID is the most GDPR-compliant identity solution in the market today. In order for the open Internet to thrive, it will require more authentication or logging in. High CPMs and relevance will gravitate to publishers and content owners who have logged in users. CTV and new sites and apps especially have a unique opportunity at this moment as the identity foundation of the Internet being rebuilt. The CTV leaders understand this. Nearly every CTV ad is shown on the authenticated side of a log-in, almost always via an e-mail or phone number, which means CTV already operates in an opt-in environment unlike much of the rest of the Internet, which is still an opt-out, although it's transitioning. Within that environment, broadcasters can work with advertisers to build the new identity fabric of the Internet that provides addressability while significantly upgrading consumer privacy. And new identity solutions, including UID2, are key here. With UID2, advertisers can safely onboard first-party data. And then with interoperability with CTV apps, they can find valuable audiences, both current and prospects, exactly when they are viewing their favorite premium content. Ultimately, this is a much better advertising experience than one based on cookies. Cookies were never really intended to do this work. They were just co-opted. But in new technology environments like CTV we can build a new identity framework that allows advertisers to create relevance, enables publishers to maximize yield and hand consumers much more control over their privacy. So in many ways, the CTV ecosystem will pioneer the future of identity. To be clear, it's not about any one identity solution. It's about interoperability. This new fabric will include new currencies such as UID2, but also other identifiers, whether it's those developed by CTV providers themselves, measurement, partners like Nielsen or by companies such as LiveRamp. And we are working with all of them to ensure this new fabric pays off those promises I just outlined for all participants. There is so much to discuss today that I'm going to bookmark a related issue that I'd like to discuss in a future call, our data marketplace. The data marketplace is as healthy as ever, largely because UID2 and a better opt-in environment creates a better foundation for our data marketplace, which has the potential to become the largest in the world. I don't think any walled garden can ever create a data marketplace to rival it. Already, we have enacted massive marketplace design upgrades. As a result, we're already seeing higher data usage, better CPAs and ROI for advertisers, better margins and a faster spinning flywheel for us. We have once again stair-step increased the consumer surplus of our offering to our clients. There is so much more to report on this and more change and benefit to come, so I'm excited to talk about that in the future. Related to all the progress we're making with UID is the recent launch of OpenPath. We announced it in our last earnings report, and I'd like to give an update today. First, a reminder of what it is. OpenPath is a way for our advertisers to plug directly into publisher inventory via our platform. By plugging in directly, publishers have the opportunity to capture the value of an opt-in Internet and implement changes that benefit all participants, including advertisers and agencies. I do want to reiterate that this does not mean that The Trade Desk is getting into the SSB or supply side business. OpenPath is simply a direct path to inventory with publishers that already have their own yield management solutions. OpenPath helps eliminate steps in the process where there may be fees or charges with no value in return. For example, since we announced OpenPath, we have shut down Google's open bidding on our platform. When we announced OpenPath a few months ago, we also had commitments from news organizations that represent a majority of news consumers in the United States, organizations such as Reuters, the Washington Post, Gannett, Conde Nast, which owns Vanity Fair, Vogue, The New Yorker and many others, McClatchy, which owns more than 30 leading daily newspapers, including The Kansas City Star and the Fort Worth Star-Telegram, Hearst Magazines and Newspapers, which operate major titles such as the Cosmopolitan and the San Francisco Chronicle, the Tribune Group and several others. In the days following the announcement, we had more than 100 inbound inquiries from major publishers looking to join the initiative. We're prioritizing journalism as we launch OpenPath because nowhere is the danger of the absence of identity more apparent. Recently, we announced more journalistic publishers committing to OpenPath, including the L.A. Times, BuzzFeed, Forbes, MediaVine and Red Ventures, which includes publications such as CNET and Lonely Planet. As more publishers adopt OpenPath, they will make UID2 deployment or interoperability a key element of their plan. In doing so, they can activate their own first-party subscriber data in a way that protects that data but also provides enough relevance to advertisers that we can enhance the value of those ad impressions and yield for publishers. For those that don't show most of their ads after a user has logged in, OpenPath will include a simple UID2-based SSO that will help them make this essential transition to a post-cookie environment. Let me bring this back to CTV because CTV is really the epicenter of open Internet identity. We've seen massive moves in the CTV landscape recently. In 2021, we added exponentially more inventory, thanks to new partnerships with a wide range of partners, including Peacock, Paramount Plus, Discovery Plus and Sky. Early this year, we entered a scaled relationship with HBO Max, one of the most recent and fastest-growing content companies to aggressively adopt ad-funded subscriptions for consumers. On a more macro level, Amazon bought MGM and streams ads through IMDB TV. Just this year so far, Disney+ announced that ads would be added as a choice to their app. Microsoft acquired Xandr. Time Warner left the AT&T family and is now owned by Discovery and is mostly led by Discovery Plus leadership, which is one of the most savvy programmatic teams in TV. And of course, Netflix recently announced that it will likely make ads available on their platform. These major changes in the landscape have huge implications for the future of CTV and programmatic. A tailored TV ad is probably the most effective scaled advertising available today on or off-line. As a result, for most of our clients, TV is the largest segment of their campaign spend. That unique combination of video and audio delivered at a time when the audience is leaned in, remains the most effective way to touch the hearts and minds of consumers. As those consumers have shifted in mass to streaming platforms, advertisers are following them. For consumers, on-demand content is just better. As content owners and the streaming apps are competing for more subscribers, it has become very clear, providing consumers with choice is the only way to win. This is a great setup for Netflix. By not having ads to date, Netflix has protected an amazing user experience, but it required Netflix to keep raising prices so that they could keep making and buying content. At some point, price becomes an issue for nearly all consumers. Consider what we can learn from TV of the past. Even in the days of cable bundles, very few consumers pay for every premium channel, Showtime, HBO, Cinemax, NBA League Pass, et cetera. In the past, nearly all channels have had ads. Now once again, consumers will have something better, choice. Netflix will very likely set up a clean option for consumers, see ads and pay meaningfully less or pay slightly more and avoid ads altogether. Consumers will continue to be given more choices. I predict that with this move, Netflix will continue to be something of a pace car in TV innovation. They were the first ones to really nail the subscription model for CTV. They were the first to 100 million global subscribers, the first to 200 million, and they continue to lead that race today. And now they are embracing consumer choice as a way to expand their market share even further. It's important to note that at least half of Netflix subscribers are outside the United States. So the implications to this move has global ramifications to the world of CTV. But there will even be more to this part of the story. As Netflix explores advertising options, they will be unburdened by legacy processes that some of their competitors are working through. For example, they will be able to structure their advertising operations so they don't have sales channel conflict. They can be data-driven from the start in everything that they do, using data to ensure that they maximize yield on every ad impression. In all of these dimensions, and likely many others, I believe Netflix will continue to innovate and set the pace. And as with any market, others will have to adapt accordingly. Many of them already are. We are working on these opportunities with leading CTV providers every single day. HBO Max, Disney+ and Netflix are all public about their intentions to implement ad experiences. This adds pressure to all content owners to accelerate the move to data-driven buying and selling and finding ways to make the most competitive consumer experience, which means limited relevant ads with high CPMs. For CTV to continue to produce the amazing and expensive content that is driving this new golden age of television, relevant ads are the only way to fund and preserve it. This requires CTV to participate in the open Internet because in walled gardens, one cannot control universal reach and frequency. Additionally, I believe this means every CTV company around the world is racing to create this optimal viewing experience. CTV has historically competed regionally due to the licensing and broadcast regulations. Netflix and YouTube have made this a global race. We're seeing content owners all over the world quickly adapting to these recent moves. Recently, I've personally spoken about this directly with some of our content partners in the United States and in Europe. They are already feeling the pressure to move fast and to improve their ad experiences. This messaging from Netflix, Disney+ and HBO Max is requiring everyone to embrace biddable environments and move away from legacy models like upfronts and even programmatic guarantees where advertiser choice is limited. These changes in the TV landscape also have adjusted marketers' mindsets. As advertisers are seeing reach and impact erode from traditional cable television, they are focused on moving to premium streaming content. Increasingly, this is the most important buy on the media plan. Marketers want to advertise against premium content as much as possible. It's content they can trust. It's content that reflects their own brand. It's content they can activate on and measure against with precision. As advertisers prioritize ads on premium content on our platform, they are beginning to start their campaign planning there, too. As a result, user-generated content is increasingly getting the leftovers. With the explosive growth of premium CTV over the last few years, especially the last year, the trend is clear. We see it clearly reflected in some of the UGC data that's been reported out in the last few weeks, and it's also why CTV remains by far our fastest-growing channel and why premium video in all of its forms has become the largest segment of our business. This trend will be equally apparent internationally where there is also a flight to premium content. We work with many of the Fortune 500 companies, almost all of whom direct their advertising campaigns at multiple international markets. As more premium supply comes online, particularly premium video, we have more than enough demand to satisfy it. And we could not be more excited about what this shift from Netflix, Disney+ and HBO Max means in terms of opening the door of AVOD supply. Not only in major markets that have already embraced CTV advertising such as Western Europe and Australia, but also in many other markets where AVOD will be a vital driver of subscription growth because of tighter economic pressure on consumer wallets. Premium video, where everything is authenticated, is one of those key areas where the future of Internet identity is being forged, not just for CTV, but across the open Internet, including inside the browser. That may not seem obvious as cookies are not present in CTV. And so you'd think they'd be less affected by the potential phaseout of cookies next year. But CTV needs persistent identity to have effective and high CPM ads, and they need high CPM ads to fund that content. It's economics that's driving that process. As more CTV leaders embrace advertising, they want to ensure that they create as much addressability as possible because that's the only way that they can maintain high CPMs. An advertiser will pay, say, a $12 CPM if they know the viewers are watching the latest hot reality show, but they will pay 3x that if there's a reasonable chance those viewers are interested in their product. And that's why they will be among the pioneers of the new identity framework or the open Internet. I'd like to wrap this up by bringing us back to the market opportunity in front of us. The global advertising industry is moving rapidly towards a $1 trillion TAM. As the market grows, the majority of that spend will be digital, and all of it will ultimately be traded programmatically. At the same time, the industry is making important progress in several dimensions in building the Internet advertising ecosystem of the future, one that no longer relies on cookies. The Internet is getting an upgrade. We're moving from an opt-out Internet to an opt-in Internet. Everything is founded on a better identity framework. On that foundation comes better controls for consumers, more choices for consumers on how to pay for CTV subscriptions, whether that's with money or with ad time, and better measurement and data. As the ecosystem continues to evolve and move away from walled gardens led by CTV, we will unleash the power of programmatic for our advertisers and for our publisher partners. It will be an improved experience for everyone, consumers included. The innovations we are driving to help accomplish this are already delivering performance improvements for us today. They are a key factor in why we are off to such a positive start in 2022 and why we are so optimistic about our growth opportunities looking forward. As I said earlier, advertisers are increasingly gravitating to our platform as the de facto DSP of the open Internet led by CTV. And we will continue to innovate to reinforce that leadership position and deliver more value to our advertisers. Our profitable business model allows us complete flexibility to make these investments and continue to drive growth. In doing so, we will help build a better Internet for all stakeholders, and all of that is what makes me so excited about our growth prospects. With that, I will hand the call over to Blake, who will take you through more of the financial details.

Thank you, Jeff, and good afternoon, everyone. As you have seen in our results, 2022 started out strong with solid Q1 financial performance and execution despite the current macro environment. Q1 revenue was $315 million, a 43% increase and an acceleration in growth from a year ago. In Q1, we benefited from a digital advertising environment that is leaning increasingly towards data-driven advertising and measurable results. This was evidenced by the continued strength in CTV, which again led our growth from a scale channel perspective. Solimar adoption is over 80%, and we continue to see promising results as customers are utilizing Solimar to leverage more data elements than they did previously. More data-driven precision improves ROI for customers, and we believe this helps spin the flywheel of our business faster. We are also starting to see green shoots in our retail media business, with Q1 representing our first full quarter of operations in this space. We have brought on additional retail media partners into the platform and are cautiously optimistic as spend continues to ramp up. With the durable top line performance in Q1, we generated $121 million in adjusted EBITDA or about 38% of revenue. The $121 million in adjusted EBITDA represents a 72% increase from a year ago. In Q1, we continued to benefit from temporarily lower-than-expected operating expenses, partly driven by the virtual environment. Even recognizing that, I'm proud of our continued ability to consistently grow our top line revenue while generating meaningfully positive adjusted EBITDA and cash flow that has enabled our cash and short-term investments balance to end the quarter over the $1 billion mark for the first time. In the current environment, our demonstrated ability to invest for growth and self-fund our high-growth rates through profitable long-term cash flow generation sets us up well for the future. From a scaled channel perspective, CTV by a wide margin led our growth again during the quarter. For Q1, video, including CTV, represented our largest percent of share on the platform, followed by mobile. Video and mobile each represented about 40% of spend. Display continued to grow well in Q1 and represented about 15% of spend, and audio represented about 5% of spend. Geographically, North America represented 88% of spend and international represented 12% of spend. International's overall share, while relatively small for our overall business, dropped slightly from Q4 and the prior year. Historically, our growth has been driven by the strong position we have in CTV, particularly in North America. That said, our CTV business internationally continues to grab share, with European CTV spend more than doubling over the prior year in Q1. We did see a larger gap between our North American growth rate and international growth rate, particularly in the second half of Q1, mainly due to spend in Europe. However, through April, Europe has recovered to levels we saw early in Q1, although there is still some room to improve. I'm excited about our opportunities to grab share as we have proven that as our customers become more deliberate and data-driven with their ad spend, much like they did in late 2020, The Trade Desk is in a great position to help those customers and also spin our flywheel. It is still early days for us internationally, but we are optimistic about our market position and the long-term growth opportunity that we have. In terms of the verticals that represent at least 1% of our spend, nearly all of them grew in the double digits during the quarter. Both travel and pets more than doubled compared with a year ago. Shopping and food and drink were also very strong. We believe there is still the potential for share gain and improvement in most of our verticals. Turning now to expenses. Excluding stock-based compensation, operating expenses were $207 million in Q1, up 30% year-over-year. We continued to see significant operating leverage as we scale the business and improve our efficiency. Our income tax benefit of $2.7 million in the quarter was mainly due to the tax benefits associated with employee stock-based awards, the timing of which can be variable. Adjusted net income for the quarter was $105 million or $0.21 per fully diluted share. Net cash provided by operating activities was $146 million for Q1, and free cash flow was $136 million. DSOs exiting the quarter were 88 days, down 5 days from a year ago. DPOs were 72 days, down 3 days from a year ago. We exited Q1 with a strong cash and liquidity position. Cash, cash equivalents and short-term investments ended the quarter at $1.1 billion. We have no debt on the balance sheet. Turning to our outlook for the second quarter. We estimate Q2 revenue to be at least $364 million, which would represent growth of 30% on a year-over-year basis. We estimate adjusted EBITDA to be approximately $121 million in Q2. With a large available market in front of us, we see significant opportunities ahead and continue to be motivated to invest thoughtfully in the business, placing a high importance on hiring to support future growth. This enables us to continue distancing ourselves from the competition in areas such as technology, identity, supply chain optimization and customer service. I am pleased that over the past couple of years, the operating expense structure of the company has improved and is significantly better than it was prior to the pandemic. Doing so allows us to invest meaningfully in opportunities for growth while still generating strong adjusted EBITDA and free cash flow. In closing, we are excited about the momentum of our business with significant long-term growth drivers, including CTV, our international business, our retail media opportunity, which is only just beginning, our recent platform upgrade in Solimar and the upcoming U.S. midterm election cycle, we remain highly optimistic about the long-term prospects for our business in 2022 and beyond. We continue to generate strong free cash flow. And the strength of our business model and balance sheet have positioned us well in the current environment. I believe we have the structure in place to continue driving long-term growth while scaling our business efficiently. And I'm cautiously optimistic about continued improvement in the future. That concludes our prepared remarks. And with that, operator, let's open up the call for questions.

[Operator Instructions] And the first question is coming from Shyam Patil from SIG.

Congrats on the results. I had a couple of questions. First one, Jeff, when we look at your results and your outlook, they look a lot better than what we’ve seen from a lot of other ad-funded companies during earnings. Can you just talk about what you think is driving your outperformance? And then second question, can you talk a little bit about how you see the rest of the year shaping up?

You bet. Thanks, Shyam. Appreciate it. So I – as I look at the outperformance for this quarter, and I just look at all the things that would write in this quarter, it’s hard not to start with connected television. I mentioned in the prepared remarks, the CTV had more positive changes than ever. And I don’t know that I could have made up a better script in terms of just seeing companies like HBO move from sort of testing phase to scale. And then Netflix and Disney+ talking about ads were really created in an environment that is really optimal for ads. And of course, we already had great relationships with Paramount and Peacock and Sky and so many of those that you think of as the AVOD leaders to now have really everybody entering into this world of choice that is driven by ads. It’s just a very exciting phenomenon. But I’m also just very encouraged by the fact that, of course, there’s macro pressures and noise and uncertainty that everybody has seen costs from war and inflation. And of course, the stock market bouncing around a lot. But in that environment, what we’ve historically seen is that the moment when CMOs and marketers get very deliberate about where they’re going to spend money, and they become very data-driven in the choices that they’re making. And in our case, that means they’re spending more with us. So I’m just incredibly encouraged by all the things that we're –we’ve seen this quarter and how it sets it up for the rest of the year, which gets to the second half of your question. So with all these moves in advertising, especially from the global players of CTV, I think it really sets up the second half of the year for – around the world to see movement towards ad-funded CTV in a way that we started seeing early on in the pandemic. But I think we’re seeing even more of now. We didn’t spend a lot of time in the prepared remarks talking about shopper data. In the first quarter of this year, we also just had our first full quarter with Walmart and their DSP who’s just doing really well. We have talked about new partnerships with Walgreens and Drizly. There have been others that have talked about our partnership with Target’s media company, Roundel. So to have Walgreens, Walmart and Target on the platform and partners as it relates to data and measurement, just unbelievable. But just again, nearing a perfect setup as it relates to shopper partnerships. And then, of course, in the second half of the year, we’re also going to have a midterm election. From recent events, that seems to be one that’s going to be exciting as well. And I suspect just because of the momentum and attention that it will have more investment than most. And we think it’s – we’re very well positioned to have it be our biggest political year ever. Solimar is now over 80% adoption. So we’ll finish that by the end of the year. So in other words, we’ll move everything over to Solimar, the platform that we shipped on July 7, 7/7 last year. To go from launch to 100% adoption the following year is something that we were aiming for, but now we’re extremely confident that we’ll hit. And then we spent a lot of time in the prepared remarks talking about UID and OpenPath. I mean we mentioned a longer list of names on OpenPath, but we didn’t mention those that we mentioned in the press release just a couple of days ago. Buzzfeed, L.A. Times, Forbes, MediaVine, Red Ventures, which includes CNET and a whole bunch of others, have also been added to it just since last quarter that we announced publicly sent. So all of those amount to some amazing contributors to the second – or to the remainder of the year, say, second half, but to the remainder of the year.

And the next question is coming from Youssef Squali from Truist Securities.

Two, if I can. Jeff, 3 to 4 years ago, you were already on the strong opinion or the strong belief that Netflix has to offer an ad-supported model. That was just a matter of time. How do you feel about your chances of potentially partnering with Netflix around that opportunity and – or the potential risk of Netflix potentially building its own DSP, Amazon? And Blake, Q2 EBITDA implies a pretty big sequential and year-on-year drop, I think, to that 33%. Can you maybe just flesh out the biggest areas of investments and whether there is a typical kind of conservative built into that or – and just how should we think about that for the remainder of the year? A –Jeff Green: Yes. Great. So you’re right, I’ve been saying for more than half a decade that I believe that Netflix will eventually have to show ads. And that’s really based on the fact that I believe that consumers want choice. And that while Netflix has done a phenomenal job of preserving an amazing experience for consumers that at some point, that becomes cost prohibitive because you have to just keep raising prices, that is exactly what’s happened over the years. And they’re now at a place where I believe they will benefit from offering that choice. I think they have more pressure on them. Because of that history, I believe they have more pressure on them to create an amazing ad experience than anybody in the streaming competition, if you will. It’s partly because of that, that – you may know, David Wells, who was the previous CFO of Netflix joined our Board almost 5 years ago. So we’ve had a great relationship with Netflix because of him, and I’m extremely optimistic in the potential for us to partner with Netflix. One thing that you should know – and Youssef, you – I think you put just words to something I’ve heard from a few other people as well is why wouldn’t Netflix build this themselves? So what most advertisers are trying to do, they are trying to manage what we call reach and frequency. Like how often do I show the same ad to the same consumer across apps and channels? And so if I just control how many times I show an ad on station 112 and then just control how they can they show an ad separately on station 114, and those 2 things don’t talk to each other at all, you can waste a lot of money and show a lot of repetitive apps. This is why in traditional television, there’s a lot of repetition. It’s also why the ad break has so many ad in that. If Netflix were to provide an ad experience that have lots of repetition, in order for them to make the money that they need, they would have to show lots of them because the CPMs will be lower because they’re less effective, which creates more repetition, and you get into that unfortunate cycle that I believe has happened in traditional television. The sure is way out of that is for them to partner with an objective independent DSP that manages reach and frequency and budgeting across all the fragmented pieces of streaming so that we can provide the very best ad experience for everybody because we’ll be paying the highest prices, because of the fact that it’s so much more efficient or effective. So I’m very optimistic that we’ll be able to create partnership with every major streaming company in the world, including Netflix. The fact that we have a phenomenal relationship with Discovery, and therefore, also Time Warner and HBO, we have great relationship with them. We have a fantastic relationship with Disney. We partnered for years with Peacock and with Paramount and so many others. Of course, I had the expectation that we’ll do the same thing with Netflix.

And Youssef, to follow up on your question on the EBITDA for Q2. Just to frame it up, I’m really happy with our situation and where we are. Like we mentioned on last quarter’s call, we do expect in 2022 to increase the pace of our investment as we focus on the long-term growth of our business. And that’s got a support from a very strong business model that produces strong free cash flow and has a really, really solid balance sheet. Our Q2 forecast reflects that. It includes accelerating hiring across the business, particularly in engineering, business development and account management roles that really play a huge factor in driving our long-term growth. We also expect our in-office expenses to start ramping this year to prepandemic levels. And we also anticipate hosting more employee events to get the team together. But in terms of this year, Q1 EBITDA was very strong. I’m comfortable with our EBITDA trajectory and where things stand over the remainder of the year. And like we said last quarter, we do expect the operating expense structure of the company to be better than it was prior to the pandemic. And as I’ve always said, this business is really built for and I’m really optimistic about driving meaningful EBITDA and free cash flow as we scale. So I think that lots of great opportunities in front of us, and I feel pretty good about it.

The next question is coming from Matt Swanson from RBC Capital.

I’ll add my congratulations on the quarter. Jeff, maybe staying on the theme of CTV and Netflix. You mentioned still having an abundance or maybe an overabundance of demand for CTV. Well, with the upfront is coming up, could you maybe give us an updated view on the supply-demand curve, especially for premium CTV content? And how you think about the addition of Netflix and Disney+ with all that content coming online and whether or not we’ll see lower CPMs? And then I guess as was kind of a follow-up. Jeff, you mentioned that obviously, you saw Netflix coming from a long term – a long time away. When we think about the maturity curve now, though, for any subscription model hitting that threshold of payers, do you think this is going to change how new products launch from here on out when they see a Disney and Netflix and HBO Max all leading ads? Is – are we going to see any subscription-only products still get launched?

First of all, I appreciate the congratulations. We’re extremely excited about the results and as well as just all the things going in our direction, most notably on CTV. So appreciate that sentiment. So first, let me just address head on the concern that you raised in your first question. Will CPMs be lower as a result of this additional inventory? And can I just describe a little bit the demand? So the demand is really off the charts. And it’s in large part because people are moving away from traditional cable television where there are just tons of ads and you’re paying more and getting less than you have in a very long time. And so as a result, when you’re adding new inventory, it’s desperately needed. There’s demand already lined up. And the thing that is really great about the way that we're seeing players like Disney or what I’anticipate Netflix will do or HBO Max and then those that have been doing it for a while is that they’re, of course, in order to continue subscribers, which is the way that they continue to gain subscribers, which is the way they’re all graded, they have to have a great ad experience. They can’t alienate users. That means that they have to provide relevance, and they have to provide very few ads. So that means we’re going to see scarcity for a while, for as far as we can see in the future, honestly. And that means that there will be demand and that it is the best way for them to get incremental subscribers. Because I believe that those economics are becoming obvious – as obvious to everyone, so much so that the biggest names in the business seem to pivot very quickly that we’re just SVOD, I don’t think it’s strategically smart for anybody who’s just entering the space now to start with SVOD only. It’s like any product where over time as it evolves, if you launch the iPhone today or a new smartphone and it doesn’t have features that rivals the iPhone 13, and instead, it rivals the features of iPhone 1, you’re just not going to be competitive. You’ve got to be at parity with the current state of the market. The current way to compete is to offer consumers choice. And I believe that, that becomes increasingly important for anybody entering streaming wars with hopes of competing with the biggest players in the space.

And the next question is coming from Vasily Karasyov from Cannonball Research.

I have a couple, if I may. One on Europe. You said in the prepared remarks that spend did slow down around the start of the war in Ukraine, but then recovered in April. So can you tell us your thought maybe in more detail about what the advertising environment is in Europe right now and where it’s going in your view? The second question is about political. You did make some comments on it, but wanted to see if you could give us more detail. So broadcasting companies have been reporting, and they’re saying that they see a record political cycle spending so far. So can you tell us, please, how you feel you are positioned? And do you think this could be some incremental revenue growth this year from political?

Yes. Sounds great. I’m going to ask Blake to actually take a stand of both of them, and then I’ll also take time with both of them. So Blake? A –Blake Grayson: Sure. Thanks, Vasily, for the question. So with regards to Europe, just first to put into context, historically, our growth has been driven by the very strong position we have in the U.S. Europe represents a single-digit share of our spend. CTV has been the primary driver behind our growth in the U.S., but European CTV also gaining share. I think in the prepared remarks, we talked about that more than doubled – they grew in the triple digits in Q1. We did see more of that gap – of a gap between North America and international in the second half, but it did – it recovered a bit in April and recovered back to what we were seeing in January. But there is still some room to improve. I think that, that’s not a surprise, I think, for people who follow the space. The thing I think about when I think about opportunities like that is when customers become more deliberate with spend and they focus on the most efficient investment opportunities, that’s when The Trade Desk tends to shine because from my perspective, we proved it out in the second half of 2020 when we saw that as people needed to be more deliberate, they were focusing on the areas of investment that have the highest ROI, then they were consulting with us, and it worked out actually quite well in our favor. So I’m super optimistic about that. With regards to political, yes, it’s a great opportunity for us, and we’ll see how this ramps up because it’s going to probably start ramping up for us over the summer into November, obviously. You’ve seen reports that talk about midterm election spend on par or better than the 2020 presidential elections. The one thing I would encourage you to think about as you go through the forecasting is that seasonality is going to be different than we saw in 2020, so you’ll need to take that into account. There’s still a lot of factors to consider like the number of competitive races out there and stuff. But we do believe we’ve set ourselves up to be the kind of go-to platform for this political advertising versus maybe social media platforms and such. And we’ll have more color on this as we progress in 2022, more in the second half of the year, but definitely look forward to some tailwinds there. And then whatever, Jeff, you want to add on top.

Yes. So first, I agree with everything Blake just said. He covered almost all of it. I’ll just add a little bit more color. So first, I’ve been to Europe twice in the last 4-ish months, and that’s in large part because there’s just such an opportunity shaping up in connected television. In various markets, we’re seeing just a lot of movement from even some of the companies that previously hadn’t embraced ads and certainly programmatic open Internet ads and are now doing just that. And now with pressure from some of the biggest global players, we’re seeing them move relatively quickly, which is why we saw CTV up over 2x in Q1 in EMEA. So just very excited by the momentum. Even in the very rare cases where there’s pauses or there’s – I’ve seen some supply chains coming from Ukraine that are a little bit more affected in EMEA, the sentiment is very positive as it relates to their intentions to spend with us in the rest of the year. So I’ve got both of the trips in the last 4 months, more positive than when I got there and believing that what most people are doing is exactly what we described in the prepared remarks, which is when there’s some economic pressure or they have to do more with less, they become very data-driven, and they become closer partners of ours during that time. And that’s exactly what I’m seeing everywhere around the world and maybe as much in EMEA as anywhere else. On the political, I’ll just underline what Blake said on – the seasonality is a little bit different in midterm and election than it is in the presidential election. So we expect to see more hit the second half. We also heard similar reports of just this potentially being record-setting for political on the macro. But I’ll just say lastly, on the political, we – I’m really proud of what we’ve proven in the last couple of election cycles, which is that we can objectively represent the Democratic party as well as the Republican party that we can support a fair process and that buying in programmatic and in a data-driven way, there’s room for both parties to run a better process than what they have in other mediums, including, in some cases, in social. So we’re really excited about what we’ve proven in the past and believe that we’ve set ourselves up to do more for both parties and even the more independent than what we have ever done before. So excited about what that means for the second half of the year in particular.

And the next question is coming from Jason Helfstein from Oppenheimer.

I’ll just ask one. Just want to focus back on CTV. So for a very long time, Google wanted to get into this, and the media companies don’t want them basically doing programmatic CTV. While they let them do YouTube TV, right, that YouTube isn’t doing the ads. And we’ve seen media companies try to own technology assets – ad tech assets and have not been good at it. And I guess, Jeff, your perspective, I mean, given what we’ve now almost seen as kind of like the undoing of some of the media mergers, where there’s like a clear idea that content owners need to be content owners and maybe just be the best of that because it’s so competitive, just how do you see how that kind of impacts your space on the board, and ultimately, to be potentially like the default partner to help the media companies with this transition?

Yes. So I think your assessment sort of that’s built into your question is spot on. I just – I believe the tolerance for conflict of interest among media companies and technology companies is lower than in almost any other place. So I think it’s really interesting that Google decided to go to the upfronts this year. They scheduled their upfronts right on top of Disney’s, of which is just sort of bad form and certainly not a way to win friends. And I think that’s somewhat representative of the way they are being received among many of the media companies. So I think it’s just such an amazing backdrop for us to be in the CTV space, being one of, and in many cases, the very biggest provider of ad demand for some of the biggest media companies in the world, and they’re leaning into our partnerships in a way they have never before. It’s just really incredible. And that’s largely because they know who we are. We are very clear on the value that we provide. We are not trying to compete with them. We don’t own any content. We are constantly – well, publicly and privately reassuring them that we will not own content. And we do that so that we can create a more effective supply chain, but also so that we can partner with them and just be very upfront about who we are and what we do because we think that’s the best way to be competitive today. And so because we think that they are, to some extent, doing the exact same thing, they – even companies like that, that were somewhat hybrid content and technology companies have largely become a content manufacturing machine. And so it just creates opportunity for us to partner because we’re all becoming very clear on who we are and what we do rather than some tech behemoth that wants to be everything, right? And Amazon competes with nearly every business and the S&P 500 at this point. And I think that becomes increasingly problematic, especially in the intersection of media and tech.

And the next question is coming from Brent Thill from Jefferies.

Maybe if you can give us a quick update on Walmart and any critical milestones that you’ve had and how you look at that through the second half of ‘22. A –Jeff Green: You bet. Yes. If there’s any topic that didn’t get its due, it’s – I don’t know, it’s a rival between our data marketplace and our shopper marketing efforts. And so as I did mention, though, we just finished our first full quarter with Walmart. We saw over 200 advertisers. These are all very large brands – provide test budgets during that time. We expect even more large brands and more expansion as we continue forward. And we think that this is going to be just an amazing growth driver over the next 5 years. We, of course, saw some early tests and some amazing results from CPGs, as you might expect. But I don’t know that enough has been said about what is being done by companies like Walgreens and Target and Drizly, and this Target’s division Roundel because what they’re largely doing is really changing the way measurement works in CPG and really anything that’s primarily built – I’m sorry, bought off-line because what it makes possible is the ability t’ measure from the –me’you show the ad to the time somebody buys the product and measure that end-to-end using retail data instead of a walled garden or technology companies sort of grading their own homework data. And so by having that collection there, we now put together this mosaic that really creates this amazing marketplace that we even call the measurement marketplace for anybody that’s selling products that are largely bought in those stores. And then, of course, those stores spin their flywheel faster. So the green shoots are fantastic. We’ve merely scratched the surface, but we’re very excited about the start that we’ve had and very excited about our partnerships with Walmart, Walgreens and Drizly, Roundel, and GoJet and Flybuys and so many others. I’m not even listing half of the internationals, but very excited about all the progress.

And the next question is coming from Mark Zgutowicz from The Benchmark Company.

Jeff, I was just hoping you could maybe define what you consider the large publisher market in terms of having, I guess, the majority of loyal signed-in users and how many you think you need to sign on to UID2 for your platform to come close to replacing cookie scale, when and if Google shuts down cookies? And then just in terms of UID2, what's the status on finding an administrator for UID2, and particularly the importance of that in Europe? Appreciate answers to those.

You bet. So in terms of loyal signed-on users, it's actually a fairly complicated question because there is a question of how many users are signed on, but then there's also like how connected are those to sign-ins on other websites. So to sort of boil it down to what I think is the most important and easiest to explain concept, there is some amount of the Internet that needs to be logged in, in order to create the ability to model or predict what's happening on the rest of it. Instantly, this is exactly the same way that companies that use log-ins today like Google or Facebook as they're a primary identity mechanism rather than cookies. That's exactly why they're in a good position is that they'll use that and then model on some additional percentage. In general, we've seen this from some of the independent data companies. You really need only about 10% to be logged in, in order to model well on all the rest of it. I actually think that the numbers can end up being much, much higher than that in terms of what will actually be logged in and what will actually be available on UID if the trends that we predict continue. So that's the first part of your question. On the -- can you remind me the second part of your question?

Yes. So I was just wondering if you – what the progress is on finding an administrator for UID2? By administrator, meaning somebody who’s willing to accept liability for violations of GDPR. A –Jeff Green: Yes. So because of the fact that – so first, there’s a European issue, and then there’s the administrator issue in other parts of the world as well, including in the United States. The position that we’ve taken so far is that we wanted to make UID2 an open source project so that it was available to everybody and sort of administering or managing that code base so that it could be available to everybody was the most important first order of business. And that we’ve done with the IAB, and we’ve done that based here in the United States, but it’s available everywhere in the world. As it relates to administration of its operation, because essentially, you’re handing over control at that point, it’s a double-edged sword. You can hand over a liability. You can also hand over some of its future. That’s something that we want to be very certain is good and secure before we hand that off. So we’re in no rush to do that, whether that’s with [IV] in the United States or any entity in Europe. And because in Europe, everybody is essentially taking some amount of risk if you take on the role of controller. So I don’t believe that it’s an effective way to distribute or mitigate risk at this point. So there’s nothing – we’re in no rush to do that. And instead, what we want to make certain that we do, especially in Europe, but really everywhere around the world, is develop a system that can scale and make sure that early on, we partner with companies that we believe are being responsible, that are doing the right thing and that we establish very clearly the quid pro quos and opt-outs that are in compliance with GDPR. And we believe that EUID is the most GDPR-compliant ID in the world, but we will make it interoperable with others that we believe are also doing the right thing, and that’s going to create a better Internet, one that I think is really important for Europe and optimistic that we’ll continue to see scale. But we’re much more early days in EUID than we are in UID2 because there’s just a lot more things to consider and a much more political environment. So I’m just excited of the progress at this point.

The final question will be from Michael Morris from Guggenheim.

I’ll try to squeeze in 2 final questions. The first one is on the pretty consistent comment that you made, Jeff, about The Trade Desk being the default DSP for the open Internet. Obviously, this implies potential for a pretty universal adoption across buyers. So I’m curious if you can elaborate on where you are now in terms of partner penetration. You referenced over 1,000 customers. But any frame of reference or what that means for full penetration, sort of how that’s been trending would be helpful. And the second question is a little bit of elaboration on the impacts of Netflix and other peers introducing these global ad-supported businesses, which are pretty new to market, of course. Does this drive an acceleration in your investment internationally? Any other kind of fundamental changes that this makes to the industry? A –Jeff Green: You bet. So as it relates to partner penetration, I’m trying to think of the best way to quantify it. In general, I believe that we have only scratched the surface. I’m sometimes referencing last year, we had over $6 billion flow through the platform, but we’re still looking at a nearly $1 trillion TAM in terms of what’s spent in total global advertising. So we’re still just merely scratching the surface and a tiny amount of what’s possible. When you look at how many of those dollars are spent in the Fortune 500, while we’re very encouraged by what we’ve done inside of the Fortune 500 among the biggest advertisers, when you become the default for them and learn how to support the most sophisticated in the world, of course, it then gives you room to do similar things for midsized businesses, midsized agencies as we’ve always supported agencies. We continue to expand among – more and more midsized agencies, and that’s giving us a wider variety of clients, which is why we added so many advertisers both directly and through agencies in Q1. So I think this was a quarter where we added more to the sort of quantity of advertisers and agencies than we usually have. But it then tees up the opportunity for us to then get a greater share of wallet where I think there’s just still way more upside than sort of dollars we already have. You asked if the – the expansion that we’re seeing, especially from these global CTV players, if that will increase our investment around the world. I do think it will. Maybe not immediately, but I believe that investment will happen in the coming months and quarters. And that’s largely because it’s difficult to pay for a subscription and avoid the ads. Like in the prepared remarks, I made that reference or the analogy to traditional television where it’s really a luxury to pay for a station that doesn’t have any ads. It costs more. And so if you think about most markets outside the United States have a median household income that is lower than the United States. And so as a result, most of them would prefer to pay by seeing ads than by paying a premium. And especially if you’re fighting like hell to go get more subscribers, that becomes the very best way for you to grow in new markets. Incidentally, advertisers also love that, especially when you’re looking at places like Asia, but even some of the markets in Europe, where there’s just such a growth of middle class not to – occur – or occurring right now that just is a great time to advertise when people’s wealth is growing for the first time to levels that give them sort of unprecedented purchasing power. So I definitely think that will result in investments from us around the world. And I do think it will change the CTV landscape around the world to have companies that were historically U.S. companies that continue to become more of a force internationally. And I think ad-supported business models will make them stronger competitors around the world, not weaker.

Thank you, ladies and gentlemen. This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.