Trade Desk forecasts first-quarter revenue below estimates, shares plunge

(Reuters) - Trade Desk forecast its first-quarter revenue below analysts' estimate on Wednesday, signaling softer demand for its digital advertising services in the connected TV market, sending its shares down more than 20% in extended trading.

The company's downbeat forecast adds to lingering concerns of economic uncertainty and higher-for-longer interest rates crimping client budgets and hurting ad spend.

Trade Desk forecast its first-quarter revenue to be at least $575 million, below analysts' average estimate of $591.8 million, according to data compiled by LSEG.

The outlook is for the period following the holiday season where analysts expected retailers to double down on advertising, with a focus on political ad spending during the U.S. presidential elections.

The company recorded revenue of $741 million in the fourth quarter, missing analysts' estimate of $758.9 million.

"We are disappointed that we fell short of our own expectations in the fourth quarter," said Jeff Green, founder and CEO of Trade Desk. The company had forecast fourth-quarter revenue of at least $756 million in November.

Trade Desk did not match up to lofty expectations from investors, who drove a more than 60% increase in its shares last year, betting on the company benefiting from ad dollars being funneled into online advertising.

The company helps provide connected TV ads — advertisements displayed on streaming content through apps on smart TVs or over-the-top devices — which have gained prominence as consumers pivot from traditional TV.

On an adjusted basis, it earned 59 cents per share, compared with the estimate of 56 cents.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi Majumdar)

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