Greetings. Welcome to The Trade Desk first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Chris Toth. You may begin. Thank you, operator. Hello, and good day to everyone. Welcome to The Trade Desk first quarter 2023 earnings conference call. On the call today are founder and CEO, Jeff Green, Chief Financial Officer, Blake Grayson, and Executive Vice President of Finance, Laura Schenkein. 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. These forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. Actual results may vary significantly, and we expressly assume no obligations to update any of our forward-looking statements. Should any of our beliefs or 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 the risk factors referenced in our press release and included 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 measures 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. With that, I'll now turn the call over to founder and CEO, Jeff Green. Jeff? Thanks, Chris, and thank you all for joining us today. As you've seen from our press release, we are off to a very strong start in 2023. We reported first quarter revenue of $383 million, representing growth of 21% compared with last year, again, exceeding our own expectations. Has been the case in the last few quarters, we continue to significantly outperform the digital advertising industry. We are gaining market share as advertisers embrace the precision and relevance of data-driven advertising on the open internet via our platform. Even as most brands and advertisers continue to deal with some level of uncertainty, they are increasingly shifting more of their campaign dollars to decisioned data-driven opportunities where they can have more confidence that those dollars are working as hard as possible. As a result, we are signing multi-year joint business plans, JBPs, with the leading agencies and brands, some of which represent spend projections that exceed $1 billion. From the beginning, our goal has been to align our incentives with the buy side. This continues today. Because we do not own any media, and because of our unwavering commitment to the demand side, our clients trust that we represent their interests alone, and we continue to innovate our platform to bring maximum value and ROI for their brand and agency campaigns. With that in mind, I'd like to focus my comments today on a few key areas. First, CTV. Second, AI, including generative AI. Third, agility. And fourth, the combination of OpenPath and identity. First, the transformational impact of CTV. In the Q1, video, which includes CTV, was the fastest-growing channel of our business. Our CTV growth is not just here in the United States. CTV continues to grow rapidly, both in EMEA and across Asia. As I've said before, the shift to CTV is driving significant change, not only in TV advertising, but also in omnichannel advertising. In other words, our whole business. Many campaigns are now starting with high-value CTV impressions with carefully monitored reach and frequency. As part of an omnichannel campaign, these impressions are then followed up with less expensive display, audio, mobile, and native ads to move the user down the funnel. The focus on the transformational nature of CTV is never more apparent than at this time of year, as major networks work to sell as much of their inventory as possible in advance through the annual spring upfront process. As the upfronts kick into gear, the role of programmatic CTV advertising is increasingly top of mind for our agency and brand clients. In recent years, upfronts have been charging higher CPMs for less reach in broadcast TV, which only serves to shine more clarity on the value of digital and CTV. We expect more dollars to flow into the spot market, programmatic, and decision TV. As a result, I expect CTV to play a more central role than ever in this year's upfronts. Ad Age summarized recent trends in an article a couple of weeks ago that I quote, "Advertisers are requesting new deal terms with the major streaming TV companies ahead of this year's spring ad haggle, including how brands spend through programmatic platforms. In some cases, brands and agencies are asking streaming publishers to let The Trade Desk be a part of the deals. The shift to decision CTV was reinforced at our recent Forward 2023 CTV event in New York City, where most of the major streaming media companies joined us on stage to talk about how they are innovating in CTV to bring value to the world's top advertisers. Paramount talked about how advertisers are incorporating data, identity, and optimization into the upfronts. Disney spoke about the multi-year transition taking place in CTV, much of it hinging on advances in addressability made possible by CTV. Also, at Forward 2023, NBCU made the big announcement that they have adopted UID2. They are integrating UID2 in order to ensure a premium CTV experience with low ad loads and frequency controls for advertisers. Across the board, UID2 is accelerating as the primary currency for CTV decisioning. We've discussed previously; biddable marketplaces are inevitable for media companies to maximize demand and compete in the CTV content arms race. This only becomes more true as the streaming wars intensify each year. This also makes integration with The Trade Desk somewhat inevitable for all major streaming platforms as they scale because they need as much demand as possible to their platforms. Even Netflix, a company who just launched their advertising business model at the end of last year, highlighted on their earnings call a few weeks ago that the ad-funded subscriber is more valuable to them than the ad-free subscriber. Hulu has said the same thing for years, even in the early days of the market. Ad-supported streaming is proving to be the most effective engine for growth and value, that is even before Netflix brings the power of identity and biddable marketplaces to the table. With a critical mass of premium CTV inventory available across a wide range of platforms, our advertising clients are eager to embrace the power of decisioning in their TV campaigns, and many of them are working with us to drive new innovations in CTV to get the maximum value from their investments. Recently, we launched a new product, the TV Quality Index, or TVQI for short. It helps advertisers understand the quality of the ad experience that the consumer is having. The index analyzes consumer perceptions of different streaming platforms, ad relevance, and publisher signals to ensure that each campaign targets the most relevant inventory to any specific audience group. It also helps advertisers compare the impact of premium video against the sea of UGC skippable ads. One of our large independent agency clients, Tombras, recently ran a campaign for one of their large global banking customers. Tombras wanted to understand how CTV could help increase brand awareness and favorability. With TVQI, Tombras was able to see where increases in the index score drove meaningfully higher brand lift. In this particular campaign, Tombras was able to drive a 22.5% lift in awareness and a 17% improvement in favorability by focusing on high-scoring inventory from HBO Max and Discovery+ based on TVQI. The TV inventory quality is particularly important to advertisers when thinking about premium CTV content compared to the user-generated video content that often characterizes walled gardens. This was a priority for Sinyi Realty, one of the top real estate companies in Taiwan, for an omnichannel campaign that they recently ran on The Trade Desk. Sinyi wanted to boost its business by reaching more sellers, and they had previously relied on social media marketing against UGC. With The Trade Desk, however, Sinyi was able to significantly expand targeted reach and improve performance with an omnichannel campaign that embraced CTV, online video, and display advertising, allowing them to maximize precision and optimize frequency across all those channels at once. Sinyi onboarded their valuable first-party data, leveraged UID2 to find new target audiences, and used third-party behavioral data to find people interested in real estate and related topics, including consumers who had recently purchased home decoration products. With this approach, Sinyi was able to significantly expand their target audience, outperforming every one of their key KPIs. Indeed, Sinyi's video advertising assets performed 2x as well as their previous UGC campaigns. I think it's also worth noting that while we spend a lot of time talking about the transformational nature of CTV, Sinyi's experience is a typical one of many of our clients. As I mentioned before, CTV is often just a starting point. Very few advertisers execute in CTV alone. Almost all of them want to bring decisioning to their TV spend so that they can be more data-driven across all advertising channels. The emergence of premium CTV inventory at scale now enables that omnichannel optimization. Next, I'd like to talk about artificial intelligence and our focus on innovation. AI has always been a very strategic focus of The Trade Desk, and we're confident that once again, we're in a leading position. In our original business plan, we said that our technology had to be a fusion of human and machine. Our initial products reflected that paradigm. Humans are often best at creating hypotheses, especially about how to emotionally connect with other people, something that is key to the success of any advertising campaign. Machines can often test those hypotheses and constantly learn from new data. In 2018, AI was deployed throughout The Trade Desk product in enough places that we launched a brand that year, Koa. To our users, Koa denotes the presence of TTD's proprietary AI learning technology that generates recommendations and optimizations. When we launched Koa in 2018, we used the analogy of the co-pilot, where our thousands of daily users are the pilots and our generative AI recommendations serve as their co-pilot. More and more of our users have these features turned on as a default because they know that they're getting AI-driven insights and optimizations constantly applied to their campaigns. I love what the CEO of Coca-Cola said publicly after their earnings a few weeks ago, I quote, "Much has been said about AI, and it's certainly going to obey the maxim, 'Profound transformative technology is often overestimated in its impact in the short term and underestimated in the long term.' This is going to have a profound impact, profound internally for the way our business operates, but also how we engage with consumers." He added, "I think AI is going to make a huge impact in marketing." With that in mind, not enough has been said about what it takes to make great AI. ChatGPT is an amazing technology, but its usefulness is conditioned on the quality of the data set it is pointed at. Regurgitating bad data, bad opinions, or fake news, or AI-generated deepfakes, for example, will be a problem that all generative AI will likely be dealing with for decades to come. We believe many of the novel AI use cases in market today will face challenges with monetization and copyright and data integrity or truth and scale. By contrast, we are so excited about our position in the advertising ecosystem when it comes to AI. We look at over 10 billion ad requests every second. Those requests in sum represent a very robust and very unique data set with incredible integrity. We can point generative AI at that data set with confidence for years to come. We know that our size, our data set size and integrity, our profitability, and our team will make Koa and generative AI a promising part of our future. In the future, you'll also hear us talk about other applications of AI in our business. These include generating code faster, changing the way customers understand and interact with their own data, generating new and more targeted creatives, especially for video and CTV, and using virtual assistants to shorten the learning curve that comes with the complicated world of programmatic advertising by optimizing the documentation process and making it more engaging. We'll have a lot more to say about the role of AI, particularly how it is getting more distributed within our system, as well as many other game-changing innovations at our net platform launch event on 6/6 in New York. It will be the largest platform launch in our history, and I even hesitate to call it an upgrade because it is so much more than that. It will encompass a new approach to collaborative innovation, breakthroughs in how we surface value for advertisers, and expanding accessibility as marketers of all types embrace the power of programmatic. The new release is called Kokai, and we look forward to sharing new product announcements, new ways for partners and clients to adopt and integrate with The Trade Desk, and even deeper relationships as a result. For the third topic today, I'd like to talk briefly about agility. In our work with the thousands of agencies and brands that utilize our platform, there has been a shift in the discussions we're having over the last 12 months or so. All of our clients are cognizant of the macro market environment, whether it's high interest rates or fears of recession, the stability of the banking system, or ongoing supply chain issues. They are also, though, keenly aware of the role that advertising continues to play in helping them drive growth and differentiate their businesses even in times of uncertainty. Because of this, marketing leaders need to be deliberate with advertising budgets. More and more, they are looking to understand where they can shift investments and where they can be more flexible, agile, and data-driven to find those important opportunities to differentiate and drive growth to their business. In that environment, the value of The Trade Desk becomes even more apparent. With us, agencies and brands can plan and optimize in real time. They can work in month-to-month increments versus a year-long or a six-month plan. A great example of this is FairPrice in Singapore. You may remember that FairPrice is one of our retail media partners. They are the largest grocery chain in Singapore. They are also an advertiser on our platform. Their goal was quite simple. In an increasingly competitive market, FairPrice wanted to reach new customers with a lower acquisition cost. Working with The Trade Desk, they were able to import their valuable first-party data from their loyalty program, which comprises more than 2 million customers. Using UID2, they were able to do lookalike modeling to understand where additional potential customers might be targeted, potential customers who share some characteristics of their most loyal customers. The results were very impressive. When using UID2 to execute that modeling, FairPrice's acquisition cost per customer was one-third lower than with traditional identifiers but also with 2x the scale. The same trend is happening around the world. One of the world's largest CPG companies, also one of our largest clients, recently highlighted this on their earnings call. They talked about how programmatic was helping them drive significant campaign and media efficiencies, maximizing the ROI of every campaign dollar. This efficiency helped them reinvest in more media and innovation, driving competitive differentiation. The trend toward agility and flexibility plays into the strengths of The Trade Desk. In fact, I would argue that at a time when it can be harder than ever to predict macro market trends, the ability to drive a growth and competitive differentiation agenda using our platform becomes more compelling than ever. We expect this trend to continue regardless of the macro environment. More and more marketing leaders from CMOs to agency leaders to media planners understand the power of programmatic to thoughtfully drive value. They are leaning in, whether it's in CTV, retail media, UID2, or any number of other key programmatic innovations. Finally, I'd like to discuss UID2 and the OpenPath. I've mentioned UID a few times on this call already. I'd like to touch on the progress we've made there and with OpenPath in the last few months as well. Much has been written about these innovations in recent weeks, especially about what they might mean for the evolving roles of demand-side platforms and supply-side platforms. As I hope you've picked up in the client stories I've shared today, UID2 is much more than a new identity alternative to cookies. It's really about helping our clients drive advertising precision in a privacy-safe way across all advertising channels. As the open internet continues to grow and evolve, it's essential that we develop new identity currencies that help us preserve the vital value exchange of relevant advertising for free content. Last quarter, I said we expect 75% of the third-party data ecosystem to be activating on UID2 by the middle of the year. I'm proud to report today that we are now right at that level, with most major third-party data providers leveraging UID2s on our platform. A growing number of publishers are also sending UID2s, providing advertisers with greater insight into audience engagement and campaign performance. As a result, ad spend is increasingly gravitating towards ad impressions that include UID2. It's worth noting that in some cases, we may see the same ad impression from up to 8 or 9 SSP supply paths on our platform. When this occurs, our clients are more likely to transact on impressions that incorporate UID2 because they have a clearer sense of exactly which audience they are reaching and how those ads are performing. A few weeks ago, for example, Unilever announced that ad impressions including UID2 on Disney were 12 times more effective in reaching their target audience than those with traditional identifiers. This is not atypical, and our advertisers are willing to pay for the value of that precision. Indeed, CPMs on ad impressions containing UID2 are meaningfully higher than those without in most channels. In this way, UID2 simply helps advertisers drive as much value as possible from every advertising dollar. The same can be said of OpenPath. To begin the discussion on OpenPath, let me first remind you of what it is. OpenPath is a direct integration from our platform into publisher inventory. It provides our clients with a direct line of sight into premium inventory across channels, and it provides publishers with a direct view of what advertisers are willing to pay for their impressions. In no way, shape, or form is OpenPath an effort by The Trade Desk to enter the supply side of digital advertising. That is not in our interest. To explain that a bit more clearly, it's worth spending a moment on some of the industry dynamics that make OpenPath compelling for our clients. OpenPath was born of an advertiser interest in having a more clear and transparent path to publisher inventory, where every participant in the supply path is contributing more value than they are extracting in fees. Advertisers have long been aware that there are quite a few hops in the advertising supply chain, and neither the price nor the value of each hop has ever been completely clear. We share this concern. In this way, OpenPath is very consistent with our long-term commitment to make supply chain optimization and efficiency a reality. Advertisers' eagerness for more transparency came at a time when publishers were becoming increasingly frustrated in their ability to manage yield in the complex world of programmatic. Indeed, many of them were starting to do it themselves, with some even launching their own ad servers. Why were they frustrated? It really has a lot to do with Google's dominance of the supply side and the draconian measures they've taken that hurt publisher revenues. The recent Department of Justice lawsuit against Google does a remarkably thorough job of outlining these dynamics. We have long asked the supply side to do a better job of yield management. It's not something we will ever do. We see the impact that Google is having, and we believe DoubleClick for Publishers, or DFP, should have more and better competition from SSPs, just as we tried to provide on the demand side. Given the state of the supply chain in programmatic, which is one where either companies have the power to create change and don't want to, or they are too small to have the power to create the change, advertisers want direct integrations, and publishers are welcoming them. Many publishers representing thousands of media properties across CTV, mobile, and display have already integrated with OpenPath, and our advertisers are increasingly prioritizing direct channels where they have a clear view of value. For all of the publishers that have integrated, we have a multiple of that number going through the process of getting on board right now. Let me bring this all to a close by highlighting that our work in these areas is made possible by our focus on profitability. In the first quarter, once again, The Trade Desk generated strong adjusted EBITDA and free cash flow. We remain one of the very few high-growth technology companies to consistently do so year after year. Our strong profitability allows us to invest in emerging technologies such as OpenPath and UID2 and deliver them to market even if development resources are in short supply across our clients and partners. It means we can continue to invest in innovations such as our retail media marketplace, enabling our clients to more effectively measure how specific campaigns drive in-store or online purchases. Just a couple of days ago, we announced a new retail partnership with Macy's here in the United States. In Europe, we recently announced a new partnership with Ocado, a joint venture involving Marks & Spencer, and one of U.K.'s fastest-growing grocery groups. We now work with many of the world's leading retailers to activate their data for our advertisers, and our clients are embracing the opportunity to apply more performance and measurement precision to their retail campaigns. In many cases, this is incremental market opportunity for us. It also means we continue to advance our industry leadership in AI, which I mentioned earlier, and which we will talk about more on June 6 with the launch of Kokai. Our commitment to industry-leading innovation underpins everything we do. In the first quarter, we once again outperformed the market with 21% revenue growth, meaning we continue to gain market share at an impressive pace because we consistently bring innovation value to our clients every single day. The innovation acceleration in programmatic will only continue in 2023 as more advertisers embrace breakthroughs in CTV, retail, identity, and so many other areas. The Trade Desk will stay at the bleeding edge of this innovation curve, and in doing so, I'm optimistic that we will continue to outperform the market, deliver more value to our clients than we extract, and gain share. As I hand over the microphone to Blake Grayson, I'd like to underscore an announcement that we made in our press release. I'm so thrilled to announce the promotion of Laura Schenkein to become our new Chief Financial Officer, succeeding Blake, who will be leaving the company for a senior finance role outside of the ad tech industry. First, I'd like to thank Blake for the amazing contribution that he's made to this company during his time here the last few years. I can't imagine having been through this with anyone else. Never expected to experience the effects of the pandemic, some very difficult decisions in the middle of 2020 around resource allocation as we were looking into uncharted territories and lots of uncertainty. I am extremely excited to announce Laura as our new CFO. Laura and I have worked together for about the last 10 years. I've seen Laura grow as a leader. I think it's fair to say that one of the most significant achievements of Blake during his time here is how much he has mentored and helped Laura to grow. Laura understands our business, and on a personal note, because I've worked with Laura for a decade, I've come to trust her strategic counsel and her recommendations. I'm very proud to call her my partner and our new CFO. With that, I'll hand it over to Blake to say a few words and cover our financials. Thank you, Jeff, for the kind words, and good afternoon, everyone. I'm immensely proud of our achievements as a company, and it has been an honor to work with Jeff and the leadership team as well as so many talented individuals at The Trade Desk. I'm leaving for a new challenge knowing the company is well-positioned for the future. Laura is an extremely well-respected and accomplished colleague and has my full confidence as she assumes her new role. On to our results. Q1 was an exceptional quarter of financial performance and execution for The Trade Desk. Q1 revenue was $383 million, a 21% increase year-over-year. Our Q1 performance was bolstered by the growing trend toward unbiased data-driven advertising on the open Internet. This shift has played to the strengths of our platform as marketers have become more agile and deliberate with their digital advertising. While some macro uncertainty in the market has led to relatively uneven ad budgets, we are seeing increasing numbers of marketers embrace our platform to take advantage of our flexible and data-driven approach. Our success in Q1 was demonstrated by several key achievements. Our performance in the CTV space remained robust, and we continued to achieve strong momentum in retail media, further solidifying our position as a leading player in the industry. Strong growth returned to many of our key international offices. The growing adoption of UID2 by major advertisers and publishers speaks to the value that is placed on identity in the open internet ecosystem. In addition, we deepened our partnerships with clients by expanding our Joint Business Plans on a global level, a testament to our unwavering commitment to providing outstanding value and results for our customers. In addition to strong top-line performance, in Q1, we generated $109 million in adjusted EBITDA or 28% of revenue, exceeding our own expectations. As it typically occurs, when we outperform on the top line, it generally flows through to our bottom-line results as it did in this quarter. This outperformance led to record free cash flow of $177 million in Q1, marking nearly $500 million in free cash flow on a trailing twelve-month basis, which is nearly 10x the free cash flow we generated just three years ago. In the current environment, our consistent ability to grow our top-line revenue while generating meaningfully positive adjusted EBITDA and cash flow puts us in a strong position to continue investing for growth and grabbing land while others are forced to pull back. Additionally, I am proud that our robust cash generation allowed us to return excess capital to shareholders for the first time via our share repurchase program. In Q1, growth was broad-based across channels. The shift of advertising dollars from linear to connected TV continued to be a core driver of our business. From a scaled channel perspective, video, which includes CTV, represented a mid-40s% share of our business and continues to grow rapidly as a% of our mix. Mobile represented a mid-30s% share of spend as growth was again solid across in-app and mobile video. Display represented a low double-digit% share of our business, and audio represented around 5%. Geographically, North America accounted for 88% of our Q1 spend, with international representing the remaining 12%. We're pleased to report that international growth slightly outpaced North America during this period, with particularly strong performance in EMEA. Our CTV business in Europe grew well into the triple digits year-over-year in Q1, while CTV growth in North Asia also showed encouraging momentum, with year-over-year CTV spend growth in both regions improving each month. Looking ahead, we see significant opportunities to capture share in international markets as operating conditions continue to improve. As customers seek to optimize their ad spend, The Trade Desk is well-positioned to deliver value and drive ROI, as we demonstrated in late 2020. In terms of the verticals that represent at least 1% of our spend, travel nearly tripled in spend in Q1 compared with a year ago as the sector continues to recover from the pandemic. Food and drink, automotive, and home and garden were also among our strongest performing verticals, while shopping and business were below the average. We continue to believe there is still potential for us to gain share within most of our verticals. Turning now to expenses. Excluding stock-based compensation, operating expenses in Q1 were $293 million, up 41% year-over-year. We continued to invest prudently in our team during the quarter to support our long-term growth objectives. The year-over-year increase in operating expenses, excluding stock-based compensation, was partly due to in-person events and travel that did not take place in Q1 of the prior year, as we had not yet fully resumed back to office work or in-person events. Unlike many ad-funded and technology peers, we have responsibly managed headcount and operating expenses over the past few years, maintaining a focus on profitable growth. As a result, we are well-positioned to capture market share and increase spend while generating significant adjusted EBITDA. Our income tax benefit was $19 million in the quarter, 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 $114 million or $0.23 per fully diluted share. Net cash provided by operating activities was a record $188 million, and free cash flow was a record $177 million in Q1. DSOs exiting the quarter were 88 days and DPOs were 72 days. We exited Q1 with a strong cash and liquidity position. Cash, cash equivalents, and short-term investments ended the quarter at $1.3 billion. We have no debt on the balance sheet. In February, upon review of our capital allocation strategy, we announced a $700 million share repurchase program. In Q1, we repurchased 5.1 million shares of Class A common stock for an aggregate amount of $293 million. The company will continue to approach the repurchase program opportunistically, depending on market conditions and capital priorities. Before I pass the microphone to Laura to cover the outlook for Q2, I'll summarize by saying The Trade Desk is off to a fantastic start in 2023, with strong momentum across the business. Our robust business model and solid balance sheet have positioned us well to succeed in the current environment. With powerful secular trends such as the shift from linear to CTV, the growing use of data in marketing campaigns, and significant long-term growth drivers such as CTV, retail media, joint business plans, and gaining share in international markets, we are highly optimistic about the potential to continue growing and capturing market share in the years ahead. With that, I'll hand it over to Laura. Thank you, Blake, and thank you, Jeff, for the kind words. I'm incredibly excited to be taking on the CFO role starting next month. I feel fortunate to have worked with Blake these last three and a half years. It's because of his and Jeff's mentorship that I feel well-prepared to take the baton and build upon the strong foundation they've set for TTD's future. Turning now to our outlook for the second quarter. While macro conditions remain uncertain, visibility has improved slightly since the beginning of the year. We are cautiously optimistic and estimate Q2 revenue to be at least $452 million, which would represent growth of 20% on a year-over-year basis. Excluding U.S. political election spend, which represented a low single-digit% of spend in Q2 2022, our estimated revenue growth rate in Q2 of this year would be about 21% on a year-over-year basis. We estimate adjusted EBITDA to be approximately $160 million in Q2. As Jeff has outlined, with the large addressable market in front of us, we see significant growth opportunities and continue to invest thoughtfully in the business. We continue to be one of the few technology companies capable of consistently generating high top-line growth, significant adjusted EBITDA margins, and free cash flow. This enables us to continue distancing ourselves from the competition in areas such as platform innovation, customer service, identity, and supply chain optimization. In addition, this year we remain focused on hiring to support future growth, although at about half the rate of 2022, as we expect our year-over-year headcount growth to continue to decelerate as we progress throughout the year. That concludes our prepared remarks. With that, operator, let's open up the call for questions. Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Shyam Patil with Susquehanna. Please proceed. Hey, guys. Congrats on the strong performance. Laura, congrats to you, and Blake, all the best. I just have one question. Jeff, we're hearing a lot about walled gardens starting to open up, and this is something that you've talked about for a while now. Could you just talk about, what you're actually seeing on this front and how you think about the benefits and the timing of benefits to Trade Desk from this move? Thank you. Thanks, Shyam. Appreciate the kind words and also the question. Let me start by just restating something that I've said many times over the years. I do not believe the walled garden strategy is a good long-term strategy for anybody. That includes even the biggest, the Googles and Facebooks and Baidus, Alibabas, and Tencents of the world. It's especially bad for the smaller walled gardens, and there are a lot of players that have been essentially copying the Google/Facebook playbook and creating friction to buy their inventory. As I've said before, I think that the cracks in that strategy or in those walls show up in proportion to size, and that they're the result of sort of economic pressure. When you have more supply than demand, you want to welcome more demand and not make it harder to buy your inventory. It's natural that in an environment where there's a lot of pressure, and certainly that the advent of CTV makes it so there's more options in the open internet than there's ever been before, that that puts pressure on all walled gardens, but especially those that are smaller. You might be commenting on a number of specific companies who've been more public in the market, talking about how they're opening up, and they're using phrases like, "We're opening to other demand." That's very exciting for us, and I do think that's indicative of what's to come. One thing I just want to encourage everybody to do, though, is to scrutinize the type of demand that they're opening up, when inventory is available in price-discoverable ways where we can bid on it and understand exactly what we're bidding, and not just plug into an API and transfer budgets, but to actually know what we're buying and do what we do on the rest of the internet and with our core business. That is extremely exciting to us. When you can layer on top of it identity, which of course, we're gonna talk more about in UID2 undoubtedly, that also creates just opportunity for higher prices for them, more price discovery for us, and that's the sort of everyone wins situation. We're seeing more and more talk about moving in that direction. We're seeing some movements heading in that direction. I'm very optimistic that that will continue. But right now, there's a lot of early discussions, and that's just the byproduct, I think, of just some of the economic pressures and the alternatives and also the advent and success of UID2, too. All of that together I think is really creating yet another secular tailwind in our favor. Very excited about it and appreciate the question, Shyam. Thank you. Thanks, Shyam. Next question. The next question comes from Justin Patterson with KeyBank. Please proceed. Great. Thank you very much, and good afternoon. I'd also like to issue my congratulations to Laura and best wishes to Blake. My question for Jeff. There's a perception that shopper marketing is just a new form of retargeting. Could you express your views on this and just how measurement and the approach to marketing efficacy has changed with this approach versus that retargeting model of the past? Thank you. Thank you again for the kind words. I really appreciate this question. If I do this well, I can avoid writing another op-ed because this is something that's been on my mind for a little while. I'm so glad you've asked the question. Those that have argued that shopper marketing is just a new form of retargeting don't really understand the significance of what is happening in shopper marketing. If you, first of all, sort of visualize the purchase funnel, where at the top you're creating awareness, that's also where most of the surface area of the funnel is, and at the bottom is where a purchase gets made. Retargeting is a small sliver in the middle of that purchase funnel, where somebody has expressed interest, they went to the shopping cart, they filled it out, but then they didn't actually purchase. If you do it badly, the way often our industry does, you just harass the person until they buy it. If you do it well, then you do that in a metered approach. It is just a small sliver of the marketing budget that is spent to get the customers that almost got to the finish line but didn't. Shopper marketing is the entire funnel. It is a new segment that widens the entire funnel, where, first of all, you're able to measure all the way to the very bottom of the funnel, so you're able to see who actually went to Walmart and bought the razor. If they did buy the razor, now I can look-alike model and go find 100,000 people that look just like them. Then I go create new awareness, and I move them down the funnel. Will retargeting be a part of that? Of course, just like all the other e-effective parts of the purchase funnel. The real beauty of shopper marketing is that you're creating new look-alike modeling at the very top of the funnel to find 100,000 people or more that look just like the people that bought the product, and then you're able to measure all the way down to the bottom and say, "These are the people that actually bought the product." It's that last piece that has been missing. There's been a whole bunch of proxy metrics and measurements that has been used to argue, especially from walled gardens, that they're the ones that have driven all the sales. This is really the first and very best way at scale to say we're selling product that is directly related to the marketing that we've been doing before. If you're anything that sells product in brick-and-mortar... I don't wanna to suggest that it's isolated to brick-and-mortar. It's not. You can do the exact same thing online. There's just such a strategic pressure on those that are in brick-and-mortar when you think about, for instance, Walmart or Target, who are both partners, of course, trying to compete with Amazon, that the way that they leverage their strengths in being in brick-and-mortar, where Amazon mostly isn't, is for them to see how they can take offline measurement and apply it to online marketing and complete the entire purchase funnel and quite literally widen that purchase funnel. Lastly, I just wanna underscore that in a very short amount of time, this has become a big part of our business. Not only has it widened the TAM, but we just have amazing success stories with Walmart and Target and Walgreens and Albertsons and Kroger, and then so many others. The Flybuys, the Boots, so many others around the world. I'm very excited about our most recent announcement just a few days ago with Macy's, where so much of what we've been doing is in grocery stores and convenience stores and those types, albeit all over the world, including like the Gojek of Indonesia and just so many others. Macy's is the first time that we're really getting into more clothing and fashion and a totally different part of the economy, and we expect that partnership to continue to pay dividends for years to come. Very excited about it. I really appreciate the question because it is so much more than simply retargeting. I appreciate the opportunity to clarify. Thanks for saving me an op-ed. Thanks, Jeff. Okay. The next question comes from Vasily Karasyov with Cannonball Research. Please proceed. Good afternoon. Wanted to ask a question about Open Path and SPO. When I read the industry blogs and press, it seems like they're pitting DSPs and SSPs against each other as competitors. There is, narrative or talk about each player trying to disintermediate each other, the other players. It seems very hostile environment in the industry right now according to the industry press. Jeff, could you provide us your view on what really is going on there and, where we're going with respect to supply chain optimization here? Absolutely. Thank you for the question. It's funny. In the last one I said, "Thanks for saving me an op-ed." I'm almost done with the op-ed on this one, which will come out early next week on the current. But I really appreciate the question because I do feel like there's a phenomenon here that feels a little bit like reality TV or something, where there's just so much effort to create drama in our space, including in places where there isn't drama, that I appreciate the chance to clarify. Let me just reiterate what we said in the prepared remarks. OpenPath is a product that directly integrates with publishers and content owners so that they can see the demand that we're bringing. It is not us getting into yield management, where we're providing a service to publishers and content owners to get them the highest CPM possible. 'Cause for the most part, we're trying to get lower CPMs on behalf of buyers. They want the best value, which is they want something that's going to perform and give them great brand equity, but they wanna pay as little as they have to to get that. That's, for the most part, the exact opposite of what publishers want. We can't play both sides without creating the conflict of interest that we're extremely critical of in walled gardens. We wouldn't sign up to go do that given how public we are in our criticisms of those that try. I will say that the supply chain of digital advertising is extremely convoluted and there's lots of inefficiencies and complexity. I think it's one of the most complicated supply chains of any scaled market in the world. I do believe that it's impossible to talk about this topic without talking about Google because they often sit in the middle, largely because of the technology that was formerly called DFP that now is part of GAM, Google Ad Manager, that according to the Department of Justice lawsuit, has almost 90% market share. When they have that sort of market share and they have a business model that is deliberately opaque, it becomes very difficult to see what everyone else is doing. There are a number of initiatives to create greater transparency. You've heard about ClearLine from Magnite potentially. Yeah product called Activate from PubMatic. really what everybody's trying to do is create clearer supply chains and make it so that there are less hoops and duplication that every single impression is running through. When I say everyone is trying to do that, I think those that are being loudest and those that are biggest. There are, of course, players in the supply chain that are trying to exploit the opaqueness. There are small players and big players trying to do that. What OpenPath does is it creates a baseline to compare all those against. Over time, we'll continue to make certain that we don't spend on paths that are less efficient. OpenPath gives us that benchmark or that baseline to make certain that we don't do that. We think over time, those that are trying to do the right thing and create a more effective supply chain, they're gonna be rewarded by our efforts and their efforts to be more transparent and more open about what we're buying and selling. This is not us trying to compete with the sell side. This is not us declaring war on the sell side. We are declaring war on inefficiency. We are declaring war on those players that are trying to do the wrong thing. Honestly, it's hard on some days to tell who's trying to do the right thing and who's doing the wrong thing. We just developed the technology that exposes the math, that makes certain that price discovery wins, that makes certain that people are passing the metadata so that price discovery can actually happen. On a significant amount of impressions, it doesn't. Over time, you're gonna see us just continue to reward those players that enable price discovery and punish those that don't as it relates to where we take our business. I expect the supply chain to continue to get more effective. OpenPath is a critical part of that. We're excited to have the support of most of the scaled open internet ad tech. E very now and again, there's something critical written in the press, and honestly, I think that's often them looking for drama. I think they've learned over time that if you write something about The Trade Desk, you get clicks. That's different than what's actually happening sometimes. Thank you. The next question comes from Youssef Squali with Truist. Please proceed. Great. Thank you very much. Congrats on the solid quarter, Blake. Best of luck. Laura, congrats on the new assignment. Jeff, on AI, I think we can all see the potential impacts on content creation, ad copy, A/B testing, et cetera, et cetera. I'd love to hear your thought as to how AI is likely to potentially impact the competitive landscape within your industry. Does that give an unfair potentially competitive advantage to those that have been investing in the technology maybe a little longer than others? How are you guys in particular, how is The Trade Desk, kind of inserting more and more of the new capabilities into your product roadmap? Thank you. Amazing. First of all, thank you so much for the question. If I could have chosen the questions today, I probably would have chosen those similar to this. I probably would have moved AI actually up. I'm almost shocked that we got through three questions without talking about AI, so I'm so excited to talk about it. I've never seen a topic that is so hot or hotter than what AI is right now. Not cloud, not blockchain. I don't even know that dot-com 20 years ago was hotter than AI is right now. I'm excited that we're talking about it, but this is not a new topic for us. First of all, when we first wrote our business plan, we talked about how this was the fusion of man and machine. The analogy that we used in the very beginning was that of pilot and copilot, where human beings are often good at creating hypotheses, and especially given that we operate in an industry that is about essentially predicting and influencing human behavior, that there is always an opportunity for us human beings to create the emotional and make it an emotional appeal. After you do that, there of course is a role for machines to play in following the data, in learning, revising those hypotheses, in iterating, testing blue creative versus the red creative. Of course, blue and red, in terms of the different types of creative have evolved into all different types of generative AI, where creatives can do a whole bunch of different things. There's so much opportunity for AI to play a significant role. You may also recall that when we launched a new product in 2018, that we called it Koa, and it was our AI solution that helped advertisers optimize campaigns on our platform. We, in fact, there used the analogy of Copilot, which of course Microsoft is using today as their analogy to help engineers write code, which incidentally I think is one of the most interesting ways that people are actually monetizing AI. Almost all the discussion about generative AI is on things that I think are going to have difficulty in actually monetizing. Copilot at Microsoft, I think is an opportunity to actually monetize, and I think it will help our team write code faster. There is a couple things that I just want to highlight that I do not believe are happening in the public discussion adequately today. The first is there's this mindset of winner take all and there's this Google versus Microsoft way of looking at things, and I just don't think that's the right paradigm. I think we should look at AI like very expensive code. It is expensive to write, and it is very expensive to process. It takes more compute power. And because the reason it's more expensive to write is partly because of how complicated it is and the implications, especially of generative AI. Because it's very expensive to both write and to execute, it is an opportunity for bigger companies or at least those that are profitable to do very well. The fact that we have been operating so profitably for so long puts us in an amazing position. Additionally, there's this topic of the quality of our data sets. I just want to remind everybody that the internet has been struggling for a very long time with the concept of truth. Think back to, like, social networks, in the last election cycle and how much discussion was spent on fake news and all these topics that really center around truth. Now that you're able to crawl so much of the internet to generate essentially, artificially intelligence-driven opinions, it is very difficult to figure out what is true. It's even harder than before. I wouldn't say that the internet did a phenomenal job before. Now of where we're all sitting is we're looking at the data sets that we rely on and say, "How good are they?" Because the AI will never be better than the quality of our data sets. That is the reason why I think we are in a phenomenal position because so much of the data that we're looking at is, number one, something that we get directly from the data source itself. We're listening to every ad request on the open internet. From that, we have essentially a pure data set that we can reach conclusions on. We're not scraping user-generated content. We're not scraping the comment section of every website on the internet where there's just tons of falsehoods and inaccuracies. We're looking at what people actually read, what they actually listen to, what they actually are interested in, and we're able to create conclusions and pair them with UID2 and have massive data sets that we then can use to make more informed decisions. That creates opportunity for us to play a huge role in the future of AI in advertising. Just to rattle off a few ways that that can have can play a role in our business. We can have an AI assistant for traders and essentially create a better ability to talk to the data. We can automate the building of ad groups and campaigns to find audiences to make recommendations. We can do a better job of creating, not just internal information seeking, where you write a search query, although we can, of course, make it easier to query, but we can also do a more personal job of summarizing that. Maybe the thing that I'm most excited about is the creative generation, where we can create more variety, but also we can make it really easy to create ads, especially for video and CTV, for medium and even smaller businesses that I think can lower the barrier to entry for us to move from not just the biggest advertisers in the world, but to many, many others where the friction can be reduced. Those are just a couple of ways that I think AI is gonna play a substantial role. I just remind everybody the comment that I quoted from the CEO of Coca-Cola in the prepared remarks. I think that captures very well just another opinion that I have on the topic. Hopefully that gives you a sense of why we're thinking about this so much, why we have been investing really from the very beginning, why we launched Koa in 2018, and why we continue to iterate on it. Thanks so much for the question. Well, thank you, Jeff. Up next, we have Jason Helfstein with Oppenheimer. Please proceed. Thanks. Jeff, I'll ask one. How are you thinking about the benefits to advertisers from using The Trade Desk offering for a connected TV PMP or kind of like, this upfront product versus what the SSPs are pitching as their kind of PMP or it's not really a PMP, but their kind of direct product, and then kind of what the downside risk would be to the publisher from either solution? There is this opportunity for buyers to look across all reach and frequency and all the different places that they buy and summarize that all in one place. And that is one of the benefits that The Trade Desk brings to the table, is that people tend to come to us and say, "I need to have a holistic view." And because CTV in particular is fragmented, as I've said before, perfectly, meaning that it's not too small, that there's millions of websites. We have dozens of outlets. But it's not too aggregated so that we only have one place to buy, which is not that dissimilar from what search is, where you buy from one place or what much of social is. By having it fragmented, that makes it so needing somebody to look across everything becomes very important. Now, in the cases where you're buying programmatic guaranteed or you're buying at a fixed rate and you're not controlling frequency across all these different things, then you lose a lot of the benefits of programmatic, and in fact, you lose decisioning. What is sometimes happening is people are buying at a fixed rate, they're going to the seller and saying, "Hey, in the short term, I don't need to control region frequency. I don't even care about decisioning. I'll let you, the seller, decide which impressions I get. I just need to move this over from a broadcast or traditional television into the digital ecosystem." In that, given that you've sort of weakened the value proposition of programmatic, it is a bit of a jump ball. You could do that with an SSP or a DSP because you've gotten rid of all the benefits or the best benefits of programmatic. That's where others are stepping up and saying, "If you want to, you can temporarily use us to buy directly." Even if you listen or read closely in, for instance, what PubMatic announced, Authorize is saying, "While people are just moving dollars over, we want to help them move them over. We do believe that in the medium and long term, this will be very good for DSPs. What they're acknowledging is that as soon as somebody wants to be holistic about their buying, and they wanna compare this buy to something else, that they have to use a DSP in order to do that. Because we're so convinced that the very best of programmatic, and really what's in the best interest of buyers, is for them to participate in decisioning, not to give that away to the sell side, but for them to participate in decisioning. While sometimes that means they have to pay a little bit more, including to us, that decisioning and what we bring to the table is always worth it. It's because of that belief that I believe that the SSPs are highlighting that in the medium and long term, the buyers are going to gravitate to the places where they have decisioning. In the short term, when people are just trying to move over from essentially an insertion order and not control any amount of decisioning and just do so with sort of dumb pipes, that can be done with us or with somebody else. The advantage of doing it with somebody else is they might be able to save a point or two. Advantage of doing it with us is they'll have a more holistic view. We think both medium and long term, they're gonna end up going to a place where they can decision holistically. We think that means they end up with us, especially in the world of CTV. Thanks, Jason. The next question is from Tim Nollen with Macquarie. Please proceed. Great. Thanks very much. I've got a CTV related question as well. I was listening to the Disney call just before your call started here, and Bob Iger said some very interesting things related to CTV and programmatic. I mean, including saying that they've added 1,000 new advertisers using programmatic. A third of advertisers are trying programmatic. They're talking about their pricing tiers, seeing the value of programmatic ads in driving advertising revenue for them, for their ad-supported tier and so on. My question then is given the Forward 2023 event that you had, a month or 2 ago and the talk, the conversation you've had, Jeff, with both sides, maybe if you could just give us a bit of insight into how you're working with, is it Disney, or if you don't want to talk about Disney specifically, other network groups, as to how to get them to offer more of their ad inventory in a biddable format, not just doing the insertion orders? If this is something that you're participating in actively in the upfront market, which is due to start next week. Absolutely. I really appreciate the question. I heard some of those remarks before I jumped over, of course, to focusing on ours and was very excited by the remarks that Bob made. Let me first just say I'm so proud of our partnership with Disney and what we've done there. I'm also excited about the fact that both Paramount and NBCUniversal announced their adoption of UID2 in Q1. As it relates to all the major content owners in the United States, everyone now has spoken publicly about their adoption of UID2. I think all of this, whether it's Bob's comments or the adoption of UID2, is a commentary on the state of streaming competition. Actually the numbers with Disney are also a commentary on that. They're trying to grow but also be profitable. There's a lot of pressure on the current environment and on cost. What that means is that people need to do more with less. Especially the content owners, they need higher CPMs so that they can fund all the content and make the same money that they've been making as people continue to make more and more content and the market gets more competitive. The only way to do that is to make the ads more relevant and more effective for the advertiser. The only way to do that is to leverage things like UID2 and transparency and biddable marketplaces so that we can participate and get that increased value. What we're most excited about is all of these are moving more towards biddable. In light of what we just said in the last question, when we were talking about how when people don't want decisioning, then they can use dumb pipes to execute that. That's not in anyone's best interest long term, because advertisers need efficacy, the publishers need higher CPMs. The only way that that works is in a highly decision, highly data-driven, biddable marketplace. That means that everybody is moving into to biddable environments. When we look at all the things that were talked about at our Forward '23 event, as well as we look at what's happening going into the upfronts, honestly, the fact that the upfronts are sort of have this cloud over their heads with the writers' strike, I actually think helps us and Connected TV because that amount of uncertainty makes it so that people are more likely to say, "You know what? I'll just buy it in the spot market." The spot market is programmatic. That's great for everybody, to be honest, because it means a biddable data-driven ecosystem. The themes that we keep hearing is that they want the ability to activate their data, meaning advertisers want the ability to activate their data. We're seeing them buy on value more and more and not on price, that often means that they're willing to pay a premium for decisioning. In fact, at our Forward event, Vinnie from Hershey's I think articulated this about as well as anybody can. In this economic environment, we're seeing more and more people gravitate towards flexibility and having the ability to adjust. When you add that cloud of writers' strike, you also add just economic uncertainty. You of course add in biddable, you have the ability to bring data to the equation. That makes it so that everybody is looking more and more to programmatic as its future. I think, when Bob Iger underlines that, I think it becomes easier for everybody to believe that in the marketplace. I was excited by his comments and appreciate your question. Thank you. Next question is from Matthew Cost with Morgan Stanley. Please proceed. Hi, this is Chloe on for Matt, and thank you for taking our question. Just as we think about OpEx leverage throughout the year, are there any areas that you would call out in the second quarter and going forward where you're looking potentially to gain a little bit of leverage in the model? Second, on the key investment priorities, it sounds like you have so many exciting products and so many moving parts between CTV, the retail media opportunity, UID2, OpenPath. Like, there's a lot to unpack there that you're focused on. But what do you think is gonna contribute most significantly to growth this year? What are you prioritizing? What's a little bit more of a longer-term project? Thank you. You bet. On the OpEx, I'm gonna ask Laura to take the first part of it, and then, I'll add a little color on that, and then I'll also talk about the in-investment opportunities, or feel free to chime in on both. Absolutely. Thank you, Chloe, for the question. When we look at the big picture for Q2 and the rest of 2023, we're excited. We have a great luxury. We're high growth, we've got profitability, and we've got cash flow. I'm proud of how we've stayed disciplined with our investments over the past few years, as it's really paid off. Unlike many of our ad-funded peers and other high-growth tech companies, we've responsibly managed our headcount and operating expense growth since 2019. Since our revenue is still growing well in the double digits while others are contracting or in the low single digits, we intend to and can stay the course and grab share even while our peers are pulling back. We do expect for 2023 that our operating expenses will increase year-over-year, both with and without stock-based compensation, and we continue to be extremely deliberate in our investments and our hiring. Our headcount will grow this year, but roughly at half the rate as it did last year, which sets us up nicely for the rest of the year and for 2024. On the second part of the question, we still see significant opportunities to invest in areas like CTV, data, and retail media. As we've seen in the past, when we outperform on the top line, that usually drops through to the bottom line. We saw that in Q1. We are comfortable with where things stand and cautiously optimistic about growth this year, say that especially as we think about significant tailwinds in 2023 that set The Trade Desk apart from other companies and that can help offset anything we see in the macro environment. By that, I'm talking about a strong JBP pipeline, which bodes very well for future growth. CTV as a channel continues to grow incredibly fast, and in the big picture, we still have a relatively small amount of share and lots of room to grow. Then, as we've been talking about retail media, we're really just scratching the surface of a $100 billion+ incremental TAM opportunity, and all of that makes us extremely excited. Jeff, I don't know if there's anything you would add. That was amazing. Very impressive, Laura. Thank you. I don't have anything to add on the OpEx. On the investment side, I'll just add. Let me first just say, I am so excited about the moment that we're in right now, in the ecosystem, as well as just all the macro that sort of framed this moment for us. And I recognize that there's lots of uncertainty and managing that day-to-day isn't always fun. But overall, it just creates this amazing opportunity for us, and I just want to explain why. First, we have an opportunity to continue to invest in our people and to grow our culture. During the pandemic, managing our team and preserving our culture was really hard. Everybody was remote and things like that. It's just, it was very difficult. In part, because of the decisions that Blake and I made to make certain that we didn't invest too aggressively, we never had to do a layoff. We never had to hit the brakes too hard. Now we're in a moment where we get to continue to hire. He's really set things up well for me and Laura to continue on that path. We are hiring today. Unlike a year and a half ago, where we were competing with every other company seemingly in the world, especially in Silicon Valley, now we're hiring from those companies, and we're not competing with them at all. So we're able to very carefully choose people because we were one of the first to come back to the office. We have a culture that's really well intact, and we're hiring into that, and that allows us to grow. When you're trying to hire engineers, especially when there's this opportunity to invest, like in AI, this environment and this backdrop and our history makes it an amazing time and place to invest in people. As just from knowing our financials at all, like that is our biggest investment is in our people. It is also our greatest asset, no matter what the numbers say. I'll also just say, of course, we're gonna continue to invest in CTV. This is the biggest secular tailwind we may ever see in this company's history. I didn't know that another one would come along when we ran into shopper marketing. Of course, there's an opportunity for us to invest in the forward market, which really has a lot to do with CTV. Of course, we're gonna keep investing in UID2. That is gonna continue to pay dividends for as far as we can see into the future. Of course, when you have a strong balance sheet like ours, you get to invest in things like AI, but you also get to do things like a stock repurchase, which we started to execute on, but there's more opportunity for us to do going forward. Just so many places for us to continue to invest. Those are some of the highlights. I'm sure I left off a dozen or more. Thanks, Chloe and John. You can close out the call. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.