Trade Desk Inc.

11/06/2025 | Press release | Distributed by Public on 11/06/2025 16:01

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements generally relate to future events or our future financial or operating performance and may include statements concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for, our business and the markets in which we operate), financial results, the impact of macroeconomic uncertainty on our business, operations, and the markets and communities in which we, our clients, and partners operate, results of operations, revenues, operating expenses, income taxes, including the impact of the One Big Beautiful Bill Act (the "OBBBA"), capital expenditures including share repurchases, sales and marketing initiatives and competition. In some cases, you can identify forward-looking statements because they contain words such as "may," "might," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "suggests," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.
We discuss many of these risks in Part II of this Quarterly Report on Form 10-Q in greater detail under the heading "Risk Factors" and in other filings we make from time to time with the Securities and Exchange Commission (the "SEC"). Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q, which are inherently subject to change and involve risks and uncertainties. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, investors should not place undue reliance on these forward-looking statements.
Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this report and have filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
References to "Notes" are notes included in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Overview
We are a global leader in advertising technology. Our platform empowers ad buyers to create, manage and optimize digital advertising campaigns across ad formats, channels and devices. Our platform's depth, AI capabilities and rich ecosystem of inventory, publisher and data partner integrations enable superior reach and decisioning for clients. In addition to the primary capabilities provided by our self-service platform, our enterprise APIs equip our clients with the ability to customize and expand platform functionality.
Since our founding in 2009, we have been committed to building a more transparent and objective advertising ecosystem and enabling more expressive and data-driven campaigns through pioneering technology innovations.
Our clients are advertising agencies, advertisers and other service providers for agencies or advertisers, with whom we enter into ongoing MSAs. We generate revenue by charging our clients a platform fee generally based on a percentage of our clients' total spend on our platform and from providing value-added services and data to support their advertising campaigns.
Executive Summary
Highlights
Three Months Ended September 30, Nine Months Ended September 30,
Dollars Change Dollars Change
2025 2024 $ % 2025 2024 $ %
(in thousands, except percentages)
Revenue $ 739,433 $ 628,016 $ 111,417 18 % $ 2,049,493 $ 1,703,819 $ 345,674 20 %
Net income $ 115,547 $ 94,158 $ 21,389 23 % $ 256,354 $ 210,847 $ 45,507 22 %
Trends, Opportunities and Challenges
Since our founding, we have focused on developing the most sophisticated, rich and objective platform for buyers of advertising. The growing digitization of media, fragmentation of audiences and ongoing lack of transparency in the advertising technology ecosystem have increased the complexity of advertising and thereby increased the need for an ad buying platform that users can trust. Our platform delivers valuable insights and results to clients without the conflict of interest and lack of objectivity that come with also selling advertising inventory. We believe our continued success relies on further developing our platform's programmatic capabilities while expanding access to advertising inventory, value-added services and data to support our clients' advertising campaigns.
We believe that our key opportunities include (i) our ongoing global expansion, (ii) continuing development of our omnichannel ad inventory (including in channels such as CTV and other video, mobile, audio and others), (iii) continuing development, optimization and adoption of the data usage, measurement and targeting capabilities provided by our platform, which create a natural flywheel in our business, (iv) the adoption and utilization of third-party data, in particular, retail data, and first-party data by our clients, and (v) the continuing development and incorporation of AI in our platform and related offerings.
We believe that growth of the programmatic advertising market is important for our ability to grow our business. Adoption of programmatic advertising by advertisers allows us to acquire new clients and grow revenue from existing clients. Although our clients include some of the largest advertising agencies and advertisers in the world, we believe there is significant room for us to expand our business relationships with these clients to gain a larger portion of their advertising spend through our platform. We also believe that the industry trends noted above will lead to advertisers adopting programmatic advertising through platforms such as ours.Accordingly, we see a significant market opportunity across advertisers and agencies with which we do not yet do business.
Similarly, the adoption of programmatic advertising by inventory owners and content providers allows us to expand the volume and type of advertising inventory we present to our clients. For example, we have expanded our CTV, audio and other advertising offerings through our integrations with supply-side partners and publishers.
We invest for long-term growth. We anticipate that our operating expenses will continue to increase in the foreseeable future as we invest in platform operations for our hosting capabilities as well as technology and development to enhance our platform and related offerings, including our continued focus on the development and incorporation of AI. We also anticipate that our sales and marketing expenses will continue to increase to acquire new clients and reinforce our relationships with existing clients. In addition, we expect to continue making investments in our infrastructure, including our information technology, financial and administrative systems and controls to support our growing operations.
We believe the markets outside of the United States, and in particular across Europe and Asia in markets such as the U.K, Germany, France, China, Japan, India and Australia, offer opportunities for growth. We intend to make additional investments in sales and marketing and product development to expand in international markets where we are making significant investments in our platform and growing our team.
We believe that these investments will contribute to our long-term growth, although they may negatively impact profitability in the near term.
Our business model has allowed us to grow significantly, and we believe that our operating leverage enables us to support future long-term growth profitably.
Macroeconomic Uncertainty
Changes in interest rates, foreign currency exchange rates, inflation, trade policies and practices and other geopolitical developments have resulted, and may continue to result, in a global slowdown of economic activity, which may decrease demand for a broad variety of goods and services in various industries, including those provided by our clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time until economic activity normalizes. As a result of the current uncertainty in economic activity, we are unable to predict the size and duration of the impact on our revenue and our results of operations. The extent of the impact of these macroeconomic factors on our operational and financial performance will depend on a variety of factors, and the duration and extent of geopolitical and global economic disruption and their respective impacts on our clients, partners, industry and employees, all of which are uncertain at this time and cannot be accurately predicted. See "Item 1A. Risk Factors" in Part II. Other Information for further discussion of the adverse impacts of macroeconomic uncertainty on our business.
Results of Operations for the Three and Nine Months Ended September 30, 2025 Compared with the Three and Nine Months Ended September 30, 2024
The following tables set forth our condensed consolidated results of operations for the periods presented.
Three Months Ended September 30,
2025 2024
(in thousands) (% of Revenue) (in thousands) (% of Revenue)
Revenue $ 739,433 100 % $ 628,016 100 %
Operating expenses:
Platform operations 162,154 22 % 122,656 20 %
Sales and marketing 156,830 21 % 140,296 22 %
Technology and development 127,893 17 % 117,705 19 %
General and administrative 131,337 18 % 138,878 22 %
Total operating expenses 578,214 78 % 519,535 83 %
Income from operations 161,219 22 % 108,481 17 %
Other expense (income):
Total other income, net (18,300) (2) % (18,697) (3) %
Income before income taxes 179,519 24 % 127,178 20 %
Provision for income taxes 63,972 9 % 33,020 5 %
Net income $ 115,547 16 % $ 94,158 15 %
Nine Months Ended September 30,
2025 2024
(in thousands) (% of Revenue) (in thousands) (% of Revenue)
Revenue $ 2,049,493 100 % $ 1,703,819 100 %
Operating expenses:
Platform operations 455,973 22 % 336,745 20 %
Sales and marketing 470,704 23 % 395,888 23 %
Technology and development 394,546 19 % 335,426 20 %
General and administrative 395,822 19 % 403,902 24 %
Total operating expenses 1,717,045 84 % 1,471,961 86 %
Income from operations 332,448 16 % 231,858 14 %
Other expense (income):
Total other income, net (56,041) (3) % (53,845) (3) %
Income before income taxes 388,489 19 % 285,703 17 %
Provision for income taxes 132,135 6 % 74,856 4 %
Net income $ 256,354 13 % $ 210,847 12 %
_______________
Note: Percentages may not sum due to rounding.
Revenue
Revenue increased by $111 million, or 18%, and $346 million, or 20%, for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively. The increase was primarily due to higher gross spend in the current year on our platform, which was primarily driven by higher spend per advertising campaign and new clients. The increase in revenue was also due to changes in the mix of value-added services and data utilized by clients for their campaigns, which fluctuates from period to period.
Platform Operations
Platform operations expense increased by $39 million, or 32%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was primarily due to increases of $36 million in hosting costs and $3 million in personnel costs. The increase in hosting costs was primarily attributable to support costs relating to the increased use of our platform by our clients, increased use of features by our technical teams in support of our platform and investment in new data centers to support the continued growth of our platform. The increase in personnel costs was primarily due to headcount growth.
Platform operations expense increased by $119 million, or 35%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase was primarily due to increases of $99 million in hosting costs and $16 million in personnel costs, which included a $6 million increase in stock-based compensation. The increase in hosting costs was primarily attributable to support costs relating to the increased use of our platform by our clients, increased use of features by our technical teams in support of our platform and investment in new data centers to support the continued growth of our platform. The increase in personnel costs was primarily due to headcount growth as well as the increase in stock-based compensation driven by new equity awards and the impact of stock price volatility on our ESPP.
We expect platform operations expenses to increase in absolute dollars in future periods as we continue to experience increased volumes of media impressions through our platform, invest in our hosting capabilities, including to support new technical features and functionality of our platform and related offerings, such as AI, and hire additional personnel to support our growth.
Sales and Marketing
Sales and marketing expense increased by $17 million, or 12%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was primarily due to increases of $13 million in personnel costs, which included a $3 million increase in stock-based compensation and $3 million in marketing costs. The increase in personnel costs was primarily due to headcount growth to support our sales efforts and to continue to develop and maintain relationships with our clients as well as an increase in travel costs. The increase in stock-based compensation was primarily driven by new equity awards. The increase in marketing costs was primarily due to an increase in marketing events, creatives, client engagement and sponsorships.
Sales and marketing expense increased by $75 million, or 19%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase was primarily due to increases of $58 million in personnel costs, which included a $17 million increase in stock-based compensation, $11 million in marketing costs and $6 million in allocated facilities costs. The increase in personnel costs was primarily due to headcount growth to support our sales efforts and to continue to develop and maintain relationships with our clients, an increase in incentive compensation driven by gross spend growth and an increase in travel costs. The increase in stock-based compensation was primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in marketing costs was primarily due to an increase in marketing creatives, campaigns, events, client engagement and sponsorships. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
We expect sales and marketing expenses to increase in absolute dollars in future periods, as we continue to hire additional personnel and focus on increasing the adoption of our platform and related offerings with existing and new clients and expanding our international business.
Technology and Development
Technology and development expense increased by $10 million, or 9%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was due to an increase of $10 million in
personnel costs, which included a $3 million increase in stock-based compensation. The increase in personnel costs was primarily attributable to headcount growth to maintain and support further development of our platform and related offerings as well as the increase in stock-based compensation, primarily driven by new equity awards.
Technology and development expense increased by $59 million, or 18%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase was primarily due to increases of $51 million in personnel costs, which included a $27 million increase in stock-based compensation, and $6 million in allocated facilities costs. The increase in stock-based compensation was primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in other personnel costs was primarily attributable to headcount growth to maintain and support further development of our platform and related offerings. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
We expect technology and development expense to increase in absolute dollars as we continue to hire additional personnel, invest in the development of our platform and related offerings to support additional features and functionality, including AI, increase the number of advertising inventory and data suppliers and support the anticipated increase in volume of advertising spending by our clients on our platform.
General and Administrative
General and administrative expense decreased by $8 million, or 5%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to a $14 million decrease in stock-based compensation, partially offset by increases of $4 million in administrative costs and $3 million in personnel costs. The decrease in stock-based compensation was primarily due to a $16 million decrease relating to the CEO Performance Option driven by the graded-vesting attribution method, under which more expense is recognized earlier in the option's life, partially offset by a $2 million increase primarily driven by an acceleration of stock-based compensation in connection with an executive transition. The increase in administrative costs was primarily driven by increases in external professional fees, including legal expenses for various litigation, regulatory and governance matters. The increase in personnel costs was primarily attributable to increased headcount to support our growth, partially offset by a decrease in cash incentive award expenses.
General and administrative expense decreased by $8 million, or 2%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily due to a $36 million decrease in stock-based compensation, partially offset by increases of $17 million in administrative costs, $8 million in personnel costs and $2 million in allocated facilities costs. The decrease in stock-based compensation was primarily due to a $45 million decrease relating to the CEO Performance Option driven by the graded-vesting attribution method, under which more expense is recognized earlier in the option's life, partially offset by a $9 million increase primarily driven by an acceleration of stock-based compensation in connection with an executive transition, new equity awards and the impact of stock price volatility on our ESPP. The increase in administrative costs was primarily driven by increases in external professional fees, including legal expenses for various litigation, regulatory and governance matters. The increase in personnel costs was primarily attributable to increased headcount to support our growth, partially offset by a decrease in cash incentive award expenses. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
Excluding the impact of the CEO Performance Option, we expect general and administrative expenses to increase primarily due to continued investment in corporate infrastructure, headcount to support growth and various litigation, regulatory and governance matters, for which expenses may fluctuate from period to period.
Total Other Income, Net
Total other income, net, decreased by $0.4 million for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The decrease was primarily due to lower interest income on our cash and cash equivalents and short-term investments driven by falling portfolio interest rates and lower amounts invested as well as foreign currency transaction losses driven by changes in foreign currency exchange rates against the U.S. Dollar, offset by gains on foreign currency forwards.
Total other income, net, increased by $2 million for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase was primarily due to foreign currency transaction gains driven by
changes in foreign currency exchange rates against the U.S. Dollar as well as higher interest income on our cash and cash equivalents and short-term investments driven by higher amounts invested, partially offset by losses on foreign currency forwards and falling portfolio interest rates.
Provision for Income Taxes
The U.S. federal statutory tax rate was 21% for the three and nine months ended September 30, 2025 and 2024.
The provision for income taxes increased by $31 million for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was primarily due to tax detriments associated with employee stock-based awards, compared to tax benefits associated with stock-based awards in the three months ended September 30, 2024, as well as higher pre-tax profitability in the three months ended September 30, 2025.
The provision for income taxes increased by $57 million for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase was primarily due to lower tax benefits associated with employee stock-based awards and higher pre-tax profitability.
On July 4, 2025, the United States enacted the OBBBA, which changes or makes permanent certain tax laws for corporations. Currently, we do not expect the provisions of the OBBBA to have a material impact on our effective tax rate or total provision for income taxes. However, the OBBBA allows for the accelerated deduction of any remaining unamortized domestic research and development costs over a one-year or two-year period beginning after December 31, 2024, at our election. As a result, during the three months ended September 30, 2025, we recognized $118 million relating to domestic research and development costs as income taxes receivable, presented in prepaid expenses and other current assets, with a corresponding reduction in deferred tax assets. We will continue to evaluate the impact of the OBBBA on our income taxes through the end of the year.
Liquidity and Capital Resources
As of September 30, 2025, we had working capital of $2.1 billion, which included $653 million in cash and cash equivalents, $73 million of which was held by our international subsidiaries, and $792 million in short-term investments in marketable securities. Additionally, we had $443 million available under our Amended Credit Facility (refer to "- Credit Facility" below). For the nine months ended September 30, 2025, we generated $681 million in cash flows from operating activities.
We believe our existing cash and cash equivalents, cash flow from operations, and our undrawn available balance under our Amended Credit Facility will be sufficient to meet our working capital requirements and investments we make from time to time for at least the next 12 months. We believe our existing cash and cash equivalents, short-term investments and cash flow from operations will be sufficient to fund our share repurchase program. Further, we have a shelf registration statement on Form S-3 on file with the SEC (the "Shelf Registration"), which permits us to issue equity securities and equity-linked securities from time to time, subject to certain limitations. The Shelf Registration is intended to provide us with additional flexibility to access capital markets for general corporate purposes, subject to market conditions and our capital needs. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in "Item 1A. Risk Factors"within this Quarterly Report on Form 10-Q.
In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt-financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by incurring additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors.
There can be no assurance that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives. In addition, if our operating performance during the next 12 months is below our expectations, our liquidity and ability to operate our business could be adversely affected. We are closely monitoring the effect that current macroeconomic factors may have on our working capital requirements.
Credit Facility
On June 15, 2021, we and a syndicate of banks, led by JPMorgan Chase Bank, N.A., as agent, entered intoa Loan and Security Agreement (the "Credit Facility"). The Credit Facility consists of a $450 million revolving loan facility, with a $20 million sublimit for swingline borrowings and a $15 million sublimit for the issuance of letters of credit. Under certain circumstances, we have the right to increase the Credit Facility by an amount not to exceed $300 million.
On December 17, 2021, we amended the Credit Facility to expand the process for issuing letters of credit and the related invoicing, particularly with respect to letters of credit not denominated in U.S. Dollars. On February 9, 2023, we further amended the Credit Facility (as amended, the "Amended Credit Facility") to transition from a variable interest rate based on the London Interbank Offered Rate ("LIBOR") to a variable interest rate based on the Secured Overnight Financing Rate ("SOFR").
As of September 30, 2025, we did not have an outstanding debt balance under the Amended Credit Facility. Availability under the Amended Credit Facility was $443 million as of September 30, 2025, which is net of outstanding letters of credit of $7 million. The Amended Credit Facility matures, and all outstanding amounts become due and payable, on June 15, 2026. As of September 30, 2025, we were in compliance with all covenants.
For additional information regarding the Amended Credit Facility, refer to Note 6-Debt.
Share Repurchase Program
In February 2023, our board of directors approved a share repurchase program to repurchase our Class A common stock. The share repurchase program, which has no expiration date, is designed to help offset the impact of future share dilution from employee stock issuances. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases determined at our discretion, depending on market conditions and corporate needs. Open market repurchases are structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares under this authorization. This program does not obligate us to acquire any particular amount of Class A common stock, and may be modified, suspended or terminated at any time at the discretion of our board of directors.
As of December 31, 2024, $464 million remained available and authorized for repurchases. At the end of January 2025, an additional $564 million was authorized under this program, bringing the total amount available for future repurchases to $1 billion. During the three months ended September 30, 2025, we repurchased and subsequently retired 6 million shares of our Class A common stock for an aggregate repurchase amount of $318 million. During the nine months ended September 30, 2025, we repurchased and subsequently retired 16 million shares of our Class A common stock for an aggregate repurchase amount of $975 million. The aggregate repurchase amounts for the three and nine months ended September 30, 2025, included $2 million and $6 million, respectively, relating to the 1% excise tax on share repurchases, net of share issuances, from the Inflation Reduction Act of 2022 ("IRA"). As of September 30, 2025, $60 million remained available and authorized for repurchases. In October 2025, we used the remaining $60 million authorized for repurchases and an additional $500 million was authorized under this program.
Cash Flows
The following table summarizes our cash flows for the periods presented:
Nine Months Ended September 30,
2025 2024
(in thousands)
Net cash provided by operating activities $ 681,132 $ 540,055
Net cash used in investing activities $ (412,928) $ (96,330)
Net cash used in financing activities $ (984,533) $ (117,379)
Operating Activities
Our cash flows from operating activities are primarily influenced by growth in our operations, increases or decreases in collections from our clients and related payments to our suppliers for Supplier Components. We typically pay
suppliers in advance of collections from our clients. Our collection and payment cycles can vary from period to period. In addition, we expect seasonality to impact cash flows from operating activities on a sequential quarterly basis during the year.
For the nine months ended September 30, 2025, cash provided by operating activities of $681 million resulted primarily from net income adjusted for noncash items of $876 million and a net decrease from our operating assets and liabilities of $195 million. The net decrease from our operating assets and liabilities was due to a $149 million increase in accounts receivable, a $92 million increase in prepaid expenses and other assets, a $48 million decrease in operating lease liabilities and a $27 million decrease in accrued expenses and other liabilities, partially offset by a $120 million increase in accounts payable. The increase in accounts receivable was due to the timing of cash receipts from clients. The increase in prepaid expenses and other assets was primarily due to the recognition of income taxes receivable for domestic research and development expenses pursuant to the OBBBA and estimated tax payments, partially offset by the tax provision and the timing of payment for employee engagement costs, including for travel and in-person events that occurred in the first quarter of 2025. The decrease in operating lease liabilities was due primarily to rent payments. The decrease in accrued expenses and other liabilities was primarily due to tax payments against the prior year income tax liability. The increase in accounts payable was due to the timing of payments for Supplier Components.
For the nine months ended September 30, 2024, cash provided by operating activities of $540 million resulted primarily from net income adjusted for noncash items of $670 million, and a net decrease from our operating assets and liabilities of $130 million. The net decrease from our operating assets and liabilities was due to a $126 million increase in accounts receivable, a $68 million increase in prepaid expenses and other assets and a $32 million decrease in operating lease liabilities, partially offset by an $87 million increase in accounts payable and a $9 million increase in accrued expenses and other liabilities. The increase in accounts receivable was due to the growth of our business and the timing of cash receipts from clients. The increase in prepaid expenses and other assets was primarily due to cash paid for income taxes. The decrease in operating lease liabilities was due primarily to rent payments. The increase in accounts payable was due to the growth of our business and the timing of payments for Supplier Components. The increase in accrued expenses and other liabilities was primarily due to an increase in the liability related to the ESPP for employee contributions toward the upcoming purchase of shares.
Investing Activities
Our primary investing activities consist of investing in short-term marketable securities, capital expenditures for property and equipment for the expansion of facilities to support our hosting capabilities and growing headcount as well as capital expenditures to develop our software in support of enhancing our platform and related offerings. As our business grows, we expect our capital expenditures to increase, and our other investment activity may increase.
For the nine months ended September 30, 2025, we used $413 million of cash in investing activities, consisting of $229 million of net purchases of short-term investments, $171 million to purchase property and equipment, $9 million of investments in capitalized software and $4 million for the acquisition of certain assets accounted for as a business combination.
For the nine months ended September 30, 2024, we used $96 million of cash in investing activities, consisting of $78 million to purchase property and equipment, $12 million of net purchases of short-term investments and $7 million of investments in capitalized software.
Financing Activities
For the nine months ended September 30, 2025, we used $985 million of cash in financing activities, consisting of $958 million of cash paid for repurchases of our Class A common stock and $80 million of taxes paid for restricted stock award settlements, partially offset by $32 million of proceeds from our ESPP and $20 million of proceeds from stock option exercises.
For the nine months ended September 30, 2024, we used $117 million of cash in financing activities, consisting of $177 million of cash paid for repurchases of Class A common stock and $98 million of taxes paid for restricted stock award settlements, partially offset by $128 million of proceeds from stock option exercises and $30 million of proceeds from our ESPP.
Off-Balance Sheet Arrangements
We do not have any relationships with other entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We did not have any other off-balance sheet arrangements at September 30, 2025 other than the indemnification agreements described below.
Contractual Obligations
Our principal commitments consist of non-cancelable operating leases for our various office and hosting facilities and other contractual commitments consisting of obligations to our hosting services, hardware providers and providers of software as a service. In certain cases, the terms of the lease agreements provide for rental payments on a graduated basis.
The following table summarizes our non-cancelable contractual obligations as of September 30, 2025 (in thousands):
Payments Due by Period
Remainder of 2025 2026 and Thereafter Total
Operating lease commitments $ 20,580 $ 791,076 $ 811,656
Other contractual commitments 99,217 231,250 330,467
Total $ 119,797 $ 1,022,326 $ 1,142,123
In the ordinary course of business, we enter into agreements in which we may agree to indemnify clients, suppliers, vendors, lessors, business partners, lenders, stockholders and other parties with respect to certain matters, including losses resulting from claims of intellectual property infringement, damages to property or persons, business losses or other liabilities. Generally, these indemnity and defense obligations relate to our own business operations, obligations and acts or omissions. However, under some circumstances, we agree to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations and acts or omissions, or the business operations, obligations and acts or omissions of third parties. These indemnity provisions generally survive termination or expiration of the agreements in which they appear. In addition, we have entered into indemnification agreements with our directors, executive officers and other officers that will require us to indemnify them against liabilities that may arise by reason of their status or service as directors, officers or employees. In the ordinary course of business, demands have been made upon us to provide indemnification under such agreements, but we are not aware of any claims that could have a material effect on our condensed consolidated financial statements. Accordingly, no material amounts have been recorded at September 30, 2025.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
We believe that the assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements, stock-based compensation expense and income taxes, including the realizability of deferred tax assets, have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
Refer to Note 8-Stock-Based Compensation for information regarding the amendment and restatement of our 2016 Incentive Award Plan. We do not currently expect that the new or modified provisions under the amended and restated 2016 Incentive Award Plan will have a material impact on our financial statements in the near term.
Refer to Note 9-Income Taxesfor information regarding the impact of the OBBBA on income taxes.
Recently Issued Accounting Pronouncements
Refer to Note 2-Basis of Presentation and Summary of Significant Accounting Policiesof our condensed consolidated financial statements.
Trade Desk Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 22:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]