The Trade Desk(US:TTD)2025-11-06 22:01Financial Performance - Revenue increased by $111 million, or 18%, for the three months ended September 30, 2025, and by $346 million, or 20%, for the nine months ended September 30, 2025, compared to the same periods in 2024[101]. - Net income for the three months ended September 30, 2025, was $115.5 million, a 23% increase from $94.2 million in 2024, and for the nine months, it was $256.4 million, a 22% increase from $210.8 million in 2024[89]. - The increase in revenue was attributed to higher gross spend on the platform, driven by increased spend per advertising campaign and new clients[101]. Operating Expenses - Platform operations expense increased by $39 million, or 32%, for the three months ended September 30, 2025, primarily due to a $36 million increase in hosting costs[102]. - Sales and marketing expense rose by $17 million, or 12%, for the three months ended September 30, 2025, driven by a $13 million increase in personnel costs[105]. - Total operating expenses as a percentage of revenue decreased from 83% in 2024 to 78% in 2025 for the three months ended September 30[99]. - The company anticipates continued increases in operating expenses as it invests in platform operations and technology development, including AI capabilities[104]. - Technology and development expenses increased by $10 million, or 9%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to personnel costs[108]. - For the nine months ended September 30, 2025, technology and development expenses rose by $59 million, or 18%, driven by a $51 million increase in personnel costs[110]. - General and administrative expenses decreased by $8 million, or 5%, for the three months ended September 30, 2025, mainly due to a $14 million decrease in stock-based compensation[112]. Cash Flow and Capital Management - Cash flows from operating activities for the nine months ended September 30, 2025, were $681 million, up from $540 million in the same period of 2024[132]. - During the nine months ended September 30, 2025, the company repurchased 16 million shares of Class A common stock for an aggregate amount of $975 million[131]. - For the nine months ended September 30, 2025, the company used $413 million in cash for investing activities, a significant increase from $96 million in the same period of 2024[138][139]. - Cash used in financing activities for the nine months ended September 30, 2025, was $985 million, compared to $117 million in the prior year, primarily due to $958 million for stock repurchases[140][141]. - As of September 30, 2025, the company had working capital of $2.1 billion, including $653 million in cash and cash equivalents[122]. - The Amended Credit Facility had $443 million available as of September 30, 2025, with no outstanding debt balance[128]. Risk Management - A hypothetical one percentage point change in interest rates would result in an annual increase or decrease in investment income of approximately $8 million based on short-term investments as of September 30, 2025[151]. - An immediate 10% adverse change in foreign exchange rates would lead to a foreign currency loss of approximately $40 million as of September 30, 2025[152]. - The company has not used any derivative financial instruments to manage interest rate risk exposure as of September 30, 2025[151]. - The company has entered into forward contracts to hedge foreign currency risk, although there is no assurance of their effectiveness[153]. Strategic Focus - The company is focusing on global expansion, particularly in Europe and Asia, to capture growth opportunities in markets like the U.K., Germany, France, China, Japan, India, and Australia[95]. - The adoption of programmatic advertising is seen as a significant opportunity for growth, allowing the company to acquire new clients and increase revenue from existing ones[92]. - Sales and marketing expenses are expected to increase in absolute dollars as the company hires additional personnel and expands its international business[107]. - The company expects to continue making investments in infrastructure and technology to support its growing operations[94]. Accounting Policies - The company’s critical accounting policies include revenue recognition criteria and stock-based compensation expense, which have the greatest potential impact on financial statements[146]. - The company does not have any off-balance sheet arrangements as of September 30, 2025, other than indemnification agreements[142]. - The company does not expect the new provisions under the amended 2016 Incentive Award Plan to have a material impact on financial statements in the near term[147]. Other Income and Taxes - Total other income, net, decreased by $0.4 million for the three months ended September 30, 2025, primarily due to lower interest income and foreign currency transaction losses[115]. - The provision for income taxes increased by $31 million for the three months ended September 30, 2025, due to tax detriments associated with employee stock-based awards and higher pre-tax profitability[119]. - As of September 30, 2025, the company's total non-cancelable contractual obligations amounted to $1,142.1 million, with $811.7 million related to operating lease commitments[144].