Trade Desk Inc. (NASDAQ:TTD)

Current Provision

The current provision demonstrates a significant upward trend from 2020 to 2024. It starts with a negative value of -67,196 thousand US dollars in 2020, indicating a tax benefit or refund during that year. In 2021, the provision turns positive, registering 2,350 thousand US dollars, and continues to increase sharply to 99,769 thousand in 2022. This growth persists in 2023 and 2024, reaching 149,876 and 189,591 thousand US dollars respectively. The consistent increase suggests rising current income tax liabilities over the years.

Deferred Provision

The deferred provision remains negative throughout the observed periods, indicating a deferred income tax benefit. However, there is a marked increase in the absolute value of this benefit from 2021 onward. Beginning at -31,218 thousand US dollars in 2020, the deferred provision slightly decreases to -18,076 thousand in 2021, then increases again to -25,784 thousand in 2022. The benefit significantly deepens in 2023 and 2024, reaching -60,821 and -75,365 thousand US dollars respectively. This trend indicates growing deferred tax benefits, possibly from timing differences or carryforwards.

Provision for (Benefit from) Income Taxes

The overall provision for income taxes, combining both current and deferred components, reflects an improving but still fluctuating situation. The total provision is a negative 98,414 thousand US dollars in 2020, showing a net tax benefit. It improves to a smaller net tax expense of -15,726 thousand in 2021, then switches to a positive provision of 73,985 thousand in 2022. This positive trend continues with the provision increasing to 89,055 thousand in 2023 and 114,226 thousand in 2024. The shift from negative to positive and the steady increase in tax expense over the years indicate the company is transitioning from a net tax benefit position to experiencing growing income tax expenses.

The analysis of the presented financial tax-related data over the five-year period reveals several notable trends and fluctuations.

U.S. Federal Statutory Income Tax Rate

The U.S. federal statutory income tax rate remains consistently stable at 21% throughout the entire period from 2020 to 2024, indicating no changes in the federal tax legislation impacting this rate during these years.

State and Local Income Taxes, Net of Federal Benefit

This item exhibits a significant upward trend, moving from a substantial negative value of -15.7% in 2020 to a positive 2.8% by 2024. The negative values in earlier years suggest a tax benefit or credit effect offsetting taxes, which has diminished over time, transitioning into an actual tax expense at the state and local level net of federal benefits by the last year.

Foreign Income at Other than U.S. Rates

The percentage associated with foreign income taxed at rates other than U.S. rates decreases from a peak of 14.2% in 2021 down to 4.1% in 2024. This decline may reflect a reduction in foreign income subjected to non-U.S. tax rates or changes in geographic income mix or tax environments abroad.

Stock-Based Compensation

Stock-based compensation shows considerable volatility and a marked turnaround. After being significantly negative at -59.6% in 2020 and -29.9% in 2021, it turns positive to 31% in 2022, before decreasing sharply to 8.3% in 2023 and slightly negative again at -0.9% in 2024. This indicates fluctuations in the effects of stock-based compensation on the effective tax rate, possibly reflecting changes in the magnitude or tax treatment of such compensation.

Meals and Entertainment

This category experiences a gradual increase from a minimal 0.2% in 2020 and 2021 to 1% in 2023, followed by a slight decrease to 0.6% in 2024. The modest upward trend suggests a growing but limited impact of meals and entertainment expenses on the tax profile.

Nondeductible Compensation

Nondeductible compensation remains relatively minor but shows some variability, starting at 0.6% in 2020, rising to 1.7% in 2021, and then declining to 0.4% by 2024. This suggests fluctuations in compensation elements that are not deductible for tax purposes but overall maintain a low impact level.

Research and Development Credit

The research and development (R&D) credit consistently trends upward from a negative 14.1% in 2020 to a less negative 5.8% in 2024. This pattern indicates a decreasing benefit from R&D credits, possibly due to lower qualifying expenditures, changes in credit rates, or phase-out mechanisms.

Other Permanent Items

Other permanent items display small fluctuations around zero, with values ranging between -0.6% and 0.5%. These items appear to have a minimal and relatively stable influence on the effective tax rate.

Benefit from Carryback of Net Operating Losses (NOLs)

A benefit from carryback of net operating losses is recorded only in 2020 at -11.8%, absent in subsequent periods. This indicates a one-time substantial tax benefit in 2020 possibly related to tax loss carrybacks that was not available or utilized in later years.

Effective Income Tax Rate

The effective income tax rate exhibits high variability. In 2020, it was deeply negative at -68.4%, indicating a tax benefit or credit effect exceeding the taxable income. This negative effect lessened significantly in 2021 to -12.9% but reversed in 2022 to a high positive 58.1%. Subsequent years show a gradual reduction in the effective tax rate to more normalized values of 33.2% in 2023 and 22.5% in 2024. This pattern suggests that the company experienced significant tax benefits or adjustments in early years that tapered off, leading to higher tax expenses and finally stabilization near the statutory rate.

In summary, the data reveals a complex tax situation characterized by significant initial tax benefits, especially in 2020, related to loss carrybacks and stock-based compensation impacts, followed by normalization and stabilization of the effective tax rate closer to the statutory rate in recent years. Changes in state and local taxes and foreign income taxation further modulate the tax profile, alongside the diminishing influence of R&D credits and minor fluctuations in other categories.

Reserves and allowances

The reserves and allowances fluctuated over the period, initially increasing from 5,521 thousand US$ in 2020 to a peak of 8,401 thousand US$ in 2023, before declining to 5,931 thousand US$ in 2024. This indicates some variability but no clear long-term upward or downward trend.

Accrued expenses

Accrued expenses decreased from 8,977 thousand US$ in 2020 to 7,466 thousand US$ in 2022, followed by a considerable rise to 13,761 thousand US$ in 2024. This suggests an increasing obligation or costs recognized but not yet paid in the later years.

Net operating losses

Net operating losses demonstrated a consistent and significant rise year over year, from 58,813 thousand US$ in 2020 to 292,022 thousand US$ in 2024, indicating growing operational challenges or significant investments generating losses.

Research and development tax credit

The R&D tax credit peaked in 2021 at 53,472 thousand US$ but declined sharply in 2022 to 17,359 thousand US$, followed by modest recovery to 22,948 thousand US$ in 2024. This points to variability in eligible R&D activities or changes in tax policy implications.

Stock-based compensation

Stock-based compensation rose steadily from 13,584 thousand US$ in 2020 to a peak of 25,727 thousand US$ in 2023, then slightly decreased to 23,431 thousand US$ in 2024, reflecting increased use of equity incentives with some moderation in the last year.

Prepaid expenses

Prepaid expenses remained negative throughout, varying between -1,674 thousand US$ in 2021 and -944 thousand US$ in 2023, with no clear trend discernible. The persistent negative values may indicate reclassification or accounting treatments affecting prepaid balances.

Property and equipment

Property and equipment consistently held negative balances increasing in magnitude from -14,375 thousand US$ in 2020 to -29,020 thousand US$ in 2022, then slightly improving to -27,171 thousand US$ in 2024. This suggests accumulated depreciation or disposals affecting the asset base.

Intangibles

Intangible assets peaked at 219,492 thousand US$ in 2021 and have since declined steadily to 161,060 thousand US$ by 2024, indicating amortization or impairments reducing the intangible asset value over time.

Capitalized software development costs

There was a notable turnaround in capitalized software development costs, moving from negative values (-2,836 to -3,565 thousand US$) in 2020-2021 to significant positive balances rising dramatically to 181,862 thousand US$ by 2024. This reflects increasing capitalization of software development expenditure.

Operating lease assets

Operating lease assets consistently registered negative values with some fluctuations, reaching the lowest point of -57,846 thousand US$ in 2024. This could indicate a reduction in leased asset values or adjustments in lease accounting.

Operating lease liabilities

Operating lease liabilities decreased from 64,359 thousand US$ in 2020 to 48,153 thousand US$ in 2023 but then increased again to 69,493 thousand US$ in 2024, showing variability that may stem from new leases or remeasurement of existing leases.

Other

Other financial items experienced an upward trend, increasing from 487 thousand US$ in 2020 to 4,495 thousand US$ in 2024, suggesting growth in miscellaneous assets or liabilities.

Valuation allowance

The valuation allowance expanded significantly in negative magnitude from -242,415 thousand US$ in 2020 to -458,605 thousand US$ in 2024. This growing allowance likely reflects increased uncertainty about the realization of deferred tax assets amidst mounting losses.

Deferred tax assets (liabilities), net

Deferred tax assets (net of liabilities) grew substantially from 50,168 thousand US$ in 2020 to 230,214 thousand US$ in 2024, indicating increasing recognition of deferred tax benefits possibly linked to accumulated operating losses and capitalization practices.

The financial data demonstrates a consistent and substantial increase in deferred tax assets over the five-year period from December 31, 2020, to December 31, 2024. Specifically, the value of deferred tax assets increased each year, starting from 50,168 thousand US dollars at the end of 2020 and reaching 230,214 thousand US dollars by the end of 2024.

This upward trend reflects a growth of approximately 358.4% over the five-year span, indicating that the company is reporting increasing amounts of tax benefits expected to be realized in future periods. Such a trend in deferred tax assets can be indicative of timing differences between accounting income and taxable income, possibly due to growth in deductible temporary differences or carryforwards of tax losses and credits.

The accelerating growth, particularly notable from 2022 onwards where the increase between years becomes more pronounced, suggests evolving tax positions or expanding operations leading to greater deferred tax recognition. The increasing deferred tax assets may also reflect changes in tax planning strategies or anticipated future profitability allowing the company to utilize these deferred tax benefits effectively.

Overall, the consistent increase in deferred tax assets signifies an improving tax asset position that may enhance future cash flows and reduce tax burdens, contingent upon sufficient future taxable income to realize these deferred benefits.

The data reveals several key trends regarding the financial position and performance over the period from the end of 2020 through 2024.

Total Assets

Both reported and adjusted total assets show a consistent upward trajectory throughout the period. Reported total assets increased from approximately $2.75 billion in 2020 to about $6.11 billion in 2024, representing more than a twofold increase. Adjusted total assets follow a similar pattern, rising from roughly $2.70 billion to $5.88 billion during the same timeframe. The gap between reported and adjusted figures remains relatively stable, indicating consistent adjustments related to deferred income taxes.

Stockholders’ Equity

Reported stockholders’ equity also exhibits growth, ascending from around $1.01 billion in 2020 to nearly $2.95 billion by 2024. Adjusted stockholders’ equity demonstrates a similar positive trend but remains slightly lower than the reported equity each year. The increase in equity suggests accumulation of retained earnings and possibly capital injections, reinforcing the company’s financial strength over time.

Net Income

Reported net income demonstrates volatility but ultimately trends upward. Starting at $242 million in 2020, it declined sharply to approximately $138 million in 2021 and further to about $53 million in 2022. However, it rebounded to $179 million in 2023 and surged markedly to $393 million in 2024. Conversely, adjusted net income follows a similar pattern of decline and recovery but at consistently lower levels than the reported net income. In particular, adjusted net income decreases from $211 million in 2020 to $28 million in 2022, before improving to $118 million in 2023 and $318 million in 2024.

Overall Insights

The ongoing growth in assets and equity highlights an expansion in the company's scale and financial base. The divergence between reported and adjusted figures primarily reflects the impact of tax adjustments, which appear significant in magnitude but stable relative to the overall financials. The net income volatility indicates operational or market challenges in 2021 and 2022, followed by a strong recovery. The substantial improvement in both reported and adjusted net income by 2024 suggests effective management of these challenges and improved profitability going forward.

Net Profit Margin

The reported net profit margin demonstrates a declining trend from 28.98% in 2020 to a low of 3.38% in 2022, followed by a recovery to 16.08% in 2024. The adjusted net profit margin follows a similar pattern, declining from 25.25% in 2020 to 1.75% in 2022, then improving to 13.00% by 2024. Overall, margins weakened significantly during the 2021-2022 period but showed notable improvement thereafter.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios display a consistent upward trend across the period. Reported turnover increased from 0.30 in 2020 to 0.40 in 2023 and held steady at 0.40 in 2024. Adjusted turnover rose from 0.31 to 0.42 over the same timeframe, indicating improved efficiency in utilizing assets to generate revenue.

Financial Leverage

Financial leverage ratios declined initially, with the reported leverage decreasing from 2.72 in 2020 to 2.07 in 2022, then showing some fluctuations rising to 2.26 in 2023 but returning to 2.07 in 2024. The adjusted leverage follows a similar dynamic, dropping from 2.81 in 2020 to 2.12 in 2022, increasing to 2.36 in 2023, and settling at 2.16 in 2024. This pattern suggests a reduction in reliance on debt or equity multiplier effects around 2022 followed by a moderate increase.

Return on Equity (ROE)

Reported ROE mirrors the net profit margin trend, starting at 23.92% in 2020, plunging to 2.52% in 2022, then recovering to 13.33% in 2024. The adjusted ROE exhibits a sharper decline from 21.92% in 2020 to 1.37% in 2022, with a gradual rebound to 11.69% by 2024. These shifts indicate significant challenges affecting equity returns during the mid-period, followed by a partial recovery.

Return on Assets (ROA)

Reported ROA decreased from 8.80% in 2020 to 1.22% in 2022 before improving to 6.43% in 2024. Adjusted ROA shows a similar trajectory, declining from 7.81% to 0.64% in 2022, then climbing back to 5.40% in 2024. This trend reflects changes in asset efficiency and profitability, consistent with the patterns seen in profitability and efficiency indicators.

An analysis of the reported and deferred income tax adjusted financial data reveals several key trends over the five-year period from 2020 to 2024.

Reported Net Income

The reported net income shows a significant decline between 2020 and 2022, decreasing from 242,317 thousand US dollars in 2020 to a low of 53,385 thousand US dollars in 2022. However, a recovery trend is observed thereafter, with reported net income rising markedly to 178,940 thousand US dollars in 2023 and further to 393,076 thousand US dollars in 2024, exceeding the initial 2020 level.

Adjusted Net Income

The adjusted net income, which accounts for deferred income tax adjustments, follows a similar pattern but with lower values throughout. It decreases from 211,099 thousand US dollars in 2020 to a minimum of 27,601 thousand US dollars in 2022, then increases to 118,119 thousand US dollars in 2023 and further to 317,711 thousand US dollars in 2024. Despite the recovery, adjusted net income in 2024 remains below the 2020 reported net income, indicating the impact of adjustments.

Reported Net Profit Margin

The reported net profit margin experiences a sharp decline from 28.98% in 2020 to 3.38% in 2022, reflecting reduced profitability in those years. It then recovers to 9.19% in 2023 and continues to improve to 16.08% in 2024. Although the margin improves significantly by 2024, it does not reach the peak level observed in 2020.

Adjusted Net Profit Margin

The adjusted net profit margin presents a similar trend but at consistently lower levels. It declines steeply from 25.25% in 2020 to 1.75% in 2022, followed by a rebound to 6.07% in 2023 and a further increase to 13.00% in 2024. The adjusted margin remains below the reported margin during all periods, emphasizing the reducing effect of tax adjustments on profitability ratios.

Overall, the data indicates a period of weakening financial performance culminating in 2022, after which the company shows a notable recovery in both reported and adjusted net income and profit margins through 2024. The adjustments for deferred income tax consistently reduce net income and profit margins, highlighting their material impact on the company's financial results. The recovery trajectory suggests improved operational or financial conditions post-2022, though adjusted profitability has not fully rebounded to the initial levels observed in 2020.

Asset Growth

Reported total assets demonstrated a steady increase from 2,753,645 thousand USD in 2020 to 6,111,951 thousand USD in 2024. Adjusted total assets followed a similar upward trajectory, growing from 2,703,477 thousand USD in 2020 to 5,881,737 thousand USD in 2024. This consistent growth reflects an expansion in the company's asset base over the observed periods.

Adjustment Impact

The adjusted total assets are consistently slightly lower than the reported total assets across all years, indicating a downward adjustment for deferred income tax or similar items. The difference remains approximately stable in proportion over time, suggesting a consistent adjustment policy or tax effect relative to the asset base size.

Asset Turnover Ratios

The reported total asset turnover ratio increased steadily from 0.3 in 2020 to 0.4 in 2023 and remained stable at 0.4 in 2024. The adjusted total asset turnover ratio shows a similar but consistently higher trend, starting at 0.31 in 2020 and rising to 0.42 by 2024. This indicates an improving efficiency in the company's utilization of assets to generate revenue when adjusted for income taxes.

Overall Trends

Both reported and adjusted figures show growth and improvement: asset size has expanded significantly, while asset turnover ratios have improved, suggesting enhanced operational efficiency. The adjusted metrics provide a slightly more favorable view of asset utilization, highlighting the importance of deferred income tax adjustments in evaluating performance.

The data reflects a consistent upward trajectory in both reported and adjusted total assets over the five-year period. Reported total assets increased from approximately $2.75 billion in 2020 to about $6.11 billion in 2024, while adjusted total assets showed a similar pattern, rising from around $2.70 billion to $5.88 billion during the same timeframe. This suggests steady asset growth, with reported figures consistently slightly higher than adjusted figures, indicating that adjustments have a modest downward effect on total asset valuation.

Stockholders’ equity also exhibited significant growth across the years. The reported stockholders’ equity increased from roughly $1.01 billion in 2020 to nearly $2.95 billion in 2024. The adjusted stockholders’ equity followed a similar trend, moving from about $963 million to $2.72 billion. The gap between reported and adjusted equity also indicates some downward adjustments applied over time, albeit maintaining the growth trend.

Financial leverage ratios, expressed as a ratio, display a general decline in leverage from 2020 to 2024. Reported financial leverage decreased from 2.72 in 2020 to 2.07 in 2024, indicating a gradual reduction in the use of debt relative to equity. However, the leverage ratio shows a slight increase in 2023 compared to 2022 before declining again in 2024. The adjusted financial leverage follows a similar pattern but remains consistently higher than the reported leverage, rising from 2.81 in 2020, peaking at 2.36 in 2023, and then dropping to 2.16 in 2024. This implies that adjustments tend to reflect a slightly more leveraged financial position than the reported figures.

Overall, the trends denote strong asset and equity growth accompanied by a moderate reduction in financial leverage over the observed period. The differences between reported and adjusted figures suggest adjustments that moderately reduce asset and equity values while indicating a somewhat higher leverage level when adjustments are considered.

The analysis of the financial data reveals several notable trends in profitability and equity performance over the reported periods.

Net Income Trends

The reported net income shows a significant decline from 242,317 thousand USD in 2020 to 53,385 thousand USD in 2022, followed by a recovery to 393,076 thousand USD by 2024. This pattern indicates an initial decrease in profitability with a substantial rebound in the later years. The adjusted net income follows a similar trajectory but with consistently lower values, suggesting the adjustments reduce reported profitability. The adjusted net income also dips sharply to 27,601 thousand USD in 2022 before rising to 317,711 thousand USD in 2024, representing a more moderate recovery compared to the reported figures.

Stockholders’ Equity Developments

Reported stockholders’ equity consistently increased throughout the periods, from 1,013,145 thousand USD in 2020 to nearly 2,949,145 thousand USD in 2024. Adjusted stockholders’ equity exhibited a parallel increasing trend, albeit at slightly lower levels across all years. This steady growth in equity indicates an expanding capital base, supporting potentially higher operational capacity or investment leverage.

Return on Equity (ROE) Performance

The reported ROE declines significantly from 23.92% in 2020 to 2.52% in 2022, followed by a recovery to 13.33% in 2024. The adjusted ROE reflects this pattern but at lower values, dropping from 21.92% to a low of 1.37% in 2022 before recovering to 11.69% by 2024. This suggests that the adjustments have a meaningful impact on the measurement of profitability relative to equity, indicating reduced efficiency or returns when accounting for deferred income tax impacts.

Overall, the data depicts a period of declining profitability and returns from 2020 through 2022, with a marked improvement in the subsequent years. The consistent expansion in equity provides a strong capital foundation, though the lower adjusted figures suggest caution when interpreting profitability trends due to income tax adjustments.

Net Income Trends

Reported net income exhibits a notable decline from 242,317 thousand US dollars in 2020 to 53,385 thousand US dollars in 2022, followed by a strong recovery to 393,076 thousand US dollars by 2024. Adjusted net income follows a similar pattern but with lower values, declining from 211,099 thousand US dollars in 2020 to 27,601 thousand US dollars in 2022, then increasing to 317,711 thousand US dollars in 2024. This indicates substantial volatility in profitability over the period with a significant downturn around 2022 and subsequent robust rebound.

Total Assets Trends

Reported total assets consistently increase throughout the period, growing from 2,753,645 thousand US dollars in 2020 to 6,111,951 thousand US dollars in 2024. Adjusted total assets show a comparable upward trend, moving from 2,703,477 thousand US dollars to 5,881,737 thousand US dollars during the same years. This steady asset growth suggests ongoing investment and expansion activities despite fluctuations in net income.

Return on Assets (ROA) Trends

Reported ROA declines sharply from 8.8% in 2020 to 1.22% in 2022, subsequently rising to 6.43% by 2024. Adjusted ROA mirrors this trend but at consistently lower levels, decreasing from 7.81% in 2020 to 0.64% in 2022, then improving to 5.4% in 2024. The decline in ROA during the early years suggests diminishing efficiency in generating profits from assets, with partial recovery seen in later years. The persistent gap between reported and adjusted ROA indicates that deferred income tax adjustments have a material effect on profitability metrics.

Overall Observations

The data reveals a period of financial stress around 2022 as evidenced by declines in both reported and adjusted net income and ROA. Despite this, total assets have grown steadily, implying continued asset accumulation or acquisition. The recovery in profitability metrics after 2022 aligns with a normalization or improvement in operational performance. The persistent difference between reported and adjusted figures highlights the impact of tax-related adjustments on earnings and efficiency measures.