Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Trade Desk Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 579,226 – 18.34% × 2,114,481 = 191,350
The financial performance from 2021 to 2025 is characterized by an initial period of economic value destruction followed by a decisive shift toward positive value creation. While the entity operated with negative economic profit for the majority of the analyzed period, a significant acceleration in operational profitability in the later years successfully offset the cost of capital associated with the invested capital base.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited substantial volatility, declining sharply from US$ 127,366 thousand in 2021 to US$ 27,018 thousand in 2022. Following this trough, a consistent and aggressive upward trajectory is observed, with profits expanding to US$ 73,055 thousand in 2023, US$ 264,450 thousand in 2024, and reaching US$ 579,226 thousand by 2025.
- Cost of Capital
- The cost of capital remained remarkably stable throughout the five-year period, fluctuating minimally between 18.34% and 18.80%. This consistency indicates a steady hurdle rate that the company was required to exceed to generate economic value.
- Invested Capital
- Invested capital showed a general upward trend with some fluctuations, rising from US$ 1,539,599 thousand in 2021 to a peak of US$ 2,455,827 thousand in 2024, before moderating to US$ 2,114,481 thousand in 2025. The expansion of the capital base during the early years of the period contributed to an increase in the capital charge, which exacerbated economic losses during the 2022 downturn.
- Economic Profit
- Economic profit remained negative from 2021 through 2024, signifying that NOPAT was insufficient to cover the cost of capital. The maximum deficit occurred in 2022 at negative US$ 323,239 thousand. However, the trend reversed starting in 2023, leading to a critical inflection point in 2025 when economic profit turned positive, reaching US$ 191,350 thousand. This transition indicates that the company began generating returns in excess of its cost of capital, effectively creating economic value.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Trade Desk Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 436,330 × 4.80% = 20,944
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 22,734 × 21.00% = 4,774
6 Addition of after taxes interest expense to net income.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 70,507 × 21.00% = 14,806
8 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) exhibited significant fluctuations over the five-year period. While net income demonstrated volatility, the trend in NOPAT presents a more pronounced pattern of initial decline followed by substantial recovery and growth.
- Overall Trend
- NOPAT decreased considerably from 2021 to 2022, then experienced a period of moderate growth in 2023. A substantial increase occurred between 2023 and 2024, and this upward trajectory continued into 2025, resulting in the highest NOPAT value within the observed timeframe.
- Year-over-Year Changes
- A significant decrease in NOPAT is observed from US$127,366 thousand in 2021 to US$27,018 thousand in 2022, representing a substantial contraction. The subsequent year, 2023, showed improvement, with NOPAT reaching US$73,055 thousand. However, the most dramatic change occurred between 2023 and 2024, with NOPAT increasing to US$264,450 thousand. This growth continued in 2025, with NOPAT reaching US$579,226 thousand.
- Relationship to Net Income
- While both net income and NOPAT experienced fluctuations, NOPAT’s decline in 2022 was more pronounced than that of net income. Conversely, the growth in NOPAT from 2024 to 2025 outpaced the growth in net income, suggesting increasing operational efficiency or changes in the capital structure impacting the calculation of NOPAT. The difference between net income and NOPAT remained consistent throughout the period, indicating a stable relationship between non-operating items and net income.
The substantial recovery and growth in NOPAT from 2023 onwards suggest a positive shift in the company’s operational performance and profitability. Further investigation into the factors driving these changes would be beneficial for a comprehensive understanding of the company’s financial health.
AI Ask an analyst for more
Cash Operating Taxes
Trade Desk Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The provision for (benefit from) income taxes and cash operating taxes exhibit distinct trends over the observed period. The provision for income taxes demonstrates a significant shift from a benefit in 2021 to substantial provisions in subsequent years, indicating increasing tax liabilities. Conversely, cash operating taxes show a more volatile pattern, peaking in 2023 and declining sharply in 2025.
- Provision for Income Taxes
- A substantial benefit from income taxes was recorded in 2021, amounting to negative US$15.726 million. This was followed by a marked increase in provisions, reaching US$73.985 million in 2022, US$89.055 million in 2023, US$114.226 million in 2024, and further increasing to US$215.451 million in 2025. This consistent upward trend suggests growing taxable income and potentially changes in applicable tax rates or available tax credits.
- Cash Operating Taxes
- Cash operating taxes began at US$4.359 million in 2021, increasing significantly to US$98.789 million in 2022. This growth continued into 2023, reaching US$137.273 million, and then to US$175.853 million in 2024. However, a considerable decrease is observed in 2025, with cash operating taxes falling to US$32.711 million. This decline could be attributed to various factors, including changes in tax payment schedules, utilization of tax loss carryforwards, or adjustments to estimated tax payments.
The divergence between the provision for income taxes and cash operating taxes is noteworthy. While the provision for income taxes consistently increased, cash operating taxes peaked in 2024 and then decreased substantially in 2025. This difference suggests a timing mismatch between the recognition of taxable income and the actual cash outflow for taxes. Further investigation would be required to determine the specific reasons for this discrepancy, such as deferred tax assets or liabilities, or changes in the timing of tax payments.
AI Ask an analyst for more
Invested Capital
Trade Desk Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of short-term investments, net.
The reported invested capital exhibited a fluctuating pattern over the five-year period. Initially, a growth trajectory was observed, followed by a decline and subsequent increase, culminating in a final decrease. A detailed examination of the components contributing to invested capital reveals further insights.
- Total Invested Capital Trend
- Invested capital increased from US$1,539,599 thousand in 2021 to US$1,865,761 thousand in 2022, representing a growth of approximately 21.1%. A subsequent decrease was noted in 2023, with invested capital falling to US$1,764,443 thousand. This was followed by a significant increase in 2024, reaching US$2,455,827 thousand. Finally, invested capital decreased to US$2,114,481 thousand in 2025.
- Debt & Leases
- Total reported debt and leases generally decreased from 2021 to 2023, moving from US$284,598 thousand to US$235,893 thousand. However, a substantial increase occurred in 2024, rising to US$312,215 thousand, and continued into 2025, reaching US$436,330 thousand. This suggests a shift towards increased reliance on debt financing in the later years of the period.
- Stockholders’ Equity
- Stockholders’ equity demonstrated a consistent increase from 2021 to 2024. It rose from US$1,527,306 thousand in 2021 to US$2,949,145 thousand in 2024. However, a decrease was observed in 2025, with equity falling to US$2,484,391 thousand. This suggests potential factors impacting equity value in the most recent year, such as share repurchases or changes in retained earnings.
The interplay between debt and equity significantly influences the overall invested capital. The increase in debt in 2024 and 2025, coupled with the decrease in equity in 2025, contributed to the overall decline in invested capital observed in the final year. The fluctuations in invested capital warrant further investigation to understand the underlying drivers and their implications for the company’s financial performance and risk profile.
AI Ask an analyst for more
Cost of Capital
Trade Desk Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 11,337,773) | 11,337,773) | ÷ | 11,774,103) | = | 0.96 | 0.96 | × | 18.90% | = | 18.20% | ||
| Operating lease liability3 | 436,330) | 436,330) | ÷ | 11,774,103) | = | 0.04 | 0.04 | × | 4.80% × (1 – 21.00%) | = | 0.14% | ||
| Total: | 11,774,103) | 1.00 | 18.34% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 35,748,141) | 35,748,141) | ÷ | 36,060,356) | = | 0.99 | 0.99 | × | 18.90% | = | 18.74% | ||
| Operating lease liability3 | 312,215) | 312,215) | ÷ | 36,060,356) | = | 0.01 | 0.01 | × | 4.30% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 36,060,356) | 1.00 | 18.77% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 37,017,407) | 37,017,407) | ÷ | 37,253,300) | = | 0.99 | 0.99 | × | 18.90% | = | 18.78% | ||
| Operating lease liability3 | 235,893) | 235,893) | ÷ | 37,253,300) | = | 0.01 | 0.01 | × | 3.60% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 37,253,300) | 1.00 | 18.80% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 32,539,695) | 32,539,695) | ÷ | 32,800,652) | = | 0.99 | 0.99 | × | 18.90% | = | 18.75% | ||
| Operating lease liability3 | 260,957) | 260,957) | ÷ | 32,800,652) | = | 0.01 | 0.01 | × | 3.10% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 32,800,652) | 1.00 | 18.77% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 39,227,804) | 39,227,804) | ÷ | 39,512,402) | = | 0.99 | 0.99 | × | 18.90% | = | 18.77% | ||
| Operating lease liability3 | 284,598) | 284,598) | ÷ | 39,512,402) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 39,512,402) | 1.00 | 18.78% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
Economic Spread Ratio
Trade Desk Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 191,350) | (196,498) | (258,698) | (323,239) | (161,844) | |
| Invested capital2 | 2,114,481) | 2,455,827) | 1,764,443) | 1,865,761) | 1,539,599) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 9.05% | -8.00% | -14.66% | -17.32% | -10.51% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 26.49% | 22.36% | 15.73% | 7.34% | 26.63% | |
| Comcast Corp. | 1.87% | -1.33% | -3.22% | -7.69% | -2.69% | |
| Meta Platforms Inc. | 16.59% | 13.74% | 6.65% | 0.40% | 22.68% | |
| Netflix Inc. | 0.71% | -3.98% | -10.24% | -10.76% | -6.16% | |
| Walt Disney Co. | -12.58% | -15.99% | -17.50% | -15.31% | -18.30% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 191,350 ÷ 2,114,481 = 9.05%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 indicates a transition from economic value destruction to economic value creation. While the initial years of the period were marked by negative economic profit and a declining spread ratio, a consistent recovery phase began after 2022, culminating in a positive economic outcome by the end of 2025.
- Economic Profit Trends
- Economic profit experienced a significant decline between 2021 and 2022, with losses widening from -161,844 thousand US$ to -323,239 thousand US$. Following this trough, a steady upward trend is observed, with losses narrowing to -258,698 thousand US$ in 2023 and -196,498 thousand US$ in 2024. This recovery culminated in a pivotal shift in 2025, where economic profit turned positive, reaching 191,350 thousand US$.
- Invested Capital Fluctuations
- Invested capital exhibited volatility throughout the period. An initial increase occurred in 2022, reaching 1,865,761 thousand US$, followed by a slight contraction in 2023. A substantial peak was observed in 2024 at 2,455,827 thousand US$, suggesting a period of intensified capital deployment. By 2025, invested capital decreased to 2,114,481 thousand US$, coinciding with the transition to positive economic profit.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the trends seen in economic profit, starting at -10.51% in 2021 and reaching a low of -17.32% in 2022. From 2023 onward, a consistent improvement is evident, moving to -14.66% and then to -8.00% in 2024. The ratio shifted to a positive 9.05% in 2025, signifying that the return on invested capital has finally exceeded the cost of capital.
The overall data suggests a successful turnaround in capital efficiency. The ability to move the economic spread ratio from a deep negative position to a positive one, despite fluctuations in the total invested capital, indicates an improvement in the underlying operational profitability relative to the cost of funding the business.
AI Ask an analyst for more
Economic Profit Margin
Trade Desk Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 191,350) | (196,498) | (258,698) | (323,239) | (161,844) | |
| Revenue | 2,896,284) | 2,444,831) | 1,946,120) | 1,577,795) | 1,196,467) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 6.61% | -8.04% | -13.29% | -20.49% | -13.53% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | 20.30% | 14.53% | 9.69% | 5.24% | 17.66% | |
| Comcast Corp. | 3.51% | -2.31% | -5.56% | -13.57% | -5.30% | |
| Meta Platforms Inc. | 17.81% | 13.85% | 6.96% | 0.35% | 17.82% | |
| Netflix Inc. | 0.68% | -4.15% | -11.45% | -12.84% | -7.19% | |
| Walt Disney Co. | -22.02% | -29.09% | -34.18% | -31.50% | -46.63% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × 191,350 ÷ 2,896,284 = 6.61%
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 indicates a transition from consistent value destruction to the achievement of positive economic value added. While revenue grew steadily throughout the period, the company failed to generate returns exceeding its cost of capital until the final year of the analysis.
- Revenue Growth Trends
- A consistent upward trend in revenue is observed, increasing from US$ 1.19 billion in 2021 to US$ 2.89 billion by 2025. This reflects a period of sustained top-line expansion.
- Economic Profit Trajectory
- Economic profit remained negative from 2021 through 2024, signifying that the company did not earn sufficient returns to cover the cost of its invested capital. A significant decline occurred in 2022, where economic profit reached its lowest point at negative US$ 323 million. A recovery phase followed, with losses narrowing sequentially in 2023 and 2024, culminating in a pivot to a positive economic profit of US$ 191 million in 2025.
- Economic Profit Margin Evolution
- The economic profit margin mirrored the volatility and subsequent recovery of absolute economic profit. The margin deteriorated from -13.53% in 2021 to a trough of -20.49% in 2022. Following this decline, a steady improvement is noted, with the margin rising to -13.29% in 2023 and -8.04% in 2024, before achieving a positive 6.61% in 2025. This shift indicates a fundamental transition toward creating shareholder value.
AI Ask an analyst for more