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 – 18.33% × 2,114,481 = 191,591
The financial trajectory from 2021 to 2025 demonstrates a transition from value destruction to value creation, characterized by a significant recovery in operating profitability and a eventual shift into positive economic profit.
- Net Operating Profit After Taxes (NOPAT) Trends
- NOPAT exhibited significant volatility in the early part of the period, dropping sharply from 127,366 thousand USD in 2021 to 27,018 thousand USD in 2022. However, a consistent and aggressive upward trend followed, with profits expanding to 73,055 thousand USD in 2023, 264,450 thousand USD in 2024, and reaching a peak of 579,226 thousand USD by 2025.
- Cost of Capital and Invested Capital Dynamics
- The cost of capital remained remarkably stable throughout the five-year period, fluctuating minimally around the 18.7% to 18.8% range before a slight decrease to 18.33% in 2025. Invested capital showed a general upward trend, increasing from 1,539,599 thousand USD in 2021 to a peak of 2,455,827 thousand USD in 2024, followed by a reduction to 2,114,481 thousand USD in 2025.
- Economic Profit and Value Creation
- Economic profit remained negative from 2021 through 2024, indicating that the returns generated by the operating assets were insufficient to cover the cost of the invested capital. The most significant deficit occurred in 2022 at -323,020 thousand USD. A steady recovery pattern emerged starting in 2023, with the deficit narrowing each subsequent year until 2025, when the company achieved a positive economic profit of 191,591 thousand USD. This shift confirms that the company began generating returns in excess of its required cost of capital by the end of the observed period.
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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$579,226 thousand.
- Relationship to Net Income
- While both net income and NOPAT experienced fluctuations, NOPAT’s decline in 2022 was more pronounced than that of net income. Conversely, the growth in NOPAT from 2024 to 2025 outpaced the growth in net income, suggesting increasing operational efficiency or changes in the capital structure impacting the calculation of NOPAT. The difference between net income and NOPAT remained consistent throughout the period, indicating a stable relationship between non-operating items and net income.
The substantial recovery and growth in NOPAT from 2023 onwards suggest a positive shift in the company’s operational performance and profitability. Further investigation into the factors driving these changes would be beneficial for a comprehensive understanding of the company’s financial health.
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Cash Operating Taxes
Trade Desk Inc., cash operating taxes calculation
US$ 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$32.711 million. This decline could be attributed to various factors, including changes in tax payment schedules, utilization of tax loss carryforwards, or adjustments to estimated tax payments.
The divergence between the provision for income taxes and cash operating taxes is noteworthy. While the provision for income taxes consistently increased, cash operating taxes peaked in 2024 and then decreased substantially in 2025. This difference suggests a timing mismatch between the recognition of taxable income and the actual cash outflow for taxes. Further investigation would be required to determine the specific reasons for this discrepancy, such as deferred tax assets or liabilities, or changes in the timing of tax payments.
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Invested Capital
Trade Desk Inc., invested capital calculation (financing approach)
US$ 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.
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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 | × | 18.89% | = | 18.19% | ||
| 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 | 18.33% | ||||||||||
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 | × | 18.89% | = | 18.73% | ||
| 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 | 18.76% | ||||||||||
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 | × | 18.89% | = | 18.77% | ||
| 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 | 18.79% | ||||||||||
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 | × | 18.89% | = | 18.74% | ||
| 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 | 18.76% | ||||||||||
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 | × | 18.89% | = | 18.76% | ||
| 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 | 18.77% | ||||||||||
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 | 191,591) | (196,210) | (258,490) | (323,020) | (161,663) | |
| Invested capital2 | 2,114,481) | 2,455,827) | 1,764,443) | 1,865,761) | 1,539,599) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 9.06% | -7.99% | -14.65% | -17.31% | -10.50% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 26.50% | 22.38% | 15.74% | 7.35% | 26.64% | |
| Comcast Corp. | 1.86% | -1.34% | -3.23% | -7.70% | -2.70% | |
| Meta Platforms Inc. | 16.62% | 13.77% | 6.68% | 0.43% | 22.71% | |
| Netflix Inc. | 0.78% | -3.92% | -10.17% | -10.70% | -6.10% | |
| Walt Disney Co. | -12.54% | -15.95% | -17.46% | -15.27% | -18.26% | |
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 × 191,591 ÷ 2,114,481 = 9.06%
4 Click competitor name to see calculations.
The financial performance from 2021 through 2025 indicates a significant transition from value destruction to value creation. For the majority of the period, the organization failed to generate returns exceeding its cost of capital, but a consistent recovery trend began after 2022, culminating in a positive economic position by the end of 2025.
- Economic Spread Ratio
- The economic spread ratio exhibited a V-shaped recovery. After starting at -10.50% in 2021, the ratio deteriorated to its lowest point of -17.31% in 2022. Subsequently, a steady upward trajectory was observed, improving to -14.65% in 2023 and -7.99% in 2024. The trend reached a pivotal turning point in 2025, where the ratio shifted to a positive 9.06%, signifying that the return on invested capital finally surpassed the cost of capital.
- Economic Profit
- Economic profit mirrored the trajectory of the spread ratio, characterized by initial losses followed by a strong recovery. The deficit widened significantly in 2022, reaching a peak loss of 323,020 thousand US dollars. This was followed by three consecutive years of improvement. The losses narrowed to 258,490 thousand US dollars in 2023 and 196,210 thousand US dollars in 2024, before pivoting to a positive economic profit of 191,591 thousand US dollars in 2025.
- Invested Capital
- Invested capital demonstrated a fluctuating trend over the five-year period. Capital grew from 1,539,599 thousand US dollars in 2021 to 1,865,761 thousand US dollars in 2022, followed by a slight contraction in 2023. A substantial increase occurred in 2024, peaking at 2,455,827 thousand US dollars. In 2025, invested capital decreased to 2,114,481 thousand US dollars, a reduction that coincided with the shift toward positive economic profit and a positive economic spread.
The convergence of decreasing invested capital and increasing economic profit in the final year suggests an improvement in capital efficiency. The transition to a positive economic spread ratio in 2025 marks the point where the entity began generating genuine economic value above its required return.
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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 | 191,591) | (196,210) | (258,490) | (323,020) | (161,663) | |
| Revenue | 2,896,284) | 2,444,831) | 1,946,120) | 1,577,795) | 1,196,467) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 6.62% | -8.03% | -13.28% | -20.47% | -13.51% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | 20.31% | 14.53% | 9.70% | 5.25% | 17.67% | |
| Comcast Corp. | 3.49% | -2.33% | -5.58% | -13.59% | -5.32% | |
| Meta Platforms Inc. | 17.84% | 13.88% | 6.99% | 0.38% | 17.84% | |
| Netflix Inc. | 0.75% | -4.08% | -11.38% | -12.76% | -7.12% | |
| Walt Disney Co. | -21.95% | -29.02% | -34.10% | -31.42% | -46.53% | |
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 × 191,591 ÷ 2,896,284 = 6.62%
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 reveals a transition from economic value destruction to economic value creation, characterized by consistent revenue expansion and a pivot into positive economic profit in the final year of the period.
- Revenue Growth Trends
- A consistent upward trend in revenue is observed, with figures rising from 1,196,467 thousand US dollars in 2021 to 2,896,284 thousand US dollars by 2025. This represents steady top-line growth over the five-year span.
- Economic Profit Evolution
- Economic profit remained negative between 2021 and 2024, indicating that the returns generated were insufficient to cover the cost of capital. A peak in economic loss occurred in 2022 at -323,020 thousand US dollars. Following this trough, a recovery phase is evident, with losses narrowing sequentially in 2023 and 2024 before shifting to a positive value of 191,591 thousand US dollars in 2025.
- Economic Profit Margin Analysis
- The economic profit margin reflects the underlying volatility and eventual recovery of value creation. The margin deteriorated from -13.51% in 2021 to a low of -20.47% in 2022. A sustained improvement followed, with the margin ascending to -13.28% in 2023 and -8.03% in 2024. The period concludes with a positive margin of 6.62% in 2025, signaling that the entity has reached a threshold of positive economic value added relative to its revenue.
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