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.
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- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Income Statement
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2016
- Return on Assets (ROA) since 2016
- Total Asset Turnover since 2016
- Price to Earnings (P/E) since 2016
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Economic Profit
Trade Desk Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The analysis reveals a significant shift in economic profit performance over the five-year period. Initially, the entity experienced economic losses, but transitioned to economic profit in the final year of the observed period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrates substantial volatility. A significant decrease is observed between 2021 and 2022, followed by a partial recovery in 2023. However, NOPAT experiences a dramatic increase in 2024 and continues to rise substantially in 2025, indicating improved operational profitability.
- Cost of Capital
- The cost of capital remains relatively stable throughout the period, fluctuating within a narrow range between 18.75% and 18.78%. A slight decrease is noted in 2025, to 18.33%, potentially reflecting changes in the entity’s risk profile or market conditions.
- Invested Capital
- Invested capital increased from 2021 to 2022, then decreased slightly in 2023. A substantial increase is observed in 2024, followed by a decrease in 2025, suggesting active capital allocation and potential strategic shifts in investment.
- Economic Profit
- Economic profit initially reflects substantial losses from 2021 to 2024. The magnitude of the loss decreases over time. A turning point is reached in 2025, with economic profit becoming positive, indicating that the entity’s returns exceed its cost of capital. This positive shift suggests improved value creation for investors.
The progression from consistent economic losses to positive economic profit in 2025 is a key observation. This improvement is likely driven by the substantial increase in NOPAT, coupled with a slight reduction in the cost of capital. The fluctuations in invested capital warrant further investigation to understand their impact on overall performance.
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
= × =
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
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$579,226 thousand.
- Relationship to Net Income
- While both net income and NOPAT experienced fluctuations, NOPAT’s decline in 2022 was more pronounced than that of net income. Conversely, the growth in NOPAT from 2024 to 2025 outpaced the growth in net income, suggesting increasing operational efficiency or changes in the capital structure impacting the calculation of NOPAT. The difference between net income and NOPAT remained consistent throughout the period, indicating a stable relationship between non-operating items and net income.
The substantial recovery and growth in NOPAT from 2023 onwards suggest a positive shift in the company’s operational performance and profitability. Further investigation into the factors driving these changes would be beneficial for a comprehensive understanding of the company’s financial health.
Cash Operating Taxes
Trade Desk Inc., cash operating taxes calculation
US$ 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$32.711 million. This decline could be attributed to various factors, including changes in tax payment schedules, utilization of tax loss carryforwards, or adjustments to estimated tax payments.
The divergence between the provision for income taxes and cash operating taxes is noteworthy. While the provision for income taxes consistently increased, cash operating taxes peaked in 2024 and then decreased substantially in 2025. This difference suggests a timing mismatch between the recognition of taxable income and the actual cash outflow for taxes. Further investigation would be required to determine the specific reasons for this discrepancy, such as deferred tax assets or liabilities, or changes in the timing of tax payments.
Invested Capital
Trade Desk Inc., invested capital calculation (financing approach)
US$ 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.
Cost of Capital
Trade Desk Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited a notable progression over the five-year period. Initially negative, the ratio transitioned to positive territory, indicating a shift in value creation. This analysis details the observed trends and potential implications.
- Economic Spread Ratio Trend
- The economic spread ratio demonstrated a consistent decline from -10.49% in 2021 to -17.31% in 2022, suggesting a widening gap between the cost of capital and returns generated from invested capital. This trend continued, albeit at a slower pace, reaching -14.64% in 2023. A significant improvement occurred in 2024, with the ratio moving to -7.98%, indicating a narrowing of the gap. The most substantial change was observed in 2025, where the ratio became positive at 9.07%, signifying that returns on invested capital exceeded the cost of capital.
- Relationship with Economic Profit
- The economic spread ratio’s negative values from 2021 to 2024 align with the reported negative economic profit during those years. The transition to positive economic profit in 2025 directly corresponds with the economic spread ratio exceeding zero. This correlation suggests a strong link between the two metrics, where a positive spread is necessary for generating positive economic profit.
- Invested Capital Considerations
- Invested capital increased from US$1,539,599 thousand in 2021 to US$1,865,761 thousand in 2022, then decreased to US$1,764,443 thousand in 2023. A substantial increase was observed in 2024, reaching US$2,455,827 thousand, followed by a decrease to US$2,114,481 thousand in 2025. The fluctuations in invested capital should be considered alongside the economic spread ratio to understand the drivers of economic profit. The positive spread in 2025 occurred with a lower level of invested capital compared to 2024, potentially indicating improved capital efficiency.
In summary, the progression from negative to positive economic spread ratio indicates a strengthening of financial performance and value creation. The interplay between the economic spread ratio, economic profit, and invested capital suggests a dynamic relationship requiring further investigation to understand the underlying factors driving these changes.
Economic Profit Margin
Trade Desk Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin demonstrates a significant shift over the five-year period. Initially negative, the metric transitions to positive territory, indicating improving economic profitability.
- Economic Profit Margin Trend
- The economic profit margin began at -13.50% in 2021 and deteriorated to -20.47% in 2022. A subsequent improvement was observed in 2023, with the margin reaching -13.28%. This positive trend continued into 2024, where the margin decreased to -8.02%. By 2025, the economic profit margin had become positive, reaching 6.62%.
The movement in the economic profit margin closely mirrors the trend in economic profit. The substantial negative economic profit values in 2021 and 2022 correspond with the lowest margins during the period. The reduction in negative economic profit in 2023 and 2024 is reflected in the improving, though still negative, margins. The positive economic profit reported in 2025 directly results in the positive economic profit margin for that year.
- Revenue Relationship
- Revenue consistently increased throughout the period, rising from US$1,196,467 thousand in 2021 to US$2,896,284 thousand in 2025. However, revenue growth alone did not drive the improvement in the economic profit margin. The margin’s positive shift suggests that improvements in operational efficiency and/or cost of capital management played a crucial role in generating economic profit despite the increasing revenue base.
The substantial change from negative to positive economic profit margin in 2025 warrants further investigation to understand the specific factors contributing to this improvement. These factors could include changes in the cost of capital, operational efficiencies, or strategic shifts in business operations.