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 – 18.41% × 2,114,481 = 190,046
The financial trajectory from 2021 to 2025 is characterized by a transition from economic value destruction to value creation. After several consecutive years of negative economic profit, a pivotal shift occurred in 2025, marking the first instance where operating returns exceeded the weighted cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability experienced significant volatility in the early part of the period, with a sharp contraction in 2022 followed by a gradual recovery in 2023. Subsequently, a period of aggressive growth emerged, with NOPAT increasing from 264.45 million in 2024 to 579.23 million in 2025. This rapid escalation in operating earnings provided the necessary momentum to offset the capital charge.
- Cost of Capital and Invested Capital
- The cost of capital remained remarkably stable for the majority of the analysis period, hovering around 18.8% before a slight compression to 18.41% in 2025. Invested capital showed a fluctuating trend, peaking at 2.46 billion in 2024 before declining to 2.11 billion in 2025. The combination of a decreasing capital base and a decreasing cost of capital in the final year enhanced the efficiency of capital deployment.
- Economic Profit Analysis
- Economic profit remained negative between 2021 and 2024, reflecting a period where the company did not generate sufficient operating returns to cover its cost of capital. The deficit peaked in 2022 at negative 324.43 million. However, a consistent upward trend in economic profit is observed from 2023 onward, culminating in a positive value of 190.05 million in 2025. This inflection point indicates that the entity has transitioned to a state of genuine economic value addition.
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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 | × | 18.97% | = | 18.26% | ||
| 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 | 18.41% | ||||||||||
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 | × | 18.97% | = | 18.80% | ||
| 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 | 18.83% | ||||||||||
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 | × | 18.97% | = | 18.85% | ||
| 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 | 18.87% | ||||||||||
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 | × | 18.97% | = | 18.82% | ||
| 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 | 18.84% | ||||||||||
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 | × | 18.97% | = | 18.83% | ||
| 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 | 18.85% | ||||||||||
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 | 190,046) | (198,057) | (259,820) | (324,425) | (162,823) | |
| Invested capital2 | 2,114,481) | 2,455,827) | 1,764,443) | 1,865,761) | 1,539,599) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 8.99% | -8.06% | -14.73% | -17.39% | -10.58% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 26.43% | 22.30% | 15.67% | 7.28% | 26.56% | |
| Comcast Corp. | 1.84% | -1.37% | -3.26% | -7.72% | -2.73% | |
| Meta Platforms Inc. | 16.53% | 13.67% | 6.59% | 0.34% | 22.62% | |
| Netflix Inc. | 0.64% | -4.05% | -10.30% | -10.83% | -6.22% | |
| Walt Disney Co. | -12.64% | -16.04% | -17.56% | -15.36% | -18.36% | |
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 × 190,046 ÷ 2,114,481 = 8.99%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 indicates a transition from a period of economic value destruction to one of value creation. Initial years were characterized by negative economic profit and a negative economic spread ratio, suggesting that returns on invested capital were insufficient to cover the cost of capital. However, a consistent recovery trend began after 2022, culminating in a positive economic outcome by the end of 2025.
- Economic Profit Analysis
- Economic profit exhibited significant volatility, reaching its lowest point in 2022 at negative 324,425 thousand US dollars. Following this trough, a steady upward trajectory was observed through 2024, with the deficit narrowing to 198,057 thousand US dollars. A pivotal shift occurred in 2025, where economic profit turned positive, reaching 190,046 thousand US dollars, signaling that the entity began generating wealth above its required return.
- Invested Capital Dynamics
- Invested capital showed an overall upward trend for the first four years, peaking in 2024 at 2,455,827 thousand US dollars. This increase suggests a period of aggressive resource deployment or capital investment. A subsequent reduction to 2,114,481 thousand US dollars in 2025 coincided with the shift to positive economic profit, potentially indicating improved capital efficiency or a divestment of non-performing assets.
- Economic Spread Ratio Trends
- The economic spread ratio mirrors the movement of economic profit, starting at negative 10.58% in 2021 and deteriorating to negative 17.39% in 2022. From 2023 onward, the ratio improved incrementally, moving to negative 14.73% and then negative 8.06% in 2024. The trend culminated in a positive spread of 8.99% in 2025, confirming that the return on invested capital finally exceeded the cost of capital.
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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 | 190,046) | (198,057) | (259,820) | (324,425) | (162,823) | |
| Revenue | 2,896,284) | 2,444,831) | 1,946,120) | 1,577,795) | 1,196,467) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 6.56% | -8.10% | -13.35% | -20.56% | -13.61% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | 20.26% | 14.48% | 9.65% | 5.19% | 17.62% | |
| Comcast Corp. | 3.45% | -2.37% | -5.63% | -13.64% | -5.37% | |
| Meta Platforms Inc. | 17.74% | 13.79% | 6.89% | 0.30% | 17.77% | |
| Netflix Inc. | 0.62% | -4.22% | -11.53% | -12.92% | -7.27% | |
| Walt Disney Co. | -22.12% | -29.19% | -34.29% | -31.61% | -46.77% | |
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 × 190,046 ÷ 2,896,284 = 6.56%
3 Click competitor name to see calculations.
Analysis of the economic performance from 2021 through 2025 reveals a significant transition from value destruction to value creation. The period is characterized by consistent revenue expansion and a successful reversal of negative economic profit trends, culminating in a positive economic return on invested capital by the final year.
- Revenue Growth Trends
- Revenue exhibited an uninterrupted upward trajectory, increasing from US$ 1,196,467 thousand in 2021 to US$ 2,896,284 thousand in 2025. This sustained growth indicates a consistent expansion of operational scale over the five-year period.
- Economic Profit Trajectory
- Economic profit experienced a notable decline between 2021 and 2022, reaching a peak deficit of US$ -324,425 thousand. Following this trough, a steady recovery occurred, with losses narrowing to US$ -259,820 thousand in 2023 and US$ -198,057 thousand in 2024, before transitioning to a positive value of US$ 190,046 thousand in 2025.
- Economic Profit Margin Evolution
- The economic profit margin followed a U-shaped recovery pattern, bottoming at -20.56% in 2022. A progressive improvement was observed in subsequent years, with the margin rising to -13.35% in 2023 and -8.10% in 2024. The period concluded with a positive margin of 6.56% in 2025, signifying that the entity has shifted toward generating returns that exceed its cost of capital.
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