Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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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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Return on Invested Capital (ROIC)
Trade Desk Inc., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, 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 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The analysis reveals a fluctuating pattern in Return on Invested Capital (ROIC) over the five-year period. Net operating profit after taxes (NOPAT) and invested capital both exhibit variability, contributing to the observed ROIC trends.
- ROIC Trend
- ROIC began at 8.27% in 2021, experienced a substantial decline to 1.45% in 2022, followed by a modest recovery to 4.14% in 2023. A significant increase is then observed, with ROIC reaching 10.77% in 2024 and further escalating to 27.39% in 2025. This indicates a considerable improvement in the efficiency with which capital is deployed to generate profits in the later years of the period.
- NOPAT Analysis
- NOPAT decreased significantly from US$127,366 thousand in 2021 to US$27,018 thousand in 2022. It then showed a recovery to US$73,055 thousand in 2023, before experiencing substantial growth to US$264,450 thousand in 2024 and US$579,226 thousand in 2025. The substantial growth in NOPAT in 2024 and 2025 is a primary driver of the corresponding increase in ROIC.
- Invested Capital Analysis
- Invested capital increased from US$1,539,599 thousand in 2021 to US$1,865,761 thousand in 2022. It then decreased to US$1,764,443 thousand in 2023, before rising to US$2,455,827 thousand in 2024 and decreasing to US$2,114,481 thousand in 2025. While invested capital generally increased over the period, the decrease in 2025, coupled with the significant NOPAT increase, contributed to the substantial ROIC improvement.
The considerable fluctuations in both NOPAT and invested capital suggest potential operational or strategic shifts within the observed timeframe. The strong ROIC performance in 2024 and 2025 warrants further investigation to understand the underlying factors driving this improvement and assess its sustainability.
Decomposition of ROIC
Trade Desk Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period demonstrates significant fluctuations in return on invested capital (ROIC), driven by changes in operating profit margin, capital turnover, and the effective cash tax rate. A notable improvement in ROIC is observed from 2021 to 2025, although the path is uneven.
- Operating Profit Margin (OPM)
- The operating profit margin experienced a decline from 11.01% in 2021 to 7.97% in 2022. A recovery began in 2023, reaching 10.81%, followed by substantial increases to 18.01% in 2024 and 21.13% in 2025. This indicates improving operational efficiency and pricing power over the later years of the period.
- Turnover of Capital (TO)
- The turnover of capital showed a modest increase from 0.78 in 2021 to 0.85 in 2022. A more substantial improvement occurred in 2023, rising to 1.10, suggesting increased efficiency in utilizing capital to generate revenue. The ratio decreased slightly to 1.00 in 2024 before increasing significantly to 1.37 in 2025, indicating a further acceleration in asset utilization.
- Effective Cash Tax Rate (CTR)
- The (1 – Effective cash tax rate) metric began at a high of 96.69% in 2021, indicating a very low cash tax burden. This decreased dramatically to 21.48% in 2022 and continued to rise gradually to 34.73% in 2023 and 60.06% in 2024. A significant increase to 94.65% is observed in 2025, suggesting a return to a very low effective cash tax rate. Fluctuations in this rate significantly impact net profitability and, consequently, ROIC.
- Return on Invested Capital (ROIC)
- ROIC decreased substantially from 8.27% in 2021 to 1.45% in 2022, mirroring the declines in both operating profit margin and the (1 – Effective cash tax rate). A gradual recovery to 4.14% in 2023 was followed by a more pronounced increase to 10.77% in 2024. The largest increase occurred between 2024 and 2025, with ROIC reaching 27.39%. This final increase is attributable to the combined positive effects of a higher operating profit margin, increased capital turnover, and a return to a low effective cash tax rate.
The decomposition of ROIC reveals that improvements in profitability, asset utilization, and tax efficiency all contributed to the overall positive trend from 2022 to 2025. The substantial increase in ROIC in 2025 is particularly noteworthy, driven by strong performance across all three components.
Operating Profit Margin (OPM)
Trade Desk Inc., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibits a notable trend of fluctuation and overall improvement over the observed period. Net operating profit before taxes also demonstrates a consistent upward trajectory, contributing to the margin’s performance.
- Operating Profit Margin (OPM)
- In 2021, the operating profit margin stood at 11.01%. A decline was observed in 2022, with the margin decreasing to 7.97%. However, the margin began to recover in 2023, reaching 10.81%. This positive momentum continued into 2024, with a significant increase to 18.01%. The most recent year, 2025, shows further improvement, with the operating profit margin reaching 21.13%. This represents the highest margin observed within the analyzed timeframe.
- Net Operating Profit Before Taxes (NOPBT) and Revenue Relationship
- The increase in operating profit margin from 2022 to 2025 correlates with substantial growth in net operating profit before taxes. While revenue also increased consistently throughout the period, the rate of growth in NOPBT exceeded that of revenue in the latter years, driving the margin expansion. Revenue increased from US$1,196,467 thousand in 2021 to US$2,896,284 thousand in 2025. NOPBT increased from US$131,725 thousand in 2021 to US$611,937 thousand in 2025.
The observed trend suggests increasing operational efficiency and/or pricing power. The substantial improvement in the operating profit margin in recent years indicates a strengthening ability to convert revenue into profit before taxes.
Turnover of Capital (TO)
Trade Desk Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, 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 Invested capital. See details »
2 2025 Calculation
TO = Revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The turnover of capital demonstrates a clear upward trend over the observed period. Initially, the ratio exhibited modest growth, followed by a more substantial increase in later years. This suggests improving efficiency in utilizing invested capital to generate revenue.
- Revenue
- Revenue consistently increased throughout the period, moving from 1,196,467 thousand US dollars in 2021 to 2,896,284 thousand US dollars in 2025. This growth provides the numerator for the turnover calculation and contributes to the overall positive trend.
- Invested Capital
- Invested capital fluctuated during the period. It increased from 1,539,599 thousand US dollars in 2021 to 1,865,761 thousand US dollars in 2022, then decreased to 1,764,443 thousand US dollars in 2023. A subsequent increase to 2,455,827 thousand US dollars in 2024 was followed by a decrease to 2,114,481 thousand US dollars in 2025. These fluctuations influence the denominator in the turnover calculation, but the revenue growth ultimately drove the overall trend.
- Turnover of Capital (TO)
- The turnover of capital ratio began at 0.78 in 2021 and rose to 0.85 in 2022, indicating a slight improvement in capital utilization. A significant increase was observed in 2023, with the ratio reaching 1.10. The ratio decreased slightly to 1.00 in 2024, before rising substantially to 1.37 in 2025. This final value represents the highest ratio observed during the period, signifying a considerable improvement in the efficiency with which capital is employed to generate revenue.
The increasing trend in the turnover of capital suggests that the company is becoming more effective at generating sales from its invested capital base. While invested capital experienced some volatility, the consistent revenue growth appears to be the primary driver of the improved turnover ratio.
Effective Cash Tax Rate (CTR)
Trade Desk Inc., CTR 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited significant fluctuations over the five-year period. Initial values were low, followed by a substantial increase, then a decline, culminating in a markedly low rate in the final year examined.
- Effective Cash Tax Rate (CTR) - Trend Analysis
- In 2021, the effective cash tax rate was 3.31%. This rate increased dramatically to 78.52% in 2022. A subsequent decrease was observed in 2023, with the rate falling to 65.27%. The rate continued to decline in 2024, reaching 39.94%. Finally, in 2025, the effective cash tax rate experienced a substantial drop to 5.35%.
The substantial increase in the effective cash tax rate in 2022 warrants further investigation. This rise coincided with an increase in cash operating taxes, but the magnitude of the change suggests potential factors beyond simple proportional tax liabilities. The subsequent declines in 2023 and 2024 indicate a possible reversal of these factors or the implementation of tax planning strategies. The significant decrease to 5.35% in 2025 is particularly noteworthy and may be attributable to changes in the tax code, utilization of tax credits, or shifts in the geographic distribution of profits.
- Relationship to NOPBT and Cash Taxes
- Net operating profit before taxes increased significantly from 2021 to 2024, with continued growth into 2025. However, the effective cash tax rate did not move in direct proportion to NOPBT. While cash operating taxes generally increased alongside NOPBT, the CTR’s volatility demonstrates that the relationship is not linear. The large increase in cash taxes from 2021 to 2022, while NOPBT remained relatively stable, is a key driver of the CTR spike. The substantial increase in NOPBT in 2024 and 2025 did not translate into proportionally higher cash taxes, resulting in lower CTRs.
The observed patterns suggest that the company’s tax burden is sensitive to factors beyond its pre-tax profitability. A deeper analysis of the company’s tax provisions and related disclosures is recommended to understand the underlying drivers of these fluctuations.