Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Trade Desk Inc., profitability ratios
Based on: 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), 10-K (reporting date: 2020-12-31).
The financial data over the five-year period exhibits several notable trends concerning profitability and returns.
- Gross profit margin
- The gross profit margin has shown a consistent but moderate increase from 78.61% in 2020 to a peak of 82.18% in 2022. Although there was a slight decline in the subsequent two years, margins remained robust, staying above 80%. This indicates stable cost management in production or service delivery over the period.
- Operating profit margin
- Operating profit margin declined sharply from 17.25% in 2020 to a low of 7.2% in 2022, suggesting increased operational expenses or less efficient operations during these years. However, a recovery is observed in 2023 and 2024, reaching 17.47%, slightly surpassing the level at the start of the period. This recovery may be indicative of improved operational efficiencies or cost control measures implemented after 2022.
- Net profit margin
- The net profit margin follows a similar trajectory to the operating margin, with a significant decrease from 28.98% in 2020 to 3.38% in 2022. This indicates a period of reduced overall profitability, possibly driven by higher costs or non-operating expenses. Improvement is noted in the following years, ending at 16.08% in 2024, which, though lower than in 2020, reflects a positive trend in recovering profitability.
- Return on equity (ROE)
- ROE experienced a marked decrease from 23.92% in 2020 down to 2.52% in 2022, highlighting diminished effectiveness in generating returns for shareholders during this timeframe. Subsequent years show a recovery, with ROE increasing to 13.33% by 2024, suggesting efforts to enhance equity utilization are yielding results, albeit not yet reaching the initial high levels.
- Return on assets (ROA)
- ROA also declined significantly from 8.8% in 2020 to 1.22% in 2022, indicating a reduced capacity to generate profit from assets during the middle years. Improvement commenced thereafter, with ROA rising to 6.43% in 2024, nearing levels twice those of the 2022 trough. This suggests enhancements in asset utilization contributing to improved profitability relative to assets employed.
Overall, the period displays a downward trend in profitability and returns across most metrics until 2022, followed by a recovery phase. The gross profit margin remained relatively stable and high throughout, which implies that operational challenges affecting margins were mainly related to operating expenses and other costs beyond gross profit. The improvements in margins and returns after 2022 suggest corrective actions have been effective, though profitability and returns have not fully returned to the peak levels observed in 2020.
Return on Sales
Return on Investment
Gross Profit Margin
Trade Desk Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 1,972,819) | 1,580,522) | 1,296,672) | 974,913) | 657,221) | |
| Revenue | 2,444,831) | 1,946,120) | 1,577,795) | 1,196,467) | 836,033) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 80.69% | 81.21% | 82.18% | 81.48% | 78.61% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 58.20% | 56.63% | 55.38% | 56.94% | 53.58% | |
| Charter Communications Inc. | 39.79% | 38.83% | 39.14% | 39.09% | 37.77% | |
| Comcast Corp. | 70.08% | 69.76% | 68.53% | 66.96% | 68.02% | |
| Meta Platforms Inc. | 81.67% | 80.76% | 78.35% | 80.79% | 80.58% | |
| Netflix Inc. | 46.06% | 41.54% | 39.37% | 41.64% | 38.89% | |
| Walt Disney Co. | 35.75% | 33.41% | 34.24% | 33.06% | 32.89% | |
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 1,972,819 ÷ 2,444,831 = 80.69%
2 Click competitor name to see calculations.
- Revenue Trend
- Revenue has shown a continuous and substantial increase each year from 2020 to 2024. Starting at approximately 836 million US dollars in 2020, revenue rose to about 1.2 billion in 2021 and experienced further growth to nearly 2.45 billion by 2024. This consistent upward trajectory indicates robust business expansion and increasing sales over the period analyzed.
- Gross Profit Trend
- Gross profit has also increased steadily in all reported years, mirroring the revenue growth pattern. It rose from approximately 657 million US dollars in 2020 to nearly 2 billion in 2024. This indicates improved operational profitability and capacity to generate earnings above the cost of goods sold, aligned with the company's increasing scale of operations.
- Gross Profit Margin Analysis
- The gross profit margin showed some variability but remained relatively stable at high levels throughout the period. Beginning at 78.61% in 2020, it increased to a peak of 82.18% in 2022, followed by a slight decline but maintained above 80% thereafter. This suggests effective cost management relative to revenue and a consistently strong pricing or product mix strategy.
- Overall Financial Implications
- The data indicates a positive and expanding financial position characterized by strong growth in revenue and gross profit, accompanied by a stable and high gross profit margin. Such trends imply efficient operational performance and enhanced value creation over the observed years.
Operating Profit Margin
Trade Desk Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income from operations | 427,167) | 200,480) | 113,654) | 124,817) | 144,208) | |
| Revenue | 2,444,831) | 1,946,120) | 1,577,795) | 1,196,467) | 836,033) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 17.47% | 10.30% | 7.20% | 10.43% | 17.25% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 32.11% | 27.42% | 26.46% | 30.55% | 22.59% | |
| Charter Communications Inc. | 23.81% | 23.00% | 22.14% | 20.37% | 17.48% | |
| Comcast Corp. | 18.83% | 19.18% | 11.56% | 17.89% | 16.89% | |
| Meta Platforms Inc. | 42.18% | 34.66% | 24.82% | 39.65% | 38.01% | |
| Netflix Inc. | 26.71% | 20.62% | 17.82% | 20.86% | 18.34% | |
| Walt Disney Co. | 9.11% | 5.74% | 7.90% | 4.46% | -2.97% | |
| Operating Profit Margin, Sector | ||||||
| Media & Entertainment | 28.73% | 24.11% | 20.57% | 25.88% | 20.06% | |
| Operating Profit Margin, Industry | ||||||
| Communication Services | 26.02% | 22.24% | 16.97% | 22.33% | 16.41% | |
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenue
= 100 × 427,167 ÷ 2,444,831 = 17.47%
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending December 31, 2024. Revenue demonstrates consistent growth each year, increasing from approximately $836 million in 2020 to about $2.44 billion in 2024. This represents a nearly threefold increase, indicating strong top-line expansion.
Income from operations also shows an overall upward trend, but with more variability. Starting at around $144 million in 2020, it declined for two consecutive years to about $114 million by the end of 2022. However, a sharp recovery occurred in 2023, with operating income climbing to roughly $200 million, followed by a significant jump to approximately $427 million in 2024, the highest recorded in the dataset.
Operating profit margin, expressed as a percentage, experienced fluctuations over the period. It began relatively high at 17.25% in 2020, then declined steadily to a low of 7.2% in 2022. Subsequently, the margin improved, rising to 10.3% in 2023 and returning to a level close to the initial figure, 17.47%, in 2024. This suggests the company managed to enhance operational efficiency or control costs effectively after a period of margin compression.
- Revenue
- Steady and substantial growth over five years, nearly tripling from 2020 to 2024.
- Income from Operations
- Initial decline over the first two years, followed by a strong rebound and record high in 2024.
- Operating Profit Margin
- Decreased sharply to a low point in 2022, then recovered to surpass the margin level of 2020 by 2024.
Overall, the data indicates a company that underwent a period of margin pressure and income reduction amidst revenue growth but ultimately succeeded in reversing these trends, achieving strong profitability and operational improvements by 2024.
Net Profit Margin
Trade Desk Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 393,076) | 178,940) | 53,385) | 137,762) | 242,317) | |
| Revenue | 2,444,831) | 1,946,120) | 1,577,795) | 1,196,467) | 836,033) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 16.08% | 9.19% | 3.38% | 11.51% | 28.98% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 28.60% | 24.01% | 21.20% | 29.51% | 22.06% | |
| Charter Communications Inc. | 9.23% | 8.35% | 9.36% | 9.01% | 6.70% | |
| Comcast Corp. | 13.09% | 12.66% | 4.42% | 12.17% | 10.17% | |
| Meta Platforms Inc. | 37.91% | 28.98% | 19.90% | 33.38% | 33.90% | |
| Netflix Inc. | 22.34% | 16.04% | 14.21% | 17.23% | 11.05% | |
| Walt Disney Co. | 5.44% | 2.65% | 3.80% | 2.96% | -4.38% | |
| Net Profit Margin, Sector | ||||||
| Media & Entertainment | 23.95% | 18.95% | 14.66% | 22.04% | 16.29% | |
| Net Profit Margin, Industry | ||||||
| Communication Services | 20.40% | 16.24% | 11.34% | 18.22% | 11.25% | |
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × 393,076 ÷ 2,444,831 = 16.08%
2 Click competitor name to see calculations.
- Revenue Trend
- The revenue demonstrates a consistent upward trajectory over the observed five-year period. Starting at approximately $836 million in 2020, revenue increased steadily each year, reaching nearly $2.44 billion in 2024. This represents a compounding growth indicative of expanding sales and market presence.
- Net Income Trend
- Net income exhibits greater volatility relative to revenue. It peaked at $242 million in 2020, then declined sharply to $138 million in 2021 and further to $53 million in 2022. However, the figure rebounded in 2023 to $179 million, followed by a significant surge to $393 million in 2024, surpassing the initial 2020 level. This pattern suggests fluctuating profitability despite increasing revenue, potentially influenced by variations in cost structure or exceptional items.
- Net Profit Margin Analysis
- The net profit margin showcases a declining trend from 29.0% in 2020 to a low of 3.4% in 2022, indicating a substantial compression in profitability during this period. This was followed by a recovery in 2023 to 9.2%, and further improvement to 16.1% in 2024. Although still below the initial peak, the upward trend in margin in the latter years signals improving operational efficiency or favorable shifts in cost management relative to revenue.
- Overall Insights
- Despite steady revenue growth, profit metrics reflect periods of financial stress or strategic investment impacting net income adversely from 2020 through 2022. The strong recovery in 2023 and 2024, both in absolute net income and margin percentage, implies successful initiatives to enhance profitability. The evolving margin suggests a company that encountered margin pressures but has been able to adapt and improve profitability over the most recent two years.
Return on Equity (ROE)
Trade Desk Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 393,076) | 178,940) | 53,385) | 137,762) | 242,317) | |
| Stockholders’ equity | 2,949,145) | 2,164,219) | 2,115,339) | 1,527,306) | 1,013,145) | |
| Profitability Ratio | ||||||
| ROE1 | 13.33% | 8.27% | 2.52% | 9.02% | 23.92% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Alphabet Inc. | 30.80% | 26.04% | 23.41% | 30.22% | 18.09% | |
| Charter Communications Inc. | 32.61% | 41.11% | 55.43% | 33.12% | 13.53% | |
| Comcast Corp. | 18.92% | 18.61% | 6.63% | 14.73% | 11.66% | |
| Meta Platforms Inc. | 34.14% | 25.53% | 18.45% | 31.53% | 22.72% | |
| Netflix Inc. | 35.21% | 26.27% | 21.62% | 32.28% | 24.96% | |
| Walt Disney Co. | 4.94% | 2.37% | 3.31% | 2.25% | -3.43% | |
| ROE, Sector | ||||||
| Media & Entertainment | 26.83% | 21.58% | 17.17% | 23.87% | 14.86% | |
| ROE, Industry | ||||||
| Communication Services | 23.70% | 19.18% | 13.75% | 20.51% | 11.57% | |
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 393,076 ÷ 2,949,145 = 13.33%
2 Click competitor name to see calculations.
- Net income trends
- The net income experienced a significant decrease from 242,317 thousand US dollars in 2020 to 53,385 thousand US dollars in 2022. Subsequently, it showed a marked recovery, increasing to 178,940 thousand in 2023 and then more than doubling to 393,076 thousand in 2024. This indicates a strong rebound in profitability after a period of decline.
- Stockholders’ equity development
- Stockholders' equity exhibited consistent growth throughout the period. Starting at 1,013,145 thousand US dollars in 2020, it steadily increased each year, reaching 2,949,145 thousand US dollars in 2024. This upward trend suggests ongoing capital accumulation and retained earnings contributing to the company's net asset base.
- Return on equity (ROE) analysis
- The return on equity showed a declining trend from 23.92% in 2020 to a low of 2.52% in 2022, mirroring the downturn in net income. It then improved to 8.27% in 2023 and further to 13.33% in 2024, indicating a partial recovery in profitability relative to shareholder equity. However, the ROE in 2024 has not yet returned to the high level observed in 2020.
- Overall observations
- The financial data reflects a period of earnings contraction culminating in 2022, followed by significant recovery in subsequent years. The consistent increase in equity despite fluctuations in net income suggests prudent capital management. The improving ROE signals renewed efficiency in generating profits from shareholders’ equity, albeit not reaching the previous peak within the reported period.
Return on Assets (ROA)
Trade Desk Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 393,076) | 178,940) | 53,385) | 137,762) | 242,317) | |
| Total assets | 6,111,951) | 4,888,687) | 4,380,679) | 3,577,340) | 2,753,645) | |
| Profitability Ratio | ||||||
| ROA1 | 6.43% | 3.66% | 1.22% | 3.85% | 8.80% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Alphabet Inc. | 22.24% | 18.34% | 16.42% | 21.16% | 12.60% | |
| Charter Communications Inc. | 3.39% | 3.10% | 3.50% | 3.27% | 2.23% | |
| Comcast Corp. | 6.08% | 5.81% | 2.09% | 5.13% | 3.85% | |
| Meta Platforms Inc. | 22.59% | 17.03% | 12.49% | 23.72% | 18.29% | |
| Netflix Inc. | 16.24% | 11.10% | 9.24% | 11.48% | 7.03% | |
| Walt Disney Co. | 2.53% | 1.15% | 1.54% | 0.98% | -1.42% | |
| ROA, Sector | ||||||
| Media & Entertainment | 14.15% | 10.80% | 8.38% | 11.83% | 7.30% | |
| ROA, Industry | ||||||
| Communication Services | 9.96% | 7.62% | 5.29% | 8.04% | 4.54% | |
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 393,076 ÷ 6,111,951 = 6.43%
2 Click competitor name to see calculations.
- Net Income
- Net income experienced significant fluctuations over the five-year period under review. Beginning at 242,317 thousand US dollars in 2020, it sharply declined to 137,762 thousand in 2021 and further dropped to 53,385 thousand in 2022. However, the trend reversed in 2023, with net income increasing to 178,940 thousand, followed by a substantial rise to 393,076 thousand in 2024. This indicates a recovery phase post-2022, culminating in a new peak by the end of 2024.
- Total Assets
- Total assets exhibited a consistent upward trajectory throughout the period. Starting at 2,753,645 thousand US dollars in 2020, assets grew steadily each year, reaching 3,577,340 thousand in 2021, 4,380,679 thousand in 2022, 4,888,687 thousand in 2023, and finally 6,111,951 thousand by the end of 2024. This continuous growth suggests successful expansion and asset accumulation.
- Return on Assets (ROA)
- The return on assets showed a declining trend from 2020 through 2022, falling from 8.8% to a low of 1.22%. Thereafter, ROA began to recover, rising to 3.66% in 2023 and further to 6.43% in 2024. Despite the recovery, ROA in 2024 remained below the 2020 level, indicating that the efficiency in generating profit from assets, although improving, has not fully returned to the earlier peak.
- Overall Analysis
- The financial data reveals a period marked by initial decline in profitability metrics such as net income and ROA up to 2022, possibly reflecting challenging operating conditions or investment phases. Concurrently, total assets expanded consistently, indicating ongoing investment and growth efforts. Following 2022, a clear recovery in profitability is observable, evidenced by rising net income and improving ROA, though the latter has yet to reach the highest level recorded in 2020. The combined trends suggest a strategic focus on growth, with profitability rebounding after a period of reduced returns.