Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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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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Profitability Ratios (Summary)
Trade Desk Inc., profitability ratios
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 profitability metrics demonstrate a period of fluctuation followed by improvement. Initial declines in some key ratios were subsequently reversed, culminating in positive trends by the end of the observed period.
- Gross Profit Margin
- The gross profit margin exhibited a slight initial increase from 81.48% in 2021 to 82.18% in 2022, before beginning a consistent, though moderate, decline. This trend continued through 2024, reaching 80.69%, and accelerated in 2025 to 78.63%. This suggests potential pressures on cost of goods sold or pricing strategies.
- Operating and Net Profit Margins
- Operating profit margin experienced a significant decrease from 10.43% in 2021 to 7.20% in 2022. However, it rebounded strongly, increasing to 10.30% in 2023, and then demonstrating substantial growth to 17.47% in 2024 and 20.35% in 2025. A similar pattern is observed in the net profit margin, falling sharply from 11.51% in 2021 to 3.38% in 2022, followed by recovery to 9.19% in 2023, and then accelerating to 16.08% in 2024 and 15.31% in 2025. The divergence between the gross profit margin decline and the operating/net profit margin improvements indicates effective management of operating expenses.
- Return on Equity (ROE)
- Return on equity mirrored the trend of the net profit margin. A decline from 9.02% in 2021 to 2.52% in 2022 was followed by a consistent increase, reaching 8.27% in 2023, 13.33% in 2024, and 17.84% in 2025. This suggests increasing efficiency in utilizing shareholder equity to generate profits.
- Return on Assets (ROA)
- Return on assets followed a similar trajectory to ROE and net profit margin. It decreased from 3.85% in 2021 to 1.22% in 2022, then increased to 3.66% in 2023, 6.43% in 2024, and 7.20% in 2025. This indicates improved efficiency in utilizing assets to generate earnings.
Overall, the period began with a contraction in profitability, but demonstrated a strong recovery and positive trend in operating and net margins, as well as returns on equity and assets, in the later years. While the gross profit margin experienced a consistent decline, the company appears to have effectively managed its operating expenses to drive overall profitability improvements.
Return on Sales
Return on Investment
Gross Profit Margin
Trade Desk Inc., gross 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) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| 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 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited a generally stable, yet slightly declining, pattern over the five-year period. While initially high, the metric demonstrates a gradual erosion towards the end of the observed timeframe.
- Gross Profit Margin - Overall Trend
- The gross profit margin began at 81.48% in 2021 and peaked at 82.18% in 2022. Subsequent years show a consistent, though moderate, decrease, falling to 80.69% in 2024 and further to 78.63% in 2025. This indicates a diminishing ability to maintain profitability at the gross level as revenue increases.
Gross profit itself increased consistently year-over-year, moving from 974,913 thousand US dollars in 2021 to 2,277,217 thousand US dollars in 2025. Revenue also increased consistently, from 1,196,467 thousand US dollars to 2,896,284 thousand US dollars over the same period. The decline in gross profit margin, despite increasing gross profit, suggests that revenue growth is outpacing the growth of gross profit.
- Year-over-Year Changes
- The largest year-over-year increase in gross profit margin occurred between 2021 and 2022, with a gain of 0.70 percentage points. The most significant decline was observed between 2024 and 2025, with a decrease of 2.06 percentage points. These fluctuations suggest potential shifts in cost structures or pricing strategies.
The consistent growth in both gross profit and revenue is positive, but the decreasing gross profit margin warrants further investigation. Potential factors contributing to this trend could include increased costs of goods sold, changes in the revenue mix towards lower-margin products or services, or increased competitive pressure requiring price adjustments.
Operating Profit Margin
Trade Desk Inc., operating 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) | ||||||
| Income from operations | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
| Operating Profit Margin, Sector | ||||||
| Media & Entertainment | ||||||
| Operating Profit Margin, Industry | ||||||
| Communication Services | ||||||
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 2025 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited considerable fluctuation over the five-year period. Initial observations reveal a decline followed by substantial growth.
- Operating Profit Margin - Trend Analysis
- In 2021, the operating profit margin stood at 10.43%. A decrease was observed in 2022, with the margin falling to 7.20%. This represents a contraction in profitability relative to revenue. Subsequently, the margin recovered to 10.30% in 2023, indicating a stabilization and partial recovery of operational efficiency. The period from 2023 to 2024 witnessed a significant increase, with the operating profit margin reaching 17.47%. This suggests improved cost management or increased pricing power. The upward trend continued into 2025, with the margin further expanding to 20.35%, demonstrating a sustained enhancement in operational profitability.
The income from operations increased consistently throughout the period, but the rate of increase varied. The most substantial growth in income from operations occurred between 2023 and 2024, which aligns with the significant jump in the operating profit margin. Revenue also increased consistently, but the margin expansion indicates that the company was able to grow its profits at a faster rate than its revenue, particularly in the later years of the observed period.
- Relationship between Revenue and Operating Profit Margin
- While revenue increased from US$1,196,467 thousand in 2021 to US$2,896,284 thousand in 2025, the operating profit margin’s expansion suggests that the company benefited from economies of scale or improved operational efficiencies as revenue grew. The increasing margin indicates that a larger proportion of each revenue dollar translated into operating profit over time.
The observed trend in the operating profit margin suggests a strengthening of the company’s core business performance and its ability to convert revenue into profit. The substantial improvement in the margin from 2022 onwards warrants further investigation into the underlying drivers of this positive trend.
Net Profit Margin
Trade Desk Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
| Net Profit Margin, Sector | ||||||
| Media & Entertainment | ||||||
| Net Profit Margin, Industry | ||||||
| Communication Services | ||||||
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 2025 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited significant fluctuation over the five-year period. Initial values decreased substantially before recovering and stabilizing at a relatively high level.
- Overall Trend
- The net profit margin demonstrated a marked decline from 2021 to 2022, followed by a period of consistent growth through 2025. The margin began at 11.51% in 2021, decreased to a low of 3.38% in 2022, and then increased to 15.31% by 2025.
- 2021-2022
- A substantial decrease in net profit margin occurred between 2021 and 2022. While revenue increased significantly, net income decreased, resulting in a considerable drop in profitability. This suggests potential increases in operating costs or other expenses that outpaced revenue growth during this period.
- 2022-2025
- From 2022 through 2025, the net profit margin experienced consistent improvement. Both net income and revenue increased, but the rate of net income growth exceeded that of revenue, driving the margin higher. This indicates improved operational efficiency or better cost management as the company scaled.
- Recent Performance
- The net profit margin stabilized in the latter part of the period, reaching 16.08% in 2024 and 15.31% in 2025. This suggests that the company has reached a level of operational maturity where profitability is consistently strong, although a slight decrease was observed between 2024 and 2025.
The observed trends suggest a period of initial disruption followed by successful adaptation and improved profitability. The company appears to have effectively managed its costs and operations to capitalize on revenue growth in the later years of the analyzed period.
Return on Equity (ROE)
Trade Desk Inc., ROE 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 income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
| ROE, Sector | ||||||
| Media & Entertainment | ||||||
| ROE, Industry | ||||||
| Communication Services | ||||||
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 2025 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited considerable fluctuation over the five-year period. Initial values demonstrated a decline followed by a substantial upward trajectory. Net income and stockholders’ equity both influenced the observed ROE trends.
- ROE Trend
- The ROE began at 9.02% in 2021, experienced a significant decrease to 2.52% in 2022, and then showed a recovery to 8.27% in 2023. Further increases were noted in subsequent years, reaching 13.33% in 2024 and culminating in 17.84% in 2025. This indicates improving profitability relative to shareholder investment over the latter part of the analyzed period.
- Net Income Influence
- Net income decreased substantially from 2021 to 2022, coinciding with the initial drop in ROE. However, net income then increased significantly in 2023 and continued to grow through 2025, contributing to the subsequent rise in ROE. The largest increase in net income occurred between 2022 and 2023, and again between 2023 and 2024.
- Stockholders’ Equity Influence
- Stockholders’ equity increased from 2021 to 2023, but the rate of increase slowed in 2023. A more substantial increase occurred between 2023 and 2024. However, stockholders’ equity decreased in 2025. The increase in equity between 2023 and 2024 did not prevent ROE from increasing, suggesting net income growth was the dominant factor. The decrease in equity in 2025 occurred alongside a further increase in ROE, indicating that net income growth more than offset the impact of reduced equity.
The combined effect of net income and stockholders’ equity movements resulted in the observed ROE pattern. The substantial growth in net income, particularly in the later years, appears to be the primary driver of the increasing ROE, even in the face of fluctuating equity levels.
Return on Assets (ROA)
Trade Desk Inc., ROA 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 income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
| ROA, Sector | ||||||
| Media & Entertainment | ||||||
| ROA, Industry | ||||||
| Communication Services | ||||||
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 2025 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a fluctuating pattern over the five-year period. Initial values decreased before demonstrating substantial improvement. Net income increased significantly over the period, while total assets also grew, though at a varying rate.
- Overall Trend
- The ROA initially declined from 3.85% in 2021 to a low of 1.22% in 2022. Subsequently, the ROA experienced a strong upward trend, reaching 3.66% in 2023, 6.43% in 2024, and peaking at 7.20% in 2025. This indicates increasing efficiency in utilizing assets to generate profit.
- Year-over-Year Changes
- The most significant year-over-year change occurred between 2022 and 2023, with the ROA increasing by 2.44 percentage points. A further substantial increase of 2.77 percentage points was observed between 2023 and 2024. The increase from 2024 to 2025 was more moderate, at 0.77 percentage points.
- Relationship to Net Income and Total Assets
- The decline in ROA from 2021 to 2022 coincided with a decrease in net income. However, despite a continued increase in total assets in 2023, the ROA improved, suggesting that the growth in net income outpaced the growth in assets. The substantial increases in ROA in 2024 and 2025 were driven by significant growth in net income, coupled with a more moderate increase in total assets. The asset base stabilized between 2024 and 2025, allowing a larger proportion of income to be generated from the existing asset level.
The observed trend suggests improving profitability relative to the asset base. The company appears to be becoming more effective at converting its investments in assets into net income.