Trade Desk Inc. (NASDAQ:TTD)

Receivables turnover

The receivables turnover ratio demonstrates a consistent upward trend over the observed periods, increasing from 0.53 in 2020 to 0.73 in 2024. This indicates improved efficiency in collecting receivables, suggesting the company is able to convert its receivables into cash more quickly over time.

Payables turnover

The payables turnover ratio shows a gradual increase from 0.13 in 2020 to 0.18 in 2024. This suggests the company is paying off its payables more frequently within the year, indicating potentially shorter payment cycles or improved management of payable obligations.

Working capital turnover

The working capital turnover ratio initially declines from 1.00 in 2020 to 0.87 in 2022, indicating reduced efficiency in utilizing working capital to generate sales. However, the ratio recovers to 1.08 in 2023 before a slight decline to 0.99 in 2024, suggesting fluctuating but overall stable efficiency in working capital usage by the end of the period.

Average receivable collection period

The average receivable collection period consistently decreases from 692 days in 2020 to 497 days in 2024. This shortening time frame corroborates the improving receivables turnover ratio and reflects enhanced effectiveness in collecting outstanding receivables, reducing the average time customers take to pay.

Average payables payment period

This metric shows a downward trend, declining significantly from 2753 days in 2020 to 2035 days in 2024. The reduction in the average time taken to pay suppliers aligns with the increase in payables turnover and signifies that the company is settling its payables more rapidly over the years.

The financial data reveals upward trends in the key metrics over the five-year period from 2020 to 2024.

Revenue

The revenue figures demonstrate consistent annual growth, increasing from approximately $836 million in 2020 to about $2.44 billion in 2024. This represents significant expansion, indicating strong sales performance and business scaling over the period.

Accounts Receivable, Net of Allowance for Credit Losses

The accounts receivable balance also shows a steady increase each year, rising from roughly $1.58 billion in 2020 to approximately $3.33 billion in 2024. The growth in receivables is substantial and correlates with the revenue growth, reflecting higher sales on credit terms.

Receivables Turnover Ratio

The receivables turnover ratio improved gradually from 0.53 in 2020 to 0.73 in 2024. This upward trend indicates enhanced efficiency in collecting receivables, suggesting the company has been able to accelerate cash inflows from customers relative to the size of receivables outstanding.

Overall, the data shows that while both revenue and accounts receivable have grown markedly, the company has managed to improve its receivables turnover ratio, implying better management of credit and collections processes alongside business expansion.

Platform Operations

Platform operations revenues demonstrate a consistent upward trajectory over the five-year period. Starting from $178,812 thousand in 2020, the figure rose steadily each year, reaching $472,012 thousand by the end of 2024. This trend indicates robust growth, with the largest year-over-year increase observed between 2023 and 2024.

Accounts Payable

Accounts payable also show a sustained increase throughout the years, growing from $1,348,480 thousand in 2020 to $2,631,213 thousand in 2024. The growth in payables aligns with increasing operational scale, suggesting escalating purchasing or supplier obligations corresponding with expanding business activities.

Payables Turnover

The payables turnover ratio exhibits a gradual improvement from 0.13 in 2020 and 2021 to 0.18 by 2024. This upward trend implies enhanced efficiency in managing payables, as the company is turning over its payables more frequently over time, potentially reflecting better cash flow management or optimized payment cycles.

Working Capital

The working capital has shown a significant upward trend throughout the analyzed periods. Starting at approximately 836 million US dollars at the end of 2020, it surged notably to about 2.46 billion US dollars by the end of 2024. This reflects robust growth in current assets relative to current liabilities, indicating improved short-term financial health and increased liquidity capacity.

Revenue

Revenue has experienced consistent and substantial growth over the years. From around 836 million US dollars in 2020, revenue increased steadily each year, reaching approximately 2.44 billion US dollars in 2024. This growth trend suggests expanding business operations and increasing market demand.

Working Capital Turnover

The working capital turnover ratio shows a fluctuating pattern across the observed periods. Initially, it was at 1.00 in 2020, indicating proportionate revenue relative to working capital. It then declined to 0.93 in 2021 and further to 0.87 in 2022, which may indicate less efficient use of working capital during those years. However, the ratio improved significantly to 1.08 in 2023, before slightly decreasing to 0.99 in 2024. Overall, this suggests periods of varying efficiency in converting working capital into revenue, with the most recent years showing improvement towards a more effective utilization.

The analysis of the financial data reveals a positive trend in the management of receivables over the five-year period ending December 31, 2024.

Receivables Turnover

The receivables turnover ratio has shown steady improvement, increasing from 0.53 in 2020 to 0.73 in 2024. This indicates that the company has increasingly become more efficient at collecting its receivables yearly, suggesting better credit control and collection processes.

Average Receivable Collection Period

Corresponding with the turnover ratio, the average receivable collection period has decreased significantly from 692 days in 2020 to 497 days in 2024. This reduction points to a faster conversion of receivables into cash, enhancing liquidity and reducing the risk of bad debts. Despite the large values suggesting long collection periods overall, the downward trend is a favorable sign of operational improvement.

In summary, both key metrics demonstrate enhanced efficiency in trade receivables management. The company has successfully shortened the time to collect outstanding debts while increasing the frequency of receivables turnover, thereby potentially strengthening cash flow and working capital position over the analyzed timeframe.

Payables Turnover

The payables turnover ratio exhibited a consistent upward trend over the five-year period. Starting at 0.13 in the year ending 2020, it remained stable through 2021 before gradually increasing to 0.15 in 2022, 0.16 in 2023, and reaching 0.18 in 2024. This progression indicates a steady improvement in the company's efficiency in settling its payables relative to its purchases or expenses.

Average Payables Payment Period

The average payables payment period, expressed in the number of days, showed a continuous decline from 2020 through 2024. The period decreased from an exceptionally high 2,753 days in 2020 to 2,728 days in 2021, then dropped more markedly to 2,430 days in 2022, 2,314 days in 2023, and further down to 2,035 days in 2024. This downward trend complements the increasing payables turnover ratio, reflecting that the company is progressively reducing the time it takes to pay its suppliers.

Overall Interpretation

The observed trends in both payables turnover and average payment period suggest an ongoing strategic effort or operational improvement geared toward more timely payment of payables. The company appears to be accelerating its payment processes, potentially to strengthen supplier relationships or to capitalize on favorable credit terms. However, despite the notable improvement, the average payment period remains at a very high level, which may warrant further investigation into the nature of the payables and terms of credit.