Trade Desk Inc (TTD)

Short-term

Turnover ratios

The analysis of Trade Desk Inc.’s activity ratios reveals several notable trends and aspects of operational efficiency over the period covered.

Inventory Turnover: Data indicates that inventory turnover data is not available throughout the reporting period, suggesting that the company either holds minimal or no physical inventories, consistent with a primarily service or software-based revenue model where inventory management is not a core activity.

Receivables Turnover: The receivables turnover ratio exhibits fluctuations but generally demonstrates an upward trend. Starting from approximately 0.53 at the end of 2020, the ratio increased steadily to around 0.84 by mid-2025. This increase implies a gradual improvement in the company’s collection efficiency, reflecting more effective credit policies or faster receivables collection over time. Notably, the ratio's movement suggests enhanced cash conversion cycles, positively impacting liquidity.

Payables Turnover: The ratio remains relatively stable but shows a mild increasing trend, rising from approximately 0.13-0.19 in late 2020 to about 0.20-0.21 by mid-2025. This indicates that the firm may be managing trade payables more actively, possibly taking advantage of stretched payment terms or aligning payables management with receivables collection improvements. The slight increase suggests optimal management of its payables cycle without exerting undue pressure on cash flows.

Working Capital Turnover: This ratio exhibits a more pronounced upward trend, increasing from approximately 0.87-1.08 in late 2022 to about 1.18-1.27 by mid-2025. The rising trend indicates that Trade Desk Inc. is efficiently utilizing its working capital to generate higher sales, reflecting improved operational leverage, better management of receivables and payables, or increased sales relative to working capital invested.

Summary of Trends: Overall, Trade Desk Inc.’s activity ratios suggest an operational environment characterized by improved receivables collection efficiency and better utilization of working capital. The stability in payables turnover demonstrates disciplined management of liabilities. The consistent upward movement in receivables, payables, and working capital turnover ratios signifies an enhancement in operational efficiency and liquidity management over the period. The absence of inventory turnover data aligns with a business model focused on digital advertising services rather than inventory-intensive operations.

---

Average number of days

The activity ratios for Trade Desk Inc, specifically focusing on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, reveal several insights into the company's operational and liquidity management over the analyzed period.

Firstly, the data indicates that there is no recorded inventory on hand throughout the time span, as reflected by the consistent "— days" entries for DOH across all periods. This is characteristic of a digital advertising technology company that does not hold physical inventory, aligning with industry norms where inventory turnover is either irrelevant or minimal.

Regarding the Days of Sales Outstanding (DSO), which measure the average collection period for receivables, the figures fluctuate significantly over the period. In September 2020, DSO was notably high at approximately 568 days, suggesting lengthy collection cycles. This extended collection period persisted into December 2020, rising further to 692 days, indicating possible delays or challenges in receivable collections during this period. Subsequently, the DSO shows a downward trend, with intermittent fluctuations, reaching approximately 433 days by March 2025. These changes may reflect improvements in credit and collections processes or changes in customer payment behaviors.

The Number of Days of Payables demonstrates substantial variation, with prominent peaks and troughs. At its highest in December 2020 (around 2,753 days), the payables period indicates an extended time before settling liabilities, which could be indicative of favorable credit terms negotiated with suppliers or delays in payment. Over time, the payables days generally decline, reaching approximately 1,713 days in March 2025, signaling an overall reduction in the average payment period. Such a trend may suggest improved cash flow management, renegotiation of credit terms, or operational adjustments to optimize working capital.

In summary, Trade Desk Inc appears to operate in a manner that inherently involves negligible physical inventory. Its receivables collection period has experienced a notable reduction from highly extended durations toward more moderate levels, while its payables period has also shortened substantially over time. These patterns highlight ongoing efforts to optimize cash flow, streamline receivable and payable cycles, and adapt to changing financial and operational strategies.

---

Long-term

The analysis of Trade Desk Inc.'s long-term activity ratios reveals several noteworthy trends and points of stability over the analyzed period.

Starting with the Fixed Asset Turnover ratio, the data exhibits significant fluctuations, indicating variability in how effectively the company's fixed assets generate revenue. The ratio was relatively low at 2.33 as of September 30, 2020, and experienced a substantial peak of 9.89 on March 31, 2022. This sharp increase suggests periods where the company has maximized its usage of fixed assets to generate sales, potentially reflecting strategic investments or operational efficiencies. Conversely, the ratio dipped again post-2022, with values falling back to approximately 2.80 by June 30, 2021, indicating periods of less efficient fixed asset utilization or changes in asset structure.

In comparison, the Total Asset Turnover ratio demonstrates much greater stability and a gradual upward trend over time. Starting at 0.34 on September 30, 2020, it remained relatively steady, fluctuating slightly but generally maintaining values between 0.30 and 0.42. Notably, there is a consistent upward movement beginning around March 2022, reaching 0.45 by June 2025, which suggests the company is gradually improving its efficiency in using total assets to generate revenue. This incremental increase indicates enhanced asset utilization capabilities and possibly a more optimized asset base over time.

Overall, the variations in the Fixed Asset Turnover ratio reflect episodic improvements in fixed asset efficiency, possibly driven by strategic investments or operational shifts. Meanwhile, the steady growth in the Total Asset Turnover ratio signals a positive trend in the company's overall asset utilization efficiency. These trends collectively imply that Trade Desk Inc. is progressively enhancing its asset management effectiveness, although the fluctuations in fixed asset-specific metrics suggest periods of operational adjustment or restructuring.