Trade Desk Inc (TTD)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 80.69% | 81.21% | 82.18% | 81.48% | 78.61% |
| Operating profit margin | 17.47% | 10.30% | 7.20% | 10.43% | 17.25% |
| Pretax margin | 20.75% | 13.77% | 8.07% | 10.20% | 17.21% |
| Net profit margin | 16.08% | 9.19% | 3.38% | 11.51% | 28.98% |
The profitability ratios of Trade Desk Inc. over the period from 2020 to 2024 reveal notable trends and fluctuations that reflect the company's evolving financial performance.
The gross profit margin demonstrates a consistent high level of profitability, starting at 78.61% in 2020 and increasing to a peak of 82.18% in 2022. Subsequently, it declines slightly to 81.21% in 2023 and further to 80.69% in 2024. This pattern indicates that the company's ability to maintain a high gross profit margin remains strong, although there is a marginal reduction in recent years, suggesting potential pressures on cost of goods sold or pricing strategies.
Operating profit margin exhibits more variability, decreasing from 17.25% in 2020 to a low of 7.20% in 2022, which may reflect increased operating expenses or strategic investments during that period. It then recovers to 10.30% in 2023 before further improving to 17.47% in 2024, surpassing previous levels and indicating enhanced operational efficiency or better expense management.
The pretax margin follows a similar trajectory, declining from 17.21% in 2020 to a nadir of 8.07% in 2022. It subsequently improves to 13.77% in 2023 and reaches 20.75% in 2024, indicating substantial growth in profitability before taxes and reflecting improved cost controls or revenue enhancements.
The net profit margin portrays a more pronounced fluctuation, beginning at 28.98% in 2020, then dropping sharply to 3.38% in 2022. This significant decline could be attributed to increased tax expenses, one-time charges, or other non-operating costs. The margin then improves to 9.19% in 2023 and continues upward to 16.08% in 2024, suggesting a recovery in net profitability driven by improved operational performance and possibly more effective tax planning.
Overall, the data illustrates that Trade Desk Inc. experienced a challenging drop in profitability metrics through 2022 but has shown signs of recovery and strengthening profitability from 2023 onwards, with notable improvements in operating, pretax, and net profit margins, especially in 2024.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 6.99% | 4.10% | 2.59% | 3.49% | 5.24% |
| Return on assets (ROA) | 6.43% | 3.66% | 1.22% | 3.85% | 8.80% |
| Return on total capital | 14.48% | 9.26% | 5.37% | 2.77% | 8.12% |
| Return on equity (ROE) | 13.33% | 8.27% | 2.52% | 9.02% | 23.92% |
The analysis of Trade Desk Inc.'s profitability ratios over the period from December 2020 to December 2024 indicates notable fluctuations and trends in its financial performance.
Starting with the Operating Return on Assets (Operating ROA), the ratio demonstrated a decline from 5.24% at the end of 2020 to a low of 2.59% in 2022. This suggests a decrease in the efficiency of core operating activities relative to total assets during this period. However, from 2022 onward, there was a marked recovery, with the Operating ROA increasing to 4.10% in 2023 and further rising to 6.99% in 2024. This upward movement indicates improved operational efficiency and the company's ability to generate higher operating returns on its assets in recent years.
Similarly, the overall Return on Assets (ROA) experienced a significant decline from 8.80% at the end of 2020 to an all-time low of 1.22% in 2022. The downturn suggests that the company's overall profitability relative to its total assets was challenged during this period, possibly due to increased costs or decreased asset utilization. Nonetheless, a rebound was observed in 2023 and 2024, with ROA rising to 3.66% and subsequently to 6.43%, which points toward improved overall asset efficiency and profitability.
The Return on Total Capital exhibited a downward trend initially, dropping from 8.12% in 2020 to 2.77% in 2021, before rising sharply to 5.37% in 2022. The further substantial increase to 9.26% in 2023 and 14.48% in 2024 indicates that the company has significantly enhanced its ability to generate returns on all sources of capital, including debt and equity, reflecting a strengthening in overall profitability and capital efficiency in the latter years.
In terms of Return on Equity (ROE), there was a considerable decline from 23.92% in 2020 to 2.52% in 2022, signaling a drastic decrease in shareholders' return during that period. The company’s ROE improved in 2023 to 8.27% and further increased to 13.33% in 2024, demonstrating a recovery in profitability attributable to shareholders and improved net earnings relative to shareholders' equity.
Overall, the data indicates that Trade Desk Inc. faced profitability challenges between 2020 and 2022, with declines across most ratios. Nevertheless, the subsequent years reflect a solid recovery and substantial improvement in profitability metrics, highlighting enhanced operational efficiency, better asset utilization, and stronger capital returns in the most recent reporting periods.