Trade Desk Inc (TTD)

Return on equity (ROE)

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net income	US$ in thousands	393,076	178,940	53,385	137,762	242,317
Total stockholders’ equity	US$ in thousands	2,949,140	2,164,220	2,115,340	1,527,310	1,013,140
ROE		13.33%	8.27%	2.52%	9.02%	23.92%

December 31, 2024 calculation

ROE = Net income ÷ Total stockholders’ equity
= $393,076K ÷ $2,949,140K
= 13.33%

The return on equity (ROE) for Trade Desk Inc. has demonstrated significant fluctuations over the specified period from December 31, 2020, to December 31, 2024. At the end of 2020, the company's ROE stood at 23.92%, indicating a robust ability to generate profits relative to shareholders' equity. This high ROE may reflect strong operational performance and efficient use of equity capital during that period.

However, by the end of 2021, the ROE sharply declined to 9.02%, suggesting a substantial reduction in profitability or increased equity base without a commensurate increase in net income. This decline could be attributed to various factors, such as increased operating expenses, shifts in revenue streams, or strategic investments that temporarily dampened profitability.

The downward trend continued into 2022, with ROE decreasing further to 2.52%. This near erosion of ROE indicates a period of substantial challenges, possibly from market pressures, increased costs, or operational headwinds that significantly impacted net income relative to equity. The persistently low ROE raises concerns about the company's ability to efficiently generate returns for shareholders during this timeframe.

In 2023, the ROE rebounded somewhat to 8.27%, suggesting a partial recovery in profitability and efficiency in utilizing shareholders' equity. This improvement might reflect operational adjustments, strategic initiatives, or market expansion efforts beginning to bear fruit, though the ROE remains substantially below its 2020 peak.

Looking forward to 2024, the ROE increased again to 13.33%. Although this figure does not fully restore the earlier high of 2020, it indicates a positive trend toward greater profitability and better utilization of equity capital. Continued improvements in ROE would be necessary to return to previous levels of performance and to restore investor confidence in the company's ability to consistently generate shareholder value.

Overall, the company's ROE over this period reflects significant volatility, transitioning from a strong profitability position in 2020 to a low point in 2022, followed by gradual recovery through 2023 and into 2024. This pattern highlights periods of operational difficulties and subsequent strategic or market-driven recoveries that impact the company's capacity to produce returns relative to shareholders' equity.