0001671933-26-000054
SEC filingRevenue grew 12% YoY to $688.9M, but net income fell 21% due to higher platform operations costs and tax impacts.
For the three months ended March 31, 2026, The Trade Desk reported revenue of $688.9 million, a 12% increase compared to $616.0 million in the same period last year. The growth was primarily driven by higher gross spend on the platform from new and existing clients, increased adoption of value-added services, and higher platform fees. Operating income rose 22% to $66.6 million, with operating margin expanding 90 basis points to 9.7% from 8.8% in the prior year, as revenue growth outpaced total operating expense growth (11% vs. 12%).
Net income, however, declined 21% to $40.0 million from $50.7 million, largely due to a $14 million increase in the provision for income taxes (driven by tax detriments from employee stock-based awards versus benefits in the prior year) and a $9 million decrease in other income, net (lower interest income and foreign currency losses). Adjusted EBITDA was nearly flat at $206.1 million, down 1% from $207.9 million, as revenue gains were offset by higher operating costs.
Key expense drivers included a 27% increase in platform operations costs ($39 million), led by $23 million in higher hosting costs from new data centers and increased platform usage, and $11 million in data-related costs. Sales and marketing expense rose 13% ($19 million) on higher headcount and incentive compensation. Technology and development expense increased 8% ($10 million) from headcount growth. General and administrative expense decreased 6% ($8 million) due to a $16 million decline in stock-based compensation (primarily from the CEO Performance Option), partially offset by an $8 million increase in personnel costs.
The MD&A does not report segment-level revenue or operating income. The company operates as a single reporting segment, with revenue derived from platform fees charged to advertising agencies and advertisers. Growth is attributed to increased gross spend across all client types and channels, with particular strength in CTV, audio, and other omnichannel inventory. The company noted that revenue mix is influenced by the types of services rendered, utilization of value-added services, client and channel mix, and pricing changes.
Management expects operating expenses to continue increasing in absolute dollars as the company invests in platform operations (hosting, AI capabilities), sales and marketing (to acquire new clients and expand internationally), and technology development (including AI and machine learning). International markets, particularly in Europe and Asia (U.K., Germany, France, China, Japan, India, Australia), are highlighted as growth opportunities. The company anticipates that these investments may negatively impact near-term profitability but believes operating leverage will support long-term profitable growth. No specific revenue or earnings guidance was provided. The company also noted that macroeconomic uncertainty (interest rates, inflation, geopolitical developments) could impact demand and results of operations, but the size and duration of any impact cannot be predicted.
As of March 31, 2026, The Trade Desk held $878.4 million in cash and cash equivalents and $527.5 million in short-term investments, totaling $1.4 billion in liquid assets. The company has no outstanding debt, with $445 million available under its revolving credit facility (maturity June 15, 2026; subsequently amended on April 14, 2026 to a $750 million facility maturing April 14, 2031). The balance sheet remains debt-free with ample liquidity.
Note 11 discloses no material purchase commitments, supply agreements, or contractual obligations beyond operating leases and ordinary course contingencies. The company is involved in multiple litigation matters (reincorporation, securities class actions, data privacy), but management believes the outcomes will not materially affect financials, and no material amounts have been accrued. Lease obligations are disclosed in Note 5: total lease cost was $30.2 million for Q1 2026, with operating lease liabilities of $423.6 million ($77.5 million current, $346.1 million non-current).
In Q1 2026, The Trade Desk repurchased 7 million shares of Class A common stock for $174 million (including $1 million excise tax). As of December 31, 2025, $150 million remained under the buyback program; in February 2026, the board authorized an additional $350 million, leaving $327 million available as of March 31, 2026. No dividends were paid or declared. No debt was issued or repaid. Capital expenditures (from cash flow statement, not in Notes) were $112.7 million for property and equipment and $3.0 million for capitalized software, but these are not explicitly stated in the Notes; therefore, excluding from this analysis.
The company operates as a single operating segment: advertising technology platform (Note 10). Revenue by principal geographic area for Q1 2026 was 82% United States and 18% international, compared to 87% and 13% in the prior-year period. The increase in international share reflects growth outside the U.S. Interest income net was $13.4 million in Q1 2026.
Operating cash flow of $391.8M significantly exceeded net income of $40.0M, reflecting strong cash conversion driven by large non-cash charges (stock-based compensation of $109.0M, depreciation/amortization of $31.4M) and a substantial working capital benefit from accounts receivable collections ($429.3M inflow). The capex intensity rose sharply: purchases of property and equipment plus capitalized software development costs totaled $115.8M (29.6% of CFO), up from $61.8M (21.2% of CFO) in the prior year, indicating increased investment in infrastructure and platform development.
Share repurchases of $163.5M consumed 42% of operating cash flow, down from 133% in Q1 2025. No dividends were paid. The company did not report free cash flow explicitly; however, CFO less capex (a proxy for FCF) was approximately $276.0M, providing ample coverage for repurchases.
Accounts payable swung to a $279.4M use of cash (vs. $234.7M use last year), reflecting timing of payments. Accrued liabilities also decreased, contributing a $9.0M outflow versus a $29.1M inflow in the prior period. Investing cash flow was nearly neutral due to $238.3M in investment maturities offsetting $122.1M in purchases.