Trade Desk TTD · USD

Note 12—Segment and Geographic InformationThe Company’s chief operating decision maker is its Chief Executive Officer (“CEO”), who manages the Company and reviews financial information on a consolidated basis. The Company has one primary business activity, its advertising technology platform, as described in Note 1 – Nature of Operations. The platform is used by clients globally in a similar manner across geographies, channels and verticals. Accordingly, the Company operates in one operating segment on a consolidated basis: advertising technology platform.The Company’s segment generates revenue from clients who enter into agreements with the Company to use its self-service, cloud-based ad buying platform. The accounting policies of the advertising technology platform segment are the same as those described in Note 2 – Basis of Consolidation and Summary of Significant Accounting Policies. Consolidated net income in the consolidated statements of operations is the measure of financial profit and loss most closely aligned with generally accepted accounting principles that is used by the CEO to assess performance against the Company’s annual financial plan as well as to allocate resources, such as decisions regarding headcount goals, significant contracts, internal investments and other items. The CEO is not regularly provided significant expense information at a greater level of disaggregation than those expenses reported on the consolidated statements of operations. The nature of those expenses is disclosed in Note 2 – Basis of Consolidation and Summary of Significant Accounting Policies- Operating Expenses.As the Company only has one operating segment, revenue, expenses and net income are disclosed in the consolidated statements of operations, and depreciation and amortization expense is disclosed in the consolidated statements of cash flows. Significant non-cash items and expenditures for long-lived assets are disclosed in the consolidated statements of cash flows and in Note 10 – Stock-Based Compensation. Segment assets are reported on the consolidated balance sheets as total assets. The Company does not have intra-entity sales or transfers.

Consolidated net income in the consolidated statements of operations is the measure of financial profit and loss most closely aligned with generally accepted accounting principles that is used by the CEO to assess performance against the Company’s annual financial plan as well as to allocate resources, such as decisions regarding headcount goals, significant contracts, internal investments and other items. The CEO is not regularly provided significant expense information at a greater level of disaggregation than those expenses reported on the consolidated statements of operations. The nature of those expenses is disclosed in Note 2 – Basis of Consolidation and Summary of Significant Accounting Policies- Operating Expenses.

Note 13—Commitments and ContingenciesAs of December 31, 2025, the Company had non-cancelable operating lease commitments for office and hosting space that were recorded as operating lease liabilities on the consolidated balance sheets. Refer to Note 8—Leases for additional information regarding lease commitments.As of December 31, 2025, the Company had non-cancelable commitments primarily for its hosting services, hardware providers and providers of software as a service. As of December 31, 2025, these purchase obligations were as follows (in thousands):YearAmount2026$226,727 202734,181 20284,942 2029— 2030— $265,850 Guarantees, Indemnification and OtherIn the ordinary course of business, the Company may provide indemnifications of varying scope and terms to clients, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. In the ordinary course of business, demands have been made upon the Company to provide indemnification under such agreements, but there are no claims of which the Company is aware that could have a material effect on the Company’s consolidated balance sheets, statements of operations or statements of cash flows. Accordingly, no material amounts have been recorded as of December 31, 2025 and 2024.The Company is under audit by various domestic and foreign tax authorities. The Company believes that the amount of losses or any estimable range of possible losses with respect to these matters will not, either individually or in the aggregate, have a material adverse effect on its business and consolidated financial statements. Due to the inherent complexity and uncertainty of these matters and judicial process in certain jurisdictions, the final outcome may be materially different from the Company’s expectations.LitigationFrom time to time, the Company is subject to various legal proceedings, litigation and claims, either asserted or unasserted, that arise in the ordinary course of business.

Note 7—DebtCredit FacilityOn June 15, 2021, the Company and a syndicate of banks, led by JPMorgan Chase Bank, N.A., as agent, entered into a Loan and Security Agreement (the “Credit Facility”). The Credit Facility consists of a $450 million revolving loan facility, with a $20 million sublimit for swingline borrowings and a $15 million sublimit for the issuance of letters of credit. Under certain circumstances, the Company has the right to increase the Credit Facility by an amount not to exceed $300 million. The Credit Facility is collateralized by substantially all of the Company’s assets, including a pledge of certain of its accounts receivable, deposit accounts, intellectual property, investment property, and equipment.On December 17, 2021, the Company amended the Credit Facility to expand the process for issuing letters of credit and the related invoicing, particularly with respect to letters of credit not denominated in U.S. Dollars. On February 9, 2023, the Company further amended its Credit Facility (as amended, the “Amended Credit Facility”) to transition from a variable interest rate based on the London Interbank Offered Rate (“LIBOR”) to a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”).Loans under the Amended Credit Facility bear interest at a rate equal to, at the Company’s option, an annual rate of either a Base Rate or an adjusted term SOFR rate (defined as SOFR for a specified term plus a credit spread adjustment of 10 basis points, subject to a 0% floor), plus an applicable margin (“Base Rate Borrowings” and “Term SOFR Borrowings”). The Base Rate is defined as a rate per annum for any day equal to the greatest of (1) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (2) the New York Federal Reserve Bank Rate in effect on such day plus half of 1%, and (3) the adjusted term SOFR rate for a one-month interest period on such day plus 1%. The applicable margin is between 0.25% to 1.25% for Base Rate Borrowings and between 1.25% and 2.25% for Term SOFR Borrowings based on the Company maintaining certain leverage ratios. The fee for undrawn amounts under the Amended Credit Facility ranges, based on the applicable leverage, from 0.200% to 0.350%. The Company is also required to pay customary letter of credit fees, as necessary. As of December 31, 2025, the Company did not have an outstanding debt balance under the Amended Credit Facility.

Note 11—Income TaxesThe following are the domestic and foreign components of the Company’s income before income taxes (in thousands):Year Ended December 31,202520242023Domestic$677,722 $579,338 $328,853 Foreign(18,967)(72,036)(60,858)Income before income taxes$658,755 $507,302 $267,995 The following are the components of the provision for income taxes (in thousands):Year Ended December 31,202520242023Current: Federal$11,117 $147,802 $120,049 State and local22,740 33,019 24,827 Foreign8,886 8,770 5,000 Total current provision42,743 189,591 149,876 Deferred: Federal160,917 (57,454)(51,822)State and local15,280 (14,853)(7,842)Foreign(3,489)(3,058)(1,157)Total deferred provision172,708 (75,365)(60,821)Total provision for income taxes$215,451 $114,226 $89,055 A reconciliation of the statutory tax rate to the effective tax rate for the periods presented is as follows:Year Ended December 31,202520242023(in thousands)%(in thousands)%(in thousands)%United States federal statutory income tax rate$138,339 21.0 %$106,533 21.0 %$56,279 21.0 %State and local income taxes, net of federal income tax effects (1)30,224 4.6 14,355 2.8 13,579 5.1 Foreign tax effectsUnited KingdomStatutory tax rate difference between the United Kingdom and United States(1,380)(0.2)(3,518)(0.7)(2,926)(1.1)Stock-based awards (2)(9,075)(1.4)(19,808)(3.9)(15,132)(5.6)Other(2,244)(0.3)(978)(0.2)(792)(0.3)Changes in valuation allowances (3)16,784 2.6 42,776 8.4 34,210 12.7 Other foreign jurisdictions2,136 0.3 2,368 0.5 1,263 0.5 Effect of changes in tax laws or rates enacted in the current period— — — — — — Effect of cross-border tax laws(515)(0.1)9 0.0 (528)(0.2)Tax creditsResearch and development tax credits(17,781)(2.7)(30,038)(5.9)(23,918)(8.9)Other33 0.0 — — — — Changes in valuation allowances— — — — — — Nontaxable or nondeductible itemsStock-based awards (2)47,008 7.1 (4,462)(0.9)22,408 8.4 Other7,130 1.1 5,228 1.0 4,270 1.5 Changes in unrecognized tax benefits4,792 0.7 1,761 0.4 342 0.1 Other adjustments— — — — — — Effective income tax rate$215,451 32.7 %$114,226 22.5 %$89,055 33.2 %____________(1)For the years ended December 31, 2025, state and local taxes in California, New York, New York City and Illinois made up the majority (greater than 50 percent) of the tax effect in this category. For the years ended December 31, 2024 and 2023, state and local taxes in New York, New York City and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.

Stock-Based CompensationStock-Based Compensation ExpenseStock-based compensation expense recorded in the consolidated statements of operations was as follows (in thousands):Year Ended December 31,202520242023Platform operations$34,480 $29,310 $21,048 Sales and marketing112,509 99,135 75,924 Technology and development163,350 138,393 120,823 General and administrative180,288 227,861 273,826 Total$490,627 $494,699 $491,621 On September 30, 2023, David R. Pickles stepped down as the Company’s Chief Technology Officer and from the Company’s board of directors. As a result, Mr. Pickles and the Company mutually agreed to cancel his unvested stock options and restricted stock without payment or replacement, resulting in the recognition of $14 million in incremental stock-based compensation expense, which is included in technology and development expense for the year ended December 31, 2023. No amount of stock-based compensation expense for these cancelled options and restricted stock remained unamortized.For the years ended December 31, 2025, 2024 and 2023, the Company recognized tax benefits on total stock-based compensation expense, which are reflected in the provision for income taxes in the consolidated statements of operations, of $9 million, $73 million and $53 million, respectively. For the years ended December 31, 2025, 2024 and 2023, the tax benefit realized related to restricted stock vested and stock options exercised during the period was $64 million, $129 million and $91 million, respectively.Stock-Based Award PlansThe Company is authorized to issue stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based and cash-based awards under its 2025 Incentive Award Plan (the “Incentive Award Plan”), an amendment and restatement of the 2016 Incentive Award Plan (the “2016 Plan”). The changes from the 2016 Plan to the Incentive Award Plan included removing the ten-year plan expiration date and providing other minor technical and administrative updates. Existing stock-based awards granted under the 2016 Plan continue unchanged under the Incentive Award Plan. These changes did not materially impact the Company’s financial statements for the year ended December 31, 2025. As of December 31, 2025, 106.8 million shares remained available for grant under the Company’s Incentive Award Plan.

Note 8—LeasesThe components of lease expense were as follows (in thousands):Year Ended December 31,202520242023Operating lease cost$70,574 $56,787 $48,866 Short-term lease cost2,851 2,231 1,898 Variable lease cost20,975 16,414 12,901 Sublease income— (42)(2,208)Total lease cost$94,400 $75,390 $61,457 Supplemental information related to leases were as follows:Year Ended December 31,20252024Weighted-average remaining lease term5.5 years4.9 yearsWeighted-average discount rate4.8 %4.

Management has implemented a program to protect the confidentiality, integrity and availability of our information systems and to identify, assess, manage and report on material risks from cybersecurity threats. The program is managed by an in-house cybersecurity team, and the program includes risk management and mitigation processes, such as malware protection, access management, technical vulnerability management and security incident response among other processes and technical safeguards; communication with third-party providers of services regarding their information security practices and disclosed cybersecurity incidents; the use of third-party service providers, as appropriate, for monitoring and mitigating cybersecurity threats and conducting penetration tests; education and training across the organization to mitigate cybersecurity threats to employees and our company; the maintenance of cybersecurity breach insurance; and disaster recovery and business continuity arrangements to minimize the potential impact to our operations in the event of a cybersecurity incident.The cybersecurity program is aligned with our enterprise risk framework. Members of our cybersecurity, enterprise risk management, engineering, finance and legal teams collaboratively assess the degree of risk to our business and operations from cybersecurity threats and incidents to develop incident response plans and risk mitigation practices. Risk is assessed across the potential technological, operational, financial, legal, regulatory and reputational impacts to our company, including the materiality of cybersecurity incidents pursuant to SEC disclosure rules. Although we follow guidance from various standards related to cybersecurity and engage third-party attestation services to test controls relevant to our business, this does not imply that we meet any particular technical standards, specifications or requirements.We have not identified risks from known cybersecurity threats, including as a result of prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, financial condition or results of operations. However, we remain subject to unknown or future cybersecurity threats that could materially affect us, including our business strategy, financial condition or results of operations. See “Item 1A. Risk Factors” for a discussion of various risks related to cybersecurity.