The Trade Desk, Inc.
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Item 1. Business
Overview
We are a global leader in advertising technology. We empower ad buyers to create, manage and optimize digital advertising campaigns across ad formats, channels and devices. Our platform’s depth, artificial intelligence (“AI”) capabilities and rich ecosystem of inventory, publisher and data partner integrations enable superior reach and decisioning for clients. In addition to the primary capabilities provided by our self-service platform, our enterprise application programming interfaces (“APIs”) equip our clients with the ability to customize and expand platform functionality.
Our clients are advertising agencies, advertisers and other service providers for agencies or advertisers, with whom we enter into ongoing master services agreements (“MSAs”). We generate revenue by charging our clients a platform fee generally based on a percentage of our clients’ total platform spend and from providing value-added services and data to support their advertising campaigns.
Our Industry
Digital advertising is reported to represent the largest and fastest-growing segment of the global advertising industry, with estimated annual spend of over $700 billion and representing more than 70% of the total market spend. The digital advertising ecosystem is divided into buyers, sellers and marketplaces. We believe that participants on the buy side or sell side should be advocates for their buyers or sellers, while those in the marketplace business should act as a referee or have market-driven incentives to protect or enhance the integrity of the marketplace.
We believe that the convergence of several trends in the advertising industry are driving the rise of programmatic advertising and will result in it becoming the predominant method for advertisers to reach consumers:
Rapid Growth of CTV. We are witnessing a generational shift from linear television to connected television (“CTV”) as Internet and television programming converge. New technologies support seamless delivery of streaming video content, accelerating consumers’ demand to watch what they want, when they want and where they want. We believe that this increased demand for CTV will bring about new opportunities for content owners and advertisers to connect with consumers, including through ad-supported subscription models, and will further drive the shift towards data-driven advertising.
Expansion of Global Advertising TAM and Programmatic Advertising. The total addressable market (“TAM”) for global advertising is reported to have surpassed $1 trillion for the first time in 2024. At the same time, advertisers are shifting more and more of their budgets to programmatic advertising as they more precisely target audiences through high-performance, decisioned advertising campaigns.
AI Driven Personalization and Automation. AI is fundamentally changing the media landscape, from the creative process all the way to the execution of advertising campaigns. As AI capabilities improve and as adoption of these tools increase, more personalized content at scale will be delivered with more predictive targeting and improved campaign automation. AI-driven platforms are poised to benefit from this evolution as the industry moves toward greater automation.
Prioritization of Data and Measurement in a Privacy-First World. In an increasingly digital, deeply interconnected and cross-platform media landscape, advertisers have begun to prioritize the use of high-quality, privacy-compliant data to drive intelligently decisioned campaigns and demand access to advanced measurement tools that demonstrate their technology partners’ performance and value. By integrating this data with measurement features, including real time feedback on customer reactions to ads, programmatic advertising increases the value of impressions for advertisers and inventory owners and serves more relevant ads to viewers.
Fragmentation of an Increasingly Digital Audience. As changes in consumer behavior and advances in technology drive media to become increasingly digital, audience fragmentation is accelerating. A growing “long tail” of mobile applications, social media platforms, streaming services and websites presents a challenge for advertisers trying to reach a large audience. Additionally, the number of devices used by individual consumers has increased. Both of these fragmentation trends are opportunities for technology companies that can consolidate and simplify media buying options for advertisers and agencies.
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Advertisers Expect More From Their Technology Partners. As programmatic advertising proliferates and the industry and technology mature, advertisers have an increasingly broad field of technology partners to choose from. As these partners differentiate themselves not just purely on value, but also on their reporting and measurement capabilities, their successful implementation of AI tools that empower advertisers and their access to desirable inventory and retail media, we expect advertisers to become increasingly selective on who they partner with.
Our Philosophy
Our approach is grounded in the following principles:
•We Focus on the Buy Side with Independence and Objectivity. We focus on buyers because they control advertising budgets. The supply of digital advertising inventory continues to exceed demand, and accordingly, we believe it is a buyer’s market. We also believe that by aligning our core offerings with buyers, we are able to avoid the conflicts of interest of our competitors who serve both the buy side and sell side. We provide and are developing offerings and features that work with publishers and supply-side partners to help ensure access to quality advertising inventory and to maximize decisioning capabilities for buyers of advertising. This objectivity allows us to build long-term, trusting relationships with our clients, many of whom leverage their proprietary, first-party data on our platform.
•We Are Data Driven. Our platform was founded on the principle that data-driven decisions will be the future of advertising. We built a data-management platform first, before building our ad-buying technology. We provide rich third-party datasets in our data marketplace to improve campaign performance, and we frequently help our clients drive campaign performance even further by ingesting their proprietary data directly, enabling greater decisioning and campaign optimization. Given our independent, buy-side focused approach and our strict protocols governing the ingestion of client first-party data, our clients trust us with their most granular and expressive data. Our technology platform enables effective use of such data, allowing our clients to run precisely targeted omnichannel advertising campaigns that help optimize campaigns and maximize return on advertising investments. Finally, the breadth and depth of data available on our data marketplace gives our clients a holistic view of their target audience, which enables more effective targeting across channels and the ability to engage in more precise attribution and closed-loop measurement.
•We Focus on AI Capabilities. Because the core of programmatic advertising is algorithmic software that automates ad buying, the development of new AI technologies is inherent to us. For nearly a decade, we have invested in augmenting the capabilities of our platform, including pioneering multiple innovations in this space. Recent technological advancements have driven even greater automation opportunities within new capabilities we are developing, such as Audience Unlimited, which will enable the radical simplification of the data buying process using the agentic co-pilot features available on our platform.
•We Invest in Lasting Client Relationships. We derive substantially all of our revenue from ongoing MSAs with our clients, rather than episodic insertion orders. We believe this approach strengthens our relationships with our clients and helps us grow their use of our platform over the long term, providing us with a highly scalable business model and a customer retention rate that has exceeded 95% for over a decade.
•We Offer Transparency and are Channel Agnostic. Our platform provides granular, real-time reporting on our clients’ advertising campaigns. Our clients directly access and execute campaigns on our platform and can control all facets of inventory purchasing decisions. By providing detailed reporting and actionable insights on our platform, we enable our clients to maximize value and target their budgets toward the most effective advertising inventory, data providers and channels.
•We Are an Open Platform with a Rich Ecosystem. Clients can customize and expand platform functionality by building their own features on top of our platform. For example, clients may use our APIs to design their own user interface, bulk manage advertising campaigns and link other systems, including ad servers or reporting tools. By using our APIs or by working with our engineering team, clients can invest their own resources to build their own proprietary tools for reporting, campaign strategy, custom algorithms, proprietary data use or other use cases. Our open platform approach enables third-party partners to integrate their technology into our platform, which in turn allows our advertising agency and service provider clients to provide differentiated offerings to their clients, which we believe leads to long-term relationships and increased use of our platform.
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•We Provide Access to Premium Inventory on a Global Scale. We have forged relationships with many of the open internet’s foremost providers of premium omnichannel inventory, allowing our clients to precisely target their ads across the globe and through a broad array of channels.
Our Platform
Our world-class, AI-enabled platform helps buyers of advertising plan, execute and measure highly expressive, data-driven campaigns across premium, omnichannel inventory. Our platform enables advertisers and agencies to:
•purchase digital media programmatically on various media exchanges and sell-side platforms, as well as directly from publishers;
•acquire and use third-party data to optimize and measure digital advertising campaigns;
•integrate and deploy their proprietary first-party data within our platform to optimize campaign efficacy;
•utilize our AI-powered actionable insights to monitor, manage, and optimize ongoing digital advertising campaigns on a real-time basis;
•monitor and manage ongoing digital advertising campaigns on a real-time basis;
•link digital campaigns to offline sales results or other business objectives;
•access other services such as our data management platform and publisher management platform marketplace; and
•use our user interface and APIs to customize and expand platform functionality.
Our platform is powerful and user friendly:
•Easy to Use, Open and Customizable. Our platform offers powerful tools and interfaces that empower our users by simplifying and streamlining the ad buying experience. Our platform also enables clients to integrate custom features and interfaces for their own use through our APIs.
•Koa — Your AI Co-Pilot. Koa is our platform’s AI co-pilot. It processes and analyzes robust data sets to surface insights, optimizations and recommendations that help platform users make data-driven decisions without sacrificing control or transparency. Koa’s artificial intelligence capabilities are used across various aspects of the platform, including predictive clearing, ad impression relevance scoring, measurement and forecasting, budget optimization and key performance indicator scoring.
•Expressiveness. Our platform utilizes bid-factor-based architecture, which allows users to set up campaigns based on specific business objectives and optimize them based on performance. Because of the granularity of bid factors, users of our platform can easily define and manage advertising campaigns with multiple targeting parameters that could result in quadrillions of permutations, which we refer to as expressiveness. We believe that expressiveness provides clients with the ability to target audiences with an extremely high level of precision and thus obtain higher returns on their advertising spend.
•Integrated, Omnichannel and Cross Device. Our platform provides integrated access to a wide range of omnichannel inventory and data sources, as well as third-party services such as ad servers, ad-verification services and survey vendors. Our platform’s integration of these sources and services enables our clients to deploy their budgets through a wide variety of channels, device types and formats, targeted in their desired manner, all through a single platform.
Some of the key features of our platform are:
•Auto Optimization. We provide auto-optimization features that allow buyers the option to largely automate their campaigns. In addition, by giving clients reporting, budgeting and bidding transparency, clients can make informed decisions on whether to lean on our auto-optimization capabilities, including, for example, those within Audience Unlimited, or more actively control a campaign.
•Advanced Reporting and Analytics Tools. We provide a comprehensive view of consumers’ interactions with the ads purchased through our platform with robust reporting of performance insights across multiple variables, such as audience characteristics, ad format, site category, website, device, creative type and geography. Better reporting results in better learning, enabling better campaign optimization and outcomes.
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•Data Management and Measurement Tools. Our platform enables clients to optimize campaigns with numerous highly relevant data sets, including from an extensive selection of third-party vendors, in a seamless and easy manner. We also empower our clients with an extensive set of measurement capabilities, both through a number of proprietary benchmarking tools and indices, and through integrations with a broad selection of third-party measurement partners.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally relate to future events or our future financial or operating performance and may include statements concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for, our business and the markets in which we operate), financial results, the impact of macroeconomic uncertainty on our business, operations, and the markets and communities in which we, our clients, and partners operate, results of operations, revenues, operating expenses, taxes, capital expenditures including share repurchases, sales and marketing initiatives and competition. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “suggests,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.
We discuss many of these risks in Part II of this Quarterly Report on Form 10-Q in greater detail under the heading “Risk Factors” and in other filings we make from time to time with the Securities and Exchange Commission (the “SEC”). Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q, which are inherently subject to change and involve risks and uncertainties. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, investors should not place undue reliance on these forward-looking statements.
Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this report and have filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
References to “Notes” are notes included in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Overview
We are a global leader in advertising technology. We empower ad buyers to create, manage and optimize digital advertising campaigns across ad formats, channels and devices. Our platform’s depth, AI capabilities and rich ecosystem of inventory, publisher and data partner integrations enable superior reach and decisioning for clients. In addition to the primary capabilities provided by our self-service platform, our enterprise APIs equip our clients with the ability to customize and expand platform functionality.
Since our founding in 2009, we have been committed to building a more transparent and objective advertising ecosystem and enabling more expressive and data-driven campaigns through pioneering technology innovations.
Our clients are advertising agencies, advertisers and other service providers for agencies or advertisers, with whom we enter into ongoing MSAs. We generate revenue by charging our clients a platform fee generally based on a percentage of our clients’ total spend on our platform and from providing value-added services and data to support their advertising campaigns.
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Executive Summary
Highlights
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||
| Dollars | Change | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 688,857 | $ | 616,021 | $ | 72,836 | 12 | % | |||||||||||||||||||||||||||||||
| Net income | $ | 39,997 | $ | 50,678 | $ | (10,681) | (21) | % | |||||||||||||||||||||||||||||||
Adjusted EBITDA(1) | $ | 206,066 | $ | 207,875 | $ | (1,809) | (1) | % | |||||||||||||||||||||||||||||||
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(1) To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we present Adjusted EBITDA, which is a Non-GAAP financial measure. Additional information can be found in “— Non-GAAP Financial Measures” below, including reconciliations of Adjusted EBITDA to the corresponding GAAP measure of net income. | |||||||||||||||||||||||||||||||||||||||
Trends, Opportunities and Challenges
Since our founding, we have focused on developing the most sophisticated, rich and objective platform for buyers of advertising. The growing digitization of media, fragmentation of audiences and ongoing lack of transparency in the advertising technology ecosystem have increased the complexity of advertising, and thereby increased the need for an ad buying platform that users can trust. Our platform delivers valuable insights and results to clients without the conflict of interest and lack of objectivity that come with also selling owned advertising inventory. We believe our continued success relies on further developing our platform’s programmatic capabilities while expanding access to advertising inventory, value-added services and data to support our clients’ advertising campaigns.
We believe that our key opportunities include (i) our ongoing global expansion, (ii) continuing development of our omnichannel ad inventory (including in channels such as CTV and other video, mobile, audio and others, including potentially in any new inventory sources that may arise with the advent of AI), (iii) continuing development, optimization and adoption of the data usage, measurement and targeting capabilities provided by our platform, which create a natural flywheel in our business, (iv) the adoption and utilization of third-party data, in particular, retail data, and first-party data by our clients, and (v) continuing development and incorporation of AI in our platform and related offerings.
We believe that growth of the programmatic advertising market is important for our ability to grow our business. Adoption of programmatic advertising by advertisers allows us to acquire new clients and grow revenue from existing clients. Although our clients include some of the largest advertising agencies and advertisers in the world, we believe there is significant room for us to expand our business relationships with these clients to gain a larger portion of their advertising spend through our platform. We also believe that the industry trends noted above will lead to advertisers adopting programmatic advertising through platforms such as ours. Accordingly, we see a significant market opportunity across advertisers and agencies with which we do not yet do business.
Similarly, the adoption of programmatic advertising by inventory owners and content providers allows us to expand the volume and type of advertising inventory we present to our clients. For example, we have expanded our CTV, audio and other advertising offerings through our integrations with supply-side partners and publishers. In addition, we have expanded our efforts to improve the efficiency and transparency of complex open internet supply channels.
Our recent growth has been largely driven by expanding our share of spend by our existing clients and adding new clients. Our clients include some of the largest advertising agencies and advertisers in the world, and we believe there is significant room for us to expand further within these clients, including room to expand the aperture of clients we support across the mid-market. As a result, future revenue growth depends, in large part, upon our ability to retain our existing clients and to gain a larger amount of their spend through our platform in a highly competitive advertising market. This includes our ability to differentiate to clients our platform’s overall value from competitors’ platforms that may offer artificially low prices, which are enabled by inherent conflicts of interest and a lack of objectivity that come with also selling advertising inventory. We believe that we offer differentiated offerings with superior value to new and existing clients.
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Our future growth will also depend on our ability to continue innovating and improving the technology underlying our platform and related offerings and enhancing their functionality, including the development of new or improved value-added services or the inclusion of additional data, and driving continual and increased adoption of such value-added services and data by our clients.
We invest for long-term growth. We anticipate that our operating expenses will continue to increase in the foreseeable future as we invest in platform operations for our hosting capabilities as well as technology and development to enhance our platform and related offerings, including our continued focus on the development and incorporation of AI. We also anticipate that our sales and marketing expenses will continue to increase to acquire new clients and reinforce our relationships with existing clients. In addition, we expect to continue making investments in our infrastructure, including our information technology, financial and administrative systems and controls to support our growing operations.
We believe the markets outside of the United States, and in particular across Europe and Asia in markets such as the U.K., Germany, France, China, Japan, India and Australia, offer opportunities for growth. We intend to make additional investments in sales and marketing and product development to expand in international markets where we are making significant investments in our platform and growing our team.
We believe that these investments will contribute to our long-term growth, although they may negatively impact profitability in the near term.
Our business model has allowed us to grow significantly, and we believe that our operating leverage enables us to support future long-term growth profitably.
Macroeconomic Uncertainty
Changes in interest rates, foreign currency exchange rates, trade policies and practices, inflation and other geopolitical developments have resulted, and may continue to result, in a global slowdown of economic activity, which may decrease demand for a broad variety of goods and services in various industries, including those provided by our clients, while also disrupting supply chains, sales channels and advertising and marketing activities for an unknown period of time until economic activity normalizes. In addition, due to high demand for hosting infrastructure components, their prices have become increasingly inelastic and the cost for such components has been rising. As a result of the current uncertainty in economic activity, we are unable to predict the size and duration of the impact on our revenue and our results of operations. The extent of the impact of these macroeconomic factors on our operational and financial performance will depend on a variety of factors, and the duration and extent of geopolitical and global economic disruption and their respective impacts on our clients, partners, industry and employees, all of which are uncertain at this time and cannot be accurately predicted. See “Item 1A. Risk Factors” in Part II. Other Information for further discussion of the adverse impacts of macroeconomic uncertainty on our business.
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Results of Operations for the Three Months Ended March 31, 2026 Compared with the Three Months Ended March 31, 2025
The following tables set forth our condensed consolidated results of operations for the periods presented.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | (% of Revenue) | (in thousands) | (% of Revenue) | ||||||||||||||||||||
| Revenue | $ | 688,857 | 100 | % | $ | 616,021 | 100 | % | |||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Platform operations | 181,970 | 26 | % | 142,839 | 23 | % | |||||||||||||||||
| Sales and marketing | 172,179 | 25 | % | 152,743 | 25 | % | |||||||||||||||||
| Technology and development | 142,720 | 21 | % | 132,402 | 21 | % | |||||||||||||||||
| General and administrative | 125,341 | 18 | % | 133,585 | 22 | % | |||||||||||||||||
| Total operating expenses | 622,210 | 90 | % | 561,569 | 91 | % | |||||||||||||||||
| Income from operations | 66,647 | 10 | % | 54,452 | 9 | % | |||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Total other income, net | (12,311) | (2) | % | (21,317) | (3) | % | |||||||||||||||||
| Income before income taxes | 78,958 | 11 | % | 75,769 | 12 | % | |||||||||||||||||
| Provision for income taxes | 38,961 | 6 | % | 25,091 | 4 | % | |||||||||||||||||
| Net income | $ | 39,997 | 6 | % | $ | 50,678 | 8 | % | |||||||||||||||
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Note: Percentages may not sum due to rounding.
Revenue
Revenue increased by $73 million, or 12%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to an increase in gross spend on our platform, which was primarily driven by more overall advertising campaigns executed by new and existing clients and increased application of and changes in the mix of revenue-generating value-added services. The increase in revenue was also driven by a higher proportion of revenue earned from client spend due to increased pricing associated with value-added services, higher utilization of our value-added services and higher platform fees. Enhancements to our platform and the value-added services available to clients, including from Kokai and other features, and increased pricing associated with value-added services, enabled both our clients and us to capture increased value and drove higher utilization of our value-added services.
Revenue earned from our clients’ gross spend on our platform may fluctuate from period to period based on the types of services rendered and the extent to which our platform’s value-added services and data are utilized by clients; our client and channel mix; changes in our platform or related offerings; pricing; volume discounts; and the amount of certain costs of supplier-provided components of value-added services and data recorded as reductions to revenue versus as expenses in platform operations. We expect that our revenue earned from our clients’ gross spend will fluctuate in the future pursuant to these factors, especially as we introduce new and enhanced platform features and related offerings that may be adopted by our clients, expand our omnichannel capabilities, extend our reach to more CTV and other inventory and add additional clients whose businesses may have different underlying business models.
Platform Operations
Platform operations expense increased by $39 million, or 27%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to increases of $23 million in hosting costs, $11 million in data-related costs and $4 million in personnel costs. The increase in hosting costs was primarily attributable to investment in new data centers to support the continued growth of our platform; support costs relating to the increased use of our platform to query ad opportunities and purchase ad impressions while leveraging the AI and machine learning capabilities of our platform; and increased use of features by our technical teams in support of our platform. The increase in data-related costs was primarily attributable to investments in supplier-provided components of value-added
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services and data to inform and improve our platform and related offerings. The increase in personnel costs was primarily due to headcount growth.
We expect platform operations expense to increase in absolute dollars in future periods as we continue to experience an increased volume of queries per second (“QPS”) and media impressions purchased through our platform; invest in our hosting capabilities, including to support new technical features and functionality of our platform and related offerings and our growing AI and machine learning capabilities, subject to rising prices for data center components; and invest in hiring and retaining top talent to support our clients. Platform operations expense as a percentage of revenue may fluctuate period to period based on revenue levels and the timing of these investments in our hosting capabilities, as we continue to strategically invest in efficient data center computing and networking capacity. Platform operations expense also may vary due to the amount of certain costs of supplier-provided components of value-added services and data recorded as platform operations expense versus as reductions to revenue.
Sales and Marketing
Sales and marketing expense increased by $19 million, or 13%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to increases of $18 million in personnel costs and $1 million in marketing costs. The increase in personnel costs was primarily due to an increase in headcount to support our sales efforts and to continue to develop and maintain relationships with our clients and an increase in incentive compensation driven by changes in incentive targets, commissionable headcount growth and gross spend growth. The increase in marketing costs was primarily due to an increase in marketing campaigns, creatives and client engagement.
We expect sales and marketing expenses to increase in absolute dollars in future periods, as we focus on hiring, retaining and incentivizing top talent to drive increased adoption of our platform and related offerings with existing and new clients and to drive the expansion of our international business.
Technology and Development
Technology and development expense increased by $10 million, or 8%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was due to an increase of $9 million in personnel costs primarily attributable to headcount growth to maintain and support further development of our platform and related offerings.
We expect technology and development expense to increase in absolute dollars as we continue to focus on hiring and retaining top talent, invest in the development of our platform and related offerings to support additional platform features and functionality including AI and machine learning, increase the number of advertising inventory and data suppliers and support the anticipated increase in volume of QPS on our platform.
General and Administrative
General and administrative expense decreased by $8 million, or 6%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to a $16 million decrease in stock-based compensation, partially offset by an increase of $8 million in personnel costs. The decrease in stock-based compensation was primarily due to a $19 million decrease relating to the CEO Performance Option driven by the graded-vesting attribution method, under which more expense is recognized earlier in the option’s life, partially offset by a $3 million increase primarily driven by an acceleration of stock-based compensation in connection with an executive transition. The increase in personnel costs was primarily attributable to increased headcount to support our growth, an increase in severance benefit costs and salary increases in connection with regular merit and promotion cycles, as we continue to invest in attracting and retaining top talent.
Excluding the impact of the CEO Performance Option, the stock-based compensation for which was fully recognized by the end of the first quarter of 2026, we expect general and administrative expenses to increase primarily due to continued investment in corporate infrastructure, continued investment in hiring and retaining top talent to support growth, and various litigation, regulatory and governance matters, for which expenses may fluctuate from period to period.
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Total Other Income, Net
Total other income, net, decreased by $9 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily due to lower interest income on our cash and cash equivalents and short-term investments primarily driven by lower amounts invested as well as foreign currency transaction losses driven by changes in foreign currency exchange rates against the U.S. Dollar, partially offset by gains on foreign currency forwards.
Provision for Income Taxes
The U.S. federal statutory tax rate was 21% for the three months ended March 31, 2026 and 2025.
The provision for income taxes increased by $14 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to tax detriments associated with employee stock-based awards, compared to tax benefits associated with employee stock-based awards in the three months ended March 31, 2025.
Liquidity and Capital Resources
As of March 31, 2026, we had working capital of $2.0 billion, which included $878 million in cash and cash equivalents, $128 million of which was held by our international subsidiaries, and $528 million in short-term investments in marketable securities. Additionally, as of March 31, 2026, we had $445 million available under our Amended Credit Facility (refer to “— Credit Facility” below). For the three months ended March 31, 2026, we generated $392 million in cash flows from operating activities.
We believe our existing cash and cash equivalents, cash flow from operations, and our undrawn available balance under our Revolving Facility (refer to “— Credit Facility” below) will be sufficient to meet our working capital requirements and investments we make from time to time for at least the next 12 months. We believe our existing cash and cash equivalents, short-term investments and cash flow from operations will be sufficient to fund our share repurchase program. Further, we have a shelf registration statement on Form S-3 on file with the SEC (the “Shelf Registration”), which permits us to issue equity securities and equity-linked securities from time to time, subject to certain limitations. The Shelf Registration is intended to provide us with additional flexibility to access capital markets for general corporate purposes, subject to market conditions and our capital needs. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in “Item 1A. Risk Factors” within this Quarterly Report on Form 10-Q.
In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt-financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by incurring additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors.
There can be no assurance that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives. In addition, if our operating performance during the next 12 months is below our expectations, our liquidity and ability to operate our business could be adversely affected. We are closely monitoring the effect that current macroeconomic factors may have on our working capital requirements.
Credit Facility
On June 15, 2021, we 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, we have the right to increase the Credit Facility by an amount not to exceed $300 million.
On December 17, 2021, we 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, we further amended the Credit Facility (as amended, the “Amended Credit Facility”) to transition from a variable interest rate
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based on the London Interbank Offered Rate (“LIBOR”) to a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”).
As of March 31, 2026, we did not have an outstanding debt balance under the Amended Credit Facility. Availability under the Amended Credit Facility was $445 million as of March 31, 2026, which is net of outstanding letters of credit of $5 million. The Amended Credit Facility matures, and all outstanding amounts become due and payable, on June 15, 2026. As of March 31, 2026, we were in compliance with all covenants.
On April 14, 2026, we entered into an amended and restated loan and security agreement, among us, as borrower, and a syndicate of banks, led by JPMorgan Chase Bank, N.A., as agent and arranger (the “Restated Loan and Security Agreement”), which amends and restates the terms of our Amended Credit Facility (as so amended and restated, the “Revolving Facility”). Pursuant to the terms of the Restated Loan and Security Agreement, the Revolving Facility consists of a $750 million revolving loan facility, with a $100 million sublimit for the issuance of letters of credit and a $75 million sublimit for swingline borrowings. Under certain circumstances, including receipt of additional lender commitments, we have the right to increase the Revolving Facility by an additional amount not to exceed $750 million.
Outstanding letters of credit under the Amended Credit Facility continue in full and unchanged subsequent to the execution of the Restated Loan and Security Agreement. No outstanding debt balance existed under the Amended Credit Facility at the time of the execution of the Restated Loan and Security Agreement. We paid immaterial accrued interest and fees upon execution of the Restated Loan and Security Agreement. The Revolving Facility has a scheduled maturity of April 14, 2031, at which time all outstanding amounts become due and payable, subject to certain extension mechanics set forth in the Restated Loan and Security Agreement.
For additional information regarding the Amended Credit Facility and the Restated Loan and Security Agreement, refer to Note 6—Debt.
Share Repurchase Program
In February 2023, our board of directors approved a share repurchase program to repurchase our Class A common stock. The share repurchase program, which has no expiration date, is designed to help offset the impact of future share dilution from employee stock issuances. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases determined at our discretion, depending on market conditions and corporate needs. Open market repurchases are structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares under this authorization. This program does not obligate us to acquire any particular amount of Class A common stock, and may be modified, suspended or terminated at any time at the discretion of our board of directors.
As of December 31, 2025, $150 million remained available and authorized for repurchases. In February 2026, an additional $350 million was authorized under this program, bringing the total amount available for future repurchases to $500 million. During the three months ended March 31, 2026, we repurchased and subsequently retired 7 million shares of our Class A common stock for an aggregate repurchase amount of $174 million. The aggregate repurchase amount for the three months ended March 31, 2026, included $1 million relating to the 1% excise tax on share repurchases, net of share issuances, from the Inflation Reduction Act of 2022 (“IRA”). As of March 31, 2026, $327 million remained available and authorized for repurchases.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 391,805 | $ | 291,433 | |||||||
| Net cash provided by (used in) investing activities | $ | 466 | $ | (132,589) | |||||||
| Net cash used in financing activities | $ | (172,069) | $ | (409,762) | |||||||
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Operating Activities
Our cash flows from operating activities are primarily influenced by growth in our operations, increases or decreases in collections from our clients and related payments to our suppliers for Supplier Components. We typically pay suppliers in advance of collections from our clients. Our collection and payment cycles can vary from period to period. In addition, we expect seasonality to impact cash flows from operating activities on a sequential quarterly basis during the year.
For the three months ended March 31, 2026, cash provided by operating activities of $392 million resulted primarily from net income adjusted for noncash items of $209 million and a net increase from our operating assets and liabilities of $182 million. The net increase from our operating assets and liabilities was primarily due to a $429 million decrease in accounts receivable and a $59 million decrease in prepaid expenses and other assets, partially offset by a $279 million decrease in accounts payable and a $17 million decrease in operating lease liabilities. The decrease in accounts receivable was due to the timing and seasonality of cash receipts from clients. The decrease in prepaid expenses and other assets was primarily due to a reduction in income taxes receivable driven by the receipt of a tax refund and the current tax provision net of tax payments, partially offset by prepayments to certain cloud-based hosting and data-related service providers. The decrease in accounts payable was due to the timing and seasonality of payments for Supplier Components. The decrease in operating lease liabilities was due primarily to rent payments.
For the three months ended March 31, 2025, cash provided by operating activities of $291 million resulted primarily from net income adjusted for noncash items of $208 million and a net increase from our operating assets and liabilities of $83 million. The net increase from our operating assets and liabilities was due to a $282 million decrease in accounts receivable, a $29 million increase in accrued expenses and other liabilities and a $20 million decrease in prepaid expenses and other assets, partially offset by a $235 million decrease in accounts payable and a $14 million decrease in operating lease liabilities. The decrease in accounts receivable was due to the timing and seasonality of cash receipts from clients. The increase in accrued expenses and other liabilities was primarily due to an increase in income tax liability driven by the current income tax provision, net of tax payments, and an increase in liability relating to ESPP employee contributions toward the upcoming purchase of shares, partially offset by a decrease in incentive compensation liabilities driven by timing and the seasonality of our business. The decrease in prepaid expenses and other assets was primarily due to the timing of payment for employee engagement costs, including for travel and in-person events that occurred in the first quarter of 2025. The decrease in accounts payable was due to the timing and seasonality of payments to suppliers for Supplier Components. The decrease in operating lease liabilities was due primarily to rent payments.
Investing Activities
Our primary investing activities consist of investing in short-term marketable securities, capital expenditures for property and equipment for the expansion of facilities to support our hosting capabilities and growing headcount as well as capital expenditures to develop our software in support of enhancing our platform and related offerings. As our business grows, our capital expenditures and other investment activity may increase. Capital expenditures to support our hosting capabilities are also subject to rising prices for data center components, the timing, extent and duration of which cannot be predicted. From time to time, we may engage in sales of long-lived assets based upon business needs and market factors.
For the three months ended March 31, 2026, cash provided by investing activities of $0.5 million primarily resulted from $116 million of net maturities of short-term investments, partially offset by $113 million to purchase property and equipment and $3 million of investments in capitalized software.
For the three months ended March 31, 2025, we used $133 million of cash in investing activities, consisting of $66 million of net purchases of short-term investments, $59 million to purchase property and equipment, $4 million for the acquisition of certain assets accounted for as a business combination and $3 million of investments in capitalized software.
Financing Activities
For the three months ended March 31, 2026, we used $172 million of cash in financing activities, consisting of $164 million of cash paid for repurchases of our Class A common stock and $11 million of taxes paid for restricted stock settlements, partially offset by $2 million of proceeds from stock option exercises.
For the three months ended March 31, 2025, we used $410 million of cash in financing activities, consisting of $386 million of cash paid for repurchases of Class A common stock and $31 million of taxes paid for restricted stock settlements, partially offset by $8 million of proceeds from stock option exercises.
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Off-Balance Sheet Arrangements
We do not have any relationships with other entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We did not have any off-balance sheet arrangements at March 31, 2026 other than the indemnification agreements described below.
Contractual Obligations
Our principal commitments consist of non-cancelable operating leases for our various office and hosting facilities and other contractual commitments consisting of obligations primarily for our hosting services, hardware providers, data-related service providers and providers of software as a service. In certain cases, the terms of the lease agreements provide for rental payments on a graduated basis.
The following table summarizes our non-cancelable contractual obligations as of March 31, 2026 (in thousands):
| Payments Due by Period | ||||||||||||||||||||
| Remainder of 2026 | 2027 and Thereafter | Total | ||||||||||||||||||
| Operating lease commitments | $ | 70,244 | $ | 707,449 | $ | 777,693 | ||||||||||||||
| Other contractual commitments | 218,038 | 120,155 | 338,193 | |||||||||||||||||
| Total | $ | 288,282 | $ | 827,604 | $ | 1,115,886 | ||||||||||||||
In the ordinary course of business, we enter into agreements in which we may agree to indemnify clients, suppliers, vendors, lessors, business partners, lenders, stockholders and other parties with respect to certain matters, including losses resulting from claims of intellectual property infringement, damages to property or persons, business losses or other liabilities. Generally, these indemnity and defense obligations relate to our own business operations, obligations and acts or omissions. However, under some circumstances, we agree to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations and acts or omissions, or the business operations, obligations and acts or omissions of third parties. These indemnity provisions generally survive termination or expiration of the agreements in which they appear. In addition, we have entered into indemnification agreements with our directors, executive officers and other officers that will require us to indemnify them against 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 us to provide indemnification under such agreements, but we are not aware of any claims that could have a material effect on our condensed consolidated financial statements. Accordingly, no material amounts have been recorded at March 31, 2026.
Non-GAAP Financial Measures
In addition to our GAAP results, we consider certain non-GAAP financial measures, including Adjusted EBITDA as described below. Management believes that Adjusted EBITDA allows investors to evaluate the Company’s performance using one of the same key operating measures as used by management and securities analysts.
This Non-GAAP financial measure is supplemental to our GAAP measures, and this non-GAAP financial measure should not be considered in isolation of, as a replacement for or as superior to corresponding, similarly captioned, GAAP measures.
Adjusted EBITDA
We use Adjusted EBITDA to evaluate our financial performance, operational efficiency and profitability and for certain financial and operational decision-making purposes, including annual budgeting and evaluating the effectiveness of business strategies. We define Adjusted EBITDA as net income before depreciation and amortization expense; stock-based compensation expense; interest income, net; and provision for income taxes. Adjusted EBITDA is influenced primarily by
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fluctuations in our revenue and operating expenses, except for the income and expenses it excludes. Fluctuations impacting revenue and operating expenses are described above in “—Results of Operations”.
We believe Adjusted EBITDA helps identify underlying trends in our business that could be masked by the effect of the income and expenses that it excludes. Adjusted EBITDA is frequently used by investors and securities analysts to measure a company’s operating performance. However, Adjusted EBITDA should not be considered as an alternative to net income, income from operations or any other measure of financial performance calculated and presented in accordance with GAAP. Limitations of Adjusted EBITDA include, for example:
•Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs or contractual obligations, (2) the potentially dilutive impact of stock-based compensation, which will continue for the foreseeable future and represent recurring expense and a key part of our compensation strategy, (3) interest income earned from cash and cash equivalents and short-term investments or interest expense relating to our Amended Credit Facility or (4) tax payments that may represent a reduction in cash available to us;
•Although depreciation and amortization expense are non-cash expenses, the assets that are depreciated or amortized — such property and equipment and capitalized software development costs — may have to be replaced or expanded in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or expansions; and
•Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
The following table presents a reconciliation of net income, the most comparable GAAP measure, to Adjusted EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||
| Net income | $ | 39,997 | $ | 50,678 | |||||||||||||||
| Add back (deduct): | |||||||||||||||||||
| Depreciation and amortization expense | 31,431 | 23,985 | |||||||||||||||||
| Stock-based compensation expense | 109,046 | 128,253 | |||||||||||||||||
| Interest income, net | (13,369) | (20,132) | |||||||||||||||||
| Provision for income taxes | 38,961 | 25,091 | |||||||||||||||||
| Adjusted EBITDA | $ | 206,066 | $ | 207,875 | |||||||||||||||
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
We believe that the assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements such as whether supplier-provided components of value-added services and data should be recognized as reductions to revenue or expenses recorded in platform operations; stock-based compensation expense; and income taxes, including the realizability of deferred tax assets, have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. Refer to “Critical Accounting Policies and Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025, for a complete discussion of our critical accounting estimates. There have been no material changes to our critical accounting policies or estimates since our Annual Report on Form 10-K for the year ended December 31, 2025.
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Recently Issued Accounting Pronouncements
Refer to Note 2—Basis of Presentation and Summary of Significant Accounting Policies of our condensed consolidated financial statements.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-03-05 | FALBERG KATHRYN E indirect | Director | Sell | -50,000 | $30.48 | -$1,524,000 |
| 2026-03-05 | FALBERG KATHRYN E | Director | Sell | -102,828 | $30.45 | -$3,131,113 |
| 2026-03-04 | Green Jeffrey Terry indirect | President and CEO | Buy | +2,314,304 | $25.08 | $58,042,744 |
| 2026-03-03 | Green Jeffrey Terry indirect | President and CEO | Buy | +1,685,696 | $24.97 | $42,091,829 |
| 2026-03-02 | Green Jeffrey Terry indirect | President and CEO | Buy | +2,000,000 ×2 | $23.98 | $47,966,693 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-06 10-Q expected by 2026-08-07 (in 68 days)
- ~2026-11-05 10-Q expected by 2026-11-06 (in 159 days)
- ~2027-02-27 10-K expected by 2027-03-07 (in 273 days)
- ~2027-05-06 10-Q expected by 2027-05-07 (in 341 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-29 8-K Officer/Director Change
- 2026-05-08 8-K Officer/Director Change
- 2026-05-07 10-Q Quarterly Report
- 2026-05-07 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-20 8-K Material Agreement Entered; Material Financial Obligation
- 2026-04-09 DEF 14A Proxy Statement
- 2026-04-06 8-K Officer/Director Change
- 2026-03-25 8-K Delisting Notice; Officer/Director Change; Financial Statements and Exhibits
- 2026-03-09 8-K Officer/Director Change
- 2026-02-27 10-K Annual Report
- 2026-02-25 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-01-26 8-K Earnings Release; Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-12-15 8-K Delisting Notice
- 2025-11-06 10-Q Quarterly Report
- 2025-11-06 8-K Earnings Release; Other Events; Financial Statements and Exhibits