Item 8. Financial Statements and Supplementary Data

THE TRADE DESK, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			58
Consolidated Balance Sheets			60
Consolidated Statements of Operations			61
Consolidated Statements of Stockholders’ Equity			62
Consolidated Statements of Cash Flows			63
Notes to Consolidated Financial Statements			64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of The Trade Desk, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Trade Desk, Inc. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, of stockholders' equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

As described in Note 2 to the consolidated financial statements, the Company maintains agreements with each client and supplier in the form of master service agreements, which set out the terms of the relationship and access to the Company’s platform. The Company’s performance obligation is to provide the use of its platform to clients to develop ad campaigns and select the advertising inventory, value-added services and data to support those campaigns. The Company recognizes revenue at a point in time when a transaction is completed, which is when a bid is won and the client’s purchase occurs through the platform. The Company reports revenue net of amounts it pays suppliers for the cost of advertising inventory, supplier-provided components of value-added services and data. For the year ended December 31, 2024, the Company’s revenue was $2,445 million.

The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is the high degree of audit effort in performing procedures related to client purchases through the Company’s platform to recognize revenue.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the completeness and accuracy of the revenue recognized, including both manual and automated controls operating over the information generated from the Company’s platform and the calculation of revenue invoices based on client purchases. These procedures also included, among others (i) evaluating revenue transactions by testing the issuance and settlement of invoices and credit memos; (ii) tracing transactions not settled to a detailed listing of accounts receivable; (iii) confirming a sample of outstanding client invoice balances at year end and, for confirmations not returned, obtaining and inspecting source documents, including invoices, master service agreements, subsequent cash receipts, and recalculating amounts due, where applicable; and (iv) testing the completeness and accuracy of underlying information provided by management.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

February 21, 2025

We have served as the Company’s auditor since 2015.

THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par values)

			As of December 31,
			2024						2023
ASSETS
Current assets:
Cash and cash equivalents			$	1,369,463					$	895,129
Short-term investments, net			552,026						485,159
Accounts receivable, net of allowance for credit losses of $11,244 and $12,826 as of December 31, 2024 and 2023, respectively			3,330,343						2,870,313
Prepaid expenses and other current assets			84,626						63,353
TOTAL CURRENT ASSETS			5,336,458						4,313,954
Property and equipment, net			209,332						161,422
Operating lease assets			263,761						197,732
Deferred income taxes			230,214						154,849
Other assets, non-current			72,186						60,730
TOTAL ASSETS			$	6,111,951					$	4,888,687
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities:
Accounts payable			$	2,631,213					$	2,317,318
Accrued expenses and other current liabilities			177,760						137,996
Operating lease liabilities			64,492						55,524
TOTAL CURRENT LIABILITIES			2,873,465						2,510,838
Operating lease liabilities, non-current			247,723						180,369
Other liabilities, non-current			41,618						33,261
TOTAL LIABILITIES			3,162,806						2,724,468
Commitments and contingencies (Note 13)			—						—
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.000001; 100,000 shares authorized, zero shares issued and outstanding as of December 31, 2024 and 2023			—						—
Common stock, par value $0.000001 Class A, 1,000,000 shares authorized; 452,182 and 444,997 shares issued and outstanding as of December 31, 2024 and 2023, respectively Class B, 95,000 shares authorized; 43,919 and 43,919 shares issued and outstanding as of December 31, 2024 and 2023, respectively			—						—
Additional paid-in capital			2,594,896						1,967,265
Retained earnings			354,249						196,954
TOTAL STOCKHOLDERS’ EQUITY			2,949,145						2,164,219
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	6,111,951					$	4,888,687

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

			Year Ended December 31,
			2024						2023						2022
Revenue			$	2,444,831					$	1,946,120					$	1,577,795
Operating expenses:
Platform operations			472,012						365,598						281,123
Sales and marketing			546,517						447,970						337,975
Technology and development			463,319						411,794						319,876
General and administrative			535,816						520,278						525,167
Total operating expenses			2,017,664						1,745,640						1,464,141
Income from operations			427,167						200,480						113,654
Other expense (income):
Interest income, net			(78,842)						(68,508)						(12,755)
Foreign currency exchange loss (gain), net			(1,293)						993						(961)
Total other income, net			(80,135)						(67,515)						(13,716)
Income before income taxes			507,302						267,995						127,370
Provision for income taxes			114,226						89,055						73,985
Net income			$	393,076					$	178,940					$	53,385
Earnings per share:
Basic			$	0.80					$	0.37					$	0.11
Diluted			$	0.78					$	0.36					$	0.11
Weighted-average shares outstanding:
Basic			490,879						489,261						486,937
Diluted			501,924						500,182						499,925

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

			Class A and B Common Stock (1)												Additional Paid-In Capital						Retained Earnings						Total Stockholders’ Equity
			Shares						Amount
Balance as of December 31, 2021			483,441						$	—					$	915,177					$	612,129					$	1,527,306
Exercise of common stock options			4,497						—						47,525						—						47,525
Issuance of common stock under employee stock purchase plan			1,121						—						33,062						—						33,062
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			1,409						—						(48,595)						—						(48,595)
Stock-based compensation			—						—						502,656						—						502,656
Net income			—						—						—						53,385						53,385
Balance as of December 31, 2022			490,468						—						1,449,825						665,514						2,115,339
Exercise of common stock options			5,232						—						60,525						—						60,525
Issuance of common stock under employee stock purchase plan			886						—						38,482						—						38,482
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			2,450						—						(78,516)						—						(78,516)
Repurchases of Class A common stock			(10,120)						—						—						(647,500)						(647,500)
Stock-based compensation			—						—						496,949						—						496,949
Net income			—						—						—						178,940						178,940
Balance as of December 31, 2023			488,916						—						1,967,265						196,954						2,164,219
Exercise of common stock options			5,768						—						218,410						—						218,410
Issuance of common stock under employee stock purchase plan			1,118						—						47,994						—						47,994
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			2,804						—						(139,095)						—						(139,095)
Repurchases of Class A common stock			(2,505)						—						—						(235,781)						(235,781)
Stock-based compensation			—						—						500,322						—						500,322
Net income			—						—						—						393,076						393,076
Balance as of December 31, 2024			496,101						$	—					$	2,594,896					$	354,249					$	2,949,145

____________

(1)			Refer to Note 9—Capitalization for discussion of the Company’s two classes of common stock.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

			Year Ended December 31,
			2024						2023						2022
OPERATING ACTIVITIES:
Net income			$	393,076					$	178,940					$	53,385
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			87,490						80,418						54,425
Stock-based compensation			494,699						491,621						498,642
Deferred income taxes			(76,903)						(61,597)						(11,507)
Noncash lease expense			57,403						48,955						44,115
Provision for expected credit losses on accounts receivable			853						2,960						3,203
Other			(7,881)						(20,379)						622
Changes in operating assets and liabilities:
Accounts receivable			(474,227)						(554,012)						(291,747)
Prepaid expenses and other current and non-current assets			(38,783)						(26,815)						50,655
Accounts payable			298,919						475,463						187,119
Accrued expenses and other current and non-current liabilities			46,564						35,681						8,168
Operating lease liabilities			(41,754)						(52,913)						(48,346)
Net cash provided by operating activities			739,456						598,322						548,734
INVESTING ACTIVITIES:
Purchases of investments			(679,539)						(608,379)						(553,295)
Sales of investments			—						—						1,977
Maturities of investments			629,088						555,806						338,829
Purchases of property and equipment			(98,238)						(46,790)						(84,160)
Capitalized software development costs			(8,824)						(8,230)						(7,725)
Net cash used in investing activities			(157,513)						(107,593)						(304,374)
FINANCING ACTIVITIES:
Repurchases of Class A common stock			(234,784)						(646,597)						—
Proceeds from exercise of stock options			216,281						60,525						47,525
Proceeds from employee stock purchase plan			49,989						38,482						33,062
Taxes paid related to net settlement of restricted stock awards			(139,095)						(78,516)						(48,595)
Net cash provided by (used in) financing activities			(107,609)						(626,106)						31,992
Increase (decrease) in cash and cash equivalents			474,334						(135,377)						276,352
Cash and cash equivalents—Beginning of year			895,129						1,030,506						754,154
Cash and cash equivalents—End of year			$	1,369,463					$	895,129					$	1,030,506
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes			$	158,579					$	151,899					$	4,211
Cash paid for interest			$	986					$	967					$	995
Cash paid for operating lease liabilities			$	68,378					$	63,256					$	57,862
Operating lease assets obtained in exchange for operating lease liabilities			$	132,050					$	27,237					$	29,881
Capitalized assets financed by accounts payable			$	20,508					$	4,684					$	2,166
Tenant improvements paid by lessor			$	6,869					$	—					$	1,453
Stock-based compensation included in capitalized software development costs			$	5,623					$	5,328					$	4,014

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

THE TRADE DESK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Nature of Operations

The Trade Desk, Inc. (the “Company”) is a global technology company that empowers buyers of advertising. Through the Company’s self-service, cloud-based platform, ad buyers can create, manage and optimize more expressive data-driven digital advertising campaigns across ad formats and channels, including connected television (“CTV”) and other video, display, audio, and native, on a multitude of devices, such as televisions, streaming devices, mobile devices, computers and digital-out-of-home devices. The Company’s platform integrations with major inventory, publisher and data partners provide ad buyers reach and decisioning capabilities, and the Company’s enterprise application programming interfaces (“APIs”) enable its clients to customize and expand platform functionality.

The Company was originally incorporated in November 2009 and is a Nevada corporation. The Company is headquartered in Ventura, California with offices in various cities in North America, Europe, Asia and Australia.

Note 2—Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates.

Management regularly evaluates its estimates, primarily those related to: (1) allowances for credit losses, (2) operating lease assets and liabilities, including the incremental borrowing rate and terms and provisions of each lease (3) the useful lives of property and equipment and capitalized software development costs, (4) income taxes, (5) assumptions used in the option pricing models to determine the fair value of stock-based compensation and (6) the recognition and disclosure of contingent liabilities. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances; the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

As of December 31, 2024, the impacts to the Company’s business due to geopolitical developments and macroeconomic factors, such as changes in interest and foreign currency exchange rates, inflation, supply chain disruptions and economic growth continue to evolve. As a result, many of the Company’s estimates and assumptions, including the allowance for credit losses, consider macroeconomic factors in the market, which require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company’s estimates may change materially in future periods.

Revenue Recognition

The Company generates revenue from clients who enter into agreements with the Company to use its platform to purchase advertising inventory, value-added services and data. The Company charges its clients for total spend on its platform, which includes spend and fees on advertising inventory, value-added services and data to support those purchases, in addition to the platform fee that is generally a percentage of a client’s total spend.

The Company determines revenue recognition through the following steps:

• Identification of a contract with a client;

• Identification of the performance obligations in the contract;

• Determination of the transaction price;

• Allocation of the transaction price to the performance obligations in the contract; and

• Recognition of revenue when or as the performance obligations are satisfied.

The Company maintains agreements with each client and supplier in the form of master service agreements (“MSAs”), which set out the terms of the relationship and access to the Company’s platform. The Company’s performance obligation is to provide the use of its platform to clients to develop ad campaigns and select the advertising inventory, value-added services and data to support those campaigns. The Company recognizes revenue at a point in time when a transaction is completed, which is when a bid is won and the client’s purchase occurs through the platform. The transaction price is determined based on the consideration the Company expects to be entitled in exchange for the completion of the transaction. The associated fees are generally not subject to refund or adjustment after a bid is won. Historically, any refunds and adjustments have not been material.

Generally, the Company reports revenue net of amounts it pays suppliers for the cost of advertising inventory, supplier-provided components of value-added services and data (collectively, “Supplier Components”). Judgment is required to determine whether the Company is the principal and reports revenue on a gross basis for Supplier Components or the agent and reports revenue on a net basis for the fees charged to the client. In making this assessment, the Company considers whether it obtains control of a specified service before it is transferred to the client, including indicators such as the party primarily responsible for fulfillment, inventory risk and discretion in establishing price. Considering these factors, generally, the Company determined that it is an agent because it does not control the Supplier Components as it does not have primary responsibility for fulfillment, inventory risk or pricing latitude.

From time to time, the Company may enter into agreements with data suppliers where the purchased data is used to inform and improve the platform, generally at no additional charge to clients outside of the standard fees. Costs associated with this data (“data-related costs”) are recorded in platform operations expense.

The Company generally bills clients for their spend on advertising inventory they purchase through the platform and platform fees, value-added services and data, net of allowances (“Gross Billings”). When clients have direct payment relationships with advertising inventory suppliers, the Company does not bill these clients for the cost of advertising inventory. The Company invoices its clients monthly for the purchases occurring during the month. Typically, invoice payment terms are between 30 to 90 days. However, certain agency clients have sequential liability terms where payment is not due to the Company until the agency has received payment from its advertiser clients. Accounts receivable is recorded based on Gross Billings, which are the amounts the Company is responsible to collect. Accounts payable is recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.

Refer to Note 12—Segment and Geographic Information for geographic information related to Gross Billings.

Operating Expenses

The Company classifies its operating expenses into the following four categories and allocates overhead such as information technology infrastructure, rent, office support and occupancy charges based on headcount for these categories:

Platform Operations. Platform operations expense consists of expenses related to hosting the Company’s platform, which includes “internet traffic” associated with the viewing of available impressions or queries per second (“QPS”), purchasing data used to inform and improve the platform and providing support to clients. Platform operations expense includes hosting costs, personnel costs, data-related costs and amortization of capitalized software costs for platform development. Personnel costs include salaries, bonuses, stock-based compensation, employee benefit costs and travel for personnel who support the platform and provide clients with platform support. The Company capitalizes certain costs associated with platform development in other assets, non-current on its consolidated balance sheet and amortizes these costs into platform operations expense over their estimated useful lives.

Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, employee benefits costs, commission costs and travel, for the Company’s sales and marketing personnel. Sales and marketing expense also includes costs for market development programs, marketing events, advertising and promotional and other marketing activities. Commissions costs are expensed as incurred.

Technology and Development. Technology and development expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, employee benefits costs and travel, as well as third-party consultant

costs associated with the ongoing development of the Company’s platform and related offerings as well as integrations with advertising inventory and data suppliers. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with software development that qualifies for capitalization, which are then recorded as capitalized software development costs included in other assets, non-current on the Company’s consolidated balance sheet. The Company amortizes capitalized software development costs relating to the Company’s platform to platform operations expense.

General and Administrative. General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, employee benefits costs and travel associated with the Company’s executive, finance, legal, human resources, compliance and other administrative personnel, as well as accounting and legal professional services fees, local business taxes and fees and credit loss expense. Stock-based compensation in general and administrative expenses also includes expense related to the CEO Performance Option, which was granted in 2021.

Stock-Based Compensation

Stock-based compensation expense related to stock options, restricted stock awards and units (collectively, “restricted stock”) and awards granted under the Company’s amended and restated 2024 employee stock purchase plan (“ESPP”) is measured and recognized in the consolidated financial statements based on the fair value of the awards granted.

The fair values of the ESPP and stock option awards are estimated on the grant date using the Black-Scholes option-pricing model, except for the CEO Performance Option, granted in 2021, that was estimated using the Monte Carlo valuation model. The fair value of restricted stock is calculated using the closing market price of the Company’s common stock on the date of grant. Determining the fair value of stock options and ESPP awards requires judgment. The Company’s use of the valuation models requires the input of subjective assumptions. The assumptions used in the Company’s valuation models represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. The Company will continue to use judgment in evaluating the assumptions related to its stock-based compensation.

These assumptions and estimates are as follows:

Risk-Free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities approximating the expected term of the awards.

Expected Term. For stock options granted in 2024, the Company determined its expected term from the Company’s historical option exercise behavior. Prior to 2024, there was insufficient historical data relating to stock option exercises, and the Company applied the simplified approach in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award. The change in the expected term estimate methodology for stock options, upon obtaining sufficient historical exercise data, did not materially impact stock-based compensation expense. For ESPP awards, the expected term is the time period from the grant date to the respective purchase dates included within each offering period.

Volatility. The Company determines its price volatility based on a blend of its historical volatility, based on daily price observations over a period equivalent to the expected term of the award, and implied volatilities from its traded options. Prior to 2020, the Company determined the price volatility based on a blend of the historical volatilities of a publicly traded peer group, implied volatilities and its historical volatility.

Dividend Yield. The dividend yield assumption is based on the Company’s history and current expectations of dividend payouts. The Company has never declared or paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future, so the Company used an expected dividend yield of zero.

Derived Service Period. The stock-compensation expense attribution period for the CEO Performance Option, which was granted in 2021, was developed based on a Monte Carlo simulation of daily stock prices over the performance period.

The ESPP and the CEO Performance Option have a six-month and a one-year holding period with respect to the sale or transfer of purchased or vested common shares, respectively. Due to the holding period, the Company applies a discount to reflect the non-transferability of the shares for the ESPP and the CEO Performance Option.

Stock-based compensation expense related to stock options and restricted stock is recognized on a straight-line basis over the requisite service periods of the awards, which is generally four years. Stock-based compensation for the CEO Performance Option is recognized on a graded-vesting basis over a derived service period of approximately five years but may be accelerated if the vesting criteria are met prior to the estimated performance period. Stock-based compensation expense for ESPP awards is recognized on a graded-vesting attribution basis over the requisite service period of each award. The Company accounts for forfeitures as they occur.

Income Taxes

Deferred income tax assets and liabilities are determined based upon the net tax effects of the differences between the Company’s consolidated financial statements carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed. A valuation allowance is used to reduce some or all of the deferred tax assets if, based upon the weight of available evidence, it is more likely than not that those deferred tax assets will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized. The Company recognizes interest and penalties accrued related to its uncertain tax positions in its income tax provision in the accompanying consolidated statements of operations.

The Company makes assumptions, judgments and estimates to determine the current income tax provision, tax benefits from uncertain tax positions, deferred tax asset and liabilities and valuation allowance recorded against a deferred tax asset.

The assumptions, judgments and estimates relative to the current income tax provision take into account current tax laws, their interpretation and possible results of foreign and domestic tax audits. Changes in tax law, and their interpretation, could significantly impact the income taxes provided in the Company’s consolidated financial statements.

The evaluation of the Company’s uncertain tax positions involves significant judgment in the interpretation and application of GAAP and complex domestic and international tax laws, and matters related to the allocation of international taxation rights between countries. Although management believes the Company’s reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in the Company’s reserves. Reserves are adjusted considering changing facts and circumstances, such as the closing of a tax examination or the refinement of an estimate.

Assumptions, judgments and estimates relative to the amount of deferred income taxes, and any applicable valuation allowances, take into account future taxable income. Any of the assumptions, judgments and estimates mentioned above could cause the actual income tax obligations to differ from estimates.

Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of common stock shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common stock shares outstanding adjusted for the potentially dilutive impact of stock options, restricted stock and ESPP using the two-class method required for participating securities. Restricted stock awards are considered to be participating securities due to their non-forfeitable dividend rights.

Cash, Cash Equivalents and Marketable Securities

The Company classifies all investments that are readily convertible to known amounts of cash and have maturities of three months or less from the date of purchase as cash equivalents, which consist primarily of money market funds and commercial paper, and those with stated maturities of greater than three months as marketable securities, which primarily consist of corporate debt securities, commercial paper and U.S. government and agency securities. Investments in marketable securities with maturities beyond one year are also classified as short-term available-for-sale securities based on their highly liquid nature and because they are available for current operations.

Cash equivalents and marketable securities are carried at fair value. Realized gains and losses are recognized in other expense (income) on the consolidated statement of operations. Unrealized gains and losses, net of taxes, are included in stockholders' equity. The Company uses Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Accounting Standards Codification (“ASC”) 326 or “CECL”), to assess the investment portfolio for impairment at the individual security level and evaluates all securities in an unrealized loss position to determine if the impairment is credit related (resulting in realized credit loss, recorded in earnings) or non-credit related (resulting in an unrealized loss, recorded in stockholders' equity). The Company has not recorded any impairment charges for unrealized losses in the periods presented. Credit losses recorded in the statements of operations for the years ended 2024, 2023 and 2022 were not material.

Refer to Note 6—Cash, Cash Equivalents and Short-Term Investments, Net for additional information regarding the fair value of cash equivalents and marketable securities.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the invoiced amount, are unsecured and do not bear interest. The Company performs ongoing credit evaluations of its clients and certain advertisers when the Company’s agreements with its clients contain sequential liability terms such that client payments are not due to the Company until the client has received payment from its clients who are advertisers. The Company maintains an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense on the consolidated statements of operations.

The Company applies ASC 326 to assess the allowance for credit losses. ASC 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Industry-specific default rates are applied to receivables subject to sequential liability or receivables for which the Company is engaged with the advertiser directly.

For the years ended December 31, 2024 and 2023, the Company’s assessment considered business and market disruptions caused by macroeconomic factors, such as changes in interest and foreign currency exchange rates, inflation, economic growth, supply chain disruptions, and estimates of credit defaults by industry. The Company continues to monitor the financial implications of these macroeconomic factors on expected credit losses by reviewing the allowance for credit losses on a quarterly basis. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered.

The following table presents changes in the accounts receivable allowance for credit losses (in thousands):

			Year Ended December 31,
			2024						2023						2022
Beginning balance			$	12,826					$	10,477					$	7,374
Add: provision for expected credit losses			853						2,960						3,203
Less: write-offs, net of recoveries			(2,435)						(611)						(100)
Ending balance			$	11,244					$	12,826					$	10,477

Property and Equipment, Net

Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method based upon the following estimated useful lives:

			Years
Computer and networking equipment			2 – 3
Purchased software			3 – 5
Furniture, fixtures and office equipment			5
Leasehold improvements			*

____________

*Leasehold improvements are depreciated on a straight-line basis over the term of the lease, or the useful life of the assets, whichever is shorter.

Repair and maintenance costs are charged to expense as incurred, while improvements are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the Company’s operating results.

Capitalized Software Development Costs

The Company capitalizes certain costs associated with creating and enhancing internally developed software related to the Company’s technology infrastructure (“capitalized software development costs”), which are included in other assets, non-current. These costs include personnel and benefit-related expenses for employees who are directly associated with and devote time to software development projects, and external direct costs of materials and services consumed in developing or obtaining the software. Software development costs that do not qualify for capitalization, as further discussed below, are expensed as incurred and recorded in technology and development expense in the consolidated statements of operations.

Software development activities typically consist of three stages: (1) the planning phase; (2) the application and infrastructure development stage; and (3) the post-implementation stage. Costs incurred in the planning and post implementation phases, including costs associated with the post-configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. The Company capitalizes costs associated with software developed when the preliminary project stage is completed, management implicitly or explicitly authorizes and commits to funding the project and it is probable that the project will be completed and perform as intended. Costs incurred in the application and infrastructure development phases, including significant enhancements and upgrades, are capitalized. Capitalization ends once a project is substantially complete and the software is ready for its intended purpose. Software development costs are amortized to platform operations expense using a straight-line method over the estimated useful life of two years, commencing when the software is ready for its intended use. The straight-line recognition method approximates the manner in which the expected benefit will be derived.

The Company does not transfer ownership of its internally developed software, or lease its software, to third parties.

Cloud Computing Arrangements

Cloud computing arrangements (“CCAs”), such as software as a service and other hosting arrangements, are evaluated for capitalized implementation costs in a similar manner as capitalized software development costs. If a CCA includes a software license, the software license element of the arrangement is accounted for in a manner consistent with the acquisition of other software licenses. If a CCA does not include a software license, the service element of the arrangement is accounted for as a service contract. The Company capitalized certain implementation costs for its CCAs that are service contracts, which are included in other assets, non-current. The Company amortizes capitalized implementation costs in a CCA using a straight-line method over the life of the service contract. The Company capitalized $2 million of CCA implementation costs in 2024 and $4 million of CCA implementation costs in 2023. CCA implementation costs had a gross capitalized value of $14 million and $12 million as of December 31, 2024 and 2023, respectively, and accumulated amortization of $9 million and $6 million as of December 31, 2024 and 2023, respectively. Amortization expense was $3 million, $2 million and $2 million for 2024, 2023 and 2022, respectively. For the years ended December 31, 2024, 2023 and 2022 there were no material impairment charges to CCA implementation costs.

Operating Leases

The Company enters into operating leases for its offices, which have lease terms generally up to 10 years, some of which include options to extend the leases or to terminate the leases with proper notification. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company does not have finance leases.

The Company determines if an arrangement is, or contains, a lease at inception. Operating lease assets represent the Company’s right to control the use of an identified asset for a period of time, or term, in exchange for consideration, and operating lease liabilities represent its obligation to make lease payments arising from the aforementioned right.

Operating lease assets and liabilities are initially recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease, and may include options to extend or terminate the lease when it is reasonably certain at the commencement date that such options will be exercised. As the rate implicit for each of the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate, based on

the information available at the lease commencement date in determining the present value of its expected lease payments. Operating lease assets also include any initial direct costs and any lease payments made prior to the lease commencement date and are reduced by any lease incentives received. The Company has elected to not separate lease and non-lease components.

Operating lease assets are amortized on a straight-line basis in operating lease expense over the lease term on the consolidated statements of operations. The related amortization, referred to as noncash lease expense, along with the change in the operating lease liabilities are separately presented within the cash flows from operating activities on the consolidated statements of cash flows. The Company records lease expense for operating leases, some of which have escalating rent payments, on a straight-line basis over the lease term.

Certain leases contain provisions for property-related costs that are variable in nature for which the Company is responsible, including common area maintenance and other property operating services. These costs are calculated based on a variety of factors including property values, tax and utility rates, property services fees and other factors.

Refer to Note 8—Leases for additional information.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following:

Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3—Unobservable inputs.

Observable inputs are based on market data obtained from independent sources.

Our cash equivalents and short-term investments in marketable securities are classified within Level 1 or Level 2 of the fair value hierarchy because their fair value is derived from quoted market prices or alternative pricing sources and models utilizing observable market data. The carrying amounts of accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of the line of credit approximates fair value based on borrowing rates currently available to the Company for financing with similar terms and were determined to be Level 2.

Certain long-lived assets including capitalized software development costs are also subject to measurement at fair value on a non-recurring basis if they are deemed to be impaired as a result of an impairment review. To date, no material impairments have been recorded on those assets.

Concentration of Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, short-term investments and accounts receivable. The Company maintains its cash and cash equivalents with financial institutions, and its cash levels exceed the Federal Deposit Insurance Corporation federally insured limits. Short-term investments consist of investments in high-credit quality corporate debt securities, commercial paper, U.S. government securities and U.S. government agency securities.

If all of the Company’s individual client contractual relationships were aggregated at the holding company level, one holding company would represent more than 10% of Gross Billings in 2024, 2023 and 2022. In 2024, one holding company accounted for 14% of Gross Billings. In 2023, one holding company accounted for 12% of Gross Billings. In

2022, one holding company accounted for 11% of Gross Billings. The Company generally does not have contractual relationships with holding companies. Rather, in most cases, the Company enters into separate contracts and billing relationships with various of their individual agencies and account for those agencies as separate clients.

As of December 31, 2024, three clients each accounted for at least 10%, and collectively accounted for 42%, of consolidated accounts receivable. As of December 31, 2023, two clients each accounted for at least 10%, and collectively accounted for 31%, of consolidated accounts receivable.

As of December 31, 2024, two suppliers each accounted for at least 10%, and collectively accounted for 36%, of consolidated accounts payable. As of December 31, 2023, two suppliers each accounted for at least 10% and collectively accounted for 31% of consolidated accounts payable.

Foreign Currency Transactions

The Company’s reporting currency is the U.S. Dollar, and the functional currency of each of the Company’s subsidiaries is the U.S. Dollar. Transactions in foreign currencies are translated into U.S. Dollars at the rates of exchange in effect at the date of the transaction. Net transaction gains or losses are included in foreign currency exchange loss (gain), net in the accompanying consolidated statements of operations.

The Company enters into forward contracts to hedge foreign currency exposures related primarily to the Company’s foreign currency denominated accounts receivable. The Company does not designate the foreign exchange forward contracts as hedges for accounting purposes and changes in the fair value of the foreign exchange forward contracts are recorded in foreign currency exchange loss (gain), net in the accompanying consolidated statements of operations. Cash flows at settlement of such foreign exchange forward contracts are classified as operating activities in the consolidated statements of cash flows. The Company’s forward contracts generally have terms of 30-60 days. As of December 31, 2024, and 2023, the Company had open forward contracts with aggregate notional amounts of $272 million and $263 million, respectively. The fair value of the open forward contracts was not material.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which includes requirements to report significant segment expenses, requirements for entities with a single reportable segment to provide all disclosures otherwise required under Topic 280 and requirements to report segment information on an interim basis, among other clarifications and requirements. The Company adopted this guidance in this Annual Report on Form 10-K in its Notes to Consolidated Financial Statements. The disclosures are included in Note 12—Segment and Geographic Information. There was no impact to the Company’s consolidated balance sheets, statements of operations, statements of stockholders’ equity or statements of cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of information and consistent categories in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective on a prospective basis, with an option to apply it retrospectively, for annual periods beginning with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure of specific expense categories included in the expense captions presented on the statements of operations. The new guidance does not change the expense captions on the statements of operations. In January 2025, the FASB issued ASU No. 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) which clarified the effective date of ASU No. 2024-03. The guidance will be effective on a prospective basis, with an option to apply it retrospectively, for annual periods beginning with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2027, and for interim periods beginning with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2028. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its disclosures.

Note 3—Earnings Per Share

The Company has two classes of common stock, Class A and Class B. Basic and diluted earnings per share (“EPS”) attributable to common stockholders for Class A and Class B common stock were the same because they were entitled to the same liquidation and dividend rights.

The computation of basic and diluted EPS is as follows (in thousands, except per share amounts):

			Year Ended December 31,
			2024						2023						2022
Numerator:
Net income			$	393,076					$	178,940					$	53,385
Denominator:
Weighted-average shares outstanding—basic			490,879						489,261						486,937
Effect of dilutive securities			11,045						10,921						12,988
Weighted-average shares outstanding—diluted			501,924						500,182						499,925
Basic earnings per share			$	0.80					$	0.37					$	0.11
Diluted earnings per share			$	0.78					$	0.36					$	0.11
Anti-dilutive equity awards under stock-based award plans excluded from the determination of diluted earnings per share			284						5,580						10,707

Note 4—Property and Equipment, Net

Major classes of property and equipment were as follows (in thousands):

			As of December 31,
			2024						2023
Computer and networking equipment			$	189,821					$	145,424
Purchased software			14,016						10,424
Furniture and fixtures			29,551						25,632
Construction in progress (1)			34,537						8,487
Leasehold improvements			156,423						129,992
			424,348						319,959
Less: Accumulated depreciation			(215,016)						(158,537)
			$	209,332					$	161,422

____________

(1)			Includes leasehold improvement projects that are not yet ready for intended use.

Depreciation expense for years ended December 31, 2024, 2023 and 2022 was $67 million, $62 million and $42 million, respectively. For the years ended December 31, 2024, 2023 and 2022 there were no material impairment charges to property and equipment.

Note 5—Capitalized Software Development Costs

Capitalized software development costs, included in other assets, non-current, were as follows (in thousands):

			As of December 31,
			2024						2023
Capitalized software development costs, gross			$	26,834					$	32,333
Less: Accumulated amortization			(12,213)						(15,432)
Capitalized software development costs, net			$	14,621					$	16,901

Amortization expense was $16 million, $14 million and $7 million for the years ended December 31, 2024, 2023 and 2022, respectively. For the years ended December 31, 2024, 2023 and 2022 there were no material impairment charges to capitalized software development costs.

Note 6—Cash, Cash Equivalents and Short-Term Investments, Net

Cash, cash equivalents and short-term investments in marketable securities were as follows (in thousands):

			As of December 31, 2024
			Cash and Cash Equivalents						Short-Term Investments, Net						Total
Cash			$	218,448					$	—					$	218,448
Level 1:
Money market funds			1,031,413						—						1,031,413
Level 2:
Commercial paper			101,163						129,879						231,042
Corporate debt securities			3,498						281,775						285,273
U.S. government and agency securities			14,941						140,372						155,313
Total			$	1,369,463					$	552,026					$	1,921,489

			As of December 31, 2023
			Cash and Cash Equivalents						Short-Term Investments, Net						Total
Cash			$	289,512					$	—					$	289,512
Level 1:
Money market funds			560,673						—						560,673
Level 2:
Commercial paper			36,013						168,224						204,237
Corporate debt securities			—						185,465						185,465
U.S. government and agency securities			8,931						131,470						140,401
Total			$	895,129					$	485,159					$	1,380,288

The Company’s gross unrealized gains and losses from its short-term investments, recorded at fair value, for the years ended December 31, 2024, 2023 and 2022 were immaterial.

The contractual maturities of the Company’s short-term investments are as follows (in thousands):

			December 31, 2024
Due in one year			$	474,180
Due in one to two years			77,846
Total			$	552,026

Note 7—Debt

Credit Facility

On 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 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, 2024, the Company did not have an outstanding debt balance under the Amended Credit Facility. Availability under the Amended Credit Facility was $442 million as of December 31, 2024, which is net of outstanding letters of credit of $8 million. The Amended Credit Facility matures, and all outstanding amounts become due and payable, on June 15, 2026.

The Amended Credit Facility contains customary conditions to borrowings, events of default and covenants, including covenants that restrict the Company’s ability to sell assets, make changes to the nature of the Company’s business, engage in mergers or acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay dividends, issue equity instruments, make distributions or redeem or repurchase capital stock or make other investments, engage in transactions with affiliates and make payments in respect of subordinated debt. The Amended Credit Facility also requires the Company to maintain compliance with a maximum ratio of consolidated funded debt to consolidated EBITDA of 3.50 to 1.00. As of December 31, 2024, the Company was in compliance with all covenants.

Note 8—Leases

The components of lease expense were as follows (in thousands):

			Year Ended December 31,
			2024						2023						2022
Operating lease cost			$	56,787					$	48,866					$	51,918
Short-term lease cost			2,231						1,898						1,668
Variable lease cost			16,414						12,901						9,140
Sublease income			(42)						(2,208)						(2,490)
Total lease cost			$	75,390					$	61,457					$	60,236

Supplemental information related to leases were as follows:

			Year Ended December 31,
			2024						2023
Weighted-average remaining lease term			4.9 years						5.2 years
Weighted-average discount rate			4.3		%				3.6		%

Maturities of lease commitments as of December 31, 2024 were as follows (in thousands):

Year						Amount
2025						$	46,378
2026						88,351
2027						70,560
2028						103,919
2029						94,818
Thereafter						258,258
Total undiscounted lease commitments						662,284
Less: commitments for leases not yet commenced						(307,252)
Less: interest						(42,817)
Present value of lease liabilities						312,215
Less: operating lease liabilities, current						(64,492)
Operating lease liabilities, non-current						$	247,723

Note 9—Capitalization

The Class A and Class B common stock have the same rights and preferences including rights to dividends, except the Class B is entitled to ten votes per share and the Class A is entitled to one vote per share. Each share of Class B common stock is convertible into one share of Class A common stock at any time at the option of the holder. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, except for certain transfers described in the Company’s articles of incorporation, including, without limitation, certain transfers for tax and estate planning purposes. The Company’s articles of incorporation provides that all Class B common stock will convert automatically into Class A common stock on December 22, 2025 unless converted prior to such date.

The Company’s board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock.

In February 2023, the Company’s board of directors approved a share repurchase program to repurchase its 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 to be determined at the Company’s 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. This program does not obligate the Company to acquire any particular amount of Class A common stock, and may be modified, suspended or terminated at any time at the discretion of the Company’s board of directors.

As of December 31, 2023, $53 million remained available and authorized for repurchases. In February 2024, an additional $647 million was authorized under this program, bringing the total amount available for future repurchases back to $700 million. During the year ended December 31, 2024, the Company repurchased and subsequently retired 2.5 million shares of its Class A common stock for an aggregate repurchase amount of $236 million. The repurchase amounts included in the consolidated statements of stockholders’ equity included immaterial amounts related to the 1% excise tax on share repurchases, net of share issuances, as a result of the Inflation Reduction Act of 2022 (“IRA”). As of December 31, 2024, $464 million remained available and authorized for repurchases. In January 2025, the Company repurchased $28 million of its Class A common stock and an additional $564 million was authorized under this program, bringing the total amount for future repurchases to $1 billion. Activity under the share repurchase program was recognized in the consolidated financial statements on a trade-date basis.

Note 10—Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation expense recorded in the consolidated statements of operations was as follows (in thousands):

			Year Ended December 31,
			2024						2023						2022
Platform operations			$	29,310					$	21,048					$	18,285
Sales and marketing			99,135						75,924						64,442
Technology and development			138,393						120,823						94,822
General and administrative			227,861						273,826						321,093
Total			$	494,699					$	491,621					$	498,642

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, 2024, 2023 and 2022, 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 $73 million, $53 million and $48 million, respectively. For the years ended December 31, 2024, 2023 and 2022, the tax benefit realized related to restricted stock vested and stock options exercised during the period was $129 million, $91 million and $72 million, respectively.

Stock-Based Award Plans

The 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 2016 Incentive Award Plan. As of December 31, 2024, 94.9 million shares remained available for grant under the Company’s 2016 Incentive Award Plan. The number of shares authorized for grant is subject to increase each year on January 1, equal to the lesser of (a) 4% of the common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the board of directors. On January 1, 2025, the number of shares authorized for grant under the Company’s 2016 Incentive Award Plan was increased by 19.8 million shares in accordance with plan provisions.

Stock Options, Excluding the CEO Performance Option

Stock options granted under the Company’s stock incentive plans generally vest over four years, subject to the holder’s continued service through the vesting date and expire no later than 10 years from the date of grant.

The following summarizes stock option activity:

			Shares Under Options (in thousands)						Weighted- Average Exercise Price						Weighted- Average Contractual Life (years)						Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2023			12,258						$	31.05
Granted			2,451						82.63
Exercised			(4,353)						27.98
Expired/Forfeited			(543)						67.00
Outstanding as of December 31, 2024			9,813						$	43.31					6.0						$	728,343
Exercisable as of December 31, 2024			6,299						$	26.33					4.5						$	574,475

The fair value of options on the date of grant was estimated based on the Black-Scholes option pricing model. The weighted-average assumptions used to value options granted to employees for the periods presented were as follows:

			Year Ended December 31,
			2024						2023						2022
Expected term (years)			4.0						6.0						6.0
Expected volatility			58.5		%				64.4		%				66.5		%
Risk-free interest rate			4.70		%				3.71		%				2.91		%
Estimated dividend yield			—		%				—		%				—		%

The weighted-average grant date fair value per share of stock options granted for the years ended December 31, 2024, 2023 and 2022 and were $40.82, $38.69 and $37.65, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 were $333 million, $276 million and $232 million, respectively.

Stock-based compensation expense related to stock options was $62 million, $58 million and $49 million for the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, the Company had unrecognized stock-based compensation relating to stock options of approximately $138 million, which is expected to be recognized over a weighted-average period of 2.7 years.

CEO Performance Option

In October 2021, the Company granted a market-based performance award to the Company’s Chief Executive Officer (the “CEO Performance Option”) under the Company’s 2016 Incentive Award Plan. If specified target goals for the per share price of the Company’s Class A common stock (ranging from $90.00 to $340.00 per share) and certain other vesting conditions are satisfied, including the CEO’s continued service, the CEO may purchase up to a target amount of 16 million shares of Class A common stock, subject to adjustment as discussed in the following sentence, to be earned in eight equal tranches over a maximum term of 10 years. These target shares are subject to decrease or increase by up to 20% for each tranche based on the relative total shareholder return (“TSR”) of the Company’s Class A common stock as compared to the TSR of the Nasdaq-100 Index at each vesting tranche, for a maximum of 19.2 million shares. The CEO Performance Option has an exercise price of $68.29 per share and a grant-date fair value of approximately $819 million, which is expected to be expensed on a graded-vesting basis over a derived service period of approximately five years but may be accelerated if the vesting criteria are met prior to the estimated performance period.

The grant-date fair value was estimated based on a Monte Carlo valuation model using the following assumptions:

Expected volatility			63.4		%
Risk-free interest rate			1.55		%
Estimated dividend yield			—		%

The CEO Performance Option has a one-year holding period with respect to the sale or transfer of vested shares, with the exception that shares may be transferred during the holding period to cover withholding tax obligations in connection with such exercise and transfers to the CEO’s immediate family for estate planning purposes or in connection with charitable or philanthropic activities. Due to the holding period, the Company applied a discount to reflect the non-transferability of the shares.

The following summarizes CEO Performance Option activity:

			Shares Under Options (in thousands)						Weighted- Average Exercise Price						Weighted- Average Contractual Life (years)						Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2023			19,200						$	68.29
Granted			—						—
Exercised			(1,415)						68.29
Expired/Forfeited			—						—
Outstanding as of December 31, 2024			17,785						$	68.29					6.8						$	875,741
Exercisable as of December 31, 2024			3,385						$	68.29					6.8						$	166,685

The total intrinsic value of options exercised under the CEO Performance Option during the year ended December 31, 2024, was $71 million. There were no options exercised under the CEO Performance Option during the years ended December 31, 2023 and 2022. On November 8, 2024, the second tranche of the CEO Performance Option vested upon certification by the Company’s board of directors, resulting in 2.4 million of additional exercisable options. The vesting of the second tranche did not result in any acceleration of stock-based compensation expense as the tranche’s expense had been fully recognized. Stock-based compensation expense of $128 million, $198 million and $262 million for the CEO Performance Option was recorded as a component of general and administrative expense during the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, the Company had unrecognized stock-based compensation relating to the CEO Performance Option of $73 million that is expected to be recognized over a weighted-average period of 0.9 years, assuming no acceleration of vesting.

Restricted Stock

Restricted stock awards generally vest over four years, subject to the holder’s continued service through the vesting date. The following summarizes restricted stock activity:

			Shares (in thousands)						Weighted- Average Grant Date Fair Value Per Share
Unvested as of December 31, 2023			10,546						$	62.22
Granted			4,966						87.23
Vested			(4,266)						62.89
Forfeited			(1,049)						67.05
Unvested as of December 31, 2024			10,197						$	73.62

Stock-based compensation expense related to restricted stock was $270 million, $212 million and $137 million for the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, the Company had unrecognized stock-based compensation relating to restricted stock of approximately $693 million, which is expected to be recognized over a weighted-average period of 2.6 years.

Employee Stock Purchase Plan

In September 2016, the Company established an employee stock purchase plan with 8.0 million shares of Class A common stock available for issuance (the “2016 ESPP”). On May 28 2024, the Company’s ESPP was approved. As of December 31, 2024, 17.6 million shares remained available for grant under the ESPP. The number of shares authorized for grant is subject to increase each year on January 1, equal to the lesser of (a) 8.0 million shares, (b) 1% of the Class A common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year, and (c) such smaller number of shares as determined by the Company’s board of directors. This annual increase in shares authorized for grant under the ESPP will end on and include January 1, 2026. On January 1, 2025, the number of shares available for issuance under the Company’s ESPP increased by 4.5 million shares in accordance with plan provisions.

The ESPP provides for offering periods generally up to two years, with purchases occurring and new offering periods commencing generally every six months. ESPP purchases generally occur on May 15th and November 15th each year. Under the ESPP, offering periods that commenced prior to May 28, 2024, continue unchanged. Starting with the offering period that commenced in November 2024, new offering periods generally begin on May 15th and November 15th each year. Prior to May 28, 2024, offerings generally commenced on May 16th and November 16th each year. The ESPP will continue without an expiration date until terminated by the plan administrator. None of the amendments to the ESPP materially impacted the consolidated financial statements.

Under the ESPP, all eligible employees are permitted to contribute up to 100% of their compensation, generally through payroll deductions, to purchase shares of Class A common stock, subject to applicable ESPP and statutory limits. At each purchase date, employees are able to purchase shares at 85% of the lower of (1) the closing market price per share of Class A common stock on the employee’s enrollment into the applicable offering period and (2) the closing market price per share of Class A common stock on the purchase date. The ESPP has an automatic reset feature, whereby the offering period resets if the fair value of the Company’s common stock on a purchase date is less than that on the original offering date.

The fair value of ESPP shares was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:

			Year Ended December 31,
			2024						2023						2022
Expected term (years)			0.6						0.9						1.0
Expected volatility			44.0		%				60.3		%				74.1		%
Risk-free interest rate			4.66		%				4.95		%				2.53		%
Estimated dividend yield			—		%				—		%				—		%

The ESPP has a six-month holding period with respect to the sale or transfer of common stock purchased. Due to the holding period, the Company applies a discount to reflect the non-transferability of the shares. Stock-based compensation expense related to the ESPP was $35 million, $24 million and $50 million for the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, the Company had unrecognized stock-based compensation relating to ESPP awards of approximately $28 million, which is expected to be recognized over a weighted-average period of 0.5 years.

Note 11—Income Taxes

The following are the domestic and foreign components of the Company’s income before income taxes (in thousands):

			Year Ended December 31,
			2024						2023						2022
Domestic			$	579,338					$	328,853					$	169,891
Foreign			(72,036)						(60,858)						(42,521)
Income before income taxes			$	507,302					$	267,995					$	127,370

The following are the components of the provision for income taxes (in thousands):

			Year Ended December 31,
			2024						2023						2022
Current:
Federal			$	147,802					$	120,049					$	61,904
State and local			33,019						24,827						34,797
Foreign			8,770						5,000						3,068
Total current provision			189,591						149,876						99,769
Deferred:
Federal			(57,454)						(51,822)						(2,380)
State and local			(14,853)						(7,842)						(23,465)
Foreign			(3,058)						(1,157)						61
Total deferred provision			(75,365)						(60,821)						(25,784)
Total provision for income taxes			$	114,226					$	89,055					$	73,985

A reconciliation of the statutory tax rate to the effective tax rate for the periods presented is as follows:

			Year Ended December 31,
			2024						2023						2022
U.S. federal statutory income tax rate			21.0		%				21.0		%				21.0		%
State and local income taxes, net of federal benefit			2.8						5.0						7.0
Foreign income at other than U.S. rates (1)			4.1						6.2						9.5
Stock-based compensation			(0.9)						8.3						31.0
Meals and entertainment			0.6						1.0						0.4
Nondeductible compensation			0.4						0.3						1.6
Research and development credit			(5.8)						(8.7)						(11.8)
Other permanent items			0.3						0.1						(0.6)
Effective income tax rate			22.5		%				33.2		%				58.1		%

____________

(1)			For the years ended December 31, 2024, 2023, and 2022, includes the impact of the valuation allowance associated with the United Kingdom (“U.K.”). For additional information, see discussion below.

Set forth below are the tax effects of temporary differences that give rise to a significant portion of the deferred tax assets and deferred tax liabilities (in thousands):

			As of December 31,
			2024						2023
Reserves and allowances			$	5,931					$	8,401
Accrued expenses			13,761						12,217
Net operating losses			292,022						231,597
Research and development tax credit			22,948						18,220
Stock-based compensation			23,431						25,727
Prepaid expenses			(1,167)						(944)
Property and equipment			(27,171)						(27,952)
Intangibles (1)			161,060						180,573
Capitalized software development costs			181,862						112,736
Operating lease assets			(57,846)						(39,826)
Operating lease liabilities			69,493						48,153
Other			4,495						1,776
Valuation allowance			(458,605)						(415,829)
Total deferred tax assets, net			$	230,214					$	154,849

____________

(1)			As of December 31, 2024 and 2023, includes intangibles associated with international restructuring, net of amortization, offset by a reserve for uncertain tax position. See discussion below.

Realization of the Company’s deferred tax assets is dependent primarily on the generation of future taxable income. As of each reporting date, the Company’s management considers historical, as well as future, projected taxable income along with other objectively verifiable evidence, both positive and negative. Objectively verifiable evidence includes the realization of tax attributes, assessment of tax credits and utilization of net operating loss carryforwards during the year. During 2024, management recorded an additional $43 million to maintain a full valuation allowance against its U.K. net deferred tax assets, based on the history of cumulative losses and the conclusion that future taxable income may not be available for the utilization of the deferred tax assets for U.K. income tax purposes. The Company expects to maintain this valuation allowance for the near term, until it becomes more likely than not that the benefit of these U.K. deferred tax assets will be realized by way of expected future taxable income. To the extent sufficient positive evidence becomes available, the Company may release all or a portion of its valuation allowance in one or more future periods. A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and may result in a material income tax benefit for the period in which such release is recorded.

As of December 31, 2024, the Company had state and foreign net operating loss carryforwards of approximately $9 million and $1,263 million, respectively. The state and foreign net operating loss carryforwards are subject to limitations under applicable state and foreign tax law. State net operating loss carryforwards have varied expiration years beginning in 2036. Foreign net operating losses carry forward indefinitely.

As of December 31, 2024, the Company had state and foreign research and development tax credits of approximately $35 million and $4 million, respectively, which can be carried forward as prescribed under applicable state and foreign tax law. State and foreign research and development tax credits carry forward indefinitely.

As of December 31, 2024, unremitted earnings of the subsidiaries outside of the United States were approximately $11 million, on which no deferred tax liability has been recorded. The Company’s intention is to indefinitely reinvest these earnings outside the United States. Upon distribution of those earnings in the form of a dividend or otherwise, the Company would be subject to both state income taxes and withholding taxes payable to various foreign countries. The amounts of such tax liabilities that might be payable upon repatriation of foreign earnings are not material.

As of December 31, 2024, the Company had gross unrecognized tax benefits of approximately $107 million, $73 million of which is a reduction to deferred tax assets and the remaining $34 million which would affect the Company’s effective tax rate if recognized. As of December 31, 2023, the Company had gross unrecognized tax benefits of

approximately $98 million, $71 million of which is a reduction to deferred tax assets and the remaining $27 million which would affect the Company’s effective tax rate if recognized.

The following table presents changes in gross unrecognized tax benefits (in thousands):

			Year Ended December 31,
			2024						2023						2022 (1)
Beginning balance			$	97,703					$	90,932					$	86,331
Increases related to prior year tax positions			881						229						—
Decreases related to prior year tax positions			—						—						(84)
Increases related to current year tax positions			8,405						6,601						4,685
Settlements			—						(59)						—
Expiration of statute of limitations			—						—						—
Ending balance			$	106,989					$	97,703					$	90,932

____________

(1)Includes the impact of a statutory rate change in the U.K.

Interest and penalties related to the Company’s unrecognized tax benefits accrued as of December 31, 2024 were not material.

The Company files U.S. federal, state and foreign tax returns. The Company is currently under examination by the Internal Revenue Service for the years ended December 31, 2015, 2016, 2017, 2018, 2019 and 2020. The Company is also currently under examination by various state jurisdictions. The Company does not expect to materially reduce its unrecognized tax benefits during the next twelve months.

The Company remains subject to examination for its federal and state tax returns for the periods 2015 through 2023, and 2019 through 2023, respectively. The majority of the Company’s foreign subsidiaries remain subject to examination by local taxing authorities for 2018 and subsequent years.

In 2021, the Organization for Economic Cooperation and Development (“OECD”) announced an Inclusive Framework on Base Erosion and Profit Shifting, including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15%. Many non-U.S. tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules in 2024 (including the European Union Member States) with the adoption of additional components in later years or announced their plans to enact legislation in future years. This legislation did not impact the Company’s provision for income taxes or effective tax rate in 2024. The Company does not currently expect that the legislation will have a material impact on its provision for income taxes or effective tax rate during the near term. The Company continues to monitor for evolving tax legislation in the individual jurisdictions in which it operates and for changes to its operations that could be impacted by legislation. The final outcome may be materially different from the Company’s expectations.

Note 12—Segment and Geographic Information

The 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. The following includes interest expense and interest income (in thousands):

			Year Ended December 31,
			2024						2023						2022
Interest expense			$	1,514					$	1,656					$	4,014
Interest income			(80,356)						(70,164)						(16,769)
Interest income, net			$	(78,842)					$	(68,508)					$	(12,755)

Gross Billings, based on the address of the clients or client affiliates, net of allowances, were as follows (in thousands):

			Year Ended December 31,
			2024						2023						2022
United States			$	10,244,266					$	8,216,446					$	6,696,743
International			1,508,501						1,214,207						937,824
Total			$	11,752,767					$	9,430,653					$	7,634,567

Generally, the Company bills clients based on Gross Billings and reports revenue net of amounts it pays suppliers for the cost of Supplier Components. The Company’s accounts receivable are recorded at the amount of Gross Billings for the amounts it is responsible to collect, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.

Property and equipment, net and operating lease assets presented by principal geographic area, were as follows (in thousands):

			As of December 31,
			2024						2023
United States			$	366,188					$	278,998
International			106,905						80,156
Total			$	473,093					$	359,154

Note 13—Commitments and Contingencies

As of December 31, 2024, 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, 2024, the Company had non-cancelable commitments primarily to its hosting services, hardware providers and providers of software as a service. As of December 31, 2024, these purchase obligations were as follows (in thousands):

Year						Amount
2025						$	165,268
2026						127,426
2027						20,376
2028						—
2029						—
						$	313,070

Guarantees, Indemnification and Other

In 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 balance sheet, statement of operations or statement of cash flows. Accordingly, no material amounts have been recorded as of December 31, 2024 and 2023.

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.

Litigation

From 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. Although the outcome of the various legal proceedings, litigation and claims cannot be predicted with certainty, management does not believe that any of these proceedings or other claims will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

On May 27, 2022, a stockholder filed a derivative lawsuit captioned Huizenga v. Green, No. 2022-0461, asserting claims on behalf of the Company against certain members of the Company’s board of directors in the Court of Chancery of the State of Delaware. On June 27, 2022, a second derivative lawsuit captioned Pfeiffer v. Green, No. 2022-0560, was filed in the Court of Chancery of the State of Delaware alleging substantially similar claims. Those lawsuits were consolidated on August 18, 2022, and a lead plaintiff was appointed on October 7, 2022. The two complaints alleged generally that the defendants breached their fiduciary duties to the Company and its stockholders in connection with the negotiation and approval of the CEO Performance Option. The plaintiffs sought a court order rescinding the CEO Performance Option and monetary damages. On November 10, 2022, the plaintiffs filed a consolidated complaint, and on January 12, 2023, the defendants moved to dismiss the consolidated complaint. On February 14, 2025, the court granted the motions to dismiss under Court of Chancery Rule 23.1 in their entirety and with prejudice, finding that the plaintiffs did not allege facts sufficient to infer that at least half of the Company’s board of directors received a material benefit from the CEO Performance Option, lacked independence from Mr. Green, or faced a “substantial likelihood of liability” from having approved the CEO Performance Option. The order is subject to appeal.

On October 4, 2024, a stockholder filed a class action complaint in the Court of Chancery in the State of Delaware alleging claims for breach of contract against the Company and breach of fiduciary duties against the Company’s directors, in connection with the Company’s reincorporation from Delaware to Nevada. Gunderson v. The Trade Desk, Inc., No. 2024-1029 (Del. Ch.). On October 24, 2024, the plaintiff filed an amended complaint. The complaint sought, among other

things, an order declaring that the Company’s conversion required approval by a supermajority of the Company’s stockholders and an order enjoining the November 14, 2024 stockholder vote on the conversion. On October 28, 2024, the parties completed expedited briefing on cross motions for partial summary judgment regarding the causes of action asserted in the original complaint, and the court heard oral argument on the motions on October 30, 2024. On November 6, 2024, the court granted the defendants’ summary judgment motion and denied the plaintiff’s cross-motion, finding that the conversion did not require supermajority approval of the Company’s stockholders, and that the defendants did not breach their fiduciary duties by disclosing that the conversion required a vote of a simple majority of the Company’s stockholders. The plaintiff chose not to appeal. The case is now proceeding as to the plaintiff’s remaining claims that the Company’s directors breached their fiduciary duties because the reincorporation to Nevada was substantively and procedurally unfair, and that the transaction is not subject to the business judgment rule because it was not subject to approval by a special committee of the board or by a majority of the disinterested stockholders. The defendants have moved to dismiss, but no briefing schedule has been set.

On November 15, 2024, a different stockholder filed a complaint in the Court of Chancery of the State of Delaware requesting production of the Company’s corporate books and records related to the Nevada conversion, pursuant to 8 Del. C. § 220. On November 27, 2024, the parties agreed to stay the proceeding in exchange for the production of certain documents to the plaintiff; the court granted the stay the same day. The proceedings remain stayed.

Litigation is inherently uncertain and there can be no assurance regarding the likelihood that the motions to dismiss or defense of the various actions will be successful.

Employment Contracts

The Company has entered into agreements with severance terms with certain employees and officers, all of whom are employed on an at-will basis, subject to certain severance obligations in the event of certain involuntary terminations. The Company may be required to accelerate the vesting of certain stock options and restricted stock in the event of changes in control, as defined, and involuntary terminations.