Item 8. Financial Statements and Supplementary Data

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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)			60
Consolidated Balance Sheets			62
Consolidated Statements of Operations			63
Consolidated Statements of Stockholders’ Equity			64
Consolidated Statements of Cash Flows			65
Notes to Consolidated Financial Statements			66

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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, 2025 and 2024, 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, 2025, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 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, 2025, 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.

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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 generally 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, 2025, the Company’s revenue was $2.9 billion.

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 27, 2026

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

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THE TRADE DESK, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par values)


	As of December 31,
	2025		2024
ASSETS
Current assets:
Cash and cash equivalents	$	658,175	$	1,369,463
Short-term investments, net	644,882		552,026
Accounts receivable, net of allowance for credit losses of $12,199 and $11,244 as of December 31, 2025 and 2024, respectively	3,770,194		3,330,343
Prepaid expenses and other current assets	187,753		84,626
TOTAL CURRENT ASSETS	5,261,004		5,336,458
Property and equipment, net	396,819		209,332
Operating lease assets	342,042		263,761
Deferred income taxes	55,700		230,214
Other assets, non-current	97,655		72,186
TOTAL ASSETS	$	6,153,220	$	6,111,951
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities:
Accounts payable	$	3,007,651	$	2,631,213
Accrued expenses and other current liabilities	181,991		177,760
Operating lease liabilities	76,355		64,492
TOTAL CURRENT LIABILITIES	3,265,997		2,873,465
Operating lease liabilities, non-current	359,975		247,723
Other liabilities, non-current	42,857		41,618
TOTAL LIABILITIES	3,668,829		3,162,806
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, 2025 and 2024	—		—
Common stock, par value $0.000001 Class A, 1,000,000 shares authorized; 432,814 and 452,182 shares issued and outstanding as of December 31, 2025 and 2024, respectively Class B, 95,000 shares authorized; 43,109 and 43,919 shares issued and outstanding as of December 31, 2025 and 2024, respectively	—		—
Additional paid-in capital	3,075,303		2,594,896
Retained earnings (accumulated deficit)	(590,912)		354,249
TOTAL STOCKHOLDERS’ EQUITY	2,484,391		2,949,145
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,153,220	$	6,111,951

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

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THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)


	Year Ended December 31,
	2025		2024		2023
Revenue	$	2,896,284	$	2,444,831	$	1,946,120
Operating expenses:
Platform operations	619,067		472,012		365,598
Sales and marketing	644,300		546,517		447,970
Technology and development	525,141		463,319		411,794
General and administrative	518,455		535,816		520,278
Total operating expenses	2,306,963		2,017,664		1,745,640
Income from operations	589,321		427,167		200,480
Other expense (income):
Interest income, net	(68,717)		(78,842)		(68,508)
Foreign currency exchange loss (gain), net	(717)		(1,293)		993
Total other income, net	(69,434)		(80,135)		(67,515)
Income before income taxes	658,755		507,302		267,995
Provision for income taxes	215,451		114,226		89,055
Net income	$	443,304	$	393,076	$	178,940
Earnings per share:
Basic	$	0.91	$	0.80	$	0.37
Diluted	$	0.90	$	0.78	$	0.36
Weighted-average shares outstanding:
Basic	488,278		490,879		489,261
Diluted	493,551		501,924		500,182

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

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THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)


	Class A and B Common Stock (1)			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity
	Shares	Amount
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
Exercise of common stock options	1,501	—		24,413		—		24,413
Issuance of common stock under employee stock purchase plan	919	—		44,966		—		44,966
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	3,494	—		(97,654)		—		(97,654)
Issuance of common stock relating to business acquisition	127	—		10,299		—		10,299
Repurchases of Class A common stock	(26,219)	—		—		(1,388,465)		(1,388,465)
Stock-based compensation	—	—		498,383		—		498,383
Net income	—	—		—		443,304		443,304
Balance as of December 31, 2025	475,923	$	—	$	3,075,303	$	(590,912)	$	2,484,391

____________


(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.

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THE TRADE DESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Year Ended December 31,
	2025		2024		2023
OPERATING ACTIVITIES:
Net income	$	443,304	$	393,076	$	178,940
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	115,784		87,490		80,418
Stock-based compensation expense	490,627		494,699		491,621
Deferred income taxes	167,690		(76,903)		(61,597)
Noncash lease expense	69,682		57,403		48,955

Other	(19,237)		(7,028)		(17,419)
Changes in operating assets and liabilities:
Accounts receivable	(432,718)		(474,227)		(554,012)
Prepaid expenses and other current and non-current assets	(76,586)		(38,783)		(26,815)
Accounts payable	291,073		298,919		475,463
Accrued expenses and other current and non-current liabilities	6,926		46,564		35,681
Operating lease liabilities	(63,824)		(41,754)		(52,913)
Net cash provided by operating activities	992,721		739,456		598,322
INVESTING ACTIVITIES:
Purchases of investments	(954,273)		(679,539)		(608,379)

Maturities of investments	875,754		629,088		555,806
Purchases of property and equipment	(197,011)		(98,238)		(46,790)
Capitalized software development costs	(12,752)		(8,824)		(8,230)
Business acquisition	(4,350)		—		—
Net cash used in investing activities	(292,632)		(157,513)		(107,593)
FINANCING ACTIVITIES:


Repurchases of Class A common stock	(1,380,422)		(234,784)		(646,597)

Proceeds from exercise of stock options	23,818		216,281		60,525
Proceeds from employee stock purchase plan	42,881		49,989		38,482
Taxes paid relating to net settlement of restricted stock	(97,654)		(139,095)		(78,516)
Net cash used in financing activities	(1,411,377)		(107,609)		(626,106)
Increase (decrease) in cash and cash equivalents	(711,288)		474,334		(135,377)
Cash and cash equivalents—Beginning of year	1,369,463		895,129		1,030,506
Cash and cash equivalents—End of year	$	658,175	$	1,369,463	$	895,129
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds (1)	$	150,114	$	158,579	$	151,899
Cash paid for interest	$	993	$	986	$	967
Cash paid for operating lease liabilities	$	79,362	$	68,378	$	63,256
Operating lease assets obtained in exchange for operating lease liabilities	$	150,272	$	132,050	$	27,237
Capitalized assets financed by accounts payable	$	104,495	$	20,508	$	4,684
Assets acquired in a business combination, included in other assets, non-current, in exchange for Class A common stock	$	10,299	$	—	$	—
Tenant improvements paid by lessor	$	10,608	$	6,869	$	—

Stock-based compensation included in capitalized software development costs	$	7,756	$	5,623	$	5,328
Repurchases of Class A common stock in accrued expenses and other current liabilities	$	9,943	$	1,900	$	903

____________


(1)			Refer to Note 11—Income Taxes for disaggregation of income taxes paid, net of refunds, by jurisdiction.

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

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THE TRADE DESK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Nature of Operations

The Trade Desk, Inc. (the “Company”) is a global leader in advertising technology. The Company’s platform empowers ad buyers to create, manage and optimize digital advertising campaigns across ad formats, channels and devices. The platform’s depth, artificial intelligence (“AI”) capabilities and rich ecosystem of inventory, publisher and data partner integrations enable superior reach and decisioning for clients. In addition to the primary capabilities provided by its self-service platform, the Company’s enterprise application programming interfaces (“APIs”) equip its clients with the ability 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.

Certain prior year amounts in the consolidated statements of cash flows have been reclassified to conform to the current year presentation. These reclassifications relate to the aggregation of the provision for expected credit losses on accounts receivable presented separately in the prior year consolidated statements of cash flows that are considered immaterial. The reclassifications had no impact to cash flows from operating, investing or financing activities.

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 relating to: (1) income taxes, including the realizability of deferred tax assets and the recognition of valuation allowances, (2) assumptions used in the option pricing models to determine the fair value of stock-based compensation, (3) operating lease assets and liabilities, including the incremental borrowing rate and terms and provisions of each lease, (4) allowances for credit losses, (5) the recognition and disclosure of contingent liabilities, (6) the useful lives of long-lived assets and (7) the fair values and recoverable amounts of long-lived assets and any potential impairments. 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, 2025, the impacts to the Company’s business due to geopolitical developments and macroeconomic factors, such as changes in interest rates, foreign currency exchange rates, trade policies and practices, 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.

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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 revenue.

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 QPS and computing power to enable technical features and functionality such as AI, purchasing data used to inform and improve the platform and providing support to clients. Platform operations expense includes hosting costs, including depreciation relating to data center computing and networking equipment, personnel costs, data-related costs and amortization of capitalized software costs for platform development. Personnel costs include salaries, stock-based compensation, employee benefit costs, commission costs, bonuses 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.

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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 as their recognition period is less than one year.

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 (the “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 and thereafter, 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.

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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.

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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 2025, 2024 and 2023 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, 2025 and 2024, the Company’s assessment considered business and market disruptions caused by macroeconomic factors, such as changes in interest rates, foreign currency exchange rates, trade policies and practices, inflation, supply chain disruptions, economic growth 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,
	2025		2024		2023
Beginning balance	$	11,244	$	12,826	$	10,477

Add: provision for expected credit losses	1,487		853		2,960
Less: write-offs, net of recoveries	(532)		(2,435)		(611)
Ending balance	$	12,199	$	11,244	$	12,826

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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 $1 million of CCA implementation costs in 2025 and $2 million of CCA implementation costs in 2024. CCA implementation costs had a gross capitalized value of $15 million and $14 million as of December 31, 2025 and 2024, respectively, and accumulated amortization of $11 million and $9 million as of December 31, 2025 and 2024, respectively. Amortization expense was $2 million, $3 million and $2 million for 2025, 2024 and 2023, respectively. For the years ended December 31, 2025, 2024 and 2023 there were no material impairment charges to CCA implementation costs.

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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.

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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, two holding companies would each represent more than 10% of Gross Billings in 2025, and one holding company would represent more than 10% of Gross Billings in 2024 and 2023. In 2025, two holding companies accounted for 30% of Gross Billings. In 2024, one holding company accounted for 14% of Gross Billings. In 2023, one holding company accounted for 12% 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, 2025, two clients each accounted for at least 10%, and collectively accounted for 30%, of consolidated accounts receivable. 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, 2025, two suppliers each accounted for at least 10%, and collectively accounted for 34%, of consolidated accounts payable. As of December 31, 2024, two suppliers each accounted for at least 10% and collectively accounted for 36% 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 15-30 days. As of December 31, 2025, and 2024, the Company had open forward contracts with aggregate notional amounts of $382 million and $272 million, respectively. The fair value of the open forward contracts was not material.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. The new disclosures required by this guidance were adopted on a retrospective basis and included in Note 11 - Income Taxes.

Recent Accounting Pronouncements Not Yet Adopted

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

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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 year ending December 31, 2027, and for interim periods beginning with the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2028. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The standard amends ASC 326-20 to provide an optional practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Accounting Standards Codification (“ASC”) Topic 606. The guidance will be effective on a prospective basis for annual periods, including interim reporting periods, beginning after December 15, 2025, with early adoption permitted. The Company does not expect the provisions of ASU 2025-05 to have a material impact on its financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The standard clarifies and modernizes the accounting for costs related to internal-use software. It removes references to software development project stages and clarifies certain requirements for recognition and disclosure of capitalized software development costs and capitalized implementation costs for cloud computing arrangements. The guidance will be effective for annual periods, including interim reporting periods therein, beginning after December 15, 2027, with early adoption permitted. The guidance may be applied using a prospective, retrospective or modified transition approach. The Company is currently evaluating the impact of this guidance on its financial statements and related 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,
	2025		2024		2023
Numerator:
Net income	$	443,304	$	393,076	$	178,940
Denominator:
Weighted-average shares outstanding—basic	488,278		490,879		489,261
Effect of dilutive securities	5,273		11,045		10,921
Weighted-average shares outstanding—diluted	493,551		501,924		500,182
Basic earnings per share	$	0.91	$	0.80	$	0.37
Diluted earnings per share	$	0.90	$	0.78	$	0.36
Anti-dilutive equity awards under stock-based award plans excluded from the determination of diluted earnings per share	22,742		284		5,580

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Note 4—Property and Equipment, Net

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


	As of December 31,
	2025		2024
Computer and networking equipment	$	284,056	$	189,821
Purchased software	6,332		14,016
Furniture and fixtures	36,809		29,551
Construction in progress (1)	117,857		34,537
Leasehold improvements	213,978		156,423
Property and equipment, gross	659,032		424,348
Less: Accumulated depreciation	(262,213)		(215,016)
Property and equipment, net	$	396,819	$	209,332

____________


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

Depreciation expense for years ended December 31, 2025, 2024 and 2023 was $96 million, $67 million and $62 million, respectively. For the years ended December 31, 2025, 2024 and 2023 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,
	2025		2024
Capitalized software development costs, gross	$	34,513	$	26,834
Less: Accumulated amortization	(14,584)		(12,213)
Capitalized software development costs, net	$	19,929	$	14,621

Amortization expense was $15 million, $16 million and $14 million for the years ended December 31, 2025, 2024 and 2023, respectively. For the years ended December 31, 2025, 2024 and 2023 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, 2025
	Cash and Cash Equivalents		Short-Term Investments, Net		Total
Cash	$	240,916	$	—	$	240,916
Level 1:
Money market funds	306,658		—		306,658
Level 2:
Commercial paper	83,180		133,222		216,402
Corporate debt securities	—		358,919		358,919
U.S. government and agency securities	27,421		152,741		180,162
Total	$	658,175	$	644,882	$	1,303,057

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	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

The Company’s gross unrealized gains and losses from its short-term investments, recorded at fair value, for the years ended December 31, 2025, 2024 and 2023 were immaterial.

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


	December 31, 2025
Due in one year	$	573,132
Due in one to two years	71,750
Total	$	644,882

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 (“LIBOR”) to a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”).

Loans under the Amended Credit Facility bear interest at a rate equal to, at the Company’s option, an annual rate of either a Base Rate or an adjusted term SOFR rate (defined as SOFR for a specified term plus a credit spread adjustment of 10 basis points, subject to a 0% floor), plus an applicable margin (“Base Rate Borrowings” and “Term SOFR Borrowings”). The Base Rate is defined as a rate per annum for any day equal to the greatest of (1) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (2) the New York Federal Reserve Bank Rate in effect on such day plus half of 1%, and (3) the adjusted term SOFR rate for a one-month interest period on such day plus 1%. The applicable margin is between 0.25% to 1.25% for Base Rate Borrowings and between 1.25% and 2.25% for Term SOFR Borrowings based on the Company maintaining certain leverage ratios. The fee for undrawn amounts under the Amended Credit Facility ranges, based on the applicable leverage, from 0.200% to 0.350%. The Company is also required to pay customary letter of credit fees, as necessary.

As of December 31, 2025, the Company did not have an outstanding debt balance under the Amended Credit Facility. Availability under the Amended Credit Facility was $445 million as of December 31, 2025, which is net of outstanding letters of credit of $5 million. The Amended Credit Facility matures, and all outstanding amounts become due and payable, on June 15, 2026.

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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, 2025, 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,
	2025		2024		2023
Operating lease cost	$	70,574	$	56,787	$	48,866
Short-term lease cost	2,851		2,231		1,898
Variable lease cost	20,975		16,414		12,901
Sublease income	—		(42)		(2,208)
Total lease cost	$	94,400	$	75,390	$	61,457

Supplemental information related to leases were as follows:


	Year Ended December 31,
	2025		2024
Weighted-average remaining lease term	5.5 years		4.9 years
Weighted-average discount rate	4.8	%	4.3	%

Maturities of lease commitments as of December 31, 2025, were as follows (in thousands):


Year	Amount
2026	$	90,748
2027	85,097
2028	127,868
2029	118,976
2030	103,821
Thereafter	268,683
Total undiscounted lease commitments	795,193
Less: commitments for leases not yet commenced	(290,979)
Less: interest	(67,884)
Present value of lease liabilities	436,330
Less: operating lease liabilities, current	(76,355)
Operating lease liabilities, non-current	$	359,975

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 amended and restated articles of incorporation, including, without

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limitation, certain transfers for tax and estate planning purposes. The Company’s amended and restated articles of incorporation provide that all Class B common stock will convert automatically into Class A common stock on December 22, 2035, unless converted prior to such date pursuant to the Company’s amended and restated articles of incorporation.

The Company’s board of directors has the discretion to issue shares of preferred stock and determine the rights, preferences, privileges and restrictions, including voting rights, and the designation, preferences, relative rights, participating rights, optional rights or other special rights of any such 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, 2024, $464 million remained available and authorized for repurchases. At the end of January 2025, an additional $564 million was authorized under this program, bringing the total amount for future repurchases to $1 billion. In October 2025, an additional $500 million was authorized under this program after the previous authorization was used. During the year ended December 31, 2025, the Company repurchased and subsequently retired 26.2 million shares of its Class A common stock for an aggregate repurchase amount of $1.4 billion. The aggregate repurchase amount for the year ended December 31, 2025, included $10 million relating to the 1% excise tax on share repurchases, net of share issuances, from the Inflation Reduction Act of 2022 (“IRA”). As of December 31, 2025, $150 million remained available and authorized for repurchases. 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,
	2025		2024		2023
Platform operations	$	34,480	$	29,310	$	21,048
Sales and marketing	112,509		99,135		75,924
Technology and development	163,350		138,393		120,823
General and administrative	180,288		227,861		273,826
Total	$	490,627	$	494,699	$	491,621

On September 30, 2023, David R. Pickles stepped down as the Company’s Chief Technology Officer and from the Company’s board of directors. As a result, Mr. Pickles and the Company mutually agreed to cancel his unvested stock options and restricted stock without payment or replacement, resulting in the recognition of $14 million in incremental stock-based compensation expense, which is included in technology and development expense for the year ended December 31, 2023. No amount of stock-based compensation expense for these cancelled options and restricted stock remained unamortized.

For the years ended December 31, 2025, 2024 and 2023, the Company recognized tax benefits on total stock-based compensation expense, which are reflected in the provision for income taxes in the consolidated statements of operations, of $9 million, $73 million and $53 million, respectively. For the years ended December 31, 2025, 2024 and 2023, the tax benefit realized related to restricted stock vested and stock options exercised during the period was $64 million, $129 million and $91 million, respectively.

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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 2025 Incentive Award Plan (the “Incentive Award Plan”), an amendment and restatement of the 2016 Incentive Award Plan (the “2016 Plan”). The changes from the 2016 Plan to the Incentive Award Plan included removing the ten-year plan expiration date and providing other minor technical and administrative updates. Existing stock-based awards granted under the 2016 Plan continue unchanged under the Incentive Award Plan. These changes did not materially impact the Company’s financial statements for the year ended December 31, 2025.

As of December 31, 2025, 106.8 million shares remained available for grant under the Company’s Incentive Award Plan. 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, 2026, the number of shares authorized for grant under the Company’s Incentive Award Plan was increased by 19.0 million shares in accordance with plan provisions. This annual increase in shares authorized for grant under the Incentive Award Plan ended after the increase on January 1, 2026. The Incentive Award Plan will continue without an expiration date until terminated by the plan administrator.

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, 2024	9,813	$	43.31
Granted	4,583	52.11
Exercised	(1,501)	16.11
Expired/Forfeited	(1,686)	66.30
Outstanding as of December 31, 2025	11,209	$	47.09	6.2	$	85,680
Exercisable as of December 31, 2025	6,394	$	38.41	4.2	$	85,654

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,
	2025		2024		2023
Expected term (years)	4.0		4.0		6.0
Expected volatility	64.6	%	58.5	%	64.4	%
Risk-free interest rate	3.91	%	4.70	%	3.71	%
Estimated dividend yield	—	%	—	%	—	%

The weighted-average grant date fair value per share of stock options granted for the years ended December 31, 2025, 2024 and 2023 and were $26.94, $40.82 and $38.69, respectively. The total intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023 were $85 million, $333 million and $276 million, respectively.

Stock-based compensation expense related to stock options was $70 million, $62 million and $58 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation relating to stock options of approximately $143 million, which is expected to be recognized over a weighted-average period of 3.0 years.

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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 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.

At December 31, 2024, there were 17.8 million share options outstanding under the CEO Performance Option. There were no options under the CEO Performance Option exercised, granted, expired or forfeited during the year ended December 31, 2025. At December 31, 2025, there were 17.8 million share options outstanding under the CEO Performance Option, with no aggregate intrinsic value and a weighted-average contractual life of 5.8 years. At December 31, 2025, there were 3.4 million share options exercisable under the CEO Performance Option with no aggregate intrinsic value and a weighted-average contractual life of 5.8 years. 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 under the CEO Performance Option exercised during the year ended December 31, 2023.

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 $67 million, $128 million and $198 million for the CEO Performance Option was recorded as a component of general and administrative expense during the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation relating to the CEO Performance Option of $5 million that is expected to be recognized over a weighted-average period of 0.2 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:

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	Shares (in thousands)	Weighted- Average Grant Date Fair Value Per Share
Unvested as of December 31, 2024	10,197	$	73.62
Granted	7,931	54.26
Vested	(4,676)	68.28
Forfeited	(1,844)	66.77
Unvested as of December 31, 2025	11,608	$	63.63

Stock-based compensation expense related to restricted stock was $316 million, $270 million and $212 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation relating to restricted stock of approximately $677 million, which is expected to be recognized over a weighted-average period of 2.8 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. On May 28, 2024, the Company’s ESPP was approved, which was an amendment and restatement of the 2016 employee stock purchase plan. As of December 31, 2025, 21.2 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. On January 1, 2026, the number of shares available for issuance under the Company’s ESPP increased by 4.3 million shares in accordance with plan provisions. This annual increase in shares authorized for grant under the ESPP ended after the increase on January 1, 2026. The ESPP will continue without an expiration date until terminated by the plan administrator.

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, 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,
	2025		2024		2023
Expected term (years)	1.1		0.6		0.9
Expected volatility	70.1	%	44.0	%	60.3	%
Risk-free interest rate	3.75	%	4.66	%	4.95	%
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 $38 million, $35 million and $24 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation

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relating to ESPP awards of approximately $18 million, which is expected to be recognized over a weighted-average period of 1.1 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,
	2025		2024		2023
Domestic	$	677,722	$	579,338	$	328,853
Foreign	(18,967)		(72,036)		(60,858)
Income before income taxes	$	658,755	$	507,302	$	267,995

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


	Year Ended December 31,
	2025		2024		2023
Current:
Federal	$	11,117	$	147,802	$	120,049
State and local	22,740		33,019		24,827
Foreign	8,886		8,770		5,000
Total current provision	42,743		189,591		149,876
Deferred:
Federal	160,917		(57,454)		(51,822)
State and local	15,280		(14,853)		(7,842)
Foreign	(3,489)		(3,058)		(1,157)
Total deferred provision	172,708		(75,365)		(60,821)
Total provision for income taxes	$	215,451	$	114,226	$	89,055

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


	Year Ended December 31,
	2025				2024				2023
	(in thousands)		%		(in thousands)		%		(in thousands)		%
United States federal statutory income tax rate	$	138,339	21.0	%	$	106,533	21.0	%	$	56,279	21.0	%
State and local income taxes, net of federal income tax effects (1)	30,224		4.6		14,355		2.8		13,579		5.1
Foreign tax effects
United Kingdom
Statutory tax rate difference between the United Kingdom and United States	(1,380)		(0.2)		(3,518)		(0.7)		(2,926)		(1.1)
Stock-based awards (2)	(9,075)		(1.4)		(19,808)		(3.9)		(15,132)		(5.6)
Other	(2,244)		(0.3)		(978)		(0.2)		(792)		(0.3)
Changes in valuation allowances (3)	16,784		2.6		42,776		8.4		34,210		12.7
Other foreign jurisdictions	2,136		0.3		2,368		0.5		1,263		0.5
Effect of changes in tax laws or rates enacted in the current period	—		—		—		—		—		—
Effect of cross-border tax laws	(515)		(0.1)		9		0.0		(528)		(0.2)
Tax credits
Research and development tax credits	(17,781)		(2.7)		(30,038)		(5.9)		(23,918)		(8.9)
Other	33		0.0		—		—		—		—
Changes in valuation allowances	—		—		—		—		—		—
Nontaxable or nondeductible items
Stock-based awards (2)	47,008		7.1		(4,462)		(0.9)		22,408		8.4
Other	7,130		1.1		5,228		1.0		4,270		1.5
Changes in unrecognized tax benefits	4,792		0.7		1,761		0.4		342		0.1
Other adjustments	—		—		—		—		—		—
Effective income tax rate	$	215,451	32.7	%	$	114,226	22.5	%	$	89,055	33.2	%

____________


(1)			For the years ended December 31, 2025, state and local taxes in California, New York, New York City and Illinois made up the majority (greater than 50 percent) of the tax effect in this category. For the years ended December 31, 2024 and 2023, state and local taxes in New York, New York City and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.
(2)			Reconciling items for stock-based awards include nondeductible stock-based compensation and benefits or detriments from stock-based awards.
(3)			See discussion below regarding the valuation allowance associated with the United Kingdom (“U.K.”).
			Certain percentages may not foot due to rounding.

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Set forth below are income taxes paid, net of refunds (in thousands):


	Year Ended December 31,
	2025		2024		2023
United States - Federal	$	98,724	$	134,717	$	125,600
United States - State - California*	9,361		*		*
United States - Other State and Local	29,740		18,027		23,286
Foreign	12,289		5,835		3,013
Total income taxes paid, net of refunds	$	150,114	$	158,579	$	151,899

___________


*			Income taxes paid, net of refunds, for California do not meet the disaggregation threshold in years 2024 and 2023. Such amounts are not presented as comparative disclosures because such disclosures are not required.

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,
	2025		2024

Reserves and allowances	$	5,971	$	5,931
Accrued expenses	13,318		13,761
Net operating losses	321,226		292,022
Research and development tax credit	27,762		22,948
Stock-based compensation	33,483		23,431
Prepaid expenses	(1,472)		(1,167)
Property and equipment	(47,327)		(27,171)
Intangibles (1)	139,822		161,060
Capitalized software development costs	6,836		181,862
Operating lease assets	(79,563)		(57,846)
Operating lease liabilities	102,815		69,493
Other	8,218		4,495
Valuation allowance	(475,389)		(458,605)
Total deferred tax assets, net	$	55,700	$	230,214

____________


(1)			As of December 31, 2025 and 2024, 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 2025, management recorded an additional $17 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, 2025, for tax return purposes, the Company had federal, state and foreign net operating loss carryforwards of approximately $0.4 million, $10 million and $1.4 billion, respectively. The federal, state and foreign net

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operating loss carryforwards are subject to limitations under applicable tax law. State net operating loss carryforwards have varied expiration years beginning in 2032. Federal and foreign net operating losses carry forward indefinitely.

As of December 31, 2025, for tax return purposes, the Company had federal, state and foreign research and development tax credits of approximately $7 million, $38 million and $5 million, respectively, which can be carried forward as prescribed under applicable tax law. Federal and state tax credits will expire at various dates beginning in 2045 and 2035, respectively, unless utilized. Foreign research and development tax credits carry forward indefinitely.

As of December 31, 2025, the Company has not recorded a deferred tax liability for unremitted foreign earnings as 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, 2025, the Company had gross unrecognized tax benefits of approximately $116 million, $83 million of which is a reduction to deferred tax assets and the remaining $33 million which would affect the Company’s effective tax rate if recognized. 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.

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


	Year Ended December 31,
	2025		2024		2023
Beginning balance	$	106,989	$	97,703	$	90,932
Increases related to prior year tax positions	3,158		881		229
Decreases related to prior year tax positions	(504)		—		—
Increases related to current year tax positions	5,923		8,405		6,601
Settlements	—		—		(59)
Expiration of statute of limitations	—		—		—
Ending balance	$	115,566	$	106,989	$	97,703

Interest and penalties related to the Company’s unrecognized tax benefits accrued as of December 31, 2025 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 and foreign jurisdictions.

The Company remains subject to examination for its federal and state tax returns for the periods 2015 through 2024, and 2020 through 2024, respectively. The majority of the Company’s foreign subsidiaries remain subject to examination by local taxing authorities for 2019 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 2025. 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.

On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (the “OBBBA”), which changes or makes permanent certain tax laws for corporations, including provisions relating to domestic research and development costs, bonus depreciation and foreign derived intangible income. The primary impact to the Company is the option to immediately deduct research and development costs paid or incurred after December 31, 2024, for income tax purposes. In

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addition, the OBBBA allows for the accelerated deduction of any remaining unamortized domestic research and development costs over a one-year or two-year period beginning after December 31, 2024, at the Company’s election. As a result, during the year ended December 31, 2025, the Company recognized $175 million relating to domestic research and development costs as income taxes receivable, presented in prepaid expenses and other current assets, with a corresponding reduction in deferred tax assets. The Company continues to monitor for changes in its operations that could be impacted by the legislation.

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,
	2025		2024		2023
Interest expense	$	1,790	$	1,514	$	1,656
Interest income	(70,507)		(80,356)		(70,164)
Interest income, net	$	(68,717)	$	(78,842)	$	(68,508)

Revenue presented by principal geographic area, based on the address of the clients or client affiliates, was as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
United States	$	2,476,683	$	2,133,502	$	1,696,911
International	419,601		311,329		249,209
Total	$	2,896,284	$	2,444,831	$	1,946,120

Amounts presented by principal geographic area for the years ended December 31, 2024 and 2023 have been recast to reflect current-year presentation based on revenue. Supplier Components included as a reduction to revenue but not directly recorded to a geographic area were attributed based on the Gross Billings in the geographic area.

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


	As of December 31,
	2025		2024
United States	$	652,276	$	366,188
International	86,585		106,905
Total	$	738,861	$	473,093

Note 13—Commitments and Contingencies

As of December 31, 2025, the Company had non-cancelable operating lease commitments for office and hosting space that were recorded as operating lease liabilities on the consolidated balance sheets. Refer to Note 8**—**Leases for additional information regarding lease commitments.

As of December 31, 2025, the Company had non-cancelable commitments primarily for its hosting services, hardware providers and providers of software as a service. As of December 31, 2025, these purchase obligations were as follows (in thousands):


Year	Amount
2026	$	226,727
2027	34,181
2028	4,942
2029	—
2030	—
	$	265,850

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 consolidated balance sheets, statements of operations or statements of cash flows. Accordingly, no material amounts have been recorded as of December 31, 2025 and 2024.

The Company is under audit by various domestic and foreign tax authorities. The Company believes that the amount of losses or any estimable range of possible losses with respect to these matters will not, either individually or in the aggregate, have a material adverse effect on its business and consolidated financial statements. Due to the inherent complexity and uncertainty of these matters and judicial process in certain jurisdictions, the final outcome may be materially different from the Company’s expectations.

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 it is probable 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.

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Litigation Related to 2021 CEO Performance Option

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 plaintiffs filed a notice of appeal of the Court of Chancery’s decision. The parties completed briefing the appeal on June 13, 2025, and the Delaware Supreme Court heard oral argument on October 22, 2025. On November 5, 2025, the Delaware Supreme Court issued an order affirming the lower court ruling dismissing the action with prejudice.

Litigation Related to Reincorporation

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.) (the “Gunderson Action”). 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 April 28, 2025, the plaintiff in the Scarantino Action (as defined below) moved to intervene and stay the Gunderson Action. On May 20, 2025, the Court granted the motion to intervene and stayed the Gunderson Action pending completion of the books and records inspection in the Scarantino Action.

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 relating to the Nevada conversion, pursuant to 8 Del. C. § 220. City of Roseville Employees Retirement System v. The Trade Desk, Inc., No. 2024-1173 (Del. Ch.). 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. On April 18, 2025, the stockholder voluntarily dismissed the complaint without prejudice.

On April 24, 2025, 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 relating to the Nevada conversion and the Company’s dual class capital structure, among other things, pursuant to 8 Del. C. § 220. Richard Scarantino v. The Trade Desk, Inc., No 2025-0442 (Del. Ch.) (the “Scarantino Action”). The case was referred to a Magistrate in Chancery for trial, and a trial was held on July 16, 2025. On July 31, 2025, the Magistrate in Chancery issued a final report, in which she found that the stockholder plaintiff could receive certain limited requested board materials. The stockholder plaintiff filed exceptions to the Magistrate’s final report, and briefing on plaintiff’s exceptions was completed on September 26, 2025. On December 5, 2025, the Vice Chancellor issued an order denying plaintiff's exceptions and affirming the Magistrate’s final ruling. On January 2, 2026, plaintiff filed a notice of appeal of the Vice Chancellor’s December 5, 2025, order to the Delaware Supreme Court. The appeal remains pending.

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Litigation Related to Securities Class Actions

On February 19, 2025, plaintiff United Union of Roofers, Waterproofers & Allied Workers Local Union No. 8 WBPA Fund filed a purported federal securities class action complaint in the United States District Court, Central District of California, captioned United Union of Roofers, Waterproofers, and Allied Workers Local Union No. 8 v. The Trade Desk, Inc. et al. (No. 2:25-cv-01396), against the Company as well as its Chief Executive Officer and then-Chief Financial Officer. The complaint alleged that the defendants made false and misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The action purported to be brought on behalf of those who purchased or otherwise acquired the Company’s publicly traded securities between May 9, 2024 and February 12, 2025 and sought unspecified damages and other relief. On March 20, 2025, the court granted the parties’ joint stipulation, ordering that defendants need not respond to the complaint, pending the appointment of lead plaintiff and lead counsel.

On March 5, 2025, two additional related purported class action lawsuits were filed in the United States District Court, Central District of California, captioned Savorelli v. The Trade Desk, Inc. et al. (No. 2:25-cv-01915), bringing claims against the Company as well as its Chief Executive Officer and then-Chief Financial Officer, and New England Teamsters Pension Fund v. The Trade Desk, Inc. et al. (No. 2:25-cv-01936), bringing claims against the Company as well as its Chief Executive Officer, then-Chief Financial Officer and Chief Strategy Officer. Both complaints alleged that the defendants made false and misleading statements, similar to the allegations contained in the United Union of Roofers action, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The actions were also purportedly brought on behalf of those who purchased or otherwise acquired the Company’s publicly traded securities between May 9, 2024 and February 12, 2025 and sought unspecified damages and other relief. On March 18, 2025, the court entered orders relating the Savorelli and New England actions to the first-filed United Union of Roofers action, No. 2:25-cv-01396 (CAS). On March 28, 2025, the court granted the parties’ joint stipulations in the Savorelli and New England matters, ordering that defendants need not respond to the complaints, pending the appointment of lead plaintiff and lead counsel.

On April 21, 2025, several purported shareholders filed motions in the related actions seeking to be appointed lead plaintiff. On June 4, 2025, the court consolidated all three actions and recaptioned the action “In re The Trade Desk, Inc. Securities Litigation,” No. 2:25-cv-01396 (the “Consolidated Action”), and appointed Arkansas Public Employees Retirement System and Public Employees Retirement System of Mississippi as lead plaintiff in the Consolidated Action.

Plaintiffs filed a First Amended Consolidated Class Action Complaint (“First Amended Complaint”) on August 15, 2025. The First Amended Complaint purports to be brought on behalf of those who purchased or otherwise acquired the Company’s publicly traded securities between November 15, 2023 and August 8, 2025. It alleges that the defendants made false and misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The First Amended Complaint also asserts a separate claim under Section 20A alleging that the Company’s Chief Executive Officer, then-Chief Financial Officer and Chief Strategy Officer engaged in insider trading during the proposed class period.

Defendants filed a motion to dismiss the Consolidated Action on October 14, 2025. The motion remains pending. The case is still in its early stages. Management believes these claims to be meritless and intends to vigorously defend against them.

Shareholder Derivative Actions

On March 6, 2025 and March 14, 2025, plaintiffs Nathan C. Silva and Daniel Jong, respectively, filed purported shareholder derivative complaints in the United States District Court, Central District of California, captioned Silva v. Green et al. (No. 2:25-cv-01975) and Jong v. Green et al. (No. 2:25-cv-02268), against current and former officers and directors of the Company, naming the Company as a nominal defendant. The complaints generally arise out of the same allegations contained in the securities class action and allege claims for breach of fiduciary duties and related claims. The actions purport to be brought derivatively on behalf of the Company and seek damages and other various forms of relief. On April 9, 2025, the court granted the parties’ stipulations consolidating the shareholder derivative actions and appointing Nathan C. Silva and Daniel Jong as co-plaintiffs and the Brown Law Firm, P.C. and Rigrodsky Law, P.A. as co-lead counsel for plaintiffs. On April 24, 2025, the court granted the parties' stipulation staying the consolidated derivative action until resolution of the motion(s) to dismiss the consolidated securities class action (described above). The order also provided that plaintiffs may file an amended complaint, but defendants are under no obligation to respond during the pendency of the stay.

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On September 11, 2025, plaintiff Cara Gardner filed a purported shareholder derivative complaint in the U.S. District Court for the District of Nevada, captioned Cara Gardner v. Jeff T. Green et al. (No. 2:25-cv-01712), against current and former officers and directors of the Company, naming the Company as a nominal defendant. The complaint generally arises out of the same allegations contained in the securities class action and alleges claims for breach of fiduciary duties and related claims. The action purports to be brought derivatively on behalf of the Company and seeks damages and other various forms of relief.

On October 3, 2025, plaintiff Ahmed Ibrahim filed a purported shareholder derivative complaint in the U.S. District Court for the District of Nevada, captioned Ahmed Ibrahim v. Jeff T. Green et al. (No. 2:25-cv-01892), against current and former officers and directors of the Company, naming the Company as a nominal defendant. The complaint generally arises out of the same allegations contained in the securities class actions and alleges claims for breach of fiduciary duties and related claims. The action purports to be brought derivatively on behalf of the Company and seeks damages and other various forms of relief.

On October 24, 2025, the Court granted a joint stipulation filed by the Company and plaintiffs Cara Gardner and Ahmed Ibrahim to consolidate the Nevada derivative complaints and stay the actions until resolution of the motion to dismiss the Consolidated Action. The plaintiffs may file a consolidated complaint or designate an operative complaint, but defendants are under no obligation to respond during the pendency of the stay.

Litigation Related to the Company’s Platform and Related Offerings

On March 28, 2025, two complaints alleging various wiretapping and privacy tort theories were filed against the Company in the United States District Court, Northern District of California, captioned Michie & Dryer v. The Trade Desk, Inc., No. 3:25-cv-2889 (N.D. Cal.) and Hernandez-Mendoza v. The Trade Desk, Inc., No. 4:25-cv-02923 (N.D. Cal.). A third complaint advancing similar allegations, captioned Turner v. The Trade Desk, Inc., No. 3:25-cv-03136 (N.D. Cal.), was originally filed on March 31, 2025 in the United States District Court, Central District of California, but was voluntarily dismissed and refiled on April 7, 2025 in the United States District Court, Northern District of California. On June 18, 2025, the Court consolidated all three actions and recaptioned the consolidated action “In re The Trade Desk, Inc. Data Privacy Litigation” (No. 3:25-cv-2889), and appointed Lieff Cabraser Heimann & Bernstein, LLP as Interim Lead Counsel, with a Plaintiffs’ Executive Committee consisting of Simmons Hanly Conroy LLP, Lowey Dannenberg, P.C. and Bursor & Fisher, P.A. The complaints have now been consolidated into a single consolidated amended complaint, filed July 18, 2025. Plaintiffs seek class certification, unspecified damages, attorneys’ fees and various other forms of relief.

On December 18, 2025, the Court denied the Company’s motion to dismiss the consolidated amended complaint, except as to plaintiffs’ claim for declaratory relief, which the Court dismissed with prejudice. The case is still in its early stages. Management continues to believe the claims asserted in this action to be meritless and intends to vigorously defend against them.

Litigation is inherently uncertain and there can be no assurance that the defense of the various actions will be successful.

Employment Contracts

The Company has entered into agreements with severance terms with certain employees and officers. The Company may be required to accelerate the vesting of certain stock-based awards in the event of changes in control, as defined, and involuntary terminations.

Note 14—Subsequent Events

Effective January 24, 2026, Tahnil Davis, Executive Vice President, Chief Accounting Officer of the Company, was appointed as the Company’s principal accounting officer and appointed to serve as the Company’s interim Chief Financial Officer and interim principal financial officer. The Company has commenced an external search for a permanent Chief Financial Officer. Alex Kayyal’s employment as the Company’s Chief Financial Officer, principal financial officer and

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principal accounting officer was terminated effective as of January 24, 2026. The Company expects Mr. Kayyal to remain a member of the Company’s board of directors through the Company’s 2026 annual meeting of stockholders.

In January 2026, the Company entered into non-cancelable commitments of $92 million with certain cloud-based hosting and data-related service providers to support the Company’s platform and related offerings. These commitments commence in 2026 and expire in 2028.

In February 2026, an additional $350 million was authorized under the Company’s share repurchase program, bringing the total amount available for future repurchases to $500 million. Refer to Note 9 — Capitalization for additional information regarding the share repurchase program.

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