Greetings. Welcome to the Trade Desk fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Chris Toth.

You may begin. Thank you, Operator. Hello and good afternoon to everyone. Welcome to the Trade Desk fourth quarter 2025 earnings conference call. On the call today are CEO and co-founder Jeff Green and Interim Chief Financial Officer and Chief Accounting Officer Kenil Davis. A copy of our earnings press release is available on our website in the Investor Relations section at thetradedesk.com. Please note that aside from historical information, today's discussion and our responses during the Q&A may include forward-looking statements. These statements are subject to risks and uncertainties and reflect our views and assumptions as of the date such statements are made. Actual results may vary significantly, and we expressly disclaim any obligations to update the forward-looking statements made today. If any of our beliefs or assumptions prove incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. For a detailed discussion of risks, please refer to the risk factors mentioned in our press release and our most recent SEC filings. In addition to our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures is available in our earnings press release. We believe that presenting these non-GAAP measures alongside our GAAP results offers a more comprehensive view of the company's operational performance. With that, I will now turn the call over to CEO and co-founder Jeff Green. Jeff?

Thank you, Chris, and thank you, everyone, for joining us. Q4 was a solid quarter for the trade desk. When Q4 2025 is compared to Q4 2024, revenue grew approximately 19% year-over-year when excluding political. On an absolute basis, not adjusting for the irregular nature of political spend, revenue grew 14% Q4 over Q4. This quarter capped off a year in which we grew revenue to record levels. We maintained strong profitability margins as we scaled and continued to invest in innovation that we believe will define the next decade of digital advertising. I'm proud of how our team's executed in 2025, especially against a volatile and uncertain backdrop, all while delivering the industry's most advanced media buying platform. I want to spend the bulk of today's report talking about three things. First, the state of the macro environment and the global advertising market. As you know, we serve most of the world's largest advertisers Because the vast majority of the S&P 500 are clients, we have a unique vantage point into the global economy through branding, brand growth, and advertising spend. 2025 was fantastic for tech spend, for travel spend, for pharma spend, and for communication spend. Actually, despite a greater degree of macro uncertainty and most S&P 500 companies trying to determine what changes the evolving AI-fueled world and the geopolitical issues mean for them, most categories had a very good year. One of the clearest themes in our data and from our conversations with clients was a sustained weakness among some large consumer packaged goods companies, CPGs, as well as some global auto companies. Together, these verticals represent over a quarter of our business, but in these two categories, all global companies have levels of uncertainty that we haven't seen for most of the last 15 years. They all had tough choices to make in 2025. Most still have tough choices ahead. I do want to be clear that some autos and CPGs have done very well in this environment, especially those that have focused on growth, value, objectivity, and impact. But some have had to respond to the impact of those macro pressures and instead just focus on reducing costs. In other cases, some companies have shrunk branding spend and focused on cost-cutting instead of focusing on growing. When these companies are excluded from our year-over-year comparison, our business and the open internet is doing much better than the averages alone would suggest. Beginning in Q2 2025, CPG and auto companies began navigating a mix of category headwinds such as tariff uncertainty and uneven volumes, in addition to persistent inflationary pressures as more consumers deal with cost of living challenges. And those trends have continued into the beginning of this year. On their own earnings calls, several global brands have talked about pulling back on advertising budgets driven by the month-to-month volatility caused by these macro forces. In the CPG sector, just last week at Cagney, many of the large global brands spoke about consumer pressure, slower volume recovery, and ongoing input cost volatility, reinforcing what we are seeing in our data. I highlight the differences in verticals to provide a clearer view of our long-term opportunity and not to misunderstand unique moments of macro headwinds with the long-term prospects of our business. Without that double-click, it's harder to understand why I'm so confident in our long-term opportunity. We estimate that more supply was added to the global market than in any year before. This macro trend is something that we predicted and is a huge validation to our business model when there is more supply than demand it is a buyer's market this puts our clients in an incredibly powerful position this makes the objectivity we have by not owning inventory much more valuable than ever it has always been one of our greatest strategic assets but it is even more valuable now than ever for the advertisers that prioritize decisioning by using data to find the most relevant and valuable impressions across all channels they've never had it better they have more choice than ever and this of course plays into the trade desk strengths let me give you a couple of examples of how the supply demand imbalance has helped us one of the world's leading appliance manufacturers recently ran a test between the Trade Desk and the Amazon DSP, focusing on CTV ad performance in one of their most important markets. They found that with the Trade Desk, they were able to reach 70% more unique households because we gave them access to a much wider range of relevant touchpoints with those consumers. With the Trade Desk, they were able to reach those consumers at 30% lower total cost, so significantly better reach for meaningfully lower cost. And the kicker is that Trade Desk platform performed six times better in terms of delivering their campaign goals. All of this happened because we provided the client with objective decisioning across the open internet. We didn't prioritize our own impressions because we don't own any. We were able to help the client find the ad impressions that were most likely to lead to conversions. And while CPG and auto companies remain challenged starting this year, we are encouraged by how many of those same global brands are talking about more objective decision making in my own discussions with many of them there is growing skepticism of the cheap reach dynamics of walled garden platforms increasingly they realize that cheap reach does not drive growth vinnie rinaldi a vp at hershey's and one of the most forward-thinking cpg advertising leaders addressed this head-on he's been pointing at this problem in our space for years in what he calls the fallacy of cheap reach. But recently, he put a finer point on it when he said, for the past 15 years, marketing success was measured by one dominant pursuit, cheap reach. The advertising industry became enamored with scale over substance, equating impressions with effectiveness. This outdated approach creates a false sense of efficiency, masking the true ineffectiveness of these buys. Today, growth is no longer driven by how many people you reach but by how meaningfully you engage them effective reach transcends sheer volume it's about leveraging creative storytelling to deliver meaningful messages to the right audience in the right context at precisely the right time i couldn't have written a better description of the difference between the trade desk and the open internet and walt gardens I'm excited to be working with Vinnie and other forward thinking CPG leaders on how to execute on that disparity with objective decision making, new approaches to measurement, and our growing retail marketplace. This is a good transition to our second topic today, the innovations that we're investing in and why. Of course, we should start with AI. AI is changing nearly every industry in the world, directly or indirectly. We agree with view that the advent of ai is an unprecedented generational shift and we will change the world in ways similar to how we did when the internet itself emerged this is why we launched koa in 2018 and let me explain why we expect to continue to invest in ai first almost 100 of our clients are running through cocai today we think cocai is the most advanced ai-fueled buying platform ever pointed at the open internet. KoKai broke advertising into the basic elements of an advertising campaign and enabled every unique function in the valuation process to be enhanced with AI. From identity probabilities, to valuing impressions, to predicting performance, to forecasting spend, to predicting the right clearing price, to detecting option manipulation or even fraud, to generating creatives, to supply path optimizations, or to even surfacing insights that could once easily be buried in a mountain of data. KOKAI and AI enhanced and upgraded nearly every part of Solomar. Secondly, developing, writing code, and even building is getting easier as enterprise AI tools continue to grow and evolve. Perhaps the most obvious of AI's features is that it is a productivity enhancer. as one example every engineer at ttd is using ai tools to write and or test code we've injected ai tools across the company and productivity is going up third think of the trade desk's proprietary ai and the trade desk's unique objectivity as an unprecedented power combo we think our business model is more conducive and will benefit more from ai than any of our competitors every scaled competitor we have is first and foremost selling their owned and operated inventory oh no we don't have oh no we have aligned our interest with buyers and that is even more valuable in the ai-fueled ecosystem ai makes it easier to make better decisions for advertisers and match the best ad opportunities valuable data like advertisers first-party data is way more valuable in an AI world. Retail data is more valuable in an AI world. The buying platform with the most objectivity and the most trust is the one most likely to create the most scale and win the most market share. At the Trade Desk, we have built the industry's most advanced, trusted, and objective data set, which is based on factors like these, 20 million data opportunities every second, each with thousands of data variables and each valued objectively. Our clients' valuable first-party data, which they trust us with, that we will never jeopardize. The industry's most scaled data marketplace, including most of the world's leading retailers. Close integrations with thousands of suppliers and publishers across channels. In short, we are trying to make millions of complicated decisions every second based on massive data sets. This assignment can obviously be enhanced with AI. That's why we are investing in it and have been for years. But an AI company in the advertising space must have the data and the objectivity to make any sizable, scaled, and sustainable progress. Advertisers are becoming more selective with their data. We predict this will continue. Trust matters more than ever in an AI-fueled world, and AI companies without access to scaled quality data or amazing levels of trust will not last long. The global digital advertising marketplace is highly complex, with limitless levers and seemingly an infinite number of possible permutations for every campaign. AI will continue to play a growing role in this fast-evolving global advertising market. Let me put an even finer point on this. There is an emerging narrative that AI will compress software value or disintermediate platforms altogether. That might be true for some SaaS businesses, especially those that deal in generic process or low-grade data. However, for platforms that have earned the trust of their clients and partners and have amassed data that is scaled, unique, refined, and actionable, they are in the perfect position to leverage advances in AI to add more value. But to be very clear, this complexity of the global advertising market is not a weakness for the trade desk. It is a moat, and it is exactly that kind of environment where agentic AI can add meaningful value, not by replacing platforms, but by enhancing decision-making within them. What used to be exposed through static APIs can now be expressed through systems that can reason, adapt, and optimize toward outcomes. We are convinced that agentic AI will ultimately accrete the most value to companies that already have deep customer trust, that have scaled, refined, and objective data sets, and that prioritize objectivity, not by companies with limited data hoping an AI framework becomes their business model. In that sense, agentic AI is an evolution of outcome-based platforms, not a shortcut around them. we've spent years building the trade desk around trust objectivity and measurable outcomes while maintaining strict controls around data ownership and advertiser control that foundation is critical for agentic workflows to become more useful and more widely adopted i think this is a great transition point to talk about another innovation that is in early phases that we expect to pay massive returns in the future it's our new product audience unlimited audience unlimited is one of our biggest innovations ever this will change the usage and value of the data marketplace for both buyers and sellers and we think that agencies advertisers data providers and retailers will all benefit from this innovation and it is essential in this new ai-fueled world there has been massive underutilization to third-party data and retail data in particular since the advent of programmatic about 20 years ago. I have argued that the data marketplace is anemic for one primary reason. There is no price discovery for data. The cost has really been complicated for marketers, so generally they don't use it. We can see though that the value is obvious, especially leveraging AI. And using a flat cost structure, Audience Unlimited helps advertisers use a wider range of the most relevant data to any given campaign for an all-in cost where value and impact is clearly understood. This innovation wasn't possible before advances in AI, particularly agentic AI in this case, which allows us to surface the right data segment at the right moment. of course audience unlimited is completely optional clients can use it or continue to buy third-party data a la carte we are already seeing very positive results with early adopters and i'm excited for more advertisers to get access as this year progresses relatedly in retail media the spend on our platform that was influenced by retail data reached record levels in 2025 over the last five years or so we have launched partnerships with retailers around the world and together we have created the world's largest and richest marketplace of retail data combined we believe the retailers in our data marketplace represent more than half of global retail sales the vast majority of our retail partners are sending data via uid2 and we are building strong diversification across categories from big box and grocery to delivery travel and many other retail categories cheerios ran a display campaign in the uk recently using retail data for audience targeting on kokai they saw 88 more conversions and seven times better cpa now nestle plans to activate retail data across most of their future campaigns including audio and other channels and retail data is just one piece of the puzzle. The Audience Unlimited rollout is part of a much bigger effort to reform measurement and enable our partners to use more agentic as well. But we'll be talking more throughout this year about two new innovative frameworks. One is a measurement framework and the other is an agentic AI framework for our partners. In 2026, you will see us continue to close the gap between media dollars and real business outcomes like sales, lifetime value, and brand health. We are strengthening the value we are delivering to clients and reinforcing our position in an increasingly agentic world, including with CPGs, who are among the most eager to embrace new open internet measurement models. With advanced AI already distributed across coci, our ability to deliver more value to our clients through better performance has never been greater. I want to share one more innovation built on CoCut, and that's DealDesk. Complexity has brought many advertisers to seek out one-to-one deals as a means of simplifying supply chains, much like they used to in a non-digital world. But in that process, some buyers have inadvertently given up buy-side decisioning power, especially in CTVs. They've also given rise to inefficient supply chains or inadvertent oxygen to some bad players that a more efficient supply chain would not allow for. Deals can be a way to leverage size and get a better deal, but measuring the deal's outcomes becomes very important. It is easier to do a bad deal than ever, especially when pursuing cheap costs. Historically, 90% of deal IDs never scaled, either because they were set up poorly, hard to troubleshoot, or simply didn't perform. DealDesk centralizes the way buyers create, manage, and analyze their deals. It uses AI to forecast how a deal is likely to perform relative to the open market, and then highlights where things may go off track. Early results are encouraging. So far, deals that are set up and managed through DealDesk are performing meaningfully better than those managed the legacy way. More suppliers are signing up for DealDesk every week. DealDesk is in early stages, but it is rolling out around the world. Most recently, the two biggest SSPs in Germany announced that they are integrating with it. CTV continues to be a strong driver of overall growth and remains one of our fastest growing channels. The largest content owners in the world are leaning further into programmatic and decision buying. The shift from traditional insertion orders and programmatic guarantee toward true, biddable CTV continues to accelerate, particularly in live sports and premium episodic content. The last innovation area that I'd like to talk about is simplification, specifically simplification across the platform. The complexity of our ecosystem is a moat for the Trade Desk, but that doesn't mean that we have to hand the complexity back to our user. At the Trade Desk, we are making huge efforts to simplify the supply chains, to simplify measurement to simplify our ux and even simplify the way that we build we don't compromise the power of our platform or our values on transparency by simplifying our bills we will make it easier to compare our results and our products to walled gardens for example the vp of strategy at a large agency noted and i quote even though a large commerce walled garden may trump at one percent or no fees at the end of the day the effective cpm that we pay is higher than comparable campaigns on the trade desk we're paying more to get less functional reporting and we are spending a lot more on data than we would have on the comparable trade desk campaign our goal is not nor has ever been cheap reach which ultimately slows growth because it is ineffective. As more marketers come to terms with the limitations of cheap reach, they just need simple ways to explain around their organizations, and especially to the CEOs and CFOs of their organizations, why expensive impressions are often the best. Efficacy is not a problem for the open internet. Simplicity currently is. Our efforts in simplification are already working. IKEA, for example, is using CoCai to get a more intelligent perspective on how their ads perform across all channels. Thanks to CoCai's AI-fueled omni-channel optimization, they saw cost per acquisition decrease by 17%, while also gaining valuable new insights on the effectiveness of different channel activations at different stages of the customer journey. Another example, Best Western saw their booking rate double when using COCAI to target live sports opportunities, thanks to an 89% improvement in incremental reach with COCAI. Of course, in order for our clients to take full advantage of all of this innovation we've been talking about at scale, we need to continue to upgrade how we operate. With over 3,500 employees and serving thousands of brands, what worked for many years, particularly in our go-to-market organization, needed to evolve in order for us to scale our business from about $3 billion in revenue to $10 billion in revenue and beyond. Over the last year, we've made significant upgrades to how we operate as a company, many of which are relevant to large global advertisers in categories like CPG, but also across all industries even though we have not harvested most of those seeds we are seeing green shoots and are extremely confident that we've made the right moves to scale and improve this business we reorganized our go-to-market model around a brand first more integrated coverage approach that means unified teams are now responsible for both business development and spend activation with clear accountability for results we increase the number of advertisers where we have direct relationships and we eliminated overlapping coverage between advertiser and agency teams that makes us a more strategic unified partner for the biggest brands in the world while still advocating and aligning our business closely with our agency partners joint business plans or jbps are a good example of how this shows up in the numbers exiting 2025 jbps accounted for well over half of our business and our JBP pipeline has more than doubled over the past year. For our largest advertisers in their agencies, JBPs create shared goals, clear accountability, and a multi-year innovation roadmap. As a result of our organizational upgrades, our teams are working with more clarity and data than ever. This allows us to spot opportunities earlier, lean in where we see momentum, and adjust course when needed. It also means that when CPG or or auto spends a couple of quarters on its back foot, we can both support those clients through the turbulence while also allocating time and resources towards areas where budgets are growing faster. Finally, I'd like to zoom out and provide a little more perspective. For as long as we've been public, which is around 10 years now, there's been a narrative that our margin or take rate must compress because other platforms offer lower upfront prices for non-decision, non-data-driven buying. In reality, those business models deliver less value overall. Their business model is focused on selling O&O. Walled gardens can more than make up for the lower fee on supply side as they mark up and prioritize their owned and operated inventory. 2025 was a year of meaningful change at the trade desk. We upgraded our leadership team. We reorganized how we go to market. We sharpened our operating discipline. We shipped the most impactful product release in our history and made important strides in CTV, retail media, and improving the overall supply chain of the open internet. At the same time, we navigated a challenging environment in the CPG and automotive categories while still delivering strong growth and profitability. As we enter 2026, our focus is very clear we will continue to drive performance and innovation through coci and our ai roadmap i don't think there's any company in our industry that is better positioned to take advantage of advances in ai we will deepen our relationships with the world's largest advertisers and agencies through more rigorous account planning joint business plans and sector-based expertise we'll push forward the structural shifts happening in ctv retail media and cleaner supply chains and we will do all of that while staying true to the principles that have guided us since the beginning. Objectivity, better business outcomes, and alignment with interests of advertisers. So bottom line, AI enhances the power of choice, and it is best used by the trusted and the objective. The open internet should get the first dollar and not the last. And the best days of the Trade Desk are ahead of us. I want to thank our employees, our clients, and our partners for their trust and support throughout 2025. I am as confident as I have ever been in the opportunity in front of us and in our ability to capture it. With that, I will hand it over to Tenille to walk through the financials, and then we'll open up the call for questions.

Thank you, Jeff, and good afternoon, everyone. Before reviewing our results, I would like to share what I've shared with our team internally about my priorities over the coming months. My focus during this transition is on continuity and clear objectives. I'm here to support the ongoing operations and strategic priorities for the overall business. I'm incredibly fortunate to work alongside a world-class finance organization, and I'm confident our team will continue to support the growth at the trade desk in the near term and beyond. Now, on to our results. For the full year 2025, we delivered revenue of $2.9 billion, representing 18% year-over-year spend was approximately $13.4 billion. In Q4, we delivered revenue of $847 million, representing 14% year-over-year growth. Excluding political spend related to last year's U.S. elections, revenue increased approximately 19% year-over-year. Our strong performance in Q4 was driven by strong growth across CTV and audio from a channel perspective, as well as in regions outside of the U.S. CTV grew at a faster rate than the overall business throughout 2025, including during Q4, despite lapping strong political CTV spend in the quarter. Video, which includes CTV, represented about 50% of our business in Q4 and continues to grow as a percentage of our channel mix. Mobile represented around 30% share of our business during the quarter, while display represented a low double-digit share. Audio represented around 6% of the business and grew year-over-year at a rate higher than any other channel in Q4. Geographically, the United States represented approximately 84% of our revenue in Q4, and international represented about 16%. Growth across our international business continues to outpace growth in North America. Our strong momentum in EMEA and APAC is a reflection of the investments we have made in these regions over the last several years. Among the verticals that represent at least 1% of our business in Q4, as Jeff mentioned, CPG and to a lesser extent auto were our softest verticals, and those trends have continued into Q1. In contrast, we saw particularly strong year-over-year growth in medical health, technology, and business and finance. Importantly, this strength reflects not just market dynamics, but the diversification work that we have been doing across our business. We continue to broaden exposure across verticals, with meaningful growth and new client wins in areas such as pharmaceuticals and telecommunications. Q4 operating expenses were $590 million, up 8% from a year ago. Excluding stock-based compensation, Q4 operating expenses were $478 million, up 15% a year ago. The Trade Desk generated approximately $400 million in adjusted EBITDA, or about 47% of revenue. Q4 income tax expense was $83 million, driven primarily by our profitability and the impact of stock-based awards. Q4 net income was $187 million, or $0.39 per diluted share, or about 22% of revenue. Adjusted net income for the quarter was $284 million, or $0.59 per diluted share. Net cash provided by operating activities was $312 million, and free cash flow was $282 million in Q4. We ended the quarter with a strong cash and liquidity position. Our balance sheet had about $1.3 billion in cash, cash equivalents, and short-term investments at the end of the quarter. We had no debt on the balance sheet. DSOs and DPOs were consistent with prior periods. DSOs were approximately 100 days and DPOs are under 85 days. In Q4, we used $423 million of cash to repurchase our Class A common stock via our share repurchase program. As you saw in our press release, we announced an additional authorization bringing the total to $500 million, inclusive of the amount remaining from the existing authorization. Given our strong balance sheet and consistent cash flow generation, we plan to continue opportunistic share repurchases while also offsetting dilution from employee stock issuances. Turning to our outlook, our Q1 guidance reflects a prudent approach in an environment where visibility remains somewhat lower, particularly in CPG and to a lesser extent auto verticals. That softness is partially offset by continued strength in medical health, technology, and business and finance, and in EMEA and APAC. For the first quarter, we expect revenue to be at least $678 million, representing 10 percent year-over-year growth. We estimate adjusted EBITDA for Q1 to be approximately $195 million. In terms of our operating plan, we intend to continue investing in the business while maintaining strong cost discipline. As in 2025, we expect headcount growth to remain below revenue growth, reflecting our focus on productivity and operating leverage. We plan to be deliberate in prioritizing investments that directly support revenue growth and AI-driven innovation. Taken together, we expect our full year 2026 adjusted EBITDA margin percentage to be approximately in line with 2025. In closing, our fundamental view of the profit potential at the trade desk has not wavered. We have driven significant leverage over the years, and given the strength of our client relationships, product focus, and organizational actions underway to strengthen our sales and go-to-market execution, we believe our revenue growth rate should improve over time. We are confident that the decisions that we are making today position us well to emerge from this period even stronger and to capture the large and growing digital advertising opportunity. That concludes our prepared remarks operator. Please open the call for questions.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star 1 if you have a question or a comment. The first question comes from Sean Patel with SIG. One moment. Sean, your line is up.

Thank you. Hey, guys. I have a two-part question. first jeff you talked about the impact of cpt and auto on the business last year as well as you know potential further impact uh this year and i was just wondering can you talk a little bit about what you're seeing from these two verticals thus far in one q and then second teneal could you provide a bit more color on the one q eva guide and thoughts on the your operating expenses thank you first on thanks for the question let me zoom out just a little bit and first explain why we called this out because obviously we have not historically done that on a sort of per category basis and I also

don't want people to misunderstand CPGs and autos are some of our very best partners there's some of the parts of our business that we're most optimistic about the future we call this out to highlight that there are some forces that are bigger than us and even bigger than them and those are things like cost inflation consumer pressures tariffs cost of living increases and that inside some of the biggest brands their marketing budgets and advertising budgets are a huge part of their machine their operation and their costs and so when the world hands them uncertainty, it's often the thing that gets paused. They would rather adjust marketing budgets than lay people off, and certainly laying them off and then rehiring them when something changes is obviously less preferred than changing budgets or anything like that. So bottom line, autos and CPGs had a lot of unique pressures on them in 2025, and some of those continue today we also call this out because of just the impact on our business overall because together these two categories are roughly a quarter of our business depending on how you categorize everybody and if if you look at the impact that these two categories have we would have been at least five percent higher in growth rate if you don't include those categories or they were on a parity with everybody else additionally there is of course the supply demand and balance that we talked about at length and i do want to emphasize that in the supply demand imbalance where there's more supply than demand than ever that the value of decisioning is higher than it has ever been and that some of the cpgs have the luxury of leaning in and focusing on growth targeting they're rethinking measurement they're thinking about the future and how do they build their brands there are other CPGs that are thinking about cost they're afraid they're focused on their their cost cutting and those that are doing that and still especially if they have a mindset of spray and pray and do that at the least amount of cost those are not doing as well and they don't have the luxury of looking as forward but if you look at companies like coca-cola or Hershey's or or even the Hyundai's and some of the forward-thinking auto brands they are rethinking measurement they are rethinking brand building in this new and emerging digital ecosystem and it's really benefiting them well last two things I'll say more specifically about like to our guide our q1 guide reflects the prudence from both the auto and the CPG categories in the state of the state if you will and what they're dealing with and also it does not reflect a diminished long-term opportunity for either the trade desk or these categories specifically it is just something that's happening at a macro level at this moment in time and it is bigger than them and bigger than us and the good news is is that our dialogues with these these brands in both categories wrong in most cases as ever so we're very optimistic about the future we're giving the time back to Tenille so she can answer the second part.

So regarding our Q1 EBITDA guide, thanks for the question. So first, in Q1, I would characterize this as primarily a timing thing. We continue to expect full year adjusted EBITDA margins to be approximately in line with 2025. The primary driver in Q1 is infrastructure investment. So looking back to 2025, we remain disciplined with hiring and reinvestment. Headcount grew below revenue for the third consecutive year, and we drove operating leverage. Looking ahead, it's important to think about 2026 as a year of disciplined reinvestment. That's why we expect our full year adjusted EBITDA margin percentage to be approximately in line with 2025. We again expect headcount growth to remain below revenue growth, reflecting operating discipline. Our incremental investments are focused on infrastructure and talent. In particular, we're completing our transition to owned data centers and strengthening the AI and machine learning capabilities that power our platform. So the balance is clear. Invest where the ROI is highest, maintain strong profitability, and position us for improved leverage beyond 2026.

Next question, John.

The next question comes from Vasily Kerasyav with Cannonball Research. Please proceed.

Thank you. Jeff, wanted to ask you about what you would see as the most, the biggest organizational improvements over the last 12 months. A year ago on this call, we were talking about your reorganization. So I wanted to ask you to talk about what you have achieved and that will drive growth that you're so confident in going forward. Thank you.

You bet. Thanks for the question, Vasily. So first, let me just zoom out a little bit and just give a little bit of context. Of course, as I mentioned in the prepared remarks, but we're we've been public for a decade now nearly and obviously a lot has changed in that time throughout the history of our company we have never changed our mission what we're after our business model we've been very focused the things that we talked to investors about in the IPO roadshow the same stuff we talked about today of course there are things in the world that have changed and there's advancements in technology their marketplace dynamics the advent of CTV, issues of identity, we've navigated all those and won and gained market share at every single turn. But the people that we had at the time we were public, especially as a leadership team, are not the same people that we need to take us from $3 billion to $10 billion. And even the people in some cases that we've had in recent years, we've had to change we also just need to change the way that we think about discipline and investments like I'm really happy about the way we're growing in a very disciplined way and and we're making very deliberate decisions across the board but of course across the board we're also saying what parts of our business work and what don't what do we need to change what are the things that got us here that we should never abandon and what are the things that got us here that won't get us there, and triaging between all of those things. And in doing that, of course, there needs to be clearer ownership. There needs to be operational rigor. We've definitely streamlined our go-to-market coverage. We've gotten rid of a bunch of overlap. When you're a smaller company, the ambiguity can help you because you can be really agile and respond to it and super collaborative. You can't be as collaborative. There has to be more clear roles and responsibilities so you're not stepping on each other's toes. things aren't falling between the cracks specific number of people assigned to every brand to every agency they are very clear on their roles and responsibilities clearer than ever they're held accountable with more clarity than ever as a result our JVP pipeline is the greatest it's ever been and that to me creates a tremendous optimism for the future you know despite the fact that I don't think that this is our best earnings report ever I hope you can hear that i am as optimistic as ever and that's largely because we're improving all of these things while not compromising on our vision or on the values that got us here there's opportunity for us to improve on product and i would just summarize that as in the last couple years at times we've we've used that same agility to go really fast and put a lot of things in market sometimes we take too long to put things in market and other times we put them in market before they're ready and we just need to do a better job of being deliberate about all those and in order for us to do that with the thousands of people that we employ we just have to have the better systems to do that we kicked off this year with better systems in the way that we roll things out and that's part of the reason we're so convicted that often

2026 passion that we've always our next question comes from justin patterson with key bank please proceed.

Great. Thanks, and good afternoon. I think it's kind of building up some of the responses you just said there, Jeff. There have been the organizational changes, the macro factors, but there's also been changes in just competitive intensity across the industry. So could you talk a little bit more about just how you've seen a competitive pressure evolve across the DSP landscape and just your expectations on how spend will kind of get back to historical cadences here? Thank you.

You bet, Justin. Thank you so much for the question. I was hoping somebody would ask about this. So I just want to point out a couple of things as a bit of the backdrop for this, because I get asked this question, and honestly, the answer is more complicated than I would like it to be. And so as a result, I just need to give a little bit of context. So has the competitive pressure gone up? I would say not really. And let me explain why. People want to talk about Amazon a lot as it relates to competition. And as I've said before, I think Google was a far better competitor than Amazon is today, or frankly, will likely ever be. But the market has gotten way more complicated. It's also gotten more fragmented. And I would also say that the press has not, the trade press, has not been super friendly to us. And when we talk to some of the editors-in-chief at these firms, they'll say things like, you know what, your name gets clicks, especially when it's negative or controversial. And so they lead with that. And that hasn't always been helpful. And they love a good story of sort of a David and Goliath where there's a trade desk competing against a Google or an Amazon. And honestly, that's not always true, especially when you look at what we're doing versus what Amazon is doing. So now that said, and I'll come back to the comparison to Amazon, we have never said that there's only going to be one DSP. And in fact, when I talk to the biggest publishers in the world, I say, in order for you to manage your business properly, you need to run an auction for your premium inventory that involves competition. If we're the only bidder in the world, that's not competition. We're not trying to be the only DSP. We are trying to be the best, and we're trying to be the biggest. and we continue to maintain that the company that has the best objectivity and the best product in alignment its interests with the buyers because it will forever be a buyer's market they will win the lion's share we still think we will win the lion's share so part of the reason for that is because we play in a different sandbox than almost every competitor and that includes and especially refers to Amazon Amazon is mostly playing in selling their owned and operated inventory trying to win on non-decision inventory they can't compete on decision because if they say that they're objectively trying to buy the open internet and then spend most of the money on their owned and operated where they make all their money then it poses some hypocrisy or create some channel conflict and when you add the channel conflict that they compete with most of the companies that are the biggest brands in the world especially the cpgs that we talked to talked about earlier, that poses a threat to them and a better position to win a problem to the business. But it does make it create a higher burden for us to explain that to the world. It does also create more opportunities for AI. And that's where, again, we believe AI plus objectivity becomes way more potent and powerful. And we're really excited to play this out over the coming years. At a moment where people are concerned about cost, it requires us to educate that's part of the reason why all the operational rigor that I just talked about a minute ago is so important because as we get that finely tuned and as we go to market with a clear focus we're often competing with companies who their DSP is their 37th highest priority not their number one priority this is our number one priority and we believe that coupled with all the things I just said makes it so that we will win the lion's share and we're starting to compete over the years to come. Thanks, Jack.

The next question comes from Yusef Squally with Truist Securities. Please proceed.

Great. Thank you for taking the question. Jeff, you talked about AI in your prepared remarks and how it's been a source of innovation on the product side. Can you maybe talk about it on the monetization front? How does agentic AI change the monetization model potentially for trade desk?

You bet. There are a whole bunch of ways where I think it improves it. Let me just start by emphasizing some of the points that I've made already. First, decisioning is at our core. So one way of explaining what we do is that we look at 20 million ad opportunities every single second, and then we figure out which couple hundred we buy for any individual company. That burden of choice is also just a tremendous gift, obviously, where they get to cherry pick the very best ads for them. But decisioning is getting harder and more complicated. And that obviously creates an opportunity for a gen tech to play a role where humans can make lots of decisions, but also agents, and they can operate side by side. In order for that to work, you have to be an incredibly trusted platform. In an AI world, trust matters more than ever data potency matters more than ever but in this ai-fueled world the the third-party data ecosystem that we power using things like audience unlimited and other things all these innovations are meant to make it easier to bring data onto the platform and make it more powerful in an ai-fueled world it just inherently is more powerful when you can use it in ai instead of a simple algo or a basic bid factor so if our business improves decisioning and efficacy because of the fact that agents can make that accelerate in particular so and that's that's not to mention all the places where we inject AI that just makes our overall performance better so you know there are millions of paths to choose from in delivering a particular ad obviously ai can make that better and by making that better we our efficacy goes up that's just one of hundreds of examples where we've already injected ai and are making better decisions and that improves our ability to monetize includes it it improves the client stickiness uh and uh and improves uh even our go-to-market effort so appreciate the question hopefully that gives you some color.

Yep. Thanks.

Thank you, Jeff.

Next question comes from Tim Nolan with SSR. Please proceed.

Hi. Thanks so much for taking the question. Amid so much discussion about AI, I'd like to actually return to a longstanding favorite topic, which is CTV. And Jeff, you referenced this very briefly in the prepared remarks. I wonder if you can get a bit more color as to the evolution of direct versus PMP deals versus open exchange transactions in CTV. My question is, are advertisers and publishers demanding more bidded transactions now, or are they actually looking for more certainty via direct deals? And regarding OpenPath to CTV, similarly, are these more via direct or by bidded means?

Great question. partly because you can kind of think of all of this as a Venn diagram where there's slightly different definitions of a direct buy, a programmatic guaranteed buy, a private marketplace buy, biddable versus not biddable, open exchange, because you can have a PMP that is biddable. There are a whole bunch of variations on the groups that you described. So let me sort of reduce this down. The actual user, the actual ad is actually not your choice. It's a choice that the media company decided. And often it's not the very best ad that you could have. They're looking for ways to have guarantees on rates and to use their buying power to get some advantage while still having the bid, which usually brings them to biddable. question is are looking for more biddable more decisioning while at the same time saying guarantees and and assurances that i'm buying in the very best way decisioning less programmatic guaranteed less conversations as ever on a deal framework where i can buy any way i want and bid anywhere i want and then get credit for it in the same way that you might in an upfront or something like that across all the different ways that I bought I'm convinced that's the future you'll see more brands asking for for those sorts of deal structures with the biggest publishers and CTV companies in the world which is I'm gonna spend a hundred million dollars I want to buy it any way I want on anything I want and then I'll get a discount or I'll get some buying in bulk that I wouldn't if I didn't prearrange this so there will be more deals but there will be more bid and more decisioning, for sure. Thanks, Tim.

The next question comes from Jason Helstein with Oppenheimer. Please proceed.

Thanks for taking the question. There's one question, one follow-up. So it feels like the overhang in the stock is now more than just Amazon as a DSP competitor, and there's a super bare view, not saying we agree with this, but I think it's out there, that an agentic future makes brands irrelevant, okay? So, like, first we could say, like, I imagine you guys disagree with this. You probably have thoughts. And then as people kind of, you've discussed how, like, you know, AI should be a positive for your business, and it's still early days in deploying it. I guess when folks say, well, do you have the scale when it comes to deploying AI to compete with Amazon, let's say, DB360 on the AI side? So maybe kind of talk about that. And then just a follow-up on the comments about the rest of the year. i guess like factoring in your comments about you know the organizational upgrades you know what needs to happen for you to accelerate growth if cpg and auto remains weak thank you well that there's a lot in there um so uh i'll start with the one that i objectionable which is agentic ai makes brain and it's because it makes decisioning in a very complicated environment

it easier. And when I say easier, I don't mean that the nature of the market is getting less complex. I mean that the power of man and machine together can reason through this really complicated decision that is in front of an advertiser, which is, should I buy this ad that literally you're deciding in milliseconds? So Agentec is just an amazing tool to use in that environment. But the notion that a Gentic makes brands irrelevant to me suggests that quality doesn't matter, consistency doesn't matter, in the world you're describing integrity doesn't matter. Because if a brand performs over and over again, if they have a great product, consumers will buy it again. Like all of us have brands we love and we buy again and again and again. I don't understand why a Gentic would make Coca-Cola irrelevant. I am still going to buy it. i still love it like there's just so many so many brands like that that i i don't understand the argument of how agentic would make that that go away can you remind me of the follow-up question well just that um basically when you think about deploying ai um how do you think about your ability to scale it effectively relative to amazon and dv360 which have the benefit of these parent organizations who are trying to dominate ai yeah so as we're scaling ai important ingredient it is data that you get from the buyers themselves so one of the one of the thesis that we had when we went public that we really wrestled with was uh how can we possibly win when google has so much more data than we have and the way that we got comfortable with it and And we went over this over and over again hundreds of times in the IPO Roadshow, was if we take our objectivity and our very focused technology and couple it with the brand's data, their data is worth way more to them than Google's data ever will be. That was our thesis then. That's what we've taken to the biggest brands in the world. And we've said this is a game of winning trust. As I said in the prepared remarks, that is more true in an AI world than it was 10 years ago when we went public. So how can we compete with them? We stay super focused on what we're doing. We build technologies that are very specifically built for the task at hand, which is one of the most high-volume transaction ecosystems in the world. It's over a trillion-dollar TAM. So there's plenty to be focused on, and you don't make it a part-time job. All of those companies, their DSPs are a part-time job. And I would argue that in both their AI efforts and their cloud, they're owning the DSP. And if they get really focused on getting the best out of their DSP, they put at jeopardy their cloud products, and they put at jeopardy their consumer-facing AI products. And those are obviously the way companies like Amazon and Google are primarily valued today. So I think there's a strong argument that those companies won't stay in this business for very long because of the objectivity problem that that creates in the lines of business that really bring home the bacon for them. Thanks, Jason. Next caller, please.

The next question comes from Matt Swanson with RBC. Please proceed.

Great. Thank you guys so much for squeezing me in here. Jeff, I want to follow up on some comments you made during the prepared remarks about, I think it was Hershey that was talking about cheap reach and just really how you're working with your brands to help them understand kind of power of KoKai and getting their brand spend into a bit more of a performance lens. Or is it also more about maybe going a little bit more into that mid market where there's already larger performance budgets and teaching them about what trade does can do for them?

Yeah, I really appreciate the question. So let me just first be very open about our strategy and the way we've gone to market. I think we're the only player that has reached any scale focusing on the head and not the tail, if you will, of the market, where we went to the biggest advertisers in the world and partnered with them and then have been working our way down to the torso and tail. So we're still very focused on the head because so many of the dollars are concentrated there. But for those of you that were at our IPO or our first investor day, we talked then about the lines between brand and performance are artificial and temporary. So there is this narrative on Wall Street that performance budgets are more DTC or they're more mid-market, and then there's brand budgets that are separate from that. That paradigm, I just reject. I think everything is performance now. It's just a matter of where you are in the funnel. The problem with framing it that way is you reinforce a serious problem in the ecosystem, which is that all of the measurement frameworks that have existed to date just give credit to the last person who touched the ball before it went in the net the rest of the team gets nothing and so in the brand building business it is by its very nature at the top of the funnel where you win hearts and minds it through it tends to be more expensive media but nobody typed in by mercedes-benz into google without seeing the commercial or hearing about the company before that so giving all the credit to the last touch has been a serious mistake and so what we're working with brands like hershey's and others to do is to create a better framework to reward the things that matter and make everything perform of course the the players on the back of the field if we're using in the soccer analogy the goalie and the defender they matter as much as the striker but let's not just give all the money to the person who kicked the goal and otherwise we all play soccer like five-year-olds we hover around the ball and just try to be the last one to touch it before it goes in that unfortunately is too often the state of marketing and all of the biggest brands in the world are trying to figure out how to spread out on the field and make better decisions and that's what we're partnering with them to do Cool.

Thanks.

Let's get...

Thanks, Matt. Let's get one more in, John.

Absolutely. The next question comes from Eric Brundolo, private investor. Please proceed.

Yeah. Can you guys hear me?

Yeah. Yeah.

Yeah. Hey, Alec Brundolo from Wells Fargo. Appreciate the question. Press reports indicate some are uncomfortable getting into open paths due to concerns about transparency or perceived conflicts of interest.

Do you think you have the product, the right product and at this initiative um or are you open to making changes to make it a little more appealing to advertisers thanks yeah thank you for the question so uh i'm sure part of the reason you're asking is if there's been some trade press on this i find it uh kind of ridiculous to be honest some of the assertions that are made uh so let me just try to dispel some myths here uh we created open path to be the most efficient supply chain in the market and we wanted it to be a canary in the coal mine and the stocking horse i've learned recently that when i use those metaphors some people don't know what i'm talking about so let me unpack it a little bit canary in the coal mine meaning when there's a problem in a supply chain or that there is a supply chain that is inefficient and opaque having a more efficient one right next to it an easier path to the inventory itself it does prove in an A-B test that B is less efficient. When you do that then you have a stocking horse in the sense that we now have a much more efficient path to that a publisher or that inventory and we expect the other paths to get more efficient or they will die. So open path is meant to be competitive so the thing that I just I really want to emphasize is that at a moment where many agencies are focused on principle-based buying and I think not doing as good of a job of representing their clients as they could and that SSPs in some cases are convoluting the ecosystem more than they have in the past the need for open path is great and you can expect to get criticism from those players that are that don't want a more efficient supply chain open path is very simple in the way that it works we plug in as directly as possible as we possibly can to the to the seller or the publisher and then we charge them 4.5 which is meant to be nearly break even just slightly profitable so that we can create a more efficient supply chain and instead of just relying in the past on sell-side players that haven't seen that many of them still today don't spend any time thinking or talking even about the efficiency of the supply chain and instead spend much of their time trying to exploit it. So I'm not surprised at all that OpenPath ruffles people. I'm not surprised that some people would like to turn it off if they find ways to get paid in unique ways to create more efficiency and improve the supply chain. That's all OpenPath ever was. Our fee structure is super simple. Any assertion to the opposite is just not true. Thanks, Alex.

John, you can close out the call.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.