Trade Desk, Inc 10-Q for FY2021 Q3

About this 10-Q

Headline figures

Trade Desk, Inc. (TTD)

10-Q 2021-11-08 For: 2021-09-30

Added on April 09, 2026

Trade Desk, Inc filed this 10-Q on November 8, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $301.09M; up 39.3% from $216.11M a year earlier
Net income: $59.38M; up 44.0% from net income of $41.25M a year earlier
Diluted EPS: $0.12; up 50.0% from $0.08 a year earlier

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Title of each class		Trading Symbol		Name of each exchange on which registered
Class A Common Stock, par value $0.000001 per share		TTD		The Nasdaq Stock Market LLC

		Page
Part I.	FINANCIAL INFORMATION		3
Item 1.	Condensed Consolidated Financial Statements (Unaudited)		3
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020		3
	Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2021 and 2020		4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020		5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
Item 4.	Controls and Procedures		21
Part II.	OTHER INFORMATION		22
Item 1.	Legal Proceedings		22
Item 1A.	Risk Factors		22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		44
Item 6.	Exhibits		45
Signatures			46

	As of		As of
	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	576,916	$	437,353
Short-term investments, net		221,685		186,685
Accounts receivable, net of allowance for credit losses of $7,245 and $7,253 as of September 30, 2021 and December 31, 2020, respectively		1,624,759		1,584,109
Prepaid expenses and other current assets		92,557		102,170
TOTAL CURRENT ASSETS		2,515,917		2,310,317
Property and equipment, net		137,416		115,863
Operating lease assets		242,436		248,143
Deferred income taxes		46,405		50,168
Other assets, non-current		46,581		29,154
TOTAL ASSETS	$	2,988,755	$	2,753,645
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities:
Accounts payable	$	1,304,971	$	1,348,480
Accrued expenses and other current liabilities		77,323		88,335
Operating lease liabilities		45,603		37,868
TOTAL CURRENT LIABILITIES		1,427,897		1,474,683
Operating lease liabilities, non-current		247,923		254,562
Other liabilities, non-current		10,121		11,255
TOTAL LIABILITIES		1,685,941		1,740,500
Commitments and contingencies (Note 10)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.000001; 100,000 shares authorized, zero shares issued and outstanding as of September 30, 2021 and December 31, 2020		—		—
Common stock, par value $0.000001 Class A, 1,000,000 shares authorized; 436,033 and 423,383 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively Class B, 95,000 shares authorized; 44,556 and 50,018 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		—
Additional paid-in capital		698,724		538,778
Retained earnings		604,090		474,367
TOTAL STOCKHOLDERS’ EQUITY		1,302,814		1,013,145
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,988,755	$	2,753,645

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021		2020			2021		2020
Revenue	$	301,091	$	216,113		$	800,869	$	516,128
Operating expenses:
Platform operations		53,400		44,826			154,709		127,167
Sales and marketing		59,278		44,637			176,797		116,002
Technology and development		55,847		41,079			163,301		117,931
General and administrative		52,120		42,789			155,884		117,252
Total operating expenses		220,645		173,331			650,691		478,352
Income from operations		80,446		42,782			150,178		37,776
Other expense (income):
Interest expense (income), net		317		235			556		(740	)
Foreign currency exchange loss (gain), net		1,153		(12	)		1,004		1,574
Total other expense, net		1,470		223			1,560		834
Income before income taxes		78,976		42,559			148,618		36,942
Provision for (benefit from) income taxes		19,592		1,312			18,895		(53,473	)
Net income	$	59,384	$	41,247		$	129,723	$	90,415
Earnings per share:
Basic	$	0.12	$	0.09		$	0.27	$	0.20
Diluted	$	0.12	$	0.08		$	0.26	$	0.19
Weighted average shares outstanding:
Basic		478,101		465,819			475,496		460,747
Diluted		498,912		492,207			497,942		487,309

	Class A and B					Additional						Total
	Common Stock					Paid-In			Retained			Stockholders’
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2019		454,755		$	—	$	380,079		$	232,438		$	612,517
Impact upon adoption of ASC 326		—			—		—			(388	)		(388	)
Exercise of common stock options		5,393			—		19,478			—			19,478
Issuance of restricted stock, net of forfeitures and shares withheld for taxes		197			—		(4,893	)		—			(4,893	)
Stock-based compensation		—			—		23,263			—			23,263
Net income		—			—		—			24,057			24,057
Balance as of March 31, 2020		460,346			—		417,927			256,107			674,034
Exercise of common stock options		4,306			—		22,491			—			22,491
Issuance of restricted stock, net of forfeitures and shares withheld for taxes		613			—		(2,836	)		—			(2,836	)
Stock-based compensation		—			—		24,516			—			24,516
Issuance of common stock under employee stock purchase plan		2,026			—		15,035			—			15,035
Net income		—			—		—			25,111			25,111
Balance as of June 30, 2020		467,291			—		477,133			281,218			758,351
Exercise of common stock options		2,245			—		12,118			—			12,118
Issuance of restricted stock, net of forfeitures and shares withheld for taxes		(84	)		—		(6,455	)		—			(6,455	)
Stock-based compensation		—			—		27,366			—			27,366
Net income		—			—		—			41,247			41,247
Balance as of September 30, 2020		469,452		$	—	$	510,162		$	322,465		$	832,627

Balance as of December 31, 2020		473,401		$	—	$	538,778		$	474,367		$	1,013,145
Exercise of common stock options		1,794			—		12,621			—			12,621
Issuance of restricted stock, net of forfeitures and shares withheld for taxes		110			—		(17,080	)		—			(17,080	)
Stock-based compensation		—			—		52,985			—			52,985
Net income		—			—		—			22,642			22,642
Balance as of March 31, 2021		475,305			—		587,304			497,009			1,084,313
Exercise of common stock options		1,401			—		13,718			—			13,718
Issuance of restricted stock, net of forfeitures and shares withheld for taxes		409			—		(12,155	)		—			(12,155	)
Stock-based compensation		—			—		46,015			—			46,015
Issuance of common stock under employee stock purchase plan		1,334			—		22,758			—			22,758
Net income		—			—		—			47,697			47,697
Balance as of June 30, 2021		478,449			—		657,640			544,706			1,202,346
Exercise of common stock options		1,808			—		13,220			—			13,220
Issuance of restricted stock, net of forfeitures and shares withheld for taxes		307			—		(9,038	)		—			(9,038	)
Stock-based compensation		—			—		35,086			—			35,086
Issuance of common stock related to acquisition		25			—		1,816			—			1,816
Net income		—			—		—			59,384			59,384
Balance as of September 30, 2021		480,589		$	—	$	698,724		$	604,090		$	1,302,814

	Nine Months Ended September 30,
	2021			2020
OPERATING ACTIVITIES:
Net income	$	129,723		$	90,415
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29,969			20,777
Stock-based compensation		132,010			73,751
Allowance for credit losses on accounts receivable		520			2,722
Noncash lease expense		29,914			24,052
Deferred income taxes		5,044			(20,978	)
Other		6,730			1,242
Changes in operating assets and liabilities:
Accounts receivable		(48,637	)		21,063
Prepaid expenses and other assets		20,627			(23,919	)
Accounts payable		(44,105	)		47,728
Accrued expenses and other liabilities		(14,790	)		11,047
Operating lease liabilities		(31,886	)		(10,388	)
Net cash provided by operating activities		215,119			237,512
INVESTING ACTIVITIES:
Purchases of investments		(233,427	)		(127,254	)
Sales of investments		4,539			—
Maturities of investments		192,077			128,315
Purchases of property and equipment		(43,920	)		(57,721	)
Capitalized software development costs		(3,684	)		(4,246	)
Business acquisition		(13,261	)		—
Net cash used in investing activities		(97,676	)		(60,906	)
FINANCING ACTIVITIES:
Proceeds from line of credit		—			143,000
Repayment on line of credit		—			(71,000	)
Payment of debt financing costs		(1,924	)		—
Proceeds from exercise of stock options		39,559			54,038
Proceeds from employee stock purchase plan		22,758			15,035
Taxes paid related to net settlement of restricted stock awards		(38,273	)		(14,184	)
Net cash provided by financing activities		22,120			126,889
Increase in cash and cash equivalents		139,563			303,495
Cash and cash equivalents—Beginning of period		437,353			130,876
Cash and cash equivalents—End of period	$	576,916		$	434,371
SUPPLEMENTAL CASH FLOW INFORMATION:
Capitalized assets financed by accounts payable	$	8,934		$	12,842
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$	39,006		$	17,702
Right-of-use assets obtained in exchange for operating lease liabilities	$	23,293		$	52,238
Asset retirement obligation	$	1,609		$	1,601
Stock-based compensation included in capitalized software development costs	$	2,076		$	1,394

	As of September 30, 2021
	Cash and
	Cash		Short-Term
	Equivalents		Investments		Total
Cash	$	141,689	$	—	$	141,689
Level 1:
Money market funds		403,952		—		403,952
Level 2:
Commercial paper		31,275		84,253		115,528
Corporate debt securities		—		94,080		94,080
U.S. government and agency securities		—		43,352		43,352
Total	$	576,916	$	221,685	$	798,601

	As of December 31, 2020
	Cash and
	Cash		Short-Term
	Equivalents		Investments		Total
Cash	$	132,372	$	—	$	132,372
Level 1:
Money market funds		259,434		—		259,434
Level 2:
Commercial paper		45,547		63,372		108,919
Corporate debt securities		—		79,342		79,342
U.S. government and agency securities		—		43,971		43,971
Total	$	437,353	$	186,685	$	624,038

	September 30, 2021
Due in one year	$	195,238
Due in one to two years		26,447
Total	$	221,685

	Shares Under Option (in thousands)			Weighted- Average Exercise Price
Outstanding as of December 31, 2020		26,481		$	10.73
Granted		1,171			74.52
Exercised		(5,004	)		7.91
Cancelled		(1,186	)		18.20
Outstanding as of September 30, 2021		21,462		$	14.45
Exercisable as of September 30, 2021		13,962		$	7.97

	RSU (in thousands)			Weighted- Average Grant Date Fair Value
Unvested as of December 31, 2020		5,698		$	26.10
Granted		2,166			73.70
Vested		(1,494	)		22.41
Forfeited		(575	)		28.72
Unvested as of September 30, 2021		5,795		$	44.58

					Change
	2021		2020		$		%
	($ in thousands)
Three months ended September 30,	$	301,091	$	216,113	$	84,978		39	%
Nine months ended September 30,	$	800,869	$	516,128	$	284,741		55	%

	2021		2020		$ Change
	(in thousands)
Three months ended September 30,	$	1,470	$	223	$	1,247
Nine months ended September 30,	$	1,560	$	834	$	726

	Payments Due by Period
	Less than 1 Year (Remaining 2021)		1-3 Years (2022 and 2023)		3-5 Years (2024 and 2025)		More than 5 Years (Thereafter)		Total
Operating lease commitments	$	13,476	$	103,260	$	82,506	$	131,430	$	330,672
Other contractual commitments		11,134		68,127		210		52		79,523
Total	$	24,610	$	171,387	$	82,716	$	131,482	$	410,195

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Operating lease cost	$	12,402		$	10,768		$	38,288		$	30,848
Short-term lease cost		229			228			592			723
Variable lease cost		1,891			1,688			4,848			4,251
Sublease income		(751	)		(936	)		(2,114	)		(2,789	)
Total lease cost	$	13,771		$	11,748		$	41,614		$	33,033

Exhibit Number	Exhibit Description	Incorporated by Reference			Filed Herewith
		Form	Filing Date	Number

3.1	Amended and Restated Certificate of Incorporation.	10-K	2/19/2021	3.1

3.2	Amended and Restated Bylaws.	10-K	2/19/2021	3.2

4.1	Reference is made to Exhibits 3.1 and 3.2.

4.2	Form of Class A Common Stock Certificate.	S-1/A	9/6/2016	4.2

4.3	Form of Class B Common Stock Certificate.	S-8	9/22/2016	4.4

10.1+	Performance Stock Option Award Agreement under The Trade Desk, Inc. 2016 Incentive Award Plan, dated as of October 6, 2021, between The Trade Desk, Inc. and Jeff Green.	8-K	10/8/2021	10.1

10.2+	Amendment No. 1 to Employment Agreement, dated as of October 6, 2021, between The Trade Desk, Inc. and Jeff Green.	8-K	10/8/2021	10.2

31.1	Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

31.2	Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

32.1(1)	Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

101.ins	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.				X

101.sch	Inline XBRL Taxonomy Schema Document.				X

101.cal	Inline XBRL Taxonomy Calculation Linkbase Document.				X

101.def	Inline XBRL Taxonomy Definition Linkbase Document.				X

101.lab	Inline XBRL Taxonomy Label Linkbase Document.				X

101.pre	Inline XBRL Taxonomy Presentation Linkbase Document.				X


104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).				X

				THE TRADE DESK, INC. (Registrant)

Dated: November 8, 2021				/s/ Blake J. Grayson
				Blake J. Grayson
				Chief Financial Officer (Principal Financial and Accounting Officer)