Cash and Share Count

What the cash actually leaves behind

The Trade Desk turns revenue into cash efficiently: $783 million of free cash flow in 2025 [1] on $2.9 billion of revenue [2]. Stock compensation of $491 million takes most of it. Three years and $2.27 billion of repurchases lowered the share count by 3.0%. The headline compensation charge has held flat for four years while the CEO Performance Option ran off, and that option finished amortising in March 2026.

Sources: FY2025 Annual Report (Form 10-K), Consolidated Statements of Cash Flows [3] and Consolidated Statements of Stockholders' Equity [4].

The cash ladder

Operating cash flow of $993 million in 2025 came from net income adjusted for non-cash items of $1.27 billion, less a $275 million net investment in working capital [5]. The add-backs are dominated by one line: $490.6 million of stock-based compensation, against $115.8 million of depreciation and amortisation and $167.7 million of deferred income taxes [6].

Free cash flow on the company's own definition — operating cash flow less capital expenditure and capitalised software — was $783 million. Subtracting stock compensation, which is a real cost settled in shares rather than cash, leaves $292 million.

Source: derived from Consolidated Statements of Cash Flows, FY2023 and FY2025 Annual Reports (Forms 10-K) [7] [8].

The series matters more than the 2025 point. Free cash flow after stock compensation was negative in 2021 and 2022, crossed zero in 2023, and reached $292 million in 2025 [9]. On a trailing-twelve-month basis through March 2026 it is $358 million, on $829 million of free cash flow and $471 million of stock compensation [10].

GAAP already carries this cost. Net income of $443 million and diluted EPS of $0.90 [11] are struck after the $491 million charge; adjusted EBITDA of $1,196 million and adjusted EPS are not. The reconciliation the company publishes adds back stock compensation as the single largest item — $490.6 million of the $753 million bridge from net income to adjusted EBITDA [12].

Stock compensation has been flat for a reason

Headline stock compensation has barely moved in four years: $498.6 million in 2022, $491.6 million in 2023, $494.7 million in 2024, $490.6 million in 2025, while revenue grew 84% [13] [14] [15] [16]. As a share of revenue the charge fell fast over that stretch: 31.6% in 2022 to 16.9% in 2025.

That ratio is most sensitive to a single award. Stock compensation other than the CEO Performance Option held a 14.6% to 15.1% band of revenue in all four years, so the movement in the ratio came from the option alone. The CEO Performance Option granted in October 2021 — 16 million target shares, up to 19.2 million, at a $68.29 exercise price, with a grant-date fair value of roughly $819 million — has been amortising on a graded-vesting schedule, and its annual charge fell from $262 million to $198 million to $128 million to $67 million [17] [18].

Source: derived from Note 10 — Stock-Based Compensation, FY2023 and FY2025 Annual Reports (Forms 10-K) [19] [20].

Everything other than that option has grown from $237 million to $424 million, tracking revenue almost exactly inside that band. The falling ratio was arithmetic from a single expiring grant, not operating leverage.

That grant is now finished. Stock compensation for the CEO Performance Option was $5 million in the first quarter of 2026, and the company states that as of March 31, 2026 the expense "had been fully recognized" [21]. From here the compensation line has no declining component to offset growth in the rest.

Two facts push in opposite directions on what comes next. Grant activity has accelerated at much lower prices: 5.65 million restricted shares were granted in the first quarter of 2026 at an average grant-date fair value of $33.26, against 7.93 million for the whole of 2025 at $54.26, taking unvested restricted stock from 11.6 million shares to 15.5 million in three months, with a further 2.68 million options granted at a $25.30 exercise price [22] [23] [24]. Delivering a fixed dollar of compensation at $17 rather than $54 requires roughly three times the shares. Against that, the $915 million of unrecognised compensation still to be expensed — $749 million on restricted stock over three years, $154 million on options, $12 million on the purchase plan — was struck at grant-date values far above the market, so the reported charge will overstate what employees are actually receiving [25]. The share count is where the two effects settle.

Below the executive tier, the same gap shows up in what employees are holding. The 15.5 million unvested restricted shares outstanding at March 2026 were booked at a weighted-average grant-date value of $52.57, about $816 million of accounting value against roughly $268 million at the $17.29 price [26]. The 12.6 million ordinary options outstanding carry a weighted-average exercise price of $42.32, and the tranche granted in the first quarter at $25.30 sits below that but still above the market, so none of the option pool has intrinsic value at the current price [27]. No option exchange, repricing or make-whole grant appears anywhere in the corpus, and the employee stock plan does not permit repricing without stockholder approval [28].

Holding staff whole in value therefore costs shares rather than dollars. Delivering $490 million of grant-date value, the level of each of the last four years, takes about 9 million shares at $54.26 and about 28 million at $17.29, against 471.0 million outstanding. The buyback cannot absorb that difference on what is left of its authorisation: the $327 million available at March 31, 2026 retires about 19 million shares at $17.29 [29], more than two years of the 6.04 million shares issued in 2025 but under a year of the 28 million a constant grant-date dollar would now require. Either the company issues materially more shares to hold employees at the same value, or it delivers less value at the same share count and carries the retention risk instead.

The share-count ledger

The repurchase programme, authorised in February 2023, is not framed by the company as a return of capital. Its stated design is "to help offset the impact of future share dilution from employee stock issuances" [30]. Judged on that objective, the record is checkable line by line.

Source: Consolidated Statements of Stockholders' Equity, FY2023 and FY2025 Annual Reports (Forms 10-K) and Q1 FY2026 Form 10-Q [31] [32] [33].

Across the three fiscal years 2023 to 2025 the company retired 38.84 million shares for $2,271.7 million, an average of $58.48 [34] [35]. Over the same period 24.30 million shares went out to employees and one small acquisition. The count fell from 490.5 million to 475.9 million — 14.5 million shares, or 3.0%. Including the first quarter of 2026, the totals are $2,445.8 million spent, 19.5 million net shares removed, and a 4.0% reduction from the end of 2022. That spending equals 30% of the company's market capitalisation at the July 24, 2026 close of $17.29.

The programme did what it was designed to do, and management has said so — on the third-quarter 2025 call the company described having "repurchased nearly $2 billion through our repurchase program, effectively offsetting dilution and reducing shares outstanding over that time" [36]. The claim is accurate. What it costs is the part worth holding onto: $156 of cash per net share removed over 2023 to 2025, against a share now quoted at $17.29.

Source: Consolidated Statements of Stockholders' Equity, FY2023 and FY2025 Annual Reports (Forms 10-K) [37] [38].

The shape of that line is the honest summary. Through 2024 the count was still above where it started in 2022, because option exercises and vesting outran a $236 million year of buying. The 2025 decline came from a $1.39 billion year of repurchase at an average of $52.96 — a price the stock has since fallen 67% below. The 2026 purchases at $24.51 are much better value on the same arithmetic, and the company has said it plans "to continue opportunistic share repurchases while also offsetting dilution from employee stock reissuances" [39]. Only $327 million of authorisation remained at March 31, 2026 [40].

One balance-sheet consequence is visible: because repurchases are charged against retained earnings, the company moved from $665.5 million of retained earnings at the end of 2022 to a $724.9 million accumulated deficit at March 2026, and book equity fell from $2,949 million to $2,453 million across five profitable quarters [41] [42].

Capital spending stepped up while cash capex understated it

Capital expenditure has quadrupled in two years — $46.8 million in 2023, $98.2 million in 2024, $197.0 million in 2025 — and the first quarter of 2026 alone consumed $112.7 million, 16% of quarterly revenue [43] [44]. Depreciation ran at $96 million in 2025, so the reported charge lags the spend, and $117.9 million sat in construction in progress at year end [45].

Source: derived from Consolidated Statements of Cash Flows, FY2023 and FY2025 Annual Reports (Forms 10-K) [46] [47].

The cash figure understates 2025's investment. Supplemental disclosure shows capitalised assets financed through accounts payable of $104.5 million at the end of 2025 against $20.5 million a year earlier [48]. Capital expenditure incurred was therefore about $281 million, not $197 million, and the unpaid $84 million sits inside the $291 million rise in accounts payable that helped operating cash flow. Gross property and equipment corroborates it, rising $234.7 million before disposals [49]. On an incurred basis, 2025 free cash flow was roughly $699 million rather than $783 million — a timing effect that reverses, not a permanent gap, but one that flatters the year the multiple is being struck on.

Working capital runs the wrong way, which helps in a slowdown

The Trade Desk bills clients for gross media spend and pays suppliers for it, so both sides of the balance sheet are far larger than revenue: $3.77 billion of receivables against $3.01 billion of payables at December 2025 [50]. The company states plainly in its liquidity discussion: "We typically pay suppliers in advance of collections from our clients" [51], and the reported cycle confirms it: days sales outstanding of 92 against days payable of 77 at the end of the third quarter of 2025 [52].

That is a negative float, and it means growth consumes cash rather than generating it. In each of 2023, 2024 and 2025 the increase in receivables exceeded the increase in payables — by $79 million, $175 million and $142 million respectively [53] [54]. The mechanism runs in reverse too. In the first quarter of 2026 receivables fell $429 million and payables fell $279 million, and operating cash flow of $392 million was collected on $40 million of net income [55]. A business whose volume growth is decelerating (Share or Cycle) will release working capital as it slows — which is one reason the cash position held at roughly $1.4 billion through the deceleration [56].

The same price against successively stricter cash

At $17.29 on 471.0 million shares, with $1,406 million of cash and short-term investments and no drawn debt, the enterprise value is about $6.74 billion [57] [58]. Applied to different definitions of what the business earns, that one number produces a wide range.

Source: derived from FY2025 Annual Report (Form 10-K) cash flow statement, statements of operations and Adjusted EBITDA reconciliation and Q1 FY2026 Form 10-Q [59] [60] [61] [62].

The GAAP price-to-earnings multiple of 19.2x on 2025 diluted EPS of $0.90 [63] sits in the same zone as the after-compensation cash multiples, because GAAP earnings already charge stock compensation. The gap between 5.6x and 23.1x turns on which measures charge stock compensation. Adjusted EBITDA adds the $491 million back, and the cash-flow measures never deduct it because it is settled in shares; GAAP operating income, adjusted EBITDA less stock compensation and free cash flow less stock compensation all carry it in full.

The read

On the evidence here, the business generates genuine cash but converts less of it to per-share value than the headline figures suggest. Stock compensation has held near 15% of revenue for four years once the expiring CEO option is stripped out; the buyback has absorbed $2.45 billion to lower the count 4.0%; and the price is not cheap on any measure struck after that cost. The multiples that look most attractive — 5.6 times adjusted EBITDA, 8.6 times free cash flow — are the ones that treat the compensation as free.

The strongest fact against that read is the direction of travel. Free cash flow after stock compensation went from negative $42 million in 2022 to $358 million on a trailing basis through March 2026, and management expects a 2026 adjusted EBITDA margin of at least 40% while holding headcount growth below revenue growth [64]. If share-based pay stays near $490 million in absolute dollars while revenue compounds, the burden falls mechanically, and the after-compensation multiple compresses fast.

What would settle it is observable in two lines of the next few filings. First, the stock compensation charge for full-year 2026: with the CEO option fully expensed, a figure that holds near $490 million means the underlying cost stopped growing, while a figure above $520 million means the run-rate has simply been unmasked. Second, the share count: shares outstanding of 471.0 million at March 2026 falling through 2026 on the remaining $327 million of authorisation would show repurchases finally outrunning issuance at a price where the arithmetic works; a count that drifts back up would show grant volumes at $17 doing what grant volumes at $54 could not.