Digital advertising platform The Trade Desk (NASDAQ:TTD) reported that third-quarter 2025 results exceeded market revenue expectations, with sales increasing 17.7% year-over-year to $739.4 million. The forecast for next quarter’s revenue was better than expected, with $840 million at the midpoint, 1% above analyst estimates. Its non-GAAP profit of $0.45 per share was in line with analyst consensus estimates.
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Revenue: $739.4 million vs. analyst estimates of $719.4 million (17.7% YoY growth, 2.8% beat)
Adjusted EPS: $0.45 vs. analyst estimates of $0.44 (online)
Adjusted EBITDA: $317.5 million vs. analyst estimates of $278.8 million (42.9% margin, 13.9% beat)
Revenue guidance for the fourth quarter of 2025 is $840 million at the midpoint, above analyst estimates of $831.6 million.
EBITDA guidance for the fourth quarter of fiscal 2025 is $375 million at the midpoint, above analyst estimates of $367.6 million.
Operating margin: 21.8%, compared to 17.3% in the same quarter last year
Free cash flow margin: 21%, compared to 16.8% in the previous quarter
Market capitalization: $23.32 billion
“The third quarter was another strong quarter for The Trade Desk, with revenue increasing to $739 million, representing 18% year-over-year growth,” said Jeff Green, CEO and co-founder of The Trade Desk.
Created as an alternative to “walled garden” advertising ecosystems, The Trade Desk (NASDAQ:TTD) provides a cloud-based platform that helps advertisers and agencies plan, manage and optimize digital advertising campaigns across multiple channels and devices.
A company’s long-term sales performance can indicate its overall quality. Any company can generate one or two good quarters, but many long-lasting companies grow for years. Fortunately, The Trade Desk’s sales grew at an impressive compound annual growth rate of 30.7% over the past five years. Its growth has outpaced that of the average software company and shows that its offerings are resonating with customers, a great starting point for our analysis.
Trade Desk Quarterly Revenue
At StockStory we place the greatest emphasis on long-term growth, but within software, a half-decade historical view can overlook recent innovations or disruptive industry trends. Trade Desk’s annualized revenue growth of 23.4% over the past two years is below its five-year trend, but we still think the results suggest healthy demand.
Year-over-year revenue growth for The Trade Desk
This quarter, The Trade Desk reported year-over-year revenue growth of 17.7% and its $739.4 million in revenue beat Wall Street estimates by 2.8%. Currently, company management anticipates a year-over-year sales increase of 13.4% in the next quarter.
Looking ahead, sell-side analysts expect revenue to grow 14.1% over the next 12 months, a slowdown compared to the last two years. This projection doesn’t excite us and suggests that its products and services will face some demand challenges. At least the company is doing well on other measures of financial health.
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The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Basically, it is the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it means better returns on investment and business scalability.
Trade Desk is extremely efficient at acquiring new customers and its CAC payback period was 5.2 months this quarter. The company’s rapid recovery of customer acquisition costs indicates that it has a highly differentiated product offering and a strong brand reputation. These dynamics provide The Trade Desk with more resources to implement new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
We were impressed by how much The Trade Desk beat analysts’ revenue and EBITDA expectations this quarter. We were also pleased that its revenue and EBITDA guidance for the next quarter exceeded Wall Street estimates. Between July and October, the company repurchased $370 million in shares, maximizing its share repurchase program, and the board subsequently authorized buybacks of an additional $500 million. One shortcoming was a sizable increase in capital spending: in the first and second quarters, capital spending collectively amounted to $110 million; In this quarter alone, that figure reached $70 million. Overall, we think this was a solid quarter with many key metrics above expectations, but investors are likely punishing the company for its capital intensity. Shares traded down 7.4% at $42.48 immediately after the results.
So do we think The Trade Desk is an attractive buy at the current price? When making that decision, it is important to consider your valuation, your business qualities, as well as what happened in the last quarter. We cover that in our comprehensive, actionable research report which you can read here; It’s free for active Edge members.
