TLDR
- Q4 2025 revenue reached $846.8 million, marking a 14.3% year-over-year increase and surpassing expectations by 0.6%
- Adjusted EBITDA hit $400.3 million, exceeding analyst projections by 6.4%
- Q1 2026 revenue outlook of $678 million missed estimates by 1.5%, suggesting approximately 10% growth
- Shares plummeted 15.6% to $21.41 following the earnings announcement, continuing a difficult start to 2026
- An interim CFO is currently leading financial operations while headwinds impact CPG and automotive advertising categories
The Trade Desk delivered Q4 2025 revenue of $846.8 million, representing a 14.3% year-over-year increase. This narrowly surpassed Wall Street projections of $841.9 million by 0.6%.
Adjusted EBITDA reached $400.3 million, significantly exceeding the $376.4 million consensus forecast. The company’s operating margin climbed to 30.3%, a notable improvement from 26.4% during the comparable period last year.
Adjusted earnings per share of $0.59 aligned with analyst expectations, while free cash flow margin jumped to 33.3% from the previous quarter’s 21%.
Despite exceeding fourth-quarter expectations, shares collapsed 15.6% to $21.41 in extended trading. The driver? Forward-looking projections.
Management projected Q1 2026 revenue of “at least” $678 million, falling approximately 1.5% short of analyst expectations of $688.1 million. This forecast suggests roughly 10% year-over-year expansion, representing a significant deceleration from Q4’s 14% growth rate.
The profitability outlook presents additional concerns. The Trade Desk anticipates Q1 2026 adjusted EBITDA of approximately $195 million, trailing the $208 million generated in Q1 2025. This guidance indicates both revenue acceleration and profitability metrics will decline on a year-over-year basis.
CEO Jeff Green acknowledged the company is navigating “against a backdrop of macro uncertainty,” specifically highlighting challenges within the consumer packaged goods and automotive advertising categories. These two verticals collectively represent more than 25% of total business.
Revenue Growth Has Decelerated Over Recent Quarters
The slowdown has been gradually materializing. Revenue expanded 25% in Q1 2025, followed by 19% in Q2, 18% in Q3, and most recently 14% in Q4. The trajectory is unmistakable.
For perspective, Meta Platforms achieved 24% year-over-year Q4 revenue growth within the identical macroeconomic environment and projected approximately 30% growth for Q1 2026. This contrast intensifies scrutiny of TTD’s performance.
Over a five-year period, The Trade Desk has achieved a 28.2% compounded annual revenue growth rate, substantially outperforming the software sector average. However, the two-year annualized rate has declined to 22%, with sell-side analysts forecasting 15.6% growth over the coming twelve months.
On an encouraging note, the company’s customer acquisition cost payback period registered at merely 5.5 months, demonstrating robust product differentiation.
CFO Transition Compounds Investor Apprehension
The organization is presently functioning with an interim CFO after another recent change in the position. The search for a permanent replacement continues.
While CFO transitions don’t necessarily indicate underlying problems, the timing amplifies existing concerns investors are evaluating — decelerating growth, underwhelming guidance, and macroeconomic challenges in critical verticals.
The Trade Desk’s Koa AI platform and strategic shift toward company-owned data centers represent investments management believes will propel future results. These initiatives carry near-term margin implications.
At approximately $21 per share following the post-earnings decline, TTD is valued at roughly 23 times GAAP earnings, following 15% year-over-year EPS growth to $0.90 in 2025.
Shares have retreated dramatically from the 52-week peak of $91.45.
The Q1 2026 outlook calling for at least $678 million in revenue and $195 million in adjusted EBITDA reflects management’s current expectations as stated during the February 25 earnings discussion.
