How TTD (The Trade Desk) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a digital advertising platform like TTD (The Trade Desk) makes money is essential for investors and anyone interested in the business of programmatic advertising technology. In this post, we break down TTD's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick TTD Overview

The Trade Desk operates a leading independent demand-side platform (DSP) for digital advertising, enabling ad buyers to purchase and manage data-driven digital ad campaigns across channels like display, video, audio, and connected TV. Revenue comes primarily from platform fees and service charges based on ad spend flowing through its technology. The company’s business is focused on providing advertisers with transparent, data-rich tools to optimize their media buying, with a growing emphasis on connected TV and retail media.

Revenue Breakdown

• Total Revenue (Q2 2025): $694.0M (+18.7% YoY)
  • The Trade Desk does not publicly break out revenue by segment, but the vast majority is derived from platform fees tied to ad spend across digital channels.
  • Growth is powered by increased adoption of programmatic advertising, expansion in connected TV, and international client growth.

Gross Profit and Margins

• Gross Profit: $543.1M (78.2% gross margin)
  • Cost of Revenue: $151.0M (+36.7% YoY)
  • TTD maintains robust margins due to its scalable digital business model and efficient cloud-based infrastructure.
• Most costs come from platform infrastructure, data acquisition, and third-party service fees.

Operating Income and Expenses

• Operating Income: $116.8M (+23.3% YoY, 16.8% margin)
• Operating Expenses: $426.3M (+12.4% YoY)
  • R&D: $134.3M (+22.0% YoY, 19.3% of revenue) — Focused on enhancing AI-driven ad targeting, identity solutions, and platform innovation.
  • SG&A: $292.0M (+8.4% YoY, 42.1% of revenue) — Includes sales, marketing, and general corporate costs to support global expansion and client services.
  • TTD continues to prioritize innovation and invest in growth while maintaining operational efficiency.

Net Income

• Pre-Tax Income: $133.2M (+18.4% YoY, 19.2% margin)
• Income Tax: $43.1M (32.3% effective tax rate)
• Net Income: $90.1M (+6.0% YoY, 13.0% net margin)
• TTD converts a moderate portion of sales into profit due to its scalable platform and disciplined cost management.

What Drives TTD's Money Machine?

• Platform fees on ad spend: Over 90% of revenue comes from fees tied to digital ad campaigns transacted through TTD’s platform.
• Gross spend growth: Total ad spend on the platform continues to rise, driven by connected TV and retail media.
• R&D investment: Significant resources are allocated to AI, identity resolution (UID2.0), and cross-channel measurement.
• Future growth areas: International expansion, retail media, and advanced TV, though not yet at the scale of core digital channels.

Visualizing TTD's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and R&D) taking the largest chunk.
• Even after significant investments in technology and global expansion, 13% of revenue drops to the bottom line.

Key Takeaways

• TTD's money comes overwhelmingly from platform fees on programmatic ad spend.
• High gross and net margins illustrate the power of TTD’s scalable, data-driven business model.
• Heavy investment in R&D, balanced by efficiency in operating costs.
• Ongoing growth is driven by connected TV, international expansion, and retail media.

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FAQ About TTD's Income Statement

1. What is the main source of TTD's revenue in 2025?

TTD generates over 90% of its revenue from platform fees tied to programmatic ad spend across digital channels, including display, video, audio, and connected TV. Other sources are immaterial.

2. How profitable is TTD in Q2 2025?

TTD reported net income of $90.1M in Q2 2025, with a net margin of approximately 13.0%, reflecting strong profitability driven by high gross margins and disciplined expense management.

3. What are the largest expense categories for TTD?

The biggest expenses on TTD's income statement are operating expenses, particularly Research & Development (R&D) at $134.3M in Q2 2025 (19.3% of revenue), and Sales, General & Administrative (SG&A) at $292.0M (42.1% of revenue), as TTD prioritizes platform innovation and global sales expansion.

4. Why does international expansion operate at a loss?

International operations, despite generating growing revenue, posted an operating loss in Q2 2025. This is because TTD aggressively invests in local sales teams, data partnerships, and market development, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does TTD's effective tax rate compare to previous years?

TTD's effective tax rate in Q2 2025 was 32.3%, consistent with previous years. This moderate rate is primarily due to the company’s international structure and the impact of share-based compensation.