The Trade Desk's Q2 2026 revenue grew only 3% to $715M as existing clients cut spend, GAAP net income fell 29% to $64M, and management guided Q3 revenue to at least $650M, below last year's $739M.
Revenue
$715M
+3.0% YoY
Net income
$64M
-28.6% YoY
Diluted EPS
$0.14
-22.2% YoY
Operating margin
14.2%
Growth stalls at 3% as existing clients pull back, and the Q3 outlook points to a year-over-year decline
In the second quarter of 2026 (April–June), The Trade Desk's revenue rose just 3% to $715.1 million (from $694.0 million), down from roughly 12% growth in Q1 2026 and 19% growth a year earlier. GAAP net income fell 29% to $64.4 million and diluted earnings per share (EPS) dropped to $0.14 from $0.18. CEO Jeff Green opened the earnings release by saying the quarter "did not meet the standard we set for ourselves."
What The Trade Desk does: it runs a demand-side platform (DSP) — software that advertisers and their agencies use to buy digital ad space automatically, bidding in real time for individual ad slots across websites, apps, streaming TV and audio, rather than negotiating each deal by hand. The company doesn't book the full ad spend as revenue; it earns a platform fee, generally a percentage of what clients spend through it, plus fees for add-on data and targeting services.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$715.1M
$694.0M
+3.0%
Income from operations
$101.6M
$116.8M
-13.0%
Operating margin
14.2%
16.8%
-2.6 pts
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Operating margin is the share of revenue left after running the business, before interest and tax. Adjusted EBITDA is the company's own profit measure that adds back stock-based pay, depreciation, interest and taxes; it's the figure ad-tech companies (and The Trade Desk's own guidance) usually lead with. First-half 2026 revenue was $1,403.9M (+7%); net income $104.4M (-26%).
Why revenue slowed: fewer dollars from the clients it already had
The 10-Q is unusually direct about the source of the slowdown. Revenue growth "was primarily due to an increase in gross spend on our platform, which was primarily driven by more overall advertising campaigns executed by new clients, partially offset by a decrease in gross spend from existing clients." In the first half as a whole, growth came from "new and existing clients" — so the existing-client decline is specific to Q2. For a business that has reported customer retention above 95% "for over a decade" (a figure repeated in this release), clients staying but spending less is the problem, not clients leaving.
Two other forces pulled in opposite directions:
Helping revenue: higher pricing on value-added services (the data and targeting features sold on top of the basic buying tool), including features from Kokai, the AI-driven buying interface the company rolled out over 2024–25. The filing says Kokai and related enhancements "drove higher utilization of our value-added services."
An accounting reclassification also helped: some third-party data costs that used to be netted out of revenue are now recorded as an expense in platform operations instead. That lifts reported revenue without adding profit — it shows up as an $18 million increase in supplier-provided costs within the platform operations line. The filing doesn't size the revenue effect separately, but it means underlying growth was likely a bit weaker than the 3% headline.
Hurting revenue: "volume and other discounts in connection with joint business plans and other strategic partnerships" — price concessions given to large agencies and advertisers in exchange for committed spend.
Connected TV (ads shown on streaming services watched on a TV set, such as Netflix, Disney+ or a smart-TV home screen) remains the company's most important growth channel — the 10-Q's risk factors say "demand for CTV inventory on our platform has been a significant driver of growth." The filing does not quantify CTV spend or its growth this quarter. Its CTV news was about supply: Netflix joined the company's publisher program, and Samsung Ads opened its TV home-screen ad slots to programmatic buyers with The Trade Desk among the first platforms granted access.
Platform operations +22% (+$33M): $18M of the reclassified supplier data costs above, $8M more in hosting (data-center and computing costs from running more AI and machine-learning workloads to evaluate ad opportunities), and $3M in personnel.
Sales and marketing +8% (+$13M): mostly $11M more in personnel costs, driven by "changes in incentive plan structure," raises and more sales headcount.
Technology and development +5% (+$6M): headcount and more use of AI software tools.
General and administrative -13% (-$17M): a $20M drop in stock-based compensation, of which $19M is because a long-term CEO performance option grant finished being expensed at the end of Q1 2026. Without that one-time tailwind, operating income would have fallen further.
Below the operating line, two more things widened the gap between the 13% operating-income drop and the 29% net-income drop:
Interest income fell to $11.5M from $18.0M, on less cash invested (after buybacks) and lower rates.
The tax rate jumped to about 43% of pre-tax income ($48.7M on $113.1M) from about 32% a year earlier. The 10-Q attributes this to "tax detriments associated with employee stock-based awards" — when employees' shares vest or options are exercised at a stock price below where they were granted, the company loses part of the tax deduction it had assumed. That's a symptom of the lower share price, not of the operating business.
GAAP vs. adjusted profit: stock pay is still the big gap
Stock-based compensation was $109.6M, about 15% of revenue, and it is the single largest reason GAAP net income ($64.4M) is less than half of non-GAAP net income ($157.6M). The adjusted figures still fell year over year (adjusted EBITDA -11%, non-GAAP EPS -17%), so the deterioration is real on both views — the adjustments don't hide it. GAAP EPS fell less than net income (-22% vs -29%) because diluted share count dropped about 5% to 469.9M after buybacks; the company spent $78M on repurchases in Q2 and $241M in the first half, with $269M of authorization left.
Cash position
The balance sheet carries no borrowings, and $745M was available under the company's revolving credit facility. Cash and short-term investments were $1.49 billion at June 30 (vs $1.30 billion at year-end). First-half operating cash flow rose to $545M from $456M, but mostly because clients paid down receivables ($548M decrease) faster than the company paid its own suppliers ($428M decrease in payables) — a seasonal working-capital swing, not a sign of improving profitability.
Outlook: management guides to a year-over-year decline in Q3
Management's guidance for Q3 2026 (July–September):
Revenue of at least $650 million — versus $739 million in Q3 2025, a decline of up to 12%.
Adjusted EBITDA of approximately $160 million — versus $317 million in Q3 2025, roughly half, implying an adjusted EBITDA margin near 25% (down from 43%).
Takeaway: The problem isn't losing customers — retention is still above 95% — it's that existing clients cut their spending through the platform in Q2, and management's own Q3 guide (revenue at least $650M vs $739M a year ago, adjusted EBITDA roughly halved) says that pullback got worse, not better, after the quarter ended. Kokai-driven pricing gains and new-client wins are no longer enough to offset it.
Restructuring since the quarter: on September 3, 2026, the company filed an 8-K announcing an "organizational realignment" that cuts its workforce by about 15%, with $39–51 million of cash severance charges to be recognized in Q3 (partly offset by a $4–5 million stock-comp reversal). That comes on top of a near-complete reshuffle of senior leadership disclosed in the release — a new CFO (Nate Olmstead), Chief Marketing Officer, Chief Commercial Officer and two new board members.
Our view: Q2 marks a turn from "slowing growth" to "shrinking revenue." The headcount cut will lower costs from Q4 onward, but it addresses margins, not the underlying question of why large existing clients are routing less spend through the platform — the 10-Q points to discounting under joint business plans, and the cost side shows the company is spending more on AI compute to run Kokai. The things to watch in the Q3 10-Q (expected in early November) are whether actual revenue lands close to the $650M floor or comfortably above it, whether the "decrease in gross spend from existing clients" language persists, and whether the company begins quantifying CTV again — without CTV growth figures, it's hard to tell whether the company's most important channel is still growing underneath the headline decline.
Source: The Trade Desk Form 10-Q for the quarter ended June 30, 2026 (filed August 6, 2026), its Q2 2026 earnings release (8-K Exhibit 99.1, August 6, 2026), the Q3 2025 earnings release (for Q3 2025 comparison figures), and the Item 2.05 8-K filed September 4, 2026.