Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Trade Desk, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 12.9% to 10.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 538, DPO 2256, DIO 60). At a 9.2% WACC with mid-year discounting, the terminal value (93% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 18.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $23.74 per share, suggesting TTD is fairly valued by 8.7% at the current price of $21.84.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 429 | 483 | 527 | 585 | 643 | 659 |
| (−) Net Interest | 1 | 1 | 1 | 1 | 1 | 1 |
| (+) D&A | 102 | 123 | 141 | 170 | 193 | 197 |
| EBITDA | 532 | 606 | 668 | 755 | 837 | 857 |
| (−) Tax | 115 | 129 | 141 | 156 | 172 | — |
| (−) CapEx | 162 | 183 | 199 | 221 | 243 | — |
| (−) ΔWC | 112 | 131 | 107 | 141 | 143 | — |
| Free Cash Flow (FCF) | 142 | 163 | 221 | 236 | 278 | — |
| Peers' EBITDA Multiple | 18.9x | |||||
| Terminal Value | 16,163 | |||||
| WACC / Discount Rate | 9.18% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 136 | 143 | 177 | 174 | 187 | 10,417 |
| Enterprise Value | 11,235 | |||||
| Projection Period | 818 | 7.3% | ||||
| Terminal Value | 10,417 | 92.7% | ||||
| (−) Current Net Debt | (222) | |||||
| Equity Value | 11,457 | |||||
| (÷) Outstanding Shares | 483M | |||||
| Fair Price | $24 | +8.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 14.9x | 16.9x | 18.9x | 20.9x | 22.9x |
|---|---|---|---|---|---|
| 7.2% | $21 | $23 | $26 | $28 | $31 |
| 8.2% | $20 | $22 | $25 | $27 | $30 |
| 9.2% | $19 | $21 | $24 | $26 | $28 |
| 10.2% | $18 | $21 | $23 | $25 | $27 |
| 11.2% | $18 | $20 | $22 | $24 | $26 |
Current price: $21.84. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.