Etsy Inc. (NASDAQ:ETSY)

The financial data exhibits significant growth and changes in goodwill and intangible assets over the five-year period from 2017 to 2021. The trends reveal notable developments in the composition and valuation of these assets.

Goodwill

The goodwill amount was relatively stable from 2017 to 2018, with values around US$38.5 million and US$37.5 million respectively. However, a sharp increase occurred starting in 2019, rising to approximately US$138.7 million and continuing a gradual increase to about US$140.8 million in 2020. The most dramatic rise took place in 2021, where goodwill surged to over US$1.37 billion, indicating substantial acquisitions or revaluations that year.

Trademark

No trademark value was recorded in 2017 and 2018. Starting in 2019, trademarks appeared with a value of US$79.4 million and remained constant through 2020. In 2021, the trademark value experienced a substantial increase to approximately US$342.8 million, suggesting new registrations or revaluations of brand assets.

Customer relationships

Customer relationships were first recorded in 2019 at US$93.5 million and held steady in 2020. In 2021, a significant increase to roughly US$278.3 million was observed, reflecting enhanced valuation or acquisition of customer-related intangible assets.

Referral agreement

Values for the referral agreement were first noted in 2018 at about US$34.6 million and showed a modest upward trend, peaking at US$39.0 million in 2020 before slightly decreasing to US$36.1 million in 2021. These fluctuations indicate minor changes or potential amortization effects over time.

Technology

Technology assets were stable at US$7.2 million in 2017 through 2019 but were not reported in the years 2020 and 2021, possibly due to reclassification, disposal, or capitalization changes.

Patent licenses

Patent licenses started being recorded with a small value of US$0.2 million in 2018, gradually increasing to approximately US$3.1 million by 2021. This steady growth indicates ongoing investments or recognition of patent-related intangible assets.

Intangible assets, gross book value

The gross book value of intangible assets increased markedly from a modest US$7.2 million in 2017 to US$41.9 million in 2018, then surged to over US$216 million in 2019. It remained stable in 2020 before more than tripling to US$660.3 million in 2021, demonstrating a pattern of significant asset acquisitions or revaluations in the latter years.

Accumulated amortization

Accumulated amortization showed a continuous increase in absolute value, moving from approximately US$3.1 million in 2017 to US$53.2 million in 2021. This reflects ongoing amortization expenses related to intangible assets, naturally increasing with higher asset values.

Intangible assets, net book value

The net book value of intangible assets followed a strong upward trend through most years, from US$4.1 million in 2017 to nearly US$199.2 million in 2019. A slight decline occurred in 2020 to about US$187.4 million, likely due to amortization or write-offs, followed by a substantial rise to over US$607.2 million in 2021, consistent with gross asset value increases.

Goodwill and intangible assets combined

The combined total grew steadily from around US$42.6 million in 2017 to US$72.1 million in 2018. It more than quadrupled in 2019 to approximately US$338.0 million, remained relatively stable in 2020, then experienced a considerable leap in 2021, reaching nearly US$1.98 billion. This overall escalation underscores major investment activity and asset valuation adjustments during this period.

In summary, the data shows a pronounced expansion of goodwill and intangible assets, particularly in 2021, pointing to significant business acquisitions or revaluations. The growth across trademarks, customer relationships, and patent licenses indicates rising strategic emphasis on intangible asset accumulation. Meanwhile, accumulated amortization has increased consistently, reflecting the aging and usage of these assets. The absence of reported technology asset values after 2019 may suggest reclassification or divestiture in that category. Overall, the upward trends suggest substantial enhancement of intangible asset value and associated goodwill in recent years.

The data shows significant growth in reported total assets over the analyzed periods. Starting at 605,583 thousand USD in 2017, reported total assets progressively increased each year, reaching 3,831,809 thousand USD by the end of 2021. This represents a more than sixfold increase throughout the five-year span. The adjusted total assets, which presumably exclude goodwill, follow a similar upward trend, rising from 567,042 thousand USD in 2017 to 2,460,745 thousand USD in 2021. However, the growth in adjusted total assets is less pronounced compared to the reported figures, particularly in 2021 where a considerable gap develops between reported and adjusted values.

Regarding stockholders’ equity, the reported figures exhibit a generally positive trend from 2017 through 2020, rising from 396,894 thousand USD to a peak of 742,424 thousand USD in 2020. However, in 2021, reported stockholders’ equity declines to 628,619 thousand USD. This decline may suggest either increased liabilities, asset impairments, or changes in accounting policies during 2021. The adjusted stockholders’ equity presents a contrasting and more volatile pattern. It modestly increases from 358,353 thousand USD in 2017 to 363,416 thousand USD in 2018 but then decreases substantially to 267,903 thousand USD in 2019. A notable increase occurs in 2020, with adjusted equity reaching 601,614 thousand USD. Remarkably, in 2021, the adjusted stockholders’ equity turns negative, reaching -742,445 thousand USD, indicating that liabilities exceed adjusted assets when goodwill is excluded.

The divergence between reported and adjusted equity in 2021 highlights the material impact of goodwill on the company's balance sheet. The presence of significant goodwill appears to inflate the reported equity, masking potential underlying asset impairments or liabilities that become evident once goodwill is removed. This negative adjusted equity suggests potential financial distress or the necessity for goodwill write-downs and re-evaluation of asset values.

Overall, the company demonstrates robust asset growth over the five-year period, both in reported and adjusted terms, albeit with a decelerating pace in adjusted asset expansion towards the end of the period. The stockholders’ equity trend shows stability and moderate growth until 2020, followed by signs of stress in 2021, especially after adjustments for goodwill. This may warrant further investigation into the composition and valuation of intangible assets and liabilities as of the latest year.

The analysis of the financial ratios over the five-year period reveals several notable trends and changes concerning asset utilization, leverage, and profitability.

Total Asset Turnover (Reported vs. Adjusted)

The reported total asset turnover shows a general decline from 0.73 in 2017 to 0.61 in 2021, with a low point of 0.53 in 2019 before partially recovering in 2020. In contrast, the adjusted total asset turnover, which accounts for goodwill adjustments, follows a similar initial downward trend from 0.78 in 2017 to 0.58 in 2019 but then improves markedly to 0.95 by 2021. This suggests that, when excluding goodwill, the company’s efficiency in using its assets to generate revenue has significantly increased in the latest year.

Financial Leverage (Reported vs. Adjusted)

The reported financial leverage increases substantially from 1.53 in 2017 to 6.10 in 2021, indicating a growing reliance on debt or other liabilities relative to equity over the period. The adjusted financial leverage shows a similar ascending pattern from 1.58 in 2017 to a peak of 5.24 in 2019, then decreases to 3.76 in 2020; data for 2021 is unavailable. This volatility in adjusted figures suggests fluctuations in leverage when adjusting for goodwill, with a peak before a reduction that is not reflected in the reported figures.

Return on Equity (ROE) (Reported vs. Adjusted)

Reported ROE consistently increases from 20.61% in 2017 to a striking 78.51% in 2021, with a notable surge starting in 2020. Adjusted ROE also increases during the available years, from 22.83% in 2017 up to 58.05% in 2020, illustrating a similar upward trend in profitability from shareholders’ perspective when goodwill is excluded. This substantial increase in ROE reflects improved earnings generation relative to shareholder equity, possibly influenced by increased leverage and asset efficiency.

Return on Assets (ROA) (Reported vs. Adjusted)

Reported ROA declines sharply from 13.51% in 2017 to 6.22% in 2019, then recovers to 12.88% by 2021. The adjusted ROA mirrors this trend but with slightly higher values, dropping from 14.43% in 2017 to 6.83% in 2019, then rising to 20.06% by 2021. The adjusted ROA’s stronger improvement in the final year suggests that asset profitability improved significantly when excluding goodwill, which may highlight enhanced operational performance or asset management post-2019.

Overall, the data indicate that the company experienced declining efficiency and profitability from 2017 through 2019, followed by marked recovery and improvement from 2020 onwards. The adjusted figures, which remove the impact of goodwill, tend to show higher efficiency and profitability levels in later years. The increase in financial leverage, particularly from 2019 onward, may have contributed to the elevated ROE, while the improved asset turnover and ROA suggest strengthening operational effectiveness. The absence of some adjusted figures in 2021 limits a full comparative analysis for that year but does not obscure the general positive trend in company performance after 2019.

The financial data demonstrates significant growth in both reported and adjusted total assets over the five-year period, with reported total assets increasing from approximately $606 million at the end of 2017 to about $3.83 billion by the end of 2021. Adjusted total assets, excluding goodwill, also display a consistent upward trend, growing from roughly $567 million to $2.46 billion within the same timeframe.

Total Assets

The increase in total assets is substantial, especially notable in the jump between 2019 and 2020, and again between 2020 and 2021, indicating accelerated asset accumulation which may reflect business expansion, acquisitions, or capital investments.

The adjusted total assets grow at a somewhat lower rate compared to reported assets, suggesting that goodwill represents a growing component of total reported assets over time.

Total Asset Turnover Ratios

The reported total asset turnover ratio exhibits variability, starting at 0.73 in 2017, declining steadily to 0.53 in 2019, then rebounding to 0.72 in 2020 before decreasing to 0.61 in 2021. This pattern indicates fluctuations in the efficiency of asset utilization to generate revenue when goodwill is included.

The adjusted total asset turnover ratio shows a different trend. It begins higher than the reported ratio at 0.78 in 2017, declines to 0.58 in 2019, then increases significantly to 0.76 in 2020 and further rises sharply to 0.95 in 2021. This improvement in the adjusted ratio indicates better operational efficiency excluding goodwill, suggesting the company became more effective at using its core asset base to generate sales in recent years.

Insights

The divergence between reported and adjusted asset turnover trends implies that goodwill's growing proportion in total assets may be impacting reported efficiency measures negatively. The marked improvement in adjusted asset turnover ratio by 2021, nearing parity with one turnover per dollar of asset, signals enhanced asset productivity after removing the effects of intangible assets.

Overall, the data reflects a company with substantial asset growth and improving operational efficiency in its core assets, though the presence and increase of goodwill influence the apparent overall asset utilization when analyzed on a reported basis.

The data reveals significant growth and volatility in financial metrics over the period analyzed. Total assets, both reported and adjusted for goodwill, demonstrate a consistent upward trajectory, indicating expansion of the company's asset base. The reported total assets increased from approximately $606 million in 2017 to over $3.8 billion by the end of 2021. The adjusted total assets also follow a strong growth pattern, but show a smaller increase in 2021 compared to the reported figures, suggesting an impact of goodwill adjustments on the asset base.

Stockholders' equity presents a contrasting trend. Reported equity remains relatively stable from 2017 to 2019, hovering around $400 million, before jumping substantially to nearly $742 million in 2020, and then declining to about $629 million in 2021. In contrast, the adjusted stockholders' equity shows a marked decrease over time, moving from around $358 million in 2017 down to a substantial negative value of approximately -$742 million by the end of 2021. This negative adjusted equity in 2021 indicates significant write-downs or impairments related to goodwill adjustments, adversely affecting the shareholders' net interest.

Financial leverage ratios reveal increasing reliance on liabilities relative to equity. The reported financial leverage rose from 1.53 in 2017 to 6.10 in 2021, indicating a growing use of debt or other liabilities to finance assets. The adjusted financial leverage mirrors this pattern initially, rising from 1.58 in 2017 to a peak of 5.24 in 2019, then declining to 3.76 in 2020. Data for adjusted leverage in 2021 is missing, but the reported leverage's sharp increase that year suggests a possible continuation of the increasing leverage trend.

Assets

Both total reported and adjusted assets have grown substantially over the five years, signifying company growth, with adjusted assets showing a deceleration in 2021 relative to reported assets.

Stockholders’ Equity

Reported equity was stable until 2019, surged in 2020, then declined in 2021. Adjusted equity reveals a stark decline culminating in negative equity in 2021, highlighting potential goodwill impairments or accounting adjustments.

Financial Leverage

Leverage has generally increased, reflecting more aggressive financing strategies. The reported leverage more than quadrupled from 2017 to 2021, signalling increased risk or changes in capital structure; the adjusted leverage shows a peak in 2019 followed by a decline, with missing data limiting full assessment in 2021.

Overall, the trends depict a company undergoing rapid growth with increasing asset accumulation and higher leverage. However, the adjusted figures expose potential financial strain related to goodwill, with the negative adjusted equity in 2021 as a notable concern. This disparity between reported and adjusted figures suggests that the company’s underlying financial strength may be weaker than the reported numbers imply, warranting careful consideration of intangible asset valuations and capital structure risks.

The financial data reveals several notable trends in both reported and adjusted stockholders' equity as well as in return on equity (ROE) metrics over the five-year period ending in 2021. The reported stockholders' equity exhibits a slight increase from 2017 to 2019, followed by a significant rise in 2020, then a decline in 2021. In contrast, adjusted stockholders' equity shows a generally downward trend, with a pronounced drop between 2019 and 2021, culminating in a negative value in 2021.

Stockholders' Equity Trends

Reported stockholders' equity increased moderately from approximately $397 million in 2017 to about $407 million in 2019. Thereafter, it surged to roughly $742 million in 2020 before decreasing to around $629 million in 2021.

Adjusted stockholders' equity slightly increased from $358 million in 2017 to $363 million in 2018 but then declined sharply to $268 million in 2019. It rose again to $602 million in 2020 but experienced a steep fall to negative $742 million in 2021. This negative figure indicates considerable goodwill adjustments affecting equity that year.

Return on Equity (ROE) Analysis

The reported ROE remained relatively stable between 2017 and 2019, fluctuating around 20% to 24%. It then increased substantially to 47% in 2020 and further to an exceptionally high 78.51% in 2021, reflecting improved profitability relative to reported equity.

The adjusted ROE followed a rising trend from 22.83% in 2017 to 35.79% in 2019, then showed a strong increase to 58.05% in 2020. Data for 2021 is not available, possibly due to the negative adjusted equity that year, which would distort the ratio.

Overall, the data suggests that while the reported equity base expanded notably in 2020 followed by a contraction in 2021, adjusted equity (excluding goodwill effects) declined sharply in 2021 to negative territory. The ROE figures derived from reported equity demonstrate significant improvement over time, particularly in 2020 and 2021, indicating higher returns on shareholder investments. However, the adjusted ROE's absence in the final year and the negative adjusted equity imply underlying goodwill impairments or accounting adjustments that adversely impacted the equity base and potentially the interpretation of return measures in 2021.

The financial data reveals notable trends in both asset values and return on assets (ROA) over the analysed periods.

Total Assets

Reported total assets have exhibited a consistent and significant upward trend, growing from approximately 606 million US dollars at the end of 2017 to roughly 3.83 billion US dollars by the end of 2021. This reflects substantial asset accumulation over the five-year period.

Adjusted total assets, which likely exclude goodwill or other intangible adjustments, also show robust growth, increasing from about 567 million US dollars in 2017 to around 2.46 billion US dollars in 2021. However, adjusted assets demonstrate a smaller absolute increase relative to reported assets, especially notable in the latest year, indicating a rising proportion of goodwill or similar assets in the reported figures.

Return on Assets (ROA)

Reported ROA displays variability; after an initial decrease from 13.51% in 2017 to 6.22% in 2019, it significantly improves to 14.52% in 2020 before slightly declining to 12.88% in 2021. This pattern suggests fluctuating efficiency or profitability in relation to total assets during these years.

Adjusted ROA follows a comparable trend but at consistently higher levels compared to the reported ROA. Starting at 14.43% in 2017, it declines to 6.83% in 2019, rises sharply to 15.43% in 2020, and then more notably increases to 20.06% in 2021. The divergence between adjusted and reported ROA widens over time, particularly in 2021, suggesting that the exclusion of goodwill or intangible assets enhances the apparent asset efficiency and profitability metrics.

Overall, the data indicates substantial growth in asset base accompanied by variable but ultimately improving returns on those assets, especially when adjusted figures are considered. The growing difference between reported and adjusted figures implies increasing intangible asset values that affect reported profitability ratios. These insights highlight both expansion in asset scale and evolving asset utilization efficiency.