Analysis of Investments
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Etsy Inc. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Total Asset Turnover since 2015
- Price to Earnings (P/E) since 2015
- Price to Operating Profit (P/OP) since 2015
- Analysis of Revenues
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Etsy Inc., adjustment to net income
US$ in thousands
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|---|
| Net income (as reported) | ||||||
| Add: Unrealized gains (losses) on marketable securities, net of tax | ||||||
| Net income (adjusted) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial data demonstrates a generally positive and substantial upward trajectory in both reported and adjusted net income over the period from 2017 to 2021. The reported net income figures exhibit minor fluctuations initially, with a slight decrease from 81,800 thousand USD in 2017 to 77,491 thousand USD in 2018, followed by a recovery and increase to 95,894 thousand USD in 2019. Starting in 2020, there is a pronounced surge in reported net income, more than tripling to 349,246 thousand USD, and continuing to rise in 2021 to 493,507 thousand USD.
Similarly, adjusted net income follows a closely aligned trend, reinforcing the consistency and reliability of these results by showing only slight variations compared to the reported figures. It starts at 81,847 thousand USD in 2017, dips slightly in 2018 to 77,456 thousand USD, then rises to 96,086 thousand USD in 2019. The year 2020 marks a significant inflection point with adjusted net income jumping sharply to 349,428 thousand USD, and it remains elevated in 2021 at 492,745 thousand USD.
This parallel movement in reported and adjusted net income suggests a stable operating performance and minimal adjustments between the two measurements, indicating that the adjustments for non-recurring items or unusual transactions had limited impact on the overall profitability reported. The notable leap from 2019 to 2020 points to a major change in company performance or external factors driving earnings growth, which sustains into 2021.
- Trend from 2017 to 2019
- Both net income metrics remain relatively stable with slight fluctuations and modest growth.
- Trend from 2019 to 2020
- The company experiences a dramatic increase in profitability, with net income more than tripling, indicating significant operational improvements or market conditions favorable to earnings expansion.
- Trend from 2020 to 2021
- Profit levels continue to grow but at a slower rate, maintaining the high earnings achieved in 2020.
- Comparison of reported and adjusted net income
- Values remain closely aligned throughout the observed years, suggesting minimal adjustments are necessary and that reported earnings are a robust reflection of operational profitability.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Etsy Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net Profit Margin
- The reported net profit margin shows a decline from 18.54% in 2017 to 11.72% in 2019, indicating decreasing profitability during this period. However, it recovers significantly in 2020 and 2021, reaching 20.24% and 21.19% respectively. The adjusted net profit margin closely mirrors this trend, suggesting consistency between reported and adjusted figures.
- Return on Equity (ROE)
- The reported ROE experiences moderate fluctuations from 20.61% in 2017 to 19.33% in 2018, followed by an increase to 23.58% in 2019. A notable and substantial rise occurs in 2020 and 2021, with ROE reaching 47.04% and sharply increasing to 78.51% respectively. Adjusted ROE values align closely, confirming this strong upward trend in shareholder returns.
- Return on Assets (ROA)
- The reported ROA shows a decline from 13.51% in 2017 to 6.22% in 2019, reflecting decreasing efficiency in asset utilization during this timeframe. This is followed by a rebound to 14.52% in 2020, though it slightly decreases to 12.88% in 2021. The adjusted ROA values parallel the reported ones, indicating consistent asset performance adjustments over the years.
Etsy Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Net profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × ÷ =
The financial data reveals several notable trends in the company's profitability over the analyzed five-year period.
- Net Income Trends
- Reported net income has generally increased each year, starting from approximately 81.8 million US dollars in 2017 and reaching nearly 493.5 million US dollars by the end of 2021. The adjusted net income values closely mirror the reported figures, indicating minimal differences from investment adjustments during this period. A significant surge is observed between 2019 and 2020, where reported net income more than tripled, suggesting a substantial improvement in earnings performance.
- Profit Margin Trends
- The reported net profit margin displayed a declining trend from 18.54% in 2017 to a low of 11.72% in 2019, which indicates decreasing profitability relative to revenue during these years. However, it experienced a marked recovery starting in 2020, rising to 20.24%, and further to 21.19% in 2021, reflecting enhanced operational efficiency or better cost management. Adjusted net profit margins exhibit a virtually identical pattern, with only marginal numerical variances, reinforcing the reliability of the reported results.
- Insights from the Combined Data
- The parallel movement of reported and adjusted net income and profit margins suggests consistency in financial reporting and that investment-related adjustments had a limited impact on profitability figures. The sharp increase in both net income and profit margins from 2019 to 2020 likely indicates a significant operational or market shift favorably impacting the company's earnings. The sustained high margin levels in 2021 point to potentially stable profitability improvements rather than a one-time occurrence.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × ÷ =
The financial data over the five-year period indicates a consistent upward trend in both net income and return on equity (ROE) for the company. The reported and adjusted net income values show a steady increase, with a notable acceleration in growth from the 2019 to 2021 periods.
- Net Income
- Reported net income rose from $81.8 million in 2017 to $493.5 million in 2021, representing a more than sixfold increase over the five years. Adjusted net income values closely mirror the reported figures, indicating minimal impact from adjustments and suggesting that the core profitability performance remained stable.
- Between 2019 and 2020, there was a significant jump from approximately $95.9 million to $349.2 million, followed by another substantial increase to nearly $493.5 million in 2021.
- Return on Equity (ROE)
- Reported ROE increased from 20.61% in 2017 to 78.51% in 2021. Adjusted ROE exhibited a similar pattern, moving from 20.62% to 78.39% over the same period. This rapid increase in ROE signifies improved efficiency in using shareholder equity to generate profits.
- The ROE more than doubled between 2019 (23.58%) and 2020 (47.04%), before climbing sharply in 2021, which aligns with the surge in net income.
- Comparison between Reported and Adjusted figures
- The minimal differences between reported and adjusted net income and ROE suggest that adjustments made for investment considerations or other factors had negligible effects on the overall financial performance.
In summary, the data reveals accelerated growth and improved profitability over the examined timeframe, particularly from 2019 onwards, with the company effectively increasing net income and enhancing returns to shareholders.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × ÷ =
The financial data indicates several key trends over the five-year period ending December 31, 2021.
- Net Income Trends
- The reported net income demonstrates a generally upward trajectory, increasing from $81,800 thousand in 2017 to a peak of $493,507 thousand in 2021. There is a notable dip in growth between 2017 and 2018 followed by a more moderate growth rate in 2019. However, 2020 shows a significant surge, with net income more than tripling compared to the previous year, and this growth sustains into 2021 with further increase.
- The adjusted net income closely mirrors the reported net income throughout the period, presenting almost identical values which suggests minimal adjustments for extraordinary items or non-recurring events. This parallel movement confirms the robustness of the reported earnings figures.
- Return on Assets (ROA) Analysis
- Both reported and adjusted ROA percentages follow similar patterns, reinforcing the reliability of adjustments and consistency in measurement. The ROA figures decline steadily from 13.51% in 2017 to their lowest point in 2019 at approximately 6.22%, indicating a decrease in asset efficiency during this period.
- However, there is a pronounced recovery in 2020, where ROA more than doubles reaching approximately 14.52%, surpassing initial years. This elevated level slightly declines in 2021 to about 12.88%, yet it remains significantly higher than the 2019 trough, reflecting improved asset utilization and profitability.
In summary, the data reveals a strong recovery and growth trend post-2019 in both net income and ROA, with adjusted figures consistently validating reported results. The improvement in profitability metrics in 2020 and 2021 suggests effective operational management or strategic initiatives that enhanced financial performance relative to assets employed.