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Stock Analysis on Net

Etsy Inc. (NASDAQ:ETSY)

This company has been moved to the archive! The financial data has not been updated since November 3, 2022.

Common-Size Income Statement

Etsy Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Revenue 100.00 100.00 100.00 100.00 100.00
Cost of revenue -28.10 -26.93 -33.12 -31.60 -34.22
Gross profit 71.90% 73.07% 66.88% 68.40% 65.78%
Marketing -28.11 -29.02 -26.34 -26.17 -24.72
Product development -11.66 -10.44 -14.89 -16.11 -16.91
General and administrative -12.13 -9.04 -14.80 -13.73 -20.73
Asset impairment charges 0.00 0.00 0.00 0.00 -0.72
Operating expenses -51.90% -48.50% -56.04% -56.01% -63.08%
Income from operations 20.00% 24.57% 10.85% 12.39% 2.70%
Loss on extinguishment of debt 0.00 -0.98 0.00 0.00 0.00
Interest expense -0.42 -2.44 -2.97 -3.67 -2.52
Interest and other income 0.09 0.41 1.61 1.48 0.54
Foreign exchange gain (loss) 0.59 -0.38 0.37 -1.07 6.60
Other income (expense) 0.25% -3.38% -0.99% -3.26% 4.62%
Income before income taxes 20.25% 21.19% 9.85% 9.12% 7.31%
(Provision) benefit for income taxes 0.94 -0.95 1.86 3.71 11.23
Net income 21.19% 20.24% 11.72% 12.84% 18.54%

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 trajectory from 2017 to 2021 demonstrates a significant expansion in operational efficiency and profitability margins. A consistent trend of margin improvement is evident, characterized by a reduction in the relative weight of both the cost of revenue and operating expenses against total revenue.

Gross Profitability Trends
Gross profit margins exhibited a steady upward trend, increasing from 65.78% in 2017 to 71.90% by 2021, with a peak of 73.07% in 2020. This growth was driven by a reduction in the cost of revenue, which decreased from 34.22% in 2017 to 28.10% in 2021, suggesting improved direct cost management or more favorable pricing dynamics as the business scaled.
Operating Expense Analysis
Total operating expenses as a percentage of revenue declined from 63.08% in 2017 to 51.90% in 2021. This reduction is primarily attributed to significant gains in operational leverage within two key areas: general and administrative expenses, which fell from 20.73% to 12.13%, and product development, which decreased from 16.91% to 11.66%. Conversely, marketing expenses remained relatively stable, fluctuating between 24.72% and 29.02%, indicating a consistent investment in customer acquisition relative to revenue growth.
Operating and Net Income Margins
Income from operations showed substantial growth, rising from a thin margin of 2.70% in 2017 to 20.00% in 2021. This indicates a strong capacity to convert revenue into operating profit. Net income margins remained robust throughout the period, ending at 21.19% in 2021. While the 2017 net income of 18.54% was heavily influenced by a significant tax benefit of 11.23%, the subsequent years show a more sustainable profit structure driven by operational performance rather than one-time tax advantages.
Other Income and Financial Obligations
Interest expenses as a percentage of revenue decreased markedly from 3.67% in 2018 to 0.42% in 2021, reflecting a reduction in the relative burden of debt servicing. Other income and expenses, including foreign exchange gains and losses, remained volatile but had a diminishing impact on the overall bottom line by 2021, as evidenced by the closer alignment between income before taxes (20.25%) and net income (21.19%).

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