e.l.f. Beauty, Inc. (NYSE:ELF)

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e.l.f. Beauty, Inc., effective income tax rate (EITR) reconciliation

	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
State tax, net of federal benefit	1.80%	1.00%	2.60%	-10.60%	3.70%
State tax deferred rate change, net of federal benefit	0.00%	0.00%	-0.10%	-1.60%	0.10%
Nondeductible business expenses	0.40%	0.60%	0.40%	2.10%	0.80%
Nondeductible employee compensation	4.30%	2.50%	1.10%	9.10%	0.40%
Provision-to-return adjustment	-0.20%	-0.10%	-0.30%	1.50%	0.00%
Uncertain tax positions	0.00%	0.00%	0.10%	1.00%	-0.20%
Stock based compensation	-18.40%	-20.30%	-12.00%	-90.70%	-0.80%
Change in valuation allowance	0.40%	-0.60%	1.50%	0.00%	0.00%
Others	0.20%	-0.10%	0.10%	-0.70%	0.70%
Effective tax rate	9.50%	4.00%	14.40%	-68.90%	25.70%

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

The effective income tax rate (EITR) has exhibited significant volatility over the five-year period ending March 31, 2024, characterized by a substantial divergence from the constant federal statutory tax rate of 21.00%. While the EITR began above the statutory rate at 25.70% in 2020, it shifted to a deeply negative position in 2021 before stabilizing at levels well below the statutory benchmark from 2022 through 2024.

Impact of Stock-Based Compensation: Stock-based compensation has served as the primary driver for the reduction of the EITR. This factor reached an extreme peak in 2021, providing a negative adjustment of 90.70%, which fundamentally drove the overall EITR to -68.90% for that fiscal year. From 2022 to 2024, this benefit remained a dominant influence, consistently reducing the tax rate by double-digit percentages, ranging from -12.00% to -20.30%.
State Tax and Regulatory Adjustments: State tax contributions, net of federal benefits, have fluctuated, contributing a reduction of 10.60% in 2021 and modest increases between 1.00% and 3.70% in other years. Other adjustments, such as provision-to-return adjustments and valuation allowance changes, have remained relatively marginal, typically impacting the EITR by less than 2.00% annually.
Nondeductible Expenses: An upward trend is observed in the impact of nondeductible employee compensation, which increased from 0.40% in 2020 to 4.30% in 2024. While nondeductible business expenses have remained low and stable, peaking at 2.10% in 2021, the rising cost of nondeductible employee compensation represents a growing offset to the tax benefits derived from stock-based compensation.

Overall, the tax profile is defined by a transition from a rate exceeding the statutory minimum to a regime where aggressive tax benefits from stock-based compensation significantly suppress the actual tax burden, resulting in an EITR that remained in the single digits or low double digits for the most recent three fiscal years.

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e.l.f. Beauty, Inc., components of deferred tax assets and liabilities

US$ in thousands

	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Compensation	222)	354)	489)	624)	760)
Inventory and receivables	13,465)	9,976)	7,939)	5,710)	3,472)
Accrued expenses	3,782)	2,734)	2,225)	2,067)	1,996)
Stock compensation	7,349)	8,247)	7,567)	7,247)	3,706)
Net operating losses	1,188)	571)	426)	272)	92)
Right of use liability	5,026)	3,782)	4,763)	5,731)	3,443)
Capitalized research and development	2,051)	858)	—)	—)	—)
Other	1,792)	774)	874)	560)	558)
Gross deferred tax assets	34,875)	27,296)	24,283)	22,211)	14,027)
Valuation allowance	(744)	—)	(370)	—)	—)
Net deferred tax assets	34,131)	27,296)	23,913)	22,211)	14,027)
Goodwill	(3,546)	(5,180)	(3,084)	(4,090)	(3,468)
Fixed assets and internally developed software	(5,746)	(2,451)	(2,894)	(2,506)	(3,294)
Intangible assets	(21,326)	(19,107)	(22,740)	(23,162)	(25,287)
Right of use asset	(4,801)	(3,359)	(4,294)	(5,294)	(3,292)
Other	(557)	(378)	(494)	(463)	(563)
Deferred tax liabilities	(35,976)	(30,475)	(33,506)	(35,515)	(35,904)
Net deferred tax assets (liabilities)	(1,845)	(3,179)	(9,593)	(13,304)	(21,877)

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

The financial data indicates a consistent reduction in the net deferred tax liability over the five-year period ending March 31, 2024. While the company began the period with a substantial net deferred tax liability of 21.88 million USD, this figure narrowed significantly to 1.85 million USD by the end of the most recent fiscal year, reflecting a strong growth trend in deferred tax assets relative to liabilities.

Growth of Deferred Tax Assets: Gross deferred tax assets experienced a steady upward trajectory, increasing from 14.03 million USD in 2020 to 34.88 million USD in 2024. This growth was primarily driven by a substantial increase in assets related to inventory and receivables, which grew from 3.47 million USD to 13.47 million USD. Additional contributions came from accrued expenses and net operating losses, the latter of which grew from 92 thousand USD to 1.19 million USD over the period. Stock compensation assets also saw an overall increase, peaking in 2023 before slightly declining in 2024. Furthermore, capitalized research and development emerged as a new asset component in 2023, reaching 2.05 million USD by 2024.
Analysis of Deferred Tax Liabilities: Deferred tax liabilities remained relatively stable in aggregate, ending the period at 35.98 million USD, nearly identical to the 35.90 million USD reported in 2020. The composition of these liabilities shifted over time; liabilities associated with intangible assets decreased from 25.29 million USD in 2020 to 21.33 million USD in 2024. Conversely, liabilities related to fixed assets and internally developed software saw a sharp increase in the final year, rising to 5.75 million USD from 2.45 million USD in the previous year. Right of use assets and goodwill exhibited fluctuations but did not deviate significantly from their baseline levels.
Net Tax Position and Valuation: The net deferred tax position improved incrementally each year. The narrowing gap between assets and liabilities is attributable to the aggressive accumulation of deferred tax assets against a relatively stagnant liability base. Valuation allowances were minimal and intermittent, appearing in 2022 and 2024, suggesting a high degree of confidence in the recoverability of the deferred tax assets.

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e.l.f. Beauty, Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
	Deferred tax assets	1,821)	563)	—)	175)	15)
	Deferred tax liabilities	3,666)	3,742)	9,593)	13,479)	21,892)

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

Between March 31, 2020, and March 31, 2024, a significant shift in the deferred tax position is observed, characterized by a consistent increase in deferred tax assets and a substantial reduction in deferred tax liabilities.

Deferred Tax Assets Trend: An upward trajectory is evident in the deferred tax assets, which grew from US$ 15 thousand in 2020 to US$ 1,821 thousand by March 31, 2024. This growth accelerated notably in the final year of the period, indicating an increase in temporary differences that will result in future tax benefits.
Deferred Tax Liabilities Trend: A marked downward trend is observed in deferred tax liabilities. The balance decreased from US$ 21,892 thousand in 2020 to US$ 3,666 thousand in 2024. This represents a significant reduction in future tax obligations, suggesting the reversal of previous temporary differences over the five-year period.
Net Deferred Tax Position: The convergence of rising assets and declining liabilities has resulted in a dramatic compression of the net deferred tax liability. The entity has moved from a position of high deferred tax liability in 2020 to a significantly reduced net liability position by 2024, improving the overall long-term tax outlook.

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e.l.f. Beauty, Inc., Financial Data: Reported vs. Adjusted

e.l.f. Beauty, Inc., adjustments to financial statements

US$ in thousands

	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Adjustment to Total Assets
Total assets (as reported)	1,129,247)	595,601)	494,632)	487,393)	453,104)
Less: Noncurrent deferred tax assets, net	1,821)	563)	—)	175)	15)
Total assets (adjusted)	1,127,426)	595,038)	494,632)	487,218)	453,089)
Adjustment to Total Liabilities
Total liabilities (as reported)	486,675)	184,584)	182,203)	217,747)	210,933)
Less: Noncurrent deferred tax liabilities, net	3,666)	3,742)	9,593)	13,479)	21,892)
Total liabilities (adjusted)	483,009)	180,842)	172,610)	204,268)	189,041)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	642,572)	411,017)	312,429)	269,646)	242,171)
Less: Net deferred tax assets (liabilities)	(1,845)	(3,179)	(9,593)	(13,304)	(21,877)
Stockholders’ equity (adjusted)	644,417)	414,196)	322,022)	282,950)	264,048)
Adjustment to Net Income
Net income (as reported)	127,663)	61,530)	21,770)	6,232)	17,884)
Add: Deferred income tax expense (benefit)	(3,276)	(6,401)	(3,701)	(8,584)	2,443)
Net income (adjusted)	124,387)	55,129)	18,069)	(2,352)	20,327)

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

The financial adjustments resulting from the removal of deferred taxes indicate a systemic modification of the balance sheet, primarily impacting liabilities and stockholders' equity. Between 2020 and 2024, a consistent pattern is observed where adjusted total liabilities are lower than reported total liabilities, suggesting a reduction in recognized tax obligations.

Asset and Liability Adjustments: Adjusted total assets remained closely aligned with reported assets across the five-year period, exhibiting only marginal variances. In contrast, a significant divergence is noted in total liabilities. For the period ending March 31, 2020, the adjustment reduced reported liabilities from 210.9 million to 189.0 million. While the absolute value of liabilities grew substantially by 2024, the adjusted figures consistently remained lower than the reported values.
Impact on Stockholders' Equity: The reduction in liabilities through these adjustments correlates directly with an increase in adjusted stockholders' equity. In 2020, adjusted equity stood at 264.0 million compared to the reported 242.2 million. This trend of adjusted equity exceeding reported equity persisted through March 31, 2024, effectively presenting a more robust equity position when deferred tax elements are removed from the calculation.
Net Income Variability: The effect of deferred tax adjustments on net income is non-linear and fluctuates over time. In 2020, adjusted net income was higher than reported (20.3 million versus 17.9 million). However, in 2021, a sharp divergence occurred where the adjusted net income became negative at -2.4 million, despite a reported profit of 6.2 million. In the most recent fiscal years, 2023 and 2024, the adjusted net income figures were slightly lower than the reported net income, indicating a shift in the impact of tax adjustments on the bottom line.
Overall Growth Trajectory: Despite the tax-related adjustments, a significant growth trend is evident. Reported total assets increased from 453.1 million in 2020 to 1.13 billion in 2024. Concurrently, reported net income rose from 17.9 million in 2020 to 127.7 million in 2024. The scale of this operational growth significantly overshadows the variance introduced by the removal of deferred taxes.

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e.l.f. Beauty, Inc., Financial Ratios: Reported vs. Adjusted

e.l.f. Beauty, Inc., adjusted financial ratios

	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Net Profit Margin
Reported net profit margin	12.47%	10.63%	5.55%	1.96%	6.32%
Adjusted net profit margin	12.15%	9.52%	4.61%	-0.74%	7.19%
Total Asset Turnover
Reported total asset turnover	0.91	0.97	0.79	0.65	0.62
Adjusted total asset turnover	0.91	0.97	0.79	0.65	0.62
Financial Leverage
Reported financial leverage	1.76	1.45	1.58	1.81	1.87
Adjusted financial leverage	1.75	1.44	1.54	1.72	1.72
Return on Equity (ROE)
Reported ROE	19.87%	14.97%	6.97%	2.31%	7.38%
Adjusted ROE	19.30%	13.31%	5.61%	-0.83%	7.70%
Return on Assets (ROA)
Reported ROA	11.31%	10.33%	4.40%	1.28%	3.95%
Adjusted ROA	11.03%	9.26%	3.65%	-0.48%	4.49%

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

An analysis of the financial ratios from 2020 to 2024 reveals a strong upward trajectory in profitability and asset utilization, despite a significant contraction in 2021. The removal of deferred taxes provides a more conservative view of performance, particularly during periods of volatility.

Profitability Margins: The reported net profit margin exhibited a volatile start, dropping from 6.32% in 2020 to 1.96% in 2021, before climbing steadily to 12.47% by 2024. When adjusted for deferred taxes, the 2021 margin becomes negative (-0.74%), indicating that reported profits for that period were heavily influenced by tax accounting rather than operational performance. By 2024, the variance between reported (12.47%) and adjusted (12.15%) margins narrowed significantly, suggesting a stabilization of tax impacts on the bottom line.
Asset Efficiency: Total asset turnover shows a consistent improvement in the company's ability to generate revenue from its assets. The ratio increased from 0.62 in 2020 to a peak of 0.97 in 2023, before settling at 0.91 in 2024. There is no difference between the reported and adjusted figures for this metric, confirming that deferred tax adjustments do not impact asset turnover calculations.
Financial Leverage: Financial leverage experienced a gradual decline from 1.87 in 2020 to a low of 1.45 in 2023, followed by an increase to 1.76 in 2024. The adjusted financial leverage remained consistently lower than the reported figures throughout the period, although the gap is marginal. This suggests that the removal of deferred tax liabilities slightly reduces the perceived leverage of the organization.
Returns on Investment: Both Return on Equity (ROE) and Return on Assets (ROA) demonstrate substantial growth in the latter half of the period. Reported ROE surged from 2.31% in 2021 to 19.87% in 2024, while reported ROA rose from 1.28% in 2021 to 11.31% in 2024. The adjustment for deferred taxes reveals a critical insight in 2021, where both adjusted ROE (-0.83%) and adjusted ROA (-0.48%) turned negative. In subsequent years, the adjusted returns remained slightly lower than the reported returns, though they followed the same aggressive growth pattern, indicating that the underlying operational recovery was genuine and not merely a result of tax accounting benefits.

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	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
As Reported
Selected Financial Data (US$ in thousands)
Net income	127,663)	61,530)	21,770)	6,232)	17,884)
Net sales	1,023,932)	578,844)	392,155)	318,110)	282,851)
Profitability Ratio
Net profit margin¹	12.47%	10.63%	5.55%	1.96%	6.32%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	124,387)	55,129)	18,069)	(2,352)	20,327)
Net sales	1,023,932)	578,844)	392,155)	318,110)	282,851)
Profitability Ratio
Adjusted net profit margin²	12.15%	9.52%	4.61%	-0.74%	7.19%

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

2024 Calculations

¹ Net profit margin = 100 × Net income ÷ Net sales
= 100 × 127,663 ÷ 1,023,932 = 12.47%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales
= 100 × 124,387 ÷ 1,023,932 = 12.15%

A significant upward trajectory in profitability is observed from the fiscal year ending March 31, 2021, through March 31, 2024. Following a period of contraction in 2021, the company demonstrated accelerating growth in both absolute net income and profit margins over the subsequent three years.

Net Income Performance: Reported net income experienced a sharp decline in 2021 to 6,232 thousand US$, before entering a phase of rapid expansion to reach 127,663 thousand US$ by March 31, 2024. Adjusted net income showed greater volatility during the same period, dropping to a negative value of -2,352 thousand US$ in 2021, then recovering strongly to 124,387 thousand US$ by 2024.
Net Profit Margin Trends: The reported net profit margin recovered from a low of 1.96% in 2021 to 12.47% in 2024. Similarly, the adjusted net profit margin shifted from a negative 0.74% in 2021 to 12.15% in 2024. The consistent year-over-year increase from 2022 onward indicates a substantial improvement in the company's ability to convert revenue into actual profit.
Comparison of Reported and Adjusted Metrics: A notable divergence is observed in 2021, where the reported net profit margin remained positive while the adjusted margin fell below zero. In the most recent periods, specifically 2023 and 2024, the reported margins have slightly exceeded the adjusted margins, suggesting that the adjustments made to the net income had a marginally reductive effect on the final profitability percentage compared to the reported figures.

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	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
As Reported
Selected Financial Data (US$ in thousands)
Net sales	1,023,932)	578,844)	392,155)	318,110)	282,851)
Total assets	1,129,247)	595,601)	494,632)	487,393)	453,104)
Activity Ratio
Total asset turnover¹	0.91	0.97	0.79	0.65	0.62
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales	1,023,932)	578,844)	392,155)	318,110)	282,851)
Adjusted total assets	1,127,426)	595,038)	494,632)	487,218)	453,089)
Activity Ratio
Adjusted total asset turnover²	0.91	0.97	0.79	0.65	0.62

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

2024 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 1,023,932 ÷ 1,129,247 = 0.91

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 1,023,932 ÷ 1,127,426 = 0.91

A consistent expansion in the asset base is observed from 2020 through 2024, characterized by a significant acceleration in growth during the final fiscal year. This expansion is mirrored by a general upward trend in asset utilization efficiency, although a slight deceleration occurred in the most recent period.

Asset Base Expansion: Adjusted total assets grew steadily from US$ 453,089 thousand in 2020 to US$ 595,038 thousand in 2023. A substantial increase occurred in 2024, with adjusted total assets rising to US$ 1,127,426 thousand, representing a near-doubling of the asset base within a single year.
Asset Turnover Efficiency: The adjusted total asset turnover ratio demonstrated a continuous upward trajectory for four consecutive years, rising from 0.62 in 2020 to a peak of 0.97 in 2023. This trend indicates a period of increasing efficiency in generating revenue relative to the company's investment in assets.
Recent Performance Variance: In 2024, the adjusted total asset turnover ratio experienced a slight decline to 0.91. This contraction coincided with the sharp increase in total assets, suggesting that the growth in the asset base outpaced the corresponding growth in revenue during this specific period.
Reported versus Adjusted Metrics: There is a negligible variance between reported and adjusted total assets and turnover ratios across all five years, indicating that adjustments to the asset base did not materially impact the overall efficiency analysis.

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	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
As Reported
Selected Financial Data (US$ in thousands)
Total assets	1,129,247)	595,601)	494,632)	487,393)	453,104)
Stockholders’ equity	642,572)	411,017)	312,429)	269,646)	242,171)
Solvency Ratio
Financial leverage¹	1.76	1.45	1.58	1.81	1.87
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	1,127,426)	595,038)	494,632)	487,218)	453,089)
Adjusted stockholders’ equity	644,417)	414,196)	322,022)	282,950)	264,048)
Solvency Ratio
Adjusted financial leverage²	1.75	1.44	1.54	1.72	1.72

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

2024 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 1,129,247 ÷ 642,572 = 1.76

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 1,127,426 ÷ 644,417 = 1.75

A consistent expansion of the balance sheet is evident from 2020 through 2024, characterized by a significant acceleration in total asset growth. Total assets increased from 453.1 million US dollars in 2020 to 1.129 billion US dollars in 2024, with the most substantial increase occurring between 2023 and 2024. Stockholders' equity followed a similar upward trajectory, growing from 242.2 million US dollars in 2020 to 642.6 million US dollars in 2024.

Financial Leverage Trends: The reported financial leverage exhibited a steady decline from 1.87 in 2020 to a low of 1.45 in 2023, suggesting a period of deleveraging or equity-funded growth. This trend reversed in 2024, with the ratio rising to 1.76, which coincides with the sharp increase in total assets.
Adjusted Financial Leverage Analysis: Adjusted financial leverage followed a nearly identical pattern to reported leverage, declining from 1.72 in 2020 and 2021 to 1.44 in 2023, before rising to 1.75 in 2024. The convergence of reported and adjusted leverage ratios by 2024 indicates that the impact of the adjustments has diminished relative to the overall scale of the balance sheet.
Equity Adjustments: Adjusted stockholders' equity remained consistently higher than reported equity from 2020 to 2023, contributing to the lower adjusted financial leverage during those years. By 2024, the variance between reported and adjusted equity narrowed significantly, suggesting a reduction in the relative impact of the specific tax or accounting adjustments applied to the equity base.

The analysis indicates a strategic shift in 2024, where a rapid expansion of the asset base led to an increase in financial leverage following several years of steady decline. This suggests that the growth achieved in the final year of the observed period was more heavily reliant on liabilities than the growth observed between 2020 and 2023.

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	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
As Reported
Selected Financial Data (US$ in thousands)
Net income	127,663)	61,530)	21,770)	6,232)	17,884)
Stockholders’ equity	642,572)	411,017)	312,429)	269,646)	242,171)
Profitability Ratio
ROE¹	19.87%	14.97%	6.97%	2.31%	7.38%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	124,387)	55,129)	18,069)	(2,352)	20,327)
Adjusted stockholders’ equity	644,417)	414,196)	322,022)	282,950)	264,048)
Profitability Ratio
Adjusted ROE²	19.30%	13.31%	5.61%	-0.83%	7.70%

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

2024 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 127,663 ÷ 642,572 = 19.87%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 124,387 ÷ 644,417 = 19.30%

A significant expansion in profitability and shareholder equity is observed over the five-year period ending March 31, 2024. Following a period of volatility in 2021, the company entered a phase of accelerated growth, characterized by a substantial increase in both reported and adjusted net income.

Net Income Performance: Reported net income exhibited a V-shaped recovery, dropping from US$ 17.88 million in 2020 to US$ 6.23 million in 2021, before climbing sharply to US$ 127.66 million by 2024. Adjusted net income followed a similar trajectory but showed more volatility in 2021, falling into negative territory at US$ -2.35 million. From 2022 onward, adjusted net income grew exponentially, reaching US$ 124.39 million in 2024, indicating a strong restoration and subsequent scaling of operational profitability.
Stockholders' Equity Growth: Equity has maintained a consistent upward trend throughout the analyzed period. Reported stockholders' equity grew from US$ 242.17 million in 2020 to US$ 642.57 million in 2024. Adjusted stockholders' equity mirrored this growth closely, increasing from US$ 264.04 million to US$ 644.42 million. The most pronounced acceleration in equity accumulation occurred between 2023 and 2024, where reported equity increased by approximately 56%.
Return on Equity (ROE) Trends: The Return on Equity reflects the company's increasing efficiency in generating profits from its equity base. Reported ROE declined to a low of 2.31% in 2021 before rising steadily to 19.87% in 2024. Adjusted ROE experienced a more severe contraction, reaching -0.83% in 2021, but recovered robustly to reach 19.30% by 2024. The convergence of reported and adjusted ROE in the final two years suggests that the adjustments to net income and equity have a diminishing relative impact as absolute profit margins expand.

Overall, the transition from 2021 to 2024 marks a pivot from marginal profitability to high-growth performance. The simultaneous increase in both the equity base and the ROE indicates that the company is not only growing in size but is also improving its internal capacity to generate returns on invested capital.

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	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
As Reported
Selected Financial Data (US$ in thousands)
Net income	127,663)	61,530)	21,770)	6,232)	17,884)
Total assets	1,129,247)	595,601)	494,632)	487,393)	453,104)
Profitability Ratio
ROA¹	11.31%	10.33%	4.40%	1.28%	3.95%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	124,387)	55,129)	18,069)	(2,352)	20,327)
Adjusted total assets	1,127,426)	595,038)	494,632)	487,218)	453,089)
Profitability Ratio
Adjusted ROA²	11.03%	9.26%	3.65%	-0.48%	4.49%

Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).

2024 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 127,663 ÷ 1,129,247 = 11.31%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 124,387 ÷ 1,127,426 = 11.03%

The financial performance from 2020 to 2024 is characterized by an initial period of volatility followed by a phase of accelerated growth in both profitability and asset scale.

Net Income Trajectory: Reported net income exhibited a substantial upward trend, rising from US$ 17.88 million in 2020 to US$ 127.66 million by 2024. Adjusted net income followed a similar trajectory but showed greater volatility, specifically dropping to a negative US$ 2.35 million in 2021. From 2022 onward, adjusted net income grew aggressively, increasing from US$ 18.07 million to US$ 124.39 million over two fiscal years.
Asset Base Expansion: Total assets grew steadily from 2020 to 2023, moving from US$ 453.10 million to US$ 595.60 million. A significant acceleration in asset acquisition or valuation occurred between March 31, 2023, and March 31, 2024, where reported total assets nearly doubled to reach US$ 1.13 billion. The adjusted total assets remained closely aligned with reported figures throughout the period, suggesting minimal impact from the specific adjustments applied to the balance sheet.
Return on Assets (ROA) Analysis: Adjusted ROA experienced a sharp decline in 2021, falling to -0.48%, which contrasts with the reported ROA of 1.28% for the same period. This divergence indicates that adjustments to net income had a more pronounced negative effect on performance metrics during that year. Subsequent years showed a strong recovery and expansion, with adjusted ROA climbing to 3.65% in 2022, 9.26% in 2023, and peaking at 11.03% in 2024. The rapid increase in ROA since 2022 suggests that net income growth has significantly outpaced the growth of the asset base, reflecting enhanced operational efficiency.

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