DexCom Inc. (NASDAQ:DXCM)

The analysis of the quarterly financial ratios reveals several trends regarding asset and equity utilization over the examined periods.

Net Fixed Asset Turnover

This ratio demonstrated a declining trend from the beginning of the available data in early 2019 through late 2022, falling from approximately 5.63 to around 2.76. Despite some minor fluctuations, the overall movement is downward, indicating that the efficiency with which the net fixed assets generate revenue has diminished over this period. Notably, there is a slight recovery visible in the early quarters of 2023, with the ratio increasing to just above 3.15 by September 2023.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

When considering right-of-use assets associated with operating leases, the turnover ratio also shows a consistent downward progression from about 5.63 in early 2019 to below 2.60 by late 2022. Similar to the net fixed asset turnover alone, there is a modest improvement in the subsequent quarters, rising to nearly 2.95 by the third quarter of 2023. This indicates a broadly consistent pattern with the net fixed asset turnover, albeit with a slightly lower ratio throughout due to the inclusion of operating lease assets.

Total Asset Turnover

The total asset turnover ratio exhibits variability but lacks a definitive long-term directional trend. Starting from 0.54 in early 2019, it increased modestly to 0.65 by mid-2019, followed by a decline and stabilization around the mid-0.40s to low 0.50s range through 2020 and 2021. During 2022, the ratio shows improvement, reaching 0.57 before modestly declining again in 2023. This suggests fluctuating efficiency in utilizing total assets to generate revenues, without a clear persistent increase or decrease.

Equity Turnover

The equity turnover ratio rose from 1.56 at the start of 2019 to a peak of about 1.77 in late 2018 and early 2019, indicating improved efficiency in generating revenue from shareholders’ equity. Subsequently, the ratio systematically declined through 2020, reaching a low near 1.05, reflecting reduced revenue generation efficiency relative to equity during that period. In 2021 and 2022, a recovery trend is evident, with ratios increasing back above 1.50. Entering 2023, this turnover ratio stabilizes around 1.50, pointing towards regained efficiency in using equity to generate revenue.

In summary, asset-related turnover ratios, particularly those involving fixed assets, show a pronounced decreasing trend over several years, with signs of slight recovery in the most recent quarters. Total asset turnover remains variable without a strong directional trend. Equity turnover follows a somewhat similar pattern of decline and recovery, reflecting fluctuations in how effectively the company utilizes its equity base to drive revenues. These trends may reflect changing asset bases, investment strategies, or operational factors affecting revenue generation efficiency.

The revenue demonstrates a generally upward trend over the observed periods, with some fluctuations. Starting at $184.4 million in the first quarter of 2018, revenue consistently increased, reaching a peak of $698.2 million by the last quarter of 2021. Following this peak, there was some volatility with a decline to $628.8 million in the first quarter of 2022, after which revenue rebounded and continued to grow, culminating at $975.0 million by the third quarter of 2023. This pattern suggests strong overall growth momentum with occasional short-term setbacks.

The net property and equipment value also increased steadily throughout the timeline, starting at $152.4 million in the first quarter of 2018 and growing to approximately $1.08 billion by the third quarter of 2023. This sustained investment in fixed assets indicates ongoing capital expenditures, likely aimed at expanding operational capacity or enhancing production capabilities.

The net fixed asset turnover ratio, available from the fourth quarter of 2018 onwards, shows a decreasing trend from 5.63 initially to a low of 2.76 in the third quarter of 2022. This declining ratio indicates that revenue generated per unit of net fixed assets has weakened over time, suggesting relatively slower revenue growth compared to the increase in fixed assets. However, in the last three observed quarters, the ratio shows a modest recovery, improving from 2.76 to 3.15 by the third quarter of 2023, which may reflect improved efficiency or stronger revenue performance relative to asset base growth in that period.

Revenue

Exhibited consistent long-term growth with a peak in late 2021, followed by short-term volatility and a robust recovery in 2023.

Property and Equipment, Net

Demonstrated steady and significant growth, reflecting continuous investments in fixed assets over the observed period.

Net Fixed Asset Turnover Ratio

Displayed a downward trend initially, indicating declining efficiency in asset utilization, followed by a modest improvement in recent quarters, suggesting potential operational gains or improved revenue generation per asset unit.

The revenue exhibits a general upward trend across the periods analyzed, with notable seasonal fluctuations. Starting at $184,400 thousand in March 2018, revenue increased steadily to reach a peak of $815,200 thousand by December 2022. The data reflects some cyclical dips, particularly visible in March and June quarters of most years, but the overall trajectory remains positive, culminating in the highest reported revenues of $975,000 thousand in September 2023.

Property and equipment, net, including operating lease right-of-use assets, showed consistent growth throughout the period. Beginning at $152,400 thousand in March 2018, the net value increased steadily each quarter, reaching $1,152,300 thousand by September 2023. This indicates ongoing investment in fixed assets and leased assets, suggesting expansion or enhancement of operational capacity.

The net fixed asset turnover ratio, which measures revenue generated per dollar of net fixed assets, demonstrates a declining trend over the observed timeframe. Initial reported values in late 2018 indicate a high turnover of 5.63, decreasing to around 2.95 by September 2023. This decline implies that while asset base has increased substantially, revenue growth has not kept pace proportionally with these investments in fixed assets, potentially signaling diminishing efficiency or a strategic expansion phase with delayed revenue realization.

Revenue

Steady growth with seasonal fluctuations; increased from $184.4 million (Q1 2018) to $975 million (Q3 2023).

Property and Equipment, Net

Consistent and substantial growth from $152.4 million to over $1.15 billion, reflecting significant capital investment over five years.

Net Fixed Asset Turnover

Declining trend from 5.63 to 2.95, indicating reduced efficiency in utilizing fixed assets to generate revenue or proactive asset expansion ahead of revenue gains.

Revenue Trends

The revenue figures exhibit a general upward trajectory over the observed periods. Starting at approximately 184.4 million US dollars in Q1 2018, revenue consistently increased to a peak of around 815.2 million US dollars by Q4 2022. Some quarters demonstrated notable growth spurts, particularly between 2019 and 2021, where revenue rose from 280.5 million to nearly 698.2 million US dollars. However, fluctuations are observable in 2023, with revenue peaking at 975 million US dollars in Q3 2023 after a slight interim dip.

Total Assets Analysis

Total assets showed a substantial rise from 896.8 million US dollars in Q1 2018 to over 6.8 billion US dollars by Q2 2023. The asset base expanded relatively steadily, with marked jumps particularly in late 2019 and throughout 2020 and 2023. This upward asset movement suggests ongoing investment or acquisition activity. Some periods, such as late 2022 and mid-2023, show decline or stabilization, indicating possible asset reallocation or impairment.

Total Asset Turnover Insights

The total asset turnover ratio, available from the third quarter of 2018 onwards, remains generally stable around a range of 0.45 to 0.65. Higher ratios close to 0.62 to 0.65 were recorded toward the end of 2018 and mid-2019, implying relatively efficient asset utilization during these periods. A slight declining trend is observed during the 2020 quarters, where the ratio dipped to approximately 0.45, which aligns with rapid asset growth but comparatively moderated revenue increases. Post-2020, the ratio recovers and stabilizes near 0.5, signifying improved or consistent asset efficiency despite continued asset base growth.

Overall Observations

The company's financial metrics indicate strong growth in both revenue and asset base over the examined timeline. Despite significant asset growth, the company has managed to maintain a relatively steady asset turnover ratio, suggesting ongoing efforts to optimize asset use. The moderate fluctuations in revenue and asset turnover hint at periodic operational adjustments or market influences affecting short-term performance. The continuing rise in asset base combined with increasing revenues points to expansion and scaling activities.

The revenue exhibited a generally upward trajectory from the first quarter of 2018 through the third quarter of 2023. Starting at approximately $184.4 million in March 2018, revenue increased with some fluctuations, reaching a peak of $975 million in September 2023. Noteworthy increments occurred during late 2018 and throughout 2020 and 2021, despite a few quarters of relative stagnation or slight declines, such as in the first quarter of 2020 and the first quarter of 2022. Overall, the revenue growth indicates expansion and increasing sales over the observed periods.

Stockholders’ equity also showed a consistent rise over the examined time frame. Beginning at around $421.7 million in March 2018, equity steadily increased, with some fluctuations, to approximately $2.27 billion in September 2023. Exceptional growth periods were evident between June 2019 and December 2020, where equity nearly doubled. Some declines and subsequent recoveries appear towards 2022 and 2023, however, the general trend points to strengthening equity and potentially enhanced retained earnings or capital contributions.

The equity turnover ratio, which measures how efficiently the company uses its equity to generate revenue, presents a mixed pattern. Initial data points from March 2018 through March 2019 are missing, but from June 2019 onward, the ratio generally fluctuates between 1.05 and 1.77. Early on, the ratio was higher, around 1.56 to 1.77, indicating relatively efficient use of equity to produce revenue. This efficiency decreased in 2020 and 2021, with values as low as approximately 1.05, suggesting slower revenue generation relative to equity. In the latter quarters, the ratio improved again, crossing 1.5 in some quarters of 2022 and 2023, implying a renewed improvement in equity utilization efficiency.

In summary, the company demonstrated strong growth in revenue and stockholders' equity over the analyzed period, reflecting expansion and possibly profitable operations. The equity turnover ratio's variability suggests changing efficiency in leveraging equity for revenue generation, with recent quarters showing improvement after a period of decline.

Revenue Trends

Steady growth with some fluctuations between $184.4 million and $975 million; strongest growth phases in late 2018, 2020, and 2021.

Stockholders’ Equity Trends

Substantial increase from $421.7 million to $2.27 billion; notable surge between mid-2019 and late 2020, slight volatility thereafter.

Equity Turnover Ratio

Variable efficiency, initially high (around 1.56-1.77), dipped in 2020-2021 to near 1.05, followed by recovery to approximately 1.5 in recent quarters.