Common-Size Income Statement
Quarterly Data
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Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
- Gross Profit Trends
- Gross profit as a percentage of revenue exhibited an improving trend from early 2017 through 2018, peaking around 71.45% in December 2018. There was a slight decline observed in 2019, followed by a notable increase during 2020 reaching a high of approximately 75.58% in December 2020. Subsequently, gross profit margins stabilized in the low 70% range through 2021 and early 2022.
- Cost of Revenue
- The cost of revenue decreased steadily from approximately 35.77% in March 2017 to about 28.55% in December 2018, contributing to the rising gross profit margins. However, in 2019 the cost of revenue fluctuated around the low 30% range, and in 2020 there was a significant reduction reaching 24.42% in December 2020, indicating improved cost efficiency. From 2021 onwards, cost of revenue settled around 29-30%, reflecting relative stability.
- Operating Expenses Patterns
- Operating expenses, encompassing marketing, product development, and general & administrative costs, displayed variability over the periods. Marketing expense as a percentage of revenue fluctuated considerably, reaching peaks near 34.14% in late 2020 and troughs around 20.93% in early 2019. Product development expenses generally declined from higher levels above 18% in 2017 to under 10% in late 2020 but then increased again to approximately 17-18% by late 2022. General and administrative expenses steadily decreased from about 27.94% in mid-2017 to below 10% at the end of 2020, followed by a gradual increase to mid-teens by late 2021 and 2022.
- Operating Income
- Operating income as a percentage of revenue improved substantially from a negative of -11.52% in mid-2017 to positive double digits by late 2017, maintaining this level through 2018 and 2019 with some fluctuations. A significant increase took place in 2020, with operating income reaching highs above 27% in late 2020 and early 2021, indicating enhanced operational profitability. Subsequently, operating income softened but remained positive in the mid-teens to low 20% range up to mid-2022.
- Net Income
- Net income margins followed a similar pattern to operating income, transitioning from negative or low single-digit percentages in early 2017 to substantial positive margins above 30% in late 2017. Margins declined somewhat in 2018 and 2019 but recovered sharply in 2020, with net income exceeding 24% by the end of the year. Margins remained elevated, generally ranging between 15% to 22% in 2021 and early 2022. A sharp negative outlier appeared in late 2022 due to a significant goodwill impairment charge.
- Impact of Impairment Charges
- In the final reported quarter, there was a substantial goodwill impairment recorded at approximately -175.79% of revenue, causing both operating and net income to swing to large negative percentages (-160.61% and -162%, respectively). This one-time charge significantly distorted profitability metrics for that period and overshadowed the ongoing operational performance.
- Additional Observations
- Income tax provisions showed variability, occasionally providing benefits or charges that influenced net income margin fluctuations. Other income and expenses demonstrated minor impact overall, often near zero but with sporadic small positive or negative values.
- Summary
- Overall, the data reveals a trajectory of improving profitability from 2017 through 2020, driven by decreasing cost of revenue and disciplined expense management leading to expansion in operating and net margins. Despite some fluctuations in marketing and product development expenses, the company maintained positive operating leverage. The 2022 impairment charge marks a significant non-recurring event that materially affected financial outcomes for that quarter. Excluding this anomaly, the underlying operating and net income margins remained solid and consistent.