Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Etsy Inc., 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).
- Gross Profit Margin
- The gross profit margin exhibited a generally positive trajectory from 2017 to 2021, starting at 65.78% in 2017 and peaking at 73.07% in 2020, before slightly declining to 71.9% in 2021. This suggests improvements in production efficiency or pricing power were mostly sustained over the period, though there was a minor reduction in profitability at the gross level in the final year reported.
- Operating Profit Margin
- The operating profit margin showed substantial growth from a low 2.7% in 2017 to a notably higher 24.57% in 2020, followed by a decrease to 20% in 2021. This indicates significant improvement in operational efficiency and cost management, with the margin more than tripling over four years before a slight contraction. Despite the reduction in 2021, operating profitability remained strong relative to the starting point.
- Net Profit Margin
- The net profit margin fluctuated over the years, initially declining from 18.54% in 2017 to 11.72% in 2019, then recovering to a higher level of 21.19% by 2021. The recovery after 2019 points to improvements in overall profitability, possibly due to better cost control, revenue growth, or other financial factors contributing to bottom-line enhancement.
- Return on Equity (ROE)
- Return on equity showed a dramatic increase throughout the period, rising from 20.61% in 2017 to an exceptionally high 78.51% in 2021. This sharp rise indicates a substantial increase in the company’s ability to generate returns on shareholders’ investments, possibly driven by improved profitability, leverage changes, or share buybacks. The ROE nearly quadrupled over the span of five years, pointing to strong shareholder value creation.
- Return on Assets (ROA)
- The return on assets experienced a decline from 13.51% in 2017 to a low of 6.22% in 2019, before recovering to 14.52% in 2020 and slightly decreasing to 12.88% in 2021. This pattern implies variability in asset utilization efficiency, with a significant dip mid-period and subsequent recovery. The ROA remained positive and generally robust, indicating acceptable asset performance though less dramatic improvement compared to ROE.
Return on Sales
Return on Investment
Gross Profit Margin
Etsy Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 1,674,602) | 1,260,880) | 547,343) | 412,931) | 290,245) | |
| Revenue | 2,329,114) | 1,725,625) | 818,379) | 603,693) | 441,231) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 71.90% | 73.07% | 66.88% | 68.40% | 65.78% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Amazon.com Inc. | 42.03% | 39.57% | — | — | — | |
| Home Depot Inc. | 33.95% | 34.09% | — | — | — | |
| Lowe’s Cos. Inc. | 33.01% | 31.80% | — | — | — | |
| TJX Cos. Inc. | 23.66% | 28.46% | — | — | — | |
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).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 1,674,602 ÷ 2,329,114 = 71.90%
2 Click competitor name to see calculations.
- Revenue Trend
- The revenue shows a consistent and significant upward trajectory over the five-year period. Starting at approximately $441 million in 2017, revenue increased steadily each year to reach nearly $2.33 billion in 2021. This reflects substantial growth in the company’s sales and business scale.
- Gross Profit Movement
- Gross profit followed a similar strong upward trend, rising from about $290 million in 2017 to approximately $1.67 billion in 2021. The growth rate in gross profit aligns with the revenue increase, indicating maintained profitability on the goods or services sold.
- Gross Profit Margin Analysis
- The gross profit margin exhibits some fluctuations but remains relatively high throughout the period. It started at 65.78% in 2017 and increased to a peak of 73.07% in 2020 before slightly declining to 71.9% in 2021. Overall, the margin improvement from 2017 to 2021 suggests enhanced operational efficiency or favorable pricing power.
- Key Insights
- The significant rise in both revenue and gross profit over the period indicates strong business expansion and robust demand. The improvement and maintenance of a gross profit margin above 65% reflect effective cost control or value-added offerings. The slight dip in margin in 2021 after the peak in 2020 may warrant monitoring but does not detract from the overall positive profitability trend.
Operating Profit Margin
Etsy Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income from operations | 465,732) | 424,009) | 88,761) | 74,786) | 11,896) | |
| Revenue | 2,329,114) | 1,725,625) | 818,379) | 603,693) | 441,231) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 20.00% | 24.57% | 10.85% | 12.39% | 2.70% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Amazon.com Inc. | 5.30% | 5.93% | — | — | — | |
| Home Depot Inc. | 13.84% | 14.37% | — | — | — | |
| Lowe’s Cos. Inc. | 10.77% | 8.75% | — | — | — | |
| TJX Cos. Inc. | 1.81% | 10.59% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 7.38% | 8.11% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | 8.79% | 6.48% | — | — | — | |
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).
1 2021 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenue
= 100 × 465,732 ÷ 2,329,114 = 20.00%
2 Click competitor name to see calculations.
- Income from operations
- The income from operations shows a strong upward trend over the five-year period. It increased from $11,896 thousand in 2017 to $465,732 thousand in 2021. Notably, there was a significant jump between 2019 and 2020, where income from operations nearly quintupled, reflecting enhanced operational performance or scaling of activities. The growth in 2021 continued but at a moderated pace compared to the previous year.
- Revenue
- Revenue exhibited consistent and substantial growth each year. Starting at $441,231 thousand in 2017, it rose steadily to $2,329,114 thousand by 2021. The largest increase occurred between 2019 and 2020, where revenue more than doubled, likely indicating successful market expansion or increased demand for goods/services. Although growth remained strong in 2021, the rate of increase slowed in comparison to the previous year.
- Operating profit margin
- The operating profit margin improved markedly from 2.7% in 2017 to a peak of 24.57% in 2020, underscoring greater efficiency or favorable operating leverage during this period. However, in 2021, the margin decreased to 20%, signaling a slight reduction in operational profitability despite continued revenue and income growth. This decline might suggest increased costs or pricing pressures impacting profitability.
Net Profit Margin
Etsy Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 493,507) | 349,246) | 95,894) | 77,491) | 81,800) | |
| Revenue | 2,329,114) | 1,725,625) | 818,379) | 603,693) | 441,231) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 21.19% | 20.24% | 11.72% | 12.84% | 18.54% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Amazon.com Inc. | 7.10% | 5.53% | — | — | — | |
| Home Depot Inc. | 9.74% | 10.20% | — | — | — | |
| Lowe’s Cos. Inc. | 6.51% | 5.93% | — | — | — | |
| TJX Cos. Inc. | 0.28% | 7.84% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 7.21% | 6.58% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | 9.20% | 5.24% | — | — | — | |
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).
1 2021 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × 493,507 ÷ 2,329,114 = 21.19%
2 Click competitor name to see calculations.
The financial data reveals significant growth and evolving profitability for the company across the five-year period presented.
- Revenue:
- The revenue exhibited a strong upward trend, consistently increasing each year from 441,231 thousand US dollars in 2017 to 2,329,114 thousand US dollars in 2021. This represents more than a fivefold increase over the period, with particularly large jumps between 2019 and 2020, and again from 2020 to 2021. This indicates rapid expansion and increasing sales or service delivery.
- Net Income:
- Net income also increased substantially but with some variability in growth rates. It grew from 81,800 thousand US dollars in 2017 to 493,507 thousand US dollars in 2021. Noteworthy is the sharp rise between 2019 and 2020, where net income more than tripled from approximately 95,894 thousand to 349,246 thousand US dollars. The upward trend continued into 2021 but at a slower pace compared to the previous year.
- Net Profit Margin:
- The net profit margin declined from 18.54% in 2017 to 11.72% in 2019, indicating reduced profitability relative to revenue during the initial years. However, starting from 2020, the margin improved significantly to 20.24% and further to 21.19% in 2021. This suggests enhanced operational efficiency or cost management coinciding with the substantial revenue growth in the latter years.
Overall, the data depicts a company experiencing rapid revenue growth accompanied by a strong recovery and improvement in profitability margins after 2019. The increased net income and expanding profit margins in the last two years point to successful scaling and potentially improved cost structures or pricing power.
Return on Equity (ROE)
Etsy Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 493,507) | 349,246) | 95,894) | 77,491) | 81,800) | |
| Stockholders’ equity | 628,619) | 742,424) | 406,634) | 400,898) | 396,894) | |
| Profitability Ratio | ||||||
| ROE1 | 78.51% | 47.04% | 23.58% | 19.33% | 20.61% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Amazon.com Inc. | 24.13% | 22.84% | — | — | — | |
| Home Depot Inc. | 390.00% | — | — | — | — | |
| Lowe’s Cos. Inc. | 406.05% | 217.09% | — | — | — | |
| TJX Cos. Inc. | 1.55% | 55.01% | — | — | — | |
| ROE, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 35.05% | 40.86% | — | — | — | |
| ROE, Industry | ||||||
| Consumer Discretionary | 34.37% | 25.29% | — | — | — | |
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).
1 2021 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 493,507 ÷ 628,619 = 78.51%
2 Click competitor name to see calculations.
- Net Income Trend
- The net income shows a positive and substantial growth trend over the five-year period, increasing from $81,800 thousand in 2017 to $493,507 thousand in 2021. The rise is particularly prominent from 2019 onwards, with a sharp increase noted in 2020 and continuing into 2021.
- Stockholders’ Equity Trend
- Stockholders’ equity demonstrates a steady increase in the initial years from 2017 to 2019, moving from $396,894 thousand to $406,634 thousand. A significant jump is evident in 2020, reaching $742,424 thousand, which then decreases to $628,619 thousand in 2021. Despite this decrease in 2021, the equity remains substantially higher than the levels seen before 2020.
- Return on Equity (ROE) Analysis
- ROE presents an upward trajectory throughout the period, beginning at 20.61% in 2017 and rising to 78.51% by 2021. The increase is steady initially but accelerates dramatically from 2019 onwards, peaking in 2021. This suggests a marked improvement in the efficiency of the company’s equity in generating profits during the later years.
- Overall Insights
- The data indicate strong financial performance improvements over the period analyzed, with net income and ROE showing significant enhancements. Although stockholders’ equity experienced a reduction in the final year after a large increase in 2020, the company overall appears to have enhanced its profitability and capital efficiency substantially.
Return on Assets (ROA)
Etsy Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 493,507) | 349,246) | 95,894) | 77,491) | 81,800) | |
| Total assets | 3,831,809) | 2,404,489) | 1,542,352) | 901,851) | 605,583) | |
| Profitability Ratio | ||||||
| ROA1 | 12.88% | 14.52% | 6.22% | 8.59% | 13.51% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Amazon.com Inc. | 7.93% | 6.64% | — | — | — | |
| Home Depot Inc. | 18.23% | 21.94% | — | — | — | |
| Lowe’s Cos. Inc. | 12.49% | 10.85% | — | — | — | |
| TJX Cos. Inc. | 0.29% | 13.55% | — | — | — | |
| ROA, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 9.17% | 9.20% | — | — | — | |
| ROA, Industry | ||||||
| Consumer Discretionary | 8.07% | 4.42% | — | — | — | |
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).
1 2021 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 493,507 ÷ 3,831,809 = 12.88%
2 Click competitor name to see calculations.
- Net Income
- Net income displays an overall positive trend, increasing from 81,800 thousand US dollars in 2017 to 493,507 thousand US dollars in 2021. After a slight decline in 2018, net income rose steadily, with a significant surge occurring between 2019 and 2021.
- Total Assets
- Total assets show substantial growth over the period analyzed, rising consistently each year from 605,583 thousand US dollars in 2017 to 3,831,809 thousand US dollars in 2021. The largest single-year increase occurred between 2019 and 2020, indicating considerable asset expansion.
- Return on Assets (ROA)
- ROA exhibits variability across the years. It started relatively high at 13.51% in 2017, experienced a decline reaching its lowest point of 6.22% in 2019, followed by a rebound peaking at 14.52% in 2020 before slightly decreasing to 12.88% in 2021. This suggests fluctuating efficiency in asset utilization, with a notable improvement during the onset of the pandemic period.
- Summary
- The financial data reflect strong growth in net income and total assets over the five-year period. Although ROA decreased in the middle years, it recovered significantly, indicating improved profitability relative to asset base in recent years. The sharp increases in both net income and total assets from 2019 onwards illustrate a period of substantial business expansion and efficiency gains in asset use after an initial dip.