Shockwave Medical Inc. (NASDAQ:SWAV)

The financial data reveals several notable trends in operational efficiency and liquidity management over the observed periods.

Inventory Turnover

The inventory turnover ratio shows a declining trend starting from 1.42 in March 2020 to a low of 0.7 in December 2020 and March 2021, indicating slower inventory movement during that time. From mid-2021 onwards, there is a gradual improvement, reaching 0.92 by March 2024, signaling more efficient inventory management in the most recent quarters.

Receivables Turnover

The receivables turnover ratio experienced fluctuations, peaking at 8.03 in September 2020, which implies faster collection of receivables at that time. However, it declined sharply to 4.31 in June 2021, suggesting slower collections. The ratio then stabilized around 6.3 to 6.8 in subsequent quarters, indicating a return to a more consistent receivables management pace.

Payables Turnover

This ratio exhibits significant volatility. It rose sharply from 6.15 in March 2020 to a peak of 17.34 in September 2022, reflecting faster payments to suppliers during that period. However, the value fluctuated widely, with notably lower levels in mid-2020 and again in mid-2023. Such variability could indicate changing payment policies or supplier terms across quarters.

Working Capital Turnover

The working capital turnover ratio started low at 0.22 in March 2020, then progressively improved to a peak of 1.64 in June 2023. This upward trajectory suggests enhanced efficiency in using working capital to generate sales. However, it dropped sharply to around 0.65-0.67 in the last two reported quarters, indicating a potential decline in working capital utilization efficiency recently.

Average Inventory Processing Period

This metric increased substantially from 257 days in March 2020 to a high of 527 days in June 2020, indicating significantly slower inventory processing during that period. After peaking, it trended downward, reaching 396 days by March 2024, which implies improvement in inventory turnover speed over time but still reflecting relatively long holding periods.

Average Receivable Collection Period

The collection period varied between 45 and 85 days, with a low in September 2019 and a peak in June 2020. Following the peak, it mostly stabilized between 53 and 60 days, reflecting a consistent collections performance in more recent quarters.

Operating Cycle

The operating cycle lengthened significantly from 320 days in March 2020 to a high of 612 days in June 2020, indicating an overall slower cash-to-cash cycle during that period. Subsequently, it decreased gradually to 454 days by March 2024, demonstrating improved operational efficiency.

Average Payables Payment Period

The payment period decreased to its shortest span of 21 days in September 2022, reflecting quicker payments to suppliers at that time. However, the values showed considerable fluctuations, ranging from 21 to 67 days, suggesting inconsistent supplier payment practices across periods.

Cash Conversion Cycle

The cash conversion cycle mirrored trends seen in inventory and receivables management. It increased markedly from 261 days in March 2020 to a peak of 557 days in March 2021, indicative of longer periods tied up in operations. It then declined steadily to 419 days by March 2024, signaling improved liquidity and operational efficiency in recent periods.

Overall, the data denote periods of operational strain particularly around 2020 and early 2021, with elongated cycles and slower turnover ratios. However, there is evidence of gradual recovery and efficiency gains in inventory management, receivables collection, and cash conversion in the more recent quarters. The volatility in payables turnover and payment periods suggests evolving supplier relationship dynamics or payment policies during the period analyzed.

Cost of Revenue

The cost of revenue exhibits a generally upward trend from March 2019 through March 2024. Starting at approximately $3.07 million in March 2019, it experiences fluctuations in the early periods, with a slight dip in June 2020. From there, it steadily increases, reaching over $28.2 million by March 2024. This represents a significant growth in production or procurement costs over the analyzed periods, indicating either expansion in sales volume, increased input costs, or a combination of both.

Inventory

Inventory levels show a consistent and substantial increase over the entire timeline. Beginning around $7 million in March 2019, inventory more than doubles by the end of 2020, reaching nearly $30 million. This upward trajectory continues with sharp increases, peaking at over $111 million by March 2024. The pronounced rise in inventory suggests accumulating stock, which could indicate anticipation of higher future sales, increased production capacity, or potential overstocking issues.

Inventory Turnover

Data for inventory turnover ratios are only available from September 2019 onward. Initially, turnover was relatively higher at 1.42 but shows a declining trend through the end of 2020, dropping to approximately 0.7. From 2021 forward, turnover ratios stabilize within a narrow range between 0.82 and 0.96, with minor fluctuations around 0.9 in the most recent periods. The early decline and later stabilization at lower turnover levels imply that the company is holding inventory for longer periods, possibly due to increased inventory buildup outpacing sales growth or changes in inventory management strategies.

Summary of Observations

Overall, the financial data indicates significant growth in both cost of revenue and inventory levels, signaling business expansion or changing operational dynamics. The cost of revenue's steady rise aligns with increasing inventory, which suggests preparation for higher future demand or challenges in inventory management. The declining and then stabilizing inventory turnover ratio highlights a shift toward slower inventory movement, which warrants attention to ensure efficient asset utilization and avoid potential liquidity constraints associated with elevated inventory holdings.

The revenue demonstrated a consistent upward trend over the observed periods, increasing from US$7.3 million at the end of the first quarter of 2019 to approximately US$219 million by the first quarter of 2024. This growth was characterized by occasional fluctuations in intermediate quarters but maintained a strong overall momentum, with notable acceleration observed beginning in 2021.

The net accounts receivable also showed a significant increase, growing from about US$3.9 million in March 2019 to nearly US$124.4 million by March 2024. The expansion in accounts receivable closely parallels the revenue growth, indicating a proportional increase in credit sales or extended payment terms alongside rising revenues.

Receivables turnover ratios, available from September 2019 onward, ranged between approximately 4.3 and 8.0 times per year. There was some variability in these ratios, with occasional declines and recoveries. The ratio peaked at 8.03 in September 2020, reflecting more frequent collections, but subsequently hovered mostly in the 5.5 to 6.9 range. This suggests that while collections efficiency experienced periods of improvement and decline, it remained relatively stable in the medium term.

Revenue Trend

Steady increase with accelerated growth from 2021, reaching US$218.8 million by Q1 2024.

Accounts Receivable Trend

Marked increase consistent with revenue growth, indicating higher credit sales or payment terms expansion.

Receivables Turnover Ratio

Fluctuated between 4.31 and 8.03, indicating variable collection efficiency but overall stable performance.

Overall, the data reflects robust operational growth accompanied by increasing amounts of receivables, which have been managed with moderate stability in collection efficiency. The parallel increase of revenue and accounts receivable suggests careful monitoring of credit policies will remain important to sustain healthy cash flow alongside the expanding business scale.

Cost of Revenue

The cost of revenue has demonstrated a general upward trend over the analyzed period. Starting at $3.1 million in Q1 2019, it increased to $5.6 million by Q1 2020, showing some volatility during 2019 and early 2020. Post Q1 2020, the cost values fluctuated but maintained an overall increasing trajectory, reaching approximately $28.2 million by Q1 2024. Notable increases are observed particularly from mid-2021 onward, with quarterly costs rising sharply between Q2 2022 and Q1 2024, indicating potentially higher production or operational costs.

Accounts Payable

Accounts payable figures show variability throughout the reported periods. Initially recorded at nearly $4.0 million in Q1 2019, this figure declined through late 2019 and early 2020, hitting a low in Q4 2020 at $1.5 million. Subsequently, accounts payable rebounded significantly, with notable peaks in Q1 2022, reaching $8.5 million, and again towards Q2 2023 with $12.9 million. The end of the period in Q1 2024 shows a slight decrease to $9.8 million from the prior peak. This fluctuation may reflect changing payment terms, supplier financing, or inventory management strategies.

Payables Turnover Ratio

The payables turnover ratio exhibits considerable volatility and lacks a consistent directional trend. Early in the dataset, from Q4 2019 onward (first data point available), the ratio swings from approximately 6.15 up to 17.34 during Q3 2022, indicating fluctuation in how rapidly the company is settling its payables relative to cost of goods sold. Periods such as Q3 2020 (17.34) show very high turnover, suggesting faster payment cycles, while other quarters exhibit lower turnover ratios, such as Q1 2022 (5.48), indicating slower payment to suppliers. The ratio appears to hover mostly in the range between roughly 6 and 12 throughout the latter part of the data, with occasional spikes.

Overall Insights

The data highlights an increase in cost of revenue coinciding with growth in accounts payable, particularly in recent years. The rise in payables suggests a growing volume of business activity or possible shifts in supplier credit terms. The volatility in payables turnover indicates varied payment behaviors, possibly reflecting strategic cash flow management or operational shifts. The alignment of increasing cost of revenue with higher accounts payable levels could point to expanding operations and increased procurement activity. Nevertheless, the irregular payables turnover suggests room for improved consistency in managing supplier payments.

Working Capital

Working capital exhibited significant fluctuations over the reported periods. Starting at $136.9 million in March 2019, it declined steadily through September 2019 to around $111.7 million, then experienced a sharp increase at year-end 2019 reaching approximately $192.7 million. A notable growth phase followed from early 2020, peaking at nearly $448.8 million in March 2023. This was followed by a sharp decline to roughly $376.1 million in June 2023, before again ramping up rapidly to reach over $1.18 billion by March 2024.

Revenue

Revenue showed a generally strong upward trajectory throughout the observed timeframe. Starting from $7.3 million in March 2019, revenue saw some volatility in 2020, especially a notable dip to $10.3 million in June 2020 amid fluctuating quarterly figures. However, revenue resumed growth thereafter, rising steadily to $65.2 million by September 2021 and continuing to climb beyond $200 million by March 2024. This reflects robust expansion, particularly evident from 2021 onwards.

Working Capital Turnover Ratio

The working capital turnover ratio, introduced starting September 2019, reveals interesting operational efficiency trends. Initial ratios were low, with 0.22 reported in September 2019, gradually improving to a peak of 1.64 in March 2023. This suggests increasing ability to generate revenue per unit of working capital during this period. Post-March 2023, however, the ratio dropped sharply to around 0.64–0.67, indicating a possible buildup in working capital outpacing revenue growth or a strategic adjustment in asset management.

Overall Analysis

The data indicates that while working capital fluctuated considerably, especially with a large increase in late 2023 and early 2024, revenue growth remained comparatively steady and robust, supporting continued business expansion. The rise and fall of the working capital turnover ratio imply shifts in asset utilization efficiency, with a peak period of improved efficiency followed by a decline likely reflecting a recent increase in working capital investment. This pattern may suggest preparation for future growth or a shift in operational strategy.

Inventory Turnover

The inventory turnover ratio exhibits a general declining trend starting from the available data point in March 31, 2020, where it stands at 1.42. Following a decrease to a low of 0.7 by December 31, 2020, the ratio fluctuates within a narrow range between 0.69 and 0.96 across the subsequent quarters. From March 31, 2021, through March 31, 2024, the inventory turnover remains relatively stable, oscillating around 0.87 to 0.92, indicating a relatively consistent pace in inventory turnover during this period.

Average Inventory Processing Period

The average inventory processing period shows an increasing trend starting from March 31, 2020, where it is recorded at 257 days. This period lengthens sharply to 525 days by December 31, 2020, reflecting slower inventory processing. Although there is some variability in the following quarters, the processing period remains elevated, fluctuating mostly between roughly 379 and 527 days. From December 31, 2020, onward, the number of days generally hovers around the 400-420 range with minor quarterly variations, suggesting a stabilization at a higher inventory holding duration compared to the initial recorded data point.

Summary of Trends

The inverse relationship between inventory turnover and average inventory processing period is evident: as the turnover ratio declines, the average processing period increases, reflecting slower movement of inventory through the business. After an initial period of deterioration through 2020, both metrics stabilize from early 2021 onward, indicating that inventory management has reached a relatively steady state but at a slower turnover rate and longer holding period than observed at the start of 2020.

The receivables turnover ratio exhibits variability across the observed periods, starting at 5.82 and increasing to a peak of 8.03 before declining to a lower level around 5.54. Subsequently, it fluctuates within a narrower range, generally between 4.31 and 6.86, showing some recovery and stabilization in the later quarters, with the most recent value at 6.33.

The average receivable collection period inversely correlates with the turnover ratio, initially decreasing from 63 days to a low of 45 days, indicating improved collection efficiency. Following this, it rises sharply to 85 days, reflecting a deterioration in collection speed. In the subsequent periods, there is a gradual improvement and stabilization between 53 and 62 days. The latest data point shows a collection period of 58 days.

Receivables Turnover

The ratio suggests fluctuations in how quickly receivables are collected. After reaching a high in late 2019, a decline was observed in early 2020, with recovery attempts visible through mid to late 2022 and early 2023. These movements may reflect changes in credit policies, sales mix, or external economic conditions affecting customer payments.

Average Receivable Collection Period

The days sales outstanding trend aligns with turnover movements, initially showing improvement in collection periods, followed by a noticeable lengthening. The later quarters indicate efforts to enhance collection efficiency, stabilizing the period around two months. The consistency in recent quarters suggests better predictability in cash flow management related to accounts receivable.

Average Inventory Processing Period

The average inventory processing period shows a significant upward trend from March 2020, starting at 257 days and peaking at 527 days in June 2021. After this peak, the period gradually declines, stabilizing around the 400 to 420-day range from the end of 2021 through the first quarter of 2024. This pattern indicates an initial lengthening in inventory holding time, followed by a partial recovery and stabilization in inventory management efficiency.

Average Receivable Collection Period

The average receivable collection period displays fluctuations over the observed quarters. Starting at 63 days in March 2020, the period decreases to a low of 45 days by September 2020, suggesting improved receivables collection efficiency during this time. Subsequently, there is an increase to 85 days in June 2021, indicating a temporary slowdown in collections. After June 2021, the collection period declines again, maintaining a narrower range between 53 and 63 days through early 2024, reflecting relatively stable receivables management in recent periods.

Operating Cycle

The operating cycle follows a pattern similar to that of inventory and receivables periods. It begins at 320 days in March 2020 and rises sharply to peak at 612 days by June 2021, which is consistent with the inventory processing and receivables collection trends. Following this peak, the cycle shortens steadily to about 454 days by March 2024. This reduction suggests improved overall operational efficiency, encompassing both inventory turnover and receivable collection, although the cycle remains elevated compared to the initial measurement point.

Payables Turnover Ratio

The payables turnover ratio exhibits significant volatility over the observed periods. Starting at 6.15 in March 2020, it increased sharply to 9.18 in June 2020, followed by a decline to 7.49 in September 2020. Subsequently, the ratio rose to a peak of 14.32 in March 2021, indicating a rapid rate of payables settlement at that point. After this peak, the ratio fluctuated, reaching lower values such as 5.48 in March 2022 and then surging again to 17.34 in September 2022. Toward the most recent quarters, the ratio settles around the 10 mark, fluctuating between 6.29 and 12.75, finally recording 10.42 in March 2024. This pattern suggests variability in the company's efficiency in managing payables, with periods of accelerated turnover interspersed with slower ones.

Average Payables Payment Period

The average payables payment period follows an inverse trend relative to the payables turnover ratio, consistent with typical financial relationships. Beginning at 59 days in March 2020, the payment period shortened to 40 days in June 2020 and further to as low as 21 days in September 2022, indicating faster payment cycles during these intervals. However, this was followed by expansions in payment periods, such as 67 days in March 2022 and 58 days in March 2023, suggesting slower settlements in those quarters. The most recent data shows the period stabilizing around the low 30s, specifically 35 days in March 2024, demonstrating a return toward moderate payment timing. Overall, the fluctuations in the payment period reflect strategic or operational adjustments in managing liabilities and cash outflows.

Average Inventory Processing Period

The average inventory processing period shows a generally increasing trend from March 2020 to December 2020, rising from 257 days to 525 days. After peaking in December 2020, it gradually decreases to 379 days by December 2021. From early 2022 through the first quarter of 2024, the period fluctuates moderately around the 400-day mark, with values ranging between 396 and 422 days. This indicates some improvement and stabilization following a period of significant elongation in inventory processing times during 2020.

Average Receivable Collection Period

The receivable collection period experiences volatility over the observed period. Starting at 63 days in March 2020, it declines to a low of 45 days in September 2020 but then rises sharply to 85 days in June 2021. Post mid-2021, the period demonstrates a gradual decline and stabilization around the mid-50 day range, with minor fluctuations through March 2024. Overall, this suggests initial challenges in receivable collection subsequently followed by improved and more consistent collection efficiency.

Average Payables Payment Period

This metric exhibits notable fluctuations throughout the timeline. Beginning at 59 days in March 2020, it declines to 25 days by March 2021. Subsequently, it rises again to a peak of 67 days in June 2022, indicating extended payment terms or delays. The period then alternates between low twenties and upper fifties, ending at 35 days in March 2024. These variations suggest the company has adjusted its payment practices over time, possibly balancing supplier relationships and cash management objectives.

Cash Conversion Cycle

The cash conversion cycle closely mirrors the behavior of the inventory processing period and receivables collection. It shows a sharp increase from 261 days in March 2020 to a peak of 557 days in March 2021, indicating a prolonged duration for cash to flow through operations. After this peak, the cycle steadily shortens to 406 days by December 2021, followed by moderate fluctuations around the 400–450 day range through early 2024. This pattern indicates that despite improvements post-2021, the cash conversion cycle remains relatively extended, signaling potential challenges in working capital efficiency.