Revenue Analysis
Total and Operating Revenue: There has been a fluctuation in DXCM’s revenues over the analyzed period. The total revenue peaked in Q4 2023 at $1.0345 billion and was lowest in Q1 2023 at $741.5 million. The operating revenue has consistently been equivalent to the total revenue, indicating that all revenue is from core operations.
Gross Profit Margin: Gross profit followed a similar trend as revenue, where it was highest in Q4 2023 at $656.6 million and lowest in Q1 2023 at $462.6 million. The gross profit margin as a percentage of total revenue varies, with the highest margin observed in Q3 2023 at approximately 63.9% and the lowest in Q1 2023 at approximately 62.4%.
Cost Management
Cost of Revenue: The cost of revenue has decreased from $377.9 million in Q4 2023 to $359.1 million in Q1 2024, suggesting improvements in cost management or production efficiencies.
Operating Expense: Operating expenses have shown some volatility but were highest in Q4 2023 at $439.7 million, aligning with the increased activity shown in revenue and gross profit figures.
Total Expenses: Total expenses reached a peak of $819.9 million in Q1 2024, closely aligned with revenue increases, suggesting that expense growth rate is commensurate with revenue growth.
Profitability Analysis
EBITDA: EBITDA has decreased from $303.6 million in Q4 2023 to $189.6 million in Q1 2024, indicating a potential decrease in operational efficiency or increasing cost pressures not commensurate with revenue growth.
Operating Income: Operating income shows a similar decreasing trend from $216.9 million in Q4 2023 to $101.1 million in Q1 2024.
Pretax Income: Pretax income has similarly declined from $246.2 million in Q4 2023 to $132.5 million in Q1 2024, suggesting worsening profitability.
Net Income: Net income has decreased significantly from $256.3 million in Q4 2023 to $146.4 million in Q1 2024, which is consistent with the other profitability metrics.
Cash Flow Indicators
Reconciled Depreciation: Reconciled depreciation values remain steady which suggests consistent capital expenditure and depreciation strategies.
Interest Expense: Interest expenses are relatively stable but slight variability suggests changes in debt levels or varying interest rates affecting the cost of borrowing.
Taxation
Tax Rate: The effective tax rate has varied, with noticeable changes from 0.21 in Q4 2023 to 0.4 in Q1 2024. This fluctuation impacts net income.
Tax Provision: Tax provisions show a reduction over the periods which typically aligns with the changes in pretax income.
Tax Effect of Unusual Items: There has been no tax effect from unusual items, which suggests that there have been no significant one-off or irregular transactions affecting tax calculations.
Shareholder Metrics
Diluted and Basic EPS: Both diluted and basic EPS have trended downwards from Q4 2023 to Q1 2024, from $0.62 to $0.36 for diluted EPS and from $0.67 to $0.38 for basic EPS, signaling lesser profitability per share.
Average Shares: The number of average diluted shares has slightly increased over the period indicating potential share issuances.
Net Income Available to Common Stockholders: Net income available to common stockholders has decreased in line with net income and EPS trends.
Conclusion
DXCM showed strong performance in Q4 2023 but has seen a decline in major financial metrics in the subsequent quarter, which needs to be closely monitored. The consistent rise in operating expenses and costs of revenue could be critical areas for management to address to improve profitability. Management may need to investigate the reasons behind the rising tax rate and its impact on net income. Further probing into capital expenditures and their funding is advisable due to significant deviations observed in interest expenses and taxation.