SolarWinds Corp (SWI)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 88.53% | 86.66% | 68.41% | 70.50% | 70.39% |
| Operating profit margin | 19.82% | -113.93% | -4.57% | 7.29% | 11.94% |
| Pretax margin | 4.50% | -126.23% | -11.67% | 2.55% | 2.32% |
| Net profit margin | -1.20% | -129.20% | -7.15% | 22.11% | 2.79% |
SolarWinds Corp's profitability ratios show varying performance over the past five years. The gross profit margin has been relatively stable, ranging from 68.41% in 2021 to 88.53% in 2023, indicating strong control over production costs and pricing strategies.
However, the operating profit margin fluctuated significantly, with a negative figure of -113.93% in 2022, suggesting operational inefficiencies during that period. The positive trend in 2023, at 19.82%, may indicate improved cost management and operational effectiveness.
The pretax margin also showed inconsistency, ranging from -11.67% in 2021 to 4.50% in 2023. This metric reflects the company's ability to generate profits before accounting for taxes, with 2023 indicating a positive turnaround.
The net profit margin was negative in 2022 and 2020, possibly due to extraordinary expenses or financial challenges. The sharp increase to 22.11% in 2020 suggests a significant improvement in profitability, but the decline to -1.20% in 2023 raises concerns about sustaining consistent profitability.
In conclusion, SolarWinds Corp's profitability ratios demonstrate a mix of strengths and areas for improvement. Management should focus on maintaining and optimizing gross profit margins, stabilizing operating margins, and ensuring sustainable net profitability. Additionally, efforts should be made to address the fluctuations in profitability seen over the past five years to enhance overall financial performance.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 4.63% | -25.61% | -0.69% | 0.92% | 1.50% |
| Return on assets (ROA) | -0.28% | -29.04% | -1.07% | 2.78% | 0.35% |
| Return on total capital | 5.71% | -31.98% | -0.79% | 1.07% | 1.76% |
| Return on equity (ROE) | -0.63% | -67.86% | -2.25% | 5.26% | 0.70% |
SolarWinds Corp's profitability ratios show a mix of performance over the past five years. The Operating Return on Assets (Operating ROA) has been fluctuating, with a positive 4.63% in 2023 compared to negative figures in the previous years. This indicates that the company is generating a modest profit from its operational activities relative to its total assets.
The Return on Assets (ROA) has also seen fluctuations, with a negative -0.28% in 2023, but this is an improvement compared to the significant decline in 2022. This suggests that there may have been challenges in efficiently utilizing the company's assets to generate profits.
Return on Total Capital has shown improvement in 2023, standing at 5.71%, indicating that the company is generating a return on its total capital investment. Although this is positive, the negative figures in the previous years highlight inconsistent performance in utilizing total capital effectively.
Return on Equity (ROE) has been negative for the past three years, primarily driven by 2022 with a remarkable -67.86%. The improvement to -0.63% in 2023 indicates a slight recovery, but it still reflects the company's struggle in generating profits for its shareholders relative to their equity investment.
Overall, SolarWinds Corp's profitability ratios show a mix of positive and negative trends, suggesting the need for the company to focus on efficiently utilizing its assets, capital, and equity to enhance profitability and shareholder value.