DexCom(DXCM)2024-02-07 16:00Revenue and Profit Growth - Revenue for fiscal 2023 reached $3.62 billion, up 24% from 2022[209] - Gross profit for fiscal 2023 was $2.29 billion, up 22% from 2022[209] - Operating income for fiscal 2023 was $597.7 million, up 53% from 2022[209] - Net income for fiscal 2023 was $541.5 million, up 59% from 2022[209] - Net income increased to $541.5 million in 2023 from $341.2 million in 2022, a 58.6% increase[233] Operating and Cash Flow Performance - Operating cash flow for fiscal 2023 was $748.5 million, up 12% from 2022[209] - Positive cash flows from operating activities were $748.5 million for the twelve months ended December 31, 2023[223] - The company expects to generate positive cash flows from operations for the foreseeable future[223] Cost and Expense Analysis - Cost of sales increased by 30% to $1.33 billion in fiscal 2023, representing 37% of revenue[212] - Research and development expenses increased by 4% to $505.8 million in fiscal 2023, representing 14% of revenue[212] - Selling, general, and administrative expenses increased by 18% to $1.19 billion in fiscal 2023, representing 33% of revenue[212] - Research and development expenses increased by $33.7 million, primarily due to higher headcount, partially offset by $15.9 million lower third-party and consulting fees[219] - Selling, general, and administrative expenses increased by $88.8 million due to higher headcount, $37.8 million in legal expenses related to a patent lawsuit, and $36.6 million in advertising and marketing costs[219] Cash and Liquidity Position - The company ended fiscal 2023 with $2.72 billion in cash, cash equivalents, and short-term marketable securities[209] - Cash, cash equivalents, and short-term marketable securities totaled $2.72 billion as of December 31, 2023, with $2.54 billion (93%) located in the United States[223] - The company has a working capital ratio of 2.84 and a quick ratio of 2.38, indicating strong liquidity to cover short-term liabilities[224] Capital Expenditures and Investments - Capital expenditures for manufacturing facilities in Malaysia and Ireland are expected to increase significantly over the next year[224] - Capital expenditures decreased to $236.6 million in 2023 from $364.8 million in 2022, a 35.1% decrease[233] - Proceeds from issuance of senior convertible notes increased to $1.23 billion in 2023 from $22.5 million in 2022, a significant increase[233] - Purchases of treasury stock decreased to $688.7 million in 2023 from $557.7 million in 2022, a 23.5% increase[233] Revenue Drivers and Product Mix - Revenue increased primarily due to higher sales volume of disposable sensors, driven by global customer base growth, with disposable sensor and other revenue comprising 90% of total revenue in 2023, up from 87% in 2022[219] - Gross profit margin decreased in 2023 due to higher amortization of intangible assets and changes in product and channel mix[219] Other Income and Non-Cash Adjustments - Other income increased by $111.2 million, driven by higher interest and dividend income from cash, cash equivalents, and marketable securities[219] - Net non-cash adjustments decreased to $203.8 million in 2023 from $301.6 million in 2022, a 32.4% decrease[233] Risk Management and Financial Instruments - The company has no material exposure to interest rate risk due to the short-term nature of its investments[234] - The 2023 Warrants could have a dilutive effect on earnings per share if the stock price exceeds the strike price[235] - The company is exposed to foreign currency exchange risk, particularly with the Australian Dollar, British Pound, Canadian Dollar, Euro, and Malaysian Ringgit[236] - Foreign currency forward contracts are used to hedge monetary assets and liabilities denominated in foreign currencies, with gains and losses included in other income (expense)[236] - The company translates financial statements of international subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates for results of operations[236] Future Technology Development - The company plans to develop future generations of technologies focused on improved performance, convenience, and intelligent insulin administration[198]