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IMImobile Net Income dropped on 80.2% in 2018 and EBITDA Margin decreased on 4.2 pp from 11.0% to 6.8%

27 Jun 2018 • About IMImobile ($IMO) • By InTwits

IMImobile reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • IMImobile is a fast growth stock: FY2018 revenue growth was 46.3%, 5 year revenue CAGR was 23.6% at FY2018 ROIC 4.6%
  • EBITDA Margin is quite volatile: 6.8% in FY2018, 11.0% in FY2017, 11.1% in FY2016, 5.4% in FY2015, 16.4% in FY2014
  • IMImobile has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 3.3%
  • The company has potentially unprofitable business model: ROIC is 4.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


IMImobile's Revenue surged on 46.3%. Revenue growth was accelerating on average by 7.8 pp per annum in the last 5 years. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 4.2 pp from 11.0% to 6.8% in FY2018.

Gross Margin dropped on 11.4 pp from 57.0% to 45.6% in FY2018. Gross Margin followed a declining trend at -4.2 pp per annum in the last 5 years.

Net Income margin decreased on 5.2 pp from 6.0% to 0.81% in FY2018.

Investments (CAPEX, working capital and M&A)


In FY2018 IMImobile had CAPEX/Revenue of 0.96%. CAPEX/Revenue decreased slightly on 1.0 pp from 2.0% in FY2015 to 0.96% in FY2018. It's average level of CAPEX/Revenue for the last three years was 2.3%.

Return on investment


The company operates at low ROIC (4.6%) and ROE (1.7%). ROIC decreased on 6.0 pp from 10.6% to 4.6% in FY2018. ROE decreased on 8.9 pp from 10.6% to 1.7% in FY2018.

Leverage (Debt)


Company's Net Debt / EBITDA is -0.6x and Debt / EBITDA is 1.5x. Debt surged on 1,259% while cash increased on 7.4%.

IMImobile has no short term refinancing risk: cash is higher than short term debt (7,059.6%).

Valuation and dividends


The company's trades at EV/EBITDA 22.7x and P/E 196.0x.

Financial and operational results


FY ended 31 Mar 2018

IMImobile ($IMO) key annual financial indicators

mln. £201420152016201720182018/2017
P&L
Revenue43.448.961.676.1111.446.3%
Gross Profit27.930.036.543.450.717.0%
SG&A23.0
EBITDA7.12.66.88.47.6-9.3%
Net Income3.9-6.03.44.60.9-80.2%
Balance Sheet
Cash9.314.615.014.715.77.4%
Short Term Debt0.00.00.00.20.213.8%
Long Term Debt10.90.00.00.611.21,638.5%
Cash flow
Capex1.71.02.02.11.1-49.5%
Ratios
Revenue growth12.7%12.6%26.1%23.5%46.3%
EBITDA growth26.4%-63.1%161.4%22.6%-9.3%

Gross Margin64.3%61.4%59.3%57.0%45.6%-11.4%
EBITDA Margin16.4%5.4%11.1%11.0%6.8%-4.2%
SG&A, % of revenue53.0%
Net Income Margin9.0%-12.2%5.5%6.0%0.8%-5.2%
CAPEX, % of revenue3.9%2.0%3.3%2.8%1.0%-1.8%

ROIC27.2%0.5%9.7%10.6%4.6%-6.0%
ROE32.8%-27.6%10.6%10.6%1.7%-8.9%
Net Debt/EBITDA0.2x-5.6x-2.2x-1.6x-0.6x1.1x

Peers in Software & Computer Services


Below we provide IMImobile benchmarking against other companies in Software & Computer Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Pinnacle Technology Group ($PINN)-17.1%108.6%
Wandisco ($WAND)40.0%-2.0%3.5%72.6%
Microgen ($MCGN)-0.0%7.2%34.5%45.7%
Lombard Risk Management ($LRM)21.6%5.4%10.3%44.8%
Zoo Digital Group ($ZOO)-7.7%19.9%1.5%41.7%
 
Median (39 companies)2.8%4.7%10.9%10.9%1.6%
IMImobile ($IMO)12.6%26.1%23.5%46.3%


Top companies by Gross margin, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Lombard Risk Management ($LRM)99.2%98.6%99.3%99.6%
Netcall ($NET)91.0%90.9%91.2%91.7%
Wandisco ($WAND)80.7%93.2%88.1%90.0%
Eleco ($ELCO)87.8%88.9%86.7%87.9%
Dotdigital Group ($DOTD)90.5%89.3%87.4%86.1%
 
Median (33 companies)57.5%55.0%57.4%55.1%24.3%
IMImobile ($IMO)64.3%61.4%59.3%57.0%45.6%


Top companies by EBITDA margin, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Rightster Group ($RSTR)-146.3%-64.1%-19.9%114.2%
Dotdigital Group ($DOTD)29.2%32.0%30.4%31.7%
Sopheon ($SPE)6.8%19.8%22.6%27.9%
Mail.Ru Group Ltd ($61HE)50.5%34.6%35.2%25.1%
Gresham Computing ($GHT)8.8%18.1%20.6%22.6%
 
Median (39 companies)10.3%12.4%10.2%10.7%6.3%
IMImobile ($IMO)16.4%5.4%11.1%11.0%6.8%


Top companies by CAPEX/Revenue, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Actual Experience ($ACT)2.6%6.0%39.9%48.7%
Csf Group ($CSFG)2.4%7.1%4.9%8.5%
Pennant International Group ($PEN)1.4%0.2%6.3%7.1%
Nasstar ($NASA)2.1%5.2%8.9%6.5%
Oxford Metrics ($OMG)2.8%2.4%1.8%5.8%
 
Median (39 companies)1.7%1.1%1.2%1.3%0.8%
IMImobile ($IMO)3.9%2.0%3.3%2.8%1.0%


Top companies by ROIC, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Rm ($RM.)130.8%289.2%254.7%73.8%
Triad Group ($TRD)24.5%61.5%74.4%61.1%41.0%
Sopheon ($SPE)-10.5%14.7%22.7%32.3%
Dotdigital Group ($DOTD)28.5%31.4%28.9%29.3%
International Bus Mach Corp ($IBM)31.6%29.7%21.5%19.5%19.8%
 
Median (41 companies)9.0%5.3%7.1%6.3%13.1%
IMImobile ($IMO)27.2%0.5%9.7%10.6%4.6%


Top companies by Net Debt / EBITDA

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Datatec ($DTC)0.3x0.4x1.1x10.2x
Progility ($PGY)1.8x12.8x6.8x3.9x
Zoo Digital Group ($ZOO)38.3x3.2x
Statpro Group ($SOG)-0.3x-0.2x3.0x
Idox ($IDOX)1.0x1.3x1.2x2.2x
 
Median (31 companies)-0.3x-0.5x-0.8x-0.5x-0.2x
IMImobile ($IMO)0.2x-5.6x-2.2x-1.6x-0.6x