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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 looking at the company's long term financial model we can say that:
  • 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 a lot of higher than industry average of 2.1%.
  • The company has potentially unprofitable business model: ROIC is at 4.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

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%
Net Income Margin9.0%-12.2%5.5%6.0%0.8%-5.2%
SG&A, % of revenue53.0%0.0%
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

Revenue and profitability


IMImobile's Revenue jumped on 46.3% in FY2018. 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.

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

Capital expenditures (CAPEX) and working capital investments


In FY2018 the company had CAPEX/Revenue of 0.96%. IMImobile showed small CAPEX/Revenue decline of 1.0 pp from 2.0% in FY2015 to 0.96% in FY2018. For the last three years the average CAPEX/Revenue was 2.3%.

Return on investment


The company operates at low ROIC (4.63%) and ROE (1.72%). 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. Net Debt / EBITDA surged on 1.1x from -1.6x to -0.6x in FY2018. Debt jumped on 1,259% in FY2018 while cash increased on 7.4% in FY2018.

Valuation


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

Appendix 1: 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
Proactis Holdings ($PHD)26.2%69.6%12.5%31.1%
Accesso Technology Grp ($ACSO)27.3%24.1%10.0%30.2%
Gresham Computing ($GHT)-8.7%15.7%15.6%26.3%
Dotdigital Group ($DOTD)32.9%31.8%26.0%18.7%
Idox ($IDOX)5.9%3.1%22.6%15.8%
 
Median (7 companies)4.4%3.1%10.5%18.7%
IMImobile ($IMO)12.6%26.1%23.5%46.3%


Top companies by Gross margin, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Netcall ($NET)91.0%90.9%91.2%91.7%
Dotdigital Group ($DOTD)90.5%89.3%87.4%86.1%
Proactis Holdings ($PHD)73.6%80.4%82.4%86.0%
Gresham Computing ($GHT)73.4%81.0%82.6%84.8%
Idox ($IDOX)89.4%89.3%86.8%83.0%
 
Median (7 companies)57.8%58.8%57.4%84.8%
IMImobile ($IMO)64.3%61.4%59.3%57.0%45.6%


Top companies by EBITDA margin, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Dotdigital Group ($DOTD)29.2%32.0%30.4%31.7%
Gresham Computing ($GHT)8.8%18.1%20.6%22.6%
Oxford Metrics ($OMG)14.7%28.4%23.1%19.9%
Netcall ($NET)25.5%23.5%19.6%18.5%
Accesso Technology Grp ($ACSO)14.3%15.7%17.7%17.5%
 
Median (7 companies)11.1%12.5%11.0%18.5%
IMImobile ($IMO)16.4%5.4%11.1%11.0%6.8%


Top companies by CAPEX/Revenue, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Oxford Metrics ($OMG)2.8%2.4%1.8%5.8%
Idox ($IDOX)1.5%0.9%0.8%1.9%
Gresham Computing ($GHT)1.9%1.5%3.0%1.3%
Dotdigital Group ($DOTD)3.7%3.1%1.9%1.2%
Netcall ($NET)1.0%1.0%2.7%0.7%
 
Median (7 companies)1.9%1.0%1.2%1.2%
IMImobile ($IMO)3.9%2.0%3.3%2.8%1.0%


Top companies by ROIC, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Dotdigital Group ($DOTD)28.5%31.4%28.9%29.3%
Gresham Computing ($GHT)3.8%12.6%12.3%13.6%
Oxford Metrics ($OMG)0.8%14.6%16.3%12.7%
Netcall ($NET)15.1%12.0%7.1%7.5%
Accesso Technology Grp ($ACSO)9.3%11.9%6.4%
 
Median (7 companies)9.8%7.7%8.5%7.5%
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
Idox ($IDOX)1.0x1.3x1.2x2.2x
Proactis Holdings ($PHD)-0.7x-0.3x0.1x1.0x
Accesso Technology Grp ($ACSO)1.3x0.7x0.2x-0.5x
Oxford Metrics ($OMG)-2.0x-1.6x-1.2x-1.6x
Gresham Computing ($GHT)-4.2x-1.7x-2.0x-1.7x
 
Median (7 companies)-0.4x-0.5x-0.8x-1.6x
IMImobile ($IMO)0.2x-5.6x-2.2x-1.6x-0.6x