Redknee Solutions Inc EBITDA surged on 95.3% in 2015 while Revenue dropped on 13.6%
02.12.2015 • About Redknee Solutions Inc (
$RKN) • By InTwits
Redknee Solutions Inc reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 10.6% in FY2015, 4.7% in FY2014, 3.7% in FY2013, 11.6% in FY2012, 2.0% in FY2011
- Redknee Solutions Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's in pair with industry average of 26.4%.
- CAPEX is quite volatile: 2.8 in FY2015, 3.3 in FY2014, 2.4 in FY2013, 0.57 in FY2012, 0.037 in FY2011
- The company has business model with low profitability: ROIC is at 7.4%
- It operates with high leverage: Net Debt/EBITDA is 0.1x while industry average is -1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Redknee Solutions Inc ($RKN) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 59.1 | 56.5 | 142.0 | 257.7 | 222.7 | -13.6% |
| Gross Profit | 38.1 | 38.7 | 78.9 | 131.8 | 130.5 | -0.9% |
| SG&A | | | 45.8 | 70.0 | 62.5 | -10.7% |
| EBITDA | 1.2 | 6.6 | 5.2 | 12.1 | 23.6 | 95.3% |
| Net Income | -1.6 | 5.3 | -0.3 | -39.9 | -10.0 | -74.9% |
Balance Sheet
|
|---|
| Cash | 14.3 | 17.2 | 79.1 | 108.6 | 55.0 | -49.3% |
| Short Term Debt | 3.1 | 0.0 | 0.4 | 0.8 | 1.8 | 140.0% |
| Long Term Debt | 4.6 | 5.6 | 33.0 | 45.8 | 55.0 | 20.0% |
Cash flow
|
|---|
| Capex | 0.0 | 0.6 | 2.4 | 3.3 | 2.8 | -15.2% |
Ratios
|
|---|
| Revenue growth | 25.9% | -4.5% | 151.6% | 81.4% | -13.6% | |
| EBITDA growth | -78.1% | 453.7% | -20.8% | 132.3% | 95.3% | |
| Gross Margin | 64.4% | 68.6% | 55.6% | 51.1% | 58.6% | 7.5% |
| EBITDA Margin | 2.0% | 11.6% | 3.7% | 4.7% | 10.6% | 5.9% |
| Net Income Margin | -2.7% | 9.3% | -0.2% | -15.5% | -4.5% | 11.0% |
| SG&A, % of revenue | | | 32.2% | 27.2% | 28.1% | 0.9% |
| CAPEX, % of revenue | 0.1% | 1.0% | 1.7% | 1.3% | 1.2% | -0.0% |
| ROIC | -1.3% | 13.8% | -1.5% | -0.3% | 7.4% | 7.7% |
| ROE | -5.2% | 16.8% | -0.4% | -37.0% | -8.7% | 28.3% |
| Net Debt/EBITDA | -5.5x | -1.8x | -8.8x | -5.1x | 0.1x | 5.2x |
Revenue and profitability
The company's Revenue dropped on 13.6% in FY2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.9 pp from 4.7% to 10.6% in FY2015.
Gross Margin increased on 7.5 pp from 51.1% to 58.6% in FY2015. SG&A as a % of Revenue increased slightly on 0.90 pp from 27.2% to 28.1% in FY2015.
Net Income marign surged on 11.0 pp from -15.5% to -4.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 1.2%. Redknee Solutions Inc's CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average level of CAPEX/Revenue for the last three years was 1.4%.
Return on investment
The company operates at low but positive ROIC (7.44%) and negative ROE (-8.72%). ROIC increased on 7.7 pp from -0.28% to 7.4% in FY2015. ROE surged on 28.3 pp from -37.0% to -8.7% in FY2015.
Leverage (Debt)
Debt level is 0.1x Net Debt / EBITDA and 2.4x Debt / EBITDA. Net Debt / EBITDA surged on 5.2x from -5.1x to 0.1x in FY2015. Debt jumped on 21.9% in FY2015 while cash dropped on 49.3% in FY2015.
Appendix 1: Peers in Technology
Below you can find Redknee Solutions Inc benchmarking vs. other companies in Technology industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mitel Networks Corp ($MNW) | -9.0% | 3.8% | -5.7% | 91.4% | |
| Intrinsyc Technologies Corp ($ITC) | -19.0% | -26.8% | -21.7% | 70.8% | |
| Espial Group Inc ($ESP) | 10.2% | -9.5% | -5.5% | 59.4% | |
| iLOOKABOUT Corp ($ILA) | -7.6% | 19.6% | 8.9% | 58.8% | |
| Sylogist Ltd ($SYZ) | 1.5% | -5.8% | 25.7% | 50.5% | |
| |
|---|
| Median (33 companies) | 5.9% | 6.6% | 11.4% | 13.7% | 10.1% |
|---|
| Redknee Solutions Inc ($RKN) | | -4.5% | 151.6% | 81.4% | -13.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| ProntoForms Corp ($PFM) | 90.1% | 96.1% | 98.1% | 98.0% | |
| Constellation Software Inc/Canada ($CSU) | 85.5% | 86.2% | 85.5% | 86.1% | |
| Symbility Solutions Inc ($SY) | 82.1% | 80.6% | 79.9% | 81.0% | |
| Espial Group Inc ($ESP) | 77.9% | 77.5% | 81.7% | 78.5% | |
| Absolute Software Corp ($ABT) | 71.6% | 73.6% | 76.3% | 78.4% | 81.1% |
| |
|---|
| Median (31 companies) | 49.7% | 52.4% | 48.8% | 52.2% | 47.6% |
|---|
| Redknee Solutions Inc ($RKN) | 64.4% | 68.6% | 55.6% | 51.1% | 58.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wi-LAN Inc ($WIN) | 26.5% | 40.9% | 12.2% | 56.2% | |
| Computer Modelling Group Ltd ($CMG) | 51.5% | 53.8% | 52.2% | 51.5% | 50.8% |
| Open Text Corp ($OTC) | 27.1% | 26.5% | 29.1% | 30.0% | 31.8% |
| Sandvine Corp ($SVC) | 5.1% | 0.9% | 24.0% | 28.2% | |
| Enghouse Systems Ltd ($ESL) | 24.8% | 25.4% | 23.6% | 24.7% | |
| |
|---|
| Median (33 companies) | 8.9% | 8.3% | 6.2% | 7.2% | 17.6% |
|---|
| Redknee Solutions Inc ($RKN) | 2.0% | 11.6% | 3.7% | 4.7% | 10.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Halogen Software Inc ($HGN) | | 4.9% | 9.0% | 8.4% | |
| Intermap Technologies Corp ($IMP) | 0.4% | 1.0% | 3.2% | 7.4% | |
| Kinaxis Inc ($KXS) | 2.2% | 2.9% | 2.3% | 5.0% | |
| BlackBerry Ltd ($BB) | 5.2% | 4.9% | 3.8% | 4.2% | 2.6% |
| ProntoForms Corp ($PFM) | 1.3% | 1.1% | 0.8% | 3.6% | |
| |
|---|
| Median (33 companies) | 1.3% | 1.6% | 1.4% | 1.2% | 1.6% |
|---|
| Redknee Solutions Inc ($RKN) | 0.1% | 1.0% | 1.7% | 1.3% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kinaxis Inc ($KXS) | | | 61.8% | 63.6% | |
| Computer Modelling Group Ltd ($CMG) | 75.5% | 74.2% | 68.6% | 62.9% | 63.5% |
| SMART Technologies Inc ($SMA) | 43.2% | 21.4% | -18.9% | 28.1% | 43.8% |
| Constellation Software Inc/Canada ($CSU) | 45.8% | 45.9% | 22.4% | 24.7% | |
| Sandvine Corp ($SVC) | -1.7% | -4.9% | 16.9% | 20.2% | |
| |
|---|
| Median (33 companies) | 5.5% | 2.9% | -4.8% | 3.3% | 8.3% |
|---|
| Redknee Solutions Inc ($RKN) | -1.3% | 13.8% | -1.5% | -0.3% | 7.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Data Group Ltd ($DGI) | 3.2x | 3.5x | 3.7x | 4.0x | |
| Critical Control Energy Services Corp ($CCZ) | 1.9x | | 1.4x | 2.7x | |
| Mitel Networks Corp ($MNW) | 4.9x | 3.7x | 3.8x | 2.6x | |
| Open Text Corp ($OTC) | 0.0x | 0.1x | 0.2x | 1.8x | 1.5x |
| CGI Group Inc ($GIB.A) | 1.3x | 6.0x | 2.4x | 1.3x | 1.0x |
| |
|---|
| Median (21 companies) | -0.3x | -0.2x | -0.2x | -1.3x | 1.0x |
|---|
| Redknee Solutions Inc ($RKN) | -5.5x | -1.8x | -8.8x | -5.1x | 0.1x |
