Tucows Inc reports 78.4% Net Income growth and 2.5 pp EBITDA Margin growth from 8.8% to 11.4%
09.02.2016 • About Tucows Inc (
$TC) • By InTwits
Tucows Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tucows Inc is a fast growth stock: 2015 revenue growth was 17.1%, 5 year revenue CAGR was 15.4% at 2015 ROIC 51.4%
- EBITDA Margin is expanding: 11.4% in 2015 vs. 8.8% in 2014 vs. 5.9% in 2011
- Tucows Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%.
- The company has highly profitable business model: ROIC is at 51.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tucows Inc ($TC) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 97.1 | 114.7 | 129.9 | 147.7 | 172.9 | 17.1% |
| Gross Profit | 29.0 | 31.9 | 37.0 | 40.6 | 53.2 | 31.2% |
| SG&A | | 15.3 | 19.3 | 23.9 | 29.2 | 22.2% |
| EBITDA | 5.7 | 7.3 | 8.6 | 13.0 | 19.7 | 50.9% |
| Net Income | 6.2 | 4.4 | 4.2 | 6.4 | 11.4 | 78.4% |
Balance Sheet
|
|---|
| Cash | 6.4 | 6.4 | 12.4 | 8.3 | 7.7 | -6.6% |
| Short Term Debt | 0.9 | 3.7 | 6.3 | 0.0 | 3.5 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 0.9 | 1.0 | 1.3 | 0.7 | 3.0 | 317.0% |
Ratios
|
|---|
| Revenue growth | 14.8% | 18.2% | 13.3% | 13.6% | 17.1% | |
| EBITDA growth | 6.4% | 28.2% | 17.5% | 51.1% | 50.9% | |
| Gross Margin | 29.9% | 27.8% | 28.5% | 27.5% | 30.8% | 3.3% |
| EBITDA Margin | 5.9% | 6.4% | 6.6% | 8.8% | 11.4% | 2.5% |
| Net Income Margin | 6.4% | 3.9% | 3.2% | 4.3% | 6.6% | 2.3% |
| SG&A, % of revenue | | 13.3% | 14.9% | 16.2% | 16.9% | 0.7% |
| CAPEX, % of revenue | 0.9% | 0.9% | 1.0% | 0.5% | 1.7% | 1.2% |
| ROIC | 12.8% | 17.7% | 22.5% | 35.4% | 51.4% | 16.0% |
| ROE | 22.7% | 15.5% | 15.6% | 20.4% | 36.7% | 16.3% |
| Net Debt/EBITDA | -1.0x | -0.4x | -0.7x | -0.6x | -0.2x | 0.4x |
Revenue and profitability
The company's Revenue surged on 17.1% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.5 pp from 8.8% to 11.4% in 2015.
Gross Margin increased on 3.3 pp from 27.5% to 30.8% in 2015. SG&A as a % of Revenue increased slightly on 0.70 pp from 16.2% to 16.9% in 2015.
Net Income marign increased on 2.3 pp from 4.3% to 6.6% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 1.7%. Tucows Inc showed small growth in CAPEX/Revenue of 0.85 pp from 0.87% in 2012 to 1.7% in 2015. For the last three years the average CAPEX/Revenue was 1.1%.
Return on investment
The company operates at high and attractive ROIC (51.42%) and ROE (36.71%). ROIC surged on 16.0 pp from 35.4% to 51.4% in 2015. ROE jumped on 16.3 pp from 20.4% to 36.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.2x and Debt / EBITDA is 0.2x. Net Debt / EBITDA jumped on 0.4x from -0.6x to -0.2x in 2015. Debt surged while cash decreased on 6.6% in 2015.
Appendix 1: Peers in Communications
Below you can find Tucows Inc benchmarking vs. other companies in Communications 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 |
|---|
| Telehop Communications Inc ($HOP) | -11.7% | -13.1% | -7.8% | 105.7% | |
| Wi2Wi Corp ($YTY) | | | 11.5% | 100.3% | |
| BSM Technologies Inc ($GPS) | | | 39.1% | 55.5% | 2.7% |
| Plaintree Systems Inc ($NPT) | | 14.5% | 9.1% | 50.8% | -7.1% |
| Aimia Inc ($AIM) | 2.9% | 6.3% | -25.6% | 47.5% | |
| |
|---|
| Median (49 companies) | 9.0% | 2.5% | 1.8% | 1.9% | 2.7% |
|---|
| Tucows Inc ($TC) | | 18.2% | 13.3% | 13.6% | 17.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanted Technologies Corp ($WAN) | 86.6% | 90.5% | 93.2% | 94.3% | 95.6% |
| CounterPath Corp ($CCV) | 74.1% | 80.0% | 85.1% | 80.9% | 81.5% |
| Mediagrif Interactive Technologies Inc ($MDF) | 78.2% | 79.8% | 79.8% | 78.8% | 80.1% |
| NeuLion Inc ($NLN) | 45.2% | 53.6% | 63.8% | 70.2% | |
| Sangoma Technologies Corp ($STC) | 74.5% | 68.8% | | 66.9% | 67.2% |
| |
|---|
| Median (40 companies) | 43.3% | 43.3% | 42.7% | 42.5% | 49.7% |
|---|
| Tucows Inc ($TC) | 29.9% | 27.8% | 28.5% | 27.5% | 30.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Manitoba Telecom Services Inc ($MBT) | 33.7% | 34.3% | 33.7% | 47.4% | 42.3% |
| Cogeco Cable Inc ($CCA) | 45.8% | 46.0% | 44.9% | 43.8% | 46.2% |
| Cogeco Inc ($CGO) | 28.1% | 43.2% | 43.5% | 43.3% | 44.3% |
| Shaw Communications Inc ($SJR.B) | 43.3% | 42.7% | 43.3% | 42.1% | 44.6% |
| BCE Inc ($BCE) | 37.0% | 38.8% | 37.7% | 38.4% | 37.7% |
| |
|---|
| Median (49 companies) | 16.4% | 15.6% | 14.8% | 13.4% | 17.9% |
|---|
| Tucows Inc ($TC) | 5.9% | 6.4% | 6.6% | 8.8% | 11.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newfoundland Capital Corp Ltd ($NCC.B) | | 8.7% | 5.5% | 76.8% | |
| Axia NetMedia Corp ($AXX) | 10.7% | 30.8% | 27.2% | 27.0% | |
| UrtheCast Corp ($UR) | | | | 26.5% | |
| TeraGo Inc ($TGO) | 21.6% | 20.9% | 21.5% | 23.1% | |
| Manitoba Telecom Services Inc ($MBT) | 16.3% | 19.8% | 18.1% | 22.4% | 22.9% |
| |
|---|
| Median (52 companies) | 4.3% | 2.3% | 3.3% | 2.3% | 2.4% |
|---|
| Tucows Inc ($TC) | 0.9% | 0.9% | 1.0% | 0.5% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wi2Wi Corp ($YTY) | -28.5% | -166.9% | | 136.7% | |
| Asian Television Network International Ltd ($SAT) | 102.7% | 34.6% | 23.6% | 23.4% | |
| Points International Ltd ($PTS) | 20.7% | 14.9% | 15.0% | 21.2% | |
| NeuLion Inc ($NLN) | -62.1% | -55.8% | -10.3% | 18.5% | |
| Yellow Pages Ltd/Canada ($Y) | 8.9% | 18.0% | 28.4% | 17.9% | |
| |
|---|
| Median (53 companies) | 6.3% | 8.0% | 8.2% | 8.0% | 3.1% |
|---|
| Tucows Inc ($TC) | 12.8% | 17.7% | 22.5% | 35.4% | 51.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Plaintree Systems Inc ($NPT) | 0.7x | | | 124.2x | 3.9x |
| Advantex Marketing International Inc ($ADX) | | 4.8x | 2.2x | 5.0x | |
| MDC Partners Inc ($MDZ.A) | 7.3x | 12.4x | 112.6x | 4.6x | |
| Quebecor Inc ($QBR.B) | 2.0x | 3.7x | 3.9x | 4.2x | |
| Postmedia Network Canada Corp ($PNC.B) | 2.9x | 3.3x | 3.4x | 4.2x | |
| |
|---|
| Median (41 companies) | 1.0x | 1.4x | 1.3x | 1.5x | 1.6x |
|---|
| Tucows Inc ($TC) | -1.0x | -0.4x | -0.7x | -0.6x | -0.2x |
