DragonWave Inc revenue dropped on 45.3% in 2016
18.05.2016 • About DragonWave Inc (
$DWI) • By InTwits
DragonWave Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- DragonWave Inc is a company in decline: FY2016 revenue growth was -45.3%, 5 years revenue CAGR was -6.1%
- The company operates at negative EBITDA Margin: -24.7%
- DragonWave Inc motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -28.0% for the sames years0
- DragonWave Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 1.3 in FY2016, 3.5 in FY2015, 1 in FY2014, 2.4 in FY2013, 1.1 in FY2012
- The company has unprofitable business model: ROIC is at -45.6%
- It operates with high leverage: Net Debt/EBITDA is 0.9x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
DragonWave Inc ($DWI) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 45.7 | 123.9 | 90.0 | 157.8 | 86.3 | -45.3% |
| Gross Profit | 16.4 | 19.5 | 10.7 | 28.0 | 14.0 | -50.1% |
| SG&A | 33.0 | 42.7 | 30.3 | 30.9 | 24.4 | -21.1% |
| EBITDA | -33.2 | -51.3 | -34.9 | | -21.3 | |
| Net Income | -33.5 | -54.7 | -34.2 | -21.5 | -42.3 | |
Balance Sheet
|
|---|
| Cash | 52.8 | 23.0 | 19.0 | 23.7 | 4.3 | -81.9% |
| Short Term Debt | 0.0 | 18.3 | 1.8 | 0.5 | 22.2 | 4,209.7% |
| Long Term Debt | 0.0 | 1.5 | 0.0 | 32.4 | 0.0 | -100.0% |
Cash flow
|
|---|
| Capex | 1.1 | 2.4 | 1.0 | 3.5 | 1.3 | -62.3% |
Ratios
|
|---|
| Revenue growth | -61.3% | 171.3% | -27.3% | 75.3% | -45.3% | |
| EBITDA growth | -604.2% | 54.7% | -32.0% | | | |
| Gross Margin | 35.9% | 15.7% | 11.8% | 17.7% | 16.2% | -1.6% |
| EBITDA Margin | -72.7% | -41.4% | -38.8% | 0.0% | -24.7% | -24.7% |
| Net Income Margin | -73.3% | -44.2% | -38.0% | -13.6% | -49.0% | -35.4% |
| SG&A, % of revenue | 72.2% | 34.5% | 33.6% | 19.6% | 28.2% | 8.7% |
| CAPEX, % of revenue | 2.4% | 1.9% | 1.1% | 2.2% | 1.5% | -0.7% |
| ROIC | -33.1% | -69.7% | -71.7% | -33.3% | -45.6% | -12.4% |
| ROE | -28.6% | -69.6% | -70.5% | -50.4% | -182.7% | -132.2% |
DragonWave Inc ($DWI) key quoterly financial indicators
| mln. $ | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 26 | 27 | 21 | 12 | -8.4% | -29.0% | -55.6% | -72.5% |
| EBITDA | -5 | -6 | -3 | -8 | | | | |
| Net Income | -6 | -21 | -6 | -9 | | | | |
Balance Sheet
|
|---|
| Cash | 19 | 13 | 8 | 4 | 21.5% | -61.1% | -73.7% | -81.9% |
| Short Term Debt | 1 | 33 | 27 | 22 | -64.3% | 5,445.5% | 5,075.9% | 4,209.7% |
| Long Term Debt | 34 | 0 | 0 | 0 | 92.6% | -100.0% | -100.0% | -100.0% |
Ratios
|
|---|
| Gross Margin | 21.1% | 14.8% | 23.5% | -4.1% | 0.6% | -0.7% | 7.2% | -23.6% |
| EBITDA Margin | -18.1% | -21.9% | -14.8% | -62.5% | -18.1% | -21.9% | -14.8% | -62.5% |
| Net Income Margin | -22.6% | -77.9% | -29.8% | -75.8% | 0.4% | -54.5% | -21.8% | -70.6% |
Revenue and profitability
DragonWave Inc's Revenue dropped on 45.3%. Revenue decline showed acceleration in FY16Q4 - it was 72.5% YoY.
Gross Margin decreased slightly on 1.6 pp from 17.7% to 16.2% in FY2016. SG&A as a % of Revenue increased on 8.7 pp from 19.6% to 28.2% in FY2016.
Net Income marign dropped on 35.4 pp from -13.6% to -49.0% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.5% in FY2016. CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 1.6%.
Return on investment
The company operates at negative ROIC (-45.64%) and ROE (-182.66%). ROIC dropped on 12.4 pp from -33.3% to -45.6% in FY2016. ROE dropped on 132 pp from -50.4% to -183% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt dropped on 32.7% while cash dropped on 81.9%.
Appendix 1: Peers in Communications
Below you can find DragonWave 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($IT) | | | | 842.9% | |
| Snipp Interactive Inc ($SPN) | | 70.1% | 309.2% | 327.0% | |
| UrtheCast Corp ($UR) | | | | 205.7% | |
| Wi2Wi Corp ($YTY) | | 11.5% | 100.3% | 96.3% | |
| Shopify Inc ($SH) | | 111.9% | 109.0% | 95.4% | 89.7% |
| |
|---|
| Median (37 companies) | -0.7% | 2.3% | 2.1% | 4.4% | 2.1% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanted Technologies Corp ($WAN) | 90.5% | 93.2% | 94.3% | 95.6% | |
| NeuLion Inc ($NLN) | 53.6% | 63.8% | 70.2% | 81.1% | 81.6% |
| TeraGo Inc ($TGO) | 62.9% | 61.8% | 59.8% | 77.2% | 77.2% |
| ICTV Brands Inc ($ITV) | 67.4% | 71.9% | 69.6% | 68.1% | |
| Platinum Communications Corp ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| |
|---|
| Median (27 companies) | 43.1% | 39.7% | 41.8% | 40.4% | 41.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BCE Inc ($BCE) | 38.8% | 37.7% | 38.4% | 37.7% | 39.8% |
| Rogers Communications Inc ($RCI.A) | 37.3% | 38.4% | 37.9% | 36.9% | 32.5% |
| Quebecor Inc ($QBR.B) | 27.5% | 36.3% | 35.5% | 34.2% | 35.5% |
| TELUS Corp ($T) | 35.3% | 35.2% | 35.1% | 34.1% | 33.0% |
| ZoomerMedia Ltd ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| |
|---|
| Median (36 companies) | 9.8% | 7.2% | 8.6% | 8.6% | 7.7% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TELUS Corp ($T) | 17.9% | 17.8% | 19.8% | 20.2% | 21.5% |
| Rogers Communications Inc ($RCI.A) | 17.2% | 17.6% | 18.4% | 18.2% | 17.2% |
| Quebecor Inc ($QBR.B) | 16.7% | 15.4% | 17.9% | 17.5% | 17.6% |
| BCE Inc ($BCE) | 17.6% | 17.5% | 17.7% | 16.9% | 17.4% |
| TeraGo Inc ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| |
|---|
| Median (35 companies) | 2.4% | 2.6% | 1.8% | 1.8% | 3.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($TC) | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% |
| Asian Television Network International Ltd ($SAT) | 34.6% | 23.6% | 23.4% | 21.4% | |
| Points International Ltd ($PTS) | 14.9% | 15.0% | 21.2% | 18.8% | 0.1% |
| Norsat International Inc ($NII) | 10.9% | 1.4% | 13.7% | 13.8% | |
| MDC Partners Inc ($MDZ.A) | -3.1% | -6.3% | 14.2% | 13.7% | 10.1% |
| |
|---|
| Median (38 companies) | 9.4% | 8.6% | 7.5% | 3.1% | 0.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($IT) | | | | 9.4x | |
| MDC Partners Inc ($MDZ.A) | 12.4x | 112.6x | 4.6x | 5.5x | 9.6x |
| Quebecor Inc ($QBR.B) | 3.7x | 3.9x | 4.2x | 4.8x | 4.3x |
| Rogers Communications Inc ($RCI.A) | 2.3x | 2.4x | 3.2x | 3.6x | 3.8x |
| Newfoundland Capital Corp Ltd ($NCC.B) | 1.4x | 1.3x | 3.3x | 3.2x | |
| |
|---|
| Median (24 companies) | 1.2x | 1.1x | 1.2x | 1.1x | 1.7x |
|---|
