Sangoma Technologies Corp revenue jumped on 29.9% in 2016 while EBITDA Margin decreased on 4.8 pp from 18.2% to 13.4%
21.10.2016 • About Sangoma Technologies Corp (
$STC) • By InTwits
Sangoma Technologies Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts: The company has potentially unprofitable business model: ROIC is at 2.4%.
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sangoma Technologies Corp ($STC) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 13.763 | 12.950 | 13.829 | 16.318 | 21.193 | 29.9% |
| Gross Profit | 9.468 | | 9.255 | 10.967 | 14.408 | 31.4% |
| SG&A | | | 5.776 | 6.867 | 9.360 | 36.3% |
| EBITDA | 1.163 | | 2.806 | 2.968 | 2.830 | -4.6% |
| Net Income | 0.415 | -4.330 | 0.737 | 0.253 | 0.114 | -54.7% |
Balance Sheet
|
|---|
| Cash | 5.017 | | 4.982 | 2.518 | 2.087 | -17.1% |
| Short Term Debt | 0.034 | | 0.000 | 1.341 | 1.341 | 0.0% |
| Long Term Debt | 0.017 | | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.087 | | 0.091 | 2.483 | 2.777 | 11.9% |
Ratios
|
|---|
| Revenue growth | 16.0% | -5.9% | 6.8% | 18.0% | 29.9% | |
| EBITDA growth | -52.7% | | | 5.7% | -4.6% | |
| Gross Margin | 68.8% | | 66.9% | 67.2% | 68.0% | 0.8% |
| EBITDA Margin | 8.4% | 0.0% | 20.3% | 18.2% | 13.4% | -4.8% |
| Net Income Margin | 3.0% | -33.4% | 5.3% | 1.5% | 0.5% | -1.0% |
| SG&A, % of revenue | | | 41.8% | 42.1% | 44.2% | 2.1% |
| CAPEX, % of revenue | 0.6% | | 0.7% | 15.2% | 13.1% | -2.1% |
| ROIC | 3.2% | | | 3.8% | 2.4% | -1.4% |
| ROE | 2.1% | | | 1.5% | 0.6% | -0.8% |
| Net Debt/EBITDA | -4.3x | | -1.8x | -0.4x | -0.3x | 0.1x |
Sangoma Technologies Corp ($STC) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 5 | 5 | 5 | 6 | 70.1% | 48.7% | 10.6% | 14.3% |
| EBITDA | 1 | 1 | 1 | 1 | 115.1% | 1.2% | 7.1% | -48.9% |
| Net Income | 0 | 0 | 0 | -0 | 386.9% | | -58.1% | -180.5% |
Balance Sheet
|
|---|
| Cash | 2 | 3 | 1 | 2 | -64.5% | -52.4% | -27.2% | -17.1% |
| Short Term Debt | 1 | 1 | 1 | 1 | | 0.0% | 0.0% | 0.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | 71.2% | 72.2% | 68.6% | 61.5% | 5.1% | 9.1% | -2.5% | -5.4% |
| EBITDA Margin | 15.0% | 12.2% | 16.9% | 10.0% | 3.1% | -5.7% | -0.6% | -12.3% |
| Net Income Margin | 1.9% | 1.5% | 2.0% | -2.5% | 1.2% | 6.2% | -3.2% | -6.2% |
Revenue and profitability
The company's Revenue surged on 29.9%. Revenue growth showed slow down in FY16Q4 - it was 14.3% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 11.6 pp from 8.0% to -3.6% in FY2016.
Gross Margin increased slightly on 0.78 pp from 67.2% to 68.0% in FY2016. SG&A as a % of Revenue increased on 2.1 pp from 42.1% to 44.2% in FY2016.
Net Income marign decreased slightly on 1.0 pp from 1.5% to 0.54% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Sangoma Technologies Corp had CAPEX/Revenue of 13.1%. Sangoma Technologies Corp's CAPEX/Revenue surged13.1 pp from in FY2013 to 13.1% in FY2016. Average CAPEX/Revenue for the last three years was 9.7%.Sangoma Technologies Corp invested a big chunk of EBITDA (98.1%) to CAPEX to secure its growth.
Return on investment
The company operates at low ROIC (2.38%) and ROE (0.63%). ROIC decreased slightly on 1.4 pp from 3.8% to 2.4% in FY2016. ROE decreased slightly on 0.84 pp from 1.5% to 0.63% in FY2016.
Leverage (Debt)
Debt level is -0.3x Net Debt / EBITDA and 0.5x Debt / EBITDA. Net Debt / EBITDA jumped on 0.1x from -0.4x to -0.3x in FY2016. Debt didn't change in FY2016 while cash dropped on 17.1%.
Appendix 1: Peers in Communications
Below we provide Sangoma Technologies Corp benchmarking against other companies in Communications 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| AcuityAds Holding Inc ($AT) | | | | 51.6% | 91.4% |
| Shopify Inc ($SH) | | 111.9% | 109.0% | 95.4% | 89.7% |
| Gaming Nation Inc ($FAN) | | | | | 46.6% |
| Tucows Inc ($TC) | | 13.3% | 13.6% | 17.1% | 9.8% |
| Points International Ltd ($PTS) | | 45.1% | 26.0% | 16.2% | 8.6% |
| |
|---|
| Median (26 companies) | 13.1% | 3.5% | 2.1% | 4.2% | 2.3% |
|---|
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 ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| |
|---|
| Median (23 companies) | 44.2% | 42.8% | 45.3% | 46.4% | 41.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BCE Inc ($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 (30 companies) | 17.0% | 10.7% | 9.9% | 9.9% | 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 ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| |
|---|
| Median (29 companies) | 2.7% | 3.0% | 2.3% | 2.3% | 3.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($TC) | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% |
| BCE Inc ($BCE) | 14.1% | 12.6% | 12.6% | 12.3% | 12.6% |
| Quebecor Inc ($QBR.B) | 7.9% | 9.6% | 8.4% | 8.4% | 10.1% |
| MDC Partners Inc ($MDZ.A) | -3.1% | -6.3% | 14.2% | 13.7% | 10.1% |
| TELUS Corp ($T) | 12.4% | 13.0% | 13.0% | 11.5% | 9.6% |
| |
|---|
| Median (29 companies) | 8.9% | 7.9% | 7.3% | 2.6% | 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 (21 companies) | 1.4x | 1.3x | 1.5x | 1.6x | 1.7x |
|---|
