Sandvine Corp Net Income dropped on 68.2% in 2016 and EBITDA Margin dropped on 14.8 pp from 35.1% to 20.3%
12.01.2017 • About Sandvine Corp (
$SVC) • By InTwits
Sandvine Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 20.3% in FY2016, 35.1% in FY2015, 28.2% in FY2014, 24.0% in FY2013, 0.9% in FY2012
- Sandvine Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 1.7%.
- CAPEX is quite volatile: 36.8 in FY2016, 46.1 in FY2015, 75.2 in FY2014, 91.2 in FY2013, 70.7 in FY2012
- The company has business model with average profitability: ROIC is at 10.4%
- It operates with high leverage: Net Debt/EBITDA is -0.6x while industry average is -4.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sandvine Corp ($SVC) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 87.9 | 106.5 | 123.4 | 123.3 | 120.7 | -2.1% |
| Gross Profit | 59.3 | 78.9 | 94.7 | 95.9 | 91.7 | -4.4% |
| SG&A | | 41.4 | 45.9 | 50.1 | 50.9 | 1.6% |
| EBITDA | 0.8 | 25.5 | 34.8 | 43.3 | 24.5 | -43.3% |
| Net Income | -5.0 | 12.9 | 23.0 | 41.3 | 13.1 | -68.2% |
Balance Sheet
|
|---|
| Cash | 4.0 | 5.5 | 14.0 | 8.8 | 14.9 | 69.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 4.3 | 3.4 | 3.9 | 5.9 | 4.1 | -29.7% |
Ratios
|
|---|
| Revenue growth | -2.7% | 21.2% | 15.8% | -0.1% | -2.1% | |
| EBITDA growth | -82.2% | 3,009.1% | 36.2% | 24.4% | -43.3% | |
| Gross Margin | 67.5% | 74.1% | 76.8% | 77.8% | 75.9% | -1.8% |
| EBITDA Margin | 0.9% | 24.0% | 28.2% | 35.1% | 20.3% | -14.8% |
| Net Income Margin | -5.7% | 12.1% | 18.6% | 33.5% | 10.9% | -22.6% |
| SG&A, % of revenue | | 38.9% | 37.2% | 40.6% | 42.1% | 1.5% |
| CAPEX, % of revenue | 4.9% | 3.2% | 3.2% | 4.8% | 3.4% | -1.3% |
| ROIC | -4.9% | 16.9% | 20.2% | 21.7% | 10.4% | -11.4% |
| ROE | -4.4% | 10.8% | 15.8% | 22.5% | 6.9% | -15.7% |
| Net Debt/EBITDA | -4.8x | -0.2x | -0.4x | -0.2x | -0.6x | -0.4x |
Sandvine Corp ($SVC) key quoterly financial indicators
| mln. $ | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 34 | 34 | 26 | 27 | 5.3% | 17.3% | -4.3% | -23.1% |
| EBITDA | 9 | 7 | 4 | 5 | 1.6% | 57.9% | -9.8% | -81.5% |
| Net Income | 6 | 4 | 1 | 2 | -44.7% | 33.6% | -50.2% | -91.9% |
Balance Sheet
|
|---|
| Cash | 13 | 20 | 19 | 15 | 21.7% | 156.0% | 143.9% | 69.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | 76.2% | 74.2% | 77.0% | 76.7% | 0.1% | -0.5% | -3.2% | -3.2% |
| EBITDA Margin | 26.0% | 20.9% | 14.9% | 17.7% | -0.9% | 5.4% | -0.9% | -55.9% |
| Net Income Margin | 16.5% | 11.9% | 5.6% | 7.6% | -14.9% | 1.4% | -5.2% | -64.3% |
Revenue and profitability
Sandvine Corp's Revenue decreased on 2.1%. Revenue decline showed acceleration in FY16Q4 - it was 23.1% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 14.8 pp from 35.1% to 20.3% in FY2016.
Gross Margin decreased slightly on 1.8 pp from 77.8% to 75.9% in FY2016. SG&A as a % of Revenue increased slightly on 1.5 pp from 40.6% to 42.1% in FY2016.
Net Income marign dropped on 22.6 pp from 33.5% to 10.9% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 3.4%. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 3.8%.
Return on investment
The company operates at low ROIC (10.37%) and ROE (6.88%). ROIC dropped on 11.4 pp from 21.7% to 10.4% in FY2016. ROE dropped on 15.7 pp from 22.5% to 6.9% in FY2016.
Leverage (Debt)
The company has no debt. Cash surged on 69.1%.
Appendix 1: Peers in Technology
Below we provide Sandvine Corp benchmarking against other companies in Technology 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 |
|---|
| Intrinsyc Technologies Corp ($ITC) | | -21.7% | 70.8% | 24.5% | 39.2% |
| ProntoForms Corp ($PFM) | | 75.4% | 43.9% | 46.4% | 28.2% |
| Kinaxis Inc ($KXS) | | 30.3% | 15.2% | 30.3% | 27.0% |
| NexJ Systems Inc ($NXJ) | | 4.3% | -12.6% | 19.7% | 17.3% |
| Constellation Software Inc/Canada ($CSU) | | 35.9% | 37.9% | 10.1% | 15.6% |
| |
|---|
| Median (12 companies) | | 0.3% | 13.3% | 11.5% | 12.7% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($CSU) | 86.2% | 85.5% | 86.1% | 86.2% | 87.1% |
| ProntoForms Corp ($PFM) | 96.1% | 98.1% | 98.0% | 79.4% | |
| Espial Group Inc ($ESP) | 77.5% | 81.7% | 78.5% | 74.3% | 74.7% |
| Halogen Software Inc ($HGN) | 72.0% | 74.8% | 71.8% | 73.8% | 76.2% |
| Kinaxis Inc ($KXS) | 71.8% | 70.4% | 70.4% | 71.8% | 69.1% |
| |
|---|
| Median (12 companies) | 71.8% | 55.6% | 61.9% | 61.9% | 71.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wi-LAN Inc ($WIN) | 40.9% | 12.2% | 56.2% | 53.2% | 57.8% |
| Kinaxis Inc ($KXS) | 18.7% | 23.0% | 19.2% | 28.0% | 17.6% |
| Constellation Software Inc/Canada ($CSU) | 20.9% | 20.1% | 21.8% | 25.2% | 26.0% |
| Intrinsyc Technologies Corp ($ITC) | -10.5% | -38.8% | 2.2% | 10.8% | |
| Mitel Networks Corp ($MNW) | 10.2% | 10.0% | 7.0% | 7.7% | |
| |
|---|
| Median (14 companies) | 0.9% | 3.9% | 4.4% | 0.1% | 7.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kinaxis Inc ($KXS) | 2.9% | 2.3% | 5.0% | 4.7% | 5.0% |
| Halogen Software Inc ($HGN) | 4.9% | 9.0% | 8.4% | 2.9% | 2.6% |
| Espial Group Inc ($ESP) | 1.6% | 0.2% | 1.9% | 2.1% | 1.5% |
| ProntoForms Corp ($PFM) | 1.1% | 0.8% | 3.6% | 1.9% | |
| Critical Control Energy Services Corp ($CCZ) | | 0.5% | 1.0% | 1.6% | |
| |
|---|
| Median (14 companies) | 1.1% | 1.1% | 1.2% | 1.2% | 1.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($CSU) | 45.9% | 22.4% | 24.7% | 38.5% | 40.5% |
| Kinaxis Inc ($KXS) | | 61.8% | 63.6% | 44.0% | 22.6% |
| Halogen Software Inc ($HGN) | | -28.4% | -45.9% | -40.5% | 12.6% |
| Wi-LAN Inc ($WIN) | 2.6% | -7.6% | 8.9% | 7.4% | 8.4% |
| NexJ Systems Inc ($NXJ) | | -44.6% | -19.8% | -13.9% | 4.5% |
| |
|---|
| Median (14 companies) | -7.5% | -17.5% | 0.5% | -1.2% | 8.4% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mitel Networks Corp ($MNW) | 3.7x | 3.8x | 2.6x | 6.2x | |
| Pivot Technology Solutions Inc ($PTG) | | -0.4x | 1.1x | 4.8x | |
| Constellation Software Inc/Canada ($CSU) | 0.0x | 1.6x | 0.6x | 0.4x | -0.0x |
| Wi-LAN Inc ($WIN) | -4.9x | -12.1x | -2.3x | -1.7x | -2.0x |
| Kinaxis Inc ($KXS) | 1.9x | 4.7x | -4.2x | -3.9x | -6.3x |
| |
|---|
| Median (7 companies) | 0.9x | 1.5x | -0.8x | -1.7x | -6.3x |
|---|
