Tucows Inc EBITDA surged on 41.4% in 2016 and EBITDA Margin increased on 3.3 pp from 11.4% to 14.7%
07.02.2017 • About Tucows Inc (
$TC) • By InTwits
Tucows Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tucows Inc is a growth stock: FY2016 revenue growth was 9.8%, 5 year revenue CAGR was 14.4% at FY2016 ROIC 58.4%
- EBITDA Margin is expanding: 14.7% in FY2016 vs. 11.4% in FY2015 vs. 6.4% in FY2012
- EBITDA Margin is quite volatile: 14.7% in FY2016, 11.4% in FY2015, 8.8% in FY2014, 6.6% in FY2013, 6.4% in FY2012
- Tucows Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's a lot of higher than industry average of 8.1%.
- CAPEX is quite volatile: 7.9 in FY2016, 3.0 in FY2015, 0.71 in FY2014, 1.3 in FY2013, 1.00 in FY2012
- The company has highly profitable business model: ROIC is at 58.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tucows Inc ($TC) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 114.7 | 129.9 | 147.7 | 172.9 | 189.8 | 9.8% |
| Gross Profit | 31.9 | 37.0 | 40.6 | 53.2 | 63.1 | 18.5% |
| SG&A | 15.3 | 19.3 | 23.9 | 29.2 | 32.2 | 10.1% |
| EBITDA | 7.3 | 8.6 | 13.0 | 19.7 | 27.8 | 41.4% |
| Net Income | 4.4 | 4.2 | 6.4 | 11.4 | 16.1 | 41.3% |
Balance Sheet
|
|---|
| Cash | 6.4 | 12.4 | 8.3 | 7.7 | 15.1 | 95.6% |
| Short Term Debt | 3.7 | 6.3 | 0.0 | 3.5 | 2.2 | -36.2% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 8.0 | |
Cash flow
|
|---|
| Capex | 1.0 | 1.3 | 0.7 | 3.0 | 7.9 | 166.8% |
Ratios
|
|---|
| Revenue growth | 18.2% | 13.3% | 13.6% | 17.1% | 9.8% | |
| EBITDA growth | 28.2% | 17.5% | 51.1% | 50.9% | 41.4% | |
| Gross Margin | 27.8% | 28.5% | 27.5% | 30.8% | 33.2% | 2.5% |
| EBITDA Margin | 6.4% | 6.6% | 8.8% | 11.4% | 14.7% | 3.3% |
| Net Income Margin | 3.9% | 3.2% | 4.3% | 6.6% | 8.5% | 1.9% |
| SG&A, % of revenue | 13.3% | 14.9% | 16.2% | 16.9% | 16.9% | 0.1% |
| CAPEX, % of revenue | 0.9% | 1.0% | 0.5% | 1.7% | 4.2% | 2.5% |
| ROIC | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% | 7.0% |
| ROE | 15.5% | 15.6% | 20.4% | 36.7% | 50.1% | 13.4% |
| Net Debt/EBITDA | -0.4x | -0.7x | -0.6x | -0.2x | -0.2x | 0.0x |
Tucows Inc ($TC) key quoterly financial indicators
| mln. $ | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 46 | 47 | 49 | 49 | 12.7% | 10.7% | 10.8% | 8.4% |
| EBITDA | 7 | 7 | 8 | 6 | 42.9% | 59.2% | 44.5% | 21.3% |
| Net Income | 4 | 4 | 5 | 3 | 56.6% | 78.2% | 50.1% | -9.0% |
Balance Sheet
|
|---|
| Cash | 10 | 6 | 10 | 15 | -26.8% | -61.6% | -11.8% | 95.6% |
| Short Term Debt | 9 | 9 | 2 | 2 | 165.2% | 158.9% | -44.8% | -36.2% |
| Long Term Debt | 0 | 0 | 9 | 8 | | | | |
Ratios
|
|---|
| Gross Margin | 33.3% | 33.4% | 33.9% | 33.7% | 3.1% | 3.4% | 2.8% | 2.3% |
| EBITDA Margin | 14.8% | 14.4% | 16.3% | 12.8% | 3.1% | 4.4% | 3.8% | 1.4% |
| Net Income Margin | 9.7% | 8.6% | 9.7% | 5.8% | 2.7% | 3.2% | 2.5% | -1.1% |
Revenue and profitability
The company's Revenue increased on 9.8%. Revenue growth showed slow down in FY16Q4 - it was 8.4% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.1 pp from 32.4% to 35.6% in 2016.
Gross Margin increased on 2.5 pp from 30.8% to 33.2% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased slightly on 1.9 pp from 6.6% to 8.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 4.2%. CAPEX/Revenue increased on 3.1 pp from 1.0% in FY2013 to 4.2% in FY2016. Average CAPEX/Revenue for the last three years was 2.1%.
Return on investment
The company operates at high and attractive ROIC (58.42%) and ROE (50.10%). ROIC increased on 7.0 pp from 51.4% to 58.4% in FY2016. ROE surged on 13.4 pp from 36.7% to 50.1% in FY2016.
Leverage (Debt)
Debt level is -0.2x Net Debt / EBITDA and 0.4x Debt / EBITDA. Net Debt / EBITDA increased on 0.040x from -0.2x to -0.2x in FY2016. Debt surged on 193% while cash surged on 95.6%.
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 | 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 ($FAN) | | | | | 46.6% |
| Points International Ltd ($PTS) | | 45.1% | 26.0% | 16.2% | 8.6% |
| AgJunction Inc ($AJX) | | 5.0% | -23.0% | -12.9% | 8.2% |
| |
|---|
| Median (25 companies) | 13.1% | 2.6% | 1.1% | 3.2% | 2.1% |
|---|
| Tucows Inc ($TC) | | 13.3% | 13.6% | 17.1% | 9.8% |
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 ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| |
|---|
| Median (22 companies) | 46.4% | 43.3% | 49.1% | 48.2% | 44.6% |
|---|
| Tucows Inc ($TC) | 27.8% | 28.5% | 27.5% | 30.8% | 33.2% |
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 ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| |
|---|
| Median (29 companies) | 19.1% | 13.7% | 11.0% | 9.4% | 7.3% |
|---|
| Tucows Inc ($TC) | 6.4% | 6.6% | 8.8% | 11.4% | 14.7% |
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 ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| |
|---|
| Median (28 companies) | 2.8% | 3.2% | 2.4% | 3.1% | 2.9% |
|---|
| Tucows Inc ($TC) | 0.9% | 1.0% | 0.5% | 1.7% | 4.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% |
| Rogers Communications Inc ($RCI.A) | 17.8% | 16.1% | 12.3% | 10.7% | 8.4% |
| |
|---|
| Median (28 companies) | 8.0% | 7.7% | 7.1% | 2.0% | -0.1% |
|---|
| Tucows Inc ($TC) | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% |
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 ($NCC.B) | 1.4x | 1.3x | 3.3x | 3.2x | |
| |
|---|
| Median (20 companies) | 1.4x | 1.3x | 1.5x | 1.8x | 1.9x |
|---|
| Tucows Inc ($TC) | -0.4x | -0.7x | -0.6x | -0.2x | -0.2x |
