Data Group Ltd reports 8.6% revenue decline in FY2016 and 6.1 pp EBITDA Margin decline from -1.9% to -7.9%
09.03.2017 • About Data Group Ltd (
$DGI) • By InTwits
Data Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Data Group Ltd is a company in decline: FY2016 revenue growth was -8.6%, 5 years revenue CAGR was -3.5%
- The company operates at negative EBITDA Margin: -7.9%
- EBITDA Margin is quite volatile: -7.9% in FY2016, -1.9% in FY2015, 7.2% in FY2014, 8.1% in FY2013, 8.5% in FY2012
- Data Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
- The company has unprofitable business model: ROIC is at -52.9%
- It operates with high leverage: Net Debt/EBITDA is -2.4x while industry average is -4.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Data Group Ltd ($DGI) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 336.3 | 317.0 | 313.2 | 304.6 | 278.4 | -8.6% |
| Gross Profit | 87.2 | 80.1 | 74.6 | 71.1 | 63.1 | -11.3% |
| SG&A | | 59.8 | 57.1 | 54.7 | 55.9 | 2.2% |
| EBITDA | 28.7 | 25.6 | 22.5 | -5.7 | -22.1 | |
| Net Income | -37.1 | -45.8 | 4.5 | -19.2 | -32.1 | |
Balance Sheet
|
|---|
| Cash | 0.0 | 0.5 | 0.8 | 0.9 | 1.5 | 77.3% |
| Short Term Debt | 1.2 | 4.0 | 3.5 | 43.1 | 17.0 | -60.6% |
| Long Term Debt | 99.9 | 92.0 | 86.6 | 10.9 | 29.2 | 167.2% |
Cash flow
|
|---|
| Capex | 2.0 | 2.3 | 3.2 | 4.3 | 2.7 | -38.3% |
Ratios
|
|---|
| Revenue growth | 1.3% | -5.8% | -1.2% | -2.7% | -8.6% | |
| EBITDA growth | -5.6% | -10.8% | -12.1% | -125.3% | 288.0% | |
| Gross Margin | 25.9% | 25.3% | 23.8% | 23.3% | 22.7% | -0.7% |
| EBITDA Margin | 8.5% | 8.1% | 7.2% | -1.9% | -7.9% | -6.1% |
| Net Income Margin | -11.0% | -14.5% | 1.4% | -6.3% | -11.5% | -5.2% |
| SG&A, % of revenue | | 18.9% | 18.2% | 18.0% | 20.1% | 2.1% |
| CAPEX, % of revenue | 0.6% | 0.7% | 1.0% | 1.4% | 1.0% | -0.5% |
| ROIC | 7.0% | 8.6% | 14.2% | -13.8% | -52.9% | -39.1% |
| ROE | -41.4% | -114.5% | 24.6% | -102.4% | | 102.4% |
| Net Debt/EBITDA | 3.5x | 3.7x | 4.0x | | | 0.0x |
Data Group Ltd ($DGI) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 75 | 70 | 66 | 68 | -1.8% | -5.1% | -11.2% | -15.8% |
| EBITDA | 5 | 4 | 0 | -32 | 268.7% | | -78.3% | -261.4% |
| Net Income | 2 | 1 | -2 | -33 | | | | -347.0% |
Balance Sheet
|
|---|
| Cash | 1 | 1 | 0 | 2 | -59.1% | -71.5% | -100.0% | 77.3% |
| Short Term Debt | 6 | 17 | 18 | 17 | 42.8% | -62.7% | -59.8% | -60.6% |
| Long Term Debt | 47 | 27 | 31 | 29 | -44.4% | -38.2% | -28.7% | 167.2% |
Ratios
|
|---|
| Gross Margin | 24.6% | 24.6% | 21.7% | 19.4% | 1.9% | 3.3% | -3.1% | -5.0% |
| EBITDA Margin | 7.1% | 6.0% | 0.3% | -46.4% | 5.2% | 43.6% | -0.9% | -70.6% |
| Net Income Margin | 2.5% | 1.4% | -2.8% | -48.6% | 4.0% | 41.8% | -0.5% | -65.1% |
Revenue and profitability
Data Group Ltd's Revenue decreased on 8.6%. Revenue decline showed acceleration in FY16Q4 - it was 15.8% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 6.1 pp from -1.9% to -7.9% in FY2016.
Gross Margin decreased slightly on 0.68 pp from 23.3% to 22.7% in FY2016. SG&A as a % of Revenue increased on 2.1 pp from 18.0% to 20.1% in FY2016.
Net Income marign decreased on 5.2 pp from -6.3% to -11.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.95% in FY2016. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 1.1%.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.4x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt dropped on 14.6% while cash jumped on 77.3%.
Appendix 1: Peers in Technology
Below we provide Data Group Ltd 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 (11 companies) | | 2.3% | 15.2% | 12.8% | 15.3% |
|---|
| Data Group Ltd ($DGI) | | -5.8% | -1.2% | -2.7% | -8.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($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 (11 companies) | 71.9% | 63.0% | 70.4% | 70.7% | 74.7% |
|---|
| Data Group Ltd ($DGI) | 25.9% | 25.3% | 23.8% | 23.3% | 22.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wi-LAN Inc ($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 (13 companies) | -6.7% | 2.2% | 4.3% | 2.1% | 12.4% |
|---|
| Data Group Ltd ($DGI) | 8.5% | 8.1% | 7.2% | -1.9% | -7.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kinaxis Inc ($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 (13 companies) | 1.2% | 1.2% | 1.2% | 1.1% | 1.2% |
|---|
| Data Group Ltd ($DGI) | 0.6% | 0.7% | 1.0% | 1.4% | 1.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($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 (13 companies) | -8.9% | -20.1% | 0.2% | 0.1% | 10.5% |
|---|
| Data Group Ltd ($DGI) | 7.0% | 8.6% | 14.2% | -13.8% | -52.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mitel Networks Corp ($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) | 0.0x | 1.4x | -2.3x | -1.7x | -6.3x |
|---|
