Trending stocks

Netcall Net Income dropped on 21.8% in 2017 and EBITDA Margin decreased slightly on 1.1 pp from 19.6% to 18.5%

26 Sep 2017 • About Netcall ($NET) • By InTwits

Netcall reported FY2017 financial results today. Overall looking at the company's long term financial model we can say that:
  • EBITDA Margin is declining: 18.5% in FY2017 vs. 19.6% in FY2016 vs. 23.2% in FY2013
  • Netcall has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 2.2%.
  • CAPEX is quite volatile: 0.12 in FY2017, 0.44 in FY2016, 0.16 in FY2015, 0.17 in FY2014, 0.10 in FY2013
  • The company has business model with low profitability: ROIC is at 7.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Netcall ($NET) key annual financial indicators

mln. £201320142015201620172017/2016
P&L
Revenue16.11116.86617.15116.62716.151-2.9%
Gross Profit14.45015.35315.58715.16414.818-2.3%
SG&A13.54113.34911.91211.830-0.7%
EBITDA3.7334.2934.0343.2522.988-8.1%
Net Income1.9992.2132.6551.8861.475-21.8%
Balance Sheet
Cash9.18711.37713.72614.12212.724-9.9%
Short Term Debt0.0000.0000.0000.0000.000
Long Term Debt0.0000.0000.0000.0000.000
Cash flow
Capex0.1030.1680.1630.4440.121-72.7%
Ratios
Revenue growth10.4%4.7%1.7%-3.1%-2.9%
EBITDA growth17.9%15.0%-6.0%-19.4%-8.1%
Gross Margin89.7%91.0%90.9%91.2%91.7%0.5%
EBITDA Margin23.2%25.5%23.5%19.6%18.5%-1.1%
Net Income Margin12.4%13.1%15.5%11.3%9.1%-2.2%
SG&A, % of revenue80.3%77.8%71.6%73.2%1.6%
CAPEX, % of revenue0.6%1.0%1.0%2.7%0.7%-1.9%
ROIC14.9%15.1%12.0%7.1%7.5%0.3%
ROE12.4%11.9%12.4%8.3%6.8%-1.6%
Net Debt/EBITDA-2.5x-2.7x-3.4x-4.3x-4.3x0.1x

Revenue and profitability


Netcall's Revenue decreased on 2.9% in FY2017. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.1 pp from 19.6% to 18.5% in FY2017.

Gross Margin increased slightly on 0.55 pp from 91.2% to 91.7% in FY2017. SG&A as a % of Revenue increased slightly on 1.6 pp from 71.6% to 73.2% in FY2017.

Net Income marign decreased on 2.2 pp from 11.3% to 9.1% in FY2017.

Capital expenditures (CAPEX) and working capital investments


The company's CAPEX/Revenue was 0.75% in FY2017. CAPEX/Revenue showed almost no change from FY2014 to FY2017. Average CAPEX/Revenue for the last three years was 1.5%.

Return on investment


The company operates at low ROIC (7.47%) and ROE (6.76%). ROIC showed almost no change in FY2017. ROE decreased slightly on 1.6 pp from 8.3% to 6.8% in FY2017.

Leverage (Debt)


The company has no debt. Cash decreased on 9.9% in FY2017.

Valuation


The company's trades at EV/EBITDA 19.5x and P/E 48.1x.

Appendix 1: Peers in Software & Computer Services


Below we provide Netcall benchmarking against other companies in Software & Computer Services 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 FY2013 FY2014 FY2015 FY2016 FY2017
Pennant International Group ($PEN)29.1%-4.7%-44.4%74.0%
Sopheon ($SPE)5.3%-16.6%23.0%69.7%
Coms ($COMS)46.8%763.3%110.4%36.1%
Microgen ($MCGN)-7.7%-0.0%7.2%34.5%
IMImobile ($IMO)12.7%12.6%26.1%23.5%
 
Median (34 companies)6.1%4.4%4.1%10.9%23.5%
Netcall ($NET)4.7%1.7%-3.1%-2.9%


Top companies by Gross margin, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Lombard Risk Management ($LRM)98.8%99.2%98.6%99.3%
Wandisco ($WAND)80.3%80.7%93.2%88.1%
Dotdigital Group ($DOTD)92.7%90.5%89.3%87.4%
Idox ($IDOX)90.8%89.4%89.3%86.8%
Sanderson Group ($SND)87.6%84.9%84.5%84.1%
 
Median (24 companies)62.0%57.8%58.8%56.6%57.0%
Netcall ($NET)89.7%91.0%90.9%91.2%91.7%


Top companies by EBITDA margin, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Mail.Ru Group Ltd ($61HE)47.4%50.5%34.6%35.2%
Dotdigital Group ($DOTD)39.4%29.2%32.0%30.4%
Idox ($IDOX)26.1%26.0%28.6%27.3%
Proactis Holdings ($PHD)18.3%22.8%26.4%23.7%
Oxford Metrics ($OMG)6.0%14.7%28.4%23.1%
 
Median (27 companies)12.8%11.1%12.3%11.0%11.0%
Netcall ($NET)23.2%25.5%23.5%19.6%18.5%


Top companies by CAPEX/Revenue, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Mail.Ru Group Ltd ($61HE)5.8%3.0%3.6%5.2%
Csf Group ($CSFG)4.0%2.4%7.1%4.9%
International Bus Mach Corp ($IBM)3.7%4.0%4.4%4.5%
IMImobile ($IMO)3.3%3.9%2.0%3.3%2.8%
Unisys Corp ($USY)2.5%4.1%5.0%3.0%
 
Median (27 companies)1.6%1.9%1.3%1.2%2.8%
Netcall ($NET)0.6%1.0%1.0%2.7%0.7%


Top companies by ROIC, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Rm ($RM.)48.6%130.8%289.2%263.8%
Triad Group ($TRD)-3.8%24.5%61.5%74.4%
Dotdigital Group ($DOTD)38.0%28.5%31.4%28.9%
International Bus Mach Corp ($IBM)31.0%28.1%25.7%18.7%
Oxford Metrics ($OMG)-0.1%0.8%14.6%16.3%
 
Median (34 companies)11.6%9.8%5.3%9.8%10.6%
Netcall ($NET)14.9%15.1%12.0%7.1%7.5%


Top companies by Net Debt / EBITDA

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Zoo Digital Group ($ZOO)3.2x38.3x
Progility ($PGY)1.8x12.8x6.8x
International Bus Mach Corp ($IBM)1.2x1.4x1.7x2.2x
Idox ($IDOX)1.3x1.0x1.3x1.2x
Datatec ($DTC)-0.3x0.3x0.4x1.1x
 
Median (24 companies)-0.4x-0.3x-0.5x-0.8x-1.6x
Netcall ($NET)-2.5x-2.7x-3.4x-4.3x-4.3x